- Fiscal year 2015 operating income of
$310 million was positive for the first time in nine years; Fiscal
year 2015 Adjusted EBITDA* of $8.1 billion grew 36 percent
year-over-year
- Fiscal fourth quarter operating income
of $8 million included charges of $258 million; Adjusted EBITDA* of
$2.2 billion grew 24 percent year-over-year
- Fiscal year 2015 Sprint platform
postpaid net additions of more than 1.2 million, including phone
net additions of 438,000 which improved nearly two million
year-over-year
- Fiscal fourth quarter postpaid phone
net additions of 22,000 are the third consecutive quarter of
positive net additions and more than both Verizon and AT&T for
the first time on record
- Fiscal year 2015 Sprint platform
postpaid churn of 1.61 percent and phone churn of 1.52 percent are
the best in company history and both improved by approximately 50
basis points year-over-year
- Delivered substantial financial
flexibility with $11 billion in currently committed liquidity, up
from $6 billion at the end of the fiscal third quarter
- Ended fiscal year 2015 with $5.7
billion of available liquidity, including $2.6 billion of cash
- Successfully raised an additional $5.3
billion in April, including $2.2 billion of network-related
financing, $1.1 billion from the second transaction with Mobile
Leasing Solutions, LLC (MLS), and $2 billion of bridge
financing
Sprint Corporation (NYSE:S) today reported operating
results for fiscal year 2015 fourth quarter and full year,
including a nearly two million year-over-year improvement in Sprint
platform postpaid phone net additions and the lowest annual Sprint
platform postpaid phone churn in company history. The company also
reported fiscal year 2015 net operating revenue of $32.2 billion,
operating income of $310 million, and Adjusted EBITDA* of $8.1
billion, which grew 36 percent year-over-year.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20160503006056/en/
Source: Sprint analysis of Nielsen NMP
data for total LTE downloads 150 KB+ in 44 markets (over 155M
POPs). (Graphic: Business Wire)
For the fiscal fourth quarter, the company reported net
operating revenue of $8.1 billion, operating income of $8 million,
and Adjusted EBITDA* of $2.2 billion, which grew 24 percent
year-over-year.
“Fiscal 2015 was a transformational year in the turnaround of
Sprint. We significantly reduced our operating expenses and
stabilized operating revenues, leading to positive operating income
for the first time in nine years. At the same time, we generated
positive postpaid phone net additions for the first time in three
years, capped off by surpassing both Verizon and AT&T for the
first time on record this quarter,” said Sprint CEO Marcelo Claure.
“These accomplishments provide positive momentum heading into
fiscal year 2016 and put the business on a path to sustainable free
cash flow.”
Cost Reduction Effort Showing Results
Sprint has a multi-year plan to transform the way it does
business and significantly lower its cost structure. The company
has realized a $1.3 billion reduction in cost of services and
selling, general and administrative (SG&A) expenses in fiscal
year 2015.
Moving forward, Sprint expects a sustainable reduction of $2
billion or more of run rate operating expenses exiting fiscal year
2016 and has already realized a portion of these reductions with
its fiscal 2015 fourth quarter results, as about half of the
approximately $500 million year-over-year reduction in cost of
services and SG&A expenses was related to these fiscal year
2016 initiatives. The company continues to expect approximately $1
billion of transformation program costs, split between both
operating expenses and capital expenditures, to be incurred to
achieve the $2 billion or more of run rate benefit. Approximately
$200 million of the expected transformation program costs, mostly
related to severance, were incurred in fiscal year 2015.
The company also reported the following financial results:
- Net operating revenues of $8.1 billion
in the quarter decreased three percent year-over-year, as growth in
equipment revenue, mostly driven by higher leasing revenue, helped
offset lower wireless and wireline service revenue. Net operating
revenues have stabilized around $8 billion per quarter during
fiscal year 2015.For the full year, net operating revenues of $32.2
billion decreased seven percent year-over-year. The decline was
largely due to Brightstar sourcing some devices in Sprint’s
indirect channels, resulting in less equipment revenues than if
Sprint had fulfilled these channels. While the impact to Adjusted
EBITDA* was not material due to the offsetting reduction in cost of
products expense, net operating revenues would have declined less
year-over-year when adjusting for this change.
- Wireless service revenue plus
installment plan billings and lease revenue, which represents the
total recurring cash flows from customers, was $7.1 billion in the
fiscal fourth quarter and increased one percent from the prior year
period, as growth in both postpaid phone customers and postpaid
average billings per user* were partially offset by lower prepaid
service revenue.For the full year, wireless service revenue plus
installment plan billings and lease revenue of $28.4 billion was up
slightly from the prior year.
- Consolidated Adjusted EBITDA* of $2.2
billion in the fiscal fourth quarter grew 24 percent from the prior
year period, as expense reductions, including approximately $500
million in cost of services and SG&A expenses, more than offset
the decline in net operating revenues.For the full year,
Consolidated Adjusted EBITDA* was $8.1 billion and grew 36 percent
year-over-year.
- Operating income of $8 million in the
fiscal fourth quarter included $258 million of charges and compared
to operating income of $318 million in the year-ago quarter. The
charges were mostly related to severance and lease exit costs,
including the shutdown of legacy WiMAX service that will free up
valuable spectrum and immediately lower network costs. Adjusting
for the charges in both periods, operating income would have been
relatively flat year-over-year.For the full year, operating income
of $310 million improved by approximately $2.2 billion and was
positive for the first time in nine years.
