Sprint.com

July 25, 2016

Sprint Reports Highest First Quarter Postpaid Phone Net Additions in Nine Years, Lowest Ever Postpaid Phone Churn, and Postpaid Net Port Positive Against All Three National Carriers with First Quarter of Fiscal Year 2016 Results

  • Postpaid phone net additions of 173,000 are the fourth consecutive quarter of positive net additions
    • Postpaid phone churn of 1.39 percent is the best in company history and improved year-over-year for the sixth consecutive quarter
    • Postpaid net port positive against all three national carriers for the first time in over five years
  • Net loss of $302 million, Operating income of $361 million and Adjusted EBITDA* of $2.5 billion
    • Over $550 million of year-over-year reduction in cost of service and selling, general, and administrative expenses
  • Net cash provided by operating activities of $542 million improved by more than $400 million year-over-year; Adjusted free cash flow* of $466 million grew by $2.7 billion year-over-year
  • Delivering financial flexibility with nearly $11 billion of liquidity, including $5.1 billion of cash, cash equivalents and short-term investments
    • Successfully raised $5.8 billion of liquidity in the quarter, including $2.2 billion of network-related financing, $1.1 billion from the second transaction with Mobile Leasing Solutions, LLC (MLS), and $2.5 billion under a new unsecured financing facility
  • LTE Plus Network now available in 237 markets
    • 2.5GHz spectrum now carries more of Sprint’s LTE traffic than any other spectrum band

OVERLAND PARK, Kan. (BUSINESS WIRE), July 25, 2016 - Sprint Corporation (NYSE:S) today reported operating results for the first quarter of fiscal year 2016, including the lowest postpaid phone churn in company history at 1.39 percent and a total liquidity position of nearly $11 billion. The company also reported total net operating revenues of $8 billion, net loss of $302 million, operating income of $361 million, and Adjusted EBITDA* of $2.5 billion.

“We had another quarter of solid progress in our turnaround with the highest first quarter postpaid phone net additions in nine years1, the lowest postpaid phone churn in company history, and finally being postpaid net port positive against all three national carriers after five years” said Sprint CEO Marcelo Claure. “We also grew wireless net operating revenue year-over-year while aggressively reducing the cash operating expenses of the business and our network is performing better than ever.”

Highest Fiscal First Quarter Postpaid Phone Net Additions in Nine Years1

Sprint’s focus on delivering the best value proposition in wireless resulted in the highest fiscal first quarter postpaid phone net additions in nine years and the fourth consecutive quarter of positive net additions with 173,000 in the quarter compared to net losses of 12,000 in the prior year quarter. The 185,000 year-over-year improvement was driven by both better acquisition and retention, as postpaid phone gross additions were up 10 percent year-over-year and postpaid phone churn of 1.39 percent improved 10 basis points to reach the lowest level in company history. Postpaid phone churn has improved year-over-year for six consecutive quarters.

The company recently launched an advertising campaign featuring Paul Marcarelli, the actor who used to ask if you “could hear me now” for Verizon, to highlight the fact that networks today aren’t that different so why should customers pay more. The campaign has been one of the most successful in company history. The ad has been viewed over 8 million times on YouTube and the company became postpaid net port positive against all three national carriers for the first time in over five years. Can you hear that?

The company also reported the following Sprint platform results:

  • Total net additions were 377,000 in the quarter, including postpaid net additions of 180,000, prepaid net losses of 331,000, and wholesale and affiliate net additions of 528,000.
  • Total postpaid churn of 1.56 percent in the quarter was flat year-over-year.

Top Line Stabilizes as Cost Reductions Continue

With trends improving in its postpaid phone business, Sprint reported total net operating revenues that were flat to the prior year quarter for the first time in over two years. In addition, wireless net operating revenues grew 1 percent year-over-year and postpaid wireless service revenues have remained at $4.8 billion for the last three quarters.

Sprint also made considerable progress in its ongoing effort to transform the cost structure of the business, as the company realized over $550 million year-over-year reduction in cost of services and selling, general and administrative (SG&A) expenses. The company remains on track to achieve its goal of a sustainable reduction of $2 billion or more of run rate operating expenses exiting fiscal year 2016.

