- Fiscal year 2016 postpaid phone net
additions of 930,000 more than doubled year-over-year
- Highest postpaid phone gross additions
in four years
- Fiscal fourth quarter postpaid phone
net additions of 42,000 were the tenth consecutive quarter of
year-over-year improvement
- Return to prepaid customer growth with
180,000 net additions in the fiscal fourth quarter
- Fiscal year 2016 net operating revenues
of $33.3 billion grew for the first time in three years
- Fiscal fourth quarter net operating
revenues of $8.5 billion grew 6 percent year-over-year
- Fiscal year 2016 net loss of $1.2
billion, operating income of $1.8 billion, and Adjusted EBITDA* of
nearly $10 billion
- Highest operating income in 10 years
and highest Adjusted EBITDA* in nine years
- $2.1 billion of year-over-year
reductions in cost of service and selling, general, and
administrative expenses in fiscal year 2016
- Fiscal fourth quarter net loss of $283
million, operating income of $470 million, and Adjusted EBITDA* of
$2.7 billion
- Fiscal year 2016 net cash provided by
operating activities of $4.2 billion and adjusted free cash flow*
of $607 million
Sprint Corporation (NYSE: S) today reported operating
results for the fiscal year 2016 fourth quarter and full year,
including annual growth in net operating revenues for the first
time in three years and more than twice as many postpaid phone net
additions as last year. The company also reported its highest
annual operating income in 10 years at $1.8 billion, Adjusted
EBITDA* of nearly $10 billion for the year, which grew 22 percent
year-over-year, and positive adjusted free cash flow*.
This Smart News Release features multimedia.
View the full release here:
http://www.businesswire.com/news/home/20170503005676/en/
*This table excludes (i) our secured
revolving bank credit facility, which will expire in 2021 and has
no outstanding balance, (ii) $215 million in letters of credit
outstanding under the unsecured revolving bank credit facility,
(iii) $540 million of capital leases and other obligations, and
(iv) net premiums and debt financing costs. (Photo: Business
Wire)
For the fiscal fourth quarter, the company reported operating
income of $470 million and Adjusted EBITDA* of $2.7 billion, both
improvements of more than $450 million year-over-year.
“Sprint took a big step forward in the second year of our
turnaround plan,” said Sprint CEO Marcelo Claure. “Net operating
revenues returned to growth and cost reductions accelerated,
leading to the highest operating income in a decade and a return to
positive adjusted free cash flow*.”
Postpaid Phone Net Additions More Than Double Year-Over-Year
and Prepaid Returns to Growth
Sprint’s focus on delivering the most attractive value
proposition in wireless resulted in 930,000 postpaid phone net
additions in fiscal year 2016, more than twice as many as the prior
year. The company also reported its highest postpaid phone gross
additions in four years and improved its share of gross additions
for the second year in a row.
In a competitive quarter where Verizon and AT&T introduced
new unlimited data plans, Sprint added 42,000 postpaid phone
customers and recorded its tenth consecutive quarter of
year-over-year improvement. Sprint continued to take share and has
now added more postpaid phone customers than Verizon for five
consecutive quarters and more than AT&T for 10 consecutive
quarters.
The company also saw significant improvements in its prepaid
business in the quarter, adding 180,000 customers and returning to
customer growth for the first time in two years. With the
resurgence of prepaid and the continued growth in postpaid phone
customers, the company reported positive net additions for both in
the same quarter for the first time in four years.
The company also reported the following results:
- Total net additions were 187,000 in the
quarter, including postpaid net losses of 118,000, prepaid net
additions of 180,000, and wholesale and affiliate net additions of
125,000. For the full year, total net additions were 1.9 million,
including postpaid net additions of 811,000, prepaid net losses of
1.1 million, and wholesale and affiliate net additions of 2.1
million.
- Postpaid phone churn was 1.58 percent
and total postpaid churn was 1.75 percent in the quarter. For the
full year, postpaid phone churn of 1.48 percent was the lowest in
company history and total postpaid churn was 1.62 percent.
