Sprint.com

November 07, 2008

Sprint Nextel Reports Third Quarter 2008 Results

PDF version of this release with full financial tables

  • Free Cash Flow* of $1.1 billion in the quarter
  • Cash balance of $4.1 billion at the end of the quarter
  • Building momentum around Now Network(TM) and customer experience
    • Care Quality - first-call resolution improvement throughout the year
    • Ready Now - a revolution in the wireless retail experience to drive data usage
    • One Click - a simple, customizable user interface for easy access to applications
    • WiMAX 4G - launch of a new era of high-speed mobile internet access
  • Positioned to stabilize fourth quarter gross adds

The company's third quarter earnings conference call will be held at 8 a.m. EST today. Participants may dial 866-297-0891 in the US or Canada and provide the following ID 69374133 or may listen via the Internet at www.sprint.com/investor.

OVERLAND PARK, Kan.--(BUSINESS WIRE)--Nov. 7, 2008--Sprint Nextel Corp. (NYSE: S) today reported third quarter 2008 financial results, which included consolidated net operating revenues of $8.8 billion and a diluted loss per share of 11 cents. Adjusted EPS before Amortization*, which removes the effects of special items and non-cash amortization expense, was zero cents. The company reported Free Cash Flow* for the quarter of $1.1 billion.

During the quarter, the company retired approximately $1 billion in principal of debt and incurred a $694 million financing obligation related to the close of its tower transaction. As of Sept. 30, 2008, the company had $4.1 billion of cash and cash equivalents. In November 2008, the company renegotiated the terms of its revolving credit facility, providing greater flexibility regarding its financial covenants.

"During tough economic times, we tightly managed our business to generate and retain cash and maintain substantial liquidity while continuing to reduce debt. At the same time, we made advancements in improving operations and delivering on the promise of the Now Network," said Dan Hesse, Sprint Nextel CEO. "Customer care metrics have improved steadily throughout the year, and external surveys are confirming we're providing a better customer experience."

Hesse added, "Our Ready Now program revolutionizes the wireless data customer experience by personalizing and teaching customers how to take advantage of the capabilities of our Now Network; our One Click handsets allow customers easy access to applications, and we launched our fourth generation WiMAX service in Baltimore, which generated excellent reviews for a new era of high-speed mobile Internet access. All of this positions us to invite new customers to join us as we begin to focus on stabilizing gross adds in the fourth quarter."

CONSOLIDATED RESULTS

TABLE No. 1 Selected Unaudited Financial Data (dollars in millions,
 except per share data)

                         Quarter Ended    %      Year-to-Date      %
                         September 30,   +/-     September 30,    +/-
                        --------------- ------ ----------------- -----
Financial Data           2008    2007            2008     2007
                        ------- -------        -------- --------
Net operating revenues  $8,816  $10,044  (12)% $27,205  $30,299  (10)%
Adjusted operating
 (loss) income*           (233)     658   NM      (475)   1,542   NM
Adjusted OIBDA*          1,824    2,880  (37)%   5,929    8,345  (29)%

Net (loss) income         (326)      64   NM    (1,175)    (128)  NM

Adjusted earnings per
 share before
 amortization*          $ 0.00  $  0.23 (100)% $  0.10    $0.67  (85)%

Diluted (loss) earnings
 per common share       $(0.11) $  0.02   NM   $ (0.41)  $(0.04)  NM

Capex                   $  485  $ 1,176  (59)% $ 2,491   $4,449  (44)%

Free cash flow*         $1,059  $ 1,291  (18)% $ 1,240   $1,971  (37)%

  • Consolidated net operating revenues of $8.8 billion for the quarter were 3% lower than in the second quarter, primarily due to a lower contribution from Wireless.
  • Adjusted OIBDA* of $1.8 billion reflects a sequential decline in net operating revenues due to subscriber losses and higher cost of service, partially offset by continued improvement in SG&A expenses. Third quarter Adjusted OIBDA* includes $65 million in non-cash compensation expense, as well as $75 million in operating expenses associated with the company's WiMAX efforts.
  • The company made capital investments of $485 million in the quarter, down from $646 million in the second quarter. The decline reflects lower spending in both Wireless and Wireline segments. The company recorded $134 million in capital expenditures in the quarter related to the deployment of WiMAX.
  • For the quarter, Free Cash Flow* was $1.1 billion, compared to $1.3 billion in the third quarter of 2007 and $11 million in the second quarter of 2008. The sequential improvement reflects working capital benefit and reduced capital expenditures.
  • Net Debt* at the end of the period was $18.4 billion, consisting of total debt of $22.6 billion, offset by cash and marketable securities of $4.2 billion. The company used cash in the third quarter to extinguish $485 million in principal of affiliate debt due 2012. The company also repaid $500 million of its revolving credit facility in August 2008. In addition, the company incurred a $694 million financing obligation related to the close of its tower transaction, which includes net cash proceeds of $645 million with an additional $20 million to be received 90 days after the closing of the transaction, subject to adjustments.
  • In November 2008, the company renegotiated the terms of its revolving credit facility and increased the ratio of total indebtedness to trailing four quarters earnings before interest, taxes, depreciation and amortization and certain other non-recurring charges from no more than 3.5 to 1.0 to no more than 4.25 to 1.0. The company also paid down $1 billion of outstanding debt and decreased the current borrowing capacity of the credit facility from $6 billion to $4.5 billion, of which $1.3 billion is available.
  • In the quarter, the company recorded cash expenditures of $187 million related to intangible asset investments, including $178 million associated with re-banding efforts and $9 million for the purchases of FCC licenses.
  • On Nov. 4, the Federal Communications Commission approved plans to combine Sprint's WiMAX business and assets with Clearwire Corp.
WIRELESS RESULTS
TABLE No. 2 Selected Unaudited Financial Data (dollars in millions)

                          Quarter Ended          Year-to-Date
Financial Data            September 30,          September 30,
                         ---------------       -----------------
                                           %                       %
                          2008    2007    +/-    2008     2007    +/-
                         ------- ------- ----- -------- -------- -----
Net operating revenues   $7,536  $8,698  (13)% $23,235  $26,203  (11)%
Adjusted operating
 (loss) income*            (250)    514   NM      (645)   1,261   NM
Adjusted OIBDA*           1,646   2,603  (37)%   5,315    7,669  (31)%
Adjusted OIBDA margin*     23.4%   32.4%          24.5%    31.6%
Capex(1)                 $  217  $  813  (73)% $ 1,528  $ 3,587  (57)%

(1)Capex includes re-banding capital, but excludes other re-banding
 costs related to FCC licenses.