The company also reported the following financial results:

  • Net loss of $302 million, or $0.08 per share, in the quarter compared to a net loss of $20 million, or $0.01 per share in the year-ago period. The current quarter included $113 million of non-recurring contract termination charges primarily related to the termination of the pre-existing wholesale arrangement with Ntelos Holding Corp.
  • Operating income of $361 million in the quarter compared to operating income of $501 million in the year-ago quarter. Adjusting for the aforementioned contract termination charges related to the pre-existing wholesale arrangement with Ntelos Holding Corp. in the current quarter, operating income would have been relatively flat year-over-year.
  • Adjusted EBITDA* of $2.5 billion in the quarter grew 18 percent from the prior year period, primarily because of expense reductions, including over $550 million in cost of services and SG&A expenses.
  • Net cash provided by operating activities was $542 million in the quarter compared to $128 million in the prior year. The $414 million year-over-year improvement was driven by expense reductions and favorable changes to working capital.
  • Adjusted free cash flow* was positive $466 million in the quarter compared to negative $2.2 billion in the prior year. The $2.7 billion year-over-year improvement was due to expense reductions, lower capital spending, and net proceeds from our second transaction with MLS.

Liquidity Position Grows to Nearly $11 Billion

Sprint took several actions during the quarter to improve its financial flexibility, including successfully raising $2.2 billion of network-related financing, $1.1 billion from a second transaction with MLS, and $2.5 billion under a new unsecured financing facility, which was increased from its original $2 billion amount within the quarter. These transactions helped increase the company’s liquidity position to nearly $11 billion at the end of the quarter, including $5.1 billion of cash, cash equivalents and short-term investments. Additionally, the company has $1.1 billion of availability under vendor financing agreements that can be used toward the purchase of 2.5GHz network equipment.

The company continues to pursue additional financing initiatives, including additional handset and receivables financing transactions and a securitization involving a small portion of its spectrum assets.

LTE Plus Network Expansion Contributes to Speed and Reliability Performance

Sprint aims to unlock the value of the U.S.’s largest spectrum holding by densifying and optimizing its network to provide customers the best experience. The Sprint LTE Plus Network, which combines a rich tri-band spectrum portfolio with the LTE Advanced features of carrier aggregation and antenna beamforming, launched in 33 additional markets, increasing the total to 237 markets across the country.

Sprint’s LTE Plus Network expansion and its densification and optimization strategy have driven significant improvements in both data speeds and network reliability as noted by several third party sources.

  • Sprint’s LTE Plus Network continued to outperform Verizon, AT&T, and T-Mobile by delivering the fastest LTE download speeds based on recent crowd-sourced data from Nielsen.2 Additionally, Sprint’s reliability beat T-Mobile and performed within 1 percent of AT&T and Verizon.3
  • Independent mobile analytics firm RootMetrics® awarded Sprint 75 percent more first place Network Reliability RootScore® Awards (from 24 to 42) in the 125 markets measured in the first half of 2016 compared to the prior testing period, including wins in Chicago, Houston, and Atlanta.4
  • Sprint’s reliability beat Verizon and its average download speeds beat AT&T and T-Mobile, according to PC Magazine’s Fastest Mobile Networks 2016 report.

Sprint’s deployment of 2.5GHz spectrum has become an integral part of how the company meets the growing data usage and speed demands of its customers, as that spectrum band now carries the highest percentage of Sprint’s LTE data traffic.

Fiscal Year 2016 Outlook

The company continues to expect:

  • Operating income of $1 billion to $1.5 billion
  • Adjusted EBITDA* of $9.5 billion to $10 billion
  • Cash capital expenditures, excluding devices leased through indirect channels, of approximately $3 billion
  • Adjusted free cash flow* around break-even

Conference Call and Webcast

  • Date/Time: 8:30 a.m. (ET) Monday, July 25, 2016
  • Call-in Information
    • U.S./Canada: 866-360-1063 (ID: 43922916)
    • International: 706-634-7849 (ID: 43922916)
  • Webcast available via the Internet at www.sprint.com/investors
  • Additional information about results is available on our Investor Relations website

1 Excludes Nextel migrations

2 Average LTE download speeds based on Sprint analysis of Nielsen Mobile Performance (NMP) data for downloads (150KB+) – NMP 44 Market View (over 155 million POPs).

3 Based on Sprint’s analysis of latest Nielsen drive test data for average network reliability (voice & data) in top 106 markets.

