Sprint Delivers Best Financial Results In Company History With Highest Ever Net Income And Operating Income In Fiscal Year 2017

(Millions, except per share data)

Fiscal
4Q17

Fiscal
4Q16

Change

Fiscal
2017

Fiscal
2016

Change

Net income (loss)

$69

($283)

$352

$7,389

($1,206)

$8,595

Basic income (loss) per share

$0.02

($0.07)

$0.09

$1.85

($0.30)

$2.15

Operating income

$236

$470

($234)

$2,727

$1,764

$963

Adjusted EBITDA*

$2,768

$2,680

$88

$11,069

$9,934

$1,135

Net cash provided by (used in) operating activities

$2,653

($523)

$3,176

$10,062

($3,290)

$13,352

Adjusted free cash flow*

($240)

$80

($320)

$945

$607

$338

Wireless Operating Statistics (Unaudited)

 Quarter To Date 

 Year To Date 

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Net additions (losses) (in thousands)

Postpaid^(a)

39

256

(118)

424

811

Postpaid phone ^(a)

55

184

42

606

930

Prepaid^(b)

170

63

195

363

(1,020)

Wholesale and affiliate^(b)

(165)

66

291

81

2,342

Total wireless net additions

44

385

368

868

2,133

End of period connections (in thousands)

Postpaid^{(a) (c) (d)} 

32,119

31,942

31,576

32,119

31,576

Postpaid phone^{(a) (c)}

26,813

26,616

26,079

26,813

26,079

Prepaid^{(a) (b) (c) (e) (f) (g)}

8,989

8,997

8,688

8,989

8,688

Wholesale and affiliate ^{(b) (c) (f)}

13,517

13,642

13,375

13,517

13,375

Total end of period connections

54,625

54,581

53,639

54,625

53,639

Churn

Postpaid

1.78%

1.80%

1.75%

1.74%

1.62%

Postpaid phone

1.68%

1.71%

1.58%

1.62%

1.48%

Prepaid ^(f)

4.30%

4.63%

4.69%

4.58%

5.38%

Supplemental data - connected devices

End of period connections (in thousands)

Retail postpaid

2,335

2,259

2,001

2,335

2,001

Wholesale and affiliate

11,162

11,272

10,880

11,162

10,880

Total

13,497

13,531

12,881

13,497

12,881

ARPU^(h)

Postpaid

$     44.40

$      45.13

$      47.34

$     45.70

$    49.77

Postpaid phone

$     50.44

$      51.26

$      54.10

$     51.98

$    57.09

Prepaid^(f)

$     37.15

$      37.46

$      38.48

$     37.67

$    34.46

NON-GAAP RECONCILIATION - ABPA* AND ABPU* (Unaudited)

(Millions, except accounts, connections, ABPA*, and ABPU*)

Quarter To Date

 Year To Date 

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

ABPA*

Postpaid service revenue

$     4,270

$      4,297

$      4,493

$   17,396

$  18,677

Add: Installment plan and non-operating lease billings 

368

379

343

1,512

1,172

Add: Equipment rentals

1,136

1,047

842

4,048

3,295

Total for postpaid connections

$     5,774

$      5,723

$      5,678

$   22,956

$  23,144

Average postpaid accounts (in thousands)

11,259

11,193

11,405

11,260

11,378

Postpaid ABPA*⁽ⁱ⁾

$    171.38

$     170.39

$    165.92

$   169.99

$  169.51

Quarter To Date

 Year To Date 

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Postpaid phone ABPU*

Postpaid phone service revenue

$     4,048

$      4,069

$      4,228

$   16,463

$  17,578

Add: Installment plan and non-operating lease billings 

324

335

309

1,349

1,061

Add: Equipment rentals

1,126

1,037

829

4,003

3,240

Total for postpaid phone connections

$     5,498

$      5,441

$      5,366

$   21,815

$  21,879

Postpaid average phone connections (in thousands)

26,754

26,461

26,053

26,394

25,659

Postpaid phone ABPU* ^(j)

$     68.51

$      68.54

$      68.66

$     68.88

$    71.06

^(a)During the three-month period ended March 31, 2018, a non-Sprint branded postpaid offering was introduced allowing prepaid customers to purchase a device under our installment billing program. As a result of the extension of credit, approximately 167,000 prepaid subscribers were migrated from the prepaid subscriber base into the postpaid subscriber base. In addition, net subscriber additions under the non-Sprint branded postpaid offering were 44,000 during the three-month period ended March 31, 2018.