Another Year of Significant Cost Reductions
Sprint continued to make progress on its multi-year plan to
transform the way it does business and significantly lower its cost
structure. The company delivered $2.1 billion of year-over-year
reductions in cost of service and selling, general and
administrative expenses in fiscal year 2016, bringing the two-year
total reduction to $3.4 billion.
The company also reported the following financial results:
- Net operating revenues of $8.5 billion
in the quarter grew 6 percent year-over-year and increased
year-over-year for the third consecutive quarter. For the full
year, net operating revenues of $33.3 billion grew 4 percent and
increased year-over-year for the first time in three years.
- Net loss of $283 million, or $0.07 per
share, in the quarter compared to a net loss of $554 million, or
$0.14 per share, in the year-ago period, an improvement of $271
million, or $0.07 per share. For the full year, net loss of $1.2
billion, or $0.30 per share, compared to a net loss of $2 billion,
or $0.50 per share, in the year-ago period, an improvement of $789
million, or $0.20 per share.
- Operating income of $470 million in the
quarter compared to $8 million in the year-ago period, an
improvement of $462 million. For the full year, operating income of
$1.8 billion improved by $1.5 billion year-over-year and reached
its highest level in 10 years.
- Adjusted EBITDA* of $2.7 billion in the
quarter grew year-over-year by $522 million or 24 percent. For the
full year, Adjusted EBITDA* of nearly $10 billion grew
year-over-year by $1.8 billion or 22 percent.
- Net cash provided by operating
activities of $1.3 billion in the quarter was in line with the
year-ago period. For the full year, net cash provided by operating
activities was $4.2 billion compared to $3.9 billion in the
year-ago period.
- Adjusted free cash flow* was $80
million in the quarter compared to $603 million in the year-ago
period. For the full year, adjusted free cash flow* was positive
$607 million compared to negative $1.4 billion in the year-ago
period, an improvement of $2 billion.
Obtaining Lower Cost Funding to Retire Higher Cost
Debt
Sprint continued to execute its financing strategy of
diversifying its funding sources, lowering its cost of capital, and
reducing its future cash interest expenses. During the quarter
Sprint replaced its $3.3 billion unsecured revolving bank credit
facility with a new $6 billion secured credit facility, consisting
of a $4 billion seven-year term loan and a $2 billion four-year
revolving bank credit facility. At closing, the company borrowed $4
billion on the term loan facility at a rate of LIBOR plus 250 basis
points, which is about half of Sprint’s current effective interest
rate.
The company also retired approximately $1.6 billion of debt
maturities with higher interest payments in the quarter, including
$1 billion of 9.125 percent senior notes, $300 million associated
with its Network LeaseCo facility, and $250 million related to the
early retirement of tranche 4 of its EDC facility.
Total liquidity was $10.9 billion at the end of the quarter,
including $8.3 billion of cash, cash equivalents and short-term
investments. Additionally, the company has $1.2 billion of
availability under vendor financing agreements that can be used
toward the purchase of 2.5GHz network equipment.
New Technology Expected to Continue Network
Improvements
Sprint is unlocking the value of the largest spectrum holdings
in the U.S. in a capital-efficient manner and third party sources
continue to validate the company’s network performance
improvements.
- Independent mobile analytics firm
RootMetrics® awarded Sprint over 30 percent more first-place
(outright or shared) Metropolitan area RootScore® Awards (from 103
to 135) for reliability, speed, data, call, text, or overall
network performance in the 76 markets measured in the first half of
2017 compared to the year-ago testing period.1 Additionally, Sprint
ranked #2 nationally in Call performance for the fourth consecutive
time in the second half of 2016 report, including more metro Call
RootScore awards (108) than Verizon, AT&T, or T-Mobile for the
first time ever.
