UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 8-K
_______________________________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 2, 2018
_______________________________________
SPRINT CORPORATION
(Exact name of Registrant as specified in its charter)
_______________________________________
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Delaware | | 1-04721 | | 46-1170005 |
(State of Incorporation) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
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6200 Sprint Parkway, Overland Park, Kansas | | 66251 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code (855) 848-3280
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
Emerging growth company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Item 2.02 Results of Operations and Financial Condition.
On February 2, 2018, Sprint Corporation announced its results for the third quarter ended December 31, 2017. The press release is furnished as Exhibit 99.1, and its Quarterly Investor Update is attached as Exhibit 99.2.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
The following exhibits are furnished with this report:
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Exhibit No. | | Description |
| | Press Release Announcing Results for the Third Quarter Ended December 31, 2017 |
| | Quarterly Investor Update |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| | | SPRINT CORPORATION |
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Date: February 2, 2018 | | | | | | /s/ Stefan K. Schnopp |
| | | | | | By: | | Stefan K. Schnopp |
| | | | | | | | Corporate Secretary |
EXHIBIT INDEX
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Number | | Exhibit |
99.1 |
| | Press Release Announcing Results for the Third Quarter Ended December 31, 2017 |
99.2 |
| | Quarterly Investor Update |
SPRINT REPORTS HIGHEST RETAIL NET ADDITIONS IN NEARLY THREE YEARS AND RAISES ADJUSTED FREE CASH FLOW* GUIDANCE WITH FISCAL 2017 THIRD QUARTER RESULTS
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• | Postpaid net additions of 256,000, including 184,000 phone net additions |
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◦ | Tenth consecutive quarter of postpaid phone net additions |
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• | Prepaid net additions of 63,000 compared to net losses of 460,000 in the prior year |
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◦ | Fourth consecutive quarter of net additions and improved by 523,000 year-over-year |
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◦ | Prepaid churn improved year-over-year for the sixth consecutive quarter |
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• | Net income of $7.2 billion, operating income of $727 million, and adjusted EBITDA* of $2.7 billion |
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◦ | Net income includes approximately $7.1 billion of favorable impact from tax reform |
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◦ | Eighth consecutive quarter of operating income |
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◦ | Highest fiscal third quarter adjusted EBITDA* in 11 years |
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• | Net cash provided by operating activities of $1.2 billion and adjusted free cash flow* of $397 million |
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◦ | Adjusted free cash flow* improved by more than $1 billion year-over-year |
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◦ | Raising fiscal year 2017 adjusted free cash flow* guidance from around break-even to a range of $500 million to $700 million |
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• | Sprint Next-Gen Network to drive further network improvements and provide path to 5G |
OVERLAND PARK, Kan. - Feb. 2, 2018 - Sprint Corporation (NYSE: S) today reported operating results for the third quarter of fiscal year 2017, including its highest retail net additions in nearly three years with postpaid net additions of 256,000 and prepaid net additions of 63,000. The company also reported its eighth consecutive quarter of operating income and the highest fiscal third quarter adjusted EBITDA* in 11 years.
Net cash provided by operating activities of $1.2 billion improved by more than $500 million year-over-year. Adjusted free cash flow* of $397 million improved by more than $1 billion year-over-year and the company is raising its fiscal year 2017 expectation from around break-even to a range of $500 million to $700 million.
“Sprint has now added postpaid phone customers for 10 consecutive quarters and added prepaid customers for four consecutive quarters,” said Sprint CEO Marcelo Claure. “This momentum, along with a continued focus on the cost structure, is driving improvements in profitability metrics and adjusted free cash flow*.”
Customer Growth Continues in Both Postpaid and Prepaid Businesses
Sprint’s execution in both its postpaid and prepaid businesses resulted in the highest retail net additions in nearly three years. Postpaid net additions of 256,000 in the quarter included 184,000 phone net additions, the tenth consecutive quarter of postpaid phone net additions.
Sprint’s prepaid business also continued to add customers with 63,000 net additions, its fourth consecutive quarter of net additions and a 523,000 improvement compared to the prior year. Prepaid churn improved year-over-year for the sixth consecutive quarter and prepaid gross additions grew year-over-year for the second consecutive quarter. The sustained improvement in prepaid customer trends has translated into better financial results, as prepaid wireless service revenue grew year-over-year for the first time in nearly three years.
More Progress on Cost Reduction Program
Sprint continued to make progress on its multi-year plan to improve its cost structure. Excluding approximately $100 million of hurricane-related and other non-recurring charges in the quarter, the company reported approximately $260 million of combined year-over-year reductions in cost of services and selling, general and administrative expenses, bringing the year-to-date total reduction to more than $1 billion. The year-to-date reductions were primarily driven by changes to the device insurance program, as well as lower network expenses.
Net income of $7.2 billion included $7.1 billion of non-cash benefit from tax reform, resulting from a re-measurement of our deferred tax assets and liabilities under provisions contained in the new tax law.
The company also reported the following financial results:
Sprint Next-Gen Network to Drive Further Network Improvements and Provide Path to 5G
Sprint is unlocking the value of the largest mobile broadband spectrum holdings in the U.S. and its Next-Gen Network is designed to drive significant improvements to network performance and the customer experience by investing in four main areas.
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• | Upgrade existing towers to leverage all three of the company’s spectrum bands - 800 MHz, 1.9 GHz and 2.5 GHz - for faster, more reliable service. |
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• | Build thousands of new cell sites to expand its coverage footprint and extend coverage to more popular customer destinations. |
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• | Add more small cells -- including Sprint Magic Boxes, mini-macros and strand mounts to densify every major market and significantly boost capacity and data speeds - and leverage the recent strategic agreements with Altice and Cox. The company has already deployed more than 80,000 Sprint Magic Boxes in approximately 200 cities across the country and plans to deploy more than 1 million as part of its multi-year roadmap. |
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• | Deploy game-changing 64T64R Massive MIMO 2.5 GHz radios to increase capacity up to 10 times that of current LTE systems and increase data speeds for more customers in high-traffic locations. Massive MIMO, a key enabler for 5G, will allow the company to support both LTE and 5G NR (New Radio) modes simultaneously without additional tower climbs. |
Sprint’s network has already seen significant improvements. According to Ookla Speedtest Intelligence data, Sprint was the most improved operator in 2017 with a 60 percent year-over-year increase in its national average download speed.1
Fiscal Year 2017 Outlook
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• | The company is raising its expectation for operating income to $2.5 billion to $2.7 billion. Its previous expectation was $2.1 billion to $2.5 billion. |
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• | The company expects adjusted EBITDA* to be around the mid-point of its prior expectation of $10.8 billion to $11.2 billion. |
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• | The company expects cash capital expenditures, excluding devices leased through indirect channels, to be at the low end of its prior expectation of $3.5 billion to $4 billion. |
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• | The company is raising its expectation for adjusted free cash flow* to $500 million to $700 million. Its previous expectation was around break-even. |
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1 Average download speed increase based on Ookla’s analysis of Speedtest Intelligence data comparing December 2016 to December 2017 for all mobile results.
Conference Call and Webcast
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• | Date/Time: 8:30 a.m. (ET) Friday, Feb. 2, 2018 |
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◦ | U.S./Canada: 866-360-1063 (ID: 6374738) |
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◦ | International: 443-961-0242 (ID: 6374738) |
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• | Webcast available at www.sprint.com/investors |
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• | Additional information about results is available on our Investor Relations website |
Contact Information
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• | Media contact: Dave Tovar, David.Tovar@sprint.com |
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• | Investor contact: Jud Henry, Investor.Relations@sprint.com |
Wireless Operating Statistics (Unaudited) |
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
Net additions (losses) (in thousands) | | | | | | |
Postpaid | 256 |
| 168 |
| 405 |
| | 385 |
| 929 |
|
Postpaid phone | 184 |
| 279 |
| 368 |
| | 551 |
| 888 |
|
Prepaid (f) | 63 |
| 95 |
| (460 | ) | | 193 |
| (1,215 | ) |
Wholesale and affiliate (f) | 66 |
| 115 |
| 619 |
| | 246 |
| 2,051 |
|
Total wireless net additions | 385 |
| 378 |
| 564 |
| | 824 |
| 1,765 |
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End of period connections (in thousands) | | | | | | |
Postpaid (d) (e) | 31,942 |
| 31,686 |
| 31,694 |
| | 31,942 |
| 31,694 |
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Postpaid phone (d) | 26,616 |
| 26,432 |
| 26,037 |
| | 26,616 |
| 26,037 |
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Prepaid (d) (f) (g) (h) (i) | 8,997 |
| 8,765 |
| 8,493 |
| | 8,997 |
| 8,493 |
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Wholesale and affiliate (d) (f) (h) | 13,642 |
| 13,576 |
| 13,084 |
| | 13,642 |
| 13,084 |
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Total end of period connections | 54,581 |
| 54,027 |
| 53,271 |
| | 54,581 |
| 53,271 |
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| | | | | | |
Churn | | | | | | |
Postpaid | 1.80 | % | 1.72 | % | 1.67 | % | | 1.73 | % | 1.58 | % |
Postpaid phone | 1.71 | % | 1.59 | % | 1.57 | % | | 1.60 | % | 1.44 | % |
Prepaid (h) | 4.63 | % | 4.83 | % | 5.74 | % | | 4.68 | % | 5.57 | % |
| | | | | | |
Supplemental data - connected devices | | | | | | |
End of period connections (in thousands) | | | | | | |
Retail postpaid | 2,259 |
| 2,158 |
| 1,960 |
| | 2,259 |
| 1,960 |
|
Wholesale and affiliate | 11,272 |
| 11,221 |
| 10,594 |
| | 11,272 |
| 10,594 |
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Total | 13,531 |
| 13,379 |
| 12,554 |
| | 13,531 |
| 12,554 |
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| | | | | | |
ARPU (a) | | | | | | |
Postpaid | $ | 45.13 |
| $ | 46.00 |
| $ | 49.70 |
| | $ | 46.14 |
| $ | 50.59 |
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Postpaid phone | $ | 51.26 |
| $ | 52.34 |
| $ | 57.12 |
| | $ | 52.50 |
| $ | 58.11 |
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Prepaid (h) | $ | 37.46 |
| $ | 37.83 |
| $ | 33.97 |
| | $ | 37.84 |
| $ | 33.35 |
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NON-GAAP RECONCILIATION - ABPA* AND ABPU* (Unaudited)
(Millions, except accounts, connections, ABPA*, and ABPU*) |
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
ABPA* | | | | | | |
Postpaid service revenue | $ | 4,297 |
| $ | 4,363 |
| $ | 4,686 |
| | $ | 13,126 |
| $ | 14,184 |
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Add: Installment plan and non-operating lease billings | 379 |
| 397 |
| 291 |
| | 1,144 |
| 829 |
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Add: Lease revenue - operating | 1,047 |
| 966 |
| 887 |
| | 2,912 |
| 2,453 |
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Total for postpaid connections | $ | 5,723 |
| $ | 5,726 |
| $ | 5,864 |
| | $ | 17,182 |
| $ | 17,466 |
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| | | | | | |
Average postpaid accounts (in thousands) | 11,193 |
| 11,277 |
| 11,413 |
| | 11,261 |
| 11,368 |
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Postpaid ABPA* (b) | $ | 170.39 |
| $ | 169.25 |
| $ | 171.28 |
| | $ | 169.53 |
| $ | 170.71 |
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| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
Postpaid phone ABPU* | | | | | | |
Postpaid phone service revenue | $ | 4,069 |
| $ | 4,132 |
| $ | 4,420 |
| | $ | 12,415 |
| $ | 13,350 |
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Add: Installment plan and non-operating lease billings | 335 |
| 358 |
| 261 |
| | 1,025 |
| 752 |
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Add: Lease revenue - operating | 1,037 |
| 953 |
| 873 |
| | 2,877 |
| 2,411 |
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Total for postpaid phone connections | $ | 5,441 |
| $ | 5,443 |
| $ | 5,554 |
| | $ | 16,317 |
| $ | 16,513 |
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| | | | | | |
Postpaid average phone connections (in thousands) | 26,461 |
| 26,312 |
| 25,795 |
| | 26,275 |
| 25,528 |
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Postpaid phone ABPU* (c) | $ | 68.54 |
| $ | 68.95 |
| $ | 71.77 |
| | $ | 69.00 |
| $ | 71.87 |
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(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. Postpaid phone ARPU represents revenues related to our postpaid phone connections.
