SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003.
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
Commission File Number 1-04721
A. Full title of the plan and the address of the plan, if different from that of
the issuer named below:
SPRINT RETIREMENT SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the address of
its principal executive office:
SPRINT CORPORATION
6200 SPRINT PARKWAY
OVERLAND PARK, KS 66251
SPRINT RETIREMENT SAVINGS PLAN
2003 ANNUAL REPORT
WITH
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
SPRINT RETIREMENT SAVINGS PLAN
Index to Financial Statements
Report of Independent Registered Public Accounting Firm
Financial Statements
o Statements of Net Assets Available for Benefits as of
December 31, 2003 and 2002 1
o Statements of Changes in Net Assets Available for 2
Benefits for the Years Ended December 31, 2003, 2002,
and 2001
o Notes to Financial Statements 3
Supplemental Schedule
o Schedule I Schedule H, Line 4(i): Schedule of Assets
(Held at End of Year) 13
Report of Independent Registered Public Accounting Firm
The Employee Benefits Committee
Sprint Corporation
We have audited the accompanying statements of net assets available for benefits
of the Sprint Retirement Savings Plan (the Plan) as of December 31, 2003 and
2002, and the related statements of changes in net assets available for benefits
for each of the three years in the period ended December 31, 2003. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan at
December 31, 2003 and 2002, and the changes in its net assets available for
benefits for each of the three years in the period ended December 31, 2003, in
conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedule of assets
(held at end of year) as of December 31, 2003 is presented for purposes of
additional analysis and is not a required part of the financial statements but
is supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. This supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subjected to the auditing
procedures applied in our audits of the financial statements and, in our
opinion, is fairly stated in all material respects in relation to the financial
statements taken as a whole.
/s/ Ernst & Young LLP
Kansas City, Missouri
June 11, 2004
SPRINT RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Thousands of Dollars)
As of December 31:
2003 2002
-------------- --------------
PLAN ASSETS
Investments at current value $ 2,430,802 $ 1,964,788
Receivables:
Receivables for unsettled security sales 1,140 107
Transfers receivable 415 287
Contributions receivable 11 1
Other receivables 4 3
Accrued interest and dividend income 14 19
-------------- --------------
Total assets 2,432,386 1,965,205
-------------- --------------
PLAN LIABILITIES
Forfeiture payable 1 10
Accrued investment expenses 54 39
Payable for unsettled security purchases 1,197 -
Other payables 782 721
-------------- --------------
Total liabilities 2,034 770
-------------- --------------
Net assets available for benefits $ 2,430,352 $ 1,964,435
-------------- --------------
-------------- --------------
See Notes to Financial Statements
1
SPRINT RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(Thousands of Dollars)
For the Year Ended December 31:
2003 2002 2001
____________ ___________ ___________
Investment Income (loss):
Interest $ 6,196 $ 5,704 $ 17,852
Dividends 37,404 27,555 34,001
Net realized and unrealized appreciation (depreciation)
in the current value of investments 368,745 (995,913) (10,067)
------------ ------------- -------------
Net investment income (loss) 412,345 (962,654) 41,786
Contributions - employer (net) 64,496 73,947 70,624
Contributions - employee 191,956 207,096 207,494
Administrative fees (41) (33) (24)
Withdrawals (203,051) (203,298) (183,481)
Transfers, other 12 - 516
Inter-plan fund transfers (net) 200 954 5,764
------------ ------------- -------------
Net increase (decrease) 465,917 (883,988) 142,679
Net Assets Available for Benefits:
Beginning of year 1,964,435 2,848,423 2,705,744
------------ ------------ -------------
End of year $ 2,430,352 $ 1,964,435 $ 2,848,423
------------ ------------ -------------
------------ ------------ -------------
See Notes to Financial Statements
2
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
1. DESCRIPTION OF THE PLAN
The following brief description of the Sprint Retirement Savings Plan (the Plan)
provides only general information. For more complete information participants
should refer to the Plan document and the Summary Plan Description, which can be
obtained by calling the Employee Solutions Network at 800-697-6000.