- Sprint’s overall network reliability
continues to beat T-Mobile and performs within 1 percent of Verizon
and AT&T, based on an analysis of Nielsen data.2
As previously announced, Sprint helped develop a breakthrough
innovation called High Performance User Equipment (HPUE), a new
technology that extends the coverage of its 2.5GHz spectrum by up
to 30 percent to nearly match its mid-band 1.9GHz spectrum
performance on capable devices. In one of the fastest progressions
from global standard approval to commercial availability,
HPUE-capable devices are already available to Sprint customers,
including the recently launched LG G6, Samsung Galaxy S8, and ZTE
Max XL.
The company will be announcing another exciting technology
innovation on today’s conference call.
Fiscal Year 2017 Outlook
- The company expects Adjusted EBITDA* of
$10.7 billion to $11.2 billion.
- The company expects operating income of
$2 billion to $2.5 billion.
- The company expects cash capital
expenditures, excluding devices leased through indirect channels,
of $3.5 billion to $4 billion.
Conference Call and Webcast
- Date/Time: 8:30 a.m. (ET) Wednesday,
May 3, 2017
- Call-in Information
- U.S./Canada: 866-360-1063 (ID:
3938447)
- International: 443-961-0242 (ID:
3938447)
- Webcast available at
www.sprint.com/investors
- Additional information about results is
available on our Investor Relations website
1 Rankings based on RootMetrics Metro
RootScore Reports from 1H 2016, 2H 2016, and 1H 2017 and, National
RootScore Report from 2H 2016 for mobile performance as tested on
best available plans and devices on four mobile networks across all
available network types. Your experiences may vary. The RootMetrics
award is not an endorsement of Sprint. Visit www.rootmetrics.com
for more details.
2 Average network reliability (voice &
data) based on Sprint’s analysis of latest Nielsen drive test data
in the top 106 metro markets.
Wireless Operating Statistics (Unaudited)
Quarter To Date Year To
Date 3/31/17 12/31/16 3/31/16 3/31/17
3/31/16
Sprint platform (1):
Net additions (losses)
(in thousands) Postpaid (118 ) 405 56 811 1,245 Prepaid 180
(501 ) (264 ) (1,079 ) (1,309 ) Wholesale and affiliate
125 673
655 2,149
2,733
Total Sprint platform wireless net
additions 187
577 447
1,881 2,669
End of period connections (in thousands)
Postpaid (d) 31,576 31,694 30,951 31,576 30,951 Prepaid (d) (e)
11,992 11,812 14,397 11,992 14,397 Wholesale and affiliate (d) (e)
16,134
16,009 13,458 16,134
13,458
Total Sprint platform
end of period connections
59,702 59,515
58,806 59,702
58,806
Churn Postpaid 1.75 % 1.67 % 1.72 % 1.62 % 1.61 % Prepaid
(e) 4.99 % 5.80 % 5.65 % 5.51 % 5.39 %
Supplemental data
- connected devices End of period connections (in
thousands) Retail postpaid 2,001 1,960 1,771 2,001 1,771
Wholesale and affiliate 10,880
10,594 8,575
10,880 8,575
Total 12,881
12,554
10,346 12,881
10,346 Sprint platform
ARPU (1) (a) Postpaid $ 47.34 $ 49.70 $ 51.68 $ 49.77
$ 53.39 Prepaid (e) $ 30.08 $ 27.61 $ 27.72 $ 28.01 $ 27.66
Sprint platform postpaid phone (1) Postpaid
phone net additions 42 368 22 930 438 Postpaid phone end of period
connections (d) 26,079 26,037 25,316 26,079 25,316 Postpaid phone
churn 1.58 % 1.57 % 1.56 % 1.48 % 1.52 %
NON-GAAP
RECONCILIATION - ABPA*, POSTPAID PHONE ARPU AND ABPU*
(Unaudited) (Millions, except accounts, connections, ABPA*,
ARPU, and ABPU*) Quarter To Date Year To Date 3/31/17