- Net loss of $554 million, or $0.14 per
share, in the fiscal fourth quarter compared to a net loss of $224
million, or $0.06 per share, in the year-ago period. Adjusting for
the aforementioned charges, net loss per share would have been
relatively flat year-over-year.For the full year, net loss was
approximately $2 billion, or $0.50 per share, compared to a net
loss of approximately $3.3 billion, or $0.85 per share, in the
prior year, which is an improvement of $1.3 billion, or $0.35 per
share.
- Adjusted free cash flow* was $603
million in the fiscal fourth quarter compared to negative $914
million in the prior year, an improvement of approximately $1.5
billion, which was driven by improved business trends and lower
capital spending.For the full year, Adjusted free cash flow* of
negative $1.4 billion compared to negative $3.3 billion in the
prior year, an improvement of nearly $2 billion.
Postpaid Phone Customer Growth Continues
Sprint has been focused on attracting and retaining higher value
postpaid phone customers and added 22,000 of these customers in a
highly competitive fiscal fourth quarter, bringing the fiscal year
total to 438,000 – an improvement of nearly two million from the
prior year and the third consecutive quarter of positive postpaid
phone net additions.
Significant network improvements, a more compelling value
proposition, and better customer quality have led to higher
customer retention, with postpaid phone churn reaching a record low
of 1.52 percent in fiscal year 2015 and improving by approximately
50 basis points year-over-year. For the fiscal fourth quarter,
postpaid phone churn of 1.56 percent improved 22 basis points
year-over-year.
In addition, the company also saw year-over-year growth in
postpaid phone gross additions for both the fiscal fourth quarter
and full year.
The company also reported the following Sprint platform
results:
- Total net additions were 447,000 in the
fiscal fourth quarter, including postpaid net additions of 56,000,
prepaid net losses of 264,000, and wholesale and affiliate net
additions of 655,000.For the full year, total net additions were
nearly 2.7 million, including postpaid net additions of more than
1.2 million, prepaid net losses of 1.3 million, and wholesale and
affiliate net additions of over 2.7 million.
- Postpaid churn of 1.72 percent in the
fiscal fourth quarter improved by 12 basis points year-over-year
and was the lowest ever for a fiscal fourth quarter.For the full
year, postpaid churn of 1.61 percent was also the best in company
history and improved by approximately 50 basis points
year-over-year.
$11 Billion of Committed Liquidity
Sprint has taken several actions to improve its financial
flexibility and currently has $11 billion of committed liquidity,
up from $6 billion at the end of the fiscal third quarter. The
company also has an additional $1.2 billion of availability under
vendor financing agreements that can be used toward the purchase of
2.5 GHz network equipment.
- Total liquidity at the end of fiscal
year 2015 was $5.7 billion, including $2.6 billion of cash and cash
equivalents, $3 billion of undrawn borrowing capacity under the
revolving bank credit facility, and approximately $100 million of
undrawn availability under the receivables facility.
- Sprint received $2.2 billion from the
sale and lease-back of certain existing network assets at an
attractive cost of funding in the mid-single digits. This
transaction did not include any of the company’s spectrum
assets.
- The company executed its second
sale-leaseback transaction of certain leased devices with MLS,
providing a $1.1 billion cash infusion.
- Sprint signed an 18-month bridge
financing facility for $2 billion with better terms than its
alternatives in the high-yield debt market.
These sources of liquidity are expected to provide the resources
for the company to execute its transformation plan and fully fund
the repayment of the $3.3 billion of note maturities that come due
in fiscal year 2016. The company continues to consider financing
initiatives, including structures that would involve a small
portion of its spectrum assets, as well as additional transactions
with MLS to fund its transformation, continue to improve the
network, and meet its future financial obligations.
LTE Plus Network Expanding and Outperforming the
Competition
The Sprint LTE Plus Network, which takes advantage of the
company’s rich tri-band spectrum portfolio and uses some of the
world’s most advanced technologies in wireless such as carrier
aggregation and antenna beamforming, is now available in 204
markets across the country, including recent launches in New York
City, Boston, and Philadelphia.
The expansion is driving network performance that is beating the
competition. An analysis of Nielsen Mobile Performance
crowd-sourced data from January through March 2016 showed that
Sprint’s LTE Plus Network continued to outperform Verizon, AT&T
and T-Mobile by delivering the fastest LTE download speeds.
Total LTE coverage now reaches nearly 300 million people,
including approximately 70 percent being covered by the 2.5 GHz
spectrum deployment.
Outlook
- The company expects fiscal year 2016
Adjusted EBITDA* to be $9.5 billion to $10 billion.
- The company expects fiscal year 2016
operating income to be $1 billion to $1.5 billion.
- The company expects fiscal year 2016
cash capital expenditures, excluding indirect channel device
leases, to be approximately $3 billion, as non-network expenditures
are expected to decline year-over-year and more of the cash outlays
related to network densification are expected to be incurred in
fiscal year 2017. The company’s deep spectrum position and its
small cell focused densification are also expected to improve
overall capital efficiency.
- The company expects fiscal year 2016
Adjusted free cash flow* to be around break-even.
