- Postpaid phone net additions of 173,000
are the fourth consecutive quarter of positive net additions
- Postpaid phone churn of 1.39 percent is
the best in company history and improved year-over-year for the
sixth consecutive quarter
- Postpaid net port positive against all
three national carriers for the first time in over five years
- Net loss of $302 million, Operating
income of $361 million and Adjusted EBITDA* of $2.5 billion
- Over $550 million of year-over-year
reduction in cost of service and selling, general, and
administrative expenses
- Net cash provided by operating
activities of $542 million improved by more than $400 million
year-over-year; Adjusted free cash flow* of $466 million grew by
$2.7 billion year-over-year
- Delivering financial flexibility with
nearly $11 billion of liquidity, including $5.1 billion of cash,
cash equivalents and short-term investments
- Successfully raised $5.8 billion of
liquidity in the quarter, including $2.2 billion of network-related
financing, $1.1 billion from the second transaction with Mobile
Leasing Solutions, LLC (MLS), and $2.5 billion under a new
unsecured financing facility
- LTE Plus Network now available in 237
markets
- 2.5GHz spectrum now carries more of
Sprint’s LTE traffic than any other spectrum band
Sprint Corporation (NYSE:S) today reported operating
results for the first quarter of fiscal year 2016, including the
lowest postpaid phone churn in company history at 1.39 percent and
a total liquidity position of nearly $11 billion. The company also
reported total net operating revenues of $8 billion, net loss of
$302 million, operating income of $361 million, and Adjusted
EBITDA* of $2.5 billion.
“We had another quarter of solid progress in our turnaround with
the highest first quarter postpaid phone net additions in nine
years1, the lowest postpaid phone churn in company history, and
finally being postpaid net port positive against all three national
carriers after five years” said Sprint CEO Marcelo Claure. “We also
grew wireless net operating revenue year-over-year while
aggressively reducing the cash operating expenses of the business
and our network is performing better than ever.”
Highest Fiscal First Quarter Postpaid Phone Net Additions in
Nine Years1
Sprint’s focus on delivering the best value proposition in
wireless resulted in the highest fiscal first quarter postpaid
phone net additions in nine years and the fourth consecutive
quarter of positive net additions with 173,000 in the quarter
compared to net losses of 12,000 in the prior year quarter. The
185,000 year-over-year improvement was driven by both better
acquisition and retention, as postpaid phone gross additions were
up 10 percent year-over-year and postpaid phone churn of 1.39
percent improved 10 basis points to reach the lowest level in
company history. Postpaid phone churn has improved year-over-year
for six consecutive quarters.
The company recently launched an advertising campaign featuring
Paul Marcarelli, the actor who used to ask if you “could hear me
now” for Verizon, to highlight the fact that networks today aren’t
that different so why should customers pay more. The campaign has
been one of the most successful in company history. The ad has been
viewed over 8 million times on YouTube and the company became
postpaid net port positive against all three national carriers for
the first time in over five years. Can you hear that?
The company also reported the following Sprint platform
results:
- Total net additions were 377,000 in the
quarter, including postpaid net additions of 180,000, prepaid net
losses of 331,000, and wholesale and affiliate net additions of
528,000.
- Total postpaid churn of 1.56 percent in
the quarter was flat year-over-year.
Top Line Stabilizes as Cost Reductions Continue
With trends improving in its postpaid phone business, Sprint
reported total net operating revenues that were flat to the prior
year quarter for the first time in over two years. In addition,
wireless net operating revenues grew 1 percent year-over-year and
postpaid wireless service revenues have remained at $4.8 billion
for the last three quarters.
Sprint also made considerable progress in its ongoing effort to
transform the cost structure of the business, as the company
realized over $550 million year-over-year reduction in cost of
services and selling, general and administrative (SG&A)
expenses. The company remains on track to achieve its goal of a
sustainable reduction of $2 billion or more of run rate operating
expenses exiting fiscal year 2016.
The company also reported the following financial results:
- Net loss of $302 million, or $0.08 per
share, in the quarter compared to a net loss of $20 million, or
$0.01 per share in the year-ago period. The current quarter
included $113 million of non-recurring contract termination charges
primarily related to the termination of the pre-existing wholesale
arrangement with Ntelos Holding Corp.
- Operating income of $361 million in the
quarter compared to operating income of $501 million in the
year-ago quarter. Adjusting for the aforementioned contract
termination charges related to the pre-existing wholesale
arrangement with Ntelos Holding Corp. in the current quarter,
operating income would have been relatively flat
year-over-year.