4 Rankings based on RootMetrics 125 Metro RootScore Reports (January-June 2016) for mobile performance as tested on best available plans and devices on 4 mobile networks across all available network types. Your experience may vary. The RootMetrics awards are not an endorsement of Sprint. Visit www.rootmetrics.com.

               
Wireless Operating Statistics (Unaudited)              
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
Sprint platform (1):              
Net additions (losses) (in thousands)              
Postpaid     180       56       310    
Prepaid     (331 )     (264 )     (366 )  
Wholesale and affiliate     528       655       731    
Total Sprint platform wireless net additions     377       447       675    
               
End of period connections (in thousands)              
Postpaid (d)     30,945       30,951       30,016    
Prepaid (d)     13,974       14,397       15,340    
Wholesale and affiliate (d)     14,534       13,458       11,456    
Total Sprint platform end of period connections     59,453       58,806       56,812    
               
Churn              
Postpaid     1.56 %     1.72 %     1.56 %  
Prepaid     5.55 %     5.65 %     5.08 %  
               
Supplemental data - connected devices              
End of period connections (in thousands)              
Retail postpaid     1,822       1,771       1,439    
Wholesale and affiliate     9,244       8,575       6,620    
Total     11,066       10,346       8,059    
               
Supplemental data - total company              
End of period connections (in thousands)              

Sprint platform (1)(d)

    59,453       58,806       56,812    
Transactions (2)     -       -       856    
Total     59,453       58,806       57,668    
               

Sprint platform ARPU (1) (a)

             
Postpaid   $ 51.54     $ 51.68     $ 55.48    
Prepaid   $ 27.34     $ 27.72     $ 27.81    
               

Sprint platform postpaid phone

             
Postpaid phone net additions     173       22       (12 )  
Postpaid phone end of period connections (d)     25,322       25,316       24,866    
Postpaid phone churn     1.39 %     1.56 %     1.49 %  
               
NON-GAAP RECONCILIATION - ABPA*, POSTPAID PHONE ARPU AND ABPU* (Unaudited)  
(Millions, except accounts, connections, ABPA*, ARPU, and ABPU*)  
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
Sprint platform ABPA* (1)              
Postpaid service revenue   $ 4,778     $ 4,793     $ 4,964    
Add: Installment plan billings     264       287       298    
Add: Lease revenue     755       662       256    
Total for Sprint platform postpaid connections   $ 5,797     $ 5,742     $ 5,518    
               
Sprint platform postpaid accounts (in thousands)     11,329       11,358       11,175    

Sprint platform postpaid ABPA* (b)

  $ 170.56     $ 168.49     $ 164.63    
               
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
Sprint platform postpaid phone ARPU and ABPU* (1)              
Postpaid phone service revenue   $ 4,489     $ 4,512     $ 4,682    
Add: Installment plan billings     243       268       282    
Add: Lease revenue     741       649       249    
Total for Sprint platform postpaid phone connections   $ 5,473     $ 5,429     $ 5,213    
               
Sprint platform postpaid average phone connections (in thousands)     25,275       25,297       24,856    
Sprint platform postpaid phone ARPU (a)   $ 59.20     $ 59.45     $ 62.79    
Sprint platform postpaid phone ABPU* (c)   $ 72.17     $ 71.53     $ 69.91    
               

(a) ARPU is calculated by dividing service revenue by the sum of the monthly average number of connections in the applicable service category. Changes in average monthly service revenue reflect connections for either the postpaid or prepaid service category who change rate plans, the level of voice and data usage, the amount of service credits which are offered to connections, plus the net effect of average monthly revenue generated by new connections and deactivating connections. Sprint platform postpaid phone ARPU represents revenues related to our postpaid phone connections.

(b) Sprint platform postpaid ABPA* is calculated by dividing service revenue earned from connections plus installment plan billings and lease revenue by the sum of the monthly average number of accounts during the period.

(c) Sprint platform postpaid phone ABPU* is calculated by dividing postpaid phone service revenue earned from postpaid phone connections plus installment plan billings and lease revenue by the sum of the monthly average number of postpaid phone connections during the period.

(d) As part of the transaction involving Shenandoah Telecommunications Company (Shentel), 186,000 and 92,000 subscribers were transferred from postpaid and prepaid, respectively, to affiliates and an additional 270,000 subscribers were acquired from Shentel, which were acquired from their purchase of nTelos.