(b) Postpaid ABPA* is calculated by dividing service revenue earned from connections plus billings from installment plans and non-operating leases, as well as, operating lease revenue by the sum of the monthly average number of accounts during the period. Installment plan billings represent the substantial majority of the total billings in the table above for all periods presented.
(c) Postpaid phone ABPU* is calculated by dividing postpaid phone service revenue earned from postpaid phone connections plus billings from installment plans and non-operating leases, as well as, operating lease revenue by the sum of the monthly average number of postpaid phone connections during the period. Installment plan billings represent the substantial majority of the total billings in the table above for all periods presented.
(d) As part of the Shentel transaction, 186,000 and 92,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates, of which 18,000 prepaid subscribers were subsequently excluded from our customer base as a result of the Lifeline regulatory change as noted in (f) below. An additional 270,000 of nTelos' subscribers are now part of our affiliate relationship with Shentel and were reported in wholesale and affiliate subscribers beginning with the quarter ended June 30, 2016. In addition, during the three-month period ended June 30, 2017, 17,000 and 4,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates as a result of a the transfer of additional subscribers to Shentel.
(e) During the three-month period ended June 30, 2017, 2,000 Wi-Fi connections were adjusted from the postpaid subscriber base.
(f) Sprint is no longer reporting Lifeline subscribers due to recent regulatory changes resulting in tighter program restrictions. We have excluded them from our customer base for all periods presented, including our Assurance Wireless prepaid brand and subscribers through our wholesale MVNO's.
(g) During the three-month period ended September 30, 2017, the Prepaid Data Share platform It's On was decommissioned as the Company continues to focus on higher value contribution offerings resulting in the reduction of 49,000 to prepaid end of period subscribers.
(h) 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.
(i) During the three-month period ended December 31, 2017, prepaid end of period subscribers increased by 169,000 in conjunction with the PRWireless HoldCo, LLC joint venture.
Wireless Device Financing Summary (Unaudited)
(Millions, except sales, connections, and leased devices in property, plant and equipment)
|
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
| | | | | | |
Postpaid activations (in thousands) | 4,874 |
| 3,917 |
| 4,812 |
| | 12,459 |
| 11,827 |
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Postpaid activations financed | 84 | % | 85 | % | 80 | % | | 85 | % | 75 | % |
Postpaid activations - operating leases | 72 | % | 68 | % | 43 | % | | 66 | % | 42 | % |
| | | | | | |
Installment plans | | | | | | |
Installment sales financed | $ | 276 |
| $ | 268 |
| $ | 1,036 |
| | $ | 1,097 |
| $ | 2,188 |
|
Installment billings | $ | 353 |
| $ | 373 |
| $ | 291 |
| | $ | 1,094 |
| $ | 829 |
|
Installment receivables, net | $ | 1,383 |
| $ | 1,583 |
| $ | — |
| | $ | 1,383 |
| $ | — |
|
| | | | | | |
Leasing revenue and depreciation | | | | | | |
Lease revenue - operating | $ | 1,047 |
| $ | 966 |
| $ | 887 |
| | $ | 2,912 |
| $ | 2,453 |
|
Lease depreciation | $ | 990 |
| $ | 888 |
| $ | 837 |
| | $ | 2,732 |
| $ | 2,205 |
|
| | | | | | |
Leased device additions | | | | | | |
Cash paid for capital expenditures - leased devices | $ | 682 |
| $ | 608 |
| $ | 767 |
| | $ | 1,787 |
| $ | 1,530 |
|
Transfers from inventory - leased devices | $ | 1,761 |
| $ | 1,060 |
| $ | 1,095 |
| | $ | 3,671 |
| $ | 2,281 |
|
| | | | | | |
Leased devices | | | | | | |
Leased devices in property, plant and equipment, net | $ | 5,683 |
| $ | 4,709 |
| $ | 4,454 |
| | $ | 5,683 |
| $ | 4,454 |
|
| | | | | | |
Leased device units | | | | | | |
Leased devices in property, plant and equipment (units in thousands) | 14,002 |
| 13,019 |
| 11,981 |
| | 14,002 |
| 11,981 |
|
| | | | | | |
Leased device and receivables financings net proceeds | | | | | | |
Proceeds | $ | 1,125 |
| $ | 789 |
| $ | — |
| | $ | 2,679 |
| $ | 1,055 |
|
Repayments | (598 | ) | (1,148 | ) | (231 | ) | | (2,019 | ) | (655 | ) |
Net proceeds (repayments) of financings related to devices and receivables | $ | 527 |
| $ | (359 | ) | $ | (231 | ) | | $ | 660 |
| $ | 400 |
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Millions, except per share data)
|
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
| | | | | | |
Net operating revenues | | | | | | |
Service revenue | $ | 5,930 |
| $ | 5,967 |
| $ | 6,323 |
| | $ | 17,968 |
| $ | 19,252 |
|
Equipment revenue | 2,309 |
| 1,960 |
| 2,226 |
| | 6,355 |
| 5,556 |
|
Total net operating revenues | 8,239 |
| 7,927 |
| 8,549 |
| | 24,323 |
| 24,808 |
|
Net operating expenses | | | | | | |
Cost of services (exclusive of depreciation and amortization below) | 1,733 |
| 1,698 |
| 1,925 |
| | 5,140 |
| 6,125 |
|
Cost of products (exclusive of depreciation and amortization below) | 1,673 |
| 1,404 |
| 1,985 |
| | 4,622 |
| 5,097 |
|
Selling, general and administrative | 2,108 |
| 2,013 |
| 2,080 |
| | 6,059 |
| 5,992 |
|
Depreciation - network and other | 987 |
| 997 |
| 1,000 |
| | 2,961 |
| 3,022 |
|
Depreciation - leased devices | 990 |
| 888 |
| 837 |
| | 2,732 |
| 2,205 |
|
Amortization | 196 |
| 209 |
| 255 |
| | 628 |
| 813 |
|
Other, net | (175 | ) | 117 |
| 156 |
| | (310 | ) | 260 |
|
Total net operating expenses | 7,512 |
| 7,326 |
| 8,238 |
| | 21,832 |
| 23,514 |
|
Operating income | 727 |
| 601 |
| 311 |
| | 2,491 |
| 1,294 |
|
Interest expense | (581 | ) | (595 | ) | (619 | ) | | (1,789 | ) | (1,864 | ) |
Other (expense) income, net | (42 | ) | 44 |
| (60 | ) | | (50 | ) | (67 | ) |
Income (loss) before income taxes | 104 |
| 50 |
| (368 | ) | | 652 |
| (637 | ) |
Income tax benefit (expense) | 7,052 |
| (98 | ) | (111 | ) | | 6,662 |
| (286 | ) |
Net income (loss) | 7,156 |
| (48 | ) | (479 | ) | | 7,314 |
| (923 | ) |
Less: Net loss attributable to noncontrolling interests | 6 |
| — |
| — |
| | 6 |
| — |
|
Net income (loss) attributable to Sprint Corporation | $ | 7,162 |
| $ | (48 | ) | $ | (479 | ) | | $ | 7,320 |
| $ | (923 | ) |
| | | | | | |
Basic net income (loss) per common share | $ | 1.79 |
| $ | (0.01 | ) | $ | (0.12 | ) | | $ | 1.83 |
| $ | (0.23 | ) |
Diluted net income (loss) per common share | $ | 1.76 |
| $ | (0.01 | ) | $ | (0.12 | ) | | $ | 1.79 |
| $ | (0.23 | ) |
Weighted average common shares outstanding | 4,001 |
| 3,998 |
| 3,983 |
| | 3,998 |
| 3,979 |
|
Diluted weighted average common shares outstanding | 4,061 |
| 3,998 |
| 3,983 |
| | 4,080 |
| 3,979 |
|
| | | | | | |
Effective tax rate | -6,780.8 | % | 196.0 | % | -30.2 | % | | -1,021.8 | % | -44.9 | % |
NON-GAAP RECONCILIATION - NET INCOME (LOSS) TO ADJUSTED EBITDA* (Unaudited)
(Millions) |
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
| | | | | | |
Net income (loss) | $ | 7,156 |
| $ | (48 | ) | $ | (479 | ) | | $ | 7,314 |
| $ | (923 | ) |
Income tax (benefit) expense | (7,052 | ) | 98 |
| 111 |
| | (6,662 | ) | 286 |
|
Income (loss) before income taxes | 104 |
| 50 |
| (368 | ) | | 652 |
| (637 | ) |
Other expense (income), net | 42 |
| (44 | ) | 60 |
| | 50 |
| 67 |
|
Interest expense | 581 |
| 595 |
| 619 |
| | 1,789 |
| 1,864 |
|
