- Operating loss of $197 million and
Adjusted EBITDA* of $1.9 billion
- Nearly $800 million of year-to-date
reduction in cost of service and selling, general, and
administrative expenses builds momentum for 2016 targets
- Raising fiscal year 2015 Adjusted
EBITDA* guidance from previous expectation of $6.8 billion to $7.1
billion to a range of $7.7 billion to $8 billion
- Preliminary estimate for fiscal year
2016 Adjusted EBITDA* of approximately $9.5 billion to $10
billion
- Sprint platform postpaid net additions
of 501,000 improved by 471,000 year-over-year
- Highest postpaid net ports on record
and net port positive for the fourth consecutive quarter
- Sprint platform postpaid phone net
additions of 366,000 compared to net losses of 205,000 in the prior
year quarter – an improvement of 571,000 year-over-year
- Highest net additions in three years
and positive for the second consecutive quarter
- Lowest-ever third quarter Sprint
platform postpaid churn of 1.62 percent improved 68 basis points
from the prior year quarter
- Best year-over-year improvement in 12
years
- Significant steps taken to improve
liquidity
- Completed first sale-leaseback
transaction with Mobile Leasing Solutions, LLC, providing $1.1
billion in cash in December
- Increased existing receivables facility
by $1 billion to $4.3 billion of total capacity
- Network performing at best-ever levels
across voice and data metrics with average download speeds more
than tripling over the last two years
- Delivered the fastest download speeds
of any national carrier according to Nielsen crowd-sourced
data
- Most metro RootMetrics® RootScore®
awards in the company’s history in the second half of 2015
Sprint Corporation (NYSE:S) today reported operating
results for the third fiscal quarter of 2015, including growth in
postpaid phone customers for the second consecutive quarter with
the highest net additions in three years at 366,000, the
lowest-ever postpaid churn for a third quarter at 1.62 percent, and
the highest postpaid net ports on record. The company also reported
net operating revenue of $8.1 billion, operating loss of $197
million, and Adjusted EBITDA* of $1.9 billion, and is raising its
fiscal year 2015 Adjusted EBITDA* guidance from the previous
expectation of $6.8 billion to $7.1 billion to a range of $7.7
billion to $8 billion. In addition, the company’s preliminary
estimate for fiscal year 2016 Adjusted EBITDA* is approximately
$9.5 billion to $10 billion.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20160126005751/en/
“It’s clear from our quarterly results that we are making great
progress on achieving our goals,” said Sprint CEO Marcelo Claure.
“Revenue has stabilized, costs are coming out faster than expected,
postpaid phone net additions were the highest in three years,
postpaid churn was the lowest-ever for a third quarter, and the
network is performing at best-ever levels.”
Building Momentum on Cost Reduction Effort
Sprint remains on track to exceed its cost reduction target for
fiscal 2015 and has realized a nearly $800 million reduction in
cost of service and selling, general, and administrative expenses
year-to-date, including $500 million in the third quarter. Sprint
continues to progress toward a sustainable reduction of $2 billion
or more of run rate operating expenses exiting fiscal 2016 and
expects approximately $1 billion of transformation program costs,
which are expected to be split relatively evenly between operating
expenses and capital expenditures, to be incurred across fiscal
2015 and 2016 to achieve that run rate benefit.
“Our transformation is taking hold and the momentum is
accelerating,” said Sprint CFO Tarek Robbiati. “Most importantly,
we expect these cost reductions to be achieved without compromising
network quality or impacting the customer experience.”
Quarterly Financial Results
- Net operating revenues of $8.1 billion
decreased 10 percent year-over-year, but have stabilized over the
last three quarters, and grew two percent sequentially. The
year-over-year decline was due to lower wireless service revenues,
primarily related to customer shifts to rate plans associated with
device financing options, and lower equipment revenues due to a
shift from installment billing and subsidized sales, which
recognize more revenue at the point of sale, to leasing sales,
which recognize revenues over time.
- Wireless service revenues plus
installment plan billings and lease revenue of $7.1 billion
increased one percent from the prior year period, primarily because
of higher lease revenue and growth in postpaid phone
customers.
