EX-99.1 2 dex991.htm PRESS RELEASE ANNOUNCING FOURTH QUARTER 2013 AND YEAR END RESULTS Sprint 4Q13 Earnings Release

News Release

Media Contact:
Scott Sloat
240-855-0164
scott.sloat@sprint.com

Investor Contact:
Brad Hampton
800-259-3755
investor.relations@sprint.com

SPRINT REPORTS FOURTH QUARTER AND FULL YEAR 2013 RESULTS
 

•
Fourth quarter Operating Loss improved 22 percent to $576 million; Adjusted EBITDA* of $1.15 billion improved by nearly 40 percent or more than $300 million year-over-year compared to combined prior year results
◦
Combined annual Operating Loss of $1.9 billion
◦
Annual Adjusted EBITDA* of $5.4 billion grew 13 percent year-over-year
•
Highest-ever annual Sprint platform wireless service revenue of $28.6 billion grew more than 5 percent year-over-year
◦
Fourth quarter Sprint platform wireless service revenue of $7.2 billion grew year-over-year for the 15th consecutive quarter
◦
Best-ever annual Sprint platform postpaid ARPU of $64.07
•
Highest-ever Sprint platform subscribers at 53.9 million
◦
682,000 total Sprint platform net additions in the fourth quarter
◦
58,000 Sprint platform postpaid net additions in the fourth quarter
•
Annual retail smartphone sales of 20.5 million and a record 95 percent of quarterly Sprint platform postpaid handset sales were smartphones
•
Continued progress on the Network
◦
More than 200 million people covered by 4G LTE
◦
Sprint Spark TM available in 14 of the largest U.S. cities including today’s launches in Philadelphia and Baltimore
•
Launched revolutionary new Sprint FramilySM that redefines traditional wireless family plans

The company’s fourth quarter 2013 earnings conference call will be held at 8 a.m. ET today. Participants may dial 800-938-1120 in the U.S. or Canada (706-634-7849 internationally) and provide the following ID: 31411101 or may listen via the Internet at www.sprint.com/investors.

Additional information about results can be found in the “Quarterly Investor Update” posted on our Investor Relations website at www.sprint.com/investors.

Financial results in the enclosed tables for 2013 and 2012 include a predecessor period from January 1, 2012, through the closing of the SoftBank transaction on July 10, 2013, and a successor period from October 5, 2012 through December 31, 2013. In order to present financial results in a way that offers investors a more meaningful calendar period-to-period comparison, we have combined the current year and prior year results of operations for the predecessor and successor periods. The enclosed remarks are in reference to the unaudited combined period unless otherwise noted. For additional information please reference the section titled Financial Measures.



OVERLAND PARK, Kan. - Feb.11, 2014 - Sprint Corporation (NYSE: S) today reported operating revenue, which grew year-over-year to more than $9.1 billion for the fourth quarter and to $35.5 billion for the full year 2013. Operating loss was $576 million in the fourth quarter, a 22 percent year-over-year improvement. Quarterly Adjusted EBITDA* of $1.15 billion improved nearly 40 percent year-over-year. Annual Adjusted EBITDA* of $5.4 billion improved by 13 percent.

“In 2013 Adjusted EBITDA* and Sprint platform wireless revenues grew significantly while we made investments to improve network performance and expand 4G LTE to more than 200 million people,” said Dan Hesse, Sprint CEO. “As we roll out Sprint SparkTM and create innovative offers like Sprint FramilySM, we are building a foundation for future success.”

Sprint Platform Subscriber Net Additions of 682,000 and Record Smartphone Sales Mix
Sprint ended the year with 53.9 million Sprint platform subscribers - its highest level ever - after adding 58,000 postpaid subscribers, 322,000 prepaid subscribers and 302,000 wholesale and affiliate subscribers in the fourth quarter. Sprint sold 5.6 million smartphones in the fourth quarter and 20.5 million smartphones for the year with smartphone sales mix reaching 95 percent for postpaid and 66 percent for prepaid in the quarter.

Net Income and Operating Loss Improve Year-Over-Year; Adjusted EBITDA* Up Nearly 40 percent Year-Over-Year
Quarterly net loss was $1 billion in the fourth quarter as compared to a loss of $1.3 billion in the fourth quarter of 2012. Operating loss for the quarter was $576 million as compared to an operating loss of $738 million in the fourth quarter of 2012.

Quarterly Adjusted EBITDA* of $1.15 billion improved nearly 40 percent year-over-year as growth in Sprint platform service revenue, network savings resulting from the Nextel platform shutdown and lower net subsidy expense were partially offset by the loss of Nextel platform revenue and the consolidation of Clearwire’s results.

LTE Coverage Now Available to More than 200 Million People; Sprint Spark TM Now in 14 Markets
Sprint currently has nearly 33,000 Network Vision sites on air, an increase of more than 24,000 sites over the last 12 months. LTE coverage is now available to more than 200 million people. The company continues to expect that by the middle of this year LTE coverage will reach 250 million people and the voice/3G network modernization deployment will be complete.

During the fourth quarter the company unveiled Sprint Spark - a combination of advanced network and device technology with the potential to surpass wireless speeds of any U.S. network provider, capable of delivering 50-60 Megabits per second peak speeds today with potential speeds three times as fast by late 2015. Sprint Spark leverages the company’s 800MHz, 1.9GHz and 2.5GHz spectrum together with devices offering tri-band capability and high-definition voicei.

Sprint plans to deploy Sprint Spark in about 100 of America’s largest cities during the next three years. By the end of this year, 100 million Americans are expected to have Sprint Spark coverage. Today, Sprint Spark launches in Philadelphia and Baltimore and, with the recent launch in Kansas City, is currently available in 14 markets including New York, Los Angeles and Chicago. Ten Sprint Spark-capable devices are currently available, including the recently updated Samsung Galaxy S® 4, Samsung Galaxy MEGA™, HTC One® max, LG G Flex and NETGEAR® Zing Mobile Hotspot™.

Sprint Framily Pricing Program Lets Customers Decide
Earlier this year, Sprint introduced Sprint Framily, a new pricing program available to new and existing customers that lets consumers decide who they consider family. With Sprint Framily, the more people added to the group (up to 10 phone lines), the greater the savings for everyone on the plan.

For one line of service, new Sprint customers pay $55 per month per line for unlimited talk, text and 1GB of data while on the Sprint network. For each additional new Sprint customer who joins the Framily group, the cost per person goes down $5 a month up to a maximum monthly discount of $30 per line. With a group of at least seven people, each customer gets unlimited talk, text and 1GB of data while on the Sprint network for $25 per month per line (pricing excludes taxes and surcharges).



All members of the group can customize their plan and for an additional $20 per month per line, Framily members can buy up to unlimited data plus get a new phone every year. Each account can be billed separately.

Sprint Garners Third-Party Recognition
Sprint received notable awards in the fourth quarter. In particular CEVA Logistics, one of the world’s leading supply chain companies, named Sprint as Technology Supplier of the Year. Pinsight Media+, Sprint’s mobile media company, received the 2013 North American Mobile Advertising Product Leadership Award from Frost & Sullivan, and Dan Hesse was named Corporate Responsibility Magazine’s Lifetime Achievement Award winner for 2013. Last month, Compass Intelligence named Sprint the most “Eco Focused Wireless Carrier,” and Sprint was the only U.S. telecommunications company to be named an Efficiency Leader to the 2014 National Capital Leaders Index by GreenBiz Group and Trucost. Additionally, for the second year in a row, Sprint was rated 16th in Chief Executive Magazine’s Best Companies for Leaders list.

Forecast
The company expects 2014 Adjusted EBITDA* to be between $6.5 billion and $6.7 billion.
The company expects 2014 capital expenditures of approximately $8 billion.








