- Fourth quarter Operating Loss improved 22 percent to $576 million; Adjusted EBITDA* of $1.15 billion improved by nearly 40 percent or more than $300 million year-over-year compared to combined prior year results
- Combined annual Operating Loss of $1.9 billion
- Annual Adjusted EBITDA* of $5.4 billion grew 13 percent year-over-year
- Highest-ever annual Sprint platform wireless service revenue of $28.6 billion grew more than 5 percent year-over-year
- Fourth quarter Sprint platform wireless service revenue of $7.2 billion grew year-over-year for the 15th consecutive quarter
- Best-ever annual Sprint platform postpaid ARPU of $64.07
- Highest-ever Sprint platform subscribers at 53.9 million
- 682,000 total Sprint platform net additions in the fourth quarter
- 58,000 Sprint platform postpaid net additions in the fourth quarter
- Annual retail smartphone sales of 20.5 million and a record 95 percent of quarterly Sprint platform postpaid handset sales were smartphones
- Continued progress on the Network
- More than 200 million people covered by 4G LTE
- Sprint Spark TM available in 14 of the largest U.S. cities including today’s launches in Philadelphia and Baltimore
- Launched revolutionary new Sprint FramilySM that redefines traditional wireless family plans
The company’s fourth quarter 2013 earnings conference call will be held at 8 a.m. ET today. Participants may dial 800-938-1120 in the U.S. or Canada (706-634-7849 internationally) and provide the following ID: 31411101 or may listen via the Internet atwww.sprint.com/investors.
Additional information about results can be found in the “Quarterly Investor Update” posted on our Investor Relations website at www.sprint.com/investors.
Financial results in the enclosed tables for 2013 and 2012 include a predecessor period from January 1, 2012, through the closing of the SoftBank transaction on July 10, 2013, and a successor period from October 5, 2012 through December 31, 2013. In order to present financial results in a way that offers investors a more meaningful calendar period-to-period comparison, we have combined the current year and prior year results of operations for the predecessor and successor periods. The enclosed remarks are in reference to the unaudited combined period unless otherwise noted. For additional information please reference the section titled Financial Measures.
OVERLAND PARK, Kan.–(BUSINESS WIRE)–
Sprint Corporation (NYSE:S) today reported operating revenue, which grew year-over-year to more than $9.1 billion for the fourth quarter and to $35.5 billion for the full year 2013. Operating loss was $576 million in the fourth quarter, a 22 percent year-over-year improvement. Quarterly Adjusted EBITDA* of $1.15 billion improved nearly 40 percent year-over-year. Annual Adjusted EBITDA* of $5.4 billion improved by 13 percent.
“In 2013 Adjusted EBITDA* and Sprint platform wireless revenues grew significantly while we made investments to improve network performance and expand 4G LTE to more than 200 million people,” said Dan Hesse, Sprint CEO. “As we roll out Sprint SparkTM and create innovative offers like Sprint FramilySM, we are building a foundation for future success.”
Sprint Platform Subscriber Net Additions of 682,000 and Record Smartphone Sales Mix
Sprint ended the year with 53.9 million Sprint platform subscribers – its highest level ever – after adding 58,000 postpaid subscribers, 322,000 prepaid subscribers and 302,000 wholesale and affiliate subscribers in the fourth quarter. Sprint sold 5.6 million smartphones in the fourth quarter and 20.5 million smartphones for the year with smartphone sales mix reaching 95 percent for postpaid and 66 percent for prepaid in the quarter.
Net Income and Operating Loss Improve Year-Over-Year; Adjusted EBITDA* Up Nearly 40 percent Year-Over-Year
Quarterly net loss was $1 billion in the fourth quarter as compared to a loss of $1.3 billion in the fourth quarter of 2012. Operating loss for the quarter was $576 million as compared to an operating loss of $738 million in the fourth quarter of 2012.
Quarterly Adjusted EBITDA* of $1.15 billion improved nearly 40 percent year-over-year as growth in Sprint platform service revenue, network savings resulting from the Nextel platform shutdown and lower net subsidy expense were partially offset by the loss of Nextel platform revenue and the consolidation of Clearwire’s results.
LTE Coverage Now Available to More than 200 Million People; Sprint SparkTM Now in 14 Markets
Sprint currently has nearly 33,000 Network Vision sites on air, an increase of more than 24,000 sites over the last 12 months. LTE coverage is now available to more than 200 million people. The company continues to expect that by the middle of this year LTE coverage will reach 250 million people and the voice/3G network modernization deployment will be complete.
During the fourth quarter the company unveiled Sprint Spark – a combination of advanced network and device technology with the potential to surpass wireless speeds of any U.S. network provider, capable of delivering 50-60 Megabits per second peak speeds today with potential speeds three times as fast by late 2015. Sprint Spark leverages the company’s 800MHz, 1.9GHz and 2.5GHz spectrum together with devices offering tri-band capability and high-definition voice1.
Sprint plans to deploy Sprint Spark in about 100 of America’s largest cities during the next three years. By the end of this year, 100 million Americans are expected to have Sprint Spark coverage. Today, Sprint Spark launches in Philadelphia and Baltimore and, with the recent launch in Kansas City, is currently available in 14 markets including New York, Los Angeles and Chicago. Ten Sprint Spark-capable devices are currently available, including the recently updated Samsung Galaxy S® 4, Samsung Galaxy MEGA™, HTC One® max, LG G Flex and NETGEAR® Zing Mobile Hotspot™.
Sprint Framily Pricing Program Lets Customers Decide
Earlier this year, Sprint introduced Sprint Framily, a new pricing program available to new and existing customers that lets consumers decide who they consider family. With Sprint Framily, the more people added to the group (up to 10 phone lines), the greater the savings for everyone on the plan.
For one line of service, new Sprint customers pay $55 per month per line for unlimited talk, text and 1GB of data while on the Sprint network. For each additional new Sprint customer who joins the Framily group, the cost per person goes down $5 a month up to a maximum monthly discount of $30 per line. With a group of at least seven people, each customer gets unlimited talk, text and 1GB of data while on the Sprint network for $25 per month per line (pricing excludes taxes and surcharges).
All members of the group can customize their plan and for an additional $20 per month per line, Framily members can buy up to unlimited data plus get a new phone every year. Each account can be billed separately.
Sprint Garners Third-Party Recognition
Sprint received notable awards in the fourth quarter. In particular, CEVA Logistics, one of the world’s leading supply chain companies, named Sprint as Technology Supplier of the Year. Pinsight Media+, Sprint’s mobile media company, received the 2013 North American Mobile Advertising Product Leadership Award from Frost & Sullivan, and Dan Hesse was named Corporate Responsibility Magazine’s Lifetime Achievement Award winner for 2013. Last month, Compass Intelligence named Sprint the most “Eco Focused Wireless Carrier,” and Sprint was the only U.S. telecommunications company to be named an Efficiency Leader to the 2014 National Capital Leaders Index by GreenBiz Group and Trucost. Additionally, for the second year in a row, Sprint was rated 16th inChief Executive Magazine’s Best Companies for Leaders list.
Forecast
The company expects 2014 Adjusted EBITDA* to be between $6.5 billion and $6.7 billion.
The company expects 2014 capital expenditures of approximately $8 billion.
| Wireless Operating Statistics (Unaudited) | |||||||||||||||||||||
| Quarter To Date | Year To Date | ||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||
| Net (Losses) Additions (in thousands) | |||||||||||||||||||||
| Sprint platform: | |||||||||||||||||||||
| Postpaid (3) | 58 | (360 | ) | 401 | (96 | ) | 1,516 | ||||||||||||||
| Prepaid (4) | 322 | 84 | 525 | 488 | 2,305 | ||||||||||||||||
| Wholesale and affiliate | 302 | 181 | (243 | ) | 31 | 944 | |||||||||||||||
| Total Sprint platform | 682 | (95 | ) | 683 | 423 | 4,765 | |||||||||||||||
| Nextel platform: | |||||||||||||||||||||
| Postpaid (3) | – | – | (644 | ) | (1,632 | ) | (2,653 | ) | |||||||||||||
| Prepaid (4) | – | – | (376 | ) | (454 | ) | (1,507 | ) | |||||||||||||
| Total Nextel platform | – | – | (1,020 | ) | (2,086 | ) | (4,160 | ) | |||||||||||||
| Transactions: (a) | |||||||||||||||||||||
| Postpaid (3) | (127 | ) | (175 | ) | – | (481 | ) | – | |||||||||||||
| Prepaid (4) | (103 | ) | (56 | ) | – | (179 | ) | – | |||||||||||||
| Wholesale | 25 | 13 | – | 38 | – | ||||||||||||||||
| Total transactions | (205 | ) | (218 | ) | – | (622 | ) | – | |||||||||||||
| Total retail postpaid net losses | (69 | ) | (535 | ) | (243 | ) | (2,209 | ) | (1,137 | ) | |||||||||||