General
-------
The Plan is a defined contribution plan established by Sprint Corporation
("Sprint" or the "Company") and adopted by substantially all of its
subsidiaries. The Plan includes a qualified cash or deferred arrangement as
defined in section 401(k) of the Internal Revenue Code (Code) and is subject to
the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Upon its inception in 1984, the Plan was known as the United Telecom Savings
Plan and consisted of the portion now referred to as the Savings Plus Account
(SPA). Effective October 10, 1989, the United Telecommunications, Inc. Employee
Stock Ownership Plan, now referred to as the TRASOP Account, was merged into the
Plan. The TRASOP account is a defined contribution plan that invests in common
stock of the Company. The Plan became known as the Sprint Retirement Savings
Plan (SRSP) effective January 1, 1994. Effective November 1, 2000, the Centel
Employee Stock Ownership Plan (CESOP) was merged into the Plan.
Under the Plan, separate plan provisions relate solely to the SPA, the TRASOP
Account and the CESOP Account.
The following information pertains only to the SPA:
Eligibility - SPA
-----------------
Participation in the Plan is voluntary. Individuals employed by one of the
Company's subsidiaries on a regular, full-time basis and who are not represented
by a collective bargaining unit are eligible to participate immediately. If an
individual is not a permanent full-time employee, the employee is eligible to
participate after completing one year of service in which the employee has
worked at least 1,000 hours.
Contributions - SPA
-------------------
Participants may contribute up to 50% of their eligible pay to a pre-tax
account. Pre-tax participant contributions may not exceed annual limitations
defined in the Internal Revenue Code (Code) of $12,000 for the 2003 plan year,
$11,000 for the 2002 plan year and $10,500 for the 2001 plan year. The
percentage that may be contributed by participants who meet the definition of a
highly compensated employee as defined in the Code is periodically recalculated
in order to maintain compliance with the nondiscrimination provisions of the
Code. Subject to certain limitations and restrictions, the Plan permits
participants to make rollover contributions from other plans qualified under
Section 401 of the Code.
The Company makes a matching contribution to the Plan in an amount which,
together with forfeitures of the Company contribution due to participants'
withdrawal, equals 25% of the first 6% contributed by a participant. Prior to
July 1, 2003, the Company match was a minimum of 50% of the first 6% of a
participant's eligible pay. Contributions in excess of 6% of each participant's
eligible pay are not included in this calculation of the Company contribution.
Company contributions are made in Company common stock with a market value equal
to the Company contribution requirement.
The allocation of the Company matching contribution between FON and PCS shares
is subject to change quarterly based on the relative market capitalization of
FON and PCS common stocks. During the 2003 plan year, the Company matching
contribution invested in FON stock ranged from 69% to 81% and the Company
matching contribution invested in the PCS
3
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
Contributions - SPA (cont'd)
-----------------------------
stock ranged from 31% to 19%. During the 2002 plan year, the Company matching
contribution invested in FON stock ranged from 43% to 68% and the Company
matching contribution invested in PCS stock ranged from 57% to 32%. During the
2001 plan year, the Company matching contribution invested in FON stock ranged
from 43% to 51% and the Company matching contribution invested in PCS stock
ranged from 57% to 49%.
The Plan provides that the Company may make an optional additional Company
contribution. The amount of this additional contribution, if any, is based on a
quarterly comparison of the Company's common stock performance with the
performance of other telecommunications companies common stock. The total amount
contributed by the Company under this provision will be the product of the
additional quarterly contribution percentage multiplied by the amount
contributed by participants. Participant contributions in excess of 6% of
eligible pay are not included in this calculation.
Effective March 2002, participants may choose to receive annual taxable dividend
payments on vested Sprint FON Company matching contributions and pre-2002
employee FON contributions.