- Adjusted EBITDA* of $2.5 billion in the
quarter grew 18 percent from the prior year period, primarily
because of expense reductions, including over $550 million in cost
of services and SG&A expenses.
- Net cash provided by operating
activities was $542 million in the quarter compared to $128 million
in the prior year. The $414 million year-over-year improvement was
driven by expense reductions and favorable changes to working
capital.
- Adjusted free cash flow* was positive
$466 million in the quarter compared to negative $2.2 billion in
the prior year. The $2.7 billion year-over-year improvement was due
to expense reductions, lower capital spending, and net proceeds
from our second transaction with MLS.
Liquidity Position Grows to Nearly $11 Billion
Sprint took several actions during the quarter to improve its
financial flexibility, including successfully raising $2.2 billion
of network-related financing, $1.1 billion from a second
transaction with MLS, and $2.5 billion under a new unsecured
financing facility, which was increased from its original $2
billion amount within the quarter. These transactions helped
increase the company’s liquidity position to nearly $11 billion at
the end of the quarter, including $5.1 billion of cash, cash
equivalents and short-term investments. Additionally, the company
has $1.1 billion of availability under vendor financing agreements
that can be used toward the purchase of 2.5GHz network
equipment.
The company continues to pursue additional financing
initiatives, including additional handset and receivables financing
transactions and a securitization involving a small portion of its
spectrum assets.
LTE Plus Network Expansion Contributes to Speed and
Reliability Performance
Sprint aims to unlock the value of the U.S.’s largest spectrum
holding by densifying and optimizing its network to provide
customers the best experience. The Sprint LTE Plus Network, which
combines a rich tri-band spectrum portfolio with the LTE Advanced
features of carrier aggregation and antenna beamforming, launched
in 33 additional markets, increasing the total to 237 markets
across the country.
Sprint’s LTE Plus Network expansion and its densification and
optimization strategy have driven significant improvements in both
data speeds and network reliability as noted by several third party
sources.
- Sprint’s LTE Plus Network continued to
outperform Verizon, AT&T, and T-Mobile by delivering the
fastest LTE download speeds based on recent crowd-sourced data from
Nielsen.2 Additionally, Sprint’s reliability beat T-Mobile and
performed within 1 percent of AT&T and Verizon.3
- Independent mobile analytics firm
RootMetrics® awarded Sprint 75 percent more first place Network
Reliability RootScore® Awards (from 24 to 42) in the 125 markets
measured in the first half of 2016 compared to the prior testing
period, including wins in Chicago, Houston, and Atlanta.4
- Sprint’s reliability beat Verizon and
its average download speeds beat AT&T and T-Mobile, according
to PC Magazine’s Fastest Mobile Networks 2016 report.
Sprint’s deployment of 2.5GHz spectrum has become an integral
part of how the company meets the growing data usage and speed
demands of its customers, as that spectrum band now carries the
highest percentage of Sprint’s LTE data traffic.
Fiscal Year 2016 Outlook
The company continues to expect:
- Operating income of $1 billion to $1.5
billion
- Adjusted EBITDA* of $9.5 billion to $10
billion
- Cash capital expenditures, excluding
devices leased through indirect channels, of approximately $3
billion
- Adjusted free cash flow* around
break-even
Conference Call and Webcast
- Date/Time: 8:30 a.m. (ET) Monday, July
25, 2016
- Call-in Information
- U.S./Canada: 866-360-1063 (ID:
43922916)
- International: 706-634-7849 (ID:
43922916)
- Webcast available via the Internet at
www.sprint.com/investors
- Additional information about results is
available on our Investor Relations website
1 Excludes Nextel migrations
2 Average LTE download speeds based on Sprint analysis of
Nielsen Mobile Performance (NMP) data for downloads (150KB+) – NMP
44 Market View (over 155 million POPs).
3 Based on Sprint’s analysis of latest Nielsen drive test data
for average network reliability (voice & data) in top 106
markets.
4 Rankings based on RootMetrics 125 Metro RootScore Reports
(January-June 2016) for mobile performance as tested on best
available plans and devices on 4 mobile networks across all
available network types. Your experience may vary. The RootMetrics
awards are not an endorsement of Sprint. Visit
www.rootmetrics.com.