- Consolidated Adjusted EBITDA* of $1.9
billion improved from the prior year period, as expense reductions
more than offset the decline in operating revenues. Total expenses
improved primarily because of lower cost of product expenses
related to device leasing options for which the associated cost is
recorded as depreciation expense, and $500 million of lower
selling, general, and administrative expenses.
- Operating loss of $197 million included
$209 million of severance and exit costs and compared to an
operating loss of $2.5 billion in the year-ago quarter, an
improvement of approximately $2.3 billion. Adjusting for the $209
million of severance and exit costs in the current quarter and a
non-cash impairment charge of approximately $2.1 billion in the
prior year quarter, operating loss would have improved by
approximately $400 million year-over-year.
- Net loss of $836 million, or $0.21 per
share, compared to a net loss of $2.4 billion, or $0.60 per share,
in the year-ago period, an improvement of approximately $1.5
billion. Adjusting for the aforementioned severance and exit costs
and impairment charge, net loss would have improved by
approximately $300 million year-over-year, or $0.08 per share.
Positive Postpaid Phone Net Additions Help Stabilize Top
Line
Sprint continues to focus on attracting and retaining more
postpaid phone customers by providing a compelling value
proposition, including the recently introduced 50 percent off
Verizon, AT&T and T-Mobile rate plans promotion, which has been
extended to Feb. 11 because of its popularity. A better network
experience has also resulted in dramatic year-over-year
improvements in postpaid churn. For the second quarter in a row,
the company reported positive postpaid phone net additions and
posted year-over-year growth in wireless service revenues plus
installment plan billings and lease revenue, which is a better
representation of the total service and equipment charges on its
customers’ monthly bills.
The company also reported the following Sprint platform results,
which reflect its focus on higher value postpaid connections:
- Total net additions were 491,000
compared to 967,000 in the prior year quarter – a decline of
476,000 year-over-year.
- Postpaid net additions of 501,000
compared to 30,000 in the prior year quarter – an improvement of
471,000 year-over-year.
- Postpaid phone net additions were
366,000 compared to net losses of 205,000 in the prior year quarter
– an improvement of 571,000 year-over-year.
- Prepaid net losses of 491,000 compared
to net additions of 410,000 in the prior year quarter – a decline
of 901,000 year-over-year.
- Based on the success of the base
loyalty program that the company implemented last quarter for Boost
and Virgin, it has decided to implement the program more broadly
for its prepaid base. As a result, the company will report these
customers as part of its prepaid base and has adjusted the 175,000
previously recorded last quarter as postpaid back into prepaid for
better comparability across periods.
- Wholesale and affiliate net additions
of 481,000 compared to 527,000 in the prior year quarter – a
decline of 46,000 year-over-year.
Company Delivers on Funding Initiatives with More to
Come
Total liquidity was $6 billion at the end of the quarter,
including $2.2 billion of cash, cash equivalents and short-term
investments, $3 billion of undrawn borrowing capacity under the
revolving bank credit facility, and approximately $800 million of
undrawn availability under the receivables facility. In addition,
the company had approximately $600 million of availability under
vendor financing agreements that can be used toward the purchase of
2.5 GHz network equipment, with approximately $500 million of
additional availability coming in April. During the quarter, the
company closed two significant transactions that immediately
improved its liquidity position.
- Completed the first sale-leaseback
transaction with Mobile Leasing Solutions, LLC providing a $1.1
billion cash infusion, as well as creating a repeatable structure
for the company to mitigate the working capital impacts associated
with the leasing model. The company expects to execute future
transactions generally on a quarterly basis, and expects to receive
proceeds totaling $3 billion to $4 billion in fiscal 2016,
depending on the amount of qualified leasing sales to its
customers.
- Amended existing receivables facility
to include the sale of certain future lease receivables, thus
increasing the maximum funding limit by $1 billion to a total of
$4.3 billion. These future lease receivables are related to devices
not included in the aforementioned sale-leaseback transaction with
Mobile Leasing Solutions, LLC.
Sprint continues to use its assets to help fund the business and
fuel future growth. Together with SoftBank and its partners, the
company is establishing a network-related financing entity that
could provide $3 billion to $5 billion of incremental funding in
fiscal 2016. This entity is expected to raise proceeds from
Sprint’s existing radio access equipment, as well as a combination
of new assets associated with the network densification and a small
portion of its spectrum portfolio. Sprint expects the first
transaction to close by the middle of calendar 2016. Together with
existing facilities, these sources of liquidity are expected to
fund the transformation and repayment of all maturities that come
due over the next year.