Conference Call and Webcast
- Date/Time: 8:30 a.m. (ET) Tuesday, May
3, 2016
- Call-in Information
- U.S./Canada: 866-360-1063 (ID:
83132816)
- International: 706-634-7849 (ID:
83132816)
- Webcast available via the Internet at
www.sprint.com/investors
- Additional information about results,
including the “Quarterly Investor Update,” is available on our
Investor Relations website
Wireless Operating Statistics (Unaudited)
Quarter To Date Year To Date 3/31/16
12/31/15 3/31/15 3/31/16
3/31/15
Sprint platform
(1): Net additions (losses)
(in thousands) Postpaid 56
501 211 1,245
(212 ) Prepaid (264 ) (491 ) 546 (1,309 ) 449 Wholesale and
affiliate 655 481
492 2,733 2,349
Total Sprint platform wireless net additions
447 491
1,249 2,669
2,586 End of period connections (in
thousands) Postpaid 30,951 30,895 29,706 30,951 29,706 Prepaid
14,397 14,661 15,706 14,397 15,706 Wholesale and affiliate
13,458 12,803
10,725 13,458 10,725
Total Sprint platform end of period connections
58,806 58,359
56,137 58,806
56,137 Churn Postpaid
1.72 % 1.62 % 1.84 % 1.61 % 2.09 % Prepaid 5.65 % 5.82 % 3.84 %
5.39 % 3.99 %
Supplemental data - connected devices
End of period connections (in thousands) Retail postpaid
1,771 1,676 1,320 1,771 1,320 Wholesale and affiliate
8,575 7,930 5,832
8,575 5,832
Total
10,346 9,606
7,152 10,346
7,152 Supplemental data -
total company End of period connections (in thousands)
Sprint platform (1)
58,806 58,359
56,137 58,806 56,137
Transactions (2) - -
1,004 -
1,004
Total 58,806
58,359 57,141
58,806 57,141
Sprint platform ARPU (1)
(a)
Postpaid $ 51.68 $ 52.48 $ 56.94 $ 53.39 $ 59.63 Prepaid $ 27.72 $
27.44 $ 27.50 $ 27.66 $ 27.30
NON-GAAP
RECONCILIATION - ABPA*, POSTPAID PHONE ARPU AND ABPU*
(Unaudited) (Millions, except accounts, connections, ABPA*,
ARPU, and ABPU*) Quarter To Date Year To Date 3/31/16
12/31/15 3/31/15
3/31/16 3/31/15
Sprint platform ABPA*
(1)
Postpaid service revenue $ 4,793 $ 4,813 $ 5,049 $ 19,463 $ 21,181
Add: Installment plan billings 287 300 294 1,190 877 Add: Lease
revenue 662 531
129 1,838 164
Total for Sprint platform postpaid connections
$ 5,742 $ 5,644
$ 5,472 $ 22,491
$ 22,222 Sprint platform
postpaid accounts (in thousands) 11,358 11,261 11,199 11,248 11,453
Sprint platform postpaid ABPA* (b) $ 168.49 $ 167.11 $ 162.89 $
166.63 $ 161.67 Quarter To Date Year To Date 3/31/16
12/31/15 3/31/15
3/31/16 3/31/15
Sprint platform postpaid phone ARPU and
ABPU* (1)
Postpaid phone service revenue $ 4,512 $ 4,529 $ 4,772 $ 18,331 $
20,095 Add: Installment plan billings 268 280 281 1,116 835 Add:
Lease revenue 649 522
125 1,799 159
Total for Sprint platform postpaid phone connections
$ 5,429 $ 5,331
$ 5,178 $ 21,246
$ 21,089 Sprint platform
postpaid average phone connections (in thousands) 25,297 25,040
24,946 25,020 25,420 Sprint platform postpaid phone ARPU (a) $
59.45 $ 60.30 $ 63.76 $ 61.05 $ 65.88 Sprint platform postpaid
phone ABPU* (c) $ 71.53 $ 70.99 $ 69.19 $ 70.77 $ 69.14
(a) ARPU is calculated by dividing service
revenue by the sum of the monthly average number of connections in
the applicable service category. Changes in average monthly service
revenue reflect connections for either the postpaid or prepaid
service category who change rate plans, the level of voice and data
usage, the amount of service credits which are offered to
connections, plus the net effect of average monthly revenue
generated by new connections and deactivating connections.
Sprint platform postpaid phone ARPU represents revenues related to
our postpaid phone connections.
(b) Sprint platform postpaid ABPA* is
calculated by dividing service revenue earned from connections plus
installment plan billings and lease revenue by the sum of the
monthly average number of accounts during the period.
(c) Sprint platform postpaid phone ABPU*
is calculated by dividing postpaid phone service revenue earned
from postpaid phone connections plus installment plan billings and
lease revenue by the sum of the monthly average number of postpaid
phone connections during the period.