Wireless Customers

  • The company served 50.5 million customers at the end of the period, compared to 54.0 million at the end of the third quarter of 2007. The credit mix of acquisitions has improved for four consecutive quarters, and prime customers represent almost 83% of the post-paid base.
  • For the quarter, total wireless customers declined by a net 1.3 million including losses of 1.1 million post-paid customers and 329,000 prepaid users, which was slightly offset by a 130,000 increase in the number of wholesale and affiliate subscribers.
  • At the end of the third quarter, the company served 37.8 million post-paid subscribers, 3.9 million prepaid subscribers and 8.8 million wholesale and affiliate subscribers.
  • Subscribers by network platform include 35.4 million on CDMA, 13.5 million on iDEN and 1.6 million Power Source users who utilize both networks.
  • More than 9% of post-paid customers upgraded their handsets during the third quarter, resulting in increased contract renewals.
  • In the third quarter, the company launched Ready Now as part of an ongoing plan to familiarize customers with their handsets and service while encouraging data adoption. The company added to its device and service capabilities with the launch of the Palm(R) Treo(TM) 800w, Katana Eclipse by Sanyo, Motorola Renegade(TM) V950, M320 and M220 by Samsung, the nationwide introduction of Sprint AIRAVE(TM) by Samsung, and Touch Diamond(TM) by HTC.
  • In the fourth quarter, the device lineup is expanding further to include the award-winning Samsung Rant, Samsung Highnote and LG Lotus(TM) featuring the easy-to-use One Click interactive user interface, HTC Touch Pro, and Motorola i576. Additionally, the company will launch the BlackBerry(R) Curve(TM) 8350i - the newest Nextel Direct Connect-capable BlackBerry smartphone. In 2009, Sprint plans to launch a total of eight new Nextel Direct Connect handsets as part of its new device portfolio, with five launching during the first half of the year.

Wireless Churn

  • Wireless post-paid churn was just under 2.15%, compared to 2.0% in the second quarter and 2.3% in the year-ago period.
  • Boost churn in the third quarter was 8.2%, compared to 7.4% in the second quarter of 2008, reflecting higher churn for both traditional Boost Pay-as-you-go subscribers and for Boost Unlimited.

    Wireless Service Revenues

    • Wireless service revenues for the quarter of $6.8 billion declined 13% year-over-year and 3% sequentially. The year-over-year decline was due to fewer subscribers and lower ARPU, while the sequential decline was due primarily to fewer wireless subscribers. Wholesale, affiliate, and other revenues were down sequentially and compared to the year-ago period due to pricing pressures.
    • Wireless post-paid ARPU in the quarter was stable at $56 compared to the first and second quarters of 2008, as growth in data substantially offset voice declines. Wireless post-paid ARPU declined by nearly 6% compared to the year-ago period, reflecting continued pressure on voice MRC and overage revenues, partially offset by data revenue growth.
    • Data revenues contributed approximately $13.50 to overall post-paid ARPU in the third quarter, led by growth in CDMA data ARPU. CDMA data ARPU increased more than $1 from second quarter, to about $16.50, now representing almost 29% of total CDMA ARPU. The increase was driven by strong take rates on bundled data services, such as those included with Simply Everything(TM), as well as continued growth in data cards.
    • Prepaid ARPU in the quarter was approximately $31 compared to $30 in the year-ago period and in the second quarter of 2008. The sequential and year-over-year increase reflects a growing contribution from Boost Unlimited subscribers, offset by lower ARPU of traditional prepaid users.

    Wireless Operating Expenses and Adjusted OIBDA*

    • Total operating expenses, after normalizing for special items, were $7.8 billion in the third quarter, compared to $8.2 billion in the year-ago period and $7.9 billion in the second quarter of 2008.
    • Adjusted OIBDA* of $1.6 billion in the quarter compares to $2.6 billion in the third quarter of 2007 and $1.9 billion in the second quarter. The sequential and year-over-year decline in Adjusted OIBDA* is due to fewer wireless subscribers and lower ARPU, partially offset by lower SG&A expense.
    • Cost of services increased 5% year-over-year and 3% sequentially. The increases are due mainly to higher roaming and premium services costs.
    • Equipment subsidy of nearly $700 million (equipment revenue of approximately $500 million less cost of products of nearly $1.2 billion) was down 1% from the second quarter and up 29% from the third quarter of 2007. The year-over-year increase in subsidy is primarily due to the increase in the average cost per handset sold as the company continued to sell a greater number of higher-priced units, partially offset by a decrease in the number of handsets sold.
    • SG&A expenses declined 11% from the third quarter of 2007 and 2% from the second quarter of 2008. The year-over-year improvement is due to lower selling, bad debt and labor expenses. On a sequential basis, higher marketing spending was offset by lower customer care, labor and bad debt expenses.
    • Bad debt expense was at its lowest level since the second quarter of 2006 due to the continued increase in the credit quality of our subscribers and improved collection efforts.

    Wireless Capital Spending

    Wireless capital investments were $217 million in the third quarter, compared to $393 million spent in the second quarter of 2008 and $813 million spent in the third quarter of 2007. Lower spending levels reflect reduced capacity needs and the conclusion of several network investment initiatives. At the end of the quarter, Sprint continues to lead the competition in 3G data network reliability, and CDMA and iDEN network performance continues at best-ever levels.

    WIRELINE RESULTS

    TABLE No. 3 Selected Unaudited Financial Data (dollars in millions)
    
                                Quarter Ended         Year-to-Date
    Financial Data              September 30,         September 30,
                               ---------------       ---------------
                                                 %                     %
                                2008    2007    +/-   2008    2007    +/-
                               ------- ------- ----- ------- ------- -----
    Net operating revenues     $1,576  $1,612   (2)% $4,811  $4,844   (1)%
    Adjusted operating income*    120     158  (24)%    436     362   20%
    Adjusted OIBDA*               263     290   (9)%    849     754   13%
    Adjusted OIBDA margin*       16.7%   18.0%         17.6%   15.6%
    
    Capex                      $   81  $  138  (41)% $  342  $  427  (20)%
    

    • Wireline revenues of $1.6 billion for the quarter were slightly lower sequentially and year-over-year as legacy voice and data declines offset Internet revenue growth.
    • Internet revenues increased 37% from the year-ago period and 5% sequentially due to strong enterprise demand for Global MPLS services and the increasing base of cable subscribers who utilize our VoIP services. Internet revenues as a percent of Wireline revenue have increased from 25% to 35% year-over-year. At the end of the third quarter, the company supported more than 4 million users of cable partner VoIP services. These services are currently available to more than 30 million MSO households.
    • Legacy voice revenues declined 4% sequentially and 13% year-over-year. Compared to the second quarter, declines in retail business voice, consumer and wholesale were partially offset by growth in demand from the Wireless segment.
    • Legacy data revenues are being impacted in part by customer transitions to IP services. These legacy services declined 22% compared to the third quarter of 2007 and 8% quarter-over-quarter.
    • Adjusted OIBDA* was $263 million compared to $299 million reported for the second quarter of 2008. Total operating expenses, after normalizing for special items, were $1.5 billion in the third quarter, nearly flat to the year-ago period and the second quarter of 2008.
    • Wireline capital investment in the quarter was $81 million and was primarily deployed to support IP growth.