Wireless Operating Statistics (Unaudited)
 
 Quarter To Date
 
 Year To Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/12
Net (Losses) Additions (in thousands)
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
Postpaid (3)
58

(360
)
401

 
(96
)
1,516

Prepaid (4)
322

84

525

 
488

2,305

Wholesale and affiliate
302

181

(243
)
 
31

944

Total Sprint platform
682

(95
)
683

 
423

4,765

Nextel platform:
 
 
 
 
 
 
Postpaid (3)
—

—

(644
)
 
(1,632
)
(2,653
)
Prepaid (4)
—

—

(376
)
 
(454
)
(1,507
)
Total Nextel platform
—

—

(1,020
)
 
(2,086
)
(4,160
)
Transactions: (a)
 
 
 
 
 
 
Postpaid (3)
(127
)
(175
)
—

 
(481
)
—

Prepaid (4)
(103
)
(56
)
—

 
(179
)
—

Wholesale
25

13

—

 
38

—

Total transactions
(205
)
(218
)
—

 
(622
)
—

 
 
 
 
 
 
 
Total retail postpaid net losses
(69
)
(535
)
(243
)
 
(2,209
)
(1,137
)
Total retail prepaid net additions (losses)
219

28

149

 
(145
)
798

Total wholesale and affiliate net additions (losses)
327

194

(243
)
 
69

944

Total Wireless Net Additions (Losses)
477

(313
)
(337
)
 
(2,285
)
605

 
 
 
 
 
 
 
End of Period Subscribers (in thousands)
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
Postpaid (3)
30,149

30,091

30,245

 
30,149

30,245

Prepaid (4)
15,621

15,299

15,133

 
15,621

15,133

Wholesale and affiliate
8,164

7,862

8,162

 
8,164

8,162

Total Sprint platform
53,934

53,252

53,540

 
53,934

53,540

Nextel platform:
 
 
 
 
 
 
Postpaid (3)
—

—

1,632

 
—

1,632

Prepaid (4)
—

—

454

 
—

454

Total Nextel platform
—

—

2,086

 
—

2,086

Transactions: (a)
 
 
 
 
 
 
Postpaid (3)
688

815

—

 
688

—

Prepaid (4)
601

704

—

 
601

—

Wholesale
131

106

—

 
131

—

Total transactions
1,420

1,625

—

 
1,420

—

 
 
 
 
 
 
 
Total retail postpaid end of period subscribers
30,837

30,906

31,877

 
30,837

31,877

Total retail prepaid end of period subscribers
16,222

16,003

15,587

 
16,222

15,587

Total wholesale and affiliate end of period subscribers
8,295

7,968

8,162

 
8,295

8,162

Total End of Period Subscribers
55,354

54,877

55,626

 
55,354

55,626

 
 
 
 
 
 
 
Supplemental Data - Connected Devices
 
 
 
 
 
 
End of Period Subscribers (in thousands)
 
 
 
 
 
 
Retail postpaid
922

834

813

 
922

813

Wholesale and affiliate
3,578

3,298

2,670

 
3,578

2,670

Total
4,500

4,132

3,483

 
4,500

3,483

 
 
 
 
 
 
 
Churn
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
Postpaid
2.07
%
1.99
%
1.98
%
 
1.93
%
1.89
%
Prepaid
3.01
%
3.57
%
3.02
%
 
3.72
%
3.01
%
Nextel platform:
 
 
 
 
 
 
Postpaid
—

—

5.27
%
 
16.40
%
3.24
%
Prepaid
—

—

9.79
%
 
18.58
%
8.55
%
Transactions: (a)
 
 
 
 
 
 
Postpaid
5.48
%
6.38
%
—

 
7.65
%
—

Prepaid
8.18
%
8.84
%
—

 
8.66
%
—

 
 
 
 
 
 
 
Total retail postpaid churn
2.15
%
2.09
%
2.18
%
 
2.24
%
2.02
%
Total retail prepaid churn
3.22
%
3.78
%
3.30
%
 
3.94
%
3.45
%
 
 
 
 
 
 
 
Nextel Platform Subscriber Recaptures
 
 
 
 
 
 
Subscribers (in thousands) (5):
 
 
 
 
 
 
Postpaid
—

—

333

 
628

1,508

Prepaid
—

—

188

 
168

620

Rate (6):
 
 
 
 
 
 
Postpaid
—

—

51
%
 
38
%
55
%
Prepaid
—

—

50
%
 
37
%
33
%
(a) We acquired approximately 352,000 postpaid subscribers and 59,000 prepaid subscribers through the acquisition of assets from U.S. Cellular when the transaction closed on May 17, 2013. We acquired approximately 788,000 postpaid subscribers, 721,000 prepaid subscribers, 93,000 wholesale subscribers and transferred 29,000 Sprint wholesale subscribers that were originally recognized through our Clearwire MVNO arrangement to Transactions postpaid subscribers as a result of the Clearwire acquisition when the transaction closed on July 9, 2013.


Wireless Operating Statistics (Unaudited) (continued)
 
Successor
 
 
 
Predecessor
 
Quarter
to Date
Quarter
to Date
Year to Date
 
 
 
10 Days
Ended
191 Days
Ended
Quarter
to Date
Year to Date
 
12/31/13
9/30/13
12/31/13
 
 
 
7/10/13
7/10/13
12/31/12
12/31/12
ARPU (b)
 
 
 
 
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
 
 
 
 
Postpaid
$
64.11

$
64.24

$
64.17

 
 
 
$
64.71

$
63.98

$
63.04

$
63.05

Prepaid
$
26.78

$
25.14

$
26.01

 
 
 
$
26.99

$
26.49

$
26.30

$
25.92

Nextel platform:
 
 
 
 
 
 
 
 
 
 
Postpaid
$
—

$
—

$
—

 
 
 
$
—

$
35.84

$
37.27

$
39.65

Prepaid
$
—

$
—

$
—

 
 
 
$
—

$
32.60

$
35.59

$
35.91

Transactions: (a)
 
 
 
 
 
 
 
 
 
 
Postpaid
$
36.30

$
37.44

$
36.89

 
 
 
$
35.75

$
56.98

$
—

$
—

Prepaid
$
40.80

$
40.62

$
40.71

 
 
 
$
12.78

$
18.26

$
—

$
—

 
 
 
 
 
 
 
 
 
 
 
Total retail postpaid ARPU
$
63.44

$
63.48

$
63.46

 
 
 
$
64.55

$
63.10

$
61.47

$
60.84

Total retail prepaid ARPU
$
27.34

$
25.86

$
26.64

 
 
 
$
26.96

$
26.57

$
26.69

$
26.72

 
 
 
 
 
 
 
 
 
 
 
(a) We acquired approximately 352,000 postpaid subscribers and 59,000 prepaid subscribers through the acquisition of assets from U.S. Cellular when the transaction closed on May 17, 2013. We acquired approximately 788,000 postpaid subscribers, 721,000 prepaid subscribers, 93,000 wholesale subscribers and transferred 29,000 Sprint wholesale subscribers that were originally recognized through our Clearwire MVNO arrangement to Transactions postpaid subscribers as a result of the Clearwire acquisition when the transaction closed on July 9, 2013.
(b)ARPU is calculated by dividing service revenue by the sum of the average number of subscribers in the applicable service category. Changes in average monthly service revenue reflect subscribers 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 subscribers, plus the net effect of average monthly revenue generated by new subscribers and deactivating subscribers.