Wireless Device Financing Summary (Unaudited)
(Millions, except sales, connections, and sales and connections
mix) Quarter To Date Year To Date 3/31/16
12/31/15 3/31/15
3/31/16 3/31/15
Postpaid sales (in thousands) 3,438 4,799 4,057
16,394 17,326
Postpaid sales mix Subsidy/other 37 % 35 % 47
% 36 % 61 % Installment plans 18 % 10 % 16 % 13 % 22 % Leasing 45 %
55 % 37 % 51 % 17 %
Postpaid connections (in
thousands) 30,951 30,895 29,706 30,951 29,706
Postpaid
connections mix Subsidy/other 54 % 56 % 75 % 54 % 75 %
Installment plans 13 % 14 % 15 % 13 % 15 % Leasing 33 % 30 % 10 %
33 % 10 %
Installment plans Installment sales
financed $ 311 $ 251 $ 347 $ 1,059 $ 2,200 Installment billings 287
300 294 1,190 877 Installments receivables, net - - 1,396 - 1,396
Leasing Lease revenue $ 662 $ 531 $ 129 $ 1,838 $ 164
Lease depreciation 550 535 150 1,781 206
Leased device
additions: Cash paid for capital expenditures - leased devices
$ 568 $ 607 $ 439 $ 2,292 $ 582 Transfers from inventory - leased
devices 621 1,073
543 3,244 1,246
Total leased device additions $ 1,189
$ 1,680 $
982 $ 5,536 $
1,828 Leased devices in property, plant and
equipment, net $ 3,645 $ 3,321 $ 1,777 $ 3,645 $ 1,777
Leased device net proceeds Proceeds from MLS sale $ - $
1,136 $ - $ 1,136 $ - Repayments to MLS - - - - - Proceeds from
lease securitization 600 - - 600 - Repayments of lease
securitization - -
- - -
Net
proceeds from the sale-leaseback of devices and sales of future
lease receivables $ 600
$ 1,136 $ -
$ 1,736 $ -
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (Millions, except per share data)
Quarter To Date Year To Date 3/31/16
12/31/15 3/31/15 3/31/16
3/31/15
Net operating revenues
Service revenue $ 6,574 $ 6,683 $ 7,138 $ 27,174 $ 29,542 Equipment
revenue 1,497 1,424
1,144 5,006 4,990
Total net operating revenues
8,071 8,107
8,282 32,180
34,532 Net operating expenses Cost of services
(exclusive of depreciation and amortization below) 2,245 2,348
2,381 9,439 9,660 Cost of products (exclusive of depreciation and
amortization below) 1,551 1,589 1,827 5,795 9,309 Selling, general
and administrative 1,939 2,129 2,331 8,479 9,563 Depreciation 1,592
1,549 1,091 5,794 3,797 Amortization 300 316 363 1,294 1,552
Impairments (3) - - - - 2,133 Other, net 436
373 (29 ) 1,069
413 Total net operating expenses
8,063 8,304 7,964
31,870 36,427
Operating
income (loss) 8
(197 ) 318
310 (1,895 ) Interest
expense (552 ) (546 ) (523 ) (2,182 ) (2,051 ) Other income, net
5 4 8
18 27
Loss before
income taxes (539 ) (739 )
(197 ) (1,854 ) (3,919 )
Income tax (expense) benefit (15 ) (97
) (27 ) (141 ) 574
Net
loss $ (554 ) $
(836 ) $ (224 ) $
(1,995 ) $ (3,345 )
Basic and diluted net loss per common share
$ (0.14 ) $ (0.21
) $ (0.06 ) $
(0.50 ) $ (0.85 )
Weighted average common shares outstanding 3,972
3,970 3,962
3,969 3,953
Effective tax
rate -2.8 %
-13.1 % -13.7 %
-7.6 % 14.6 %
NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED EBITDA*
(Unaudited) (Millions) Quarter To Date Year To Date
3/31/16 12/31/15 3/31/15
3/31/16 3/31/15
Net loss $ (554 )
$ (836 ) $ (224 )
$ (1,995 ) $ (3,345
) Income tax expense (benefit) 15
97 27 141
(574 )
Loss before income taxes (539
) (739 ) (197 ) (1,854
) (3,919 ) Other income, net (5 ) (4 ) (8 )
(18 ) (27 ) Interest expense 552
546 523 2,182
2,051
Operating income (loss)
8 (197 )
318 310
(1,895 ) Depreciation 1,592 1,549 1,091 5,794 3,797
Amortization 300 316
363 1,294 1,552
EBITDA* (4)
1,900 1,668
1,772 7,398
3,454 Impairments (3) - - - - 2,133
Loss from asset dispositions and
exchanges, net (5)
81 - - 166 - Severance and exit costs (6) 162 209 (29 ) 409 304
Litigation (7) 15 21 - 193 91 Partial pension settlement (8) - - -
- 59 Reduction in liability - U.S. Cellular asset acquisition (9)
- - -
(20 ) (41 )
Adjusted EBITDA* (4)
$ 2,158 $ 1,898
$ 1,743 $ 8,146
$ 6,000 Adjusted
EBITDA margin* 32.8 % 28.4 %
24.4 % 30.0 % 20.3 %
Selected items: Cash paid for capital
expenditures - network and other $ 722 $ 994 $ 1,608 $ 4,680 $
5,422 Cash paid for capital expenditures - leased devices $ 568 $
607 $ 439 $ 2,292 $ 582
WIRELESS STATEMENTS OF OPERATIONS (Unaudited) (Millions)
Quarter To Date Year To Date 3/31/16
12/31/15 3/31/15 3/31/16
3/31/15