In 2002, catch-up contributions were introduced to eligible participants. To be
eligible to make catch-up contributions, a participant must be age 50 by the end
of the respective plan year and must contribute the maximum elective
contribution for that plan year. For plan year 2003, the pre-tax catch-up
contribution limit was $2,000. In plan year 2002, the pre-tax catch-up
contribution limit was $1,000.
Investment Funds - SPA
----------------------
Participants may direct their contributions into any of thirty funds among which
are three large capitalization Growth Stock funds, a Large Blend Stock Fund, two
Large Capitalization Value Stock funds, a Money Market Fund, four Bond funds,
five International and Emerging Market Equity funds, three Small Capitalization
Stock funds, two Mid-Capitalization Stock funds, a U. S. Equity Index Fund, an
Emerging Market Debt Fund, as well as the Sprint FON Stock Fund and the Sprint
PCS Stock Fund. The participants may also direct their contributions into five
pre-mixed portfolio investment options: Conservative Growth Portfolio, Moderate
Growth Portfolio, Balanced Growth Portfolio, High Growth Portfolio and
Aggressive Growth Portfolio.
As of June 30, 2001, the Bond Fund, the Growth Stock Fund, Aggressive Growth
Stock Fund, Value Stock Fund and International Stock Fund were invested in the
PIMCO Total Return Investment Fund, the Fidelity Magellan Fund, the Fidelity
Dividend Growth Fund, the Fidelity Equity Income Fund, and the Fidelity Overseas
Fund, respectively. The Interest Income Fund was managed by Fidelity Management
Trust Company and was invested in a number of investment contracts issued by
various insurance companies and banks and the PIMCO Low Duration Fund, Inc. as
well as the PIMCO Low Duration II Fund, Inc. The U.S. Stock Index Fund was
invested in the Fidelity U.S. Equity Index Fund, Inc. and was also managed by
Fidelity Management Trust Company.
On July 1, 2001, investment offerings in the Plan expanded to thirty and three
existing investment vehicles in the Plan were replaced as follows:
Investment Option Vehicle Name Service Dates Replacement Vehicle Effective Date
Name
Bond Fund PIMCO Total Return Fund 10/1/95 - 7/1/01 PIMCO Separately Managed 7/1/01
(B acct.)
Interest Income Fund Fidelity Separately Managed 4/1/92 - 7/1/01 PIMCO Separately Managed 7/1/01
(I acct.)
U.S. Stock Fund Fidelity U.S. Equity Index Fund 10/1/96 - 7/1/01 Barclay's Equity Index Fund 7/1/01
4
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
The following changes were implemented during Plan Year 2002:
Investment Option Vehicle Name Service Dates Replacement Vehicle Effective
Name Date
Growth Stock Fund Harbor Capital Appreciation Fund 7/1/01 - 12/31/02 Jennison Associates, LLC 12/31/02
(separately managed account)
Aggressive Growth Stock White Oak Growth Stock Fund 7/1/01 - 12/31/02 Oak Associates, Ltd. 12/31/02
Fund (separately managed account)
Value Stock Fund I Barclay's Russell 1000 Value 7/1/01 - 12/31/02 Harris Associates, L.P. 12/31/02
Fund (separately managed account)
The following changes were implemented during Plan Year 2003:
Investment Option Vehicle Name Service Dates Replacement Vehicle Effective
Name Date
Mid-Cap Growth Stock Fidelity OTC Portfolio 7/1/01 - 7/1/03 Harbor Mid-Cap Growth Stock 7/1/03
Fund Fund
Aggressive Growth Oak Associates (separately 12/31/02 - 7/1/03 Fidelity OTC Fund 7/1/03
Stock Fund managed acct.)