Wireless Operating Statistics
(Unaudited) Quarter To Date 6/30/16 3/31/16
6/30/15
Sprint platform (1): Net additions
(losses) (in thousands) Postpaid 180
56 310 Prepaid (331 )
(264 ) (366 ) Wholesale and affiliate 528
655 731
Total Sprint
platform wireless net additions 377
447 675
End of period connections (in thousands) Postpaid (d)
30,945 30,951 30,016 Prepaid (d) 13,974 14,397 15,340 Wholesale and
affiliate (d) 14,534 13,458
11,456
Total Sprint platform end of
period connections 59,453
58,806 56,812
Churn Postpaid 1.56 % 1.72 % 1.56 % Prepaid 5.55 %
5.65 % 5.08 %
Supplemental data - connected devices
End of period connections (in thousands) Retail postpaid
1,822 1,771 1,439 Wholesale and affiliate 9,244
8,575 6,620
Total 11,066
10,346 8,059
Supplemental data - total company End of period
connections (in thousands)
Sprint platform (1)(d)
59,453 58,806
56,812 Transactions (2) -
- 856
Total
59,453 58,806
57,668
Sprint platform ARPU (1)
(a)
Postpaid $ 51.54 $ 51.68 $ 55.48 Prepaid $ 27.34 $ 27.72 $ 27.81
Sprint platform postpaid phone
Postpaid phone net additions 173 22
(12 ) Postpaid phone end of period connections
(d) 25,322 25,316 24,866 Postpaid phone churn 1.39 % 1.56 % 1.49 %
NON-GAAP RECONCILIATION - ABPA*, POSTPAID PHONE ARPU AND
ABPU* (Unaudited) (Millions, except accounts, connections,
ABPA*, ARPU, and ABPU*) Quarter To Date 6/30/16 3/31/16
6/30/15
Sprint platform ABPA* (1)
Postpaid service revenue $ 4,778 $ 4,793 $ 4,964 Add: Installment
plan billings 264 287 298 Add: Lease revenue 755
662 256
Total
for Sprint platform postpaid connections $
5,797 $ 5,742
$ 5,518 Sprint platform postpaid
accounts (in thousands) 11,329 11,358 11,175
Sprint platform postpaid ABPA* (b)
$ 170.56 $ 168.49 $ 164.63 Quarter To Date 6/30/16
3/31/16 6/30/15
Sprint platform postpaid phone
ARPU and ABPU* (1) Postpaid phone service revenue $
4,489 $ 4,512 $ 4,682 Add: Installment plan billings 243 268 282
Add: Lease revenue 741 649
249
Total for Sprint platform
postpaid phone connections $ 5,473
$ 5,429 $ 5,213
Sprint platform postpaid average phone connections
(in thousands) 25,275 25,297 24,856 Sprint platform postpaid phone
ARPU (a) $ 59.20 $ 59.45 $ 62.79 Sprint platform postpaid phone
ABPU* (c) $ 72.17 $ 71.53 $ 69.91
(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.
(d) As part of the transaction involving Shenandoah
Telecommunications Company (Shentel), 186,000 and 92,000
subscribers were transferred from postpaid and prepaid,
respectively, to affiliates and an additional 270,000 subscribers
were acquired from Shentel, which were acquired from their purchase
of nTelos.
Wireless Device Financing Summary
(Unaudited) (Millions, except sales, connections, and sales and
connections mix) Quarter To Date 6/30/16 3/31/16
6/30/15
Postpaid sales (in thousands) 3,268 3,438
4,040
Postpaid sales mix Subsidy/other 31 % 37 % 36 %
Installment plans 25 % 18 % 13 % Leasing 44 % 45 % 51 %
Postpaid connections (in thousands) 30,945 30,951 30,016
Postpaid connections mix Subsidy/other 51 % 54 % 69 %
Installment plans 13 % 13 % 15 % Leasing 36 % 33 % 16 %
Installment plans Installment sales financed $ 407 $ 311 $
255 Installment billings 264 287 298 Installments receivables, net
- - 1,234
Leasing Lease revenue $ 755 $ 662 $ 256
Lease depreciation 644 550 276
Leased device
additions: Cash paid for capital expenditures - leased devices
$ 405 $ 568 $ 544 Transfers from inventory - leased devices 541 621
808 Leased devices in property, plant and equipment, net
$ 3,766 $ 3,645 $ 2,829