^(b)Sprint is no longer reporting Lifeline subscribers due to 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 MVNOs.

^(c)  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 (b) above. An additional 270,000 of nTelos' subscribers are now part of our affiliate relationship with Shentel and are being 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 and, during the three-month period ended March 31, 2018, 29,000 and 11,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates as a result of the transfer of additional subscribers to Shentel.

^(d)  During the three-month period ended June 30, 2017, 2,000 Wi-Fi connections were adjusted from the postpaid subscriber base.

^(e)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 a 49,000 reduction to prepaid end of period subscribers.

^(f)During the three-month period ended December 31, 2016, the Company aligned all prepaid brands, excluding Assurance Wireless but including prepaid affiliate subscribers, under one churn and retention program. As a result of this change, end of period prepaid and affiliate subscribers as of December 31, 2016 were reduced by 1,234,000 and 21,000, respectively.  

^(g)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.

^(h)  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.

⁽ⁱ⁾  Postpaid ABPA* is calculated by dividing postpaid service revenue earned from postpaid customers plus billings from installment plans and non-operating leases, as well as equipment rentals, by the sum of the monthly average number of postpaid accounts during the period. Installment plan billings represent the substantial majority of the total billings in the table above for all periods presented.

^(j)  Postpaid phone ABPU* is calculated by dividing service revenue earned from postpaid phone customers plus billings from installment plans and non-operating leases, as well as equipment rentals, 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.

Wireless Device Financing Summary (Unaudited)

(Millions, except sales, connections, and leased devices in property, plant and equipment)

 Quarter To Date 

 Year To Date 

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Postpaid activations (in thousands)

3,737

4,874

3,471

16,196

15,298

Postpaid activations financed

84%

84%

82%

85%

76%

Postpaid activations - operating leases

70%

72%

42%

67%

42%

Installment plans

Installment sales financed

$          214

$         276

$        696

$    1,311

$     2,884

Installment billings

$          342

$         353

$        343

$    1,436

$     1,172

Installment receivables, net

$       1,149

$      1,383

$      1,764

$    1,149

$     1,764

Equipment rentals and depreciation - equipment rentals

Equipment rentals   

$       1,136

$      1,047

$        842

$    4,048

$     3,295

Depreciation - equipment rentals

$       1,060

$         990

$        911

$    3,792

$     3,116

Leased device additions

Cash paid for capital expenditures - leased devices

$       1,928

$      2,468

$      1,080

$    7,461

$     4,976

Leased devices  

Leased devices in property, plant and equipment, net

$       6,012

$      5,683

$      4,162

$    6,012

$     4,162

Leased device units

Leased devices in property, plant and equipment (units in thousands)

14,543

14,002

11,888

14,543

11,888

Leased device and receivables financings net proceeds

Proceeds

$            -

$      1,125

$        100

$    2,679

$     1,155

Repayments

(555)

(598)

(414)

(2,574)

(1,069)

Net (repayments) proceeds of financings related to devices and receivables

$         (555)

$         527

$       (314)

$       105

$          86

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(Millions, except per share data)

Quarter To Date

Year To Date

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Net operating revenues

Service revenue

$       5,866

$      5,930

$      6,116

$    23,834

$     25,368

Equipment sales

1,081

1,262

1,581

4,524

4,684

Equipment rentals

1,136

1,047

842

4,048

3,295

Total net operating revenues

8,083

8,239

8,539

32,406

33,347

Net operating expenses

Cost of services (exclusive of depreciation and amortization below)

1,661

1,733

1,736

6,801

7,861

Cost of equipment sales

1,487

1,673

1,980

6,109

6,583

Cost of equipment rentals (exclusive of depreciation below)

146

123

141

493

975

Selling, general and administrative

2,028

2,108

2,002

8,087

7,994

Depreciation - network and other

1,015

987

960

3,976

3,982

Depreciation - equipment rentals

1,060

990

911

3,792

3,116

Amortization

184

196

239

812

1,052

Other, net

266

(298)

100

(391)

20

Total net operating expenses

7,847

7,512

8,069

29,679

31,583

Operating income

236

727

470

2,727

1,764

Interest expense

(576)

(581)

(631)

(2,365)

(2,495)

Other (expense) income, net

(9)

(42)

27

(59)

(40)

(Loss) income before income taxes

(349)

104

(134)

303

(771)

Income tax benefit (expense)

412

7,052

(149)

7,074

(435)

Net income (loss)

63

7,156

(283)

