• | Best ever Sprint platform postpaid ARPU increase of $4.03, or 6.9 percent, year-over-year drives Sprint platform wireless service revenue growth of 16 percent year-over-year |
• | Operating loss of $255 million; Adjusted OIBDA* of $1.2 billion, which includes $104 million in Network Vision related operating expense |
• | 263,000 postpaid net additions on the Sprint platform in the quarter - eighth consecutive quarter of postpaid subscriber growth on the Sprint platform |
• | Total company net additions of more than 1 million for the sixth consecutive quarter |
• | Strong iPhone sales of more than 1.5 million - 44 percent to new customers |
• | Network Vision deployment continues on track |
◦ | Continue to expect six major cities to launch 4G LTE by mid-year |
◦ | Continue to expect 12,000 sites on air by end of 2012 |
◦ | To date work has begun on 25 percent of planned 2012 sites; 5 percent are on air |
◦ | Nearly 1,300 iDEN sites taken off air to date; expect 9,600 total by the end of the third quarter |
Quarter To Date | ||||||||||
Financial Data | March 31, 2012 | March 31, 2011 | % r | |||||||
Net operating revenues | $ | 8,734 | $ | 8,313 | 5 % | |||||
Operating (loss) income | $ | (255 | ) | $ | 259 | NM | ||||
Adjusted OIBDA* | $ | 1,213 | $ | 1,514 | (20) % | |||||
Adjusted OIBDA margin* | 15.2 % | 19.9 % | ||||||||
Net loss (1) | $ | (863 | ) | $ | (439 | ) | (97) % | |||
Diluted net loss per common share (1) | $ | (0.29 | ) | $ | (0.15 | ) | (93) % | |||
Capital expenditures (2) | $ | 800 | $ | 555 | 44 % | |||||
Net cash provided by operating activities | $ | 978 | $ | 919 | 6 % | |||||
Free Cash Flow* | $ | 138 | $ | 178 | (22) % |
• | Consolidated net operating revenues of $8.7 billion for the quarter were 5 percent higher than in the first quarter of 2011 and nearly unchanged from the fourth quarter of 2011. The quarterly year-over-year improvement was primarily due to higher wireless service revenues, partially offset by a reduction in wireline revenue. Sequentially, higher wireless service revenues were offset by lower wireless equipment revenue and lower wireline revenue. |
• | Operating loss was $255 million compared to operating income of $259 million for the first quarter of 2011 and an operating loss of $438 million for fourth quarter of 2011. The quarterly year-over-year and sequential impacts to operating loss were driven by items identified below in Adjusted OIBDA* coupled with a first quarter 2012 increase in depreciation expense resulting primarily from accelerated depreciation related to the expected decommissioning of the Nextel network and a one-time net gain associated with the termination of our spectrum hosting contract in the first quarter of 2012. |
• | Adjusted OIBDA* was $1.2 billion for the quarter, compared to $1.5 billion for the first quarter of 2011 and $842 million in the fourth quarter of 2011. The quarterly year-over-year decline in Adjusted OIBDA* was primarily due to higher equipment net subsidy, higher wireless cost of service and lower wireline revenues, partially offset by higher postpaid and prepaid wireless service revenues. Sequentially, Adjusted OIBDA* increased primarily as a result of higher wireless service revenues and lower equipment net subsidy and sales expense primarily associated with fewer handset sales. |
• | Capital expenditures(2), excluding capitalized interest of $115 million, were $800 million in the quarter, compared to $555 million in the first quarter of 2011 and $900 million in the fourth quarter of 2011. Wireless capital expenditures were $710 million in the first quarter of 2012, compared to $449 million in the first quarter of 2011 and $774 million in the fourth quarter of 2011. During the quarter, the company invested approximately $315 million for our Network Vision program and approximately $250 million in data capacity related to both legacy network and Network Vision equipment. Wireline capital expenditures were $45 million in the first quarter of 2012, compared to $53 million in the first quarter of 2011 and $34 million in the fourth quarter of 2011. Corporate capital expenditures were $45 million in the first quarter of 2012, compared to $53 million in the first quarter of 2011 and $92 million in the fourth quarter of 2011, primarily related to IT infrastructure to support our Wireless and Wireline businesses. |
• | Net cash provided by operating activities was $978 million for the quarter, compared to $919 million for the first quarter of 2011 and $1.1 billion for the fourth quarter of 2011. |
• | Free Cash Flow* was $138 million for the quarter, compared to $178 million for the first quarter of 2011 and $257 million for the fourth quarter of 2011. |