Wireless Operating Statistics (Unaudited) (continued)
 
Combined (1) Quarter to Date
 
Combined (1) Year to Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/13
ARPU (b)
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
Postpaid
$
64.11

$
64.28

$
63.04

 
$
64.07

$
63.05

Prepaid
$
26.78

$
25.33

$
26.30

 
$
26.26

$
25.92

Nextel platform:
 
 
 
 
 
 
Postpaid
$
—

$
—

$
37.27

 
$
35.84

$
39.65

Prepaid
$
—

$
—

$
35.59

 
$
32.60

$
35.91

Transactions: (a)
 
 
 
 
 
 
Postpaid
$
36.30

$
40.00

$
—

 
$
39.96

$
—

Prepaid
$
40.80

$
43.20

$
—

 
$
41.55

$
—

 
 
 
 
 
 
 
Total retail postpaid ARPU
$
63.44

$
63.69

$
61.47

 
$
63.29

$
60.84

Total retail prepaid ARPU
$
27.34

$
26.04

$
26.69

 
$
26.62

$
26.72

 
 
 
 
 
 
 
(a) We acquired approximately 352,000 postpaid subscribers and 59,000 prepaid subscribers through the acquisition of assets from U.S. Cellular when the transaction closed on May 17, 2013. We acquired approximately 788,000 postpaid subscribers, 721,000 prepaid subscribers, 93,000 wholesale subscribers and transferred 29,000 Sprint wholesale subscribers that were originally recognized through our Clearwire MVNO arrangement to Transactions postpaid subscribers as a result of the Clearwire acquisition when the transaction closed on July 9, 2013.
(b)ARPU is calculated by dividing service revenue by the sum of the average number of subscribers in the applicable service category. Changes in average monthly service revenue reflect subscribers 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 subscribers, plus the net effect of average monthly revenue generated by new subscribers and deactivating subscribers. Combined ARPU for the quarter-to-date September 30, 2013 period aggregate service revenue of the ten days ended July 10, 2013 Predecessor period and the quarter-to-date September 30, 2013 Successor period divided by the sum of the average subscribers during the quarter. Combined ARPU for the year-to-date December 31, 2013 period aggregate service revenue of the 191 days ended July 10, 2013 Predecessor period and the year-to-date December 31, 2013 Successor period divided by the sum of the average subscribers during the year-to-date period. Combined ARPU for the quarter-to-date December 31, 2013 period is not affected by Predecessor activity and, therefore, is consistent with the information presented in the previous table for the quarter-to-date December 31, 2013 Successor ARPU. Combined ARPU for the quarter and year-to-date December 31, 2012 periods are not affected by Successor activity, and, therefore, is consistent with the information presented in the previous table for the quarter and year-to-date Predecessor ARPU.


CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Millions, except per Share Data)
 
Successor
 
 
 
Predecessor
 
Quarter
to Date
Quarter
to Date
87 Days Ended
Year to Date
 
 
 
10 Days
Ended
191 Days
Ended
Quarter
to Date
Year to Date
 
12/31/13
9/30/13
12/31/12
12/31/13
 
 
 
7/10/13
7/10/13
12/31/12
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
Net Operating Revenues
$
9,142

$
7,749

$
—

$
16,891

 
 
 
$
932

$
18,602

$
9,005

$
35,345

Net Operating Expenses
 
 
 
 
 
 
 
 
 
 
 
Cost of services
2,704

2,470

—

5,174

 
 
 
286

5,673

2,659

10,936

Cost of products
2,731

1,872

—

4,603

 
 
 
281

4,872

2,993

9,905

Selling, general and administrative
2,546

2,259

33

4,841

 
 
 
289

5,067

2,557

9,765

Depreciation and amortization
1,531

1,403

—

2,934

 
 
 
121

3,245

1,493

6,543

Other, net
206

103

—

309

 
 
 
(5
)
630

8

16

Total net operating expenses
9,718

8,107

33

17,861

 
 
 
972

19,487

9,710

37,165

Operating Loss
(576
)
(358
)
(33
)
(970
)
 
 
 
(40
)
(885
)
(705
)
(1,820
)
Interest expense
(502
)
(416
)
—

(918
)
 
 
 
(275
)
(1,135
)
(432
)
(1,428
)
Equity in earnings (losses) of unconsolidated investments and other, net 
55

165

10

73

 
 
 
2,905

2,463

(140
)
(923
)
(Loss) income before Income Taxes
(1,023
)
(609
)
(23
)
(1,815
)
 
 
 
2,590

443

(1,277
)
(4,171
)
Income tax expense
(15
)
(90
)
(4
)
(45
)
 
 
 
(1,508
)
(1,601
)
(44
)
(154
)
Net (Loss) Income
$
(1,038
)
$
(699
)
$
(27
)
$
(1,860
)
 
 
 
$
1,082

$
(1,158
)
$
(1,321
)
$
(4,325
)
Basic Net (Loss) Income Per Common Share
$
(0.26
)
$
(0.18
)
 NM

$
(0.54
)
 
 
 
$
0.35

$
(0.38
)
$
(0.44
)
$
(1.44
)
Diluted Net (Loss) Income Per Common Share
$
(0.26
)
$
(0.18
)
 NM

$
(0.54
)
 
 
 
$
0.30

$
(0.38
)
$
(0.44
)
$
(1.44
)
Basic Weighted Average Common Shares outstanding
3,944

3,802

 NM

3,475

 
 
 
3,086

3,027

3,007

3,002

Diluted Weighted Average Common Shares outstanding
3,944

3,802

 NM

3,475

 
 
 
3,640

3,027

3,007

3,002

Effective Tax Rate
-1.5
 %
-14.8
 %
-17.4
 %
-2.5
 %
 
 
 
58.2
%
361.4
%
-3.4
 %
-3.7
 %


NON-GAAP RECONCILIATION - NET INCOME (LOSS) TO ADJUSTED EBITDA* (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor
 
Quarter
to Date
Quarter
to Date
87 Days Ended
Year to Date
 
 
 
10 Days
Ended
191 Days
Ended
Quarter
to Date
Year to Date
 
12/31/13
9/30/13
12/31/12
12/31/13
 
 
 
7/10/13
7/10/13
12/31/12
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
Net (Loss) Income
$
(1,038
)
$
(699
)
$
(27
)
$
(1,860
)
 
 
 
$
1,082

$
(1,158
)
$
(1,321
)
$
(4,325
)
Income tax expense
15

90

4

45

 
 
 
1,508

1,601

44

154

(Loss) Income before Income Taxes
(1,023
)
(609
)
(23
)
(1,815
)
 
 
 
2,590

443

(1,277
)
(4,171
)
Equity in earnings (losses) of unconsolidated investments and other, net
(55
)
(165
)
(10
)
(73
)
 
 
 
(2,905
)
(2,463
)
140

923

Interest expense
502

416

—

918

 
 
 
275

1,135

432

1,428

Operating Loss
(576
)
(358
)
(33
)
(970
)
 
 
 
(40
)
(885
)
(705
)
(1,820
)
Depreciation and amortization
1,531

1,403

—

2,934

 
 
 
121

3,245

1,493

6,543

EBITDA*
955

1,045

(33
)
1,964

 
 
 
81

2,360

788

4,723

Severance and exit costs (7)
206

103

—

309

 
 
 
(5
)
652

(10
)
196

Gains from asset dispositions and exchanges (8)
—

—

—

—

 
 
 
—

—

—

(29
)
Asset impairments and abandonments (9)
—

—

—

—

 
 
 
—

—

18

36

Spectrum hosting contract termination, net (10)
—

—

—

—

 
 
 
—

—

—

(170
)
Access costs (11)
—

—

—

—

 
 
 
—

—

—

(17
)
Litigation (12)
—

—

—

—

 
 
 
—

(22
)
—

—

Business combinations (13)
—

100

—

100

 
 
 
19

53

19

19

Hurricane Sandy (14)
(7
)
—

—

(7
)
 
 
 
—

—

45

45

Adjusted EBITDA*
$
1,154

$
1,248

$
(33
)
$
2,366

 
 
 
$
95

$
3,043

$
860

$
4,803

Capital expenditures (2)
1,901

1,666

—

3,567

 
 
 
175

3,884

1,923

5,370

Adjusted EBITDA* less Capex
$
(747
)
$
(418
)
$
(33
)
$
(1,201
)
 
 
 
$
(80
)
$
(841
)
$
(1,063
)
$
(567
)
Adjusted EBITDA Margin*
14.5
%
17.5
%
NM

15.7
%
 
 
 
