Sprint to recombine tracking stocks

Overland Park, Kan.-based Sprint said PCS common stock, which tracks its wireless telephone arm, will be eliminated and each share of PCS common stock will convert into 0.5 share of FON common stock, which tracks its core long-distance and local telephone operations, on April 23.

Sprint said the FON shares that will be held following the recombination will not be a tracking stock, but instead will reflect the financial results and economic value of all of its operations.

The move toward a single stock comes as Sprint tries to more closely meld its local, long-distance and wireless operations to eliminate overlapping sales and administrative functions, and to offer more complete service packages for its residential and corporate customers.

Sprint said the stock conversion will cost the company about $55 million before taxes in 2004 and roughly $45 million in 2005.

Sprint, issuing guidance for its consolidated operations, said it forecasts revenue growth of 2 percent to 3 percent in 2004 and expects adjusted earnings per share in the range of 70 cents to 75 cents in 2004 and $1.05 to $1.15 in 2005.

The company created the two stocks in 1998 to help investors more accurately follow the performance of its two units. But analysts have argued that the separation of the two businesses has made accounting more complicated and has added unnecessary costs and delays.

Sprint said in a statement on Sunday there are about 1.04 billion shares of PCS common stock outstanding and roughly 906 million shares of FON common stock outstanding. Following the recombination, Sprint said there will be about 1.42 billion shares of FON common stock outstanding.

Sprint said its board expects to declare the regular dividend of 12.5 cents per share on all outstanding shares of FON common stock, including those issued in the recombination, at its meeting in April 2004, payable to shareholders of record on a date in June 2004.

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