[November 03, 2015] |
|
Sprint Hits Inflection Point in Its Turnaround by Reporting Positive Postpaid Phone Net Additions and Record Low Postpaid Churn in the Second Fiscal Quarter of 2015
Sprint Corporation (NYSE:S) today reported operating results for
the second fiscal quarter of 2015, including growth in postpaid phone
customers for the first time in over two years, record low postpaid
churn, and over 1 million total net additions. The company also reported
net operating revenue of $8 billion, operating loss of $2 million, and
Adjusted EBITDA* of $2 billion.
"As seen in our quarterly results, American consumers are happy to
switch to Sprint because they appreciate great products and great
service at a great price," said Sprint CEO Marcelo Claure. "This quarter
marked an inflection point in our turnaround journey, as we achieved
positive postpaid phone net additions for the first time in over two
years. In addition, we set another record low for postpaid churn and
improved sequentially in the September quarter, something no US carrier
has ever done before."
Company Reaches Important Milestone with Positive Postpaid Phone Net
Additions
During the past year, Sprint has focused on attracting and retaining
more postpaid phone customers by providing an improved customer
experience and a compelling value proposition, including the launch of
the iPhone® Forever program, which allows customers to always
be eligible to upgrade to the latest iPhone. The company reported
positive postpaid phone net additions in the quarter for the first time
in over two years and, based on October results, has seen positive
postpaid phone net additions for six consecutive months, a streak not
seen in nearly three years.
The company also reported the following Sprint platform results:
-
Total net additions were 1.1 million compared to 590,000 in the prior
year quarter - an improvement of 466,000 year-over-year.
-
Postpaid net additions of 553,000 compared to net losses of 272,000 in
the prior year quarter - an improvement of 825,000 year-over-year.
During the quarter 199,000 prepaid customers with consistent payment
history migrated to postpaid, with 175,000 of these migrations now
included as postpaid customers under their respective Boost and Virgin
brands. Excluding total migrations from prepaid, postpaid net
additions would have been 354,000 and improved by 626,000
year-over-year.
-
Postpaid phone net additions were 237,000 compared to net losses of
500,000 in the prior year quarter - an improvement of 737,000
year-over-year. Excluding migrations from prepaid, postpaid phone net
additions would have been 38,000 and improved by 538,000
year-over-year.
-
Prepaid net losses of 363,000 compared to net additions of 35,000 in
the prior year quarter - a decline of 398,000 year-over-year.
Excluding migrations to postpaid, prepaid net losses would have been
164,000 and declined by 199,000 year-over year.
-
Wholesale net additions of 866,000 compared to 827,000 in the prior
year quarter - an improvement of 39,000 year-over-year.
Quarterly Financial Results
-
Net operating revenues of $8 billion decreased six percent
year-over-year, as customer shifts to rate plans associated with
device financing options and postpaid phone customer losses from prior
periods drove lower wireless service revenues. Wireless service
revenues plus installment plan billings and lease revenue of $7.1
billion increased slightly from the prior year period.
-
Consolidated Adjusted EBITDA* of $2 billion grew 45 percent from the
prior year period, as expense reductions more than offset the decline
in service revenues. Total expenses improved primarily due to lower
cost of product expenses related to device leasing options for which
the associated cost is recorded as depreciation expense and lower bad
debt expense as a result of a higher acquisition mix of prime credit
quality customers in recent quarters.
-
Operating loss of $2 million compares to an operating loss of $192
million in the year-ago quarter, an improvement of $190 million due to
the items identified in Adjusted EBITDA* above, partially offset by
higher depreciation expenses related to leased device assets and
severance costs related to work force reductions in the prior year
quarter.
-
Net loss of $585 million, or $0.15 per share, compared to a net loss
of $765 million, or $0.19 per share, in the year-ago period.
-
Total liquidity was $5.9 billion at the end of the quarter, and the
company had an additional $1.2 billion of availability under vendor
financing agreements that can be used toward the purchase of 2.5 GHz
network equipment.
Further Cost Reductions Expected
Sprint plans to achieve a sustainable reduction of $2 billion or more of
run rate operating expenses in fiscal 2016, excluding any transformation
program costs to achieve that run rate benefit.
Funding the Turnaround
Sprint continues to work toward utilizing its assets to help fund the
business and fuel future growth. The company has made significant
progress working with SoftBank and others to establish a handset leasing
company and expects to close in the next few weeks. In combination with
the aforementioned plans for significant operating expense reductions,
Sprint expects the handset leasing company and other upcoming financing
structures to sufficiently meet the company's cash needs for the
foreseeable future.
Network Experience Continues to Improve With Carrier Aggregation
Deployment
Sprint remains focused on building a network that delivers the
consistent reliability, capacity and speed that customers demand. During
the quarter, the company continued deploying two-channel (2x20 MHz)
carrier aggregation in the 2.5 GHz band, which produces more capacity
and higher data speeds, in 80 markets across the country. Sprint
currently has twelve devices that are 2x20 capable, including the
recently introduced iPhone® 6s and Galaxy® S6
models.
Third-party sources continue to validate Sprint's improvements in the
network experience.
-
Independent mobile analytics firm RootMetrics® awarded
Sprint almost 55 percent more first-place (outright or shared)
RootScore® Awards for overall, reliability, speed, data,
call, or text network performance in the 54 metro markets measured so
far in the second half of 2015 compared to the year-ago periodi.
The company also saw median downlink speeds in these markets increase
by 66 percent on average from the year-ago period, including
impressive results in the Denver market, where Sprint received a
first-place ranking in network speed for its broad deployment of 2x20
carrier aggregation.
-
PC Magazine looked at speed test results for LTE connections on Sprint
iPhones in early October, finding average download speeds on the two
new devices were 50 percent faster than the last generation and the
iPhone® 6s demonstrated peak speeds of over 120 Mbps.
The company remains committed to its plan of significantly densifying
the network and continuing to improve performance.
Financial Outlook
-
Including transformation program costs, the company now expects fiscal
year 2015 Adjusted EBITDA* to be at the low end of the previous
expectation of $7.2 to $7.6 billion. This excludes any impacts from
the potential sale of certain devices being leased by our customers.