    Forecast

    Sprint Nextel expects continued pressure on post-paid subscribers in the fourth quarter; however, we expect that gross adds will stabilize and that churn rate will be consistent with the third quarter. We also expect slight downward pressure on post-paid ARPU in the fourth quarter. Consistent with recent periods, the company expects revenue pressures leading to lower Adjusted OIBDA*. The company now expects full-year capital expenditures to be in the range of $3 billion to $3.3 billion. The company expects to continue to generate positive Free Cash Flow*.

    *FINANCIAL MEASURES

    Sprint Nextel provides financial measures generated using generally accepted accounting principles (GAAP) and using adjustments to 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 non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our financial statements 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 Nextel provides reconciliations of these non-GAAP measures in its financial reporting. Because Sprint Nextel 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 Nextel does not provide reconciliations to GAAP of its forward-looking financial measures.

    The measures used in this release include the following:

    Adjusted Earnings (Loss) per Share (EPS) is defined as net income (loss) before special items, net of tax and the diluted EPS calculated thereon. Adjusted EPS before Amortization is defined as net income (loss) before special items and amortization, net of tax, and the diluted EPS calculated thereon. These non-GAAP measures should be used in addition to, but not as a substitute for, the analysis provided in the statement of operations. We believe that these measures are useful because they allow investors to evaluate our performance for different periods on a more comparable basis by excluding items that relate to acquired amortizable intangible assets and not to the ongoing operations of our businesses.

    Adjusted Operating Income (Loss) is defined as operating income (loss) before special items. This non-GAAP measure should be used in addition to, but not as a substitute for, the analysis provided in the statement of operations. We believe this measure is useful because it allows investors to evaluate our operating results for different periods on a more comparable basis by excluding special items.

    Adjusted OIBDA is defined as operating income before depreciation, amortization, severance, exit costs and asset impairments, gains or losses on asset dispositions and exchanges and other special items. Adjusted OIBDA Margin represents Adjusted OIBDA divided by non-equipment net operating revenues adjusted for certain non-recurring revenue adjustments for Wireless and Adjusted OIBDA divided by net operating revenues for Wireline. These non-GAAP measures should be used in addition to, but not as a substitute for, the analysis provided in the statement of operations. We believe that Adjusted OIBDA and Adjusted OIBDA 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 generally accepted accounting principles, these expenses primarily represent non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Adjusted OIBDA and Adjusted OIBDA 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 defined as the change in cash and cash equivalents less the change in debt, investment in certain securities, proceeds from common stock and other financing activities, net. This non-GAAP measure should be used in addition to, but not as a substitute for, the analysis provided in the statement of cash flows. 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 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, current marketable securities and restricted cash. This non-GAAP measure should be used in addition to, but not as a substitute for, the analysis provided in the balance sheet and statement of cash flows. 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 news release includes "forward-looking statements" within the meaning of the securities laws. The statements in this news release regarding the business outlook, expected performance and forward-looking guidance, as well as other statements that are not historical facts, are forward-looking statements. The words "estimate," "project," "forecast," "intend," "expect," "believe," "target," "providing guidance" and similar expressions are intended to identify 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, customer and network usage, customer growth and retention, pricing, operating costs, the timing of various events and the economic and regulatory environment.

    Future performance cannot be assured. Actual results may differ materially from those in the forward-looking statements. Some factors that could cause actual results to differ include:

    • the effects of vigorous competition, including the impact of competition on the price we are able to charge customers for services and equipment we provide and our ability to attract new customers and retain existing customers; the overall demand for our service offerings, including the impact of decisions of new subscribers between our post-paid and prepaid services offerings and between our two network platforms; and the impact of new, emerging and competing technologies on our business;
    • the impact of overall wireless market penetration on our ability to attract and retain customers with good credit standing and the intensified competition among wireless carriers for those customers;
    • the uncertainties related to the implementation of our business strategies including investments in our networks, our systems, and other businesses, including current investments and additional investments that will be required in connection with the planned deployment of a next generation wireless broadband network;
    • the costs and business risks associated with providing new services and entering new geographic markets, including in connection with the planned deployment of a next generation wireless broadband network;
    • uncertainty regarding satisfaction of the conditions to completion of the transaction with Clearwire Corporation, including approval by Clearwire's stockholders and satisfaction of the other conditions to closing;
    • the impact of recent downgrades and potential further downgrades in the ratings afforded our debt securities by ratings agencies;
    • the impact of difficulties we may encounter in implementing actions designed to maintain compliance with our financial covenants, including the success of actions involving third parties;
    • the effects of mergers and consolidations and new entrants in the communications industry and unexpected announcements or developments from others in the communications industry;
    • unexpected results of litigation filed against us or our suppliers or vendors;
    • the impact of third parties not meeting our business requirements, including a significant adverse change in the ability or willingness of such parties to provide handset devices or infrastructure equipment for our code division multiple access, or CDMA, network, or Motorola, Inc's ability or willingness to provide related handset devices, infrastructure equipment and software applications, or to develop new technologies or features, for our integrated Digital Enhanced Network, or iDEN, network;
    • the impact of adverse network performance;
    • the costs and/or potential customer impacts of compliance with regulatory mandates, particularly requirements related to the reconfiguration of the 800 megahertz, or MHz, band used to operate our iDEN network, as contemplated by the Federal Communications Commission's, or FCC's, Report and Order released in August 2004 as supplemented by subsequent memoranda;
    • equipment failure, natural disasters, terrorist acts, or other breaches of network or information technology security;
    • one or more of the markets in which we compete being impacted by changes in political, economic or other factors such as monetary policy, legal and regulatory changes or other external factors over which we have no control; and
    • other risks referenced from time to time in this report and other filings of ours with the Securities and Exchange Commission, or SEC, including in our annual report on Form 10-K for the year ended December 31, 2007 in Part I, Item 1A, "Risk Factors."

    Sprint Nextel 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 of this release. Sprint Nextel is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this release.

