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, 2002.
[ ] 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
TOTAL NUMBER OF PAGES 29
EXHIBIT INDEXES AT PAGE 27
1
REQUIRED INFORMATION
1. Opinion of Ernst & Young LLP.
2. Audited Statements of Net Assets Available for Benefits With Fund
Information as of December 31, 2002 and 2001.
3. Audited Statements of Changes in Net Assets Available for Benefits With
Fund Information For Each of the Years Ended December 31, 2002, 2001, and
2000.
4. Notes to Financial Statements.
5. Supplemental Schedules:
-Investments as of December 31, 2002.
-Reportable Transactions For the Year Ended December 31, 2002.
6. Exhibits:
-Consent of Ernst & Young LLP (Exhibit 23a).
-Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to
Section 906 of the Sarbanes - Oxley Act of 2002 (Exhibit 99).
2
SPRINT RETIREMENT SAVINGS PLAN
2002 ANNUAL REPORT
WITH
REPORT OF INDEPENDENT AUDITORS
3
SPRINT RETIREMENT SAVINGS PLAN
Index to Financial Statements
Report of Independent Auditors
Financial Statements
o Statements of Net Assets Available for Benefits as of December 31, 2002 and
2001
o Statements of Changes in Net Assets Available for Benefits for the Years
Ended December 31, 2002, 2001, and 2000
o Notes to Financial Statements
Supplemental Schedules
o Schedule I Investments as of December 31, 2002
o Schedule II Reportable Transactions for the Year Ended December 31, 2002
4
Report of Independent Auditors
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, 2002 and
2001, and the related statements of changes in net assets available for benefits
for each of the three years in the period ended December 31, 2002. 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 auditing standards generally
accepted in the 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, 2002 and 2001, and the changes in its net assets available for
benefits for each of the three years in the period ended December 31, 2002, in
conformity with accounting principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules listed in
the index to the financial statements are presented for purposes of additional
analysis and are not a required part of the financial statements but are
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. These supplemental schedules are the responsibility of
the Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in our audits of the financial statements and, in
our opinion, are fairly stated in all material respects in relation to the
financial statements taken as a whole.
/s/ Ernst & Young LLP
Kansas City, Missouri
June 6, 2003
5
SPRINT RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
(Thousands of Dollars)
December 31,
2002 2001
----------------- --------------------
PLAN ASSETS
Investments at fair value $ 1,964,788 $ 2,844,988
Receivables:
Receivables for unsettled security sales 107 5,276
Transfer receivable 287 2,524
Contributions receivable 1 17
Other receivables 3 95
Accrued interest and dividend income 19 61
----------------- --------------------
Total assets 1,965,205 2,852,961
PLAN LIABILITIES
Benefit payment payable 83 -
Loan repayment payable 24 66
Accrued transfer payable 509 3,269
Forfeiture payable 10 -
Accrued investment expenses 39 23
Payable for unsettled security purchases - 1,180
Other payables 105 -
----------------- --------------------
Total liabilities 770 4,538
----------------- --------------------
Net assets available for benefits $ 1,964,435 $ 2,848,423
================= ====================
See Notes to Financial Statements.
6
SPRINT RETIREMENT SAVINGS PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
(Thousands of Dollars)
Years Ended December 31,
2002 2001 2000
---------------- ---------------- --------------------
Investment income:
Interest $ 5,704 $ 17,852 $ 24,677
Dividends 27,555 34,001 99,520
Net realized and unrealized appreciation (depreciation)
in the fair value of investments (995,913) (10,067) (2,513,345)
---------------- ---------------- --------------------
Net investment income (loss) (962,654) 41,786 (2,389,148)
Contributions - employer (net) 73,947 70,624 84,614
Contributions - employee 207,096 207,494 202,145
Administrative fees (33) (24) (126)
Withdrawals (203,298) (183,481) (376,099)
Transfers from Centel ESOP - - 11,807
Transfers from Broadband Wireless Group and Paranet - - 21,942
Transfers from other - 516 -
Inter-plan fund transfers (net) 954 5,764 9,199
---------------- ---------------- --------------------
Net increase (decrease) (883,988) 142,679 (2,435,666)
Net assets available for benefits:
Beginning of year 2,848,423 2,705,744 5,141,410
---------------- ---------------- --------------------
End of year $ 1,964,435 $ 2,848,423 $ 2,705,744
================ ================ ====================
See Notes to Financial Statements.