Operating income | 727 |
| 601 |
| 311 |
| | 2,491 |
| 1,294 |
|
Depreciation - network and other | 987 |
| 997 |
| 1,000 |
| | 2,961 |
| 3,022 |
|
Depreciation - leased devices | 990 |
| 888 |
| 837 |
| | 2,732 |
| 2,205 |
|
Amortization | 196 |
| 209 |
| 255 |
| | 628 |
| 813 |
|
EBITDA* (1) | 2,900 |
| 2,695 |
| 2,403 |
| | 8,812 |
| 7,334 |
|
Loss (gain) from asset dispositions, exchanges, and other, net (2) | — |
| — |
| 28 |
| | (304 | ) | (326 | ) |
Severance and exit costs (3) | 13 |
| — |
| 19 |
| | 13 |
| 30 |
|
Contract terminations (4) | — |
| — |
| — |
| | (5 | ) | 113 |
|
Litigation and other contingencies (5) | (260 | ) | — |
| — |
| | (315 | ) | 103 |
|
Hurricanes (6) | 66 |
| 34 |
| — |
| | 100 |
| — |
|
Adjusted EBITDA* (1) | $ | 2,719 |
| $ | 2,729 |
| $ | 2,450 |
| | $ | 8,301 |
| $ | 7,254 |
|
| | | | | | |
Adjusted EBITDA margin* | 45.9 | % | 45.7 | % | 38.7 | % | | 46.2 | % | 37.7 | % |
| | | | | | |
Selected items: | | | | | | |
Cash paid for capital expenditures - network and other | $ | 696 |
| $ | 682 |
| $ | 478 |
| | $ | 2,499 |
| $ | 1,421 |
|
Cash paid for capital expenditures - leased devices | $ | 682 |
| $ | 608 |
| $ | 767 |
| | $ | 1,787 |
| $ | 1,530 |
|
WIRELESS STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
|
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
| | | | | | |
Net operating revenues | | | | | | |
Service revenue | | | | | | |
Postpaid | $ | 4,297 |
| $ | 4,363 |
| $ | 4,686 |
| | $ | 13,126 |
| $ | 14,184 |
|
Prepaid (7) | 993 |
| 990 |
| 985 |
| | 2,982 |
| 3,096 |
|
Wholesale, affiliate and other (7) | 329 |
| 296 |
| 275 |
| | 884 |
| 784 |
|
Total service revenue | 5,619 |
| 5,649 |
| 5,946 |
| | 16,992 |
| 18,064 |
|
| | | | | | |
Equipment revenue | 2,309 |
| 1,960 |
| 2,226 |
| | 6,355 |
| 5,556 |
|
Total net operating revenues | 7,928 |
| 7,609 |
| 8,172 |
| | 23,347 |
| 23,620 |
|
| | | | | | |
Net operating expenses | | | | | | |
Cost of services (exclusive of depreciation and amortization below) | 1,466 |
| 1,422 |
| 1,649 |
| | 4,300 |
| 5,226 |
|
Cost of products (exclusive of depreciation and amortization below) | 1,673 |
| 1,404 |
| 1,985 |
| | 4,622 |
| 5,097 |
|
Selling, general and administrative | 2,024 |
| 1,936 |
| 2,032 |
| | 5,835 |
| 5,797 |
|
Depreciation - network and other | 931 |
| 944 |
| 947 |
| | 2,800 |
| 2,868 |
|
Depreciation - leased devices | 990 |
| 888 |
| 837 |
| | 2,732 |
| 2,205 |
|
Amortization | 196 |
| 209 |
| 255 |
| | 628 |
| 813 |
|
Other, net | 139 |
| 117 |
| 150 |
| | 54 |
| 248 |
|
Total net operating expenses | 7,419 |
| 6,920 |
| 7,855 |
| | 20,971 |
| 22,254 |
|
Operating income | $ | 509 |
| $ | 689 |
| $ | 317 |
| | $ | 2,376 |
| $ | 1,366 |
|
| | | | | | |
WIRELESS NON-GAAP RECONCILIATION (Unaudited)
(Millions) |
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
| | | | | | |
Operating income | $ | 509 |
| $ | 689 |
| $ | 317 |
| | $ | 2,376 |
| $ | 1,366 |
|
Loss (gain) from asset dispositions, exchanges, and other, net (2) | — |
| — |
| 28 |
| | (304 | ) | (326 | ) |
Severance and exit costs (3) | 4 |
| — |
| 13 |
| | (1 | ) | 18 |
|
Contract terminations (4) | — |
| — |
| — |
| | (5 | ) | 113 |
|
Litigation and other contingencies (5) | 63 |
| — |
| — |
| | 63 |
| 103 |
|
Hurricanes (6) | 66 |
| 34 |
| — |
| | 100 |
| — |
|
Depreciation - network and other | 931 |
| 944 |
| 947 |
| | 2,800 |
| 2,868 |
|
Depreciation - leased devices | 990 |
| 888 |
| 837 |
| | 2,732 |
| 2,205 |
|
Amortization | 196 |
| 209 |
| 255 |
| | 628 |
| 813 |
|
Adjusted EBITDA* (1) | $ | 2,759 |
| $ | 2,764 |
| $ | 2,397 |
| | $ | 8,389 |
| $ | 7,160 |
|
| | | | | | |
Adjusted EBITDA margin* | 49.1 | % | 48.9 | % | 40.3 | % | | 49.4 | % | 39.6 | % |
| | | | | | |
Selected items: | | | | | | |
Cash paid for capital expenditures - network and other | $ | 565 |
| $ | 539 |
| $ | 389 |
| | $ | 2,042 |
| $ | 1,123 |
|
Cash paid for capital expenditures - leased devices | $ | 682 |
| $ | 608 |
| $ | 767 |
| | $ | 1,787 |
| $ | 1,530 |
|
WIRELINE STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
|
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
Net operating revenues | | | | | | |
Voice | $ | 94 |
| $ | 109 |
| $ | 153 |
| | $ | 327 |
| $ | 506 |
|
Data | 29 |
| 33 |
| 41 |
| | 96 |
| 127 |
|
Internet | 254 |
| 256 |
| 281 |
| | 765 |
| 871 |
|
Other | 16 |
| 11 |
| 22 |
| | 47 |
| 59 |
|
Total net operating revenues | 393 |
| 409 |
| 497 |
| | 1,235 |
| 1,563 |
|
| | | | | | |
Net operating expenses | | | | | | |
Cost of services (exclusive of depreciation and amortization below) | 352 |
| 372 |
| 400 |
| | 1,111 |
| 1,284 |
|
Selling, general and administrative | 71 |
| 66 |
| 49 |
| | 194 |
| 189 |
|
Depreciation and amortization | 55 |
| 49 |
| 51 |
| | 155 |
| 148 |
|
Other, net | (314 | ) | — |
| 6 |
| | (309 | ) | 13 |
|
Total net operating expenses | 164 |
| 487 |
| 506 |
| | 1,151 |
| 1,634 |
|
Operating income (loss) | $ | 229 |
| $ | (78 | ) | $ | (9 | ) | | $ | 84 |
| $ | (71 | ) |
WIRELINE NON-GAAP RECONCILIATION (Unaudited)
(Millions)
|
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
| | | | | | |
Operating income (loss) | $ | 229 |
| $ | (78 | ) | $ | (9 | ) | | $ | 84 |
| $ | (71 | ) |
Severance and exit costs (3) | 9 |
| — |
| 6 |
| | 14 |
| 13 |
|
Litigation and other contingencies (5) | (323 | ) | — |
| — |
| | (323 | ) | — |
|
Depreciation and amortization | 55 |
| 49 |
| 51 |
| | 155 |
| 148 |
|
Adjusted EBITDA* | $ | (30 | ) | $ | (29 | ) | $ | 48 |
| | $ | (70 | ) | $ | 90 |
|
| | | | | | |
Adjusted EBITDA margin* | -7.6 | % | -7.1 | % | 9.7 | % | | -5.7 | % | 5.8 | % |
| | | | | | |
Selected items: | | | | | | |
Cash paid for capital expenditures - network and other | $ | 30 |
| $ | 40 |
| $ | 24 |
| | $ | 132 |
| $ | 75 |
|
CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)
(Millions)
|
| | | | | | |
| Year To Date |
| 12/31/17 | 12/31/16 |
Operating activities | | |
Net income (loss) | $ | 7,314 |
| $ | (923 | ) |
Depreciation and amortization | 6,321 |
| 6,040 |
|
Provision for losses on accounts receivable | 312 |
| 406 |
|
Share-based and long-term incentive compensation expense | 137 |
| 57 |
|
Deferred income tax (benefit) expense | (6,707 | ) | 276 |
|
Gains from asset dispositions and exchanges | (479 | ) | (354 | ) |
Call premiums paid on debt redemptions | (129 | ) | — |
|
Loss on early extinguishment of debt | 65 |
| — |
|
Amortization of long-term debt premiums, net | (125 | ) | (234 | ) |
Loss on disposal of property, plant and equipment | 533 |
| 368 |
|
Contract terminations | (5 | ) | 96 |
|
Other changes in assets and liabilities: | | |
Accounts and notes receivable | (74 | ) | (542 | ) |
Inventories and other current assets | (3,216 | ) | (2,254 | ) |
Deferred purchase price from sale of receivables | — |
| (220 | ) |
Accounts payable and other current liabilities | (104 | ) | (97 | ) |
Non-current assets and liabilities, net | 260 |
| (313 | ) |
Other, net | 302 |
| 594 |
|
Net cash provided by operating activities | 4,405 |
| 2,900 |
|
| | |
Investing activities | | |
Capital expenditures - network and other | (2,499 | ) | (1,421 | ) |
Capital expenditures - leased devices | (1,787 | ) | (1,530 | ) |
Expenditures relating to FCC licenses | (92 | ) | (46 | ) |
Change in short-term investments, net | 5,271 |
| (2,349 | ) |
Proceeds from sales of assets and FCC licenses | 367 |
| 126 |
|
Other, net | 16 |
| 26 |
|
Net cash provided by (used in) investing activities | 1,276 |
| (5,194 | ) |
| | |
Financing activities | | |