               
Wireless Device Financing Summary (Unaudited)  
(Millions, except sales, connections, and sales and connections mix)  
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
               
Postpaid sales (in thousands)     3,268       3,438       4,040    
Postpaid sales mix              
Subsidy/other     31 %     37 %     36 %  
Installment plans     25 %     18 %     13 %  
Leasing     44 %     45 %     51 %  
               
Postpaid connections (in thousands)     30,945       30,951       30,016    
Postpaid connections mix              
Subsidy/other     51 %     54 %     69 %  
Installment plans     13 %     13 %     15 %  
Leasing     36 %     33 %     16 %  
               
Installment plans              
Installment sales financed   $ 407     $ 311     $ 255    
Installment billings     264       287       298    
Installments receivables, net     -       -       1,234    
               
Leasing              
Lease revenue   $ 755     $ 662     $ 256    
Lease depreciation     644       550       276    
               
Leased device additions:              
Cash paid for capital expenditures - leased devices   $ 405     $ 568     $ 544    
Transfers from inventory - leased devices     541       621       808    
               
Leased devices in property, plant and equipment, net   $ 3,766     $ 3,645     $ 2,829    
               
Leased device net proceeds              
Proceeds from MLS sale   $ 1,055     $ -     $ -    
Repayments to MLS     (165 )     -       -    
Proceeds from lease securitization     -       600       -    
Repayments of lease securitization     (75 )     -       -    
Net proceeds from device financings and sales of future lease receivables   $ 815     $ 600     $ -    
               
               
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)  
(Millions, except per share data)  
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
Net operating revenues              
Service revenue   $ 6,516     $ 6,574     $ 7,037    
Equipment revenue     1,496       1,497       990    
Total net operating revenues     8,012       8,071       8,027    
Net operating expenses              
Cost of services (exclusive of depreciation and amortization below)     2,099       2,245       2,393    
Cost of products (exclusive of depreciation and amortization below)     1,419       1,551       1,365    
Selling, general and administrative     1,917       1,939       2,187    
Depreciation - network and other     1,036       1,042       965    
Depreciation - leased devices     644       550       276    
Amortization     287       300       347    
Other, net     249       436       (7 )  
Total net operating expenses     7,651       8,063       7,526    
Operating income     361       8       501    
Interest expense     (615 )     (552 )     (542 )  
Other income, net     8       5       4    
Loss before income taxes     (246 )     (539 )     (37 )  
Income tax (expense) benefit     (56 )     (15 )     17    
Net loss   $ (302 )   $ (554 )   $ (20 )  
               
Basic and diluted net loss per common share   $ (0.08 )   $ (0.14 )   $ (0.01 )  
Weighted average common shares outstanding     3,975       3,972       3,967    
               
Effective tax rate     -22.8 %     -2.8 %     45.9 %  
               
               
NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED EBITDA* (Unaudited)              
(Millions)              
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
               
Net loss   $ (302 )   $ (554 )   $ (20 )  
Income tax expense (benefit)     56       15       (17 )  
Loss before income taxes     (246 )     (539 )     (37 )  
Other income, net     (8 )     (5 )     (4 )  
Interest expense     615       552       542    
Operating income     361       8       501    
Depreciation - network and other     1,036       1,042       965    
Depreciation - leased devices     644       550       276    
Amortization     287       300       347    

EBITDA* (3)

    2,328       1,900       2,089    

Loss from asset dispositions and exchanges, net (4)

    -       81       -    
Severance and exit costs (5)     16       162       13    
Contract terminations (6)     113       -       -    
Litigation (7)     -       15       -    
Reduction in liability - U.S. Cellular asset acquisition (8)     -       -       (20 )  
Adjusted EBITDA* (3)   $ 2,457     $ 2,158     $ 2,082    
               
Adjusted EBITDA margin*     37.7 %     32.8 %     29.6 %  
               
               
Selected items:              
Cash paid for capital expenditures - network and other   $ 473     $ 722     $ 1,802    
Cash paid for capital expenditures - leased devices   $ 405     $ 568     $ 544    
                           
   
WIRELESS STATEMENTS OF OPERATIONS (Unaudited)  
(Millions)  
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
Net operating revenues              
Service revenue              