| Total retail prepaid net additions (losses) | 219 | 28 | 149 | (145 | ) | 798 | |||||||||||||||
| Total wholesale and affiliate net additions (losses) | 327 | 194 | (243 | ) | 69 | 944 | |||||||||||||||
| Total Wireless Net Additions (Losses) | 477 | (313 | ) | (337 | ) | (2,285 | ) | 605 | |||||||||||||
| End of Period Subscribers (in thousands) | |||||||||||||||||||||
| Sprint platform: | |||||||||||||||||||||
| Postpaid (3) | 30,149 | 30,091 | 30,245 | 30,149 | 30,245 | ||||||||||||||||
| Prepaid (4) | 15,621 | 15,299 | 15,133 | 15,621 | 15,133 | ||||||||||||||||
| Wholesale and affiliate | 8,164 | 7,862 | 8,162 | 8,164 | 8,162 | ||||||||||||||||
| Total Sprint platform | 53,934 | 53,252 | 53,540 | 53,934 | 53,540 | ||||||||||||||||
| Nextel platform: | |||||||||||||||||||||
| Postpaid (3) | – | – | 1,632 | – | 1,632 | ||||||||||||||||
| Prepaid (4) | – | – | 454 | – | 454 | ||||||||||||||||
| Total Nextel platform | – | – | 2,086 | – | 2,086 | ||||||||||||||||
| Transactions: (a) | |||||||||||||||||||||
| Postpaid (3) | 688 | 815 | – | 688 | – | ||||||||||||||||
| Prepaid (4) | 601 | 704 | – | 601 | – | ||||||||||||||||
| Wholesale | 131 | 106 | – | 131 | – | ||||||||||||||||
| Total transactions | 1,420 | 1,625 | – | 1,420 | – | ||||||||||||||||
| Total retail postpaid end of period subscribers | 30,837 | 30,906 | 31,877 | 30,837 | 31,877 | ||||||||||||||||
| Total retail prepaid end of period subscribers | 16,222 | 16,003 | 15,587 | 16,222 | 15,587 | ||||||||||||||||
| Total wholesale and affiliate end of period subscribers | 8,295 | 7,968 | 8,162 | 8,295 | 8,162 | ||||||||||||||||
| Total End of Period Subscribers | 55,354 | 54,877 | 55,626 | 55,354 | 55,626 | ||||||||||||||||
| Supplemental Data – Connected Devices | |||||||||||||||||||||
| End of Period Subscribers (in thousands) | |||||||||||||||||||||
| Retail postpaid | 922 | 834 | 813 | 922 | 813 | ||||||||||||||||
| Wholesale and affiliate | 3,578 | 3,298 | 2,670 | 3,578 | 2,670 | ||||||||||||||||
| Total | 4,500 | 4,132 | 3,483 | 4,500 | 3,483 | ||||||||||||||||
| Churn | |||||||||||||||||||||
| Sprint platform: | |||||||||||||||||||||
| Postpaid | 2.07 | % | 1.99 | % | 1.98 | % | 1.93 | % | 1.89 | % | |||||||||||
| Prepaid | 3.01 | % | 3.57 | % | 3.02 | % | 3.72 | % | 3.01 | % | |||||||||||
| Nextel platform: | |||||||||||||||||||||
| Postpaid | – | – | 5.27 | % | 16.40 | % | 3.24 | % | |||||||||||||
| Prepaid | – | – | 9.79 | % | 18.58 | % | 8.55 | % | |||||||||||||
| Transactions: (a) | |||||||||||||||||||||
| Postpaid | 5.48 | % | 6.38 | % | – | 7.65 | % | – | |||||||||||||
| Prepaid | 8.18 | % | 8.84 | % | – | 8.66 | % | – | |||||||||||||
| Total retail postpaid churn | 2.15 | % | 2.09 | % | 2.18 | % | 2.24 | % | 2.02 | % | |||||||||||
| Total retail prepaid churn | 3.22 | % | 3.78 | % | 3.30 | % | 3.94 | % | 3.45 | % | |||||||||||
| Nextel Platform Subscriber Recaptures | |||||||||||||||||||||
| Subscribers (in thousands) (5): | |||||||||||||||||||||
| Postpaid | – | – | 333 | 628 | 1,508 | ||||||||||||||||
| Prepaid | – | – | 188 | 168 | 620 | ||||||||||||||||
| Rate (6): | |||||||||||||||||||||
| Postpaid | – | – | 51 | % | 38 | % | 55 | % | |||||||||||||
| Prepaid | – | – | 50 | % | 37 | % | 33 | % | |||||||||||||
(a) We acquired approximately 352,000 postpaid subscribers and 59,000 prepaid subscribers through the acquisition of assets from U.S. Cellular when the transaction closed on May 17, 2013. We acquired approximately 788,000 postpaid subscribers, 721,000 prepaid subscribers, 93,000 wholesale subscribers and transferred 29,000 Sprint wholesale subscribers that were originally recognized through our Clearwire MVNO arrangement to Transactions postpaid subscribers as a result of the Clearwire acquisition when the transaction closed on July 9, 2013.
| Wireless Operating Statistics (Unaudited) (continued) | |||||||||||||||||||||||
| Successor | Predecessor | ||||||||||||||||||||||
| Quarter To Date | QuarterTo Date | YearTo Date | 10 DaysEnded | 191 DaysEnded | QuarterTo Date | YearTo Date | |||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/13 | 7/10/13 | 7/10/13 | 12/31/12 | 12/31/12 | |||||||||||||||||
| ARPU (b) | |||||||||||||||||||||||
| Sprint platform: | |||||||||||||||||||||||
| Postpaid | $ | 64.11 | $ | 64.24 | $ | 64.17 | $ | 64.71 | $ | 63.98 | $ | 63.04 | $ | 63.05 | |||||||||
| Prepaid | $ | 26.78 | $ | 25.14 | $ | 26.01 | $ | 26.99 | $ | 26.49 | $ | 26.30 | $ | 25.92 | |||||||||
| Nextel platform: | |||||||||||||||||||||||
| Postpaid | $ | – | $ | – | $ | – | $ | – | $ | 35.84 | $ | 37.27 | $ | 39.65 | |||||||||
| Prepaid | $ | – | $ | – | $ | – | $ | – | $ | 32.60 | $ | 35.59 | $ | 35.91 | |||||||||
| Transactions: (a) | |||||||||||||||||||||||
| Postpaid | $ | 36.30 | $ | 37.44 | $ | 36.89 | $ | 35.75 | $ | 56.98 | $ | – | $ | – | |||||||||
| Prepaid | $ | 40.80 | $ | 40.62 | $ | 40.71 | $ | 12.78 | $ | 18.26 | $ | – | $ | – | |||||||||
| Total retail postpaid ARPU | $ | 63.44 | $ | 63.48 | $ | 63.46 | $ | 64.55 | $ | 63.10 | $ | 61.47 | $ | 60.84 | |||||||||
| Total retail prepaid ARPU | $ | 27.34 | $ | 25.86 | $ | 26.64 | $ | 26.96 | $ | 26.57 | $ | 26.69 | $ | 26.72 | |||||||||
(a) We acquired approximately 352,000 postpaid subscribers and 59,000 prepaid subscribers through the acquisition of assets from U.S. Cellular when the transaction closed on May 17, 2013. We acquired approximately 788,000 postpaid subscribers, 721,000 prepaid subscribers, 93,000 wholesale subscribers and transferred 29,000 Sprint wholesale subscribers that were originally recognized through our Clearwire MVNO arrangement to Transactions postpaid subscribers as a result of the Clearwire acquisition when the transaction closed on July 9, 2013.
(b) ARPU is calculated by dividing service revenue by the sum of the average number of subscribers in the applicable service category. Changes in average monthly service revenue reflect subscribers for either the postpaid or prepaid service category who change rate plans, the level of voice and data usage, the amount of service credits which are offered to subscribers, plus the net effect of average monthly revenue generated by new subscribers and deactivating subscribers.
| Wireless Operating Statistics (Unaudited) (continued) | |||||||||||||||||
| Combined (1) Quarter to Date | Combined (1) Year to Date | ||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||
| ARPU (b) | |||||||||||||||||
| Sprint platform: | |||||||||||||||||
| Postpaid | $ | 64.11 | $ | 64.28 | $ | 63.04 | $ | 64.07 | $ | 63.05 | |||||||
| Prepaid | $ | 26.78 | $ | 25.33 | $ | 26.30 | $ | 26.26 | $ | 25.92 | |||||||
| Nextel platform: | |||||||||||||||||
| Postpaid | $ | – | $ | – | $ | 37.27 | $ | 35.84 | $ | 39.65 | |||||||
| Prepaid | $ | – | $ | – | $ | 35.59 | $ | 32.60 | $ | 35.91 | |||||||
| Transactions: (a) | |||||||||||||||||
| Postpaid | $ | 36.30 | $ | 40.00 | $ | – | $ | 39.96 | $ | – | |||||||
| Prepaid | $ | 40.80 | $ | 43.20 | $ | – | $ | 41.55 | $ | – | |||||||
| Total retail postpaid ARPU | $ | 63.44 | $ | 63.69 | $ | 61.47 | $ | 63.29 | $ | 60.84 | |||||||
| Total retail prepaid ARPU | $ | 27.34 | $ | 26.04 | $ | 26.69 | $ | 26.62 | $ | 26.72 | |||||||
(a) We acquired approximately 352,000 postpaid subscribers and 59,000 prepaid subscribers through the acquisition of assets from U.S. Cellular when the transaction closed on May 17, 2013. We acquired approximately 788,000 postpaid subscribers, 721,000 prepaid subscribers, 93,000 wholesale subscribers and transferred 29,000 Sprint wholesale subscribers that were originally recognized through our Clearwire MVNO arrangement to Transactions postpaid subscribers as a result of the Clearwire acquisition when the transaction closed on July 9, 2013.
(b) ARPU is calculated by dividing service revenue by the sum of the average number of subscribers in the applicable service category. Changes in average monthly service revenue reflect subscribers for either the postpaid or prepaid service category who change rate plans, the level of voice and data usage, the amount of service credits which are offered to subscribers, plus the net effect of average monthly revenue generated by new subscribers and deactivating subscribers. Combined ARPU for the quarter-to-date September 30, 2013 period aggregate service revenue of the ten days ended July 10, 2013 Predecessor period and the quarter-to-date September 30, 2013 Successor period divided by the sum of the average subscribers during the quarter. Combined ARPU for the year-to-date December 31, 2013 period aggregate service revenue of the 191 days ended July 10, 2013 Predecessor period and the year-to-date December 31, 2013 Successor period divided by the sum of the average subscribers during the year-to-date period. Combined ARPU for the quarter-to-date December 31, 2013 period is not affected by Predecessor activity and, therefore, is consistent with the information presented in the previous table for the quarter-to-date December 31, 2013 Successor ARPU. Combined ARPU for the quarter and year-to-date December 31, 2012 periods are not affected by Successor activity, and, therefore, is consistent with the information presented in the previous table for the quarter and year-to-date Predecessor ARPU.