Proceeds from debt and financings | 3,073 |
| 6,830 |
|
Repayments of debt, financing and capital lease obligations | (7,159 | ) | (3,266 | ) |
Debt financing costs | (19 | ) | (272 | ) |
Other, net | (6 | ) | 68 |
|
Net cash (used in) provided by financing activities | (4,111 | ) | 3,360 |
|
| | |
Net increase in cash and cash equivalents | 1,570 |
| 1,066 |
|
| | |
Cash and cash equivalents, beginning of period | 2,870 |
| 2,641 |
|
Cash and cash equivalents, end of period | $ | 4,440 |
| $ | 3,707 |
|
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)
(Millions) |
| | | | | | | | | | | | | | | | |
| Quarter To Date | | Year To Date |
| 12/31/17 | 9/30/17 | 12/31/16 | | 12/31/17 | 12/31/16 |
| | | | | | |
Net cash provided by operating activities | $ | 1,166 |
| $ | 1,959 |
| $ | 650 |
| | $ | 4,405 |
| $ | 2,900 |
|
| | | | |
|
|
Capital expenditures - network and other | (696 | ) | (682 | ) | (478 | ) | | (2,499 | ) | (1,421 | ) |
Capital expenditures - leased devices | (682 | ) | (608 | ) | (767 | ) | | (1,787 | ) | (1,530 | ) |
Expenditures relating to FCC licenses, net | (73 | ) | (6 | ) | (14 | ) | | (92 | ) | (46 | ) |
Proceeds from sales of assets and FCC licenses | 149 |
| 117 |
| 60 |
| | 367 |
| 126 |
|
Other investing activities, net | 6 |
| (1 | ) | 134 |
| | 2 |
| 98 |
|
Free cash flow* | $ | (130 | ) | $ | 779 |
| $ | (415 | ) | | $ | 396 |
| $ | 127 |
|
| | | | | | |
Net proceeds (repayments) of financings related to devices and receivables | 527 |
| (359 | ) | (231 | ) | | 660 |
| 400 |
|
Adjusted free cash flow* | $ | 397 |
| $ | 420 |
| $ | (646 | ) | | $ | 1,056 |
| $ | 527 |
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Millions)
|
| | | | | | |
| 12/31/17 | 3/31/17 |
ASSETS | | |
Current assets | | |
Cash and cash equivalents | $ | 4,440 |
| $ | 2,870 |
|
Short-term investments | 173 |
| 5,444 |
|
Accounts and notes receivable, net | 3,917 |
| 4,138 |
|
Device and accessory inventory | 1,009 |
| 1,064 |
|
Prepaid expenses and other current assets | 626 |
| 601 |
|
Total current assets | 10,165 |
| 14,117 |
|
| | |
Property, plant and equipment, net | 19,712 |
| 19,209 |
|
Goodwill | 6,586 |
| 6,579 |
|
FCC licenses and other | 41,222 |
| 40,585 |
|
Definite-lived intangible assets, net | 2,667 |
| 3,320 |
|
Other assets | 1,067 |
| 1,313 |
|
Total assets | $ | 81,419 |
| $ | 85,123 |
|
| | |
LIABILITIES AND EQUITY | | |
Current liabilities | | |
Accounts payable | $ | 3,176 |
| $ | 3,281 |
|
Accrued expenses and other current liabilities | 3,859 |
| 4,141 |
|
Current portion of long-term debt, financing and capital lease obligations | 4,036 |
| 5,036 |
|
Total current liabilities | 11,071 |
| 12,458 |
|
| | |
Long-term debt, financing and capital lease obligations | 32,825 |
| 35,878 |
|
Deferred tax liabilities | 7,709 |
| 14,416 |
|
Other liabilities | 3,509 |
| 3,563 |
|
Total liabilities | 55,114 |
| 66,315 |
|
| | |
Stockholders' equity | | |
Common stock | 40 |
| 40 |
|
Paid-in capital | 27,825 |
| 27,756 |
|
Accumulated deficit | (1,264 | ) | (8,584 | ) |
Accumulated other comprehensive loss | (366 | ) | (404 | ) |
Total stockholders' equity | 26,235 |
| 18,808 |
|
Noncontrolling interests | 70 |
| — |
|
Total equity | 26,305 |
| 18,808 |
|
Total liabilities and equity | $ | 81,419 |
| $ | 85,123 |
|
NET DEBT* (NON-GAAP) (Unaudited)
(Millions)
|
| | | | | | |
| 12/31/17 | 3/31/17 |
| | |
Total debt | $ | 36,861 |
| $ | 40,914 |
|
Less: Cash and cash equivalents | (4,440 | ) | (2,870 | ) |
Less: Short-term investments | (173 | ) | (5,444 | ) |
Net debt* | $ | 32,248 |
| $ | 32,600 |
|
SCHEDULE OF DEBT (Unaudited)
(Millions)
|
| | | | |
| | 12/31/17 |
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 | 3,281 |
|
Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, and Sprint Spectrum Co III LLC | | 3,281 |
|
| | |
Sprint Communications, Inc. | | |
Export Development Canada secured loan | 12/17/2019 | 300 |
|
9% Guaranteed notes due 2018 | 11/15/2018 | 1,800 |
|
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% Secured debentures due 2022 | 04/15/2022 | 200 |
|
6% Senior notes due 2022 | 11/15/2022 | 2,280 |
|
Sprint Communications, Inc. | | 8,080 |
|
| | |
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 |
|
| | |
Credit facilities | | |
PRWireless secured term loan | 06/28/2020 | 183 |
|
Secured equipment credit facilities | 2020 - 2021 | 555 |
|
Secured term loan | 02/03/2024 | 3,970 |
|
Credit facilities | | 4,708 |
|
| | |
Accounts receivable facility | 11/18/2019 | 2,966 |
|
| | |
Financing obligations | 2018 - 2021 | 614 |
|
| | |
Capital leases and other obligations | 2018 - 2026 | 532 |
|
Total principal | | 36,885 |
|
| | |
Net premiums and debt financing costs | | (24 | ) |
Total debt | | $ | 36,861 |
|
NOTES TO THE FINANCIAL INFORMATION (Unaudited)
| |
(1) | 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 nine-month periods ended December 31, 2017, we leased devices through our Sprint direct channels totaling approximately $1,761 million and $3,671 million, respectively, which would have increased cost of products and reduced EBITDA* if they had been purchased under our subsidized program. |
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.
| |
(2) | During the first quarter of fiscal year 2017, 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. Additionally, the company recorded a pre-tax non-cash gain related to spectrum swaps with other carriers. During the third quarter of fiscal year 2016, 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. |
| |
(3) | 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. |
| |
(4) | During the first quarter of fiscal year 2017, we recorded a $5 million gain due to reversal of a liability recorded in relation to the termination of our relationship with General Wireless Operations, Inc. (Radio Shack). 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. |
| |
(5) | During the third and first quarters of fiscal year 2017, litigation and other contingencies consist of reductions associated with legal settlements or favorable developments in pending legal proceedings as well as non-recurring charges of $51 million related to a regulatory fee matter. During the second quarter of fiscal year 2016, litigation and other contingencies consist of unfavorable developments associated with legal matters as well as federal and state matters such as sales, use or property taxes. |
| |
(6) | During the third and second quarters of fiscal year 2017 we recorded estimated hurricane-related charges of $66 million and $34 million, respectively, consisting of customer service credits, incremental roaming costs, network repairs and replacements. |
| |
(7) | Sprint is no longer reporting Lifeline subscribers due to recent regulatory changes resulting in tighter program restrictions. We have excluded them from our customer base for all periods presented, including our Assurance Wireless prepaid brand and subscribers through our wholesale Lifeline mobile virtual network operators (MVNO). The table reflects the reclassification of the related Assurance Wireless prepaid revenue from Prepaid service revenue to Wholesale, affiliate and other revenue of $92 million and $275 million for the three and nine-month periods ended December 31, 2016, respectively. Revenue associated with subscribers through our wholesale Lifeline MVNO's continue to remain in Wholesale, affiliate and other revenue following this change. |
*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.