7,377

(1,206)

Less: Net loss attributable to noncontrolling interests

6

6

-

12

-

Net income (loss) attributable to Sprint Corporation

$           69

$      7,162

$        (283)

$      7,389

$      (1,206)

Basic net income (loss) per common share

$         0.02

$        1.79

$       (0.07)

$       1.85

$        (0.30)

Diluted net income (loss) per common share

$         0.02

$        1.76

$       (0.07)

$       1.81

$        (0.30)

Weighted average common shares outstanding

4,004

4,001

3,988

3,999

3,981

Diluted weighted average common shares outstanding

4,055

4,061

3,988

4,078

3,981

Effective tax rate

118.1%

-6,780.8%

-111.2%

-2,334.7%

-56.4%

NON-GAAP RECONCILIATION - NET INCOME (LOSS) TO ADJUSTED EBITDA* (Unaudited)

(Millions)

Quarter To Date

Year To Date

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Net income (loss)

$           63

$      7,156

$        (283)

$      7,377

$      (1,206)

Income tax (benefit) expense

(412)

(7,052)

149

(7,074)

435

(Loss) income before income taxes

(349)

104

(134)

303

(771)

Other expense (income), net

9

42

(27)

59

40

Interest expense

576

581

631

2,365

2,495

Operating income

236

727

470

2,727

1,764

Depreciation - network and other

1,015

987

960

3,976

3,982

Depreciation - equipment rentals

1,060

990

911

3,792

3,116

Amortization

184

196

239

812

1,052

EBITDA*⁽¹⁾

2,495

2,900

2,580

11,307

9,914

Loss (gain) from asset dispositions, exchanges, and other, net⁽²⁾

189

-

-

(115)

(326)

Severance and exit costs ⁽³⁾

67

13

36

80

66

Contract terminations ⁽⁴⁾

-

-

27

(5)

140

Litigation and other contingencies⁽⁵⁾

10

(260)

37

(305)

140

Hurricanes ⁽⁶⁾

7

66

-

107

-

Adjusted EBITDA*⁽¹⁾

$       2,768

$      2,719

$      2,680

$    11,069

$       9,934

Adjusted EBITDA margin*

47.2%

45.9%

43.8%

46.4%

39.2%

Selected items:

Cash paid for capital expenditures - network and other

$          780

$         696

$         529

$      3,319

$       1,950

Cash paid for capital expenditures - leased devices

$       1,928

$      2,468

$      1,080

$      7,461

$       4,976

WIRELESS STATEMENTS OF OPERATIONS (Unaudited)

(Millions)

Quarter To Date

Year To Date

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Net operating revenues

Service revenue

Postpaid

$           4,270

$           4,297

$           4,493

$         17,396

$         18,677

Prepaid ⁽⁷⁾

989

993

982

3,971

4,078

Wholesale, affiliate and other⁽⁷⁾

314

329

269

1,198

1,053

Total service revenue

5,573

5,619

5,744

22,565

23,808

Equipment sales

1,081

1,262

1,581

4,524

4,684

Equipment rentals

1,136

1,047

842

4,048

3,295

Total net operating revenues

7,790

7,928

8,167

31,137

31,787

Net operating expenses

Cost of services (exclusive of depreciation and amortization below)

1,401

1,466

1,448

5,701

6,674

Cost of equipment sales

1,487

1,673

1,980

6,109

6,583

Cost of equipment rentals (exclusive of depreciation below)

146

123

141

493

975

Selling, general and administrative

1,947

2,024

1,944

7,782

7,741

Depreciation - network and other

968

931

911

3,768

3,779

Depreciation - equipment rentals

1,060

990

911

3,792

3,116

Amortization

184

196

239

812

1,052

Other, net

258

16

91

(35)

(1)

Total net operating expenses

7,451

7,419

7,665

28,422

29,919

Operating income

$             339

$             509

$             502

$           2,715

$           1,868

WIRELESS NON-GAAP RECONCILIATION (Unaudited)

(Millions)

Quarter To Date

Year To Date

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Operating income

$             339

$             509

$             502

$           2,715

$           1,868

Loss (gain) from asset dispositions, exchanges, and other, net⁽²⁾

189

-

-

(115)

(326)

Severance and exit costs ⁽³⁾

59

4

27

58

45

Contract terminations ⁽⁴⁾

-

-

27

(5)