7
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN
The following brief description of the Sprint Retirement Savings Plan (Plan)
provides only general information. Participants should refer to the Plan
document and the summary plan description for more complete information.
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 is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
Upon its original 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). This account includes a qualified cash or deferred arrangement as
defined in section 401(k) of the Internal Revenue Code (Code). 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. With
the merger, the plan became known as the Sprint Retirement Savings Plan (SRSP).
At its meeting on December 14, 1999, the Sprint Board of Directors approved the
merger of the Broadband Wireless Group Plans into the Plan effective as of
December 31, 1999 and directed the Employee Benefits Committee to establish
procedures under which the investment of contributions and account balances of
participants in the Broadband Wireless Group Plans would be converted into
investments under the Plan.
The Broadband Wireless Group employees include the participants in the
American Telecasting, Inc. 401(k) Retirement Plan and the American
Telecasting Inc. 401(k) Retirement Plan (Fresno Associates) maintained by
American Telecasting, Inc., the People's Choice TV Corporation 401(k) Plan
maintained by People's Choice TV Corporation, the Wireless Broadcasting
Systems of America, Inc. Employees 401(k) Plan maintained by Wireless
Broadcasting Systems of America, Inc., and the Wireless Holdings, Inc. 401(k)
Plan and the Videotron U.S.A., Inc. 401(k) Plan maintained by Wireless
Holdings, Inc.
Effective January 1, 2000, any Broadband Wireless Group employees who were
eligible to participate in the above referenced Broadband Wireless Group Plans
are eligible to participate in the Plan. The vesting schedules under the
respective Broadband Wireless Group Plans remain in effect for company matching
contributions made to the Broadband Wireless Group Plans prior to January 1,
2000. The company matching contributions made to the Plan on and after January
1, 2000 for any Broadband Wireless Group employee who had either three or more
years of vesting service or less than three years of vesting service as of that
date are vested in accordance with the vesting schedules in the Plan. The
deferral elections made by participants under the Broadband Wireless Group Plans
continue under the Plan until changed by the participants. Effective for
contributions to the Plan after December 31, 1999, the investment elections of
the participants in the Broadband Wireless Group Plans have been converted into
respective investment elections under the Plan.
As of November 1, 2000, the Paranet Inc. 401(k)Plan (the Paranet Plan) was also
merged into the Plan. Any Paranet employees who were eligible to participate in
the Paranet Plan were eligible to participate in the Plan effective January 1,
1999. The investment elections of the Paranet Plan have been converted into
respective investment elections under the Plan.
8
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN (Continued)
General (Continued)
Under the Plan, separate plan provisions relate solely to the SPA, the TRASOP
Account and the Centel Employees' Stock Ownership Plan (CESOP) Account.
The following information pertains only to the SPA:
Eligibility - SPA
Participation in the Plan is voluntary. Individuals employed by the Company or
one of its adopting 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 can contribute up to 50% of their eligible pay to a pre-tax
account, provided total contributions to the pre-tax account did not exceed
annual limitations of $11,000 for the 2002 plan year and $10,500 for both the
2001 and 2000 plan years. The percentage that can be contributed by participants
who meet the definition of a highly compensated employee as defined in the Code
is periodically recomputed in order to maintain compliance with the
nondiscrimination provisions of the Code. The annual limitation on contributions
to the pre-tax account is established under the Code. Contributions are allowed
to only the pre-tax account. 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 one-half of the amount contributed by participants.