Leased device net proceeds Proceeds from MLS sale $
1,055 $ - $ - Repayments to MLS (165 ) - - Proceeds from lease
securitization - 600 - Repayments of lease securitization
(75 ) - -
Net
proceeds from device financings and sales of future lease
receivables $ 815 $
600 $ -
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (Millions, except per share data) Quarter To Date
6/30/16 3/31/16 6/30/15
Net operating revenues
Service revenue $ 6,516 $ 6,574 $ 7,037 Equipment revenue
1,496 1,497 990
Total net operating revenues
8,012 8,071
8,027 Net operating expenses Cost of services
(exclusive of depreciation and amortization below) 2,099 2,245
2,393 Cost of products (exclusive of depreciation and amortization
below) 1,419 1,551 1,365 Selling, general and administrative 1,917
1,939 2,187 Depreciation - network and other 1,036 1,042 965
Depreciation - leased devices 644 550 276 Amortization 287 300 347
Other, net 249 436
(7 ) Total net operating expenses 7,651
8,063 7,526
Operating
income 361 8
501 Interest expense
(615 ) (552 ) (542 ) Other
income, net 8 5
4
Loss before income taxes
(246 ) (539 )
(37 ) Income tax (expense) benefit
(56 ) (15 ) 17
Net
loss $ (302 ) $
(554 ) $ (20 )
Basic and diluted net loss per common share $
(0.08 ) $ (0.14 )
$ (0.01 ) Weighted average common shares
outstanding 3,975 3,972
3,967
Effective tax rate
-22.8 % -2.8 %
45.9 % NON-GAAP
RECONCILIATION - NET LOSS TO ADJUSTED EBITDA* (Unaudited)
(Millions) Quarter To Date 6/30/16 3/31/16 6/30/15
Net loss $ (302 )
$ (554 ) $ (20 )
Income tax expense (benefit) 56
15 (17 )
Loss before income taxes
(246 ) (539 ) (37 ) Other
income, net (8 ) (5 ) (4 ) Interest expense 615
552 542
Operating income 361
8 501 Depreciation
- network and other 1,036 1,042 965 Depreciation - leased devices
644 550 276 Amortization 287 300
347
EBITDA* (3)
2,328 1,900
2,089
Loss from asset dispositions and
exchanges, net (4)
- 81 - Severance and exit costs (5) 16 162 13 Contract terminations
(6) 113 - - Litigation (7) - 15 - Reduction in liability - U.S.
Cellular asset acquisition (8) -
- (20 )
Adjusted EBITDA* (3)
$ 2,457 $ 2,158
$ 2,082 Adjusted
EBITDA margin* 37.7 % 32.8 %
29.6 % Selected items: Cash paid
for capital expenditures - network and other $ 473 $ 722 $ 1,802
Cash paid for capital expenditures - leased devices $ 405 $ 568 $
544
WIRELESS STATEMENTS OF OPERATIONS
(Unaudited) (Millions) Quarter To Date 6/30/16
3/31/16 6/30/15
Net operating revenues
Service revenue
Sprint platform (1):
Postpaid $ 4,778 $ 4,793 $ 4,964 Prepaid 1,165 1,203 1,300
Wholesale, affiliate and other 158
155 181 Total Sprint platform
6,101 6,151 6,445 Total transactions (2) -
3 105 Total
service revenue 6,101 6,154 6,550 Equipment revenue
1,496 1,497 990
Total net operating revenues
7,597 7,651
7,540 Net operating expenses Cost of
services (exclusive of depreciation and amortization below) 1,784
1,922 2,005 Cost of products (exclusive of depreciation and
amortization below) 1,419 1,551 1,365 Selling, general and
administrative 1,834 1,868 2,096 Depreciation - network and other
985 991 917 Depreciation - leased devices 644 550 276 Amortization
287 300 347 Other, net 249 434
(8 ) Total net operating expenses
7,202 7,616 6,998
Operating income $ 395
$ 35 $ 542
WIRELESS NON-GAAP RECONCILIATION
(Unaudited) (Millions) Quarter To Date 6/30/16 3/31/16
6/30/15
Operating income $ 395
$ 35 $ 542
Loss from asset dispositions and
exchanges, net (4)
- 81 - Severance and exit costs (5) 16 160 12 Contract terminations
(6) 113 - - Litigation (7) - 15 - Reduction in liability - U.S.