Postpaid ABPA is average billings per account and calculated by dividing postpaid service revenue earned from postpaid customers plus billings from installment plans and non-operating leases, as well as, operating 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 postpaid customer billings per account as it approximates the expected cash collections, including billings from installment plans and non-operating leases, as well as, operating lease revenue, per postpaid account each month.
Postpaid Phone ABPU is average billings per postpaid phone user and calculated by dividing service revenue earned from postpaid phone customers plus billings from installment plans and non-operating leases, as well as, operating 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 postpaid phone customer billings as it approximates the expected cash collections, including billings from installment plans and non-operating leases, as well as, operating 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, 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 54.6 million connections as of December 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.
###
[2] Average download speed increase based on Ookla’s analysis of Speedtest
Intelligence data comparing December 2016 to December 2017 for all mobile results.[1] after adjusting for hurricane and other non-recurring charges
564
368
61
378 385
53.3
53.6 53.7
54.0
54.6
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Net Additions - In Thousands End of Period - In Millions
The company had 385,000 net additions in the current quarter compared with 564,000 in the year-
ago period and 378,000 net additions in the prior quarter.
Sprint ended the quarter with nearly 54.6 million connections, including 31.9 million postpaid, 9.0
million prepaid, and nearly 13.7 million wholesale and affiliate connections.
The company has had nearly 1.2 million net additions over the last four quarters.
405
(118)
(39)
168
256
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Postpaid Net Additions (Losses)
In Thousands
Postpaid net additions were
256,000 during the quarter
compared to net additions of
405,000 in the year-ago period
and 168,000 in the prior quarter.
The year-over-year decline was
primarily driven by lower phone
net additions and partially offset
by higher other device net
additions, while the sequential
increase was primarily driven by
higher other device net additions.
1.57% 1.58%
1.50%
1.59%
1.71%
1.67%
1.75%
1.65%
1.72%
1.80%
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Postpaid Phone Churn Postpaid Total Churn
Postpaid Total Churn and Postpaid Phone Churn
Postpaid phone churn of 1.71 percent compared
to 1.57 percent in the year-ago period and 1.59
percent in the prior quarter. Both the year-over-year
and sequential increases were driven by network
quality in certain areas within our footprint, and the
company’s decision to selectively manage both
higher ARPU customers and customers rolling off
device commitments in order to maximize the net
present value of the base. The sequential increase
was also impacted by typical seasonality.
Postpaid total churn of 1.80 percent for
the quarter compared to 1.67 percent in
the year-ago period and 1.72 percent in
the prior quarter. Both the year-over-year
and sequential increases were primarily
driven by higher postpaid phone churn.
The year-over-year increase was also
impacted by higher tablet churn as
customers rolled off promotional offers.
368
42
88
279
184
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Postpaid Phone Net Additions
In Thousands
Postpaid phone net additions of
184,000 compared to net
additions of 368,000 in the year-
ago period and 279,000 in the
prior quarter. Both the year-over-
year and sequential decreases
were primarily driven by higher
churn. The company ended the
quarter with 26.6 million phone
connections.
Tablet and other device net additions of 72,000 in the quarter compared to net additions of 37,000
in the year-ago period and net losses of 111,000 in the prior quarter. Both the year-over-year and
sequential increases were primarily driven by the launch of the Apple watch. The company ended
the quarter with 5.3 million tablet and other device connections. The current quarter included
69,000 tablet net losses, compared to 30,000 in the year-ago period and 145,000 in the prior
quarter.
26.0 26.1 26.2 26.4 26.6
5.7 5.5 5.3 5.3 5.3
31.7 31.6 31.5 31.7 31.9
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Phones Tablets and Other DevicesPostpaid Connections
In Millions
2.75 2.77
2.78 2.80
2.83
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Average Postpaid Connections per AccountAverage postpaid connections
per account of 2.83 at quarter
end compared to 2.75 in the year-
ago period and 2.80 in the prior
quarter. The growth has been
driven by higher phones per
account, partially offset by tablet
pressure.
Wholesale & affiliate net
additions were 66,000 in the
quarter compared to
619,000 in the year-ago
period and 115,000 in the
prior quarter. The year-over-
year decline was primarily
impacted by lower
connected device net
additions, which generally
have a lower ARPU than
other wholesale & affiliate
customers.
Prepaid net additions of 63,000 during the quarter compared to net losses of 460,000 in the year-
ago period and net additions of 95,000 in the prior quarter. The year-over-year improvement was
mostly driven by lower churn and higher gross additions in the Boost brand. Sequentially, the
decrease was mostly driven by lower gross additions, partially offset by lower churn.
Prepaid churn was 4.63 percent compared to 5.74 percent for the year-ago period and 4.83 percent
for the prior quarter. The year-over-year improvement was mostly due to lower churn in the Boost
brand, while the sequential improvement was mostly driven by lower churn in the Virgin brand.
(460)
195
35
95 63
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Prepaid Net Additions
In Thousands
4.8
3.5 3.7 3.9
4.9
2.3
2.5 2.3
2.5
2.4
7.1
6.0 6.0 6.4
7.3
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Postpaid PrepaidRetail Activations
In Millions
Retail activations were 7.3
million during the quarter
compared to 7.1 million in the
year-ago period and 6.4
million in the prior quarter.
Year-over-year, the increase
was primarily driven by higher
prepaid gross additions and
postpaid phone upgrades.
Sequentially, the increase was
primarily driven by higher
postpaid phone upgrades.
9.0%
6.1%
6.8% 6.7%
9.2%
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Postpaid Upgrades as a Percent of Total Postpaid Subscribers
Postpaid upgrade rate was 9.2 percent during the quarter compared to 9.0 percent for the year-
ago period and 6.7 percent for the prior quarter. The sequential increase was due to seasonality.
71%
74%
76% 78%
79%
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Postpaid Phone Connections on Unsubsidized Service PlansPostpaid phone connections
on unsubsidized service plans
represented 79 percent of the
base at the end of the quarter,
compared to 71 percent in the
year-ago period and 78 percent
in the prior quarter.
Postpaid device financing rate was 84 percent of postpaid activations for the quarter compared
to 80 percent for the year-ago period and 85 percent in the prior quarter. At the end of the quarter,
45 percent of the postpaid connection base was active on a leasing agreement compared to 38
percent in the year-ago quarter and 42 percent in the prior quarter.
Postpaid phone financing rate was 89 percent of phone activations for the quarter compared to
84 percent for the year-ago period and 89 percent in the prior quarter.
Postpaid carrier aggregation
capable phones, which allow
for higher download data
speeds, were 94 percent of
postpaid phones activated
during the quarter, increasing
the number of these phones
within the phone base to 72
percent.
80% 82%
85% 85% 84%
84% 86%
89% 89% 89%
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Total Financed Percentage of Activations
Phone Financed Percentage of Phone Activations
Postpaid Device
Financing
Upgrade existing towers to leverage all three of the company’s spectrum bands – 800 MHz,
1.9 GHz and 2.5 GHz – for faster, more reliable service.
Build thousands of new cell sites to expand its coverage footprint and extend coverage to
more popular customer destinations.
Add more small cells -- including Sprint Magic Boxes, mini-macros and strand mounts to
densify every major market and significantly boost capacity and data speeds – and leverage
the recent strategic agreements with Altice and Cox. The company has already deployed
more than 80,000 Sprint Magic Boxes in approximately 200 cities across the country and
plans to deploy more than 1 million as part of its multi-year roadmap.
Deploy game-changing 64T64R Massive MIMO 2.5 GHz radios to increase capacity up to 10
times that of current LTE systems and increase data speeds for more customers in high-
traffic locations. Massive MIMO, a key enabler for 5G, will allow the company to support both
LTE and 5G NR (New Radio) modes simultaneously without additional tower climbs.
Sprint’s network has already seen significant improvements. According to Ookla Speedtest
Intelligence data, Sprint was the most improved operator in 2017 with a 60 percent year-over-year
increase in its national average download speed.1
1 Average download speed increase based on Ookla’s analysis of Speedtest Intelligence data comparing December 2016 to December 2017 for
all mobile results.
Average Download Speed Change1
Dec. ‘16 to Dec. ‘17
Sprint is unlocking the value of the
largest mobile broadband spectrum
holdings in the U.S. and Sprint’s Next-Gen
Network is designed to drive significant
improvements to network performance
and the customer experience by
investing in four main areas.
$8.5 $8.5 $8.2 $7.9 $8.2
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Net Operating Revenues
Dollars In Billions
Net operating revenues of $8.2 billion for the quarter declined $310 million year-over-year and
increased $312 million sequentially. The year-over-year decrease was mostly driven by lower
wireless and wireline service revenue, partially offset by higher equipment revenue. Sequentially,
the increase was primarily driven by higher equipment revenue.
Wireless service revenue of $5.6 billion declined $327 million year-over-year and $30 million
sequentially. Over half of the year-over-year decrease was driven by changes to the company’s
device insurance program, which were accretive to Adjusted EBITDA* but resulted in lower
insurance revenue as the program revenue is accounted for and presented on a net basis. The year-
over-year reduction was also impacted by lower postpaid phone ARPU, partially offset by growth in
the postpaid phone customer base. Sequentially, wireless service revenue was relatively flat.
Equipment revenue of $2.3 billion increased $83 million year-over-year and increased $349 million
sequentially. The year-over-year growth was driven by increased sales of used devices to third
parties and higher lease revenue, and was partially offset by a lower mix of installment billing sales,
which recognize more revenue at the point of sale relative to leasing sales. Sequentially, the increase
was mostly driven by higher postpaid sales volume, higher average unit prices, and growth in lease
revenue. Sales of used devices to third parties, which have a corresponding impact to cost of
products expense and are relatively neutral to Adjusted EBITDA*, were in line with recent quarters.
Wireline revenues of $393 million for the quarter declined $104 million year-over-year and $16
million sequentially. The year-over-year and sequential declines were primarily driven by lower voice
volumes, as the company continues to de-emphasize certain voice services. The year-over-year
decline was also impacted by the annual process of resetting the intercompany rate, based on
current market prices for voice and IP services sold to the wireless segment.