Contributions in excess of 6% of each participant's eligible pay are not
included in this calculation of the Company contribution. Contributions are made
in Company common stock with a market value equal to the Company contribution
requirement.
Effective the first quarter of the 2000 plan year, the allocation of the company
matching contribution is subject to change based on the relative market
capitalization of FON and PCS stocks. During the 2000 plan year, the company
matching contribution invested in both FON and PCS stocks ranged from 43% to
57%. 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 49% to 57%. 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 32% to 57%. The
allocation changes on a quarterly basis based on the relative market
capitalization.
The Plan provides that the Company may provide for an optional additional
company contribution each quarter. The amount of this additional contribution,
if any, will be based on a quarterly comparison of the performance of the
Company's common stock with the performance of common stock of other
telecommunications companies. The total amount contributed by the Company under
this provision will be the
9
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN (Continued)
Contributions - SPA (Continued)
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 can choose to receive Sprint FON dividends as
taxable payments annually on vested FON company matching contributions and
pre-2002 employee FON contributions.
In 2002, catch-up contributions were introduced to participants who were age 49
(or older) on December 31, 2001 and who were making the maximum elective
contribution for the year. Participants could contribute an additional $1,000 in
pre-tax contributions to their Plan Account.
Investment Funds - SPA
Participants may direct their contributions into any of twenty-five funds among
the Growth Stock Funds, Dividend Growth Stock Fund, Balanced Stock Funds, Money
Market Fund, Bond Funds, International Equity Funds, Small Capitalization Growth
Stock Fund, Small Capitalization Value Stock Funds, Mid Capitalization Growth
Stock Fund, Mid Capitalization Value Stock Fund, Equity Index Fund and Emerging
Market Equity 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.
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, Inc., the Fidelity Magellan Fund, Inc., the
Fidelity Dividend Growth Fund, Inc., the Fidelity Equity Income Fund, Inc. and
the Fidelity Overseas Fund, Inc., respectively. The Mid Capitalization Growth
Stock Fund invested in the Fidelity OTC Portfolio Fund, Inc. 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 invested in the Fidelity U.S. Equity Index Fund,
Inc. and was also managed by Fidelity Management Trust Company.
On July 1, 2001, three existing investment vehicles in the Plan were replaced.
The Interest Income Fund managed by Fidelity Management Trust Company was
replaced by a PIMCO Bond Fund, i.e., PIMCO Separately Managed Portfolio,
Inc. (1 Account). The PIMCO Total Return Investment Fund, Inc. was replaced
by another PIMCO Bond Fund, i.e., PIMCO Separately Managed Portfolio, Inc.
(B Account). A new U.S. Stock Index Fund, i.e., Barclays' Equity Index
Fund, Inc., replaced the Fidelity U.S. Index Fund.
The five pre-mixed portfolio investment options that the Plan offers are
Conservative Growth Portfolio, Moderate Growth Portfolio, Balanced Growth
Portfolio, High Growth Portfolio and Aggressive Growth Portfolio. The
Growth Stock Funds were invested in Harbor Capital Appreciation Fund, Inc.