140

Litigation and other contingencies ⁽⁵⁾

10

63

37

73

140

Hurricanes ⁽⁶⁾

7

66

-

107

-

Depreciation - network and other

968

931

911

3,768

3,779

Depreciation - equipment rentals

1,060

990

911

3,792

3,116

Amortization

184

196

239

812

1,052

Adjusted EBITDA*⁽¹⁾

$           2,816

$           2,759

$           2,654

$         11,205

$           9,814

Adjusted EBITDA margin*

50.5%

49.1%

46.2%

49.7%

41.2%

Selected items:

Cash paid for capital expenditures - network and other

$             681

$             565

$             468

$           2,760

$           1,591

Cash paid for capital expenditures - leased devices

$           1,928

$           2,468

$           1,080

$           7,461

$           4,976

WIRELINE STATEMENTS OF OPERATIONS (Unaudited)

(Millions)

Quarter To Date

Year To Date

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Net operating revenues

344

393

480

1,579

2,043

Net operating expenses

Cost of services (exclusive of depreciation and amortization below)

316

352

402

1,427

1,686

Selling, general and administrative

76

71

49

270

238

Depreciation and amortization

50

55

47

205

195

Other, net

9

(314)

8

(300)

21

Total net operating expenses

451

164

506

1,602

2,140

Operating (loss) income

$            (107)

$             229

$              (26)

$              (23)

$              (97)

WIRELINE NON-GAAP RECONCILIATION (Unaudited)

(Millions)

Quarter To Date

Year To Date

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Operating (loss) income

$            (107)

$             229

$              (26)

$              (23)

$              (97)

Loss from asset dispositions, exchanges, and other, net⁽²⁾

1

-

-

1

-

Severance and exit costs ⁽³⁾

8

9

8

22

21

Litigation and other contingencies ⁽⁵⁾

-

(323)

-

(323)

-

Depreciation and amortization

50

55

47

205

195

Adjusted EBITDA*

$              (48)

$              (30)

$               29

$            (118)

$             119

Adjusted EBITDA margin*

-14.0%

-7.6%

6.0%

-7.5%

5.8%

Selected items:

Cash paid for capital expenditures - network and other

$               34

$               30

$               19

$             166

$               94

CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)

(Millions)

Year To Date

3/31/18

3/31/17

Operating activities

Net income (loss)

$  7,377

$ (1,206)

Depreciation and amortization

8,580

8,150

Provision for losses on accounts receivable

362

555

Share-based and long-term incentive compensation expense 

182

93

Deferred income tax (benefit) expense

(7,119)

433

Gains from asset dispositions and exchanges

(479)

(354)

Loss on early extinguishment of debt

65

-

Amortization of long-term debt premiums, net

(158)

(302)

Loss on disposal of property, plant and equipment

868

509

Contract terminations

(5)

111

Deferred purchase price from sale of receivables

(1,140)

(10,498)

Other changes in assets and liabilities:

Accounts and notes receivable

83

(1,017)

Inventories and other current assets 

705

457

Accounts payable and other current liabilities 

57

(365)

Non-current assets and liabilities, net 

271

(308)

Other, net 

413

452

Net cash provided by (used in) operating activities

10,062

(3,290)

Investing activities

Capital expenditures - network and other

(3,319)

(1,950)

Capital expenditures - leased devices

(7,461)

(4,976)

Expenditures relating to FCC licenses

(115)

(83)

Change in short-term investments, net

3,090

(5,444)

Proceeds from sales of assets and FCC licenses

527

219

Proceeds from deferred purchase price from sale of receivables

1,140

10,498

Other, net

3

41

Net cash used in investing activities 

(6,135)

(1,695)

Financing activities

Proceeds from debt and financings

8,529

10,966

Repayments of debt, financing and capital lease obligations

(8,518)

(5,417)

Debt financing costs

(93)

(358)

Call premiums paid on debt redemptions

(131)

-

Other, net

3

95

Net cash (used in) provided by financing activities 

(210)

5,286

Net increase in cash, cash equivalents and restricted cash

3,717

301

Cash, cash equivalents and restricted cash, beginning of period

2,942

2,641

Cash, cash equivalents and restricted cash, end of period

$  6,659

$  2,942

RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)

(Millions)

Quarter To Date

Year To Date

3/31/18

12/31/17

3/31/17

3/31/18

3/31/17

Net cash provided by (used in) operating activities

$ 2,653

$ 2,683

$  (523)

$ 10,062

$ (3,290)

Capital expenditures - network and other

(780)

(696)

(529)

(3,319)

(1,950)