LTE Plus Network Delivers Fastest Download Speeds
Sprint remains focused on building a network that delivers the
consistent reliability, capacity and speed that customers demand,
and its recent deployment of two-channel (2x20 MHz) carrier
aggregation in the 2.5 GHz band is driving network performance that
is beating the competition. An analysis of Nielsen Mobile
Performance crowd-sourced data from October through December 2015
showed that Sprint’s LTE Plus Network beat Verizon, AT&T and
T-Mobile by delivering the fastest LTE download speeds. The company
has deployed its LTE Plus Network in more than 150 major markets
across the country and has plans for expansion in the coming
months.
Additionally, independent mobile analytics firm RootMetrics®
awarded Sprint a company record 212 first-place (outright or
shared) RootScore® Awards for overall, reliability, speed, data,
call, or text network performance in the 125 metro markets measured
in the second half of 2015, beating T-Mobile for the first time
ever and receiving 57 percent more awards than the prior year
periodi. The company also saw median downlink speeds in these metro
markets more than triple on average from the first half of 2014
testing period and measured the fastest median download speeds of
any carrier in 16 cities, including Austin, Dallas, Denver,
Houston, Indianapolis, Kansas City, and Phoenix.
The company remains committed to its plan of significantly
densifying the network through the deployment of small cells to
further improve network performance and customer experience.
Financial Outlook
- As a result of accelerated cost
reductions, the company is raising its guidance for fiscal year
2015 Adjusted EBITDA* from its previous expectation of $6.8 billion
to $7.1 billion to a range of $7.7 billion to $8 billion.
- The company is also raising its
guidance for fiscal year 2015 operating income from its previous
expectation of an operating loss of $50 million to $250 million to
operating income of $100 million to $300 million.
- The company continues to expect fiscal
year 2015 cash capital expenditures to be approximately $5 billion,
excluding the impact of leased devices sold through indirect
channels.
- The company’s preliminary estimate for
fiscal year 2016 Adjusted EBITDA* is approximately $9.5 billion to
$10 billion.
Conference Call and Webcast
- Date/Time: 8:30 a.m. (ET) Tuesday, Jan.
26, 2016
- Call-in Information
- U.S./Canada: 866-360-1063 (ID:
21719348)
- International: 706-634-7849 (ID:
21719348)
- 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 12/31/15 9/30/15
12/31/14 12/31/15
12/31/14
Sprint platform (1): Net
additions (losses) (in thousands) Postpaid 501
378 30 1,189
(423 ) Prepaid (491 ) (188 ) 410 (1,045 ) (97 )
Wholesale and affiliate 481 866
527 2,078 1,857
Total
Sprint platform wireless net additions 491
1,056 967
2,222 1,337 End of
period connections (in thousands) Postpaid 30,895 30,394 29,495
30,895 29,495 Prepaid 14,661 15,152 15,160 14,661 15,160 Wholesale
and affiliate 12,803 12,322
10,233 12,803 10,233
Total Sprint platform end of period connections
58,359 57,868
54,888 58,359
54,888 Churn Postpaid 1.62 % 1.54 %
2.30 % 1.57 % 2.18 % Prepaid 5.82 % 5.06 % 3.94 % 5.31 % 4.05 %
Supplemental data - connected devices End of
period connections (in thousands) Retail postpaid 1,676 1,576
1,180 1,676 1,180 Wholesale and affiliate 7,930
7,338 5,175 7,930
5,175
Total 9,606
8,914 6,355
9,606 6,355
Supplemental data - total company End of period
connections (in thousands) Sprint platform (1)
58,359 57,868 54,888