and the White Oak Growth Stock Fund, Inc. from July 2001 through December
2002. Effective
10
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN (Continued)
Investment Funds - SPA (Continued)
December 31, 2002, Harbor Capital Appreciation Fund, Inc. and White Oak
Growth Stock Fund were replaced by Jennison Associates LLC Separately
Managed Account and Oak Associates, Ltd. Separately Managed Account,
respectively. The Growth Stock Funds is also invested in the Fidelity
Magellan Fund, Inc. The Large Blend Stock Fund is invested in the Fidelity
Dividend Growth Fund, Inc. The International Equity Funds are invested in
the Janus Aspen Worldwide Growth Fund, Inc., the Capital Guardian
International Equity Fund, Inc. and the Barclays' EAFE Equity Index Fund,
Inc. in addition to the Fidelity Overseas Fund, Inc. The Bond Funds are
invested in the PIMCO High Yield Fund, Inc., the PIMCO Foreign Bond Fund,
Inc. and the GMO Emerging Country Debt Share Fund, Inc. in addition to the
PIMCO Separately Managed Portfolio, Inc. The Balanced Stock Fund was invested
in the Barclays' Russell 1000 Value Index Fund from July 2001 through
December 2002. Effective December 31, 2002, the balances and future
contributions of Barclays' Russell 1000 Value Index Fund were re-directed
to Harris Associates, L.P. Separately Managed Account. The Balanced Stock
Fund is also invested in the Fidelity Equity Income Fund, Inc. The Money
Market Fund is invested in Barclays' Money Market Fund, Inc. The Small
Capitalization Value Stock Fund was invested in the Barclays' Russell 2000
Growth Index Fund, Inc. from July 2001 through December 2002. Effective
December 31, 2002, the balances and future contributions of Barclays' Russell
2000 Growth Index Fund were re-directed to Wall Street Associates Separately
Managed Account. The Small Capitalization Value Stock Fund is also
invested in the U.S. Small Capitalization Value Portfolio of DFA, Inc.
The Mid-Capitalization Growth Stock Fund is invested in the Fidelity OTC
Portfolio, Inc. The Mid-Capitalization Value Stock Fund is invested in the
American Century Equity Income Fund, Inc. And finally, the Emerging Market
Equity Fund is invested in the Capital Guardian Emerging Markets Equity Fund,
Inc.
Participants are able to invest their own contributions in the Sprint FON Stock
Fund and/or the Sprint PCS Stock Fund. For amounts attributable to participants'
own contributions, participants are also permitted to transfer their existing
balances into and out of those funds.
Participants may redirect the fund in which their current contributions are
invested each pay period. Participants may also transfer existing balances on
any weekday except holidays or when the New York Stock Exchange is closed. Other
limitations on transfers between funds apply in certain circumstances.
The following represents the number of SPA participants in each investment fund
as of December 31, 2002, 2001, and 2000:
11
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN (Continued)
Investment Funds - SPA (Continued)
Number of Participants
At December 31
2002 2001 2000
Magellan Growth Stock Fund 29,229 31,096 29,327
Fidelity Equity Income Fund 20,062 21,143 18,815
Interest Income Fund 22,531 23,460 22,193
PIMCO Bond Fund 10,952 10,232 8,701
Fidelity Overseas Fund 11,096 11,810 11,355
Sprint FON Stock Fund 54,649 55,306 50,219
Sprint PCS Stock Fund 54,771 55,634 50,333
Fidelity OTC Portfolio 14,383 15,679 15,804
Fidelity Dividend Growth Fund 15,798 16,077 12,749
U.S. Stock Index Fund 10,829 11,647 11,008
Conservative Growth Portfolio 896 339 --
Moderate Growth Portfolio 1,313 525 --
Balanced Growth Portfolio 1,952 998 --
High Growth Portfolio 1,743 1,041 --
Aggressive Growth Portfolio 2,446 1,496 --
Barclay's Money Market Fund 2,847 1,176 --
Barclays' Russell 2000 Index Fund 1,853 594 --
Barclays' EAFE Equity Index Fund 494 284 --
PIMCO High Yield Fund 1,622 700 --
Value Stock Fund I 1,372 620 --
Growth Stock Fund I 1,803 1,007 --
American Century Equity Income 3,303 1,768 --
Fund
Aggressive Growth Stock Fund 2,166 1,475 --
DFA U.S. Small Capitalization 3,936 1,503 --
Value Fund
12
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN (Continued)
Investment Funds - SPA (Continued)
Number of Participants
At December 31
2002 2001 2000
Small-Cap Growth Stock Fund 1,136 533 --
PIMCO Foreign Bond Fund 1,719 686 --
Janus Aspen Worldwide Growth Fund 2,653 1,682 --
Capital Guardian International 913 407 --
Equity Fund
GMO Emerging Market Country Debt 2,202 456 --
Share Fund
Capital Guardian Emerging Markets 784 204 --
Equity Fund
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.