11.1
%
18.0
%
10.7
%
15.0
%
Selected item:
 
 
 
 
 
 
 
 
 
 
 
Deferred tax asset valuation allowance
$
381

$
327

$
4

$
708

 
 
 
$
524

$
1,410

$
546

$
1,756



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
 
Combined (1) Quarter to Date
 
Combined (1) Year to Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/12
 
 
 
 
 
 
 
Net Operating Revenues
$
9,142

$
8,681

$
9,005

 
$
35,493

$
35,345

Net Operating Expenses
 
 
 
 
 
 
Cost of services
2,704

2,756

2,659

 
10,847

10,936

Cost of products
2,731

2,153

2,993

 
9,475

9,905

Selling, general and administrative
2,546

2,548

2,590

 
9,908

9,798

Depreciation and amortization
1,531

1,524

1,493

 
6,179

6,543

Other, net
206

98

8

 
939

16

Total net operating expenses
9,718

9,079

9,743

 
37,348

37,198

Operating Loss
(576
)
(398
)
(738
)
 
(1,855
)
(1,853
)
Interest expense
(502
)
(691
)
(432
)
 
(2,053
)
(1,428
)
Equity in earnings (losses) of unconsolidated investments and other, net 
55

3,070

(130
)
 
2,536

(913
)
(Loss) Income before Income Taxes
(1,023
)
1,981

(1,300
)
 
(1,372
)
(4,194
)
Income tax expense
(15
)
(1,598
)
(48
)
 
(1,646
)
(158
)
Net (Loss) Income
$
(1,038
)
$
383

$
(1,348
)
 
$
(3,018
)
$
(4,352
)


NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED EBITDA* (Unaudited)
(Millions)
 
Combined (1) Quarter to Date
 
Combined (1) Year to Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/12
 
 
 
 
 
 
 
Net (Loss) Income
$
(1,038
)
$
383

$
(1,348
)
 
$
(3,018
)
$
(4,352
)
Income tax expense
15

1,598

48

 
1,646

158

(Loss) Income before Income Taxes
(1,023
)
1,981

(1,300
)
 
(1,372
)
(4,194
)
Equity in earnings (losses) of unconsolidated investments and other, net
(55
)
(3,070
)
130

 
(2,536
)
913

Interest expense
502

691

432

 
2,053

1,428

Operating Loss
(576
)
(398
)
(738
)
 
(1,855
)
(1,853
)
Depreciation and amortization
1,531

1,524

1,493

 
6,179

6,543

EBITDA*
955

1,126

755

 
4,324

4,690

Severance and exit costs (7)
206

98

(10
)
 
961

196

Gains from asset dispositions and exchanges (8)
—

—

—

 
—

(29
)
Asset impairments and abandonments (9)
—

—

18

 
—

36

Spectrum hosting contract termination, net (10)
—

—

—

 
—

(170
)
Access costs (11)
—

—

—

 
—

(17
)
Litigation (12)
—

—

—

 
(22
)
—

Business combinations (13)
—

119

19

 
153

19

Hurricane Sandy (14)
(7
)
—

45

 
(7
)
45

Adjusted EBITDA*
1,154

1,343

827

 
5,409

4,770

Capital expenditures (2)
1,901

1,841

1,923

 
7,451

5,370

Adjusted EBITDA* less Capex
$
(747
)
$
(498
)
$
(1,096
)
 
$
(2,042
)
$
(600
)
Adjusted EBITDA Margin*
14.5
%
16.8
%
10.3
%
 
16.9
%
14.9
%
Selected item:
 
 
 
 
 
 
Deferred tax asset valuation allowance
$
381

$
851

$
550

 
$
2,118

$
1,760




WIRELESS STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor
 
Quarter
to Date
Quarter to Date
Year to Date
 
 
 
10 Days
Ended
191 Days
Ended
Quarter
to Date
Year to Date
 
12/31/13
9/30/13
12/31/13
 
 
 
7/10/13
7/10/13
12/31/12
12/31/12
 
 
 
 
 
 
 
 
 
 
 
Net Operating Revenues
 
 
 
 
 
 
 
 
 
 
Service revenue
 
 
 
 
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
 
 
 
 
Postpaid (3)
$
5,782

$
5,201

$
10,983

 
 
 
$
634

$
12,242

$
5,674

$
22,247

Prepaid (4)
1,237

1,028

2,265

 
 
 
132

2,602

1,170

4,377

Wholesale, affiliate and other
132

116

248

 
 
 
15

279

135

483

Total Sprint platform
7,151

6,345

13,496

 
 
 
781

15,123

6,979

27,107

Nextel platform:
 
 
 
 
 
 
 
 
 
 
Postpaid (3)
—

—

—

 
 
 
—

217

218

1,454

Prepaid (4)
—

—

—

 
 
 
—

50

68

525

Total Nextel platform
—

—

—

 
 
 
—

267

286

1,979

Transactions:
 
 
 
 
 
 
 
 
 
 
Postpaid (3)
81

89

170

 
 
 
2

26

—

—

Prepaid (4)
80

81

161

 
 
 
1

2

—

—

Wholesale
10

8

18

 
 
 
—

—

—

—

Total transactions
171

178

349

 
 
 
3

28

—

—

 
 
 
 
 
 
 
 
 
 
 
Equipment revenue
1,161

636

1,797

 
 
 
74

1,707

1,010

3,248

Total net operating revenues
8,483

7,159

15,642

 
 
 
858

17,125

8,275

32,334

 
 
 
 
 
 
 
 
 
 
 
Net Operating Expenses
 
 
 
 
 
 
 
 
 
 
Cost of services
2,248

2,087

4,335

 
 
 
240

4,703

2,210

9,034

Cost of products
2,731

1,872

4,603

 
 
 
281

4,872

2,993

9,905

Selling, general and administrative
2,444

2,100

4,544

 
 
 
256

4,780

2,436

9,290

Depreciation and amortization
1,470

1,338

2,808

 
 
 
110

3,029

1,391

6,128

Other, net
187

93

280

 
 
 
(5
)
627

3

28

Total net operating expenses
9,080

7,490

16,570

 
 
 
882

18,011

9,033

34,385

Operating Loss
$
(597
)
$
(331
)
$
(928
)
 
 
 
$
(24
)
$
(886
)
$
(758
)
$
(2,051
)
 
 
 
 
 
 
 
 
 
 
 
Supplemental Revenue Data
 
 
 
 
 
 
 
 
 
 
Total retail service revenue
$
7,180

$
6,399

$
13,579

 
 
 
$
769

$
15,139

$
7,130

$
28,603

Total service revenue
$
7,322

$
6,523

$
13,845

 
 
 
$
784

$
15,418

$
7,265

$
29,086


WIRELESS NON-GAAP RECONCILIATION (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor
 
Quarter
to Date
Quarter to Date
Year to Date
 
 
 
10 Days
Ended
191 Days
Ended
Quarter
to Date
Year to Date
 
12/31/13
9/30/13
12/31/13
 
 
 
7/10/13
7/10/13
12/31/12
12/31/12
 
 
 
 
 
 
 
 
 
 
 
Operating Loss
$
(597
)
$
(331
)
$
(928
)
 
 
 
$
(24
)
$
(886
)
$
(758
)
$
(2,051
)
Severance and exit costs (7)
187

93

280

 
 
 
(5
)
649

(10
)
196

Gains from asset dispositions and exchanges (8)
—

—

—

 
 
 
—

—

—

(29
)
Asset impairments and abandonments (9)
—

—

—

 
 
 
—

—

13

31

Spectrum hosting contract termination, net (10)
—

—

—

 
 
 
—

—

—

(170
)
Litigation (12)
—

—

—

 
 
 
—

(22
)
—

—

Business combinations (13)
—

25

25

 
 