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||||||||||||||||||||
| (Millions, except per Share Data) | ||||||||||||||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||||||||||
| QuarterTo Date | QuarterTo Date | 87 DaysEnded | YearTo Date | 10 DaysEnded | 191 DaysEnded | QuarterTo Date | YearTo Date | |||||||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 7/10/13 | 7/10/13 | 12/31/12 | 12/31/12 | |||||||||||||||||||||||||||
| Net Operating Revenues | $ | 9,142 | $ | 7,749 | $ | – | $ | 16,891 | $ | 932 | $ | 18,602 | $ | 9,005 | $ | 35,345 | ||||||||||||||||||
| Net Operating Expenses | ||||||||||||||||||||||||||||||||||
| Cost of services | 2,704 | 2,470 | – | 5,174 | 286 | 5,673 | 2,659 | 10,936 | ||||||||||||||||||||||||||
| Cost of products | 2,731 | 1,872 | – | 4,603 | 281 | 4,872 | 2,993 | 9,905 | ||||||||||||||||||||||||||
| Selling, general and administrative | 2,546 | 2,259 | 33 | 4,841 | 289 | 5,067 | 2,557 | 9,765 | ||||||||||||||||||||||||||
| Depreciation and amortization | 1,531 | 1,403 | – | 2,934 | 121 | 3,245 | 1,493 | 6,543 | ||||||||||||||||||||||||||
| Other, net | 206 | 103 | – | 309 | (5 | ) | 630 | 8 | 16 | |||||||||||||||||||||||||
| Total net operating expenses | 9,718 | 8,107 | 33 | 17,861 | 972 | 19,487 | 9,710 | 37,165 | ||||||||||||||||||||||||||
| Operating Loss | (576 | ) | (358 | ) | (33 | ) | (970 | ) | (40 | ) | (885 | ) | (705 | ) | (1,820 | ) | ||||||||||||||||||
| Interest expense | (502 | ) | (416 | ) | – | (918 | ) | (275 | ) | (1,135 | ) | (432 | ) | (1,428 | ) | |||||||||||||||||||
| Equity in earnings (losses) of unconsolidated investments and other, net | 55 | 165 | 10 | 73 | 2,905 | 2,463 | (140 | ) | (923 | ) | ||||||||||||||||||||||||
| (Loss) Income before Income Taxes | (1,023 | ) | (609 | ) | (23 | ) | (1,815 | ) | 2,590 | 443 | (1,277 | ) | (4,171 | ) | ||||||||||||||||||||
| Income tax expense | (15 | ) | (90 | ) | (4 | ) | (45 | ) | (1,508 | ) | (1,601 | ) | (44 | ) | (154 | ) | ||||||||||||||||||
| Net (Loss) Income | $ | (1,038 | ) | $ | (699 | ) | $ | (27 | ) | $ | (1,860 | ) | $ | 1,082 | $ | (1,158 | ) | $ | (1,321 | ) | $ | (4,325 | ) | |||||||||||
| Basic Net (Loss) Income Per Common Share | $ | (0.26 | ) | $ | (0.18 | ) | NM | $ | (0.54 | ) | $ | 0.35 | $ | (0.38 | ) | $ | (0.44 | ) | $ | (1.44 | ) | |||||||||||||
| Diluted Net (Loss) Income Per Common Share | $ | (0.26 | ) | $ | (0.18 | ) | NM | $ | (0.54 | ) | $ | 0.30 | $ | (0.38 | ) | $ | (0.44 | ) | $ | (1.44 | ) | |||||||||||||
| Basic Weighted Average Common Shares outstanding | 3,944 | 3,802 | NM | 3,475 | 3,086 | 3,027 | 3,007 | 3,002 | ||||||||||||||||||||||||||
| Diluted Weighted Average Common Shares outstanding | 3,944 | 3,802 | NM | 3,475 | 3,640 | 3,027 | 3,007 | 3,002 | ||||||||||||||||||||||||||
| Effective Tax Rate | -1.5 | % | -14.8 | % | -17.4 | % | -2.5 | % | 58.2 | % | 361.4 | % | -3.4 | % | -3.7 | % | ||||||||||||||||||
| NON-GAAP RECONCILIATION – NET INCOME (LOSS) TO ADJUSTED EBITDA* (Unaudited) | ||||||||||||||||||||||||||||||||||
| (Millions) | ||||||||||||||||||||||||||||||||||
| Successor | Predecessor | |||||||||||||||||||||||||||||||||
| QuarterTo Date | QuarterTo Date | 87 DaysEnded | YearTo Date | 10 DaysEnded | 191 DaysEnded | QuarterTo Date | YearTo Date | |||||||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 7/10/13 | 7/10/13 | 12/31/12 | 12/31/12 | |||||||||||||||||||||||||||
| Net (Loss) Income | $ | (1,038 | ) | $ | (699 | ) | $ | (27 | ) | $ | (1,860 | ) | $ | 1,082 | $ | (1,158 | ) | $ | (1,321 | ) | $ | (4,325 | ) | |||||||||||
| Income tax expense | 15 | 90 | 4 | 45 | 1,508 | 1,601 | 44 | 154 | ||||||||||||||||||||||||||
| (Loss) Income before Income Taxes | (1,023 | ) | (609 | ) | (23 | ) | (1,815 | ) | 2,590 | 443 | (1,277 | ) | (4,171 | ) | ||||||||||||||||||||
| Equity in earnings (losses) of unconsolidated investments and other, net | (55 | ) | (165 | ) | (10 | ) | (73 | ) | (2,905 | ) | (2,463 | ) | 140 | 923 | ||||||||||||||||||||
| Interest expense | 502 | 416 | – | 918 | 275 | 1,135 | 432 | 1,428 | ||||||||||||||||||||||||||
| Operating Loss | (576 | ) | (358 | ) | (33 | ) | (970 | ) | (40 | ) | (885 | ) | (705 | ) | (1,820 | ) | ||||||||||||||||||
| Depreciation and amortization | 1,531 | 1,403 | – | 2,934 | 121 | 3,245 | 1,493 | 6,543 | ||||||||||||||||||||||||||
| EBITDA* | 955 | 1,045 | (33 | ) | 1,964 | 81 | 2,360 | 788 | 4,723 | |||||||||||||||||||||||||
| Severance and exit costs (7) | 206 | 103 | – | 309 | (5 | ) | 652 | (10 | ) | 196 | ||||||||||||||||||||||||
| Gains from asset dispositions and exchanges (8) | – | – | – | – | – | – | – | (29 | ) | |||||||||||||||||||||||||
| Asset impairments and abandonments (9) | – | – | – | – | – | – | 18 | 36 | ||||||||||||||||||||||||||
| Spectrum hosting contract termination, net(10) | – | – | – | – | – | – | – | (170 | ) | |||||||||||||||||||||||||
| Access costs (11) | – | – | – | – | – | – | – | (17 | ) | |||||||||||||||||||||||||
| Litigation (12) | – | – | – | – | – | (22 | ) | – | – | |||||||||||||||||||||||||
| Business combinations (13) | – | 100 | – | 100 | 19 | 53 | 19 | 19 | ||||||||||||||||||||||||||
| Hurricane Sandy (14) | (7 | ) | – | – | (7 | ) | – | – | 45 | 45 | ||||||||||||||||||||||||
| Adjusted EBITDA* | $ | 1,154 | $ | 1,248 | $ | (33 | ) | $ | 2,366 | $ | 95 | $ | 3,043 | $ | 860 | $ | 4,803 | |||||||||||||||||
| Capital expenditures (2) | 1,901 | 1,666 | – | 3,567 | 175 | 3,884 | 1,923 | 5,370 | ||||||||||||||||||||||||||
| Adjusted EBITDA* less Capex | $ | (747 | ) | $ | (418 | ) | $ | (33 | ) | $ | (1,201 | ) | $ | (80 | ) | $ | (841 | ) | $ | (1,063 | ) | $ | (567 | ) | ||||||||||
| Adjusted EBITDA Margin* | 14.5 | % | 17.5 | % | NM | 15.7 | % | 11.1 | % | 18.0 | % | 10.7 | % | 15.0 | % | |||||||||||||||||||
| Selected item: | ||||||||||||||||||||||||||||||||||
| Deferred tax asset valuation allowance | $ | 381 | $ | 327 | $ | 4 | $ | 708 | $ | 524 | $ | 1,410 | $ | 546 | $ | 1,756 | ||||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||
| Combined (1) Quarter to Date | Combined (1) Year to Date | ||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||
| Net Operating Revenues | $ | 9,142 | $ | 8,681 | $ | 9,005 | $ | 35,493 | $ | 35,345 | |||||||||||||
| Net Operating Expenses | |||||||||||||||||||||||
| Cost of services | 2,704 | 2,756 | 2,659 | 10,847 | 10,936 | ||||||||||||||||||
| Cost of products | 2,731 | 2,153 | 2,993 | 9,475 | 9,905 | ||||||||||||||||||
| Selling, general and administrative | 2,546 | 2,548 | 2,590 | 9,908 | 9,798 | ||||||||||||||||||
| Depreciation and amortization | 1,531 | 1,524 | 1,493 | 6,179 | 6,543 | ||||||||||||||||||
| Other, net | 206 | 98 | 8 | 939 | 16 | ||||||||||||||||||
| Total net operating expenses | 9,718 | 9,079 | 9,743 | 37,348 | 37,198 | ||||||||||||||||||
| Operating Loss | (576 | ) | (398 | ) | (738 | ) | (1,855 | ) | (1,853 | ) | |||||||||||||
| Interest expense | (502 | ) | (691 | ) | (432 | ) | (2,053 | ) | (1,428 | ) | |||||||||||||
| Equity in earnings (losses) of unconsolidated investments and other, net | 55 | 3,070 | (130 | ) | 2,536 | (913 | ) | ||||||||||||||||
| (Loss) Income before Income Taxes | (1,023 | ) | 1,981 | (1,300 | ) | (1,372 | ) | (4,194 | ) | ||||||||||||||
| Income tax expense | (15 | ) | (1,598 | ) | (48 | ) | (1,646 | ) | (158 | ) | |||||||||||||
| Net (Loss) Income | $ | (1,038 | ) | $ | 383 | $ | (1,348 | ) | $ | (3,018 | ) | $ | (4,352 | ) | |||||||||
| NON-GAAP RECONCILIATION – NET LOSS TO ADJUSTED EBITDA* (Unaudited) | |||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||
| Combined (1) Quarter to Date | Combined (1) Year to Date | ||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||
| Net (Loss) Income | $ | (1,038 | ) | $ | 383 | $ | (1,348 | ) | $ | (3,018 | ) | $ | (4,352 | ) | |||||||||
| Income tax expense | 15 | 1,598 | 48 | 1,646 | 158 | ||||||||||||||||||
| (Loss) Income before Income Taxes | (1,023 | ) | 1,981 | (1,300 | ) | (1,372 | ) | (4,194 | ) | ||||||||||||||
| Equity in earnings (losses) of unconsolidated investments and other, net | (55 | ) | (3,070 | ) | 130 | (2,536 | ) | 913 | |||||||||||||||