12/31/16 3/31/16 3/31/17 3/31/16
Sprint platform ABPA* (1) Postpaid service
revenue $ 4,493 $ 4,686 $ 4,793 $ 18,677 $ 19,463 Add: Installment
plan billings 343 291 287 1,172 1,190 Add: Lease revenue
842 887
662 3,295
1,838
Total for Sprint platform postpaid
connections $ 5,678
$ 5,864 $
5,742 $ 23,144
$ 22,491 Sprint platform postpaid
accounts (in thousands) 11,405 11,413 11,358 11,378 11,248 Sprint
platform postpaid ABPA* (b) $ 165.92 $ 171.28 $ 168.49 $ 169.51 $
166.63 Quarter To Date Year To Date 3/31/17
12/31/16 3/31/16 3/31/17 3/31/16
Sprint platform postpaid phone ARPU and ABPU*
(1) Postpaid phone service revenue $ 4,228 $ 4,420 $ 4,512 $
17,578 $ 18,331 Add: Installment plan billings 309 261 268 1,061
1,116 Add: Lease revenue 829
873 649
3,240 1,799
Total for
Sprint platform postpaid phone connections
$ 5,366 $ 5,554
$ 5,429 $
21,879 $ 21,246
Sprint platform postpaid average phone connections (in
thousands) 26,053 25,795 25,297 25,659 25,020 Sprint platform
postpaid phone ARPU (a) $ 54.10 $ 57.12 $ 59.45 $ 57.09 $ 61.05
Sprint platform postpaid phone ABPU* (c) $ 68.66 $ 71.77 $ 71.53 $
71.06 $ 70.77 (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 in May 2016 from postpaid and prepaid,
respectively, to affiliates. An additional 270,000 nTelos'
subscribers are now part of our affiliate relationship with Shentel
and are being reported in wholesale and affiliate subscribers
during the quarter ended June 30, 2016.
(e) As a result of aligning all prepaid
brands, including prepaid affiliate subscribers, under one churn
and retention program as of December 31, 2016, end of period
prepaid and affiliate subscribers were reduced by 1,234,000 and
21,000, respectively.
Wireless Device Financing Summary (Unaudited)
(Millions, except sales, connections, and sales and connections
mix) Quarter To Date Year
To Date 3/31/17 12/31/16 3/31/16
3/31/17 3/31/16
Postpaid sales (in thousands) 3,471 4,812 3,438
15,298 16,394
Postpaid sales mix Subsidy/other 18 % 20 % 37
% 24 % 36 % Installment plans 40 % 37 % 18 % 34 % 13 % Leasing 42 %
43 % 45 % 42 % 51 %
Installment plans Installment
sales financed $ 696 $ 1,036 $ 311 $ 2,884 $ 1,059 Installment
billings $ 343 $ 291 $ 287 $ 1,172 $ 1,190
Leasing
Lease revenue $ 842 $ 887 $ 662 $ 3,295 $ 1,838 Lease depreciation
$ 911 $ 837 $ 550 $ 3,116 $ 1,781
Leased device
additions Cash paid for capital expenditures - leased devices $
395 $ 767 $ 568 $ 1,925 $ 2,292 Transfers from inventory - leased
devices $ 639 $ 1,095 $ 621 $ 2,920 $ 3,244 Leased devices
in property, plant and equipment, net $ 4,162 $ 4,454 $ 3,645 $
4,162 $ 3,645
Leased device and receivables financings
net proceeds Proceeds from MLS sale $ - $ - $ - $ 1,055 $ 1,136
Repayments to MLS (151 ) (176 ) - (653 ) - Proceeds from lease
securitization - - 600 - 600 Repayments of lease securitization
(102 ) (55 ) - (255 ) - Proceeds from receivables securitization
100 - - 100 - Repayments of receivables securitization
(161 ) -
- (161 )
-
Net (repayments) proceeds of financings
related to devices and receivables
$ (314 )
$ (231 ) $ 600
$ 86
$ 1,736 CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (Millions,
except per share data) Quarter To Date
Year To Date 3/31/17 12/31/16
3/31/16 3/31/17 3/31/16
Net operating
revenues Service revenue $ 6,116 $ 6,323 $ 6,574 $ 25,368 $
27,174 Equipment revenue 2,423
2,226 1,497
7,979 5,006
Total net
operating revenues 8,539