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
withdrawal is the lesser of $1,000 or 50% of the amount that may be withdrawn.
13
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN (Continued)
Participant Loans - SPA
Participants may borrow 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.
The following information pertains to the TRASOP account:
Contributions - TRASOP
While it is the intention of the Company to continue maintaining the TRASOP
Accounts, Company contributions to the TRASOP account were discontinued after
the 1986 plan year. 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 Company elected to allow eligible
participants to make after-tax contributions to the Plan.
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.
On December 31, 2002, there were 8,501 participants in the TRASOP FON Stock Fund
and 8,567 participants in the TRASOP PCS Stock Fund. On December 31, 2001, there
were 9,208 participants in both the TRASOP FON Stock Fund and the TRASOP PCS
Stock Fund.
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 a portion or all of their 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.
14
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN (Continued)
Effective November 1, 2000, CESOP was merged into the Plan, for nonbargaining
unit employees and the Centel Retirement Savings Plan for Bargaining Unit
Employees, as appropriate.
The following information pertains to the CESOP account established in the Plan
as a result of this merger:
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. The Company 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
Prior to March 9, 1993, CESOP assets were invested solely in company common
stock except for amounts necessary to pay dividend distributions, anticipated
expenses of the CESOP and fractional share distributions. Effective with the
March 9, 1993, merger of Centel and Sprint, each share of Centel common stock
was exchanged for 1.37 shares of Sprint common stock. As a result of
recapitalization of Sprint common stock on November 23, 1998, the Northern Trust
Company, the recordkeeper of the CESOP, adjusted the market value of the Sprint
common stock by allocating 89% of the total balance to the Sprint FON stock and
11% to the Sprint PCS stock. Effective with the November 1, 2000 plan merger,
Sprint FON stock in the CESOP was transferred to Sprint FON CESOP Stock Fund and
Sprint PCS stock in the CESOP was transferred to Sprint PCS CESOP Stock Fund,
respectively.
On December 31, 2002, there were 495 participants in the Sprint FON CESOP Stock
Fund and 470 participants in the Sprint PCS CESOP Stock Fund. On December 31,
2001, there were 505 participants in both the Sprint FON CESOP Stock Fund and
the Sprint PCS CESOP Stock Fund.
Vesting - CESOP
Participants are 100% vested in their account balances at all times.
Withdrawals - CESOP
Effective 11/1/2000, participants who elect may withdraw all or a portion 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 paid on shares held in the CESOP account were distributed to
participants quarterly in 2001 and annually in 2000. Dividends were distributed
annually in 2002.
15
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
1. DESCRIPTION OF THE PLAN (Continued)
Participant Accounts - CESOP
A separate account is maintained for each participant in the CESOP account. Each
participant's account is adjusted for (a) company contributions on behalf of the
participant, (b) the participant's share of any investment income or loss, and
(c) withdrawals.
The following information pertains to SPA and TRASOP accounts:
Participant Accounts
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.
Administration and Plan Expenses - SPA, TRASOP and CESOP
The Plan is administered by the Employee Benefits Committee of Sprint.
Administrative and investment expenses of the SPA 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 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 2002, $26,000 for 2001 and $25,000 for
2000.
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.
16
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
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 fair value. The fair value of the common
stock is based on the value of the last reported sale in the active market they
are traded in on the last business day of the year. The fair value of equity
mutual funds and bond mutual funds is valued at the redemption price. The fair
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, Interest Expense
Dividend income is recorded on the ex-dividend date. Income from the investments
is recorded as earned on an accrual basis. Interest expense on the note payable
is recorded on an accrual basis.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States 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 May 22, 1996, 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 fair market value of the
assets on the date of distribution.
Reclassification
Certain prior-year amounts have been reclassified to conform to the current year
presentation. These reclassifications had no effect on the net assets available
for benefits or the change in net assets available for benefit as previously
reported.