Global Equity Fund Janus Aspen Worldwide Growth 7/1/01 - 7/1/03 GMO Global Equity Allocation 7/1/03
Strategy
International Stock Barclay's EAFE Equity Index Fund 7/1/01 - 7/1/03 NTGI EAFE Equity Index 7/1/03
Fund Fund "F"
Money Market Fund Barclay's Money Market Fund 7/1/01 - 7/1/03 NTGI Short Term Investment 7/1/03
Fund Fund
U.S. Stock Index Fund Barclay's Equity Index Fund "F" 7/1/01 - 7/1/03 NTGI S&P 500 Equity Index 7/1/03
Fund
Small Cap Stock Fund Barclay's Russell 2000 Index Fund 7/1/01 - 7/1/03 NTGI Russell 2000 Index Fund 7/1/03
Participants may, at their discretion, alter the array of funds in which their
payroll contributions are invested. Participants may also execute a transfer of
funds on any day the New York Stock Exchange is open. Daily fund exchanges in
the FON and PCS stock funds are limited to participant contributions.
Other limitations on transfers between funds apply in certain circumstances.
5
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
Concentration of Risk
---------------------
At December 31, 2003, 2002 and 2001, a portion of the Plan's assets were in
shares of Sprint FON and PCS common stock, the value of which is subject to
fluctuations related to corporate, industry and economic factors.
The Plan's other investment options include a variety of stocks, bonds, mutual
funds, and other securities. Investment securities subject participants to
various risks, such as interest rate, market and credit risks. Due to the level
of risk associated with certain investment securities, it is likely that changes
in the values of investment securities will occur in the near term and that such
changes could affect participants' account balances and the amounts reported in
the Statements of Net Assets Available for Benefits.
Vesting - SPA
-------------
Participants are 100% vested in their participant contribution accounts at all
times.
Effective December 1, 2001, participants have a right to their Company
contributions based on a graded vesting schedule, which is: 20% vested after two
years of service, 40% vested after three years of service, 60% vested after four
years of service and 100% vested after five or more years of continuous service
with the Company. Earlier vesting may occur if, while an employee of the
Company, a participant (1) attains age 65, (2) incurs a permanent and total
disability, or (3) dies. Special rules may provide for more rapid vesting to
certain participants under vesting schedules of prior Plans.
Withdrawing participants who do not meet these vesting guidelines forfeit the
non-vested portion of the Company contribution. Such amounts are used to offset
future Company contribution requirements.
Withdrawals - SPA
-----------------
Participants may withdraw the vested value of their account when they retire,
terminate employment with the Company, reach age 59 1/2, meet "hardship"
requirements defined in the Code, or become permanently and totally disabled.
In-service withdrawals may also be made from the after-tax portion of their
account and the vested portion of their Company contribution account that has
been held by the Plan for two full calendar years following the year of
contribution. These withdrawals may not be made more often than twice per year.
The minimum in-service withdrawal is the lesser of $1,000 or 50% of the amount
that may be withdrawn.
Participant Loans - SPA
-----------------------
Participants may borrow up to the lesser of (1) one-half of the total value of
their vested account balance, (2) $50,000 reduced by the highest outstanding
balance of the participant's loan from the Plan during the one year period
ending on the date the loan is made, or (3) the total value of their pre-tax
account. The minimum loan is $1,000.
Participants may have no more than two loans outstanding from the Plan at a
time. Amounts borrowed by participants must be repaid within 5 years and no
sooner than 6 months. In the event that the proceeds of the loan are used to
acquire a participant's principal residence, the maximum repayment period may be
as much as 25 years. The interest rate charged on loans is set by the Employee
Benefits Committee.
6
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
The following information pertains to the TRASOP account:
Contributions - TRASOP
----------------------
While it is the intention of the Company to continue maintaining the TRASOP
Accounts, effective January 1, 1987, concurrent with the effective date of the
Tax Reform Act of 1986, contributions to the TRASOP account were discontinued.