8,549
8,071 33,347
32,180 Net operating expenses
Cost of services (exclusive of depreciation and amortization below)
1,736 1,925 2,245 7,861 9,439 Cost of products (exclusive of
depreciation and amortization below) 1,980 1,985 1,551 7,077 5,795
Selling, general and administrative 2,002 2,080 1,939 7,994 8,479
Depreciation - network and other 960 1,000 1,042 3,982 4,013
Depreciation - leased devices 911 837 550 3,116 1,781 Amortization
239 255 300 1,052 1,294 Other, net 241
156 436
501 1,069 Total
net operating expenses 8,069
8,238 8,063
31,583 31,870
Operating income 470
311
8 1,764
310 Interest expense (631 ) (619 ) (552 ) (2,495 )
(2,182 ) Other income (expense), net 27
(60 ) 5
(40 ) 18
Loss before income
taxes (134 ) (368 ) (539
) (771 ) (1,854 ) Income tax
expense (149 )
(111 ) (15 ) (435 )
(141 )
Net loss $
(283 ) $ (479 )
$ (554 ) $ (1,206
) $ (1,995 )
Basic and diluted net loss per common share
$ (0.07 ) $
(0.12 ) $ (0.14 )
$ (0.30 ) $ (0.50
) Weighted average common shares outstanding
3,988 3,983
3,972 3,981
3,969
Effective tax rate
-111.2 % -30.2
% -2.8 %
-56.4 % -7.6 %
NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED EBITDA*
(Unaudited) (Millions) Quarter To Date Year To Date 3/31/17
12/31/16 3/31/16 3/31/17
3/31/16
Net loss $
(283 ) $ (479 )
$ (554 ) $ (1,206
) $ (1,995 ) Income tax
expense 149
111 15 435
141
Loss before income taxes
(134 ) (368 ) (539 )
(771 ) (1,854 ) Other (income) expense,
net (27 ) 60 (5 ) 40 (18 ) Interest expense
631 619
552 2,495 2,182
Operating income
470 311
8 1,764
310 Depreciation - network and other
960 1,000 1,042 3,982 4,013 Depreciation - leased devices 911 837
550 3,116 1,781 Amortization 239
255 300
1,052 1,294
EBITDA* (3) 2,580
2,403
1,900 9,914
7,398 Loss (gain) from asset dispositions and
exchanges, net (4) - 28 81 (326 ) 166 Severance and exit costs (5)
36 19 162 66 409 Contract terminations (6) 27 - - 140 - Litigation
and other contingencies (7) 37 - 15 140 193 Reduction in liability
- U.S. Cellular asset acquisition (8) -
- -
- (20 )
Adjusted EBITDA*
(3) $ 2,680
$ 2,450 $
2,158 $ 9,934
$ 8,146 Adjusted EBITDA margin*
43.8 % 38.7 % 32.8 %
39.2 % 30.0 % Selected
items: Cash paid for capital expenditures - network and other $
529 $ 478 $ 722 $ 1,950 $ 4,680 Cash paid for capital expenditures
- leased devices $ 395 $ 767 $ 568 $ 1,925 $ 2,292
WIRELESS STATEMENTS OF OPERATIONS (Unaudited) (Millions)
Quarter To Date Year To
Date 3/31/17 12/31/16 3/31/16 3/31/17
3/31/16
Net operating revenues
Service revenue Sprint platform (1):
Postpaid $ 4,493 $ 4,686 $ 4,793 $ 18,677 $ 19,463 Prepaid 1,067
1,077 1,203 4,438 4,986 Wholesale, affiliate and other
184 183
155 693
703 Total Sprint platform 5,744 5,946 6,151 23,808
25,152 Total transactions (2) - - 3 - 219 Total service
revenue 5,744 5,946 6,154 23,808 25,371 Equipment revenue
2,423 2,226
1,497 7,979
5,006
Total net operating revenues
8,167
8,172 7,651
31,787 30,377
Net operating expenses Cost of services
(exclusive of depreciation and amortization below) 1,448 1,649
1,922 6,674 8,069 Cost of products (exclusive of depreciation and
amortization below) 1,980 1,985 1,551 7,077 5,795 Selling, general
and administrative 1,944 2,032 1,868 7,741 8,141 Depreciation -
network and other 911 947 991 3,779 3,812 Depreciation - leased
devices 911 837 550 3,116 1,781 Amortization 239 255 300 1,052
1,294 Other, net 232
150 434 480
1,045 Total net operating