 
—

—

—

—

Hurricane Sandy (14)
(7
)
—

(7
)
 
 
 
—

—

42

42

Depreciation and amortization
1,470

1,338

2,808

 
 
 
110

3,029

1,391

6,128

Adjusted EBITDA*
1,053

1,125

2,178

 
 
 
81

2,770

678

4,147

Capital expenditures (2)
1,716

1,527

3,243

 
 
 
156

3,590

1,786

4,884

Adjusted EBITDA* less Capex
$
(663
)
$
(402
)
$
(1,065
)
 
 
 
$
(75
)
$
(820
)
$
(1,108
)
$
(737
)
Adjusted EBITDA Margin*
14.4
%
17.2
%
15.7
%
 
 
 
10.3
%
18.0
%
9.3
%
14.2
%


WIRELESS STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
 
Combined (1) Quarter to Date
 
Combined (1) Year to Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/12
 
 
 
 
 
 
 
Net Operating Revenues
 
 
 
 
 
 
Service revenue
 
 
 
 
 
 
Sprint platform:
 
 
 
 
 
 
Postpaid (3)
$
5,782

$
5,835

$
5,674

 
$
23,225

$
22,247

Prepaid (4)
1,237

1,160

1,170

 
4,867

4,377

Wholesale, affiliate and other
132

131

135

 
527

483

Total Sprint platform
7,151

7,126

6,979

 
28,619

27,107

Nextel platform:
 
 
 
 
 
 
Postpaid (3)
—

—

218

 
217

1,454

Prepaid (4)
—

—

68

 
50

525

Total Nextel platform
—

—

286

 
267

1,979

Transactions:
 
 
 
 
 
 
Postpaid (3)
81

91

—

 
196

—

Prepaid (4)
80

82

—

 
163

—

Wholesale
10

8

—

 
18

—

Total transactions
171

181

—

 
377

—

 
 
 
 
 
 
 
Equipment revenue
1,161

710

1,010

 
3,504

3,248

Total net operating revenues
8,483

8,017

8,275

 
32,767

32,334

 
 
 
 
 
 
 
Net Operating Expenses
 
 
 
 
 
 
Cost of services
2,248

2,327

2,210

 
9,038

9,034

Cost of products
2,731

2,153

2,993

 
9,475

9,905

Selling, general and administrative
2,444

2,356

2,436

 
9,324

9,290

Depreciation and amortization
1,470

1,448

1,391

 
5,837

6,128

Other, net
187

88

3

 
907

28

Total net operating expenses
9,080

8,372

9,033

 
34,581

34,385

Operating Loss
$
(597
)
$
(355
)
$
(758
)
 
$
(1,814
)
$
(2,051
)
 
 
 
 
 
 
 
Supplemental Revenue Data
 
 
 
 
 
 
Total retail service revenue
$
7,180

$
7,168

$
7,130

 
$
28,718

$
28,603

Total service revenue
$
7,322

$
7,307

$
7,265

 
$
29,263

$
29,086



WIRELESS NON-GAAP RECONCILIATION (Unaudited)
(Millions)
 
Combined (1) Quarter to Date
 
Combined (1) Year to Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/12
 
 
 
 
 
 
 
Operating Loss
$
(597
)
$
(355
)
$
(758
)
 
$
(1,814
)
$
(2,051
)
Severance and exit costs (7)
187

88

(10
)
 
929

196

Gains from asset dispositions and exchanges (8)
—

—

—

 
—

(29
)
Asset impairments and abandonments (9)
—

—

13

 
—

31

Spectrum hosting contract termination, net (10)
—

—

—

 
—

(170
)
Litigation (12)
—

—

—

 
(22
)
—

Business combinations (13)
—

25

—

 
25

—

Hurricane Sandy (14)
(7
)
—

42

 
(7
)
42

Depreciation and amortization
1,470

1,448

1,391

 
5,837

6,128

Adjusted EBITDA*
1,053

1,206

678

 
4,948

4,147

Capital expenditures (2)
1,716

1,683

1,786

 
6,833

4,884

Adjusted EBITDA* less Capex
$
(663
)
$
(477
)
$
(1,108
)
 
$
(1,885
)
$
(737
)
Adjusted EBITDA Margin*
14.4
%
16.5
%
9.3
%
 
16.9
%
14.2
%



WIRELINE STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor
 
Quarter
to Date
Quarter
to Date
Year to Date
 
 
 
10 Days
Ended
191 Days
Ended
Quarter
to Date
Year to Date
 
12/31/13
9/30/13
12/31/13
 
 
 
7/10/13
7/10/13
12/31/12
12/31/12
Net Operating Revenues
 
 
 
 
 
 
 
 
 
 
Voice
$
386

$
333

$
719

 
 
 
$
42

$
771

$
385

$
1,627

Data
81

57

138

 
 
 
7

188

96

398

Internet
374

373

747

 
 
 
47

913

451

1,781

Other
18

14

32

 
 
 
2

29

17

75

Total net operating revenues
859

777

1,636

 
 
 
98

1,901

949

3,881

 
 
 
 
 
 
 
 
 
 
 
Net Operating Expenses
 
 
 
 
 
 
 
 
 
 
Cost of services and products
659

576

1,235

 
 
 
72

1,402

671

2,784

Selling, general and administrative
95

84

179

 
 
 
11

227

100

451

Depreciation and amortization
62

61

123

 
 
 
10

213

102

412

Other, net
20

10

30

 
 
 
—

3

5

(12
)
Total net operating expenses
836

731

1,567

 
 
 
93

1,845

878

3,635

Operating Income
$
23

$
46

$
69

 
 
 
$
5

$
56

$
71

$
246



WIRELINE NON-GAAP RECONCILIATION (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor
 
Quarter
to Date
Quarter
to Date
Year to Date
 
 
 
10 Days
Ended
191 Days
Ended
Quarter
to Date
Year to Date
 
12/31/13
9/30/13
12/31/13
 
 
 
7/10/13
7/10/13
12/31/12
12/31/12
 
 
 
 
 
 
 
 
 
 
 
Operating Income
$
23

$
46

$
69

 
 
 
$
5

$
56

$
71

$
246

Severance and exit costs (7)
20

10

30

 
 
 
—

3

—

—

Asset impairments and abandonments (8)
—

—

—

 
 
 
—

—

5

5

Access costs (11)
—

—

—

 
 
 
—

—

—

(17
)
Hurricane Sandy (14)
—

—

—

 
 
 
—

—

3

3

Depreciation and amortization
62

61

123

 
 
 
10

213

102

412

Adjusted EBITDA*
105

117

222

 
 
 
15

272

181

649

Capital expenditures (2)
82

73

155

 
 
 
11

165

58

242

Adjusted EBITDA* less Capex
$
23

$
44

$
67

 
 
 
$
4

$
107

$
123

$
407

Adjusted EBITDA Margin*
12.2
%
15.1
%
13.6
%
 
 
 
15.3
%
14.3
%
19.1
%
16.7
%



WIRELINE STATEMENTS OF OPERATIONS (Unaudited)
(Millions)
 
Combined (1) Quarter to Date
 
Combined (1) Year to Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/12
Net Operating Revenues
 
 
 
 
 
 
Voice
$
386

$
375

$
385

 
$
1,490

$
1,627

Data
81

64

96

 
326

398

Internet
374

420

451

 
1,660

1,781

Other
18

16

17

 
61

75

Total net operating revenues
859

875

949

 
3,537

3,881

 
 
 
 
 
 
 
Net Operating Expenses
 
 
 
 
 
 
Cost of services and products
659

648

671

 
2,637

2,784

Selling, general and administrative
95

95

100

 
406

451

Depreciation and amortization
62

71

102

 
336

412

Other, net
20

10

5

 
33

(12
)
Total net operating expenses
836

824

878

 
3,412

3,635

Operating Income
$
23

$
51

$
71

 
$
125

$
246



WIRELINE NON-GAAP RECONCILIATION (Unaudited)
(Millions)
 