• | The company served more than 56 million customers at the end of the first quarter of 2012. This includes 32.8 million postpaid subscribers (29 million on the Sprint platform and 3.8 million on the Nextel platform), 15.3 million prepaid subscribers (13.7 million on the Sprint platform and 1.6 million on the Nextel platform) and approximately 8 million wholesale and affiliate subscribers, all of whom utilize the Sprint platform. |
• | The Sprint platform added 263,000 net postpaid customers during the quarter. The Nextel platform lost 455,000 net postpaid customers in the quarter. Sprint platform postpaid net additions and Nextel platform postpaid net subscriber losses include 228,000 net subscribers who migrated from the Nextel platform to the Sprint platform. |
• | The company added 489,000 net prepaid subscribers during the quarter, which includes net additions of 870,000 prepaid Sprint platform customers, offset by net losses of 381,000 prepaid Nextel platform customers. Sprint platform prepaid net additions and Nextel platform prepaid net losses include 137,000 net subscribers who migrated from the Nextel platform to the Sprint platform. |
• | For the quarter, the company added net additions of 785,000 wholesale and affiliate subscribers (all of which are on the Sprint platform) as a result of growth in MVNOs reselling prepaid services. |
• | The credit quality of Sprint's end-of-period postpaid customers was approximately 82 percent prime, relatively flat as compared to the fourth quarter of 2011. |
• | For the quarter, the company reported Sprint platform postpaid churn of 2.00 percent, compared to 1.78 percent for the year-ago period and 1.99 percent for the fourth quarter of 2011. Quarterly, Sprint platform postpaid churn increased year-over-year primarily due to higher involuntary deactivations, which occur when Sprint disconnects a customer due to lack of payment or violations of terms and conditions. This is expected to be a temporary increase, the majority of which was associated with pricing actions taken in the second and third quarters of 2011 primarily through indirect channels. Sprint tightened its credit standards during the third and fourth quarters of 2011 to stem further impacts of these types of promotional activities by our indirect dealers. |
• | Approximately 46 percent of total subscribers that left the postpaid Nextel platform during the period were retained on the Sprint postpaid platform as compared to 27 percent in the first quarter of 2011 and 39 percent in the fourth quarter of 2011. |
• | Approximately 8 percent of Sprint platform postpaid customers upgraded their handsets during the first quarter as compared to 9 percent in the first quarter of 2011 and in the fourth quarter of 2011. The sequential decline was primarily driven by seasonality and is typical in the first quarter following fourth quarter holiday sales. The year-over-year decline was primarily due to changes in our upgrade eligibility policies. |
• | Sprint platform prepaid churn for the first quarter was 2.92 percent, compared to 3.41 percent for the year-ago period and 3.07 percent for the fourth quarter of 2011. The quarterly year-over-year and sequential improvements in the Sprint platform prepaid churn were primarily a result of improvements in the Virgin Mobile and Boost brands, and continued changes in the mix of our subscriber base as a result of strong growth in the number of Assurance Wireless® customers, who on average have lower churn than the remainder of our Sprint platform subscriber base. |
Quarter To Date | ||||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Net Additions (Losses) (in thousands) | ||||||||||||
Sprint platform: | ||||||||||||
Postpaid (a) | 263 | 539 | 253 | |||||||||
Prepaid (b) | 870 | 899 | 1,406 | |||||||||
Wholesale and affiliate | 785 | 954 | 389 | |||||||||
Total Sprint platform | 1,918 | 2,392 | 2,048 | |||||||||
Nextel platform: | ||||||||||||
Postpaid (a) | (455 | ) | (378 | ) | (367 | ) | ||||||
Prepaid (b) | (381 | ) | (392 | ) | (560 | ) | ||||||
Total Nextel platform | (836 | ) | (770 | ) | (927 | ) | ||||||
Total retail postpaid net (losses) additions | (192 | ) | 161 | (114 | ) | |||||||
Total retail prepaid net additions | 489 | 507 | 846 | |||||||||
Total wholesale and affiliate net additions | 785 | 954 | 389 | |||||||||
Total Wireless Net Additions | 1,082 | 1,622 | 1,121 | |||||||||
End of Period Subscribers (in thousands) | ||||||||||||
Sprint platform: | ||||||||||||
Postpaid (a) | 28,992 | 28,729 | 27,699 | |||||||||
Prepaid (b) | 13,698 | 12,828 | 9,941 | |||||||||
Wholesale and affiliate | 8,003 | 7,218 | 4,910 | |||||||||
Total Sprint platform | 50,693 | 48,775 | 42,550 | |||||||||
Nextel platform: | ||||||||||||
Postpaid (a) | 3,830 | 4,285 | 5,299 | |||||||||
Prepaid (b) | 1,580 | 1,961 | 3,182 | |||||||||
Total Nextel platform | 5,410 | 6,246 | 8,481 | |||||||||
Total retail postpaid end of period subscribers | 32,822 | 33,014 | 32,998 | |||||||||