Sprint platform (1):

             
Postpaid   $ 4,778     $ 4,793     $ 4,964    
Prepaid     1,165       1,203       1,300    
Wholesale, affiliate and other     158       155       181    
Total Sprint platform     6,101       6,151       6,445    
               
Total transactions (2)     -       3       105    
Total service revenue     6,101       6,154       6,550    
               
Equipment revenue     1,496       1,497       990    
Total net operating revenues     7,597       7,651       7,540    
               
Net operating expenses              
Cost of services (exclusive of depreciation and amortization below)     1,784       1,922       2,005    
Cost of products (exclusive of depreciation and amortization below)     1,419       1,551       1,365    
Selling, general and administrative     1,834       1,868       2,096    
Depreciation - network and other     985       991       917    
Depreciation - leased devices     644       550       276    
Amortization     287       300       347    
Other, net     249       434       (8 )  
Total net operating expenses     7,202       7,616       6,998    
Operating income   $ 395     $ 35     $ 542    
               
               
               
               
WIRELESS NON-GAAP RECONCILIATION (Unaudited)  
(Millions)  
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
               
Operating income   $ 395     $ 35     $ 542    

Loss from asset dispositions and exchanges, net (4)

    -       81       -    
Severance and exit costs (5)     16       160       12    
Contract terminations (6)     113       -       -    
Litigation (7)     -       15       -    
Reduction in liability - U.S. Cellular asset acquisition (8)     -       -       (20 )  
Depreciation - network and other     985       991       917    
Depreciation - leased devices     644       550       276    
Amortization     287       300       347    

Adjusted EBITDA* (3)

  $ 2,440     $ 2,132     $ 2,074    
               
Adjusted EBITDA margin*     40.0 %     34.6 %     31.7 %  
               
               
Selected items:              
Cash paid for capital expenditures - network and other   $ 376     $ 577     $ 1,640    
Cash paid for capital expenditures - leased devices   $ 405     $ 568     $ 544    
                           
               
WIRELINE STATEMENTS OF OPERATIONS (Unaudited)              
(Millions)              
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
Net operating revenues              
Voice   $ 181     $ 194     $ 233    
Data     43       37       49    
Internet     302       316       328    
Other     19       15       20    
Total net operating revenues     545       562       630    
               
Net operating expenses              
Costs of services (exclusive of depreciation and amortization below)     448       467       534    
Selling, general and administrative     78       74       87    
Depreciation and amortization     49       50       46    
Other, net     -       3       1    
Total net operating expenses     575       594       668    
Operating loss   $ (30 )   $ (32 )   $ (38 )  
               
               
WIRELINE NON-GAAP RECONCILIATION (Unaudited)              
(Millions)              
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
               
Operating loss   $ (30 )   $ (32 )   $ (38 )  
Severance and exit costs (5)     -       3       1    
Depreciation and amortization     49       50       46    
Adjusted EBITDA*   $ 19     $ 21     $ 9    
               
Adjusted EBITDA margin*     3.5 %     3.7 %     1.4 %  
               
               
Selected items:              
Cash paid for capital expenditures - network and other   $ 20     $ 74     $ 68    
                           
               
CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited)**              
(Millions)              
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
Operating activities              
Net loss   $ (302 )   $ (554 )   $ (20 )  
Depreciation and amortization     1,967       1,892       1,588    
Provision for losses on accounts receivable     93       70       163    
Share-based and long-term incentive compensation expense     15       17       18    
Deferred income tax expense (benefit)     46       3       (13 )  
Amortization of long-term debt premiums, net     (80 )     (80 )     (78 )  
Loss on disposal of property, plant and equipment     120       259       -    
Contract terminations     96       -       -    
Other changes in assets and liabilities:              
Accounts and notes receivable     (106 )     (181 )     (1,683 )  
Inventories and other current assets     (98 )     (900 )     (315 )  
Deferred purchase price from sale of receivables     (117 )     430       1,184    
Accounts payable and other current liabilities     (1,016 )     242       (867 )  
Non-current assets and liabilities, net     (159 )     (1 )     83    
Other, net     83       97       68    
Net cash provided by operating activities     542       1,294       128    
               