The Company does not intend to make any additional contributions unless
favorable tax incentives supporting such contributions become incorporated into
future law. Employees may continue to participate in the TRASOP. For certain
plan years, the TRASOP allowed eligible participants to make after-tax
contributions.
Eligibility - TRASOP
--------------------
Individuals employed by the Company or one of its participating subsidiaries
during 1976 through 1986 were eligible to participate in the Company
contribution amount for such year, provided they had completed one year of
continuous employment on or before the end of a plan year and they were still
employed by the Company at the end of such year.
Investment Fund - TRASOP
------------------------
Plan assets are invested solely in Company common stock except for amounts
necessary to meet anticipated administrative expenses and distributions.
Vesting - TRASOP
----------------
Participants are 100% vested in shares of common stock allocated to their
accounts at all times.
Withdrawals - TRASOP
--------------------
Participants who elect may withdraw their entire TRASOP account balance while an
active employee of the Company. Upon termination of employment, death,
retirement, or disability, or termination of the Plan, participants may elect to
withdraw their entire account balance.
The following information pertains to the CESOP account:
Effective November 1, 2000, CESOP was merged into the Plan for non-bargaining
unit employees and the Centel Retirement Savings Plan for Bargaining Unit
Employees as appropriate.
Eligibility/Contributions - CESOP
---------------------------------
Employees of Centel Corporation during the period of January 1, 1975, through
December 31, 1986, were eligible to participate in the CESOP. Centel Corporation
made all contributions to the CESOP through December 31, 1986. Effective January
1, 1987, concurrent with the effective date of the Tax Reform Act of 1986,
contributions to the CESOP ceased.
Investment Fund - CESOP
-----------------------
Plan assets are invested solely in Company common stock except for amounts
necessary to meet anticipated administrative expenses and distributions.
Vesting - CESOP
---------------
Participants are 100% vested in their account balances at all times.
7
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
Withdrawals - CESOP
-------------------
Participants may elect to withdraw all of their CESOP account balance while an
active employee of the Company. Upon termination of employment, retirement,
death, total and permanent disability, or upon termination of the Plan,
participants may elect to withdraw their entire account balance.
Dividends - CESOP
-----------------
Dividends earned on shares held in the CESOP account are distributed annually to
participants unless otherwise elected by a participant, or are reinvested if the
amount of the dividend payment is less than $10.
The following information pertains to SPA, TRASOP and CESOP accounts:
Participant Accounts - SPA
--------------------------
A separate account is maintained for each participant in the Plan. Each
participant's account is adjusted for (a) Company contributions on behalf of the
participant, (b) the participant's contributions to the Plan, including rollover
contributions, (c) the participant's share of any investment income or loss, (d)
withdrawals, (e) loans, and (f) forfeitures of Company contributions due to the
participant's withdrawal.
Participant Accounts - TRASOP and CESOP
---------------------------------------
A separate account is maintained for each participant in the TRASOP and CESOP.
Each participant's account is adjusted for (a) the participant's share of any
investment income or loss, and (b) withdrawals.
Administration and Plan Expenses - SPA, TRASOP and CESOP
--------------------------------------------------------
The Plan is administered by Sprint's Employee Benefits Committee. Administrative
and investment expenses of the SPA and CESOP are expenses of the Plan, and
except to the extent paid by the Company, are paid out of the trust. Certain
administrative charges for employee loans from the SPA are borne by the
participants with outstanding loans. The Company may recover TRASOP
administrative costs from the Plan, directly or by reduction of TRASOP
dividends, subject to limitations provided in the Code and the Plan. The Plan
reimbursed the Company for TRASOP administrative expenses of $23,000 for each of
2003 and 2002, and $26,000 for 2001.
Termination
-----------
Although the Company has not expressed an intention to terminate the entire
Plan, it reserves the right to amend or terminate the Plan at any time. Should
the entire Plan terminate, the accounts of all participants will become
non-forfeitable as of the date of termination.