    Participants in Solicitation

    Sprint, Clearwire and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the proposed transactions. Information concerning Sprint's participants is set forth in the proxy statement dated March 27, 2008 for Sprint's 2008 annual meeting of shareholders as filed with the SEC on Schedule 14A. Information concerning Clearwire's participants is set forth in the proxy statement dated April 29, 2008 for Clearwire's annual meeting of stockholders as filed with the SEC on Schedule 14A. Additional information regarding the interests of participants of Sprint and Clearwire in the solicitation of proxies in respect of the proposed transactions is included in the Registration Statement on Form S-4 (File No. 333-153128), and the proxy statement/prospectus contained therein, filed with the SEC. Those documents are available free of charge at the websites of the SEC and Clearwire.

    ABOUT SPRINT NEXTEL

    Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two wireless networks serving nearly 51 million customers at the end of the third quarter 2008; industry-leading mobile data services; instant national and international walkie-talkie capabilities; and a global Tier 1 Internet backbone. For more information, visit www.sprint.com.

                          Sprint Nextel Corporation
              CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                      (Millions, except per Share Data)
    
    TABLE NO. 4
    ----------------------------------------------------------------------
    
                                      Quarter Ended       Year To Date
                                   ------------------- -------------------
                                   September September September September
                                      30,       30,       30,       30,
                                     2008      2007      2008      2007
                                   --------- --------- --------- ---------
    
    Net Operating
     Revenues                      $  8,816  $ 10,044  $ 27,205  $ 30,299
                                   --------- --------- --------- ---------
    Operating
     Expenses
    Cost of
     services                         3,043     3,005     8,968     9,044
    Cost of
     products                         1,181     1,217     3,656     3,910
    Selling,
     general
     and
     administrative                   2,768     3,077     8,782     9,443
    Severance, exit
     costs and
     asset
     impairments
     (1)                                 13       125       323       384
    Gain from asset
     dispositions
     and exchanges,
     net (1)                            (41)        -       (15)        -
    Depreciation                      1,488     1,441     4,449     4,203
    Amortization                        569       781     1,955     2,600
                                   --------- --------- --------- ---------
    Total operating
     expenses                         9,021     9,646    28,118    29,584
                                   --------- --------- --------- ---------
    Operating
     (Loss) Income                     (205)      398      (913)      715
    Interest
     expense                           (338)     (367)   (1,029)   (1,099)
    Interest income                      20        66        78       123
    Other, net                            8         -       (17)       13
                                   --------- --------- --------- ---------
    Loss before
     Income Taxes                      (515)       97    (1,881)     (248)
    Income tax
     benefit                            189       (33)      706       120
                                   --------- --------- --------- ---------
    Net (Loss)
     Income                        $   (326) $     64  $ (1,175) $   (128)
                                   --------- --------- --------- ---------
    
    Diluted (Loss)
     Earnings Per
     Common Share                  $  (0.11) $   0.02  $  (0.41) $  (0.04)
                                   --------- --------- --------- ---------
    Weighted
     Average Common
     Shares                           2,855     2,860     2,852     2,876
                                   --------- --------- --------- ---------
    
    Basic (Loss)
     Earnings Per
     Common Share                  $  (0.11) $   0.02  $  (0.41) $  (0.04)
                                   --------- --------- --------- ---------
    Basic weighted
     average common
     shares                           2,855     2,845     2,852     2,876
                                   --------- --------- --------- ---------
    Effective Tax
     Rate                              36.7%     34.0%     37.5%     48.4%
    ----------------------------------------------------------------------
    
    
    ----------------------------------------------------------------------
                    Quarter Ended     Quarter Ended       Year To Date
                   --------------- ------------------- -------------------
                    June    June   September September September September
                     30,     30,      30,       30,       30,       30,
                    2008    2007     2008      2007      2008      2007
                   ------- ------- --------- --------- --------- ---------
    
    Operating
     (Loss) Income $ (210) $  316  $   (205) $    398  $   (913) $    715
    Special items
     before taxes
    Merger and
     integration
     expense (2)       44     163         -       135       130       397
    Severance, exit
     costs and
     asset
     impairments
     (1)               93      85        13       125       323       384
    Loss (gain)
     from asset
     dispositions
     and exchanges,
     net (1)           12       -       (41)        -       (15)        -
    Contingencies
     and other (3)      -       5         -         -         -        46
                   ------- ------- --------- --------- --------- ---------
    Adjusted
     Operating
     (Loss) Income*   (61)    569      (233)      658      (475)    1,542
    Depreciation
     and
     amortization   2,157   2,313     2,057     2,222     6,404     6,803
                   ------- ------- --------- --------- --------- ---------
    Adjusted OIBDA* 2,096   2,882     1,824     2,880     5,929     8,345
    Capital
     expenditures
     (4)              646   1,666       485     1,176     2,491     4,449
                   ------- ------- --------- --------- --------- ---------
    Adjusted OIBDA*
     less Capex    $1,450  $1,216  $  1,339  $  1,704  $  3,438  $  3,896
                   ------- ------- --------- --------- --------- ---------
    
    Operating
     (Loss) Income
     Margin (5)      -2.4%    3.3%     -2.5%      4.2%     -3.6%      2.5%
    Adjusted OIBDA
     Margin*         24.4%   30.1%     21.9%     30.7%     23.1%     29.4%
    ----------------------------------------------------------------------
    
                          Sprint Nextel Corporation
              RECONCILIATIONS OF EARNINGS PER SHARE (Unaudited)
                      (Millions, except per Share Data)
    
    TABLE NO. 5
    ----------------------------------------------------------------------
    
                    Quarter Ended     Quarter Ended       Year To Date
                    -------------- ------------------- -------------------
                    June    June   September September September September
                      30,     30,     30,       30,       30,       30,
                     2008    2007    2008      2007      2008      2007
                    ------- ------ --------- --------- --------- ---------
    
    Net (Loss)
     Income         $ (344) $  19  $ (326)   $  64     $(1,175)  $ (128)
    Special items
     (net of
     taxes)
    Merger and
     integration
     expense (2)        27    100       -       84          80      244
    Severance,
     exit costs
     and asset
     impairments
     (1)                56     52       8       78         199      239
    Loss (gain)
     from asset
     dispositions
     and
     exchanges,
     net (1)             8      -     (25)       -          (9)       -
    Contingencies
     and other (3)       -     12       -        -           -       37
    Net gains on
     investment
     activities
     and equity in
     earnings            -    (11)      -       (4)          -      (15)
    Tax audit
     settlement          -      -       -      (19)          -      (19)
    Gain on early
     retirement of
     debt                -      -       -       (3)          -       (5)
                    ------- ------ --------- --------- --------- ---------
    Adjusted Net
     (Loss)
     Income*                $ 172  $ (343)   $ 200     $  (905)  $  353
                    ------- ------ --------- --------- --------- ---------
    