Net operating revenues
Service revenue
Sprint platform (1):
Postpaid $ 4,793 $ 4,813 $ 5,049 $ 19,463 $ 21,181 Prepaid 1,203
1,224 1,272 4,986 4,905 Wholesale, affiliate and other
155 182 189
703 724 Total Sprint platform
6,151 6,219 6,510 25,152 26,810 Total transactions (2)
3 27 118
219 527 Total service
revenue 6,154 6,246 6,628 $ 25,371 $ 27,337 Equipment
revenue 1,497 1,424
1,144 5,006 4,990
Total net operating revenues
7,651 7,670
7,772 30,377
32,327 Net operating expenses Cost of
services (exclusive of depreciation and amortization below) 1,922
2,031 2,006 8,069 7,945 Cost of products (exclusive of depreciation
and amortization below) 1,551 1,589 1,827 5,795 9,309 Selling,
general and administrative 1,868 2,041 2,242 8,141 9,179
Depreciation 1,541 1,496 1,044 5,593 3,560 Amortization 300 316 362
1,294 1,549 Impairments (3) - - - - 1,900 Other, net
434 353 (29 )
1,045 349 Total net operating expenses
7,616 7,826
7,452 29,937 33,791
Operating income (loss) $ 35
$ (156 ) $ 320
$ 440 $ (1,464
) WIRELESS NON-GAAP
RECONCILIATION (Unaudited) (Millions) Quarter To Date Year To
Date 3/31/16 12/31/15
3/31/15 3/31/16 3/31/15
Operating income (loss) $ 35
$ (156 ) $ 320 $
440 $ (1,464 ) Impairments (3) - - - -
1,900 Loss from asset dispositions and exchanges, net (5) 81 - -
166 - Severance and exit costs (6) 160 189 (29 ) 385 263 Litigation
(7) 15 21 - 193 84 Partial pension settlement (8) - - - - 43
Reduction in liability - U.S. Cellular asset acquisition (9) - - -
(20 ) (41 ) Depreciation 1,541 1,496 1,044 5,593 3,560 Amortization
300 316 362
1,294 1,549
Adjusted
EBITDA* (4) $ 2,132
$ 1,866 $ 1,697
$ 8,051 $ 5,894
Adjusted EBITDA margin* 34.6 %
29.9 % 25.6 % 31.7 %
21.6 % Selected items: Cash paid
for capital expenditures - network and other $ 577 $ 869 $ 1,518 $
4,089 $ 4,860 Cash paid for capital expenditures - leased devices $
568 $ 607 $ 439 $ 2,292 $ 582
WIRELINE STATEMENTS OF OPERATIONS (Unaudited) (Millions)
Quarter To Date Year To Date 3/31/16
12/31/15 3/31/15 3/31/16
3/31/15
Net operating revenues
Voice $ 194 $ 201 $ 264 $ 840 $ 1,174 Data 37 42 52 171 213
Internet 316 317 335 1,284 1,353 Other 15
21 17 87
74
Total net operating revenues
562 581
668 2,382
2,814 Net operating expenses Costs of
services (exclusive of depreciation and amortization below) 467 466
538 1,962 2,338 Selling, general and administrative 74 82 90 328
363 Depreciation and amortization 50 50 46 194 232 Impairments (3)
- - - - 233 Other, net 3 20
(2 ) 25 61
Total net operating expenses 594
618 672 2,509
3,227
Operating loss $
(32 ) $ (37 )
$ (4 ) $ (127 )
$ (413 ) WIRELINE NON-GAAP
RECONCILIATION (Unaudited) (Millions) Quarter To Date Year To
Date 3/31/16 12/31/15
3/31/15 3/31/16 3/31/15
Operating loss $ (32 )
$ (37 ) $ (4 ) $
(127 ) $ (413 ) Impairments (3)
- - - - 233 Severance and exit costs (6) 3 20 (2 ) 25 39 Litigation
(7) - - - - 6 Partial pension settlement (8) - - - - 16
Depreciation and amortization 50
50 46 194
232
Adjusted EBITDA* $ 21
$ 33 $ 40
$ 92 $ 113
Adjusted EBITDA margin* 3.7 % 5.7
% 6.0 % 3.9 % 4.0
% Selected items: Cash paid for capital
expenditures - network and other $ 74 $ 74 $ 70 $ 279 $ 275
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(Unaudited)** (Millions) Year To
Date 3/31/16 3/31/15
Operating activities Net loss $ (1,995 ) $ (3,345 )
Impairments (3) - 2,133 Depreciation and amortization 7,088 5,349
Provision for losses on accounts receivable 455 892 Share-based and
long-term incentive compensation expense 75 86 Deferred income tax
expense (benefit) 123 (609 ) Amortization of long-term debt
premiums, net (316 ) (303 ) Loss on disposal of property, plant and
equipment 487 - Other changes in assets and liabilities: Accounts
and notes receivable (1,663 ) (644 ) Inventories and other current
assets (3,065 ) (1,573 ) Deferred purchase price from sale of
receivables 2,478 - Accounts payable and other current liabilities
(574 ) 481 Non-current assets and liabilities, net 111 (199 )
Other, net
693 182
Net cash provided by
operating activities
3,897 2,450
Investing activities Capital expenditures - network
and other (4,680 ) (5,422 ) Capital expenditures - leased devices
(2,292 ) (582 ) Expenditures relating to FCC licenses (98 ) (163 )