Investing activities              
Capital expenditures - network and other     (473 )     (722 )     (1,802 )  
Capital expenditures - leased devices     (405 )     (568 )     (544 )  
Expenditures relating to FCC licenses     (15 )     (23 )     (26 )  
Change in short-term investments, net     (1,304 )     41       (37 )  
Proceeds from sales of assets and FCC licenses     27       26       1    
Other, net     (25 )     (4 )     (3 )  
Net cash used in investing activities     (2,195 )     (1,250 )     (2,411 )  
               
Financing activities              
Proceeds from debt and financings     3,255       600       346    
Repayments of debt, financing and capital lease obligations     (294 )     (172 )     (26 )  
Debt financing costs     (175 )     (10 )     (1 )  
Other, net     6       4       14    
Net cash provided by financing activities     2,792       422       333    
               
Net increase (decrease) in cash and cash equivalents     1,139       466       (1,950 )  
               
Cash and cash equivalents, beginning of period     2,641       2,175       4,010    
Cash and cash equivalents, end of period   $ 3,780     $ 2,641     $ 2,060    
               
               
RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited)              
(Millions)              
    Quarter To Date  
    6/30/16   3/31/16   6/30/15  
               
Net cash provided by operating activities   $ 542     $ 1,294     $ 128    
               
Capital expenditures - network and other     (473 )     (722 )     (1,802 )  
Capital expenditures - leased devices     (405 )     (568 )     (544 )  
Expenditures relating to FCC licenses, net     (15 )     (23 )     (26 )  
Proceeds from sales of assets and FCC licenses     27       26       1    
Other investing activities, net     (25 )     (4 )     (3 )  
Free cash flow*   $ (349 )   $ 3     $ (2,246 )  
               
Net proceeds from device financings and sales of future lease receivables     815       600       -    
Adjusted free cash flow*   $ 466     $ 603     $ (2,246 )  
               

**Certain prior period amounts have been reclassified to conform to the current period presentation.

           
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)          
(Millions)          
    6/30/16   3/31/16  
ASSETS          
Current assets          
Cash and cash equivalents   $ 3,780     $ 2,641    
Short-term investments     1,304       -    
Accounts and notes receivable, net     1,113       1,099    
Device and accessory inventory     816       1,173    
Prepaid expenses and other current assets     1,949       1,920    
Total current assets     8,962       6,833    
           
Property, plant and equipment, net     19,715       20,297    
Goodwill     6,575       6,575    
FCC licenses and other     40,175       40,073    
Definite-lived intangible assets, net     4,157       4,469    
Other assets     811       728    
Total assets   $ 80,395     $ 78,975    
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities          
Accounts payable   $ 1,841     $ 2,899    
Accrued expenses and other current liabilities     4,245       4,374    
Current portion of long-term debt, financing and capital lease obligations     5,603       4,690    
Total current liabilities     11,689       11,963    
           
Long-term debt, financing and capital lease obligations     31,354       29,268    
Deferred tax liabilities     14,006       13,959    
Other liabilities     3,844       4,002    
Total liabilities     60,893       59,192    
           
Stockholders' equity          
Common stock     40       40    
Treasury shares, at cost     -       (3 )  
Paid-in capital     27,582       27,563    
Accumulated deficit     (7,680 )     (7,378 )  
Accumulated other comprehensive loss     (440 )     (439 )  
Total stockholders' equity     19,502       19,783    
Total liabilities and stockholders' equity   $ 80,395     $ 78,975    
           
           
NET DEBT* (NON-GAAP) (Unaudited)          
(Millions)          
    6/30/16   3/31/16  
Total debt   $ 36,957     $ 33,958    
Less: Cash and cash equivalents     (3,780 )     (2,641 )  
Less: Short-term investments     (1,304 )     -    
Net debt*   $ 31,873     $ 31,317    
                   
           
SCHEDULE OF DEBT (Unaudited)          
(Millions)          
        6/30/16  
ISSUER   MATURITY   PRINCIPAL  
Sprint Corporation          
7.25% Senior notes due 2021   09/15/2021   $ 2,250  
7.875% Senior notes due 2023   09/15/2023     4,250  
7.125% Senior notes due 2024   06/15/2024     2,500  
7.625% Senior notes due 2025   02/15/2025     1,500  
Sprint Corporation         10,500  
           