    Amortization
     (net of
     taxes)                   547     344      472       1,181    1,570
                    ------- ------ --------- --------- --------- ---------
    Adjusted Net
     Income
     before
     Amortization*          $ 719  $    1    $ 672     $   276   $1,923
                    ------- ------ --------- --------- --------- ---------
    
    
    
    Diluted (Loss)
     Earnings Per
     Common Share   $(0.12) $0.01  $(0.11)   $0.02       (0.41)   (0.04)
    Special items
     (net of
     taxes)           0.03   0.05   (0.01)    0.05        0.09     0.16
                    ------- ------ --------- --------- --------- ---------
    Adjusted
     (Loss)
     Earnings Per
     Share*         $(0.09) $0.06  $(0.12)   $0.07     $ (0.32)  $ 0.12
                    ------- ------ --------- --------- --------- ---------
    
    Amortization
     (net of
     taxes)           0.15   0.19    0.12     0.16        0.42     0.55
                    ------- ------ --------- --------- --------- ---------
    Adjusted
     Earnings Per
     Share before
     Amortization*  $ 0.06  $0.25  $ 0.00    $0.23     $  0.10   $ 0.67
    ----------------------------------------------------------------------
    
                          Sprint Nextel Corporation
    NON-GAAP WIRELESS STATEMENTS OF OPERATIONS AND STATISTICS (Unaudited)
               (Millions, except subscriber counts and metrics)
    
    TABLE No. 6
    ----------------------------------------------------------------------
    
                                      Quarter Ended       Year To Date
                                   ---------------------------------------
                                   September September September September
                                      30,       30,       30,       30,
                                     2008      2007      2008      2007
                                   --------- --------- --------- ---------
    Net Operating Revenues
      Service                        $6,803    $7,778   $20,931   $23,491
      Equipment                         492       662     1,558     1,919
      Wholesale, affiliate and
       other                            241       258       746       793
                                   --------- --------- --------- ---------
    Total Net Operating
     Revenues                         7,536     8,698    23,235    26,203
                                   --------- --------- --------- ---------
    
    Operating Expenses
      Cost of services                2,268     2,166     6,589     6,420
      Costs of products               1,181     1,195     3,622     3,833
      Selling, general and
       administrative                 2,441     2,734     7,709     8,281
      Merger and integration
       expense (2)                        -        76       101       257
      Severance, exit costs
       and asset impairments
       (1)                                5       119       256       345
      Gain from asset
       dispositions and
       exchanges, net (1)               (35)        -       (12)        -
      Contingencies and other
       (3)                                -         -         -        23
      Depreciation                    1,327     1,308     4,006     3,809
      Amortization                      569       781     1,954     2,599
                                   --------- --------- --------- ---------
    Total operating expenses          7,756     8,379    24,225    25,567
                                   --------- --------- --------- ---------
    Operating (Loss) Income          $ (220)   $  319   $  (990)  $   636
    ----------------------------------------------------------------------
    
    
    
    ----------------------------------------------------------------------
    NON GAAP RECONCILIATION            Quarter Ended     Quarter Ended
                                      --------------- -------------------
                                       June    June   September September
                                        30,     30,      30,       30,
                                       2008    2007     2008      2007
                                      ------- ------- --------- ---------
    
    Operating (Loss) Income           $ (262) $  282    $ (220)   $  319
      Special items before taxes
        Merger and integration
         expense (2)                      35     122         -        76
        Severance, exit costs and
         asset impairments (1)            72      85         5       119
        Loss (gain) from asset
         dispositions and exchanges,
         net (1)                          13       -       (35)        -
        Contingencies and other (3)        -       5         -         -
                                      ------- ------- --------- ---------
    Adjusted Operating (Loss) Income*   (142)    494      (250)      514
      Depreciation and amortization    2,010   2,177     1,896     2,089
                                      ------- ------- --------- ---------
    Adjusted OIBDA*                    1,868   2,671     1,646     2,603
      Capital expenditures (4)           393   1,371       217       813
                                      ------- ------- --------- ---------
    Adjusted OIBDA* less Capex        $1,475  $1,300    $1,429    $1,790
                                      ------- ------- --------- ---------
    
    Operating (Loss) Income Margin
     (5)                                -3.6%    3.4%     -3.1%      4.0%
    Adjusted OIBDA Margin*              25.7%   32.7%     23.4%     32.4%
    ----------------------------------------------------------------------
    
    
    
    ----------------------------------------------------------------------
    NON GAAP RECONCILIATION                               Year To Date
                                                       -------------------
                                                       September September
                                                          30,       30,
                                                         2008      2007
                                                       --------- ---------
    
    Operating (Loss) Income                              $ (990)   $  636
      Special items before taxes
        Merger and integration expense (2)                  101       257
        Severance, exit costs and asset impairments
         (1)                                                256       345
        Loss (gain) from asset dispositions and
         exchanges, net (1)                                 (12)        -
        Contingencies and other (3)                           -        23
                                                       --------- ---------
    Adjusted Operating (Loss) Income*                      (645)    1,261
      Depreciation and amortization                       5,960     6,408
                                                       --------- ---------
    Adjusted OIBDA*                                       5,315     7,669
      Capital expenditures (4)                            1,528     3,587
                                                       --------- ---------
    Adjusted OIBDA* less Capex                           $3,787    $4,082
                                                       --------- ---------
    
    Operating (Loss) Income Margin (5)                     -4.6%      2.6%
    Adjusted OIBDA Margin*                                 24.5%     31.6%
    ----------------------------------------------------------------------
    
    
    
    ----------------------------------------------------------------------
    Operating Statistics              Quarter Ended      Quarter Ended
                                    ----------------- -------------------
                                    June 30, June 30, September September
                                                         30,       30,
                                      2008     2007     2008      2007
                                    -------- -------- --------- ---------
    
      Direct Post-Paid Subscribers
        Service revenue (in
         millions)                  $ 6,614  $ 7,497   $ 6,423   $ 7,364
        ARPU                        $    56  $    60   $    56   $    59
        Churn                           2.0%     2.0%     2.15%      2.3%
        Net (losses) additions (in
         thousands)                    (776)      16    (1,122)     (337)
        End of period subscribers
         (in thousands)              38,905   41,601    37,783    41,434
        Hours per subscriber             16       16        16        16
    
      Direct Prepaid Subscribers
        Service revenue (in
         millions)                  $   391  $   401   $   380   $   414
        ARPU                        $    30  $    31   $    31   $    30
        Churn                           7.4%     6.8%      8.2%      6.2%
        Net (losses) additions (in
         thousands)                    (138)     169      (329)       67
        End of period subscribers
         (in thousands)               4,240    4,456     3,911     4,523
        Hours per subscriber             13        7        14         8
    