Reimbursements relating to FCC licenses - 95 Change in short-term
investments, net 166 1,054 Proceeds from sales of assets and FCC
licenses 62 315 Proceeds from sale-leaseback transaction 1,136 -
Other, net
(29 ) (11 )
Net cash used in investing
activities
(5,735 ) (4,714 )
Financing activities Proceeds from debt and
financings 755 1,930 Repayments of debt, financing and capital
lease obligations (899 ) (574 ) Proceeds from sales of future lease
receivables 600 - Debt financing costs (11 ) (87 ) Proceeds from
issuance of common stock, net 10 35 Other, net
14 -
Net cash provided by financing activities
469
1,304 Net decrease in cash and cash
equivalents (1,369 ) (960 )
Cash and cash equivalents, beginning of period
4,010
4,970 Cash and cash equivalents, end
of period
$ 2,641 $ 4,010
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW*
(NON-GAAP) (Unaudited) (Millions) Quarter To Date Year To Date
3/31/16 12/31/15
3/31/15 3/31/16 3/31/15
Net cash provided by operating activities $
1,294 $ 806 $ 976 $
3,897 $ 2,450 Capital expenditures -
network and other (722 ) (994 ) (1,608 ) (4,680 ) (5,422 ) Capital
expenditures - leased devices (568 ) (607 ) (439 ) (2,292 ) (582 )
Expenditures relating to FCC licenses, net (23 ) (30 ) (42 ) (98 )
(68 ) Proceeds from sales of assets and FCC licenses 26 32 201 62
315 Other investing activities, net (4 )
(4 ) (2 ) (29 )
(11 )
Free cash flow* $ 3
$ (797 ) $ (914 )
$ (3,140 ) $
(3,318 ) Net proceeds from the sale-leaseback
of devices and sales of future lease receivables 600
1,136 -
1,736 -
Adjusted free cash
flow* $ 603 $
339 $ (914 )
$ (1,404 ) $ (3,318
) **Certain prior period amounts have been
reclassified to conform to the current period presentation.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Millions) 3/31/16
3/31/15
ASSETS Current assets Cash and cash
equivalents $ 2,641 $ 4,010 Short-term investments - 166 Accounts
and notes receivable, net 1,099 2,290 Device and accessory
inventory 1,173 1,359 Deferred tax assets - 62 Prepaid expenses and
other current assets 1,920 1,890
Total current assets 6,833 9,777 Property, plant and
equipment, net 20,297 19,721 Goodwill 6,575 6,575 FCC licenses and
other 40,073 39,987 Definite-lived intangible assets, net 4,469
5,893 Other assets (10) 728 888
Total assets $ 78,975
$ 82,841 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Accounts payable $
2,899 $ 4,347 Accrued expenses and other current liabilities 4,374
5,293 Current portion of long-term debt, financing and capital
lease obligations 4,690 1,300
Total current liabilities 11,963 10,940 Long-term
debt, financing and capital lease obligations (10) 29,268 32,342
Deferred tax liabilities 13,959 13,898 Other liabilities
4,002 3,951
Total
liabilities 59,192
61,131 Stockholders' equity Common stock 40 40
Treasury shares, at cost (3 ) (7 ) Paid-in capital 27,563 27,468
Accumulated deficit (7,378 ) (5,383 ) Accumulated other
comprehensive loss (439 ) (408 ) Total
stockholders' equity 19,783
21,710
Total liabilities and stockholders' equity
$ 78,975 $ 82,841
NET DEBT* (NON-GAAP) (Unaudited)
(Millions) 3/31/16 3/31/15 Total
debt $ 33,958 $ 33,642 Less: Cash and cash equivalents (2,641 )
(4,010 ) Less: Short-term investments -
(166 )
Net debt* $ 31,317
$ 29,466
SCHEDULE OF DEBT (Unaudited) (Millions) 3/31/16
ISSUER
COUPON MATURITY PRINCIPAL
Sprint Corporation 7.25% Notes due 2021 7.250% 09/15/2021 $
2,250 7.875% Notes due 2023 7.875% 09/15/2023 4,250 7.125% Notes
due 2024 7.125% 06/15/2024 2,500 7.625% Notes due 2025
7.625% 02/15/2025 1,500
Sprint
Corporation
10,500 Sprint Communications, Inc. Export
Development Canada Facility (Tranche 4) 5.914% 12/15/2017 250
Export Development Canada Facility (Tranche 3) 4.164% 12/17/2019
300 6% Senior notes due 2016 6.000% 12/01/2016 2,000 9.125% Senior
notes due 2017 9.125% 03/01/2017 1,000 8.375% Senior notes due 2017
8.375% 08/15/2017 1,300 9% Guaranteed notes due 2018 9.000%
11/15/2018 3,000 7% Guaranteed notes due 2020 7.000% 03/01/2020
1,000 7% Senior notes due 2020 7.000% 08/15/2020 1,500 11.5% Senior
notes due 2021 11.500% 11/15/2021 1,000 9.25% Debentures due 2022
9.250% 04/15/2022 200 6% Senior notes due 2022 6.000%
11/15/2022 2,280
Sprint Communications, Inc.