Cellular asset acquisition (8) - - (20 ) Depreciation - network and
other 985 991 917 Depreciation - leased devices 644 550 276
Amortization 287 300
347
Adjusted EBITDA* (3)
$ 2,440 $ 2,132
$ 2,074 Adjusted
EBITDA margin* 40.0 % 34.6 %
31.7 % Selected items: Cash paid
for capital expenditures - network and other $ 376 $ 577 $ 1,640
Cash paid for capital expenditures - leased devices $ 405 $ 568 $
544
WIRELINE STATEMENTS OF
OPERATIONS (Unaudited) (Millions) Quarter To Date 6/30/16
3/31/16 6/30/15
Net operating revenues Voice $
181 $ 194 $ 233 Data 43 37 49 Internet 302 316 328 Other
19 15 20
Total net operating revenues 545
562 630
Net operating expenses Costs of services (exclusive
of depreciation and amortization below) 448 467 534 Selling,
general and administrative 78 74 87 Depreciation and amortization
49 50 46 Other, net - 3
1 Total net operating expenses
575 594 668
Operating loss $ (30 )
$ (32 ) $ (38 )
WIRELINE NON-GAAP RECONCILIATION (Unaudited)
(Millions) Quarter To Date 6/30/16 3/31/16 6/30/15
Operating loss $ (30 ) $
(32 ) $ (38 ) Severance and exit
costs (5) - 3 1 Depreciation and amortization 49
50 46
Adjusted
EBITDA* $ 19 $
21 $ 9 Adjusted
EBITDA margin* 3.5 % 3.7 %
1.4 % Selected items: Cash paid
for capital expenditures - network and other $ 20 $ 74 $ 68
CONDENSED CONSOLIDATED CASH FLOW
INFORMATION (Unaudited)** (Millions) Quarter To Date 6/30/16
3/31/16 6/30/15
Operating activities Net loss
$ (302 ) $ (554 ) $ (20 ) Depreciation and amortization 1,967 1,892
1,588 Provision for losses on accounts receivable 93 70 163
Share-based and long-term incentive compensation expense 15 17 18
Deferred income tax expense (benefit) 46 3 (13 ) Amortization of
long-term debt premiums, net (80 ) (80 ) (78 ) Loss on disposal of
property, plant and equipment 120 259 - Contract terminations 96 -
- Other changes in assets and liabilities: Accounts and notes
receivable (106 ) (181 ) (1,683 ) Inventories and other current
assets (98 ) (900 ) (315 ) Deferred purchase price from sale of
receivables (117 ) 430 1,184 Accounts payable and other current
liabilities (1,016 ) 242 (867 ) Non-current assets and liabilities,
net (159 ) (1 ) 83 Other, net 83
97 68
Net cash provided by operating
activities 542
1,294 128
Investing activities Capital expenditures - network and
other (473 ) (722 ) (1,802 ) Capital expenditures - leased devices
(405 ) (568 ) (544 ) Expenditures relating to FCC licenses (15 )
(23 ) (26 ) Change in short-term investments, net (1,304 ) 41 (37 )
Proceeds from sales of assets and FCC licenses 27 26 1 Other, net
(25 ) (4 ) (3 )
Net
cash used in investing activities (2,195
) (1,250 )
(2,411 ) Financing activities Proceeds
from debt and financings 3,255 600 346 Repayments of debt,
financing and capital lease obligations (294 ) (172 ) (26 ) Debt
financing costs (175 ) (10 ) (1 ) Other, net 6
4 14
Net cash provided
by financing activities 2,792
422 333
Net increase (decrease) in cash and cash equivalents
1,139 466 (1,950 ) Cash and
cash equivalents, beginning of period
2,641 2,175
4,010 Cash and cash equivalents, end of period
$ 3,780 $ 2,641
$ 2,060
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP)
(Unaudited) (Millions) Quarter To Date 6/30/16 3/31/16
6/30/15
Net cash provided by operating
activities $ 542 $ 1,294 $
128 Capital expenditures - network and other (473 )
(722 ) (1,802 ) Capital expenditures - leased devices (405 ) (568 )
(544 ) Expenditures relating to FCC licenses, net (15 ) (23 ) (26 )
Proceeds from sales of assets and FCC licenses 27 26 1 Other
investing activities, net (25 ) (4 )
(3 )
Free cash flow* $
(349 ) $ 3
$ (2,246 ) Net proceeds from device
financings and sales of future lease receivables 815
600 -
Adjusted
free cash flow* $ 466
$ 603 $ (2,246 )
**Certain prior period amounts have been reclassified to conform
to the current period presentation.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Millions) 6/30/16 3/31/16
ASSETS
Current assets Cash and cash equivalents $ 3,780 $ 2,641 Short-term
investments 1,304 - Accounts and notes receivable, net 1,113 1,099
Device and accessory inventory 816 1,173 Prepaid expenses and other
current assets 1,949 1,920
Total current assets 8,962 6,833 Property, plant and
equipment, net 19,715 20,297 Goodwill 6,575 6,575 FCC licenses and
other 40,175 40,073 Definite-lived intangible assets, net 4,157
4,469 Other assets 811 728