-
The company continues to expect fiscal year 2015 cash capital
expenditures to be approximately $5 billion, excluding the impact of
leased devices sold through indirect channels.
Conference Call and Webcast
-
Date/Time: 8:30 a.m. (ET) Tuesday, Nov. 3, 2015
-
Call-in Information
-
U.S./Canada: 866-360-1063 (ID: 56083433)
-
International: 706-634-7849 (ID: 56083433)
-
Webcast available via the Internet at www.sprint.com/investors
-
Additional information about results, including the "Quarterly
Investor Update," is available on our Investor Relations website
Wireless Operating Statistics (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
6/30/15
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
9/30/14
|
|
Sprint platform (1):
|
|
|
|
|
|
|
|
|
Net additions (losses) (in thousands)
|
|
|
|
|
|
|
|
|
Postpaid (2)
|
|
|
|
553
|
|
|
310
|
|
|
(272
|
)
|
|
|
863
|
|
|
(453
|
)
|
Prepaid (2)
|
|
|
|
(363
|
)
|
|
(366
|
)
|
|
35
|
|
|
|
(729
|
)
|
|
(507
|
)
|
Wholesale and affiliate
|
|
|
|
866
|
|
|
731
|
|
|
827
|
|
|
|
1,597
|
|
|
1,330
|
|
Total Sprint platform wireless net additions
|
|
|
|
1,056
|
|
|
675
|
|
|
590
|
|
|
|
1,731
|
|
|
370
|
|
|
|
|
|
|
|
|
|
|
End of period connections (in thousands)
|
|
|
|
|
|
|
|
|
Postpaid (2)
|
|
|
|
30,569
|
|
|
30,016
|
|
|
29,465
|
|
|
|
30,569
|
|
|
29,465
|
|
Prepaid (2)
|
|
|
|
14,977
|
|
|
15,340
|
|
|
14,750
|
|
|
|
14,977
|
|
|
14,750
|
|
Wholesale and affiliate
|
|
|
|
12,322
|
|
|
11,456
|
|
|
9,706
|
|
|
|
12,322
|
|
|
9,706
|
|
Total Sprint platform end of period connections
|
|
|
|
57,868
|
|
|
56,812
|
|
|
53,921
|
|
|
|
57,868
|
|
|
53,921
|
|
|
|
|
|
|
|
|
|
|
Churn
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
|
1.54
|
%
|
|
1.56
|
%
|
|
2.18
|
%
|
|
|
1.55
|
%
|
|
2.12
|
%
|
Prepaid
|
|
|
|
5.07
|
%
|
|
5.08
|
%
|
|
3.76
|
%
|
|
|
5.07
|
%
|
|
4.10
|
%
|
|
|
|
|
|
|
|
|
|
Supplemental data - connected devices
|
|
|
|
|
|
|
|
|
End of period connections (in thousands)
|
|
|
|
|
|
|
|
|
Retail postpaid
|
|
|
|
1,576
|
|
|
1,439
|
|
|
1,039
|
|
|
|
1,576
|
|
|
1,039
|
|
Wholesale and affiliate
|
|
|
|
7,338
|
|
|
6,620
|
|
|
4,635
|
|
|
|
7,338
|
|
|
4,635
|
|
Total
|
|
|
|
8,914
|
|
|
8,059
|
|
|
5,674
|
|
|
|
8,914
|
|
|
5,674
|
|
|
|
|
|
|
|
|
|
|
Supplemental data - total company
|
|
|
|
|
|
|
|
|
End of period connections (in thousands)
|
|
|
|
|
|
|
|
|
Sprint platform (1)
|
|
|
|
57,868
|
|
|
56,812
|
|
|
53,921
|
|
|
|
57,868
|
|
|
53,921
|
|
Transactions (3)
|
|
|
|
710
|
|
|
856
|
|
|
1,116
|
|
|
|
710
|
|
|
1,116
|
|
Total
|
|
|
|
58,578
|
|
|
57,668
|
|
|
55,037
|
|
|
|
58,578
|
|
|
55,037
|
|
|
|
|
|
|
|
|
|
|
Sprint platform ARPU (1) (a)
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
$
|
54.02
|
|
$
|
55.48
|
|
$
|
60.58
|
|
|
$
|
54.74
|
|
$
|
61.33
|
|
Prepaid
|
|
|
$
|
27.54
|
|
$
|
27.81
|
|
$
|
27.19
|
|
|
$
|
27.68
|
|
$
|
27.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP RECONCILIATION - ABPA*, POSTPAID PHONE ARPU AND ABPU*
(Unaudited)
|
(Millions, except accounts, connections, ABPA*, ARPU, and ABPU*)
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
6/30/15
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
9/30/14
|
|
Sprint platform ABPA* (1) (b)
|
|
|
|
|
|
|
|
|
Postpaid service revenue
|
|
|
$
|
4,900
|
|
$
|
4,964
|
|
$
|
5,377
|
|
|
$
|
9,864
|
|
$
|
10,930
|
|
Add: Installment plan billings and lease revenue
|
|
|
|
694
|
|
|
554
|
|
|
193
|
|
|
|
1,248
|
|
|
330
|
|
Total for Sprint platform postpaid connections
|
|
|
$
|
5,594
|
|
$
|
5,518
|
|
$
|
5,570
|
|
|
$
|
11,112
|
|
$
|
11,260
|
|
|
|
|
|
|
|
|
|
|
Sprint platform postpaid accounts (in thousands)
|
|
|
|
11,226
|
|
|
11,175
|
|
|
11,521
|
|
|
|
11,201
|
|
|
11,637
|
|
Sprint platform postpaid ABPA*
|
|
|
$
|
166.05
|
|
$
|
164.63
|
|
$
|
161.12
|
|
|
$
|
165.34
|
|
$
|
161.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
6/30/15
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
9/30/14
|
|
Sprint platform postpaid phone ARPU and
ABPU* (1)
|
|
|
|
|
|
|
|
|
Postpaid phone service revenue
|
|
|
$
|
4,615
|
|
$
|
4,682
|
|
$
|
5,096
|
|
|
$
|
9,297
|
|
$
|
10,390
|
|
Add: Installment plan billings and lease revenue
|
|
|
|
665
|
|
|
531
|
|
|
183
|
|
|
|
1,196
|
|
|
312
|
|
Total for Sprint platform postpaid phone connections
|
|
|
$
|
5,280
|
|
$
|
5,213
|
|
$
|
5,279
|
|
|
$
|
10,493
|
|
$
|
10,702
|
|
|
|
|
|
|
|
|
|
|
Sprint platform postpaid average phone connections (in thousands)
|
|
|
|
24,915
|
|
|
24,856
|
|
|
25,499
|
|
|
|
24,885
|
|
|
25,785
|
|
Sprint platform postpaid phone ARPU (a)
|
|
|
$
|
61.74
|
|
$
|
62.79
|
|
$
|
66.62
|
|
|
$
|
62.26
|
|
$
|
67.16
|
|
Sprint platform postpaid phone ABPU* (c)
|
|
|
$
|
70.64
|
|
$
|
69.91
|
|
$
|
69.02
|
|
|
$
|
70.27
|
|
$
|
69.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) ARPU is calculated by dividing service revenue by the
sum of the monthly average number of connections in the applicable
service category. Changes in average monthly service revenue reflect
connections for either the postpaid or prepaid service category who
change rate plans, the level of voice and data usage, the amount of
service credits which are offered to connections, plus the net
effect of average monthly revenue generated by new connections and
deactivating connections.