$71.77
$68.66 $69.51 $68.95 $68.54
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Service Equipment
Postpaid Phone Average Billings Per User
(ABPU)*
Postpaid Phone Average Billings Per
User (ABPU)* of $68.54 for the quarter
decreased 5 percent year-over-year
and less than 1 percent sequentially.
The year-over-year decline was
primarily due to lower insurance
revenue resulting from the change in
the company’s device insurance
program, which was accretive to
Adjusted EBITDA*, promotions, and
hurricane-related credits. Normalizing
for the device insurance program
change and hurricane-related credits,
ABPU* would have decreased less
than 1% year-over-year.
$985 $982 $999 $990 $993
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Prepaid Service Revenue
Dollars In Millions
Prepaid Service Revenue of $993 million increased $8
million year-over-year and $3 million sequentially. When
adjusting for the removal of low-engagement
customers from the base in the third fiscal quarter of
2016, relatively stable ARPU combined with four
straight quarters of net additions have led to year-over-
year growth in prepaid service revenue for the first time
in nearly three years.
Prepaid Average Revenue Per
User (ARPU) of $37.46 for the
quarter increased 10 percent
year-over-year and decreased 1
percent sequentially. The year-
over-year increase was primarily
driven by a change in the
company’s churn rules resulting in
the removal of low-engagement
customers from the base in the
third fiscal quarter of 2016.
/--------------------------Normalized--------------------------/
$1.9
$1.7 $1.7 $1.7 $1.7
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Cost of Services
Dollars In Billions
Cost of services (CoS) of $1.7 billion
for the quarter decreased $192
million year-over-year and increased
$35 million sequentially. The current
quarter included non-recurring
charges of $51 million related to a
regulatory fee matter and $30 million
related to hurricane expenses.
Adjusting for these impacts, the year-
over-year decline would have been
approximately $273 million, primarily
driven by changes to the company’s
device insurance program, as the
program revenue is accounted for
and reported on a net basis and
related expenses are no longer
incurred by Sprint, as well as lower
network expenses. Sequentially, cost
of services would have decreased
approximately $31 million when
adjusting for the aforementioned
charges.
$2.1
$2.0
$1.9
$2.0
$2.1
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Selling, General, and Administrative
Dollars In Billions
Selling, general and administrative
expenses (SG&A) of $2.1 billion for the
quarter increased by $28 million year-
over-year and $95 million sequentially.
The year-over-year increases in
prepaid marketing and sales as well as
general and administrative expenses
were mostly offset by lower bad debt
expenses related to a decrease in
installment billing sales. Sequentially,
the increases were mostly driven by
seasonally higher postpaid sales and
marketing expenses.
YTD in CoS and SG&A*
year-over-year
$1.0 $1.0 $1.0 $1.0 $1.0
$0.8 $0.9 $0.9 $0.9 $1.0
$0.3 $0.2 $0.2 $0.2
$0.2
$2.1 $2.1 $2.1 $2.1 $2.2
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Network and Other
Leased Devices
Amortization
Depreciation and
Amortization
Dollars In Billions
$2.0 $2.0
$1.5 $1.4
$1.7
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Cost of Products
Dollars In Billions
Cost of products of $1.7 billion for
the quarter decreased $312 million
year-over-year and increased $269
million sequentially. The year-over-
year decrease was impacted by a
lower mix of installment billing
sales, and was partially offset by
more sales of used devices to third
parties. The sequential increase
was impacted by higher postpaid
sales volume and higher average
unit costs.
Depreciation and amortization expense of $2.2 billion for the
quarter increased $81 million year-over-year and $79 million
sequentially. Leased device depreciation was $990 million in the
quarter, $837 million in the year-ago period, and $888 million in
the prior quarter.
Other, net in the current
quarter represented a net
benefit of $175 million,
primarily resulting from $343
million associated with
favorable legal settlements
for patent infringement
lawsuits net of legal fees,
partially offset by $32 million
in litigation and other
contingencies expense, $13
million in severance and exit
costs, and $123 million in
loss on leased devices, the
latter of which impacted
Adjusted EBITDA*.
$0.3
$0.5
$1.2
$0.6
$0.7
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Operating Income
Dollars In Billions
Operating income of $727 million
compared to $311 million in the year-
ago period and $601 million in the
prior quarter. The current quarter
included $343 million in favorable
settlements for patent infringement
lawsuits net of legal fees, $66 million of
hurricane-related impacts, a $51
million charge related to a regulatory
fee matter, $32 million litigation and
other contingencies expense, and $13
million in severance and exit costs. The
year-ago period included $47 million
primarily related to asset dispositions
and severance costs, while the prior
quarter included $34 million of
hurricane-related impacts. Adjusting
for items in each period, operating
income would have improved by
approximately $190 million year-over-
year and declined approximately $90
million sequentially.
$2.5
$2.7
$2.9
$2.7 $2.7
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Adjusted EBITDA*
Dollars In Billions
Adjusted EBITDA* was $2.7 billion
for the quarter, compared to $2.5
billion in the year-ago period and
$2.7 billion in the prior quarter. The
year-over-year improvement was
primarily due to lower cost of
services and cost of products
expenses, partially offset by lower
operating revenues. Sequentially
higher equipment revenues offset
higher cost of products expenses.
Net income of $7.2 billion for the quarter compared to
a net loss of $479 million in the year-ago period and a
net loss of $48 million in the prior quarter.
The current quarter included a $7.1 billion non-cash
income tax benefit resulting from a re-measurement of
the company’s deferred tax assets and liabilities due to
changes in tax laws included in the Tax Cuts and Jobs
Act, which was enacted into law in December 2017.
Excluding tax reform, hurricane-related impacts, and
other non-recurring items, the net loss would have
improved by approximately $300 million year-over-year.
$0.7
$1.3 $1.3
$2.0
$1.2
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Cash Provided by Operating Activities
Dollars In Billions
Adjusted free cash flow* of $397
million for the quarter compared to
negative $646 million in the year-
ago period and $420 million in the
prior quarter. The year-over-year
improvement was primarily driven
by higher net proceeds of
financings related to devices and
receivables and higher cash
provided by operating activities,
partially offset by higher network
capital expenditures. Sequentially,
higher net proceeds of financings
related to devices and receivables
was offset by lower cash provided
by operating activities.
Cash provided by operating
activities of $1.2 billion for the
quarter compared to $650 million in
the year-ago period and $2.0 billion
in the prior quarter. Both the year-
over-year and sequential changes
benefitted from a cash settlement
related to a patent infringement
lawsuit. In addition, the year-over-
year increase was driven by
improvements in Adjusted EBITDA*,
while the sequential decrease was
primarily driven by unfavorable
working capital changes.
Cash capital expenditures were $1.4 billion in the quarter compared to $1.2 billion in the year-
ago period and $1.3 billion in the prior quarter. The year-over-year increase was driven by higher
capital expenditures for network equipment. Capital expenditures for leased devices were $682
million in the current quarter compared to $767 million in the year-ago period and $608 million in
the prior quarter.
($646)
$80
$239
$420 $397
3QFY16 4QFY16 1QFY17 2QFY17 3QFY17
Adjusted Free Cash Flow *
Dollars In Millions
2.7
4.6
1.8
0.8
0.4
3.2
0.5
0.4
Liquidity as of
12/31/17
Current Maturities**
Cash, Cash Equiv, Short-Term Investments Revolver
Network Equipment Financing
Receivables/Device Financing
Vendor Financing Note Maturities
Other
** Includes maturities due through December 2018.
Liquidity and Debt
Dollars In Billions
$10.4 of
General
Purpose
Liquidity
$ 4.0
$ 10.8
Unsecured Credit Facility Commitment
Total general purpose liquidity was $10.4 billion at the end of the quarter, including $4.6 billion
of cash, cash equivalents and short-term investments. Additionally, the company has approximately
$427 million of availability under vendor financing agreements that can be used toward the
purchase of 2.5GHz network equipment.
excluding devices
leased through
indirect channels
Wireless Operating Statistics (Unaudited)
Quarter To Date
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Net additions (losses) (in thousands)
Postpaid 256 168 405 385 929
Postpaid phone 184 279 368 551 888
Prepaid (f ) 63 95 (460) 193 (1,215)
Wholesale and affiliate (f ) 66 115 619 246 2,051
Total wireless net additions 385 378 564 824 1,765
End of period connections (in thousands)
Postpaid (d) (e) 31,942 31,686 31,694 31,942 31,694
Postpaid phone (d) 26,616 26,432 26,037 26,616 26,037
Prepaid (d) (f ) (g) (h) (i) 8,997 8,765 8,493 8,997 8,493
Wholesale and affiliate (d) (f ) (h) 13,642 13,576 13,084 13,642 13,084
Total end of period connections 54,581 54,027 53,271 54,581 53,271
Churn
Postpaid 1.80% 1.72% 1.67% 1.73% 1.58%
Postpaid phone 1.71% 1.59% 1.57% 1.60% 1.44%
Prepaid (h) 4.63% 4.83% 5.74% 4.68% 5.57%
Supplemental data - connected devices
End of period connections (in thousands)
Retail postpaid 2,259 2,158 1,960 2,259 1,960
Wholesale and affiliate 11,272 11,221 10,594 11,272 10,594
Total 13,531 13,379 12,554 13,531 12,554
ARPU (a)
Postpaid 45.13$ 46.00$ 49.70$ 46.14$ 50.59$
Postpaid phone 51.26$ 52.34$ 57.12$ 52.50$ 58.11$
Prepaid (h) 37.46$ 37.83$ 33.97$ 37.84$ 33.35$
NON-GAAP RECONCILIATION - ABPA* AND ABPU* (Unaudited)
(Millions, except accounts, connections, ABPA*, and ABPU*)
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
ABPA*
Postpaid service revenue 4,297$ 4,363$ 4,686$ 13,126$ 14,184$
Add: Installment plan and non-operating lease billings 379 397 291 1,144 829
Add: Lease revenue - operating 1,047 966 887 2,912 2,453
Total for postpaid connections $ 5,723 $ 5,726 $ 5,864 $ 17,182 $ 17,466
Average postpaid accounts (in thousands) 11,193 11,277 11,413 11,261 11,368
Postpaid ABPA* (b) 170.39$ 169.25$ 171.28$ 169.53$ 170.71$
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Postpaid phone ABPU*
Postpaid phone service revenue 4,069$ 4,132$ 4,420$ 12,415$ 13,350$
Add: Installment plan and non-operating lease billings 335 358 261 1,025 752
Add: Lease revenue - operating 1,037 953 873 2,877 2,411
Total for postpaid phone connections $ 5,441 $ 5,443 $ 5,554 $ 16,317 $ 16,513
Postpaid average phone connections (in thousands) 26,461 26,312 25,795 26,275 25,528
Postpaid phone ABPU* (c) 68.54$ 68.95$ 71.77$ 69.00$ 71.87$
(i) During the three-month period ended December 31, 2017, prepaid end of period subscribers increased by 169,000 in conjunction with the PRWireless HoldCo, LLC
joint venture.