      Wholesale Subscribers (6)
        Net (losses) additions (in
         thousands)                     (10)     155       108       194
        End of period subscribers
         (in thousands)               7,831    6,980     7,939     7,174
    
      Affiliate Subscribers
        Net additions (in
         thousands)                      23       33        22        16
        End of period subscribers
         (in thousands)                 883      978       905       824
    
      Total Subscribers
        Net (losses) additions (in
         thousands)                    (901)     373    (1,321)      (60)
        End of period subscribers
         (in thousands)              51,859   54,015    50,538    53,955
    
    
    ----------------------------------------------------------------------
    Operating Statistics                                  Year To Date
                                                       -------------------
                                                       September September
                                                          30,       30,
                                                         2008      2007
                                                       --------- ---------
    
      Direct Post-Paid Subscribers
        Service revenue (in millions)                   $19,770   $22,279
        ARPU                                            $    56   $    60
        Churn                                               2.2%      2.2%
        Net (losses) additions (in thousands)            (2,968)     (541)
        End of period subscribers (in thousands)         37,783    41,434
        Hours per subscriber                                 15        16
    
      Direct Prepaid Subscribers
        Service revenue (in millions)                   $ 1,161   $ 1,212
        ARPU                                            $    30   $    31
        Churn                                               8.5%      6.6%
        Net (losses) additions (in thousands)              (667)      511
        End of period subscribers (in thousands)          3,911     4,523
        Hours per subscriber                                 13         7
    
      Wholesale Subscribers (6)
        Net (losses) additions (in thousands)               265       816
        End of period subscribers (in thousands)          7,939     7,174
    
      Affiliate Subscribers
        Net additions (in thousands)                         61        95
        End of period subscribers (in thousands)            905       824
    
      Total Subscribers
        Net (losses) additions (in thousands)            (3,309)      881
        End of period subscribers (in thousands)         50,538    53,955
    
                          Sprint Nextel Corporation
         WIRELINE STATEMENTS OF OPERATIONS AND STATISTICS (Unaudited)
                                  (Millions)
    TABLE NO. 7
    ----------------------------------------------------------------------
                                      Quarter Ended       Year To Date
                                   ------------------- -------------------
                                   September September September September
                                      30,       30,       30,       30,
                                     2008      2007      2008      2007
                                   --------- --------- --------- ---------
    Net Operating
     Revenues
      Voice                        $  755    $  868    $2,365    $2,676
      Data                            231       297       750       918
      Internet                        556       407     1,580     1,122
      Other                            34        40       116       128
                                   --------- --------- --------- ---------
    Total Operating
     Revenues                       1,576     1,612     4,811     4,844
                                   --------- --------- --------- ---------
    
    Operating
     Expenses
      Costs of
       services and
       products                     1,070     1,095     3,218     3,343
      Selling,
       general and
    administrative
                                      243       227       744       770
      Severance,
       exit costs
       and asset
       impairments
       (1)                              4         3        60        35
      Gain from
       asset
       dispositions
       and
       exchanges,
       net (1)                         (4)        -        (2)        -
      Depreciation                    143       132       413       392
                                   --------- --------- --------- ---------
      Total
       operating
       expenses                     1,456     1,457     4,433     4,540
                                   ------------------- --------- ---------
    Operating Income               $  120    $  155    $  378    $  304
    -------------------------------------------------- -------------------
    
    
    
    ----------------------------------------------------------------------
    NON GAAP         Quarter Ended    Quarter Ended       Year To Date
     RECONCILIATION
                     ------------- ------------------- -------------------
                     June   June   September September September September
                       30,    30,     30,       30,       30,       30,
                      2008   2007    2008      2007      2008      2007
                     ------ ------ --------- --------- --------- ---------
    Operating Income $ 143  $ 126  $  120    $  155    $  378    $  304
      Special items
       before taxes
       Severance,
        exit costs
        and asset
        impairments
        (1)             20      -       4         3        60        35
       Gain from
        asset
        dispositions
        and
        exchanges,
        net (1)
                        (3)     -      (4)        -        (2)        -
       Contingencies
        and other
        (3)
                         -      -       -         -         -        23
                     ------ ------ --------- --------- --------- ---------
    Adjusted
     Operating
     Income*           160    126     120       158       436       362
      Depreciation     139    133     143       132       413       392
                     ------ ------ --------- --------- --------- ---------
    Adjusted OIBDA*    299    259     263       290       849       754
      Capital
       expenditures
       (4)             113    145      81       138       342       427
                     ------ ------ --------- --------- --------- ---------
    Adjusted OIBDA*
     less Capex      $ 186  $ 114  $  182    $  152    $  507    $  327
                     ------ ------ --------- --------- --------- ---------
    
    Operating Income
     Margin            8.9%   7.7%    7.6%      9.6%      7.9%      6.3%
    Adjusted OIBDA
     Margin*          18.6%  15.9%   16.7%     18.0%     17.6%     15.6%
    ----------------------------------------------------------------------
    
    
    
    ----------------------------------------------------------------------
    Operating        Quarter Ended    Quarter Ended       Year To Date
     Statistics
                     ------------- ------------------- -------------------
                      2Q     2Q     3Q 2008   3Q 2007
                      2008   2007                        2008      2007
                     ------ ------ --------- --------- --------- ---------
    YOY Voice only
     minutes volume
     growth
    (does not
     include minutes
     associated with
     Cable VOIP)        -9%     6%     -9%        4%       -8%        4%
    
                          Sprint Nextel Corporation
    
         CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)
                                (Millions)
    TABLE NO. 8
    ------------------------------------------------------------------
                                                   September September
                                                      30,       30,
    For the Year to Date Period Ended                2008      2007
    ------------------------------------------------------------------
    Operating Activities
      Net loss                                      $(1,175)  $  (128)
      Depreciation and
    amortization                                      6,404     6,803
      Provision for losses on accounts
       receivable                                       559       645
      Share-based
    compensation
    expense                                             207       197
      Deferred income taxes                            (747)     (159)
      Other, net                                       (147)     (210)
                                                   --------- ---------
    Net cash provided by operating activities         5,101     7,148
                                                   --------- ---------
    
    Investing Activities
      Capital
    expenditures                                     (3,272)   (4,651)
      Expenditures relating to FCC licenses            (655)     (462)
      Acquisitions, net of cash acquired                  -      (287)
      Decrease in marketable securities, net            113         9
      Proceeds from sale of investments and
       assets                                            76       157
      Cash collateral for securities loan
       agreements                                         -       866
      Other investing activities                        (10)       (6)
                                                   --------- ---------
    Net cash used in investing activities            (3,748)   (4,374)
                                                   --------- ---------
    