|
Sprint platform postpaid phone ARPU represents revenues related to
our postpaid phone connections.
|
(b) Sprint platform postpaid ABPA* is calculated by dividing service
revenue earned from connections plus installment plan billings and
lease revenue by the sum of the monthly average number of accounts
during the period.
|
(c) Sprint platform postpaid phone ABPU* is calculated by dividing
postpaid phone service revenue earned from postpaid phone
connections plus installment plan billings and lease revenue by the
sum of the monthly average number of postpaid phone connections
during the period.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
(Millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
|
6/30/15
|
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
|
9/30/14
|
|
Net operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
|
$
|
6,880
|
|
|
$
|
7,037
|
|
|
$
|
7,449
|
|
|
$
|
13,917
|
|
|
$
|
15,132
|
|
Equipment revenue
|
|
|
|
1,095
|
|
|
|
990
|
|
|
|
1,039
|
|
|
|
2,085
|
|
|
|
2,145
|
|
Total net operating revenues
|
|
|
|
7,975
|
|
|
|
8,027
|
|
|
|
8,488
|
|
|
|
16,002
|
|
|
|
17,277
|
|
Net operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization below)
|
|
|
|
2,453
|
|
|
|
2,393
|
|
|
|
2,429
|
|
|
|
4,846
|
|
|
|
4,949
|
|
Cost of products (exclusive of depreciation and amortization below)
|
|
|
|
1,290
|
|
|
|
1,365
|
|
|
|
2,372
|
|
|
|
2,655
|
|
|
|
4,530
|
|
Selling, general and administrative
|
|
|
|
2,224
|
|
|
|
2,187
|
|
|
|
2,301
|
|
|
|
4,411
|
|
|
|
4,585
|
|
Depreciation and amortization
|
|
|
|
1,743
|
|
|
|
1,588
|
|
|
|
1,294
|
|
|
|
3,331
|
|
|
|
2,575
|
|
Impairments (4)
|
|
|
|
85
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85
|
|
|
|
-
|
|
Other, net
|
|
|
|
182
|
|
|
|
(7
|
)
|
|
|
284
|
|
|
|
175
|
|
|
|
311
|
|
Total net operating expenses
|
|
|
|
7,977
|
|
|
|
7,526
|
|
|
|
8,680
|
|
|
|
15,503
|
|
|
|
16,950
|
|
Operating (loss) income
|
|
|
|
(2
|
)
|
|
|
501
|
|
|
|
(192
|
)
|
|
|
499
|
|
|
|
327
|
|
Interest expense
|
|
|
|
(542
|
)
|
|
|
(542
|
)
|
|
|
(510
|
)
|
|
|
(1,084
|
)
|
|
|
(1,022
|
)
|
Other income, net
|
|
|
|
5
|
|
|
|
4
|
|
|
|
8
|
|
|
|
9
|
|
|
|
9
|
|
Loss before income taxes
|
|
|
|
(539
|
)
|
|
|
(37
|
)
|
|
|
(694
|
)
|
|
|
(576
|
)
|
|
|
(686
|
)
|
Income tax (expense) benefit
|
|
|
|
(46
|
)
|
|
|
17
|
|
|
|
(71
|
)
|
|
|
(29
|
)
|
|
|
(56
|
)
|
Net loss
|
|
|
$
|
(585
|
)
|
|
$
|
(20
|
)
|
|
$
|
(765
|
)
|
|
$
|
(605
|
)
|
|
$
|
(742
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per common share
|
|
|
$
|
(0.15
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
(0.15
|
)
|
|
$
|
(0.19
|
)
|
Weighted average common shares outstanding
|
|
|
|
3,969
|
|
|
|
3,967
|
|
|
|
3,949
|
|
|
|
3,968
|
|
|
|
3,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effective tax rate
|
|
|
|
-8.5
|
%
|
|
|
45.9
|
%
|
|
|
-10.2
|
%
|
|
|
-5.0
|
%
|
|
|
-8.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED EBITDA* (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
|
6/30/15
|
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
|
9/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(585
|
)
|
|
$
|
(20
|
)
|
|
$
|
(765
|
)
|
|
$
|
(605
|
)
|
|
$
|
(742
|
)
|
Income tax expense (benefit)
|
|
|
|
46
|
|
|
|
(17
|
)
|
|
|
71
|
|
|
|
29
|
|
|
|
56
|
|
Loss before income taxes
|
|
|
|
(539
|
)
|
|
|
(37
|
)
|
|
|
(694
|
)
|
|
|
(576
|
)
|
|
|
(686
|
)
|
Other income, net
|
|
|
|
(5
|
)
|
|
|
(4
|
)
|
|
|
(8
|
)
|
|
|
(9
|
)
|
|
|
(9
|
)
|
Interest expense
|
|
|
|
542
|
|
|
|
542
|
|
|
|
510
|
|
|
|
1,084
|
|
|
|
1,022
|
|
Operating (loss) income
|
|
|
|
(2
|
)
|
|
|
501
|
|
|
|
(192
|
)
|
|
|
499
|
|
|
|
327
|
|
Depreciation and amortization
|
|
|
|
1,743
|
|
|
|
1,588
|
|
|
|
1,294
|
|
|
|
3,331
|
|
|
|
2,575
|
|
EBITDA*
|
|
|
|
1,741
|
|
|
|
2,089
|
|
|
|
1,102
|
|
|
|
3,830
|
|
|
|
2,902
|
|
Impairments (4)
|
|
|
|
85
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85
|
|
|
|
-
|
|
Severance and exit costs (5)
|
|
|
|
25
|
|
|
|
13
|
|
|
|
284
|
|
|
|
38
|
|
|
|
311
|
|
Litigation (6)
|
|
|
|
157
|
|
|
|
-
|
|
|
|
-
|
|
|
|
157
|
|
|
|
-
|
|
Reduction in liability - U.S. Cellular asset acquisition (7)
|
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