Total assets $ 80,395
$ 78,975 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Accounts payable $
1,841 $ 2,899 Accrued expenses and other current liabilities 4,245
4,374 Current portion of long-term debt, financing and capital
lease obligations 5,603 4,690
Total current liabilities 11,689 11,963 Long-term
debt, financing and capital lease obligations 31,354 29,268
Deferred tax liabilities 14,006 13,959 Other liabilities
3,844 4,002
Total
liabilities 60,893
59,192 Stockholders' equity Common stock 40 40
Treasury shares, at cost - (3 ) Paid-in capital 27,582 27,563
Accumulated deficit (7,680 ) (7,378 ) Accumulated other
comprehensive loss (440 ) (439 ) Total
stockholders' equity 19,502
19,783
Total liabilities and stockholders' equity
$ 80,395 $ 78,975
NET DEBT* (NON-GAAP) (Unaudited)
(Millions) 6/30/16 3/31/16 Total debt $ 36,957 $ 33,958
Less: Cash and cash equivalents (3,780 ) (2,641 ) Less: Short-term
investments (1,304 ) -
Net
debt* $ 31,873 $
31,317 SCHEDULE OF DEBT
(Unaudited) (Millions) 6/30/16
ISSUER
MATURITY PRINCIPAL Sprint
Corporation 7.25% Senior notes due 2021 09/15/2021 $ 2,250
7.875% Senior notes due 2023 09/15/2023 4,250 7.125% Senior notes
due 2024 06/15/2024 2,500 7.625% Senior notes due 2025
02/15/2025 1,500
Sprint Corporation
10,500 Sprint Communications,
Inc. Export Development Canada Facility (Tranche 4) 12/15/2017
250 Export Development Canada Facility (Tranche 3) 12/17/2019 300
6% Senior notes due 2016 12/01/2016 2,000 9.125% Senior notes due
2017 03/01/2017 1,000 8.375% Senior notes due 2017 08/15/2017 1,300
9% Guaranteed notes due 2018 11/15/2018 3,000 7% Guaranteed notes
due 2020 03/01/2020 1,000 7% Senior notes due 2020 08/15/2020 1,500
11.5% Senior notes due 2021 11/15/2021 1,000 9.25% Debentures due
2022 04/15/2022 200 6% Senior notes due 2022 11/15/2022
2,280
Sprint Communications, Inc.
13,830 Sprint Capital
Corporation 6.9% Senior notes due 2019 05/01/2019 1,729 6.875%
Senior notes due 2028 11/15/2028 2,475 8.75% Senior notes due 2032
03/15/2032 2,000
Sprint Capital
Corporation 6,204
Clearwire Communications LLC 14.75% First-priority senior
secured notes due 2016 12/01/2016 300 8.25% Exchangeable notes due
2040 12/01/2040 629
Clearwire
Communications LLC 929
Secured equipment credit facilities 2017 - 2021
773 Financing obligations 2017 - 2021
3,833 Capital leases and other obligations
2016 - 2023
492 Total principal
36,561 Net premiums
and debt financing costs 396
Total debt $ 36,957
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) As more of our
customers elect to lease a device rather than purchasing one under
our subsidized program, there is a significant positive impact to
EBITDA* and Adjusted EBITDA* from direct channel sales 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-month period ended June 30, 2016, we
leased devices through our Sprint direct channels totaling
approximately $540 million, which would have increased cost of
products and reduced EBITDA* if they had been purchased under our
subsidized program. Also, during the three-month period ended June
30, 2016, the equipment revenue derived from customers electing to
finance their devices through device leasing or installment billing
programs in our direct channel was 67%. 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. (4) During the
fourth quarter 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. (5) 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. (6)
Contract terminations primarily relate to the termination of our
pre-existing wholesale arrangement with Ntelos Holding Corp.
(7) For the fourth quarter of fiscal year 2015, litigation activity
is a result of unfavorable developments in connection with pending
litigation. (8) 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.
*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 device financings 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, 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 59.4
million connections as of June 30, 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.
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version on businesswire.com: http://www.businesswire.com/news/home/20160725005380/en/
Sprint CorporationMedia:Dave Tovar,
913-315-1451David.Tovar@sprint.comorInvestors:Jud Henry,
800-259-3755Investor.Relations@sprint.com
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