| Interest expense | 502 | 691 | 432 | 2,053 | 1,428 | ||||||||||||||||||
| Operating Loss | (576 | ) | (398 | ) | (738 | ) | (1,855 | ) | (1,853 | ) | |||||||||||||
| Depreciation and amortization | 1,531 | 1,524 | 1,493 | 6,179 | 6,543 | ||||||||||||||||||
| EBITDA* | 955 | 1,126 | 755 | 4,324 | 4,690 | ||||||||||||||||||
| Severance and exit costs (7) | 206 | 98 | (10 | ) | 961 | 196 | |||||||||||||||||
| Gains from asset dispositions and exchanges (8) | – | – | – | – | (29 | ) | |||||||||||||||||
| Asset impairments and abandonments (9) | – | – | 18 | – | 36 | ||||||||||||||||||
| Spectrum hosting contract termination, net (10) | – | – | – | – | (170 | ) | |||||||||||||||||
| Access costs (11) | – | – | – | – | (17 | ) | |||||||||||||||||
| Litigation (12) | – | – | – | (22 | ) | – | |||||||||||||||||
| Business combinations (13) | – | 119 | 19 | 153 | 19 | ||||||||||||||||||
| Hurricane Sandy (14) | (7 | ) | – | 45 | (7 | ) | 45 | ||||||||||||||||
| Adjusted EBITDA* | 1,154 | 1,343 | 827 | 5,409 | 4,770 | ||||||||||||||||||
| Capital expenditures (2) | 1,901 | 1,841 | 1,923 | 7,451 | 5,370 | ||||||||||||||||||
| Adjusted EBITDA* less Capex | $ | (747 | ) | $ | (498 | ) | $ | (1,096 | ) | $ | (2,042 | ) | $ | (600 | ) | ||||||||
| Adjusted EBITDA Margin* | 14.5 | % | 16.8 | % | 10.3 | % | 16.9 | % | 14.9 | % | |||||||||||||
| Selected item: | |||||||||||||||||||||||
| Deferred tax asset valuation allowance | $ | 381 | $ | 851 | $ | 550 | $ | 2,118 | $ | 1,760 | |||||||||||||
| WIRELESS STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||||||||||
| Successor | Predecessor | ||||||||||||||||||||||||||||||
| QuarterTo Date | QuarterTo Date | YearTo Date | 10 DaysEnded | 191 DaysEnded | QuarterTo Date | YearTo Date | |||||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/13 | 7/10/13 | 7/10/13 | 12/31/12 | 12/31/12 | |||||||||||||||||||||||||
| Net Operating Revenues | |||||||||||||||||||||||||||||||
| Service revenue | |||||||||||||||||||||||||||||||
| Sprint platform: | |||||||||||||||||||||||||||||||
| Postpaid (3) | $ | 5,782 | $ | 5,201 | $ | 10,983 | $ | 634 | $ | 12,242 | $ | 5,674 | $ | 22,247 | |||||||||||||||||
| Prepaid (4) | 1,237 | 1,028 | 2,265 | 132 | 2,602 | 1,170 | 4,377 | ||||||||||||||||||||||||
| Wholesale, affiliate and other | 132 | 116 | 248 | 15 | 279 | 135 | 483 | ||||||||||||||||||||||||
| Total Sprint platform | 7,151 | 6,345 | 13,496 | 781 | 15,123 | 6,979 | 27,107 | ||||||||||||||||||||||||
| Nextel platform: | |||||||||||||||||||||||||||||||
| Postpaid (3) | – | – | – | – | 217 | 218 | 1,454 | ||||||||||||||||||||||||
| Prepaid (4) | – | – | – | – | 50 | 68 | 525 | ||||||||||||||||||||||||
| Total Nextel platform | – | – | – | – | 267 | 286 | 1,979 | ||||||||||||||||||||||||
| Transactions: | |||||||||||||||||||||||||||||||
| Postpaid (3) | 81 | 89 | 170 | 2 | 26 | – | – | ||||||||||||||||||||||||
| Prepaid (4) | 80 | 81 | 161 | 1 | 2 | – | – | ||||||||||||||||||||||||
| Wholesale | 10 | 8 | 18 | – | – | – | – | ||||||||||||||||||||||||
| Total transactions | 171 | 178 | 349 | 3 | 28 | – | – | ||||||||||||||||||||||||
| Equipment revenue | 1,161 | 636 | 1,797 | 74 | 1,707 | 1,010 | 3,248 | ||||||||||||||||||||||||
| Total net operating revenues | 8,483 | 7,159 | 15,642 | 858 | 17,125 | 8,275 | 32,334 | ||||||||||||||||||||||||
| Net Operating Expenses | |||||||||||||||||||||||||||||||
| Cost of services | 2,248 | 2,087 | 4,335 | 240 | 4,703 | 2,210 | 9,034 | ||||||||||||||||||||||||
| Cost of products | 2,731 | 1,872 | 4,603 | 281 | 4,872 | 2,993 | 9,905 | ||||||||||||||||||||||||
| Selling, general and administrative | 2,444 | 2,100 | 4,544 | 256 | 4,780 | 2,436 | 9,290 | ||||||||||||||||||||||||
| Depreciation and amortization | 1,470 | 1,338 | 2,808 | 110 | 3,029 | 1,391 | 6,128 | ||||||||||||||||||||||||
| Other, net | 187 | 93 | 280 | (5 | ) | 627 | 3 | 28 | |||||||||||||||||||||||
| Total net operating expenses | 9,080 | 7,490 | 16,570 | 882 | 18,011 | 9,033 | 34,385 | ||||||||||||||||||||||||
| Operating Loss | $ | (597 | ) | $ | (331 | ) | $ | (928 | ) | $ | (24 | ) | $ | (886 | ) | $ | (758 | ) | $ | (2,051 | ) | ||||||||||
| Supplemental Revenue Data | |||||||||||||||||||||||||||||||
| Total retail service revenue | $ | 7,180 | $ | 6,399 | $ | 13,579 | $ | 769 | $ | 15,139 | $ | 7,130 | $ | 28,603 | |||||||||||||||||
| Total service revenue | $ | 7,322 | $ | 6,523 | $ | 13,845 | $ | 784 | $ | 15,418 | $ | 7,265 | $ | 29,086 | |||||||||||||||||
| WIRELESS NON-GAAP RECONCILIATION (Unaudited) | |||||||||||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||||||||||
| Successor | Predecessor | ||||||||||||||||||||||||||||||
| QuarterTo Date | QuarterTo Date | YearTo Date | 10 DaysEnded | 191 DaysEnded | QuarterTo Date | YearTo Date | |||||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/13 | 7/10/13 | 7/10/13 | 12/31/12 | 12/31/12 | |||||||||||||||||||||||||
| Operating Loss | $ | (597 | ) | $ | (331 | ) | $ | (928 | ) | $ | (24 | ) | $ | (886 | ) | $ | (758 | ) | $ | (2,051 | ) | ||||||||||
| Severance and exit costs (7) | 187 | 93 | 280 | (5 | ) | 649 | (10 | ) | 196 | ||||||||||||||||||||||
| Gains from asset dispositions and exchanges (8) | – | – | – | – | – | – | (29 | ) | |||||||||||||||||||||||
| Asset impairments and abandonments(9) | – | – | – | – | – | 13 | 31 | ||||||||||||||||||||||||
| Spectrum hosting contract termination, net (10) | – | – | – | – | – | – | (170 | ) | |||||||||||||||||||||||
| Litigation (12) | – | – | – | – | (22 | ) | – | – | |||||||||||||||||||||||
| Business combinations (13) | – | 25 | 25 | – | – | – | – | ||||||||||||||||||||||||
| Hurricane Sandy (14) | (7 | ) | – | (7 | ) | – | – | 42 | 42 | ||||||||||||||||||||||
| Depreciation and amortization | 1,470 | 1,338 | 2,808 | 110 | 3,029 | 1,391 | 6,128 | ||||||||||||||||||||||||
| Adjusted EBITDA* | 1,053 | 1,125 | 2,178 | 81 | 2,770 | 678 | 4,147 | ||||||||||||||||||||||||
| Capital expenditures (2) | 1,716 | 1,527 | 3,243 | 156 | 3,590 | 1,786 | 4,884 | ||||||||||||||||||||||||
| Adjusted EBITDA* less Capex | $ | (663 | ) | $ | (402 | ) | $ | (1,065 | ) | $ | (75 | ) | $ | (820 | ) | $ | (1,108 | ) | $ | (737 | ) | ||||||||||
| Adjusted EBITDA Margin* | 14.4 | % | 17.2 | % | 15.7 | % | 10.3 | % | 18.0 | % | 9.3 | % | 14.2 | % | |||||||||||||||||
…
| WIRELESS STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||
| Combined (1) Quarter to Date | Combined (1) Year to Date | ||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||
| Net Operating Revenues | |||||||||||||||||||||||
| Service revenue | |||||||||||||||||||||||
| Sprint platform: | |||||||||||||||||||||||
| Postpaid (3) | $ | 5,782 | $ | 5,835 | $ | 5,674 | $ | 23,225 | $ | 22,247 | |||||||||||||
| Prepaid (4) | 1,237 | 1,160 | 1,170 | 4,867 | 4,377 | ||||||||||||||||||
| Wholesale, affiliate and other | 132 | 131 | 135 | 527 | 483 | ||||||||||||||||||
| Total Sprint platform | 7,151 | 7,126 | 6,979 | 28,619 | 27,107 | ||||||||||||||||||
| Nextel platform: | |||||||||||||||||||||||
| Postpaid (3) | – | – | 218 | 217 | 1,454 | ||||||||||||||||||
| Prepaid (4) | – | – | 68 | 50 | 525 | ||||||||||||||||||
| Total Nextel platform | – | – | 286 | 267 | 1,979 | ||||||||||||||||||
| Transactions: | |||||||||||||||||||||||
| Postpaid (3) | 81 | 91 | – | 196 | – | ||||||||||||||||||
| Prepaid (4) | 80 | 82 | – | 163 | – | ||||||||||||||||||
| Wholesale | 10 | 8 | – | 18 | – | ||||||||||||||||||
| Total transactions | 171 | 181 | – | 377 | – | ||||||||||||||||||
| Equipment revenue | 1,161 | 710 | 1,010 | 3,504 | 3,248 | ||||||||||||||||||
| Total net operating revenues | 8,483 | 8,017 | 8,275 | 32,767 | 32,334 | ||||||||||||||||||
| Net Operating Expenses | |||||||||||||||||||||||
| Cost of services | 2,248 | 2,327 | 2,210 | 9,038 | 9,034 | ||||||||||||||||||
| Cost of products | 2,731 | 2,153 | 2,993 | 9,475 | 9,905 | ||||||||||||||||||
| Selling, general and administrative | 2,444 | 2,356 | 2,436 | 9,324 | 9,290 | ||||||||||||||||||
| Depreciation and amortization | 1,470 | 1,448 | 1,391 | 5,837 | 6,128 | ||||||||||||||||||
| Other, net | 187 | 88 | 3 | 907 | 28 | ||||||||||||||||||