Combined (1) Quarter to Date
 
Combined (1) Year to Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/12
 
 
 
 
 
 
 
Operating Income
$
23

$
51

$
71

 
$
125

$
246

Severance and exit costs (7)
20

10

—

 
33

—

Asset impairments and abandonments (8)
—

—

5

 
—

5

Access costs (11)
—

—

—

 
—

(17
)
Hurricane Sandy (14)
—

—

3

 
—

3

Depreciation and amortization
62

71

102

 
336

412

Adjusted EBITDA*
105

132

181

 
494

649

Capital expenditures (2)
82

84

58

 
320

242

Adjusted EBITDA* less Capex
$
23

$
48

$
123

 
$
174

$
407

Adjusted EBITDA Margin*
12.2
%
15.1
%
19.1
%
 
14.0
%
16.7
%



CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor
 
Year to
Date
87 Days
Ended
 
 
 
191 Days Ended
Year to
Date
 
12/31/13
12/31/12
 
 
 
7/10/13
12/31/12
Operating Activities
 
 
 
 
 
 
 
Net loss
$
(1,860
)
$
(27
)
 
 
 
$
(1,158
)
$
(4,325
)
Depreciation and amortization
2,934

—

 
 
 
3,245

6,543

Provision for losses on accounts receivable
261

—

 
 
 
194

561

Share-based and long-term incentive compensation expense
98

—

 
 
 
37

82

Deferred income taxes
32

1

 
 
 
1,586

209

Gain on previously-held equity interests
—

—

 
 
 
(2,926
)
—

Equity in losses of unconsolidated investments, net
—

—

 
 
 
482

1,114

Interest expense related to beneficial conversion feature on convertible bond
—

—

 
 
 
247

—

Contribution to pension plan
(7
)
—

 
 
 
—

(108
)
Spectrum hosting contract termination, net (10)
—

—

 
 
 
—

(170
)
Call premiums on debt redemptions
(180
)
—

 
 
 
—

—

Amortization and accretion of long-term debt premiums and discounts
(160
)
 
 
 
 
9

4

Other working capital changes, net
(924
)
(3
)
 
 
 
728

(802
)
Other, net
(255
)
29

 
 
 
227

(109
)
Net cash (used in) provided by operating activities
(61
)
—

 
 
 
2,671

2,999

 
 
 
 
 
 
 
 
Investing Activities
 
 
 
 
 
 
 
Capital expenditures (2)
(3,847
)
—

 
 
 
(3,140
)
(4,261
)
Expenditures relating to FCC licenses
(146
)
—

 
 
 
(125
)
(198
)
Change in short-term investments, net
(4
)
—

 
 
 
1,224

(1,699
)
Acquisitions, net of cash acquired
(14,112
)
—

 
 
 
(4,039
)
—

Investment and derivative in Sprint Communications, Inc.
—

(3,100
)
 
 
 
—

—

Investment in Clearwire (including debt securities)
—

—

 
 
 
(308
)
(228
)
Other, net
1

—

 
 
 
3

11

Net cash used in investing activities
(18,108
)
(3,100
)
 
 
 
(6,385
)
(6,375
)
 
 
 
 
 
 
 
 
Financing Activities
 
 
 
 
 
 
 
Proceeds from debt and financings
9,500

—

 
 
 
204

9,176

Debt financing costs
(147
)
—

 
 
 
(11
)
(134
)
Repayments of debt and capital lease obligations
(3,378
)
—

 
 
 
(362
)
(4,791
)
Proceeds from issuance of common stock and warrants, net
18,567

3,105

 
 
 
60

29

Other, net
(14
)
—

 
 
 
—

—

Net cash provided by (used) in financing activities
24,528

3,105

 
 
 
(109
)
4,280

 
 
 
 
 
 
 
 
Net Increase (Decrease) in Cash and Cash Equivalents
6,359

5

 
 
 
(3,823
)
904

 
 
 
 
 
 
 
 
Cash and Cash Equivalents, beginning of period
5

—

 
 
 
6,351

5,447

 
 
 
 
 
 
 
 
Cash and Cash Equivalents, end of period
$
6,364

$
5

 
 
 
$
2,528

$
6,351


RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor
 
Quarter
to Date
Quarter
to Date
Year to Date
87 Days Ended
 
 
 
10 Days
Ended
191 Days
Ended
Quarter
to Date
Year to Date
 
12/31/13
9/30/13
12/31/13
12/31/12
 
 
 
7/10/13
7/10/13
12/31/12
12/31/12
 
 
 
 
 
 
 
 
 
 
 
 
Net Cash (Used in) Provided by Operating Activities
$
(761
)
$
694

$
(61
)
$
—

 
 
 
$
496

$
2,671

$
216

$
2,999

 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures (2)
(1,969
)
(1,878
)
(3,847
)
—

 
 
 
(188
)
(3,140
)
(1,477
)
(4,261
)
Expenditures relating to FCC licenses, net
(115
)
(31
)
(146
)
—

 
 
 
(2
)
(125
)
(46
)
(198
)
Other investing activities, net
1

—

1

—

 
 
 
—

3

(2
)
11

Free Cash Flow*
(2,844
)
(1,215
)
(4,053
)
—

 
 
 
306

(591
)
(1,309
)
(1,449
)
 
 
 
 
 
 
 
 
 
 
 
 
Debt financing costs
(40
)
(107
)
(147
)
—

 
 
 
—

(11
)
(44
)
(134
)
(Decrease) increase in debt and other, net
(207
)
6,329

6,122

—

 
 
 
—

(158
)
3,316

4,385

Acquisitions, net of cash acquired
—

(14,112
)
(14,112
)
—

 
 
 
(3,530
)
(4,039
)
—

—

Proceeds from issuance of common stock and warrants, net
15

18,552

18,567

3,105

 
 
 
9

60

8

29

Increase in restricted cash
3,050

(3,050
)
—

—

 
 
 
—

—

—

—

Investment in Clearwire (including debt securities)
—

—

—

—

 
 
 
(68
)
(308
)
(100
)
(228
)
Investment and derivative in Sprint Communications, Inc.
—

—

—

(3,100
)
 
 
 
—

—

—

—

Other financing activities, net
1

(14
)
(14
)
—

 
 
 
—

—

—

—

Net (Decrease) Increase in Cash, Cash
 
 
 
 
 
 
 
 
 
 
 
   Equivalents and Short-Term Investments
$
(25
)
$
6,383

$
6,363

$
5

 
 
 
$
(3,283
)
$
(5,047
)
$
1,871

$
2,603



CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)
(Millions)
 
Combined (1) Year to Date
 
12/31/13
12/31/12
Operating Activities
 
 
Net loss
$
(3,018
)
$
(4,352
)
Depreciation and amortization
6,179

6,543

Provision for losses on accounts receivable
455

561

Share-based and long-term incentive compensation expense
135

82

Deferred income taxes
1,618

210

Gain on previously-held equity interests
(2,926
)
—

Equity in losses of unconsolidated investments, net
482

1,114

Interest expense related to beneficial conversion feature on convertible bond
247

—

Contribution to pension plan
(7
)
(108
)
Spectrum hosting contract termination, net (10)
—

(170
)
Call premiums on debt redemptions
(180
)
—

Amortization and accretion of long-term debt premiums and discounts
(151
)
4

Other working capital changes, net
(196
)
(805
)
Other, net
(28
)
(80
)
Net cash provided by operating activities
2,610

2,999

 
 
 
Investing Activities
 
 
Capital expenditures (2)
(6,987
)
(4,261
)
Expenditures relating to FCC licenses
(271
)
(198
)
Change in short-term investments, net
1,220

(1,699
)
Acquisitions, net of cash acquired
(18,151
)
—

Investment and derivative in Sprint Communications, Inc.
—

(3,100
)
Investment in Clearwire (including debt securities)
(308
)
(228
)
Other, net
4