expenses 7,665
7,855 7,616 29,919
29,937
Operating income
$ 502
$ 317 $ 35
$ 1,868 $ 440
WIRELESS NON-GAAP RECONCILIATION
(Unaudited) (Millions) Quarter To Date Year To Date
3/31/17 12/31/16 3/31/16
3/31/17 3/31/16
Operating income
$ 502 $ 317 $ 35 $
1,868 $ 440 Loss (gain) from asset
dispositions and exchanges, net (4) - 28 81 (326 ) 166 Severance
and exit costs (5) 27 13 160 45 385 Contract terminations (6) 27 -
- 140 - Litigation and other contingencies (7) 37 - 15 140 193
Reduction in liability - U.S. Cellular asset acquisition (8) - - -
- (20 ) Depreciation - network and other 911 947 991 3,779 3,812
Depreciation - leased devices 911 837 550 3,116 1,781 Amortization
239 255
300 1,052
1,294
Adjusted EBITDA* (3)
$ 2,654
$ 2,397 $ 2,132
$ 9,814 $
8,051 Adjusted EBITDA margin*
46.2 % 40.3 % 34.6 %
41.2 % 31.7 % Selected
items: Cash paid for capital expenditures - network and other $
468 $ 389 $ 577 $ 1,591 $ 4,089 Cash paid for capital expenditures
- leased devices $ 395 $ 767 $ 568 $ 1,925 $ 2,292
WIRELINE STATEMENTS OF OPERATIONS (Unaudited) (Millions)
Quarter To Date Year To
Date 3/31/17 12/31/16 3/31/16 3/31/17
3/31/16
Net operating revenues
Voice $ 143 $ 153 $ 194 $ 649 $ 840
Data 39 41 37 166 171 Internet 276 281 316 1,147 1,284 Other
22 22
15 81
87
Total net operating revenues
480 497
562 2,043
2,382 Net
operating expenses Costs of services (exclusive of depreciation
and amortization below) 402 400 467 1,686 1,962 Selling, general
and administrative 49 49 74 238 328 Depreciation and amortization
47 51 50 195 194 Other, net 8
6 3
21 25 Total net operating
expenses 506
506 594 2,140
2,509
Operating loss
$ (26 )
$ (9 ) $ (32
) $ (97 ) $
(127 ) WIRELINE NON-GAAP
RECONCILIATION (Unaudited) (Millions) Quarter To Date Year To
Date 3/31/17 12/31/16 3/31/16 3/31/17
3/31/16
Operating loss $
(26 ) $ (9 ) $ (32
) $ (97 ) $ (127 )
Severance and exit costs (5) 8 6 3 21 25 Depreciation and
amortization 47
51 50 195
194
Adjusted EBITDA*
$ 29 $
48 $ 21 $
119 $ 92
Adjusted EBITDA margin* 6.0 % 9.7
% 3.7 % 5.8 % 3.9
% Selected items: Cash paid for capital
expenditures - network and other $ 19 $ 24 $ 74 $ 94 $ 279
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(Unaudited)** (Millions)
Year to Date 3/31/17 3/31/16
Operating activities Net loss $ (1,206 ) $ (1,995 )
Depreciation and amortization 8,150 7,088 Provision for losses on
accounts receivable 555 455 Share-based and long-term incentive
compensation expense 93 75 Deferred income tax expense 433 123
Gains from asset dispositions and exchanges (354 ) - Amortization
of long-term debt premiums, net (302 ) (316 ) Loss on disposal of
property, plant and equipment 509 487 Litigation 140 193 Contract
terminations 111 - Other changes in assets and liabilities:
Accounts and notes receivable (1,017 ) (1,663 ) Inventories and
other current assets (2,305 ) (3,065 ) Deferred purchase price from
sale of receivables (289 ) 2,478 Accounts payable and other current
liabilities (365 ) (574 ) Non-current assets and liabilities, net
(308 ) 111 Other, net
323
500
Net cash provided by operating activities
4,168
3,897 Investing activities Capital
expenditures - network and other (1,950 ) (4,680 ) Capital
expenditures - leased devices (1,925 ) (2,292 ) Expenditures
relating to FCC licenses (83 ) (98 ) Change in short-term
investments, net (5,444 ) 166 Proceeds from sales of assets and FCC