-
|
|
Adjusted EBITDA*
|
|
|
$
|
2,008
|
|
|
$
|
2,082
|
|
|
$
|
1,386
|
|
|
$
|
4,090
|
|
|
$
|
3,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin*
|
|
|
|
29.2
|
%
|
|
|
29.6
|
%
|
|
|
18.6
|
%
|
|
|
29.4
|
%
|
|
|
21.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected items:
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures - network and other
|
|
|
$
|
1,162
|
|
|
$
|
1,802
|
|
|
$
|
1,143
|
|
|
$
|
2,964
|
|
|
$
|
2,389
|
|
Cash paid for capital expenditures - leased devices
|
|
|
$
|
573
|
|
|
$
|
544
|
|
|
$
|
-
|
|
|
$
|
1,117
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELESS STATEMENTS OF OPERATIONS (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
|
6/30/15
|
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
|
9/30/14
|
|
Net operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
Service revenue
|
|
|
|
|
|
|
|
|
|
|
|
Sprint platform (1):
|
|
|
|
|
|
|
|
|
|
|
|
Postpaid
|
|
|
$
|
4,900
|
|
|
$
|
4,964
|
|
|
$
|
5,377
|
|
|
$
|
9,864
|
|
|
$
|
10,930
|
|
Prepaid
|
|
|
|
1,252
|
|
|
|
1,300
|
|
|
|
1,197
|
|
|
|
2,552
|
|
|
|
2,418
|
|
Wholesale, affiliate and other
|
|
|
|
185
|
|
|
|
181
|
|
|
|
181
|
|
|
|
366
|
|
|
|
344
|
|
Total Sprint platform
|
|
|
|
6,337
|
|
|
|
6,445
|
|
|
|
6,755
|
|
|
|
12,782
|
|
|
|
13,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions (3)
|
|
|
|
84
|
|
|
|
105
|
|
|
|
135
|
|
|
|
189
|
|
|
|
285
|
|
Total service revenue
|
|
|
|
6,421
|
|
|
|
6,550
|
|
|
|
6,890
|
|
|
$
|
12,971
|
|
|
$
|
13,977
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equipment revenue
|
|
|
|
1,095
|
|
|
|
990
|
|
|
|
1,039
|
|
|
|
2,085
|
|
|
|
2,145
|
|
Total net operating revenues
|
|
|
|
7,516
|
|
|
|
7,540
|
|
|
|
7,929
|
|
|
|
15,056
|
|
|
|
16,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services (exclusive of depreciation and amortization below)
|
|
|
|
2,111
|
|
|
|
2,005
|
|
|
|
1,988
|
|
|
|
4,116
|
|
|
|
4,037
|
|
Cost of products (exclusive of depreciation and amortization below)
|
|
|
|
1,290
|
|
|
|
1,365
|
|
|
|
2,372
|
|
|
|
2,655
|
|
|
|
4,530
|
|
Selling, general and administrative
|
|
|
|
2,136
|
|
|
|
2,096
|
|
|
|
2,199
|
|
|
|
4,232
|
|
|
|
4,392
|
|
Depreciation and amortization
|
|
|
|
1,694
|
|
|
|
1,540
|
|
|
|
1,232
|
|
|
|
3,234
|
|
|
|
2,444
|
|
Impairments (4)
|
|
|
|
85
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85
|
|
|
|
-
|
|
Other, net
|
|
|
|
181
|
|
|
|
(8
|
)
|
|
|
248
|
|
|
|
173
|
|
|
|
271
|
|
Total net operating expenses
|
|
|
|
7,497
|
|
|
|
6,998
|
|
|
|
8,039
|
|
|
|
14,495
|
|
|
|
15,674
|
|
Operating income (loss)
|
|
|
$
|
19
|
|
|
$
|
542
|
|
|
$
|
(110
|
)
|
|
$
|
561
|
|
|
$
|
448
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELESS NON-GAAP RECONCILIATION (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
|
6/30/15
|
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
|
9/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss)
|
|
|
$
|
19
|
|
|
$
|
542
|
|
|
$
|
(110
|
)
|
|
$
|
561
|
|
|
$
|
448
|
|
Impairments (4)
|
|
|
|
85
|
|
|
|
-
|
|
|
|
-
|
|
|
|
85
|
|
|
|
-
|
|
Severance and exit costs (5)
|
|
|
|
24
|
|
|
|
12
|
|
|
|
248
|
|
|
|
36
|
|
|
|
271
|
|
Litigation (6)
|
|
|
|
157
|
|
|
|
-
|
|
|
|
-
|
|
|
|
157
|
|
|
|
-
|
|
Reduction in liability - U.S. Cellular asset acquisition (7)
|
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
-
|
|
|
|
(20
|
)
|
|
|
-
|
|
Depreciation and amortization
|
|
|
|
1,694
|
|
|
|
1,540
|
|
|
|
1,232
|
|
|
|
3,234
|
|
|
|
2,444
|
|
Adjusted EBITDA*
|
|
|
$
|
1,979
|
|
|
$
|
2,074
|
|
|
$
|
1,370
|
|
|
$
|
4,053
|
|
|
$
|
3,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin*
|
|
|
|
30.8
|
%
|
|
|
31.7
|
%
|
|
|
19.9
|
%
|
|
|
31.2
|
%
|
|
|
22.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected items:
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures - network and other
|
|
|
$
|
1,003
|
|
|
$
|
1,640
|
|
|
$
|
989
|
|
|
$
|
2,643
|
|
|
$
|
2,109
|
|
Cash paid for capital expenditures - leased devices
|
|
|
$
|
573
|
|
|
$
|
544
|
|
|
$
|
-
|
|
|
$
|
1,117
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELINE STATEMENTS OF OPERATIONS (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
|
6/30/15
|
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