(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.
Postpaid phone ARPU represents revenues related to our postpaid phone connections.
Year To Date
Quarter To Date Year To Date
Quarter To Date Year To Date
(h) 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.
(g) During the three-month period ended September 30, 2017, the Prepaid Data Share platform It's On was decommissioned as the Company continues to focus on
higher value contribution offerings resulting in the reduction of 49,000 to prepaid end of period subscribers.
(e) During the three-month period ended June 30, 2017, 2,000 Wi-Fi connections were adjusted from the postpaid subscriber base.
(b) Postpaid ABPA* is calculated by dividing service revenue earned from connections plus billings from installment plans and non-operating leases, as well as,
operating lease revenue by the sum of the monthly average number of accounts during the period. Installment plan billings represent the substantial majority of the
total billings in the table above for all periods presented.
(c) Postpaid phone ABPU* is calculated by dividing postpaid phone service revenue earned from postpaid phone connections plus billings from installment plans and
non-operating leases, as well as, operating lease revenue by the sum of the monthly average number of postpaid phone connections during the period. Installment
plan billings represent the substantial majority of the total billings in the table above for all periods presented.
(d) As part of the Shentel transaction, 186,000 and 92,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates, of which 18,000 prepaid
subscribers were subsequently excluded from our customer base as a result of the Lifeline regulatory change as noted in (f) below. An additional 270,000 of nTelos'
subscribers are now part of our affiliate relationship with Shentel and were reported in wholesale and affiliate subscribers beginning with the quarter ended June 30,
2016. In addition, during the three-month period ended June 30, 2017, 17,000 and 4,000 subscribers were transferred from postpaid and prepaid, respectively, to
affiliates as a result of a the transfer of additional subscribers to Shentel.
(f ) Sprint is no longer reporting Lifeline subscribers due to recent regulatory changes resulting in tighter program restrictions. We have excluded them from our
customer base for all periods presented, including our Assurance Wireless prepaid brand and subscribers through our wholesale MVNO's.
Wireless Device Financing Summary (Unaudited)
(Millions, except sales, connections, and leased devices in property, plant and equipment)
Quarter To Date
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Postpaid activations (in thousands) 4,874 3,917 4,812 12,459 11,827
Postpaid activations financed 84% 85% 80% 85% 75%
Postpaid activations - operating leases 72% 68% 43% 66% 42%
Installment plans
Installment sales financed 276$ 268$ 1,036$ 1,097$ 2,188$
Installment billings 353$ 373$ 291$ 1,094$ 829$
Installment receivables, net 1,383$ 1,583$ -$ 1,383$ -$
Leasing revenue and depreciation
Lease revenue - operating 1,047$ 966$ 887$ 2,912$ 2,453$
Lease depreciation 990$ 888$ 837$ 2,732$ 2,205$
Leased device additions
Cash paid for capital expenditures - leased devices 682$ 608$ 767$ 1,787$ 1,530$
Transfers from inventory - leased devices 1,761$ 1,060$ 1,095$ 3,671$ 2,281$
Leased devices
Leased devices in property, plant and equipment, net 5,683$ 4,709$ 4,454$ 5,683$ 4,454$
Leased device units
Leased devices in property, plant and equipment (units in thousands) 14,002 13,019 11,981 14,002 11,981
Leased device and receivables financings net proceeds
Proceeds 1,125$ 789$ -$ 2,679$ 1,055$
Repayments (598) (1,148) (231) (2,019) (655)
Net proceeds (repayments) of financings related to devices and
receivables 527$ (359)$ (231)$ 660$ 400$
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
Year To Date
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Millions, except per share data)
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Net operating revenues
Service revenue 5,930$ 5,967$ 6,323$ 17,968$ 19,252$
Equipment revenue 2,309 1,960 2,226 6,355 5,556
Total net operating revenues 8,239 7,927 8,549 24,323 24,808
Net operating expenses
Cost of services (exclusive of depreciation and amortization below) 1,733 1,698 1,925 5,140 6,125
Cost of products (exclusive of depreciation and amortization below) 1,673 1,404 1,985 4,622 5,097
Selling, general and administrative 2,108 2,013 2,080 6,059 5,992
Depreciation - network and other 987 997 1,000 2,961 3,022
Depreciation - leased devices 990 888 837 2,732 2,205
Amortization 196 209 255 628 813
Other, net (175) 117 156 (310) 260
Total net operating expenses 7,512 7,326 8,238 21,832 23,514
Operating income 727 601 311 2,491 1,294
Interest expense (581) (595) (619) (1,789) (1,864)
Other (expense) income, net (42) 44 (60) (50) (67)
Income (loss) before income taxes 104 50 (368) 652 (637)
Income tax benefit (expense) 7,052 (98) (111) 6,662 (286)
Net income (loss) 7,156 (48) (479) 7,314 (923)
Less: Net loss attributable to noncontrolling interests 6 - - 6 -
Net income (loss) attributable to Sprint Corporation 7,162$ (48)$ (479)$ 7,320$ (923)$
Basic net income (loss) per common share 1.79$ (0.01)$ (0.12)$ 1.83$ (0.23)$
Diluted net income (loss) per common share 1.76$ (0.01)$ (0.12)$ 1.79$ (0.23)$
Weighted average common shares outstanding 4,001 3,998 3,983 3,998 3,979
Diluted weighted average common shares outstanding 4,061 3,998 3,983 4,080 3,979
Effective tax rate -6,780.8% 196.0% -30.2% -1,021.8% -44.9%
NON-GAAP RECONCILIATION - NET INCOME (LOSS) TO ADJUSTED EBITDA* (Unaudited)
(Millions)
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Net income (loss) 7,156$ (48)$ (479)$ 7,314$ (923)$
Income tax (benefit) expense (7,052) 98 111 (6,662) 286
Income (loss) before income taxes 104 50 (368) 652 (637)
Other expense (income), net 42 (44) 60 50 67
Interest expense 581 595 619 1,789 1,864
Operating income 727 601 311 2,491 1,294
Depreciation - network and other 987 997 1,000 2,961 3,022
Depreciation - leased devices 990 888 837 2,732 2,205
Amortization 196 209 255 628 813
EBITDA* (1) 2,900 2,695 2,403 8,812 7,334
Loss (gain) from asset dispositions, exchanges, and other, net (2) - - 28 (304) (326)
Severance and exit costs (3) 13 - 19 13 30
Contract terminations (4) - - - (5) 113
Litigation and other contingencies (5) (260) - - (315) 103
Hurricanes (6) 66 34 - 100 -
Adjusted EBITDA* (1) 2,719$ 2,729$ 2,450$ 8,301$ 7,254$
Adjusted EBITDA margin* 45.9% 45.7% 38.7% 46.2% 37.7%
Selected items:
Cash paid for capital expenditures - network and other 696$ 682$ 478$ 2,499$ 1,421$
Cash paid for capital expenditures - leased devices 682$ 608$ 767$ 1,787$ 1,530$
Quarter To Date Year To Date
Quarter To Date Year To Date
WIRELESS STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Net operating revenues
Service revenue
Postpaid 4,297$ 4,363$ 4,686$ 13,126$ 14,184$
Prepaid (7) 993 990 985 2,982 3,096
Wholesale, affiliate and other (7) 329 296 275 884 784
Total service revenue 5,619 5,649 5,946 16,992 18,064
Equipment revenue 2,309 1,960 2,226 6,355 5,556
Total net operating revenues 7,928 7,609 8,172 23,347 23,620
Net operating expenses
Cost of services (exclusive of depreciation and amortization below) 1,466 1,422 1,649 4,300 5,226
Cost of products (exclusive of depreciation and amortization below) 1,673 1,404 1,985 4,622 5,097
Selling, general and administrative 2,024 1,936 2,032 5,835 5,797
Depreciation - network and other 931 944 947 2,800 2,868
Depreciation - leased devices 990 888 837 2,732 2,205
Amortization 196 209 255 628 813
Other, net 139 117 150 54 248
Total net operating expenses 7,419 6,920 7,855 20,971 22,254
Operating income 509$ 689$ 317$ 2,376$ 1,366$
WIRELESS NON-GAAP RECONCILIATION (Unaudited)
(Millions)
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Operating income 509$ 689$ 317$ 2,376$ 1,366$
Loss (gain) from asset dispositions, exchanges, and other, net (2) - - 28 (304) (326)
Severance and exit costs (3) 4 - 13 (1) 18
Contract terminations (4) - - - (5) 113
Litigation and other contingencies (5) 63 - - 63 103
Hurricanes (6) 66 34 - 100 -
Depreciation - network and other 931 944 947 2,800 2,868
Depreciation - leased devices 990 888 837 2,732 2,205
Amortization 196 209 255 628 813
Adjusted EBITDA* (1) 2,759$ 2,764$ 2,397$ 8,389$ 7,160$
Adjusted EBITDA margin* 49.1% 48.9% 40.3% 49.4% 39.6%
Selected items:
Cash paid for capital expenditures - network and other 565$ 539$ 389$ 2,042$ 1,123$
Cash paid for capital expenditures - leased devices 682$ 608$ 767$ 1,787$ 1,530$
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Quarter To Date Year To Date
Quarter To Date Year To Date
WIRELINE STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Net operating revenues
Voice 94$ 109$ 153$ 327$ 506$
Data 29 33 41 96 127
Internet 254 256 281 765 871
Other 16 11 22 47 59
Total net operating revenues 393 409 497 1,235 1,563
Net operating expenses
Cost of services (exclusive of depreciation and amortization below) 352 372 400 1,111 1,284
Selling, general and administrative 71 66 49 194 189
Depreciation and amortization 55 49 51 155 148
Other, net (314) - 6 (309) 13
Total net operating expenses 164 487 506 1,151 1,634
Operating income (loss) 229$ (78)$ (9)$ 84$ (71)$
WIRELINE NON-GAAP RECONCILIATION (Unaudited)
(Millions)
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Operating income (loss) 229$ (78)$ (9)$ 84$ (71)$
Severance and exit costs (3) 9 - 6 14 13