11

Net cash used in investing activities
(24,493
)
(9,475
)
 
 
 
Financing Activities
 
 
Proceeds from debt and financings
9,704

9,176

Debt financing costs
(158
)
(134
)
Repayments of debt and capital lease obligations
(3,740
)
(4,791
)
Proceeds from issuance of common stock and warrants, net
18,627

3,134

Other, net
(14
)
—

Net cash provided by financing activities
24,419

7,385

 
 
 
Net Increase in Cash and Cash Equivalents
2,536

909

 
 
 
Cash and Cash Equivalents, beginning of period
3,828

5,447

 
 
 
Cash and Cash Equivalents, end of period
$
6,364

$
6,356


RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)
(Millions)
 
Combined (1) Quarter to Date
 
Combined (1) Year to Date
 
12/31/13
9/30/13
12/31/12
 
12/31/13
12/31/12
 
 
 
 
 
 
 
Net Cash (Used in) Provided by Operating Activities
$
(761
)
$
1,190

$
216

 
$
2,610

$
2,999

 
 
 
 
 
 
 
Capital expenditures (2)
(1,969
)
(2,066
)
(1,477
)
 
(6,987
)
(4,261
)
Expenditures relating to FCC licenses, net
(115
)
(33
)
(46
)
 
(271
)
(198
)
Other investing activities, net
1

—

(2
)
 
4

11

Free Cash Flow*
(2,844
)
(909
)
(1,309
)
 
(4,644
)
(1,449
)
 
 
 
 
 


Debt financing costs
(40
)
(107
)
(44
)
 
(158
)
(134
)
(Decrease) increase in debt and other, net
(207
)
6,329

3,316

 
5,964

4,385

Acquisitions, net of cash acquired
—

(17,642
)
—

 
(18,151
)
—

Proceeds from issuance of common stock and warrants, net
15

18,561

3,113

 
18,627

3,134

Increase in restricted cash
3,050

(3,050
)
—

 
—

—

Investment in Clearwire (including debt securities)
—

(68
)
(100
)
 
—

(228
)
Investment and derivative in Sprint Communications, Inc.
—

—

(3,100
)
 
(308
)
(3,100
)
Other financing activities, net
1

(14
)
—

 
(14
)
—

Net (Decrease) Increase in Cash, Cash
 
 
 
 
 
 
   Equivalents and Short-Term Investments
$
(25
)
$
3,100

$
1,876

 
$
1,316

$
2,608



CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor

 
12/31/13
12/31/12
 
 
 
12/31/12
Assets
 
 
 
 
 
 
Current assets
 
 
 
 
 
 
Cash and cash equivalents
$
6,364

$
5

 
 
 
$
6,351

Short-term investments
1,105

—

 
 
 
1,849

Accounts and notes receivable, net
3,570

6

 
 
 
3,658

Device and accessory inventory
1,205

—

 
 
 
1,200

Deferred tax assets
186

—

 
 
 
1

Prepaid expenses and other current assets
628

—

 
 
 
700

Total current assets
13,058

11

 
 
 
13,759

 
 
 
 
 
 
 
Investments and other assets
601

3,104

 
 
 
1,833

Property, plant and equipment, net
16,164

—

 
 
 
13,607

Goodwill
6,434

—

 
 
 
359

FCC licenses and other
41,824

—

 
 
 
20,677

Definite-lived intangible assets, net
8,014

—

 
 
 
1,335

Total
$
86,095

$
3,115

 
 
 
$
51,570

 
 
 
 
 
 
 
Liabilities and Shareholders' Equity
 
 
 
 
 
 
Current liabilities
 
 
 
 
 
 
Accounts payable
$
3,312

$
—

 
 
 
$
3,487

Accrued expenses and other current liabilities
6,363

4

 
 
 
5,008

Current portion of long-term debt, financing and capital lease obligations
994

—

 
 
 
379

Total current liabilities
10,669

4

 
 
 
8,874

 
 
 
 
 
 
 
Long-term debt, financing and capital lease obligations
32,017

—

 
 
 
23,962

Deferred tax liabilities
14,227

1

 
 
 
7,047

Other liabilities
3,598

—

 
 
 
4,600

Total liabilities
60,511

5

 
 
 
44,483

 
 
 
 
 
 
 
Shareholders' equity
 
 
 
 
 
 
Common shares
39

—

 
 
 
6,019

Paid-in capital
27,330

3,137

 
 
 
47,016

Accumulated deficit
(1,887
)
(27
)
 
 
 
(44,815
)
Accumulated other comprehensive loss
102

—

 
 
 
(1,133
)
Total shareholders' equity
25,584

3,110

 
 
 
7,087

Total
$
86,095

$
3,115

 
 
 
$
51,570



NET DEBT* (NON-GAAP) (Unaudited)
(Millions)
 
Successor
 
 
 
Predecessor

 
12/31/13
12/31/12
 
 
 
12/31/12
 
 
 
 
 
 
 
Total Debt
$
33,011

$
—

 
 
 
$
24,341

Less: Cash and cash equivalents
(6,364
)
—

 
 
 
(6,351
)
Less: Short-term investments
(1,105
)
—

 
 
 
(1,849
)
Net Debt*
$
25,542

$
—

 
 
 
$
16,141





SCHEDULE OF DEBT (Unaudited)
(Millions)
 
 
 
12/31/13
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

Sprint Corporation
 
 
9,000

 
 
 
 
Sprint Communications, Inc.
 
 
 
Export Development Canada Facility (Tranche 2)
3.618%
12/15/2015
500

6% Senior Notes due 2016
6.000%
12/01/2016
2,000

9.125% Senior Notes due 2017
9.125%
03/01/2017
1,000

8.375% Senior Notes due 2017
8.375%
08/15/2017
1,300

9% Guaranteed Notes due 2018
9.000%
11/15/2018
3,000

7% Guaranteed Notes due 2020
7.000%
03/01/2020
1,000

7% Senior Notes due 2020
7.000%
08/15/2020
1,500

11.5% Senior Notes due 2021
11.500%
11/15/2021
1,000

9.25% Debentures due 2022
9.250%
04/15/2022
200

6% Senior Notes due 2022
6.000%
11/15/2022
2,280

Sprint Communications, Inc.
 
 
13,780

 
 
 
 
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

 
 
 
 
iPCS Inc.
 
 
 
Second Lien Senior Secured Floating Rate Notes due 2014
3.492%
05/01/2014
181

iPCS Inc.
 
 
181

 
 
 
 
EKN Secured Equipment Facility ($1 Billion)
2.030%
03/30/2017
889

 
 
 
 
Vendor financing notes - Clearwire Communications LLC
 
2015
20

 
 
 
 
Tower financing obligation
6.092%
09/30/2021
339

Capital lease obligations and other
 
2014 - 2022
187

TOTAL PRINCIPAL
 
 
31,529

 
 
 
 
Net premiums
 
 
1,482

TOTAL DEBT
 
 
$
33,011

Supplemental information:
The Company had $2.1 billion of borrowing capacity available under our unsecured revolving bank credit facility as of December 31, 2013. Our unsecured revolving bank credit facility expires in February 2018.
In May 2012, certain of our subsidiaries entered into a $1.0 billion secured equipment credit facility to finance equipment-related purchases for Network Vision. The facility is equally divided into two consecutive tranches of $500 million, with the drawdown availability contingent upon Sprint's acquisition of equipment-related purchases from Ericsson, up to the maximum of each tranche, ending on May 31, 2013 and May 31, 2014, for the first and second tranche, respectively. Interest and principal are payable semi-annually with a final maturity of March 2017 for both tranches.
*This table excludes (i) our unsecured revolving bank credit facility, which will expire in 2018 and has no outstanding balance, (ii) $915 million in letters of credit outstanding under the unsecured revolving bank credit facility, (iii) vendor financing notes assumed in the Clearwire Acquisition, and (iv) all capital leases and other financing obligations.