17
SPRINT RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
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)
December 31,
2002 2001
---------------- ---------------
Investments at Fair Value as
Determined by Quoted Market Price:
Sprint FON Common Stock $ 525,501 $ 692,645
Sprint PCS Common Stock 187,182 720,086
Fidelity Magellan Fund, Inc. 320,512 440,599
Fidelity Equity Income Fund, Inc. 155,730 192,467
PIMCO Separately Managed 1 Account 266,953 270,196
18
SPRINT RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
3. INVESTMENTS (Continued)
During 2002, 2001 and 2000, the Plan's investments (including
investments purchased, sold and held during the year) appreciated
(depreciated) in value as follows:
Net Realized and Unrealized Appreciation (Thousands of Dollars)
(Depreciation) in Value Years Ended December 31,
2002 2001 2000
------------------ ------------------ ------------------
Investments at Fair Value as Determined
by Quoted Market Price:
Common stock:
Sprint Corporation - SPA:
Sprint FON $(146,222) $ (4,394) $ (1,297,568)
Sprint PCS (554,877) 104,271 (623,199)
Sprint Corporation - TRASOP (94,299) 12,220 (414,943)
Sprint Corporation - CESOP (3,806) 502 (3,700)
Equity mutual funds (203,954) (134,089) (171,204)
Bond mutual funds 22,063 14,717 2,959
Equity index fund (13,018) (3,375) (5,690)
Other (1,800) 81 -
------------------ ------------------ ------------------
$(995,913) $ (10,067) $ (2,513,345)
================== ================== ==================
19
SPRINT RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2002
4 NON-PARTICIPANT DIRECTED INVESTMENTS
The funds comprised of Company stock (FON Stock Fund and PCS Stock Fund)
include both participant-directed and nonparticipant-directed amounts.
Information regarding the changes in net assets relating to these funds
in total is as follows:
(Thousands of Dollars)
Year Ended December 31
2002 2001 2000
------------------ ----------------- ----------------
Investment income:
Interest $ 1,859 $ 2,476 $ 2,671
Dividends 14,118 13,689 13,693
Net realized and unrealized appreciation (depreciation)
in the fair value of investments (701,100) 99,858 (1,920,767)
------------------ ----------------- ----------------
Net investment income (loss) (685,123) 116,023 (1,904,403)
Contributions - employer (net) 75,773 74,476 84,052
Contributions - employee 45,458 58,441 74,764
Administrative fees (5) (4) (18)
Withdrawals (52,117) (68,678) (188,975)
Inter-plan fund transfers (net) 269 3,136 6,830
Intra-plan fund transfers (net) (731) (13,968) 23,399
------------------ ----------------- ----------------
Net increase (decrease) (616,476) 169,426 (1,904,351)
Net assets available for benefits:
Beginning of year 1,266,109 1,096,683 3,001,034
------------------ ----------------- ----------------
End of year $ 649,633 $ 1,266,109 $ 1,096,683
================== ================= ================
Of the above net assets, information about the net assets of the nonparticipant-directed investments is as follows:
(Thousands of Dollars)
December 31,
2002 2001
------------------ -----------------
Net Assets:
Sprint Corporation - SPA:
FON Stock Fund $ 334,419 $ 423,892
PCS Stock Fund 78,145 298,361
20
SPRINT RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2002
5. RELATED PARTY TRANSACTIONS
Non-participant directed contributions are made directly to the FON and PCS
stock funds. In addition, participants can elect to contribute a percentage
of their contribution to these funds. 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. In 2000,
approximately $69 million and $89 million were contributed to the FON and
PCS stock funds, respectively.