    Financing Activities
      Borrowings under credit facility                2,500       750
      Repayments under credit facility                 (500)        -
      Proceeds from issuance of debt
       securities                                         -       750
      Proceeds from financing obligation                645         -
      Proceeds from issuance of commercial
       paper                                            681     4,837
      Maturities of commercial paper                 (1,060)   (4,951)
      Purchase, retirements and payments of
       debt and capital leases                       (1,797)   (1,386)
      Payments of securities loan agreements              -      (866)
      Purchase of common shares                           -    (1,833)
      Dividends paid                                      -      (215)
      Proceeds from issuance of common shares,
       net                                               48       337
                                                   --------- ---------
    Net cash provided by (used in) financing
     activities                                         517    (2,577)
                                                   --------- ---------
    
    Change in Cash and Cash Equivalents               1,870       197
    
    Cash and Cash Equivalents, beginning of
     period                                           2,246     2,046
                                                   --------- ---------
    
    Cash and Cash Equivalents, end of period        $ 4,116   $ 2,243
    ------------------------------------------------------------------
    
    
    
    
    
                          FREE CASH FLOW (NON GAAP)
                                  (Millions)
    TABLE NO. 9
    ----------------------------------------------------------------------
    
                                      Quarter Ended      Quarter Ended
                                    ----------------- -------------------
                                    June 30, June 30, September September
                                                         30,       30,
                                      2008     2007     2008      2007
                                    -------- -------- --------- ---------
    
    Adjusted OIBDA*                 $ 2,096  $ 2,882    $1,824   $ 2,880
      Adjust for special items         (149)    (253)       28      (260)
      Other operating activities,
       net (7)                         (868)    (659)       63        94
                                    -------- -------- --------- ---------
    Cash from Operating Activities
     (GAAP)                           1,079    1,970     1,915     2,714
    
      Capital
    expenditures                       (899)  (1,577)     (703)   (1,261)
      Expenditures relating to FCC
       licenses                        (194)    (151)     (187)     (204)
      Proceeds from sales of
       investments and assets            30       15        38       115
      Dividends paid                      -      (72)        -       (71)
      Other investing activities,
       net                               (5)      (2)       (4)       (2)
                                    -------- -------- --------- ---------
    Free Cash Flow*                      11      183     1,059     1,291
    
      Purchase of common shares           -   (1,101)        -      (432)
      Increase (decrease) in debt,
       net                           (1,306)     748      (393)     (775)
      Acquisitions,
    net of cash
    acquired                              -        -         -      (287)
      Proceeds from issuance of
       common shares, net                17      243        22        25
      Decrease (increase) in
       marketable securities, net        69        5       (41)       (3)
                                    -------- -------- --------- ---------
    Change in Cash and Cash
     Equivalents (GAAP)             $(1,209) $    78    $  647   $  (181)
                                    -------- -------- --------- ---------
    
                                                          Year-to-Date
                                                       -------------------
                                                       September September
                                                          30,       30,
                                                         2008      2007
                                                       --------- ---------
    
    Adjusted OIBDA*                                     $ 5,929   $ 8,345
      Adjust for special items                             (438)     (827)
      Other operating activities, net (7)                  (390)     (370)
                                                       --------- ---------
    Cash from Operating Activities (GAAP)                 5,101     7,148
    
      Capital
    expenditures                                         (3,272)   (4,651)
      Expenditures relating to FCC licenses                (655)     (462)
      Proceeds from sales of investments and assets          76       157
      Dividends paid                                          -      (215)
      Other investing activities, net                       (10)       (6)
                                                       --------- ---------
    Free Cash Flow*                                       1,240     1,971
    
      Purchase of common shares                               -    (1,833)
      Increase (decrease) in debt, net                      469         -
      Acquisitions,
    net of cash
    acquired                                                  -      (287)
      Proceeds from issuance of common shares, net           48       337
      Decrease (increase) in marketable securities,
       net                                                  113         9
                                                       --------- ---------
    Change in Cash and Cash Equivalents (GAAP)          $ 1,870   $   197
                                                       --------- ---------
    
                          Sprint Nextel Corporation
                         CONSOLIDATED BALANCE SHEETS
                                  (Millions)
    TABLE NO. 10                                     (Unaudited)
    ----------------------------------------------------------------------
                                                     September   December
                                                         30,        31,
                                                        2008       2007
                                                     ----------- ---------
    Assets
      Current assets
        Cash and cash equivalents                      $  4,116  $  2,246
        Marketable securities                                75       194
        Accounts and notes receivable, net                3,452     4,196
        Device and accessory inventory                      682       938
        Deferred tax assets                                 181       447
        Prepaid expenses and other current assets           760       640
                                                     ----------- ---------
        Total current assets                              9,266     8,661
    
      Investments                                           137       165
      Property, plant and equipment, net                 24,773    26,636
      Goodwill                                              977       978
      FCC licenses and other                             21,990    21,123
      Customer relationships, net                         2,396     4,203
      Other definite lived intangible assets, net         1,695     1,835
      Other assets                                          627       694
                                                     ----------- ---------
    
      Total                                            $ 61,861  $ 64,295
                                                     ----------- ---------
    
    Liabilities and Shareholders' Equity
      Current liabilities
        Accounts payable                               $  2,582  $  3,481
        Accrued expenses and other current
         liabilities                                      3,849     3,960
        Current portion of long-term debt and
         capital lease obligations                        1,617     1,661
                                                     ----------- ---------
        Total current liabilities                         8,048     9,102
    
      Long-term debt and capital lease obligations       21,023    20,469
      Deferred tax liabilities                            7,846     8,742
      Other liabilities                                   3,785     3,847
                                                     ----------- ---------
        Total liabilities                                40,702    42,160
                                                     ----------- ---------
    
      Shareholders' equity
        Common shares                                     5,902     5,902
        Paid-in capital                                  46,843    46,693
        Treasury shares, at cost                         (1,970)   (2,161)
        Accumulated deficit                             (29,509)  (28,188)
        Accumulated other comprehensive loss               (107)     (111)
                                                     ----------- ---------
        Total shareholders' equity                       21,159    22,135
                                                     ----------- ---------
    
      Total                                            $ 61,861  $ 64,295
    ----------------------------------------------------------------------
    
    
    
    
                       NET DEBT (NON-GAAP) (Unaudited)
                                  (Millions)
    TABLE NO. 11
    ----------------------------------------------------------------------
                                                     September   December
                                                         30,        31,
                                                        2008       2007
                                                     ----------- ---------
    Total Debt                                         $ 22,640  $ 22,130
      Less: Cash and cash equivalents                    (4,116)   (2,246)
      Less: Marketable securities                           (75)     (194)
                                                     ----------- ---------
    Net Debt*                                          $ 18,449  $ 19,690
                                                     =========== =========
    