|
9/30/14
|
|
Net operating revenues
|
|
|
|
|
|
|
|
|
|
|
|
Voice
|
|
|
$
|
212
|
|
|
$
|
233
|
|
|
$
|
294
|
|
|
$
|
445
|
|
|
$
|
621
|
|
Data
|
|
|
|
43
|
|
|
|
49
|
|
|
|
53
|
|
|
|
92
|
|
|
|
109
|
|
Internet
|
|
|
|
323
|
|
|
|
328
|
|
|
|
340
|
|
|
|
651
|
|
|
|
685
|
|
Other
|
|
|
|
31
|
|
|
|
20
|
|
|
|
21
|
|
|
|
51
|
|
|
|
39
|
|
Total net operating revenues
|
|
|
|
609
|
|
|
|
630
|
|
|
|
708
|
|
|
|
1,239
|
|
|
|
1,454
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
Costs of services (exclusive of depreciation and amortization below)
|
|
|
|
495
|
|
|
|
534
|
|
|
|
593
|
|
|
|
1,029
|
|
|
|
1,219
|
|
Selling, general and administrative
|
|
|
|
85
|
|
|
|
87
|
|
|
|
88
|
|
|
|
172
|
|
|
|
173
|
|
Depreciation and amortization
|
|
|
|
48
|
|
|
|
46
|
|
|
|
60
|
|
|
|
94
|
|
|
|
127
|
|
Other, net
|
|
|
|
1
|
|
|
|
1
|
|
|
|
35
|
|
|
|
2
|
|
|
|
39
|
|
Total net operating expenses
|
|
|
|
629
|
|
|
|
668
|
|
|
|
776
|
|
|
|
1,297
|
|
|
|
1,558
|
|
Operating loss
|
|
|
$
|
(20
|
)
|
|
$
|
(38
|
)
|
|
$
|
(68
|
)
|
|
$
|
(58
|
)
|
|
$
|
(104
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WIRELINE NON-GAAP RECONCILIATION (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
|
|
9/30/15
|
|
|
|
6/30/15
|
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
|
9/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss
|
|
|
$
|
(20
|
)
|
|
$
|
(38
|
)
|
|
$
|
(68
|
)
|
|
$
|
(58
|
)
|
|
$
|
(104
|
)
|
Severance and exit costs (5)
|
|
|
|
1
|
|
|
|
1
|
|
|
|
35
|
|
|
|
2
|
|
|
|
39
|
|
Depreciation and amortization
|
|
|
|
48
|
|
|
|
46
|
|
|
|
60
|
|
|
|
94
|
|
|
|
127
|
|
Adjusted EBITDA*
|
|
|
$
|
29
|
|
|
$
|
9
|
|
|
$
|
27
|
|
|
$
|
38
|
|
|
$
|
62
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin*
|
|
|
|
4.8
|
%
|
|
|
1.4
|
%
|
|
|
3.8
|
%
|
|
|
3.1
|
%
|
|
|
4.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected items:
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for capital expenditures - network and other
|
|
|
$
|
63
|
|
|
$
|
68
|
|
|
$
|
65
|
|
|
$
|
131
|
|
|
$
|
124
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year To Date
|
|
|
|
|
|
|
|
|
9/30/15
|
|
|
|
9/30/14
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
$
|
(605
|
)
|
|
$
|
(742
|
)
|
Impairments (4)
|
|
|
|
|
|
|
|
85
|
|
|
|
-
|
|
Depreciation and amortization
|
|
|
|
|
|
|
|
3,331
|
|
|
|
2,575
|
|
Provision for losses on accounts receivable
|
|
|
|
|
|
|
|
278
|
|
|
|
493
|
|
Share-based and long-term incentive compensation expense
|
|
|
|
|
|
|
|
40
|
|
|
|
65
|
|
Deferred income tax expense
|
|
|
|
|
|
|
|
28
|
|
|
|
28
|
|
Amortization of long-term debt premiums, net
|
|
|
|
|
|
|
|
(157
|
)
|
|
|
(149
|
)
|
Other changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts and notes receivable
|
|
|
|
|
|
|
|
(1,357
|
)
|
|
|
(828
|
)
|
Inventories and other current assets
|
|
|
|
|
|
|
|
173
|
|
|
|
(155
|
)
|
Accounts payable and other current liabilities
|
|
|
|
|
|
|
|
(509
|
)
|
|
|
503
|
|
Non-current assets and liabilities, net
|
|
|
|
|
|
|
|
125
|
|
|
|
(146
|
)
|
Other, net
|
|
|
|
|
|
|
|
365
|
|
|
|
63
|
|
Net cash provided by operating activities
|
|
|
|
|
|
|
|
1,797
|
|
|
|
1,707
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Capital expenditures - network and other
|
|
|
|
|
|
|
|
(2,964
|
)
|
|
|
(2,389
|
)
|
Capital expenditures - leased devices
|
|
|
|
|
|
|
|
(1,117
|
)
|
|
|
-
|
|
Expenditures relating to FCC licenses
|
|
|
|
|
|
|
|
(45
|
)
|
|
|
(79
|
)
|
Reimbursements relating to FCC licenses
|
|
|
|
|
|
|
|
-
|
|
|
|
95
|
|
Change in short-term investments, net
|
|
|
|
|
|
|
|
63
|
|
|
|
53
|
|
Proceeds from sales of assets and FCC licenses
|
|
|
|
|
|
|
|
4
|
|
|
|
101
|
|
Other, net
|
|
|
|
|
|
|
|
(21
|
)
|
|
|
(6
|
)
|
Net cash used in investing activities
|
|
|
|
|
|
|
|
(4,080
|
)
|
|
|
(2,225
|
)
|
|
|
|
|
|
|
|
|
|
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Proceeds from debt and financings
|
|
|
|
|
|
|
|
434
|
|
|
|
-
|
|
Repayments of debt, financing and capital lease obligations
|
|
|
|
|
|
|
|
(206
|
)
|
|
|
(363
|
)
|
Proceeds from issuance of common stock, net
|
|
|
|
|
|
|
|
8
|
|
|
|
46
|
|
Other, net
|
|
|
|
|
|
|
|
9
|
|
|
|
-
|
|