8
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies of the Plan:
Valuation of Investments
------------------------
Investments of the Plan are valued at current value. The current value of the
common stock is based on the value of the last reported sale in the active
market in which they are traded on the last business day of the year. The
current value of equity mutual funds and bond mutual funds is valued at the
redemption price on the last business day of the year. The current value of the
short term investments is estimated at cost plus accrued interest. Notes
receivable from participants are valued at their principal balance.
Interest and Dividend Income
----------------------------
Dividend income is recorded on the ex-dividend date. Income from the investments
is recorded as earned on an accrual basis.
Use of Estimates
----------------
The preparation of financial statements in conformity with U. S. generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from these estimates.
Income Tax Status
-----------------
The Plan has received a determination letter from the Internal Revenue Service
dated June 12, 2003, stating that the Plan is qualified under Section 401(a) of
the Code and, therefore, the related trust is exempt from taxation. Subsequent
to this issuance of the determination letter, the Plan was amended. Once
qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The plan administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan, as amended, is qualified and the related
trust is tax exempt.
Withdrawals
-----------
Withdrawals, other than cash, are recorded at the current market value of the
assets on the date of distribution.
Reclassifications
-----------------
Certain prior-year amounts have been reclassified to conform to the current-year
presentation. These reclassifications had no effect on net assets available for
benefits.
9
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
3. INVESTMENTS
The Plan's investments are held by the Fidelity Management Trust Company of
Boston, Massachusetts, as trustee. The following table presents the Plan
investments that represent 5% or more of the Plan's net assets available
for benefits.
(Thousands of Dollars)
As of December 31:
2003 2002
-------------- -----------------
Investments at Current Value as Determined by
Quoted Market Price:
Sprint FON Common Stock $ 537,687 $ 525,501
Sprint PCS Common Stock 245,184 187,182
Fidelity Magellan Fund 392,661 320,512
Fidelity Equity Income Fund 200,441 155,730
PIMCO Separately Managed I Account 245,965 266,953
During 2003, 2002 and 2001, the Plan's investments (including investments
purchased, sold and held during the year) appreciated (depreciated) in
value as follows:
(Thousands of Dollars)
Net Realized and Unrealized Appreciation For the Year Ended December 31:
(Depreciation) in Value
2003 2002 2001
-------------- ----------------- --------------
Investments at Current Value as Determined by
Quoted Market Price:
Common stock:
Sprint Corporation - SPA
FON $ 69,092 $ (146,222) $ (4,394)
PCS 56,093 (554,877) 104,271
Sprint Corporation - TRASOP 14,179 (94,299) 12,220
Sprint Corporation - CESOP 586 (3,806) 502
Equity mutual funds 193,562 (203,954) (134,089)
Equity index fund 17,237 (13,018) (3,375)
Bond mutual funds 12,241 22,063 14,717
Other investments 5,755 (1,800) 81
-------------- ----------------- --------------
Total Appreciation (Depreciation) $ 368,745 $ (995,913) $(10,067)
============== ================= ==============
10
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
4. NON-PARTICIPANT-DIRECTED INVESTMENTS
The funds comprised of Company stock (FON Stock Fund and PCS Stock Fund)
include both participant-directed and non-participant-directed amounts.