58,359 54,888 Transactions (2)
- 710 1,041 -
1,041
Total 58,359
58,578 55,929
58,359 55,929
Sprint platform ARPU (1) (a) Postpaid $ 52.48
$ 53.99 $ 58.90 $ 53.97 $ 60.52 Prepaid $ 27.44 $ 27.66 $ 27.12 $
27.64 $ 27.23
NON-GAAP RECONCILIATION - ABPA*,
POSTPAID PHONE ARPU AND ABPU* (Unaudited)
(Millions, except accounts, connections, ABPA*, ARPU, and ABPU*)
Quarter To Date Year To Date 12/31/15
9/30/15 12/31/14 12/31/15
12/31/14
Sprint platform ABPA*
(1) Postpaid service revenue $ 4,813 $ 4,893 $ 5,202 $
14,670 $ 16,132 Add: Installment plan billings and lease revenue
831 694 288
2,079 618
Total for Sprint platform
postpaid connections $ 5,644
$ 5,587 $ 5,490 $
16,749 $ 16,750 Sprint
platform postpaid accounts (in thousands) 11,261 11,197 11,341
11,211 11,538 Sprint platform postpaid ABPA* (b) $ 167.11 $ 166.26
$ 161.35 $ 166.00 $ 161.27 Quarter To Date
Year To Date 12/31/15 9/30/15
12/31/14 12/31/15 12/31/14
Sprint platform postpaid phone ARPU and ABPU*
(1) Postpaid phone service revenue $ 4,529 $ 4,608 $ 4,933 $
13,819 $ 15,323 Add: Installment plan billings and lease revenue
802 665 276
1,998 588
Total for Sprint platform
postpaid phone connections $ 5,331
$ 5,273 $ 5,209 $
15,817 $ 15,911 Sprint
platform postpaid average phone connections (in thousands) 25,040
24,886 25,163 24,927 25,578 Sprint platform postpaid phone ARPU (a)
$ 60.30 $ 61.71 $ 65.35 $ 61.60 $ 66.57 Sprint platform postpaid
phone ABPU* (c) $ 70.99 $ 70.62 $ 69.01 $ 70.51 $ 69.12
(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.
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) (Millions, except per share data)
Quarter To Date Year To Date 12/31/15
9/30/15 12/31/14 12/31/15
12/31/14
Net operating revenues Service revenue $
6,683 $ 6,880 $ 7,272 $ 20,600 $ 22,404 Equipment revenue
1,424 1,095 1,701
3,509 3,846
Total net operating
revenues 8,107 7,975
8,973 24,109
26,250 Net operating expenses Cost of
services (exclusive of depreciation and amortization below) 2,348
2,453 2,330 7,194 7,279 Cost of products (exclusive of depreciation
and amortization below) 1,589 1,290 2,952 4,244 7,482 Selling,
general and administrative 2,129 2,224 2,647 6,540 7,232
Depreciation and amortization 1,865 1,743 1,320 5,196 3,895
Impairments (3) - 85 2,133 85 2,133 Other, net 373
182 131 548
442 Total net operating expenses 8,304
7,977 11,513 23,807
28,463
Operating (loss) income
(197 ) (2 ) (2,540
) 302 (2,213 )
Interest expense (546 ) (542 ) (506 )
(1,630 ) (1,528 ) Other income, net 4
5 10 13 19
Loss before income taxes (739
) (539 ) (3,036 )
(1,315 ) (3,722 ) Income
tax (expense) benefit (97 ) (46 ) 657
(126 ) 601
Net loss
$ (836 ) $ (585 )
$ (2,379 ) $ (1,441 )
$ (3,121 ) Basic and diluted net
loss per common share $ (0.21 )
$ (0.15 ) $ (0.60 )
$ (0.36 ) $ (0.79 )
Weighted average common shares outstanding 3,970
3,969 3,957 3,969
3,950
Effective tax rate
-13.1 % -8.5 %
21.6 % -9.6 % 16.1
% NON-GAAP RECONCILIATION - NET LOSS TO
ADJUSTED EBITDA* (Unaudited) (Millions) Quarter To Date
Year To Date 12/31/15 9/30/15
12/31/14 12/31/15
12/31/14
Net loss $ (836
) $ (585 ) $ (2,379
) $ (1,441 ) $ (3,121
) Income tax expense (benefit) 97
46 (657 ) 126 (601 )
Loss before income taxes (739 ) (539
) (3,036 ) (1,315 )
(3,722 ) Other income, net (4 ) (5 ) (10 ) (13 ) (19
) Interest expense 546 542
506 1,630 1,528
Operating (loss) income (197 )
(2 ) (2,540 )
302 (2,213 ) Depreciation and
amortization 1,865 1,743
1,320 5,196 3,895
EBITDA*
(4) 1,668 1,741
(1,220 ) 5,498
1,682 Impairments (3) - 85 2,133 85 2,133
Severance and exit costs (5) 209 25 22 247 333 Litigation (6) 21