13,830
Sprint Capital Corporation 6.9% Senior notes due 2019 6.900%
05/01/2019 1,729 6.875% Senior notes due 2028 6.875% 11/15/2028
2,475 8.75% Senior notes due 2032 8.750% 03/15/2032
2,000
Sprint Capital Corporation
6,204 Clearwire
Communications LLC 14.75% First-priority senior secured notes
due 2016 14.750% 12/01/2016 300 8.25% Exchangeable notes due 2040
8.250% 12/01/2040 629
Clearwire
Communications LLC
929 Secured equipment credit facilities 2.020%
- 2.745% 2017 - 2021
805 Financing obligations
2.016% - 6.098% 2017 - 2021
828 Capital lease
obligations and other 2.348% - 10.517% 2016 -
2023
265 Total principal
33,361 Net premiums
and debt financing costs
597 Total debt
$ 33,958 NOTES TO THE
FINANCIAL INFORMATION (Unaudited) (1) Sprint platform
refers to the Sprint network that supports the wireless service we
provide through our multiple brands. (2) Postpaid and
prepaid connections from transactions are defined as retail
postpaid and prepaid connections acquired from Clearwire in July
2013 who had not deactivated or been recaptured on the Sprint
platform. (3) For the third quarter of fiscal year 2014,
impairment losses were recorded after determining that the carrying
value exceeded estimated fair value of both the Sprint trade name
and Wireline asset group, which consists primarily of property,
plant and equipment. (4)
As more of our customers elect to lease a
device rather than purchasing one under our subsidized program,
there is a positive impact to EBITDA* and Adjusted EBITDA*
primarily due to the fact the cost of the device is not recorded as
cost of products but rather is depreciated over the customer lease
term. Under our device leasing program for the direct channel,
devices are transferred from inventory to property and equipment
and the cost of the leased device is recognized as depreciation
expense over the customer lease term to an estimated residual
value. The customer payments are recognized as revenue over the
term of the lease. Under our subsidized program, the cash received
from the customer for the device is recognized as equipment revenue
at the point of sale and the cost of the device is recognized as
cost of products. During the three and twelve-month periods ended
March 31, 2016, we leased devices through our Sprint direct
channels totaling approximately $600 million and $3.2 billion,
respectively, which would have increased cost of products and
reduced EBITDA* if they had been purchased under our subsidized
program. Also, during the three and twelve-month periods ended
March 31, 2016, the equipment revenue derived from customers
electing to finance their devices through device leasing or
installment billing programs in our direct channel was 58% and 51%,
respectively.
The impact to EBITDA* and Adjusted EBITDA*
resulting from the sale of devices under our installment billing
program is neutral except for the impact from the time value of
money element related to the imputed interest on the installment
receivable.
(5) During the fourth and second quarters of fiscal year
2015, we recorded losses on dispositions of assets primarily
related to network development costs that are no longer relevant as
a result of changes in the Company's network plans. (6)
Severance and exit costs consist of lease exit costs primarily
associated with tower and cell sites, access exit costs related to
payments that will continue to be made under our backhaul access
contracts for which we will no longer be receiving any economic
benefit, and severance costs associated with reduction in our work
force. (7) For the fourth and third quarters of fiscal year
2015, litigation activity is a result of unfavorable developments
in connection with pending litigation. (8) The partial
pension settlement resulted from amounts paid to eligible
terminated participants who voluntarily elected to receive lump sum
distributions as a result of an approved plan amendment to the
Sprint Retirement Pension Plan by the Board of Directors in June
2014. (9) As a result of the U.S. Cellular asset
acquisition, we recorded a liability related to network shut-down
costs, which primarily consisted of lease exit costs, for which we
agreed to reimburse U.S. Cellular. During the third quarter of
fiscal year 2014, we identified favorable trends in actual costs
and, as a result, reduced the liability resulting in a gain of
approximately $41 million. During the first quarter of fiscal year
2015, we revised our estimate and, as a result, reduced the
liability resulting in approximately $20 million of income.
(10) During the fourth quarter of fiscal year 2015, the Company
elected to adopt accounting guidance which requires that debt
issuance costs related to a recognized debt liability be presented
in the balance sheet as a direct deduction from the carrying amount
of that debt liability, consistent with debt discounts. Also
addressed in this guidance is the presentation and subsequent
measurement of debt issuance costs associated with line-of-credit
arrangements. We elected to adopt the guidance early with full
retrospective application. Debt issuance costs associated with our
revolving credit facility remain in "Other assets" on the
consolidated balance sheet and continue to be amortized over the
term of the facility as allowed by the guidance. For the year ended
March 31, 2015 debt issuance costs for all other debt totaling $189
million have been reclassified from "Other assets" to "Long-term
debt, financing and capital lease obligations" on the consolidated
balance sheet.
*FINANCIAL MEASURES
Sprint provides financial measures determined in accordance with
GAAP and adjusted GAAP (non-GAAP). The non-GAAP financial measures
reflect industry conventions, or standard measures of liquidity,
profitability or performance commonly used by the investment
community for comparability purposes. These measurements should be
considered in addition to, but not as a substitute for, financial
information prepared in accordance with GAAP. We have defined below
each of the non-GAAP measures we use, but these measures may not be
synonymous to similar measurement terms used by other
companies.
Sprint provides reconciliations of these non-GAAP measures in
its financial reporting. Because Sprint does not predict special
items that might occur in the future, and our forecasts are
developed at a level of detail different than that used to prepare
GAAP-based financial measures, Sprint does not provide
reconciliations to GAAP of its forward-looking financial
measures.