Net cash provided by (used in) financing activities
|
|
|
|
|
|
|
|
245
|
|
|
|
(317
|
)
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash equivalents
|
|
|
|
|
|
|
|
(2,038
|
)
|
|
|
(835
|
)
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
|
|
|
|
|
4,010
|
|
|
|
4,970
|
|
Cash and cash equivalents, end of period
|
|
|
|
|
|
|
$
|
1,972
|
|
|
$
|
4,135
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP)
(Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
Quarter To Date
|
|
Year To Date
|
|
|
9/30/15
|
|
|
|
6/30/15
|
|
|
|
9/30/14
|
|
|
|
9/30/15
|
|
|
|
9/30/14
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
$
|
1,669
|
|
|
$
|
128
|
|
|
$
|
1,028
|
|
|
$
|
1,797
|
|
|
$
|
1,707
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures - network and other
|
|
(1,162
|
)
|
|
|
(1,802
|
)
|
|
|
(1,143
|
)
|
|
|
(2,964
|
)
|
|
|
(2,389
|
)
|
Capital expenditures - leased devices
|
|
(573
|
)
|
|
|
(544
|
)
|
|
|
-
|
|
|
|
(1,117
|
)
|
|
|
-
|
|
(Expenditures) reimbursements relating to FCC licenses, net
|
|
(19
|
)
|
|
|
(26
|
)
|
|
|
(38
|
)
|
|
|
(45
|
)
|
|
|
16
|
|
Proceeds from sales of assets and FCC licenses
|
|
3
|
|
|
|
1
|
|
|
|
81
|
|
|
|
4
|
|
|
|
101
|
|
Other investing activities, net
|
|
(18
|
)
|
|
|
(3
|
)
|
|
|
(3
|
)
|
|
|
(21
|
)
|
|
|
(6
|
)
|
Free cash flow*
|
$
|
(100
|
)
|
|
$
|
(2,246
|
)
|
|
$
|
(75
|
)
|
|
$
|
(2,346
|
)
|
|
$
|
(571
|
)
|
|
|
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
9/30/15
|
|
|
|
3/31/15
|
|
ASSETS
|
|
|
|
|
Current assets
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,972
|
|
|
$
|
4,010
|
|
Short-term investments
|
|
|
103
|
|
|
|
166
|
|
Accounts and notes receivable, net
|
|
|
1,980
|
|
|
|
2,290
|
|
Device and accessory inventory
|
|
|
889
|
|
|
|
1,359
|
|
Deferred tax assets
|
|
|
63
|
|
|
|
62
|
|
Prepaid expenses and other current assets
|
|
|
2,089
|
|
|
|
1,890
|
|
Total current assets
|
|
|
7,096
|
|
|
|
9,777
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
|
21,061
|
|
|
|
19,721
|
|
Goodwill
|
|
|
6,575
|
|
|
|
6,575
|
|
FCC licenses and other
|
|
|
40,025
|
|
|
|
39,987
|
|
Definite-lived intangible assets, net
|
|
|
5,155
|
|
|
|
5,893
|
|
Other assets
|
|
|
939
|
|
|
|
1,077
|
|
Total assets
|
|
$
|
80,851
|
|
|
$
|
83,030
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
Current liabilities
|
|
|
|
|
Accounts payable
|
|
$
|
3,527
|
|
|
$
|
4,347
|
|
Accrued expenses and other current liabilities
|
|
|
4,333
|
|
|
|
5,293
|
|
Current portion of long-term debt, financing and capital lease
obligations
|
|
|
1,395
|
|
|
|
1,300
|
|
Total current liabilities
|
|
|
9,255
|
|
|
|
10,940
|
|
|
|
|
|
|
Long-term debt, financing and capital lease obligations
|
|
|
32,570
|
|
|
|
32,531
|
|
Deferred tax liabilities
|
|
|
13,929
|
|
|
|
13,898
|
|
Other liabilities
|
|
|
3,940
|
|
|
|
3,951
|
|
Total liabilities
|
|
|
59,694
|
|
|
|
61,320
|
|
|
|
|
|
|
Stockholders' equity
|
|
|
|
|
Common stock
|
|
|
40
|
|
|
|
40
|
|
Treasury shares, at cost
|
|
|
-
|
|
|
|
(7
|
)
|
Paid-in capital
|
|
|
27,517
|
|
|
|
27,468
|
|
Accumulated deficit
|
|
|
(5,988
|
)
|
|
|
(5,383
|
)
|
Accumulated other comprehensive loss
|
|
|
(412
|
)
|
|
|
(408
|
)
|
Total stockholders' equity
|
|
|
21,157
|
|
|
|
21,710
|
|
Total liabilities and stockholders' equity
|
|
$
|
80,851
|
|
|
$
|
83,030
|
|
|
|
|
|
|
|
|
|
|
|
NET DEBT* (NON-GAAP) (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
9/30/15
|
|
|
|
3/31/15
|
|
Total debt
|
|
$
|
33,965
|
|
|
$
|
33,831
|
|
Less: Cash and cash equivalents
|
|
|
(1,972
|
)
|
|
|
(4,010
|
)
|
Less: Short-term investments
|
|
|
(103
|
)
|
|
|
(166
|
)
|
Net debt*
|
|
$
|
31,890
|
|
|
$
|
29,655
|
|
|
|
|
|
|
|
|
|
|
SCHEDULE OF DEBT (Unaudited)
|
(Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/15
|
ISSUER
|
|
|
|
COUPON
|
|
MATURITY
|
|
PRINCIPAL
|
Sprint Corporation
|
|
|
|
|
|
|
|
|
7.25% Notes due 2021
|
|
|
|
7.250
|
%
|
|
09/15/2021
|
|
$
|
2,250
|
7.875% Notes due 2023
|
|
|
|
7.875
|
%
|
|
09/15/2023
|
|
|
4,250
|
7.125% Notes due 2024
|
|
|
|
7.125
|
%
|
|
06/15/2024
|
|
|
2,500
|
7.625% Notes due 2025
|
|
|
|
7.625
|
%
|
|
02/15/2025
|
|
|
1,500
|
Sprint Corporation
|
|
|
|
|
|
|
|
|
10,500
|
|
|
|
|
|
|
|
|
|
Sprint Communications, Inc.