NOTES TO THE FINANCIAL INFORMATION (Unaudited)

(1) Except for the quarter-to-date December 31, 2013 period, financial results for 2013 and 2012 include a Predecessor period from January 1, 2012, through the closing of the SoftBank transaction on July 10, 2013, and a Successor period from October 5, 2012 through December 31, 2013. In order to present financial results in a way that offers investors a more meaningful calendar period-to-period comparison, we have combined the current year results of operations for the Predecessor and Successor periods. For purposes of presenting the comparative financial information in the tables, we have labeled the quarter-to-date December 31, 2013 period as Combined, however, these results are not combined but rather represent the consolidated results of operations in accordance with accounting principles generally accepted in the United States (GAAP).
(2) Capital expenditures is an accrual based amount that includes the changes in unpaid capital expenditures and excludes capitalized interest. Cash paid for capital expenditures includes total capitalized interest of $1 million, $13 million and $29 million for the predecessor third and second quarters and year-to-date periods of 2013, respectively, $16 million, $14 million and $30 million for the successor fourth and third quarters and year-to-date periods of 2013, respectively, and $52 million, $102 million, and $269 million for the third and second quarters and year-to-date periods of 2012, respectively, and can be found in the Condensed Consolidated Cash Flow Information and the Reconciliation to Free Cash Flow*.
(3) Postpaid subscribers on the Sprint platform are defined as retail subscribers on the CDMA network, including subscribers utilizing WiMax and LTE technology. Postpaid subscribers previously on the Nextel platform are defined as retail postpaid subscribers on the iDEN network through June 30, 2013. Postpaid subscribers from transactions are defined as retail postpaid subscribers acquired from U.S. Cellular in May 2013 and Clearwire in July 2013 who had not deactivated or been recaptured on the Sprint platform. Included in net additions for the Sprint platform are tablets and connected devices, which generally generate a significantly lower ARPU than other postpaid subscribers. During the fourth quarter 2013, net additions for the Sprint platform included approximately 466,000 tablets.
(4) 'Prepaid subscribers on the Sprint platform are defined as retail prepaid subscribers and session-based tablet users who utilize the CDMA network and WiMax and LTE technology via our multi-brand offerings. Prepaid subscribers previously on the Nextel platform are defined as retail prepaid subscribers who utilized iDEN technology through June 30, 2013. Prepaid subscribers from transactions are defined as retail prepaid subscribers acquired from U.S. Cellular in May 2013 and Clearwire in July 2013 who had not deactivated or been recaptured on the Sprint platform.
(5) Nextel Subscriber Recaptures are defined as the number of subscribers that deactivated service from the postpaid or prepaid Nextel platform, as applicable, during each period but remained with the Company as subscribers on the postpaid or prepaid Sprint platform, respectively. Subscribers that deactivated service from the Nextel platform and activated service on the Sprint platform are included in the Sprint platform net additions for the applicable period.
(6) The Postpaid and Prepaid Nextel Recapture Rates are defined as the portion of total subscribers that left the postpaid or prepaid Nextel platform, as applicable, during the period and were retained on the postpaid or prepaid Sprint platform, respectively.
(7) Severance and lease exit costs are primarily associated with workforce reductions and with exit costs associated with the Nextel platform and acquisition of Clearwire.
(8) For the first quarter of 2012, gains from asset dispositions and exchanges are primarily due to spectrum exchange transactions.
(9) For the first quarter of 2012, asset impairment and abandonment activity includes $18 million related to a change in our backhaul architecture in connection to our Network Vision design from microwave to a more cost effective fiber backhaul.
(10) On March 16, 2012, we elected to terminate the arrangement with LightSquared LP and LightSquared, Inc. (LightSquared). As we have no future service obligations with respect to the arrangement with LightSquared, we recognized $236 million of the advanced payments as other operating income in the first quarter of 2012. As a result of the termination of the hosting agreement, we impaired capitalized costs specific to LightSquared's 1.6 GHz spectrum that the company no longer intends to deploy which totaled $66 million.
(11) Favorable developments during the first quarter of 2012 relating to disagreements with local exchange carriers resulted in a reduction in expected access costs of $17 million.
(12) For the first quarter of 2013, litigation activity is primarily a result of favorable developments in connection with a tax (non-income) related contingency.
(13) For the third and second quarters of 2013, included in selling, general and administrative expenses are fees paid to unrelated parties for the transaction with SoftBank and our acquisition of Clearwire.
(14) Hurricane Sandy amounts for the fourth quarter and year-to-date periods of 2013 represent insurance recoveries. Hurricane Sandy charges for the fourth quarter of 2012, represent estimated hurricane-related charges of $45 million, consisting of customer credits, incremental roaming costs, network repairs and replacements.


*FINANCIAL MEASURES
 

On July 9, 2013, Sprint Communications, Inc. (formerly Sprint Nextel Corporation) completed its acquisition of Clearwire. On July 10, 2013 we consummated the SoftBank Merger with Starburst II, which immediately changed its name to Sprint Corporation (now referred to as the Company or Sprint). As a result of these transactions, the assets and liabilities of Sprint Communications, Inc. and Clearwire were adjusted to fair value on the respective closing dates. The Company's financial statement presentations herein distinguish between a predecessor period relating to Sprint Communications, Inc. for periods prior to the SoftBank Merger (Predecessor) and a successor period (Successor). The Successor information includes the activity and accounts of Sprint Corporation as of and for the three and twelve month periods ended December 31, 2013 and as of and for the 87 days ended December 31, 2012, which includes the activity and accounts of Sprint Communications, Inc., prospectively, beginning on July 11, 2013. The Predecessor information contained herein represents the historical basis of presentation for Sprint Communications, Inc. for all periods prior to the SoftBank Merger date on July 10, 2013. As a result of the valuation of assets acquired and liabilities assumed at fair value at the time of the SoftBank Merger and Clearwire Acquisition, the financial statements for the successor period are presented on a measurement basis different than the predecessor period, which was Sprint Communication’s historical cost, and are, therefore, not comparable.

In order to present financial results in a way that offers investors a more meaningful calendar period-to-period comparison, we have combined the current and prior year results of operations for the predecessor with successor results of operations on an unaudited combined basis. The combined information for the period October 5, 2012 (date of Starburst II incorporation) through December 31, 2013 does not purport to represent what our consolidated results of operations would have been if the acquisition had occurred as of the beginning of the first period presented. For purposes of presenting the comparative financial information in the tables, we have labeled the quarter-to-date December 31, 2013 results as combined, however, these results are not combined but rather represent the consolidated results of operations in accordance with accounting principles generally accepted in the United States (GAAP).

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. Other than the use of non-GAAP combined results as described above, 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, including our ability to fund discretionary spending such as capital expenditures, spectrum acquisitions and other investments and our ability to incur and service debt. 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.




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, and amounts included as investments in Clearwire and Sprint Communications, Inc. during the period. 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, subscriber 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 ability to operationalize the anticipated benefits from the SoftBank, Clearwire and U.S. Cellular transactions, the development and deployment of new technologies; efficiencies and cost savings of new technologies and services; customer and network usage; customer growth and retention; service, speed, coverage and quality; availability of devices; 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 Nextel’s Annual Report on Form 10-K for the year ended December 31, 2012, our Quarterly Report on Form 10-Q for the second quarter of 2013, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and when filed our Annual Report on Form 10-K for the year ended December 31, 2013. 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) offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint served more than 55 million customers at the end of 2013 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 prepaid 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. The American Customer Satisfaction Index rated Sprint as the most improved company in customer satisfaction, across all 47 industries, during the last five years. Sprint has been named to the Dow Jones Sustainability Index (DSJI) North America in 2011, 2012 and 2013. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.


###

_______________________________
i Sprint Spark actual deployment plans and speeds will be determined over time based on many factors, including build economics and the availability of equipment, devices and applications.