| Total net operating expenses | 9,080 | 8,372 | 9,033 | 34,581 | 34,385 | ||||||||||||||||||
| Operating Loss | $ | (597 | ) | $ | (355 | ) | $ | (758 | ) | $ | (1,814 | ) | $ | (2,051 | ) | ||||||||
| Supplemental Revenue Data | |||||||||||||||||||||||
| Total retail service revenue | $ | 7,180 | $ | 7,168 | $ | 7,130 | $ | 28,718 | $ | 28,603 | |||||||||||||
| Total service revenue | $ | 7,322 | $ | 7,307 | $ | 7,265 | $ | 29,263 | $ | 29,086 | |||||||||||||
| WIRELESS NON-GAAP RECONCILIATION (Unaudited) | |||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||
| Combined (1) Quarter to Date | Combined (1) Year to Date | ||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||
| Operating Loss | $ | (597 | ) | $ | (355 | ) | $ | (758 | ) | $ | (1,814 | ) | $ | (2,051 | ) | ||||||||
| Severance and exit costs (7) | 187 | 88 | (10 | ) | 929 | 196 | |||||||||||||||||
| Gains from asset dispositions and exchanges (8) | – | – | – | – | (29 | ) | |||||||||||||||||
| Asset impairments and abandonments (9) | – | – | 13 | – | 31 | ||||||||||||||||||
| Spectrum hosting contract termination, net (10) | – | – | – | – | (170 | ) | |||||||||||||||||
| Litigation (12) | – | – | – | (22 | ) | – | |||||||||||||||||
| Business combinations (13) | – | 25 | – | 25 | – | ||||||||||||||||||
| Hurricane Sandy (14) | (7 | ) | – | 42 | (7 | ) | 42 | ||||||||||||||||
| Depreciation and amortization | 1,470 | 1,448 | 1,391 | 5,837 | 6,128 | ||||||||||||||||||
| Adjusted EBITDA* | 1,053 | 1,206 | 678 | 4,948 | 4,147 | ||||||||||||||||||
| Capital expenditures (2) | 1,716 | 1,683 | 1,786 | 6,833 | 4,884 | ||||||||||||||||||
| Adjusted EBITDA* less Capex | $ | (663 | ) | $ | (477 | ) | $ | (1,108 | ) | $ | (1,885 | ) | $ | (737 | ) | ||||||||
| Adjusted EBITDA Margin* | 14.4 | % | 16.5 | % | 9.3 | % | 16.9 | % | 14.2 | % | |||||||||||||
| WIRELINE STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||||||||||
| Successor | Predecessor | ||||||||||||||||||||||||||||||
| QuarterTo Date | QuarterTo Date | YearTo Date | 10 DaysEnded | 191 DaysEnded | QuarterTo Date | YearTo Date | |||||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/13 | 7/10/13 | 7/10/13 | 12/31/12 | 12/31/12 | |||||||||||||||||||||||||
| Net Operating Revenues | |||||||||||||||||||||||||||||||
| Voice | $ | 386 | $ | 333 | $ | 719 | $ | 42 | $ | 771 | $ | 385 | $ | 1,627 | |||||||||||||||||
| Data | 81 | 57 | 138 | 7 | 188 | 96 | 398 | ||||||||||||||||||||||||
| Internet | 374 | 373 | 747 | 47 | 913 | 451 | 1,781 | ||||||||||||||||||||||||
| Other | 18 | 14 | 32 | 2 | 29 | 17 | 75 | ||||||||||||||||||||||||
| Total net operating revenues | 859 | 777 | 1,636 | 98 | 1,901 | 949 | 3,881 | ||||||||||||||||||||||||
| Net Operating Expenses | |||||||||||||||||||||||||||||||
| Costs of services and products | 659 | 576 | 1,235 | 72 | 1,402 | 671 | 2,784 | ||||||||||||||||||||||||
| Selling, general and administrative | 95 | 84 | 179 | 11 | 227 | 100 | 451 | ||||||||||||||||||||||||
| Depreciation and amortization | 62 | 61 | 123 | 10 | 213 | 102 | 412 | ||||||||||||||||||||||||
| Other, net | 20 | 10 | 30 | – | 3 | 5 | (12 | ) | |||||||||||||||||||||||
| Total net operating expenses | 836 | 731 | 1,567 | 93 | 1,845 | 878 | 3,635 | ||||||||||||||||||||||||
| Operating Income | $ | 23 | $ | 46 | $ | 69 | $ | 5 | $ | 56 | $ | 71 | $ | 246 | |||||||||||||||||
| WIRELINE NON-GAAP RECONCILIATION (Unaudited) | |||||||||||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||||||||||
| Successor | Predecessor | ||||||||||||||||||||||||||||||
| QuarterTo Date | QuarterTo Date | YearTo Date | 10 DaysEnded | 191 DaysEnded | QuarterTo Date | YearTo Date | |||||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/13 | 7/10/13 | 7/10/13 | 12/31/12 | 12/31/12 | |||||||||||||||||||||||||
| Operating Income | $ | 23 | $ | 46 | $ | 69 | $ | 5 | $ | 56 | $ | 71 | $ | 246 | |||||||||||||||||
| Severance and exit costs (7) | 20 | 10 | 30 | – | 3 | – | – | ||||||||||||||||||||||||
| Asset impairments and abandonments(8) | – | – | – | – | – | 5 | 5 | ||||||||||||||||||||||||
| Access costs (11) | – | – | – | – | – | – | (17 | ) | |||||||||||||||||||||||
| Hurricane Sandy (14) | – | – | – | – | – | 3 | 3 | ||||||||||||||||||||||||
| Depreciation and amortization | 62 | 61 | 123 | 10 | 213 | 102 | 412 | ||||||||||||||||||||||||
| Adjusted EBITDA* | 105 | 117 | 222 | 15 | 272 | 181 | 649 | ||||||||||||||||||||||||
| Capital expenditures (2) | 82 | 73 | 155 | 11 | 165 | 58 | 242 | ||||||||||||||||||||||||
| Adjusted EBITDA* less Capex | $ | 23 | $ | 44 | $ | 67 | $ | 4 | $ | 107 | $ | 123 | $ | 407 | |||||||||||||||||
| Adjusted EBITDA Margin* | 12.2 | % | 15.1 | % | 13.6 | % | 15.3 | % | 14.3 | % | 19.1 | % | 16.7 | % | |||||||||||||||||
| WIRELINE STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||
| Combined (1) Quarter to Date | Combined (1) Year to Date | ||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||
| Net Operating Revenues | |||||||||||||||||||||||
| Voice | $ | 386 | $ | 375 | $ | 385 | $ | 1,490 | $ | 1,627 | |||||||||||||
| Data | 81 | 64 | 96 | 326 | 398 | ||||||||||||||||||
| Internet | 374 | 420 | 451 | 1,660 | 1,781 | ||||||||||||||||||
| Other | 18 | 16 | 17 | 61 | 75 | ||||||||||||||||||
| Total net operating revenues | 859 | 875 | 949 | 3,537 | 3,881 | ||||||||||||||||||
| Net Operating Expenses | |||||||||||||||||||||||
| Costs of services and products | 659 | 648 | 671 | 2,637 | 2,784 | ||||||||||||||||||
| Selling, general and administrative | 95 | 95 | 100 | 406 | 451 | ||||||||||||||||||
| Depreciation and amortization | 62 | 71 | 102 | 336 | 412 | ||||||||||||||||||
| Other, net | 20 | 10 | 5 | 33 | (12 | ) | |||||||||||||||||
| Total net operating expenses | 836 | 824 | 878 | 3,412 | 3,635 | ||||||||||||||||||
| Operating Income | $ | 23 | $ | 51 | $ | 71 | $ | 125 | $ | 246 | |||||||||||||
| WIRELINE NON-GAAP RECONCILIATION (Unaudited) | |||||||||||||||||||||||
| (Millions) | |||||||||||||||||||||||
| Combined (1) Quarter to Date | Combined (1) Year to Date | ||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||||
| Operating Income | $ | 23 | $ | 51 | $ | 71 | $ | 125 | $ | 246 | |||||||||||||
| Severance and exit costs (7) | 20 | 10 | – | 33 | – | ||||||||||||||||||
| Asset impairments and abandonments (8) | – | – | 5 | – | 5 | ||||||||||||||||||
| Access costs (11) | – | – | – | – | (17 | ) | |||||||||||||||||
| Hurricane Sandy (14) | – | – | 3 | – | 3 | ||||||||||||||||||
| Depreciation and amortization | 62 | 71 | 102 | 336 | 412 | ||||||||||||||||||
| Adjusted EBITDA* | 105 | 132 | 181 | 494 | 649 | ||||||||||||||||||
| Capital expenditures (2) | 82 | 84 | 58 | 320 | 242 | ||||||||||||||||||
| Adjusted EBITDA* less Capex | $ | 23 | $ | 48 | $ | 123 | $ | 174 | $ | 407 | |||||||||||||
| Adjusted EBITDA Margin* | 12.2 | % | 15.1 | % | 19.1 | % | 14.0 | % | 16.7 | % | |||||||||||||
| CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited) | |||||||||||||||||||||||||||||||||
| (Millions) | Successor | Predecessor | |||||||||||||||||||||||||||||||
| Year | Year | ||||||||||||||||||||||||||||||||
| To | 87 Days | 191 Days | To | ||||||||||||||||||||||||||||||
| Date | Ended | Ended | Date | ||||||||||||||||||||||||||||||
| 12/31/13 | 12/31/12 | 7/10/13 | 12/31/12 | ||||||||||||||||||||||||||||||
| Operating Activities | |||||||||||||||||||||||||||||||||
| Net loss | $ | (1,860 | ) | $ | (27 | ) | $ | (1,158 | ) | $ | (4,325 | ) | |||||||||||||||||||||
| Depreciation and amortization | 2,934 | – | 3,245 | 6,543 | |||||||||||||||||||||||||||||
| Provision for losses on accounts receivable | 261 | – | 194 | 561 | |||||||||||||||||||||||||||||
| Share-based and long-term incentive compensation expense | 98 | – | 37 | 82 | |||||||||||||||||||||||||||||
| Deferred income taxes | 32 | 1 | 1,586 | 209 | |||||||||||||||||||||||||||||
| Gain on previously-held equity interests | – | – | (2,926 | ) | – | ||||||||||||||||||||||||||||
| Equity in losses of unconsolidated investments, net | – | – | 482 | 1,114 | |||||||||||||||||||||||||||||
