Sprint Corp. (S) Announces Q1 Results; Reports 173k Postpaid Net Sub Adds
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Sprint Corporation (NYSE: S) 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) |
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