Litigation and other contingencies (5) (323) - - (323) -
Depreciation and amortization 55 49 51 155 148
Adjusted EBITDA* (30)$ (29)$ 48$ (70)$ 90$
Adjusted EBITDA margin* -7.6% -7.1% 9.7% -5.7% 5.8%
Selected items:
Cash paid for capital expenditures - network and other 30$ 40$ 24$ 132$ 75$
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Quarter To Date Year To Date
Quarter To Date Year To Date
CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)
(Millions)
12/31/17 12/31/16
Operating activities
Net income (loss) 7,314$ (923)$
Depreciation and amortization 6,321 6,040
Provision for losses on accounts receivable 312 406
Share-based and long-term incentive compensation expense 137 57
Deferred income tax (benefit) expense (6,707) 276
Gains from asset dispositions and exchanges (479) (354)
Call premiums paid on debt redemptions (129) -
Loss on early extinguishment of debt 65 -
Amortization of long-term debt premiums, net (125) (234)
Loss on disposal of property, plant and equipment 533 368
Contract terminations (5) 96
Other changes in assets and liabilities:
Accounts and notes receivable (74) (542)
Inventories and other current assets (3,216) (2,254)
Deferred purchase price from sale of receivables - (220)
Accounts payable and other current liabilities (104) (97)
Non-current assets and liabilities, net 260 (313)
Other, net 302 594
Net cash provided by operating activities 4,405 2,900
Investing activities
Capital expenditures - network and other (2,499) (1,421)
Capital expenditures - leased devices (1,787) (1,530)
Expenditures relating to FCC licenses (92) (46)
Change in short-term investments, net 5,271 (2,349)
Proceeds from sales of assets and FCC licenses 367 126
Other, net 16 26
Net cash provided by (used in) investing activities 1,276 (5,194)
Financing activities
Proceeds from debt and financings 3,073 6,830
Repayments of debt, financing and capital lease obligations (7,159) (3,266)
Debt financing costs (19) (272)
Other, net (6) 68
Net cash (used in) provided by financing activities (4,111) 3,360
Net increase in cash and cash equivalents 1,570 1,066
Cash and cash equivalents, beginning of period 2,870 2,641
Cash and cash equivalents, end of period 4,440$ 3,707$
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)
(Millions)
12/31/17 9/30/17 12/31/16 12/31/17 12/31/16
Net cash provided by operating activities 1,166$ 1,959$ 650$ 4,405$ 2,900$
Capital expenditures - network and other (696) (682) (478) (2,499) (1,421)
Capital expenditures - leased devices (682) (608) (767) (1,787) (1,530)
Expenditures relating to FCC licenses, net (73) (6) (14) (92) (46)
Proceeds from sales of assets and FCC licenses 149 117 60 367 126
Other investing activities, net 6 (1) 134 2 98
Free cash flow* (130)$ 779$ (415)$ 396$ 127$
Net proceeds (repayments) of financings related to devices and receivables 527 (359) (231) 660 400
Adjusted free cash flow* 397$ 420$ (646)$ 1,056$ 527$
Year to Date
Quarter To Date Year to Date
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Millions)
12/31/17 3/31/17
ASSETS
Current assets
Cash and cash equivalents 4,440$ 2,870$
Short-term investments 173 5,444
Accounts and notes receivable, net 3,917 4,138
Device and accessory inventory 1,009 1,064
Prepaid expenses and other current assets 626 601
Total current assets 10,165 14,117
Property, plant and equipment, net 19,712 19,209
Goodwill 6,586 6,579
FCC licenses and other 41,222 40,585
Definite-lived intangible assets, net 2,667 3,320
Other assets 1,067 1,313
Total assets 81,419$ 85,123$
LIABILITIES AND EQUITY
Current liabilities
Accounts payable 3,176$ 3,281$
Accrued expenses and other current liabilities 3,859 4,141
Current portion of long-term debt, financing and capital lease obligations 4,036 5,036
Total current liabilities 11,071 12,458
Long-term debt, financing and capital lease obligations 32,825 35,878
Deferred tax liabilities 7,709 14,416
Other liabilities 3,509 3,563
Total liabilities 55,114 66,315
Stockholders' equity
Common stock 40 40
Paid-in capital 27,825 27,756
Accumulated deficit (1,264) (8,584)
Accumulated other comprehensive loss (366) (404)
Total stockholders' equity 26,235 18,808
Noncontrolling interests 70 -
Total equity 26,305 18,808
Total liabilities and equity 81,419$ 85,123$
NET DEBT* (NON-GAAP) (Unaudited)
(Millions)
12/31/17 3/31/17
Total debt 36,861$ 40,914$
Less: Cash and cash equivalents (4,440) (2,870)
Less: Short-term investments (173) (5,444)
Net debt* 32,248$ 32,600$
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SCHEDULE OF DEBT (Unaudited)
(Millions)
12/31/17
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 3,281
Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, and Sprint Spectrum Co III LLC 3,281
Sprint Communications, Inc.
Export Development Canada secured loan 12/17/2019 300
9% Guaranteed notes due 2018 11/15/2018 1,800
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% Secured debentures due 2022 04/15/2022 200
6% Senior notes due 2022 11/15/2022 2,280
Sprint Communications, Inc. 8,080
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
Credit facilities
PRWireless secured term loan 06/28/2020 183
Secured equipment credit facilities 2020 - 2021 555
Secured term loan 02/03/2024 3,970
Credit facilities 4,708
Accounts receivable facility 11/18/2019 2,966
Financing obligations 2018 - 2021 614
Capital leases and other obligations 2018 - 2026 532
Total principal 36,885
Net premiums and debt financing costs (24)
Total debt 36,861$
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NOTES TO THE FINANCIAL INFORMATION (Unaudited)
(1) 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 nine-month periods ended December 31, 2017, we leased devices through our Sprint direct channels totaling
approximately $1,761 million and $3,671 million, respectively, which would have increased cost of products and reduced EBITDA* if they had
been purchased under our subsidized program.
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.
(2) During the first quarter of fiscal year 2017, 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. Additionally, the company recorded
a pre-tax non-cash gain related to spectrum swaps with other carriers. During the third quarter of fiscal year 2016, 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.
(3) 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.
(4) During the first quarter of fiscal year 2017, we recorded a $5 million gain due to reversal of a liability recorded in relation to the termination of our
relationship with General Wireless Operations, Inc. (Radio Shack). 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.
(5) During the third and first quarters of fiscal year 2017, litigation and other contingencies consist of reductions associated with legal settlements or
favorable developments in pending legal proceedings as well as non-recurring charges of $51 million related to a regulatory fee matter. During the
second quarter of fiscal year 2016, litigation and other contingencies consist of unfavorable developments associated with legal matters as well as
federal and state matters such as sales, use or property taxes.
(6) During the third and second quarters of fiscal year 2017 we recorded estimated hurricane-related charges of $66 million and $34 million,
respectively, consisting of customer service credits, incremental roaming costs, network repairs and replacements.
(7) Sprint is no longer reporting Lifeline subscribers due to recent regulatory changes resulting in tighter program restrictions. We have excluded
them from our customer base for all periods presented, including our Assurance Wireless prepaid brand and subscribers through our wholesale
Lifeline mobile virtual network operators (MVNO). The table reflects the reclassification of the related Assurance Wireless prepaid revenue from
Prepaid service revenue to Wholesale, affiliate and other revenue of $92 million and $275 million for the three and nine-month periods ended
December 31, 2016, respectively. Revenue associated with subscribers through our wholesale Lifeline MVNO's continue to remain in Wholesale,
affiliate and other revenue following this change.
*FINANCIAL MEASURES
*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.
Postpaid ABPA is average billings per account and calculated by dividing postpaid service revenue earned from postpaid
customers plus billings from installment plans and non-operating leases, as well as, operating 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 postpaid customer billings per account as it approximates the
expected cash collections, including billings from installment plans and non-operating leases, as well as, operating lease
revenue, per postpaid account each month.
Postpaid Phone ABPU is average billings per postpaid phone user and calculated by dividing service revenue earned from
postpaid phone customers plus billings from installment plans and non-operating leases, as well as, operating 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 postpaid phone customer
billings as it approximates the expected cash collections, including billings from installment plans and non-operating leases,
as well as, operating 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
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,
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 54.6 million connections as of December 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.
This regulatory filing also includes additional resources:
fiscal3q17sprintquarterlyinv.pdf
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