|
|
|
|
|
|
|
|
|
Export Development Canada Facility (Tranche 2)
|
|
|
|
4.077
|
%
|
|
12/15/2015
|
|
|
500
|
Export Development Canada Facility (Tranche 3)
|
|
|
|
3.783
|
%
|
|
12/17/2019
|
|
|
300
|
6% Senior notes due 2016
|
|
|
|
6.000
|
%
|
|
12/01/2016
|
|
|
2,000
|
9.125% Senior notes due 2017
|
|
|
|
9.125
|
%
|
|
03/01/2017
|
|
|
1,000
|
8.375% Senior notes due 2017
|
|
|
|
8.375
|
%
|
|
08/15/2017
|
|
|
1,300
|
9% Guaranteed notes due 2018
|
|
|
|
9.000
|
%
|
|
11/15/2018
|
|
|
3,000
|
7% Guaranteed notes due 2020
|
|
|
|
7.000
|
%
|
|
03/01/2020
|
|
|
1,000
|
7% Senior notes due 2020
|
|
|
|
7.000
|
%
|
|
08/15/2020
|
|
|
1,500
|
11.5% Senior notes due 2021
|
|
|
|
11.500
|
%
|
|
11/15/2021
|
|
|
1,000
|
9.25% Debentures due 2022
|
|
|
|
9.250
|
%
|
|
04/15/2022
|
|
|
200
|
6% Senior notes due 2022
|
|
|
|
6.000
|
%
|
|
11/15/2022
|
|
|
2,280
|
Sprint Communications, Inc.
|
|
|
|
|
|
|
|
|
14,080
|
|
|
|
|
|
|
|
|
|
Sprint Capital Corporation
|
|
|
|
|
|
|
|
|
6.9% Senior notes due 2019
|
|
|
|
6.900
|
%
|
|
05/01/2019
|
|
|
1,729
|
6.875% Senior notes due 2028
|
|
|
|
6.875
|
%
|
|
11/15/2028
|
|
|
2,475
|
8.75% Senior notes due 2032
|
|
|
|
8.750
|
%
|
|
03/15/2032
|
|
|
2,000
|
Sprint Capital Corporation
|
|
|
|
|
|
|
|
|
6,204
|
|
|
|
|
|
|
|
|
|
Clearwire Communications LLC
|
|
|
|
|
|
|
|
|
14.75% First-priority senior secured notes due 2016
|
|
|
|
14.750
|
%
|
|
12/01/2016
|
|
|
300
|
8.25% Exchangeable notes due 2040
|
|
|
|
8.250
|
%
|
|
12/01/2040
|
|
|
629
|
Clearwire Communications LLC
|
|
|
|
|
|
|
|
|
929
|
|
|
|
|
|
|
|
|
|
Secured equipment credit facilities
|
|
|
|
1.991% - 2.385%
|
|
2017 - 2020
|
|
|
889
|
|
|
|
|
|
|
|
|
|
Tower financing obligation
|
|
|
|
6.093
|
%
|
|
08/31/2021
|
|
|
244
|
Capital lease obligations and other
|
|
|
|
2.348% - 10.517%
|
|
2015 - 2023
|
|
|
173
|
Total principal
|
|
|
|
|
|
|
|
|
33,019
|
|
|
|
|
|
|
|
|
|
Net premiums
|
|
|
|
|
|
|
|
|
946
|
Total debt
|
|
|
|
|
|
|
|
$
|
33,965
|
|
|
|
|
|
|
|
|
|
|
NOTES TO THE FINANCIAL INFORMATION (Unaudited)
|
|
|
|
(1)
|
|
Sprint platform refers to the Sprint network that supports the
wireless service we provide through our multiple brands.
|
(2)
|
|
During the quarter ended September 30, 2015, the Company introduced
a program to provide certain tenured Boost and Virgin Mobile prepaid
subscribers with an extension of credit for their use of wireless
service. Subscribers who opt-into this program may also qualify for
certain device offers and/or service credits. Approximately 175,000
subscribers migrated from the prepaid subscriber base and into the
postpaid subscriber base under their respective Boost and Virgin
Mobile brands as a result of their decision to choose to participate
in this program. In mid-June 2015, we implemented a program
targeting our high tenure prepaid subscribers with consistent
payment history, providing them the option to become a postpaid
subscriber. During the three-month period ended September 30, 2015,
approximately 24,000 prepaid subscribers with a consistent payment
history switched to a postpaid plan as part of this program.
|
(3)
|
|
Postpaid and prepaid connections from transactions are defined as
retail postpaid and prepaid connections acquired from Clearwire in
July 2013 who had not deactivated or been recaptured on the Sprint
platform.
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(4)
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During the three-month period ended September 30, 2015, we recorded
$85 million of asset impairments primarily related to network
development costs that are no longer relevant as a result of changes
in the Company's network plans.
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(5)
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Severance and exit costs consist of lease exit costs primarily
associated with tower and cell sites, access exit costs related to
payments that will continue to be made under our backhaul access
contracts for which we will no longer be receiving any economic
benefit, and severance costs associated with reduction in our work
force.
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(6)
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For the second quarter of fiscal year 2015, litigation activity is a
result of unfavorable developments in connection with pending
litigation.