The measures used in this release include the following:
EBITDA is operating income/(loss) before depreciation and
amortization. Adjusted EBITDA is EBITDA excluding
severance, exit costs, and other special items. Adjusted EBITDA
Margin represents Adjusted EBITDA divided by non-equipment net
operating revenues for Wireless and Adjusted EBITDA divided by net
operating revenues for Wireline. We believe that Adjusted EBITDA
and Adjusted EBITDA Margin provide useful information to investors
because they are an indicator of the strength and performance of
our ongoing business operations. While depreciation and
amortization are considered operating costs under GAAP, these
expenses primarily represent non-cash current period costs
associated with the use of long-lived tangible and definite-lived
intangible assets. Adjusted EBITDA and Adjusted EBITDA Margin are
calculations commonly used as a basis for investors, analysts and
credit rating agencies to evaluate and compare the periodic and
future operating performance and value of companies within the
telecommunications industry.
Sprint Platform Postpaid ABPA is average billings per
account and calculated by dividing postpaid service revenue earned
from postpaid customers plus installment plan billings and lease
revenue by the sum of the monthly average number of postpaid
accounts during the period. We believe that ABPA provides useful
information to investors, analysts and our management to evaluate
average Sprint platform postpaid customer billings per account as
it approximates the expected cash collections, including
installment plan billings and lease revenue, per postpaid account
each month.
Sprint Platform Postpaid Phone ABPU is average billings
per postpaid phone user and calculated by dividing service revenue
earned from postpaid phone customers plus installment plan billings
and lease revenue by the sum of the monthly average number of
postpaid phone connections during the period. We believe that ABPU
provides useful information to investors, analysts and our
management to evaluate average Sprint platform postpaid phone
customer billings as it approximates the expected cash collections,
including installment plan billings and lease revenue, per postpaid
phone user each month.
Free Cash Flow is the cash provided by operating
activities less the cash used in investing activities other than
short-term investments, including changes in restricted cash, if
any, and excluding the sale-leaseback of devices. Adjusted
Free Cash Flow is Free Cash Flow plus the proceeds
from the sale-leaseback of devices and sales of future lease
receivables, net of repayments. We believe that Free Cash Flow and
Adjusted Free Cash Flow provide useful information to investors,
analysts and our management about the cash generated by our core
operations and net proceeds obtained to fund certain leased
devices, respectively, after interest and dividends, if any, and
our ability to fund scheduled debt maturities and other financing
activities, including discretionary refinancing and retirement of
debt and purchase or sale of investments.
Net Debt is consolidated debt, including current
maturities, less cash and cash equivalents, short-term investments
and, if any, restricted cash. We believe that Net Debt provides
useful information to investors, analysts and credit rating
agencies about the capacity of the company to reduce the debt load
and improve its capital structure.
SAFE HARBOR
This release includes “forward-looking statements” within the
meaning of the securities laws. The words “may,” “could,” “should,”
“estimate,” “project,” “forecast,” “intend,” “expect,”
“anticipate,” “believe,” “target,” “plan, “outlook,” “providing
guidance,” and similar expressions are intended to identify
information that is not historical in nature. All statements that
address operating performance, events or developments that we
expect or anticipate will occur in the future — including
statements relating to our network, connections growth, and
liquidity; and statements expressing general views about future
operating results — are forward-looking statements. Forward-looking
statements are estimates and projections reflecting management’s
judgment based on currently available information and involve a
number of risks and uncertainties that could cause actual results
to differ materially from those suggested by the forward-looking
statements. With respect to these forward-looking statements,
management has made assumptions regarding, among other things, the
development and deployment of new technologies and services;
efficiencies and cost savings of new technologies and services;
customer and network usage; connection growth and retention;
service, speed, coverage and quality; availability of devices;
availability of various financings, including any leasing
transactions; the timing of various events and the economic
environment. Sprint believes these forward-looking statements are
reasonable; however, you should not place undue reliance on
forward-looking statements, which are based on current expectations
and speak only as of the date when made. Sprint undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events
or otherwise, except as required by law. In addition,
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially
from our company's historical experience and our present
expectations or projections. Factors that might cause such
differences include, but are not limited to, those discussed in
Sprint Corporation’s Annual Report on Form 10-K for the fiscal year
ended March 31, 2015 and, when filed, its Annual Report on Form
10-K for the fiscal year ended March 31, 2016. You should
understand that it is not possible to predict or identify all such
factors. Consequently, you should not consider any such list to be
a complete set of all potential risks or uncertainties.
About Sprint:
Sprint (NYSE: S) is a communications services company
that creates more and better ways to connect its customers to
the things they care about most. Sprint served more than 58.8
million connections as of March 31, 2016 and is widely recognized
for developing, engineering and deploying innovative technologies,
including the first wireless 4G service from a national carrier in
the United States; leading no-contract brands including Virgin
Mobile USA, Boost Mobile, and Assurance Wireless; instant national
and international push-to-talk capabilities; and a global Tier 1
Internet backbone. Sprint has been named to the Dow Jones
Sustainability Index (DJSI) North America for the past five years.
You can learn more and visit Sprint at www.sprint.com or
www.facebook.com/sprint and www.twitter.com/sprint.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160503006056/en/
Sprint CorporationMedia:Dave Tovar,
913-315-1451David.Tovar@sprint.comorInvestors:Jud Henry,
800-259-3755Investor.Relations@sprint.com
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