Information regarding the changes in net assets relating to these funds in
total is as follows:
(Thousands of Dollars)
For the Year Ended December 31:
2003 2002 2001
-------------- -------------- -----------------
Investment Income:
Interest $ 1,202 $ 1,859 $ 2,476
Dividends 15,866 14,118 13,689
Net realized and unrealized appreciation (depreciation)
in the current value of investments 125,185 (701,100) 99,858
-------------- -------------- -----------------
Net investment income (loss) 142,253 (685,123) 116,023
Contributions - employer (net) 65,115 75,773 74,476
Contributions - employee 34,976 45,458 58,441
Administrative fees (8) (5) (4)
Withdrawals (51,412) (49,560) (67,544)
Inter-plan fund transfers (net) 43 269 3,136
Intra-plan fund transfers (net) (13,395) (688) (10,482)
-------------- -------------- -----------------
Net increase (decrease) 177,572 (613,876) 174,046
Net Assets Available for Benefits:
Beginning of year 623,213 1,237,089 1,063,043
-------------- -------------- -----------------
End of year $ 800,785 $ 623,213 $ 1,237,089
============== ============== =================
Of the above net assets, information about the net assets of the non-participant
-directed investments is as follows:
(Thousands of Dollars)
For the Year Ended December 31:
2003 2002 2001
-------------- -------------- -----------------
Net Assets:
Sprint Corporation - SPA:
FON Stock Fund $ 410,271 $ 334,419 $ 423,892
PCS Stock Fund 105,188 78,145 298,361
11
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2003
5. RELATED PARTY TRANSACTIONS
Company contributions are made directly to the FON and PCS stock funds;
participants may also elect to direct a percentage of their contribution to
these funds. In 2003, these combined contributions approximated $62 million and
$38 million to the FON and PCS stock funds, respectively. In 2002, approximately
$52 million and $69 million were contributed to the FON and PCS stock funds,
respectively. In 2001, approximately $55 million and $78 million were
contributed to the FON and PCS stock funds, respectively.
6. LEGAL PROCEEDINGS
In 2003, several putative class action lawsuits were filed in the U. S. District
Court for the District of Kansas by individual participants in the Plan, the
Sprint Retirement Savings Plan for Bargaining Unit Employees, and the Centel
Retirement Savings Plan for Bargaining Unit Employees against the Company, the
committee that administers the plans, the trustee for the plans, and various
current and former officers and directors of the Company. These lawsuits have
been consolidated before a single judge. The lawsuit alleges that defendants
breached their fiduciary duties to the plans and violated the ERISA statutes by
including FON stock and PCS stock among the investment options offered to plan
participants. The lawsuit seeks to recover any decline in the value of FON stock
and PCS stock during the class period.
7. SUBSEQUENT EVENTS (unaudited)
Increased Diversification
-------------------------
Effective January 1, 2004, participants may diversify their Company matching
contributions based on the schedule below:
o For Company matching contributions made prior to January 1, 2004:
o In 2004, 20% of the Company matching contributions may be transferred
to other investment options.
o In each succeeding year (2005, 2006, 2007 and 2008), an additional 20%
of the Company matching contributions balance may be diversified.
o Company matching contributions made on or after January 1, 2004, may
be diversified beginning on the last day of the third year after the
year the contributions are made. For example, Company matching
contributions made in 2004 may be diversified on December 31, 2007.
Similarly, Company matching contributions made in 2005 may be
diversified on December 31, 2008.
In addition, effective January 1, 2004, all employees age 55 or older may choose
to fully diversify all Company matching contributions once each year. The
previous age requirement was 60.
Common Stock Recombination
--------------------------
In February 2004, Sprint's board of directors decided to recombine the tracking
stocks and return to a single common stock. As a result, on April 23, 2004, each
share of PCS stock automatically converted to 0.50 shares of FON stock.
Concurrently, the Sprint FON Stock Fund and the Sprint PCS Stock Fund were
combined. Since that date, Company contributions are made only in FON stock to
the Company Stock Fund. Participants may also direct contributions to the
Company Stock Fund. The FON stock now represents the only outstanding common
stock of the Company.
Oversight Committee Reconstitution
----------------------------------
On April 1, 2004, the duties of the Pension and Savings Trusts Committee were
assumed by the Employee Benefits Committee and the Pension and Savings Trusts
Committee ceased to exist. The Employee Benefits Committee is the named
fiduciary of the Plan and has responsibility for the administrative and
financial activities of the Plan.