licenses 219 62 Proceeds from sale-leaseback transaction - 1,136
Other, net
(42 ) (29 )
Net
cash used in investing activities
(9,225 ) (5,735 )
Financing activities Proceeds from debt and
financings 10,966 1,355 Repayments of debt, financing and capital
lease obligations (5,417 ) (899 ) Debt financing costs (358 ) (11 )
Other, net
95 24
Net cash provided by financing activities
5,286 469
Net increase (decrease) in cash and cash
equivalents 229 (1,369 ) Cash
and cash equivalents, beginning of period
2,641 4,010
Cash and cash equivalents, end of period
$ 2,870 $ 2,641
RECONCILIATION TO CONSOLIDATED FREE CASH
FLOW* (NON-GAAP) (Unaudited) (Millions) Quarter To Date Year to
Date 3/31/17 12/31/16 3/31/16 3/31/17
3/31/16
Net cash provided by operating
activities $ 1,268 $ 650 $
1,294 $ 4,168 $ 3,897
Capital expenditures - network and other (529 ) (478 ) (722 )
(1,950 ) (4,680 ) Capital expenditures - leased devices (395 ) (767
) (568 ) (1,925 ) (2,292 ) Expenditures relating to FCC licenses,
net (37 ) (14 ) (23 ) (83 ) (98 ) Proceeds from sales of assets and
FCC licenses 93 60 26 219 62 Other investing activities, net
(6 ) 134
(4 ) 92 (29
)
Free cash flow* (9) $
394 $ (415 )
$ 3 $
521 $ (3,140 )
Net (repayments) proceeds of financings related to devices
and receivables (314 )
(231 ) 600 86
1,736
Adjusted free cash
flow* $ 80
$ (646 ) $ 603
$ 607
$ (1,404 ) **Certain prior
period amounts have been reclassified to conform to the current
period presentation.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Millions)
3/31/17 3/31/16
ASSETS Current assets Cash and
cash equivalents $ 2,870 $ 2,641 Short-term investments 5,444 -
Accounts and notes receivable, net 4,138 1,099 Device and accessory
inventory 1,064 1,173 Prepaid expenses and other current assets
601 1,920
Total current assets 14,117 6,833 Property, plant and
equipment, net 19,209 20,297 Goodwill 6,579 6,575 FCC licenses and
other 40,585 40,073 Definite-lived intangible assets, net 3,320
4,469 Other assets 1,313
728
Total assets $
85,123 $ 78,975
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Accounts payable $ 3,281 $ 2,899 Accrued expenses and
other current liabilities 4,141 4,374 Current portion of long-term
debt, financing and capital lease obligations
5,036 4,690 Total current
liabilities 12,458 11,963 Long-term debt, financing and
capital lease obligations 35,878 29,268 Deferred tax liabilities
14,416 13,959 Other liabilities 3,563
4,002
Total liabilities
66,315
59,192 Stockholders' equity Common stock 40 40
Treasury shares, at cost - (3 ) Paid-in capital 27,756 27,563
Accumulated deficit (8,584 ) (7,378 ) Accumulated other
comprehensive loss (404 )
(439 ) Total stockholders' equity 18,808
19,783
Total liabilities and
stockholders' equity $ 85,123
$ 78,975
NET DEBT* (NON-GAAP) (Unaudited) (Millions) 3/31/17
3/31/16 Total debt $ 40,914 $
33,958 Less: Cash and cash equivalents (2,870 ) (2,641 ) Less:
Short-term investments (5,444 )
-
Net debt* $
32,600 $ 31,317
SCHEDULE OF DEBT
(Unaudited) (Millions) 3/31/17
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 Spectrum Co LLC, Sprint Spectrum Co
II LLC and Sprint Spectrum Co III LLC 3.36% Senior secured
notes due 2021 09/20/2021
3,500
Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC and
Sprint Spectrum Co III LLC
3,500 Sprint Communications,
Inc. Export Development Canada secured loan 12/17/2019 300
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.