| Interest expense related to beneficial conversion feature on convertible bond | – | – | 247 | – | |||||||||||||||||||||||||||||
| Contribution to pension plan | (7 | ) | – | – | (108 | ) | |||||||||||||||||||||||||||
| Spectrum hosting contract termination, net (10) | – | – | – | (170 | ) | ||||||||||||||||||||||||||||
| Call premiums on debt redemptions | (180 | ) | – | – | – | ||||||||||||||||||||||||||||
| Amortization and accretion of long-term debt premiums and discounts | (160 | ) | – | 9 | 4 | ||||||||||||||||||||||||||||
| Other working capital changes, net | (924 | ) | (3 | ) | 728 | (802 | ) | ||||||||||||||||||||||||||
| Other, net | (255 | ) | 29 | 227 | (109 | ) | |||||||||||||||||||||||||||
| Net cash (used in) provided by operating activities | (61 | ) | – | 2,671 | 2,999 | ||||||||||||||||||||||||||||
| Investing Activities | |||||||||||||||||||||||||||||||||
| Capital expenditures (2) | (3,847 | ) | – | (3,140 | ) | (4,261 | ) | ||||||||||||||||||||||||||
| Expenditures relating to FCC licenses | (146 | ) | – | (125 | ) | (198 | ) | ||||||||||||||||||||||||||
| Change in short-term investments, net | (4 | ) | – | 1,224 | (1,699 | ) | |||||||||||||||||||||||||||
| Acquisitions, net of cash acquired | (14,112 | ) | – | (4,039 | ) | – | |||||||||||||||||||||||||||
| Investment and derivative in Sprint Communications, Inc. | – | (3,100 | ) | – | – | ||||||||||||||||||||||||||||
| Investment in Clearwire (including debt securities) | – | – | (308 | ) | (228 | ) | |||||||||||||||||||||||||||
| Other, net | 1 | – | 3 | 11 | |||||||||||||||||||||||||||||
| Net cash used in investing activities | (18,108 | ) | (3,100 | ) | (6,385 | ) | (6,375 | ) | |||||||||||||||||||||||||
| Financing Activities | |||||||||||||||||||||||||||||||||
| Proceeds from debt and financings | 9,500 | – | 204 | 9,176 | |||||||||||||||||||||||||||||
| Debt financing costs | (147 | ) | – | (11 | ) | (134 | ) | ||||||||||||||||||||||||||
| Repayments of debt and capital lease obligations | (3,378 | ) | – | (362 | ) | (4,791 | ) | ||||||||||||||||||||||||||
| Proceeds from issuance of common stock and warrants, net | 18,567 | 3,105 | 60 | 29 | |||||||||||||||||||||||||||||
| Other, net | (14 | ) | – | – | – | ||||||||||||||||||||||||||||
| Net cash provided by (used in) financing activities | 24,528 | 3,105 | (109 | ) | 4,280 | ||||||||||||||||||||||||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 6,359 | 5 | (3,823 | ) | 904 | ||||||||||||||||||||||||||||
| Cash and Cash Equivalents, beginning of period | 5 | – | 6,351 | 5,447 | |||||||||||||||||||||||||||||
| Cash and Cash Equivalents, end of period | $ | 6,364 | $ | 5 | $ | 2,528 | $ | 6,351 | |||||||||||||||||||||||||
| RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited) | |||||||||||||||||||||||||||||||||
| (Millions) | Successor | Predecessor | |||||||||||||||||||||||||||||||
| Quarter | Quarter | Year | Quarter | Year | |||||||||||||||||||||||||||||
| To | To | To | 87 Days | 10 Days | 191 Days | To | To | ||||||||||||||||||||||||||
| Date | Date | Date | Ended | Ended | Ended | Date | Date | ||||||||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/13 | 12/31/12 | 7/10/13 | 7/10/13 | 12/31/12 | 12/31/12 | ||||||||||||||||||||||||||
| Net Cash (Used in) Provided by Operating Activities | $ | (761 | ) | $ | 694 | $ | (61 | ) | $ | – | $ | 496 | $ | 2,671 | $ | 216 | $ | 2,999 | |||||||||||||||
| Capital expenditures (2) | (1,969 | ) | (1,878 | ) | (3,847 | ) | – | (188 | ) | (3,140 | ) | (1,477 | ) | (4,261 | ) | ||||||||||||||||||
| Expenditures relating to FCC licenses, net | (115 | ) | (31 | ) | (146 | ) | – | (2 | ) | (125 | ) | (46 | ) | (198 | ) | ||||||||||||||||||
| Other investing activities, net | 1 | – | 1 | – | – | 3 | (2 | ) | 11 | ||||||||||||||||||||||||
| Free Cash Flow* | (2,844 | ) | (1,215 | ) | (4,053 | ) | – | 306 | (591 | ) | (1,309 | ) | (1,449 | ) | |||||||||||||||||||
| Debt financing costs | (40 | ) | (107 | ) | (147 | ) | – | – | (11 | ) | (44 | ) | (134 | ) | |||||||||||||||||||
| (Decrease) increase in debt and other, net | (207 | ) | 6,329 | 6,122 | – | – | (158 | ) | 3,316 | 4,385 | |||||||||||||||||||||||
| Acquisitions, net of cash acquired | – | (14,112 | ) | (14,112 | ) | – | (3,530 | ) | (4,039 | ) | – | – | |||||||||||||||||||||
| Proceeds from issuance of common stock and warrants, net | 15 | 18,552 | 18,567 | 3,105 | 9 | 60 | 8 | 29 | |||||||||||||||||||||||||
| Increase in restricted cash | 3,050 | (3,050 | ) | – | – | – | – | – | – | ||||||||||||||||||||||||
| Investment in Clearwire (including debt securities) | – | – | – | – | (68 | ) | (308 | ) | (100 | ) | (228 | ) | |||||||||||||||||||||
| Investment and derivative in Sprint Communications, Inc. | – | – | – | (3,100 | ) | – | – | – | – | ||||||||||||||||||||||||
| Other financing activities, net | 1 | (14 | ) | (14 | ) | – | – | – | – | – | |||||||||||||||||||||||
| Net (Decrease) Increase in Cash, Cash Equivalents and Short-Term Investments | $ | (25 | ) | $ | 6,383 | $ | 6,363 | $ | 5 | $ | (3,283 | ) | $ | (5,047 | ) | $ | 1,871 | $ | 2,603 | ||||||||||||||
| CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited) | |||||||||||||||||||||
| (Millions) | |||||||||||||||||||||
| Combined (1) Year to Date | |||||||||||||||||||||
| 12/31/13 | 12/31/12 | ||||||||||||||||||||
| Operating Activities | |||||||||||||||||||||
| Net loss | $ | (3,018 | ) | $ | (4,352 | ) | |||||||||||||||
| Depreciation and amortization | 6,179 | 6,543 | |||||||||||||||||||
| Provision for losses on accounts receivable | 455 | 561 | |||||||||||||||||||
| Share-based and long-term incentive compensation expense | 135 | 82 | |||||||||||||||||||
| Deferred income taxes | 1,618 | 210 | |||||||||||||||||||
| Gain on previously-held equity interests | (2,926 | ) | – | ||||||||||||||||||
| Equity in losses of unconsolidated investments, net | 482 | 1,114 | |||||||||||||||||||
| Interest expense related to beneficial conversion feature on convertible bond | 247 | – | |||||||||||||||||||
| Contribution to pension plan | (7 | ) | (108 | ) | |||||||||||||||||
| Spectrum hosting contract termination, net (10) | – | (170 | ) | ||||||||||||||||||
| Call premiums on debt redemptions | (180 | ) | – | ||||||||||||||||||
| Amortization and accretion of long-term debt premiums and discounts | (151 | ) | 4 | ||||||||||||||||||
| Other working capital changes, net | (196 | ) | (805 | ) | |||||||||||||||||
| Other, net | (28 | ) | (80 | ) | |||||||||||||||||
| Net cash provided by operating activities | 2,610 | 2,999 | |||||||||||||||||||
| Investing Activities | |||||||||||||||||||||
| Capital expenditures (2) | (6,987 | ) | (4,261 | ) | |||||||||||||||||
| Expenditures relating to FCC licenses | (271 | ) | (198 | ) | |||||||||||||||||
| Change in short-term investments, net | 1,220 | (1,699 | ) | ||||||||||||||||||
| Acquisitions, net of cash acquired | (18,151 | ) | – | ||||||||||||||||||
| Investment and derivative in Sprint Communications, Inc. | – | (3,100 | ) | ||||||||||||||||||
| Investment in Clearwire (including debt securities) | (308 | ) | (228 | ) | |||||||||||||||||
| Other, net | 4 | 11 | |||||||||||||||||||
| Net cash used in investing activities | (24,493 | ) | (9,475 | ) | |||||||||||||||||
| Financing Activities | |||||||||||||||||||||
| Proceeds from debt and financings | 9,704 | 9,176 | |||||||||||||||||||
| Debt financing costs | (158 | ) | (134 | ) | |||||||||||||||||
| Repayments of debt and capital lease obligations | (3,740 | ) | (4,791 | ) | |||||||||||||||||
| Proceeds from issuance of common stock and warrants, net | 18,627 | 3,134 | |||||||||||||||||||
| Other, net | (14 | ) | – | ||||||||||||||||||
| Net cash provided by financing activities | 24,419 | 7,385 | |||||||||||||||||||
| Net Increase in Cash and Cash Equivalents | 2,536 | 909 | |||||||||||||||||||
| Cash and Cash Equivalents, beginning of period | 3,828 | 5,447 | |||||||||||||||||||
| Cash and Cash Equivalents, end of period | $ | 6,364 | $ | 6,356 | |||||||||||||||||
| RECONCILIATION TO CONSOLIDATED FREE CASH FLOW* (NON-GAAP) (Unaudited) | |||||||||||||||||||||
| (Millions) | |||||||||||||||||||||