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(7)
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As a result of the U.S. Cellular asset acquisition, we recorded a
liability related to network shut-down costs, which primarily
consisted of lease exit costs, for which we agreed to reimburse U.S.
Cellular. During the first quarter of fiscal year 2015, we revised
our estimate and, as a result, reduced the liability resulting in
approximately $20 million of income.
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*FINANCIAL MEASURES
Sprint provides financial measures determined in accordance with GAAP
and adjusted GAAP (non-GAAP). The non-GAAP financial measures reflect
industry conventions, or standard measures of liquidity, profitability
or performance commonly used by the investment community for
comparability purposes. These measurements should be considered in
addition to, but not as a substitute for, financial information prepared
in accordance with GAAP. We have defined below each of the non-GAAP
measures we use, but these measures may not be synonymous to similar
measurement terms used by other companies.
Sprint provides reconciliations of these non-GAAP measures in its
financial reporting. Because Sprint does not predict special items that
might occur in the future, and our forecasts are developed at a level of
detail different than that used to prepare GAAP-based financial
measures, Sprint does not provide reconciliations to GAAP of its
forward-looking financial measures.
The measures used in this release include the following:
EBITDA is operating income/(loss) before depreciation and
amortization. Adjusted EBITDA is EBITDA excluding
severance, exit costs, and other special items. Adjusted EBITDA Margin
represents Adjusted EBITDA divided by non-equipment net operating
revenues for Wireless and Adjusted EBITDA divided by net operating
revenues for Wireline. We believe that Adjusted EBITDA and Adjusted
EBITDA Margin provide useful information to investors because they are
an indicator of the strength and performance of our ongoing business
operations. While depreciation and amortization are considered operating
costs under GAAP, these expenses primarily represent non-cash current
period costs associated with the use of long-lived tangible and
definite-lived intangible assets. Adjusted EBITDA and Adjusted EBITDA
Margin are calculations commonly used as a basis for investors, analysts
and credit rating agencies to evaluate and compare the periodic and
future operating performance and value of companies within the
telecommunications industry.
Sprint Platform Postpaid ABPA is average billings per account and
calculated by dividing postpaid service revenue earned from postpaid
customers plus installment plan billings and lease revenue by the sum of
the monthly average number of postpaid accounts during the period. We
believe that ABPA provides useful information to investors, analysts and
our management to evaluate average Sprint platform postpaid customer
billings per account as it approximates the expected cash collections,
including installment plan billings and lease revenue, per postpaid
account each month.
Sprint Platform Postpaid Phone ABPU is average billings per
postpaid phone user and calculated by dividing service revenue earned
from postpaid phone customers plus installment plan billings and lease
revenue by the sum of the monthly average number of postpaid phone
connections during the period. We believe that ABPU provides useful
information to investors, analysts and our management to evaluate
average Sprint platform postpaid phone customer billings as it
approximates the expected cash collections, including installment plan
billings and lease revenue, per postpaid phone user each month.
Free Cash Flow is the cash provided by operating activities less
the cash used in investing activities other than short-term investments,
including changes in restricted cash, if any. We believe that Free Cash
Flow provides useful information to investors, analysts and our
management about the cash generated by our core operations after
interest and dividends, if any, and our ability to fund scheduled debt
maturities and other financing activities, including discretionary
refinancing and retirement of debt and purchase or sale of investments.
Net Debt is consolidated debt, including current maturities, less
cash and cash equivalents, short-term investments and, if any,
restricted cash. We believe that Net Debt provides useful information to
investors, analysts and credit rating agencies about the capacity of the
company to reduce the debt load and improve its capital structure.
SAFE HARBOR
This release includes "forward-looking statements" within the meaning of
the securities laws. The words "may," "could," "should," "estimate,"
"project," "forecast," "intend," "expect," "anticipate," "believe,"
"target," "plan," "providing guidance," and similar expressions are
intended to identify information that is not historical in nature. All
statements that address operating performance, events or developments
that we expect or anticipate will occur in the future - including
statements relating to our network, connections growth, and liquidity;
and statements expressing general views about future operating results -
are forward-looking statements. Forward-looking statements are estimates
and projections reflecting management's judgment based on currently
available information and involve a number of risks and uncertainties
that could cause actual results to differ materially from those
suggested by the forward-looking statements. With respect to these
forward-looking statements, management has made assumptions regarding,
among other things, the development and deployment of new technologies
and services; efficiencies and cost savings of new technologies and
services; customer and network usage; connection growth and retention;
service, speed, coverage and quality; availability of devices;
availability of various financings, including any leasing transactions;
the timing of various events and the economic environment. Sprint
believes these forward-looking statements are reasonable; however, you
should not place undue reliance on forward-looking statements, which are
based on current expectations and speak only as of the date when made.
Sprint undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. In addition,
forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
our company's historical experience and our present expectations or
projections. Factors that might cause such differences include, but are
not limited to, those discussed in Sprint Corporation's Annual Report on
Form 10-K for the fiscal year ended March 31, 2015. You should
understand that it is not possible to predict or identify all such
factors. Consequently, you should not consider any such list to be a
complete set of all potential risks or uncertainties.
About Sprint:
Sprint (NYSE:S) is a communications services company that creates more
and better ways to connect its customers to the things they care about
most. Sprint served more than 58.6 million connections as of September
30, 2015 and is widely recognized for developing, engineering and
deploying innovative technologies, including the first wireless 4G
service from a national carrier in the United States; leading
no-contract brands including Virgin Mobile USA, Boost Mobile, and
Assurance Wireless; instant national and international push-to-talk
capabilities; and a global Tier 1 Internet backbone. Sprint has been
named to the Dow Jones Sustainability Index (DJSI) North America for the
past five years. You can learn more and visit Sprint at www.sprint.com
or www.facebook.com/sprint
and www.twitter.com/sprint.
i Rankings based on 54 corresponding RootMetrics Metro
RootScore Reports from 2H 2014 and 2H 2015 (July 1 - Oct 12, 2015) for
mobile performance as tested on best available plans and devices on four
mobile networks across all available network types. Your experiences may
vary. The RootMetrics award is not an endorsement of Sprint. Visit www.rootmetrics.com
for more details.
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