                          Sprint Nextel Corporation
                         Schedule of Debt (Unaudited)
                                  (Millions)
    TABLE NO. 12
    ----------------------------------------------------------------------
                                                                 September
                                                                    30,
                                                                   2008
    ----------------------------------------------------------------------
    
     ISSUER                                    COUPON  MATURITY  PRINCIPAL
     ----------------------------------------- ------ ---------- ---------
     Sprint Nextel Corporation
     Floating Rate Notes due 2010              4.169% 06/28/2010       750
     Bank Credit Facility                      4.038% 12/19/2010     2,000
     Export Development Canada Facility        4.601% 03/30/2012       750
     6% Notes due 2016                         6.000% 12/01/2016     2,000
     9.25% Debentures due 2022                 9.250% 04/15/2022       200
                                                                 ---------
      Sprint Nextel Corporation subtotal                             5,700
    
     Sprint Capital Corporation
     6.375% Notes due 2009                     6.375% 05/01/2009       600
     7.625% Notes due 2011                     7.625% 01/30/2011     1,650
     8.375% Notes due 2012                     8.375% 03/15/2012     2,000
     6.9% Notes due 2019                       6.900% 05/01/2019     1,729
     6.875% Notes due 2028                     6.875% 11/15/2028     2,475
     8.75% Notes due 2032                      8.750% 03/15/2032     2,000
                                                                 ---------
      Sprint Capital Corporation subtotal                           10,454
    
     Nextel Communications Inc.
     5.25% Convertible Senior Notes due 2010   5.250% 01/15/2010       607
     6.875% Senior Serial Redeemable Notes due
      2013                                     6.875% 10/31/2013     1,473
     5.95% Senior Serial Redeemable Notes due
      2014                                     5.950% 03/15/2014     1,170
     7.375% Senior Serial Redeemable Notes due
      2015                                     7.375% 08/01/2015     2,137
                                                                 ---------
      Nextel Communications Inc. subtotal                            5,387
    
     Tower financing obligation                9.500% 01/01/2028       694
    
     Capital lease obligations and other                                90
    
                                                                 ---------
     TOTAL PRINCIPAL                                                22,325
    
     Premiums, discounts, variable interest entity and other
      adjustments                                                      315
    
                                                                 ---------
     TOTAL DEBT                                                    $22,640
                                                                 =========
    
                          Sprint Nextel Corporation
                     NOTES TO FINANCIAL DATA (Unaudited)
    
    (1) In the third quarter 2008, severance, exit costs and asset
         impairment charges and gains from asset dispositions and
         exchanges were a net $28 million credit. In the year-to-date
         period 2008, we recorded severance, exit costs and asset
         impairment charges and gains from asset dispositions and
         exchanges of $308 million pre-tax ($190 million, net of tax)
         primarily related to the work force reductions and continued
         organizational realignment initiatives. In the third quarter 2007
         and year-to-date period 2007, we recorded severance, exit costs
         and asset impairment charges of $125 million pre-tax ($78
         million, net of tax) and $384 million pre-tax ($239 million, net
         of tax), respectively. These costs consist of workforce
         reductions, realignment initiatives and exit and asset impairment
         costs associated with lease termination charges and write-off of
         network costs. Severance, exit costs and asset impairment charges
         and gains or losses from asset dispositions and exchanges are
         allocated to the appropriate segment results.
    
    (2) In the third quarter 2008, merger and integration costs were not
         material. In the year-to-date period 2008, we recorded merger and
         integration costs of $130 million pre-tax ($80 million, net of
         tax). In the third quarter 2007 and year-to-date period 2007, we
         recorded merger and integration costs of $135 million pre-tax
         ($84 million, net of tax) and $397 million pre-tax ($244 million,
         net of tax), respectively. All merger costs are related to the
         Sprint-Nextel merger and/or the PCS Affiliates and Nextel
         Partners' acquisitions and are generally non-recurring in nature.
         Merger and integration expenses which are solely and directly
         attributable to the Wireless segment have been allocated to that
         segment. These expenses are classified as selling, general and
         administrative, cost of products, or equipment revenues as
         appropriate on our consolidated statement of operations. Merger
         and integration expenses that are not solely and directly
         attributable to the Wireless segment are included in the
         Corporate segment and are classified as selling, general and
         administrative expenses on our consolidated statement of
         operations.
    
    (3) Contingencies and other includes charges associated with legal
         contingencies and net costs associated with the exit of a non-
         core line of business.
    
    (4) Capital expenditures is an accrual based amount that includes the
         changes in unpaid capital expenditures and excludes capitalized
         interest. Consolidated capital expenditures of $485 million for
         the third quarter 2008 includes $185 million reduction in accrued
         capital expenditures less $33 million of capitalized interest.
         Wireless segment capital expenditures of $217 million for the
         third quarter 2008 includes $158 million reduction in accrued
         capital expenditures less $11 million of capitalized interest.
         Wireline segment capital expenditures of $81 million for the
         third quarter 2008 includes $7 million reduction in accrued
         capital expenditures less $2 million of capitalized interest.
    
        Consolidated capital expenditures of $2.5 billion for the year-to-
         date period 2008 includes $674 million reduction in accrued
         capital expenditures less $107 million of capitalized interest.
         Wireless segment capital expenditures of $1.5 billion for the
         year-to-date period 2008 includes $487 million reduction in
         accrued capital expenditures less $50 million of capitalized
         interest. Wireline segment capital expenditures of $342 million
         for the year-to-date period includes $72 million reduction in
         accrued capital expenditures less $5 million of capitalized
         interest. Cash paid for capital expenditures can be found in the
         statements of cash flows on Table No. 8 and free cash flows on
         Table No. 9.
    
    (5) Operating (loss) income margin excludes equipment revenues.
    
    (6) Certain wholesale devices are activated on the network prior to
         selling the device to the end customer, which resulted in
         approximately 210,000 additions during the third quarter 2008. As
         of September 30, 2008, these subscribers for which devices are
         not in the hands of an end user customer represented
         approximately 3% of the total wholesale subscriber base.
    
    (7) Other operating activities, net includes the change in working
         capital, change in deferred income taxes, miscellaneous operating
         activities and non-operating items in net loss.
    

    CONTACT: Sprint Nextel Corp.
    Media Relations
    James Fisher, 703-433-8677
    james.w.fisher@sprint.com
    or
    Investor Relations
    Yijing Brentano, 800-259-3755
    Investor.relations@sprint.com

    SOURCE: Sprint Nextel Corp.



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