| Combined (1) Quarter to Date | Combined (1) Year to Date | ||||||||||||||||||||
| 12/31/13 | 9/30/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||||||||||
| Net Cash (Used in) Provided by Operating Activities | $ | (761 | ) | $ | 1,190 | $ | 216 | $ | 2,610 | $ | 2,999 | ||||||||||
| Capital expenditures (2) | (1,969 | ) | (2,066 | ) | (1,477 | ) | (6,987 | ) | (4,261 | ) | |||||||||||
| Expenditures relating to FCC licenses, net | (115 | ) | (33 | ) | (46 | ) | (271 | ) | (198 | ) | |||||||||||
| Other investing activities, net | 1 | – | (2 | ) | 4 | 11 | |||||||||||||||
| Free Cash Flow* | (2,844 | ) | (909 | ) | (1,309 | ) | (4,644 | ) | (1,449 | ) | |||||||||||
| – | – | ||||||||||||||||||||
| Debt financing costs | (40 | ) | (107 | ) | (44 | ) | (158 | ) | (134 | ) | |||||||||||
| (Decrease) increase in debt and other, net | (207 | ) | 6,329 | 3,316 | 5,964 | 4,385 | |||||||||||||||
| Acquisitions, net of cash acquired | – | (17,642 | ) | – | (18,151 | ) | – | ||||||||||||||
| Proceeds from issuance of common stock and warrants, net | 15 | 18,561 | 3,113 | 18,627 | 3,134 | ||||||||||||||||
| Increase in restricted cash | 3,050 | (3,050 | ) | – | – | – | |||||||||||||||
| Investment in Clearwire (including debt securities) | – | (68 | ) | (100 | ) | – | (228 | ) | |||||||||||||
| Investment and derivative in Sprint Communications, Inc. | – | – | (3,100 | ) | (308 | ) | (3,100 | ) | |||||||||||||
| Other financing activities, net | 1 | (14 | ) | – | (14 | ) | – | ||||||||||||||
| Net (Decrease) Increase in Cash, Cash Equivalents and Short-Term Investments
| $ | (25 | ) | $ | 3,100 | $ | 1,876 | $ | 1,316 | $ | 2,608 | ||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||||||||
| (Millions) | |||||||||||||
| Successor | Predecessor | ||||||||||||
| 12/31/13 | 12/31/12 | 12/31/12 | |||||||||||
| Assets | |||||||||||||
| Current assets | |||||||||||||
| Cash and cash equivalents | $ | 6,364 | $ | 5 | $ | 6,351 | |||||||
| Short-term investments | 1,105 | – | 1,849 | ||||||||||
| Accounts and notes receivable, net | 3,570 | 6 | 3,658 | ||||||||||
| Device and accessory inventory | 1,205 | – | 1,200 | ||||||||||
| Deferred tax assets | 186 | – | 1 | ||||||||||
| Prepaid expenses and other current assets | 628 | – | 700 | ||||||||||
| Total current assets | 13,058 | 11 | 13,759 | ||||||||||
| Investments and other assets | 601 | 3,104 | 1,833 | ||||||||||
| Property, plant and equipment, net | 16,164 | – | 13,607 | ||||||||||
| Goodwill | 6,434 | – | 359 | ||||||||||
| FCC licenses and other | 41,824 | – | 20,677 | ||||||||||
| Definite-lived intangible assets, net | 8,014 | – | 1,335 | ||||||||||
| Total | $ | 86,095 | $ | 3,115 | $ | 51,570 | |||||||
| Liabilities and Shareholders’ Equity | |||||||||||||
| Current liabilities | |||||||||||||
| Accounts payable | $ | 3,312 | $ | – | $ | 3,487 | |||||||
| Accrued expenses and other current liabilities | 6,363 | 4 | 5,008 | ||||||||||
| Current portion of long-term debt, financing and capital lease obligations | 994 | – | 379 | ||||||||||
| Total current liabilities | 10,669 | 4 | 8,874 | ||||||||||
| Long-term debt, financing and capital lease obligations | 32,017 | – | 23,962 | ||||||||||
| Deferred tax liabilities | 14,227 | 1 | 7,047 | ||||||||||
| Other liabilities | 3,598 | – | 4,600 | ||||||||||
| Total liabilities | 60,511 | 5 | 44,483 | ||||||||||
| Shareholders’ equity | |||||||||||||
| Common shares | 39 | – | 6,019 | ||||||||||
| Paid-in capital | 27,330 | 3,137 | 47,016 | ||||||||||
| Accumulated deficit | (1,887 | ) | (27 | ) | (44,815 | ) | |||||||
| Accumulated other comprehensive loss | 102 | – | (1,133 | ) | |||||||||
| Total shareholders’ equity | 25,584 | 3,110 | 7,087 | ||||||||||
| Total | $ | 86,095 | $ | 3,115 | $ | 51,570 | |||||||
| NET DEBT* (NON-GAAP) (Unaudited) | |||||||||||||
| (Millions) | |||||||||||||
| Successor | Predecessor | ||||||||||||
| 12/31/13 | 12/31/12 | 12/31/12 | |||||||||||
| Total Debt | $ | 33,011 | $ | – | $ | 24,341 | |||||||
| Less: Cash and cash equivalents | (6,364 | ) | – | (6,351 | ) | ||||||||
| Less: Short-term investments | (1,105 | ) | – | (1,849 | ) | ||||||||
| Net Debt* | $ | 25,542 | $ | – | $ | 16,141 | |||||||
| SCHEDULE OF DEBT (Unaudited) | |||||||
| (Millions) | |||||||
| 12/31/13 | |||||||
| ISSUER | COUPON | MATURITY | PRINCIPAL | ||||
| Sprint Corporation | |||||||
| 7.25% Notes due 2021 | 7.250% | 09/15/2021 | $ 2,250 | ||||
| 7.875% Notes due 2023 | 7.875% | 09/15/2023 | 4,250 | ||||
| 7.125% Notes due 2024 | 7.125% | 06/15/2024 | 2,500 | ||||
| Sprint Corporation | 9,000 | ||||||
| Sprint Communications, Inc. | |||||||
| Export Development Canada Facility (Tranche 2) | 3.618% | 12/15/2015 | 500 | ||||
| 6% Senior Notes due 2016 | 6.000% | 12/01/2016 | 2,000 | ||||
| 9.125% Senior Notes due 2017 | 9.125% | 03/01/2017 | 1,000 | ||||
| 8.375% Senior Notes due 2017 | 8.375% | 08/15/2017 | 1,300 | ||||
| 9% Guaranteed Notes due 2018 | 9.000% | 11/15/2018 | 3,000 | ||||
| 7% Guaranteed Notes due 2020 | 7.000% | 03/01/2020 | 1,000 | ||||
| 7% Senior Notes due 2020 | 7.000% | 08/15/2020 | 1,500 | ||||
| 11.5% Senior Notes due 2021 | 11.500% | 11/15/2021 | 1,000 | ||||
| 9.25% Debentures due 2022 | 9.250% | 04/15/2022 | 200 | ||||
| 6% Senior Notes due 2022 | 6.000% | 11/15/2022 | 2,280 | ||||
| Sprint Communications, Inc. | 13,780 | ||||||
| Sprint Capital Corporation | |||||||
| 6.9% Senior Notes due 2019 | 6.900% | 05/01/2019 | 1,729 | ||||
| 6.875% Senior Notes due 2028 | 6.875% | 11/15/2028 | 2,475 | ||||
| 8.75% Senior Notes due 2032 | 8.750% | 03/15/2032 | 2,000 | ||||
| Sprint Capital Corporation | 6,204 | ||||||
| Clearwire Communications LLC | |||||||
| 14.75% First-Priority Senior Secured Notes due 2016 | 14.750% | 12/01/2016 | 300 | ||||
| 8.25% Exchangeable Notes due 2040 | 8.250% | 12/01/2040 | 629 | ||||
| Clearwire Communications LLC | 929 | ||||||
| iPCS Inc. | |||||||
| Second Lien Senior Secured Floating Rate Notes due 2014 | 3.492% | 05/01/2014 | 181 | ||||
| iPCS Inc. | 181 | ||||||
| EKN Secured Equipment Facility ($1 Billion) | 2.030% | 03/30/2017 | 889 | ||||
| Vendor financing notes – Clearwire Communications LLC | 2015 | 20 | |||||
| Tower financing obligation | 6.092% | 09/30/2021 | 339 | ||||
| Capital lease obligations and other | 2014 – 2022 | 187 | |||||
| TOTAL PRINCIPAL | 31,529 | ||||||
| Net premiums | 1,482 | ||||||
| TOTAL DEBT | $ 33,011 | ||||||
Supplemental information:
The Company had $2.1 billion of borrowing capacity available under our unsecured revolving bank credit facility as of December 31, 2013. Our unsecured revolving bank credit facility expires in February 2018.
In May 2012, certain of our subsidiaries entered into a $1.0 billion secured equipment credit facility to finance equipment-related purchases for Network Vision. The facility is equally divided into two consecutive tranches of $500 million, with the drawdown availability contingent upon Sprint’s acquisition of equipment-related purchases from Ericsson, up to the maximum of each tranche, ending on May 31, 2013 and May 31, 2014, for the first and second tranche, respectively. Interest and principal are payable semi-annually with a final maturity of March 2017 for both tranches.
NOTES TO THE FINANCIAL INFORMATION (Unaudited)
(1) Except for the quarter-to-date December 31, 2013 period, financial results for 2013 and 2012 include a Predecessor period from January 1, 2012, through the closing of the SoftBank transaction on July 10, 2013, and a Successor period from October 5, 2012 through December 31, 2013. In order to present financial results in a way that offers investors a more meaningful calendar period-to-period comparison, we have combined the current year results of operations for the Predecessor and Successor periods. For purposes of presenting the comparative financial information in the tables, we have labeled the quarter-to-date December 31, 2013 period as Combined, however, these results are not combined but rather represent the consolidated results of operations in accordance with accounting principles generally accepted in the United States (GAAP).