157 91 178 91 Partial pension settlement (7) - - 59 - 59 Reduction
in liability - U.S. Cellular asset acquisition (8) -
- (41 ) (20 ) (41 )
Adjusted EBITDA* (4) $ 1,898
$ 2,008 $ 1,044
$ 5,988 $ 4,257
Adjusted EBITDA margin* 28.4 % 29.2
% 14.4 % 29.1 % 19.0
% Selected items: Cash paid for capital
expenditures - network and other $ 994 $ 1,162 $ 1,425 $ 3,958 $
3,814 Cash paid for capital expenditures - leased devices $ 607 $
573 $ 143 $ 1,724 $ 143
WIRELESS STATEMENTS
OF OPERATIONS (Unaudited) (Millions) Quarter To Date Year To
Date 12/31/15 9/30/15 12/31/14
12/31/15 12/31/14
Net
operating revenues Service revenue Sprint platform (1):
Postpaid $ 4,813 $ 4,893 $ 5,202 $ 14,670 $ 16,132 Prepaid 1,224
1,259 1,215 3,783 3,633 Wholesale, affiliate and other
182 185 191 548
535 Total Sprint platform 6,219 6,337 6,608
19,001 20,300 Total transactions (2) 27
84 124 216 409
Total service revenue 6,246 6,421 6,732 $ 19,217 $ 20,709
Equipment revenue 1,424 1,095
1,701 3,509 3,846
Total net operating revenues 7,670
7,516 8,433
22,726 24,555 Net
operating expenses Cost of services (exclusive of depreciation
and amortization below) 2,031 2,111 1,902 6,147 5,939 Cost of
products (exclusive of depreciation and amortization below) 1,589
1,290 2,952 4,244 7,482 Selling, general and administrative 2,041
2,136 2,545 6,273 6,937 Depreciation and amortization 1,812 1,694
1,259 5,046 3,703 Impairments (3) - 85 1,900 85 1,900 Other, net
353 181 107
526 378 Total net operating expenses
7,826 7,497 10,665
22,321 26,339
Operating (loss) income
$ (156 ) $ 19
$ (2,232 ) $ 405 $
(1,784 ) WIRELESS
NON-GAAP RECONCILIATION (Unaudited) (Millions) Quarter To Date
Year To Date 12/31/15
9/30/15 12/31/14 12/31/15
12/31/14
Operating (loss) income $
(156 ) $ 19 $ (2,232
) $ 405 $ (1,784 )
Impairments (3) - 85 1,900 85 1,900 Severance and exit costs (5)
189 24 21 225 292 Litigation (6) 21 157 84 178 84 Partial pension
settlement (7) - - 43 - 43 Reduction in liability - U.S. Cellular
asset acquisition (8) - - (41 ) (20 ) (41 ) Depreciation and
amortization 1,812 1,694
1,259 5,046 3,703
Adjusted
EBITDA* (4) $ 1,866 $
1,979 $ 1,034 $
5,919 $ 4,197 Adjusted
EBITDA margin* 29.9 % 30.8 %
15.4 % 30.8 % 20.3 %
Selected items: Cash paid for capital
expenditures - network and other $ 869 $ 1,003 $ 1,233 $ 3,512 $
3,342 Cash paid for capital expenditures - leased devices $ 607 $
573 $ 143 $ 1,724 $ 143
WIRELINE STATEMENTS OF
OPERATIONS (Unaudited) (Millions) Quarter To Date
Year To Date 12/31/15 9/30/15
12/31/14 12/31/15 12/31/14
Net operating revenues Voice $ 201 $ 212 $ 289 $ 646 $ 910
Data 42 43 52 134 161 Internet 317 323 333 968 1,018 Other
21 31 18 72
57
Total net operating revenues
581 609 692
1,820 2,146 Net
operating expenses Costs of services (exclusive of depreciation
and amortization below) 466 495 581 1,495 1,800 Selling, general
and administrative 82 85 100 254 273 Depreciation and amortization
50 48 59 144 186 Impairments (3) - - 233 - 233 Other, net
20 1 24 22
63 Total net operating expenses 618
629 997 1,915
2,555
Operating loss $
(37 ) $ (20 ) $
(305 ) $ (95 ) $
(409 ) WIRELINE NON-GAAP
RECONCILIATION (Unaudited) (Millions) Quarter To Date Year To
Date 12/31/15 9/30/15 12/31/14
12/31/15 12/31/14
Operating loss $ (37 ) $
(20 ) $ (305 ) $
(95 ) $ (409 ) Impairments (3) -
- 233 - 233 Severance and exit costs (5) 20 1 2 22 41 Litigation
(6) - - 6 - 6 Partial pension settlement (7) - - 16 - 16
Depreciation and amortization 50 48
59 144 186
Adjusted EBITDA* $ 33 $
29 $ 11 $ 71
$ 73 Adjusted EBITDA
margin* 5.7 % 4.8 % 1.6
% 3.9 % 3.4 %