Sprint Communications, Inc.          
Export Development Canada Facility (Tranche 4)   12/15/2017     250  
Export Development Canada Facility (Tranche 3)   12/17/2019     300  
6% Senior notes due 2016   12/01/2016     2,000  
9.125% Senior notes due 2017   03/01/2017     1,000  
8.375% Senior notes due 2017   08/15/2017     1,300  
9% Guaranteed notes due 2018   11/15/2018     3,000  
7% Guaranteed notes due 2020   03/01/2020     1,000  
7% Senior notes due 2020   08/15/2020     1,500  
11.5% Senior notes due 2021   11/15/2021     1,000  
9.25% Debentures due 2022   04/15/2022     200  
6% Senior notes due 2022   11/15/2022     2,280  
Sprint Communications, Inc.         13,830  
           
Sprint Capital Corporation          
6.9% Senior notes due 2019   05/01/2019     1,729  
6.875% Senior notes due 2028   11/15/2028     2,475  
8.75% Senior notes due 2032   03/15/2032     2,000  
Sprint Capital Corporation         6,204  
           
Clearwire Communications LLC          
14.75% First-priority senior secured notes due 2016   12/01/2016     300  
8.25% Exchangeable notes due 2040   12/01/2040     629  
Clearwire Communications LLC         929  
           
Secured equipment credit facilities   2017 - 2021     773  
           
Financing obligations   2017 - 2021     3,833  
           
Capital leases and other obligations   2016 - 2023     492  
Total principal         36,561  
           
Net premiums and debt financing costs         396  
Total debt       $ 36,957  
           
 

NOTES TO THE FINANCIAL INFORMATION (Unaudited)

     
(1)   Sprint platform refers to the Sprint network that supports the wireless service we provide through our multiple brands.
 
(2)   Postpaid and prepaid connections from transactions are defined as retail postpaid and prepaid connections acquired from Clearwire in July 2013 who had not deactivated or been recaptured on the Sprint platform.
 
(3)   As more of our customers elect to lease a device rather than purchasing one under our subsidized program, there is a significant positive impact to EBITDA* and Adjusted EBITDA* from direct channel sales primarily due to the fact the cost of the device is not recorded as cost of products but rather is depreciated over the customer lease term. Under our device leasing program for the direct channel, devices are transferred from inventory to property and equipment and the cost of the leased device is recognized as depreciation expense over the customer lease term to an estimated residual value. The customer payments are recognized as revenue over the term of the lease. Under our subsidized program, the cash received from the customer for the device is recognized as equipment revenue at the point of sale and the cost of the device is recognized as cost of products. During the three-month period ended June 30, 2016, we leased devices through our Sprint direct channels totaling approximately $540 million, which would have increased cost of products and reduced EBITDA* if they had been purchased under our subsidized program. Also, during the three-month period ended June 30, 2016, the equipment revenue derived from customers electing to finance their devices through device leasing or installment billing programs in our direct channel was 67%.
 
    The impact to EBITDA* and Adjusted EBITDA* resulting from the sale of devices under our installment billing program is neutral except for the impact from the time value of money element related to the imputed interest on the installment receivable.
 
(4)   During the fourth quarter of fiscal year 2015, we recorded losses on dispositions of assets primarily related to network development costs that are no longer relevant as a result of changes in the Company's network plans.
 
(5)   Severance and exit costs consist of lease exit costs primarily associated with tower and cell sites, access exit costs related to payments that will continue to be made under our backhaul access contracts for which we will no longer be receiving any economic benefit, and severance costs associated with reduction in our work force.
 
(6)   Contract terminations primarily relate to the termination of our pre-existing wholesale arrangement with Ntelos Holding Corp.
 
(7)   For the fourth quarter of fiscal year 2015, litigation activity is a result of unfavorable developments in connection with pending litigation.
 
(8)   As a result of the U.S. Cellular asset acquisition, we recorded a liability related to network shut-down costs, which primarily consisted of lease exit costs, for which we agreed to reimburse U.S. Cellular. During the third quarter of fiscal year 2014, we identified favorable trends in actual costs and, as a result, reduced the liability resulting in a gain of approximately $41 million. During the first quarter of fiscal year 2015, we revised our estimate and, as a result, reduced the liability resulting in approximately $20 million of income.
     