21
SUPPLEMENTAL SCHEDULES
22
Schedule I
Page 1 of 2
SPRINT RETIREMENT SAVINGS PLAN
Investments
December 31, 2002
(Thousands of Dollars)
Fair
Identity of Issue Cost Value
--------------------------------- -------------------- --------------------
Common stock:
Sprint Corporation - SPA:
Sprint Corporation - FON** $ 635,802 $ 435,231
Sprint Corporation - PCS** 560,424 174,372
Sprint Corporation - TRASOP:
Sprint Corporation - FON** 53,024 86,809
Sprint Corporation - PCS** 8,483 12,300
Sprint Corporation - CESOP:
Sprint Corporation - FON** 2,045 3,461
Sprint Corporation - PCS** 259 510
-------------------- --------------------
Total common stock 1,260,037 712,683
Equity mutual funds:
Fidelity Magellan Fund, Inc. ** 390,527 320,512
Fidelity Dividend Growth Fund, Inc. ** 97,509 80,055
Fidelity Equity Income Fund, Inc. ** 178,452 155,730
Fidelity OTC Portfolio Fund, Inc. ** 126,207 69,456
Fidelity Overseas Fund, Inc. ** 52,004 33,994
Capital Gardian International Equity Fund 1,894 1,682
Capital Gardian Emerging Market Equity Fund 1,391 1,231
Jennison Associates LLC Separately Managed Account 3,814 3,814
Janus Aspen Worldwide Growth Fund 4,228 3,394
Oak Associates, Ltd. Separately Managed Account 3,522 3,522
American Century Equity Income Fund 12,517 11,794
DFA U.S. Small-Cap Value Portfolio 16,616 13,384
Barclays' Russell 2000 Index Fund 4,033 3,504
Barclays' EAFE Equity Index Fund 606 521
Harris Associates, L.P. Separately Managed Account 2,563 2,563
Wall Street Associates Separately Managed Account 1,796 1,796
-------------------- --------------------
Total equity mutual funds 897,679 706,952
Bond mutual funds:
PIMCO High Yield Fund 3,212 3,122
PIMCO Foreign Bond Fund 4,141 4,165
GMO Emerging Country Debt Share Fund 7,065 6,880
PIMCO Separately Managed 1 Account 243,726 266,953
PIMCO Separately Managed B Account 67,726 75,617
-------------------- --------------------
Total bond mutual funds 325,870 356,737
U.S. Stock index fund:
Barclays' Equity Index Fund 60,833 47,131
23
Schedule I
Page 2 of 2
SPRINT RETIREMENT SAVINGS PLAN
Investments
December 31, 2002
(Thousands of Dollars)
Fair
Identity of Issue Cost Value
--------------------------------- -------------------- --------------------
Short-term investments:
Barclays' Money Market Fund 30,199 30,199
Fidelity Investment Cash Portfolio ** 16,082 16,082
Fidelity Retirement Market Account** 68 68
-------------------- --------------------
Total short-term investments 46,349 46,349
Other:
Conservative Growth Portfolio $2,516 $2,542
Moderate Growth Portfolio 2,972 2,951
Balanced Growth Portfolio 5,494 5,181
High Growth Portfolio 4,712 4,237
Aggressive Growth Portfolio 4,203 3,637
-------------------- --------------------
Total other investments 19,897 18,548
Notes receivable from participants 76,388 76,388
-------------------- --------------------
Total Investments $ 2,687,053 $ 1,964,788
==================== ====================
** Indicates party-in-interest to the Plan.
24
Schedule II
SPRINT RETIREMENT SAVINGS PLAN
REPORTABLE TRANSACTIONS
For the Year Ended December 31, 2002
(Thousands of Dollars)
NO REPORTABLE TRANSACTIONS FOR THE YEAR ENDED DECEMBER 31, 2002.
25
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the Pension & Savings Trusts 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
Date: June 24, 2003 By: /s/ Gene Betts
----------------------------------------
Gene Betts
Pension & Savings Trusts Committee Member
26
EXHIBIT INDEX
Exhibit Number Page
23a Consent of Ernst & Young LLP 28
99 Certification in Compliance with 18 U.S.C. 29
Section 1350 as Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002.
27