10,580
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 8.25% Exchangeable notes due 2017 (a)
12/01/2017 629
Clearwire
Communications LLC
629 Credit facilities Secured equipment
credit facilities 2019 - 2021 431 Accounts receivable facility
11/19/2018 1,964 Secured term loan 02/03/2024
4,000
Credit facilities
6,395 Financing
obligations 2017 - 2021
2,476 Capital leases
and other obligations 2017 - 2024
540 Total principal
40,824 Net
premiums and debt financing costs
90 Total debt
$ 40,914 (a)
$629 million Clearwire 8.25% Exchangeable Notes due
2040 have both a par call and put in December 2017.
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 and twelve-month periods ended March 31, 2017, we leased
devices through our Sprint direct channels totaling approximately
$639 million and $2,920 million, 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, 2017, the equipment revenue
derived from customers electing to finance their devices through
device leasing or installment billing programs in our direct
channel was 52% and 62%, respectively.
The impact to EBITDA* and Adjusted EBITDA*
resulting from the sale of devices under our installment billing
program is generally neutral except for the impact from the time
value of money element related to the imputed interest on the
installment receivable.
(4) During the third quarter of fiscal year 2016 and the fourth
quarter of fiscal year 2015, the company recorded losses on
dispositions of assets primarily related to cell site construction
and network development costs that are no longer relevant as a
result of changes in the company's network plans. During the second
quarter of fiscal year 2016 the company recorded a pre-tax non-cash
gain of $354 million related to spectrum swaps with other carriers.
(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 the company's backhaul
access contracts for which the company will no longer be receiving
any economic benefit, and severance costs associated with reduction
in its work force. (6) During the fourth quarter of fiscal year
2016, we terminated our relationship with General Wireless
Operations Inc. (Radio Shack) and incurred net contract termination
charges of approximately $27 million primarily related to cash
termination payments and write-downs of leasehold improvements at
associated retail stores that were shut down as of March 31, 2017.
During the first quarter of fiscal year 2016 contract terminations
primarily relate to the termination of our pre-existing wholesale
arrangement with NTELOS Holding Corp. (7) Litigation and other
contingencies consist of unfavorable developments associated with
legal as well as federal and state matters such as sales, use or
property taxes. (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 $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. (9) Free cash flow* for the
three-month period ended December 31, 2016 and the twelve-month
period ended March 31, 2017, included net cash outflows of
approximately $370 million related to the termination of our MLS
Tranche 1 arrangement, which included the repurchase of the
devices.
*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 and equity method
investments. Adjusted Free Cash Flow is Free Cash
Flow plus the proceeds from device financings and sales of
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, cost reductions, 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, and, when filed, its Annual Report on Form
10-K for the fiscal year ended March 31, 2017. 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 59.7 million
connections as of March 31, 2017 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/20170503005676/en/
Sprint CorporationMedia:Dave
TovarDavid.Tovar@sprint.comorInvestors:Jud
HenryInvestor.Relations@sprint.com
SentinelOne (NYSE:S)
Historical Stock Chart
From Mar 2024 to Apr 2024
SentinelOne (NYSE:S)
Historical Stock Chart
From Apr 2023 to Apr 2024