*FINANCIAL MEASURES

Sprint provides financial measures determined in accordance with GAAP and adjusted GAAP (non-GAAP). The non-GAAP financial measures reflect industry conventions, or standard measures of liquidity, profitability or performance commonly used by the investment community for comparability purposes. These measurements should be considered in addition to, but not as a substitute for, financial information prepared in accordance with GAAP. We have defined below each of the non-GAAP measures we use, but these measures may not be synonymous to similar measurement terms used by other companies.

Sprint provides reconciliations of these non-GAAP measures in its financial reporting. Because Sprint does not predict special items that might occur in the future, and our forecasts are developed at a level of detail different than that used to prepare GAAP-based financial measures, Sprint does not provide reconciliations to GAAP of its forward-looking financial measures.

The measures used in this release include the following:

EBITDA is operating income/(loss) before depreciation and amortization. Adjusted EBITDA is EBITDA excluding severance, exit costs, and other special items. Adjusted EBITDA Margin represents Adjusted EBITDA divided by non-equipment net operating revenues for Wireless and Adjusted EBITDA divided by net operating revenues for Wireline. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors because they are an indicator of the strength and performance of our ongoing business operations. While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent non-cash current period costs associated with the use of long-lived tangible and definite-lived intangible assets. Adjusted EBITDA and Adjusted EBITDA Margin are calculations commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the telecommunications industry.

Sprint Platform Postpaid ABPA is average billings per account and calculated by dividing postpaid service revenue earned from postpaid customers plus installment plan billings and lease revenue by the sum of the monthly average number of postpaid accounts during the period. We believe that ABPA provides useful information to investors, analysts and our management to evaluate average Sprint platform postpaid customer billings per account as it approximates the expected cash collections, including installment plan billings and lease revenue, per postpaid account each month.

Sprint Platform Postpaid Phone ABPU is average billings per postpaid phone user and calculated by dividing service revenue earned from postpaid phone customers plus installment plan billings and lease revenue by the sum of the monthly average number of postpaid phone connections during the period. We believe that ABPU provides useful information to investors, analysts and our management to evaluate average Sprint platform postpaid phone customer billings as it approximates the expected cash collections, including installment plan billings and lease revenue, per postpaid phone user each month.

Free Cash Flow is the cash provided by operating activities less the cash used in investing activities other than short-term investments, including changes in restricted cash, if any, and excluding the sale-leaseback of devices. Adjusted Free Cash Flow is Free Cash Flow plus the proceeds from device financings and sales of future lease receivables, net of repayments. We believe that Free Cash Flow and Adjusted Free Cash Flow provide useful information to investors, analysts and our management about the cash generated by our core operations and net proceeds obtained to fund certain leased devices, respectively, after interest and dividends, if any, and our ability to fund scheduled debt maturities and other financing activities, including discretionary refinancing and retirement of debt and purchase or sale of investments.

Net Debt is consolidated debt, including current maturities, less cash and cash equivalents, short-term investments and, if any, restricted cash. We believe that Net Debt provides useful information to investors, analysts and credit rating agencies about the capacity of the company to reduce the debt load and improve its capital structure.

SAFE HARBOR

This release includes “forward-looking statements” within the meaning of the securities laws. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan”, “outlook,” “providing guidance,” and similar expressions are intended to identify information that is not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to our network, connections growth, and liquidity; and statements expressing general views about future operating results — are forward-looking statements. Forward-looking statements are estimates and projections reflecting management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, the development and deployment of new technologies and services; efficiencies and cost savings of new technologies and services; customer and network usage; connection growth and retention; service, speed, coverage and quality; availability of devices; availability of various financings, including any leasing transactions; the timing of various events and the economic environment. Sprint believes these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date when made. Sprint undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our company's historical experience and our present expectations or projections. Factors that might cause such differences include, but are not limited to, those discussed in Sprint Corporation’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.

About Sprint:

Sprint (NYSE:S) is a communications services company that creates more and better ways to connect its customers to the things they care about most. Sprint served more than 59.4 million connections as of June 30, 2016 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; leading no-contract brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. Sprint has been named to the Dow Jones Sustainability Index (DJSI) North America for the past five years. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.

Contact(s):

Sprint Corporation
Media:
Dave Tovar, 913-315-1451
David.Tovar@sprint.com
or
Investors:
Jud Henry, 800-259-3755
Investor.Relations@sprint.com


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