Selected items: Cash paid for capital expenditures - network
and other $ 74 $ 63 $ 81 $ 205 $ 205
CONDENSED
CONSOLIDATED CASH FLOW INFORMATION (Unaudited) (Millions)
Year To Date 12/31/15
12/31/14
Operating activities Net loss $
(1,441 ) $ (3,121 ) Impairments (3) 85 2,133 Depreciation and
amortization 5,196 3,895 Provision for losses on accounts
receivable 385 730 Share-based and long-term incentive compensation
expense 58 89 Deferred income tax expense (benefit) 120 (634 )
Amortization of long-term debt premiums, net (236 ) (226 ) Loss on
disposal of leased assets 143 - Other changes in assets and
liabilities: Accounts and notes receivable (1,351 ) (1,356 )
Inventories and other current assets (278 ) (1,044 ) Accounts
payable and other current liabilities (811 ) 1,183 Non-current
assets and liabilities, net 137 (281 ) Other, net
596 106
Net cash provided by operating activities
2,603
1,474 Investing activities Capital
expenditures - network and other (3,958 ) (3,814 ) Capital
expenditures - leased devices (1,724 ) (143 ) Expenditures relating
to FCC licenses (75 ) (121 ) Reimbursements relating to FCC
licenses - 95 Change in short-term investments, net 125 966
Proceeds from sales of assets and FCC licenses 36 114 Proceeds from
sale-leaseback transaction 1,136 - Other, net
(25 ) (9 )
Net cash used in
investing activities
(4,485 ) (2,912 )
Financing activities Proceeds from debt and financings 755
300 Repayments of debt, financing and capital lease obligations
(727 ) (390 ) Debt financing costs (1 ) (37 ) Proceeds from
issuance of common stock, net 10 50 Other, net
10 -
Net cash
provided by (used in) financing activities
47 (77
) Net decrease in cash and cash equivalents
(1,835 ) (1,515 ) Cash and
cash equivalents, beginning of period
4,010 4,970
Cash and cash equivalents, end of period
$ 2,175
$ 3,455 RECONCILIATION TO
CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited) (Millions)
Quarter To Date Year To Date 12/31/15 9/30/15
12/31/14 12/31/15
12/31/14
Net cash provided by (used in) operating
activities $ 806 $ 1,669 $
(233 ) $ 2,603 $ 1,474
Capital expenditures - network and other (994 ) (1,162 )
(1,425 ) (3,958 ) (3,814 ) Capital expenditures -
leased devices (607 ) (573 ) (143 ) (1,724 ) (143 )
Expenditures relating to FCC licenses, net (30 ) (19 ) (42 ) (75 )
(26 ) Proceeds from sales of assets and FCC licenses 32 3 13 36 114
Other investing activities, net (4 ) (18 )
(3 ) (25 ) (9 )
Free cash
flow* $ (797 ) $ (100
) $ (1,833 ) $
(3,143 ) $ (2,404 )
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Millions) 12/31/15
3/31/15
ASSETS Current assets Cash and cash
equivalents $ 2,175 $ 4,010 Short-term investments 41 166 Accounts
and notes receivable, net 1,033 2,290 Device and accessory
inventory 995 1,359 Deferred tax assets - 62 Prepaid expenses and
other current assets 2,317 1,890
Total current assets 6,561 9,777 Property, plant and
equipment, net 20,645 19,721 Goodwill 6,575 6,575 FCC licenses and
other 40,052 39,987 Definite-lived intangible assets, net 4,807
5,893 Other assets 911 1,077
Total assets $ 79,551
$ 83,030 LIABILITIES AND
STOCKHOLDERS' EQUITY Current liabilities Accounts payable $
3,078 $ 4,347 Accrued expenses and other current liabilities 4,474
5,293 Current portion of long-term debt, financing and capital
lease obligations 3,324 1,300 Deferred tax liabilities
186 - Total current liabilities
11,062 10,940 Long-term debt, financing and capital lease
obligations 30,429 32,531 Deferred tax liabilities 13,773 13,898
Other liabilities 3,954 3,951
Total liabilities 59,218
61,320 Stockholders' equity