12
SUPPLEMENTAL SCHEDULE
Schedule I
Page 1 of 2
SPRINT RETIREMENT SAVINGS PLAN
EIN: 48-0457967
Plan #004
Schedule H, Line 4(i) - Schedule of Assets (Held at End of Year)
December 31, 2003
(Thousands of Dollars)
Identity of Issue Cost Current Value
-------------- --------------
Common Stock:
Sprint Corporation - SPA:
FON** $ 648,948 $ 537,687
PCS** 526,580 245,184
Sprint Corporation - TRASOP:
FON** 51,519 93,888
PCS** 8,078 14,519
Sprint Corporation - CESOP:
FON** 2,109 3,839
PCS** 256 620
-------------- --------------
Total Common Stocks 1,237,490 895,737
Equity Funds:
Fidelity Magellan Fund** 381,509 392,661
Fidelity Equity Income Fund** 182,021 200,441
Fidelity OTC Portfolio Fund** 120,126 95,938
Fidelity Overseas Fund** 52,434 51,493
Fidelity Dividend Growth Fund** 105,405 108,517
Capital Guardian International Equity Fund 2,881 3,522
Capital Guardian Emerging Market Equity Fund 2,286 2,780
Jennison Associates LLC Separately Managed Acct 5,105 6,271
Harris Associates, L.P. Separately Managed Acct 4,950 5,925
Wall Street Associates Separately Managed Acct 4,391 5,500
American Century Equity Income Fund 17,349 19,399
DFA U.S. Small-Cap Value Portfolio 24,258 28,645
GMO Global Equity Allocation 4,827 5,768
Harbor Midcap Growth I 6,693 7,197
-------------- --------------
Total Equity Mutual Funds 914,235 934,057
Equity Index Funds:
NTGI Russell 2000 Index Fund 9,075 10,578
NTGI EAFE Index Fund 1,259 1,517
NTGI S&P 500 Equity Index Fund 59,973 68,479
-------------- --------------
Total US Stock Index Funds 70,307 80,574
Bond Funds:
PIMCO High Yield Fund 9,320 9,901
PIMCO Foreign Bond Fund 5,592 5,495
GMO Emerging Country Debt Share Fund 20,813 20,199
PIMCO Separately Managed I Account 220,698 245,965
PIMCO Separately Managed B Account 65,993 75,919
-------------- --------------
Total Bond Mutual Funds 322,416 357,479
13
Schedule I
Page 2 of 2
SPRINT RETIREMENT SAVINGS PLAN
EIN: 48-0457967
Plan #004
Schedule H, Line 4(i) - Schedule of Assets (Held at End of Year) (Cont'd)
December 31, 2003
(Thousands of Dollars)
Identity of Issue Cost Current Value
---------------- ----------------
Short-Term Investments:
NTGI Short-term $ 32,509 $ 32,509
Fidelity Retirement Market Account** 290 290
Fidelity Investment Cash Portolio** 18,186 18,186
---------------- ----------------
Total Short-Term Investments 50,985 50,985
Other Funds:
Conservative Growth Portfolio 3,992 4,267
Moderate Growth Portfolio 4,953 5,459
Balanced Growth Portfolio 9,159 10,326
High Growth Portfolio 7,449 8,570
Aggressive Growth Portfolio 6,763 7,863
---------------- ----------------
Total Other Investments 32,316 36,485
Participant Loans 75,485 75,485
---------------- ----------------
Total Investments $ 2,703,234 $ 2,430,802
================ ================
** Indicates party-in-interest to the Plan.
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Employee Benefits Committee, which administers the Plan, has duly caused this
annual report to be signed on its behalf by the undersigned, hereunto duly
authorized.
Sprint Retirement Savings Plan
By: /s/ E. J. Holland, Jr.
E. J. Holland, Jr.
Date: June 25, 2004 Employee Benefits Committee
EXHIBIT INDEX
Exhibit Number
23 Consent of Independent Registered Public Accounting Firm