(2) Capital expenditures is an accrual based amount that includes the changes in unpaid capital expenditures and excludes capitalized interest. Cash paid for capital expenditures includes total capitalized interest of $1 million, $13 million and $29 million for the predecessor third and second quarters and year-to-date periods of 2013, respectively, $16 million, $14 million and $30 million for the successor fourth and third quarters and year-to-date periods of 2013, respectively, and $52 million, $102 million, and $269 million for the third and second quarters and year-to-date periods of 2012, respectively, and can be found in the Condensed Consolidated Cash Flow Information and the Reconciliation to Free Cash Flow*.
(3) Postpaid subscribers on the Sprint platform are defined as retail subscribers on the CDMA network, including subscribers utilizing WiMax and LTE technology. Postpaid subscribers previously on the Nextel platform are defined as retail postpaid subscribers on the iDEN network through June 30, 2013. Postpaid subscribers from transactions are defined as retail postpaid subscribers acquired from U.S. Cellular in May 2013 and Clearwire in July 2013 who had not deactivated or been recaptured on the Sprint platform. Included in net additions for the Sprint platform are tablets and connected devices, which generally generate a significantly lower ARPU than other postpaid subscribers. During the fourth quarter 2013, net additions for the Sprint platform included approximately 466,000 tablets.
(4) Prepaid subscribers on the Sprint platform are defined as retail prepaid subscribers and session-based tablet users who utilize the CDMA network and WiMax and LTE technology via our multi-brand offerings. Prepaid subscribers previously on the Nextel platform are defined as retail prepaid subscribers who utilized iDEN technology through June 30, 2013. Prepaid subscribers from transactions are defined as retail prepaid subscribers acquired from U.S. Cellular in May 2013 and Clearwire in July 2013 who had not deactivated or been recaptured on the Sprint platform.
(5) Nextel Subscriber Recaptures are defined as the number of subscribers that deactivated service from the postpaid or prepaid Nextel platform, as applicable, during each period but remained with the Company as subscribers on the postpaid or prepaid Sprint platform, respectively. Subscribers that deactivated service from the Nextel platform and activated service on the Sprint platform are included in the Sprint platform net additions for the applicable period.
(6) The Postpaid and Prepaid Nextel Recapture Rates are defined as the portion of total subscribers that left the postpaid or prepaid Nextel platform, as applicable, during the period and were retained on the postpaid or prepaid Sprint platform, respectively.
(7) Severance and lease exit costs are primarily associated with workforce reductions and with exit costs associated with the Nextel platform and acquisition of Clearwire.
(8) For the first quarter of 2012, gains from asset dispositions and exchanges are primarily due to spectrum exchange transactions.
(9) For the first quarter of 2012, asset impairment and abandonment activity includes $18 million related to a change in our backhaul architecture in connection to our Network Vision design from microwave to a more cost effective fiber backhaul.
(10) On March 16, 2012, we elected to terminate the arrangement with LightSquared LP and LightSquared, Inc. (LightSquared). As we have no future service obligations with respect to the arrangement with LightSquared, we recognized $236 million of the advanced payments as other operating income in the first quarter of 2012. As a result of the termination of the hosting agreement, we impaired capitalized costs specific to LightSquared’s 1.6 GHz spectrum that the company no longer intends to deploy which totaled $66 million.
(11) Favorable developments during the first quarter of 2012 relating to disagreements with local exchange carriers resulted in a reduction in expected access costs of $17 million.
(12) For the first quarter of 2013, litigation activity is primarily a result of favorable developments in connection with a tax (non-income) related contingency.
(13) For the third and second quarters of 2013, included in selling, general and administrative expenses are fees paid to unrelated parties for the transaction with SoftBank and our acquisition of Clearwire.
(14) Hurricane Sandy amounts for the fourth quarter and year-to-date periods of 2013 represent insurance recoveries. Hurricane Sandy charges for the fourth quarter of 2012, represent estimated hurricane-related charges of $45 million, consisting of customer credits, incremental roaming costs, network repairs and replacements.
*FINANCIAL MEASURES
On July 9, 2013, Sprint Communications, Inc. (formerly Sprint Nextel Corporation) completed its acquisition of Clearwire. On July 10, 2013 we consummated the SoftBank Merger with Starburst II, which immediately changed its name to Sprint Corporation (now referred to as the Company or Sprint). As a result of these transactions, the assets and liabilities of Sprint Communications, Inc. and Clearwire were adjusted to fair value on the respective closing dates. The Company’s financial statement presentations herein distinguish between a predecessor period relating to Sprint Communications, Inc. for periods prior to the SoftBank Merger (Predecessor) and a successor period (Successor). The Successor information includes the activity and accounts of Sprint Corporation as of and for the three and twelve month periods ended December 31, 2013 and as of and for the 87 days ended December 31, 2012, which includes the activity and accounts of Sprint Communications, Inc., prospectively, beginning on July 11, 2013. The Predecessor information contained herein represents the historical basis of presentation for Sprint Communications, Inc. for all periods prior to the SoftBank Merger date on July 10, 2013. As a result of the valuation of assets acquired and liabilities assumed at fair value at the time of the SoftBank Merger and Clearwire Acquisition, the financial statements for the successor period are presented on a measurement basis different than the predecessor period, which was Sprint Communication’s historical cost, and are, therefore, not comparable.
In order to present financial results in a way that offers investors a more meaningful calendar period-to-period comparison, we have combined the current and prior year results of operations for the predecessor with successor results of operations on an unaudited combined basis. The combined information for the period October 5, 2012 (date of Starburst II incorporation) through December 31, 2013 does not purport to represent what our consolidated results of operations would have been if the acquisition had occurred as of the beginning of the first period presented. For purposes of presenting the comparative financial information in the tables, we have labeled the quarter-to-date December 31, 2013 results as combined, however, these results are not combined but rather represent the consolidated results of operations in accordance with accounting principles generally accepted in the United States (GAAP).
Sprint provides financial measures determined in accordance with GAAP and adjusted GAAP (non-GAAP). The non-GAAP financial measures reflect industry conventions, or standard measures of liquidity, profitability or performance commonly used by the investment community for comparability purposes. These measurements should be considered in addition to, but not as a substitute for, financial information prepared in accordance with GAAP. Other than the use of non-GAAP combined results as described above, we have defined below each of the non-GAAP measures we use, but these measures may not be synonymous to similar measurement terms used by other companies.
Sprint provides reconciliations of these non-GAAP measures in its financial reporting. Because Sprint does not predict special items that might occur in the future, and our forecasts are developed at a level of detail different than that used to prepare GAAP-based financial measures, Sprint does not provide reconciliations to GAAP of its forward-looking financial measures.
The measures used in this release include the following:
EBITDA is operating income/(loss) before depreciation and amortization. Adjusted EBITDA is EBITDAexcluding severance, exit costs, and other special items. Adjusted EBITDA Margin represents Adjusted EBITDA divided by non-equipment net operating revenues for Wireless and Adjusted EBITDA divided by net operating revenues for Wireline. We believe that Adjusted EBITDA and Adjusted EBITDA Margin provide useful information to investors because they are an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, spectrum acquisitions and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent non-cash current period costs associated with the use of long-lived tangible and definite-lived intangible assets. Adjusted EBITDA and Adjusted EBITDA Margin are calculations commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the telecommunications industry.
Free Cash Flow is the cash provided by operating activities less the cash used in investing activities other than short-term investments, including changes in restricted cash, and amounts included as investments in Clearwire and Sprint Communications, Inc. during the period. We believe that Free Cash Flow provides useful information to investors, analysts and our management about the cash generated by our core operations after interest and dividends, if any, and our ability to fund scheduled debt maturities and other financing activities, including discretionary refinancing and retirement of debt and purchase or sale of investments.
Net Debt is consolidated debt, including current maturities, less cash and cash equivalents, short-term investments and if any, restricted cash. We believe that Net Debt provides useful information to investors, analysts and credit rating agencies about the capacity of the company to reduce the debt load and improve its capital structure.
SAFE HARBOR
This release includes “forward-looking statements” within the meaning of the securities laws. The words “may,” “could,” “should,” “estimate,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “target,” “plan,” “providing guidance,” and similar expressions are intended to identify information that is not historical in nature. All statements that address operating performance, events or developments that we expect or anticipate will occur in the future — including statements relating to our network, subscriber growth, and liquidity, and statements expressing general views about future operating results — are forward-looking statements. Forward-looking statements are estimates and projections reflecting management’s judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, the ability to operationalize the anticipated benefits from the SoftBank, Clearwire and U.S. Cellular transactions, the development and deployment of new technologies; efficiencies and cost savings of new technologies and services; customer and network usage; customer growth and retention; service, speed, coverage and quality; availability of devices; the timing of various events and the economic environment. Sprint believes these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date when made. Sprint undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. In addition, forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our company’s historical experience and our present expectations or projections. Factors that might cause such differences include, but are not limited to, those discussed in Sprint Nextel’s Annual Report on Form 10-K for the year ended December 31, 2012, our Quarterly Report on Form 10-Q for the second quarter of 2013, our Quarterly Report on Form 10-Q for the quarter ended September 30, 2013, and when filed our Annual Report on Form 10-K for the year ended December 31, 2013. You should understand that it is not possible to predict or identify all such factors. Consequently, you should not consider any such list to be a complete set of all potential risks or uncertainties.
About Sprint
Sprint (NYSE:S) offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint served more than 55 million customers at the end of 2013 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. The American Customer Satisfaction Index rated Sprint as the most improved company in customer satisfaction, across all 47 industries, during the last five years. Sprint has been named to the Dow Jones Sustainability Index (DSJI) North America in 2011, 2012 and 2013. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.
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i Sprint Spark actual deployment plans and speeds will be determined over time based on many factors, including build economics and the availability of equipment, devices and applications.
Media Contact:
Scott Sloat, 240-855-0164
scott.sloat@sprint.com
or
Investor Contact:
Brad Hampton, 800-259-3755
investor.relations@sprint.com
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