Common stock 40 40 Treasury shares, at cost - (7 ) Paid-in capital
27,536 27,468 Accumulated deficit (6,824 ) (5,383 ) Accumulated
other comprehensive loss (419 ) (408 )
Total stockholders' equity 20,333
21,710
Total liabilities and stockholders'
equity $ 79,551 $
83,030 NET DEBT* (NON-GAAP)
(Unaudited) (Millions) 12/31/15
3/31/15 Total debt $ 33,753 $ 33,831 Less: Cash and cash
equivalents (2,175 ) (4,010 ) Less: Short-term investments
(41 ) (166 )
Net debt* $
31,537 $ 29,655
SCHEDULE OF DEBT
(Unaudited) (Millions) 12/31/15
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) 5.556 %
12/15/2017 250 Export Development Canada Facility (Tranche 3) 3.783
% 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 1.991% - 2.745% 2017 -
2021
960 Tower financing obligation 6.098%
08/31/2021
237 Capital lease obligations and other
2.348% - 10.517% 2016 - 2023
231 Total principal
32,891 Net
premiums
862 Total debt
$ 33,753 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) During the second quarter of fiscal year 2015,
we recorded $85 million of asset impairments primarily related to
network development costs that are no longer relevant as a result
of changes in the Company's network plans. 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 nine-month periods ended December 31, 2015, we leased
devices through our Sprint direct channels totaling approximately
$1.0 and $2.6 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 nine-month
periods ended December 31, 2015, the equipment revenue derived from
customers electing to finance their devices through device leasing
or installment billing programs was 58% and 59%, respectively,
while the remainder of total equipment revenue was derived from
customers purchasing devices under our subsidized program as
compared to 17% and 16% in prior periods, 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) 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) For the third and second quarters of
fiscal year 2015 and third quarter of fiscal year 2014, litigation
activity is a result of unfavorable developments in connection with
pending litigation. (7) 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. (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 proceeds from the sale-leaseback of assets. We
believe that Free Cash Flow provides useful information to
investors, analysts and our management about the cash generated by
our core operations 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. 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 58.4
million connections as of December 31, 2015 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.
i Rankings and underlying data metrics based on 125 RootMetrics
Metro RootScore Reports from 2H 2014 and 2H 2015 for mobile
performance as tested on best available plans and devices on four
mobile networks across all available network types. 16 markets that
measured the fastest median download speeds in 2H 2015: Austin, TX;
Chattanooga, TN; Corpus Christi, TX; Dallas, TX; Denton, TX;
Denver, CO; Houston, TX; Indianapolis, IN; Kansas City, MO;
McAllen, TX; Ogden, UT; Phoenix, AZ; Spokane, WA; Toledo, OH;
Wichita, KS; and Youngstown, OH . Your experiences may vary. The
RootMetrics award is not an endorsement of Sprint. Visit
www.rootmetrics.com for more details.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160126005751/en/
Sprint CorporationMedia:Dave Tovar,
913-315-1451David.Tovar@sprint.comorInvestors:Jud Henry,
800-259-3755Investor.Relations@sprint.com
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