Capital expenditures - leased devices

(1,928)

(2,468)

(1,080)

(7,461)

(4,976)

Expenditures relating to FCC licenses, net

(23)

(73)

(37)

(115)

(83)

Proceeds from sales of assets and FCC licenses

160

149

93

527

219

Proceeds from deferred purchase price from sale of receivables

231

269

2,476

1,140

10,498

Other investing activities, net

2

6

(6)

6

103

Free cash flow*

$   315

$   (130)

$   394

$     840

$     521

Net (repayments) proceeds of financings related to devices and receivables

(555)

527

(314)

105

86

Adjusted free cash flow*

$  (240)

$    397

$     80

$     945

$     607

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(Millions)

3/31/18

3/31/17

ASSETS

Current assets

Cash and cash equivalents

$       6,610

$           2,870

Short-term investments

2,354

5,444

Accounts and notes receivable, net

3,711

4,138

Device and accessory inventory

1,003

1,064

Prepaid expenses and other current assets

575

601

Total current assets

14,253

14,117

Property, plant and equipment, net

19,925

19,209

Goodwill

6,586

6,579

FCC licenses and other

41,309

40,585

Definite-lived intangible assets, net

2,465

3,320

Other assets

921

1,313

Total assets

$     85,459

$         85,123

LIABILITIES AND EQUITY

Current liabilities

Accounts payable

$       3,409

$           3,281

Accrued expenses and other current liabilities

3,962

4,141

Current portion of long-term debt, financing and capital lease obligations

3,429

5,036

Total current liabilities

10,800

12,458

Long-term debt, financing and capital lease obligations

37,463

35,878

Deferred tax liabilities

7,294

14,416

Other liabilities

3,483

3,563

Total liabilities 

59,040

66,315

Stockholders' equity

Common stock

40

40

Paid-in capital

27,884

27,756

Accumulated deficit

(1,332)

(8,584)

Accumulated other comprehensive loss

(236)

(404)

Total stockholders' equity

26,356

18,808

Noncontrolling interests

63

-

Total equity

26,419

18,808

Total liabilities and equity

$     85,459

$         85,123

NET DEBT* (NON-GAAP) (Unaudited)

(Millions)

3/31/18

3/31/17

Total debt

$     40,892

$         40,914

Less: Cash and cash equivalents

(6,610)

(2,870)

Less: Short-term investments

(2,354)

(5,444)

Net debt*

$     31,928

$         32,600

SCHEDULE OF DEBT (Unaudited)

(Millions)

3/31/18

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

7.625% Senior notes due 2026

03/01/2026

1,500

Sprint Corporation

12,000

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

3,063

4.738% Senior secured notes due 2025

03/20/2025

2,100

5.152% Senior secured notes due 2028

03/20/2028

1,837

Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, and Sprint Spectrum Co III LLC

7,000

Sprint Communications, Inc.

Export Development Canada secured loan

12/17/2019

300

9% Guaranteed notes due 2018

11/15/2018

1,753

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.

8,033

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

182

Secured equipment credit facilities

2020 - 2021

527

Secured term loan

02/03/2024

3,960

Credit facilities

4,669

Accounts receivable facility

11/18/2019

2,411

Financing obligations

08/31/2021

150

Capital leases and other obligations

2018 - 2026

536

Total principal

41,003

Net premiums and debt financing costs

(111)

Total debt

$      40,892

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 equipment sales 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 revenue from equipment sales at the point of sale and the cost of the device is recognized as cost of equipment sales. During the three and twelve-month periods ended March 31, 2018, we leased devices through our Sprint direct channels totaling approximately $1,213 million and $4,884 million, respectively, which would have increased cost of equipment sales 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 fourth and first quarters 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 fourth quarter of fiscal year 2016, we terminated our relationship with Radio Shack and incurred net contract termination charges of approximately $27 million primarily related to cash termination payments and write-downs of leasehold improvements at associated retail stores that were shut down as of March 31, 2017. During the first quarter of fiscal year 2016, contract terminations primarily relate to the termination of our pre-existing wholesale arrangement with NTELOS Holding Corp.

⁽⁵⁾

During the fourth, 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 fourth and second quarters 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 fourth, third and second quarters of fiscal year 2017 we recorded estimated hurricane-related charges of $7 million, $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 $85 million and $360 million for the three and twelve-month periods ended March 31, 2017, respectively. Revenue associated with subscribers through our wholesale Lifeline MVNO's continue to remain in Wholesale, affiliate and other revenue following this change.