Total retail prepaid end of period subscribers | 15,278 | 14,789 | 13,123 | |||||||||
Total wholesale and affiliate end of period subscribers | 8,003 | 7,218 | 4,910 | |||||||||
Total End of Period Subscribers | 56,103 | 55,021 | 51,031 | |||||||||
Supplemental Data - Connected Devices | ||||||||||||
End of Period Subscribers (in thousands) | ||||||||||||
Retail postpaid | 791 | 783 | 715 | |||||||||
Wholesale and affiliate | 2,217 | 2,077 | 1,883 | |||||||||
Total | 3,008 | 2,860 | 2,598 | |||||||||
Churn | ||||||||||||
Sprint platform: | ||||||||||||
Postpaid | 2.00 | % | 1.99 | % | 1.78 | % | ||||||
Prepaid | 2.92 | % | 3.07 | % | 3.41 | % | ||||||
Nextel platform: | ||||||||||||
Postpaid | 2.09 | % | 1.89 | % | 1.95 | % | ||||||
Prepaid | 8.73 | % | 7.18 | % | 6.94 | % | ||||||
Total retail postpaid churn | 2.01 | % | 1.98 | % | 1.81 | % | ||||||
Total retail prepaid churn | 3.61 | % | 3.68 | % | 4.36 | % | ||||||
ARPU (c) | ||||||||||||
Sprint platform: | ||||||||||||
Postpaid | $ | 62.55 | $ | 61.22 | $ | 58.52 | ||||||
Prepaid | $ | 25.64 | $ | 25.16 | $ | 25.76 | ||||||
Nextel platform: | ||||||||||||
Postpaid | $ | 40.94 | $ | 41.91 | $ | 44.35 | ||||||
Prepaid | $ | 35.68 | $ | 34.91 | $ | 35.46 | ||||||
Total retail postpaid ARPU | $ | 59.88 | $ | 58.59 | $ | 56.17 | ||||||
Total retail prepaid ARPU | $ | 26.82 | $ | 26.62 | $ | 28.39 | ||||||
Postpaid Nextel Recapture Rate (d) | 46 | % | 39 | % | 27 | % |
Quarter To Date | ||||||||||
Financial Data | March 31, 2012 | March 31, 2011 | % r | |||||||
Net operating revenues | $ | 7,950 | $ | 7,413 | 7 % | |||||
Operating (loss) income | $ | (331 | ) | $ | 140 | NM | ||||
Adjusted OIBDA* | $ | 1,052 | $ | 1,283 | (18) % | |||||
Adjusted OIBDA margin* | 14.6 % | 19.1 % | ||||||||
Capital expenditures (2) | $ | 710 | $ | 449 | 58 % |
• | Wireless retail service revenues of $7.1 billion for the quarter represent an increase of 7 percent compared to the first quarter of 2011 and an increase of approximately 3 percent compared to the fourth quarter of 2011. The quarterly year-over-year improvement was primarily due to higher postpaid ARPU as well as an increased number of net prepaid subscribers due to continued growth of Assurance Wireless and Virgin Mobile Beyond Talk customers, partially offset by lower prepaid ARPU. Sequentially, wireless retail service revenues increased, primarily as a result of higher postpaid ARPU and growth in the number of prepaid subscribers. |
• | Wireless postpaid ARPU increased year-over-year from $56.17 to $59.88, the largest year-over-year postpaid ARPU growth in the company's history, while sequentially ARPU increased from $58.59 to $59.88. Quarterly year-over-year and sequential ARPU benefited from higher monthly recurring revenues primarily as a result of the premium data add-on charges for smartphones introduced in the first quarter of 2011. |
• | Prepaid ARPU of $26.82 for the quarter declined from $28.39 in the first quarter of 2011 and increased slightly from $26.62 in the fourth quarter of 2011. The decline in the year-over-year period is a result of a greater mix of Assurance Wireless customers who on average have lower ARPU than the remainder of our prepaid subscriber base, partially offset by improvements in Boost and Virgin Mobile ARPU. |
• | Quarterly wholesale, affiliate and other revenues of $103 million increased by $34 million, compared to the year-ago period and increased by $29 million sequentially, resulting primarily from growth in MVNOs reselling prepaid services. |
• | Total wireless net operating expenses were $8.3 billion in the first quarter, compared to $7.3 billion in the year-ago period and $8.4 billion in the fourth quarter of 2011. |
• | Wireless equipment net subsidy in the first quarter was approximately $1.6 billion (equipment revenue of $735 million, less cost of products of $2.3 billion), compared to approximately $1.1 billion in the year-ago period and approximately $1.7 billion in the fourth quarter of 2011. The quarterly year-over-year increase in net subsidy is primarily due to the launch of the iPhone, which on average carries a higher subsidy rate per handset as compared to other handsets. The sequential decline in net subsidy is primarily due to a decline in postpaid handset sales typical for the first quarter following the fourth quarter holiday sales activity. |
• | Wireless cost of service was flat sequentially, primarily due to lower 4G data costs, offset by higher Network Vision related expenses. Wireless cost of service increased approximately 12 percent year-over-year primarily due to higher 4G data costs, Network Vision related expenses, service and repair expenses and backhaul costs driven by higher data usage, partially offset by lower licenses and fees. |
• | Wireless SG&A expenses increased approximately 2 percent year-over-year and declined by approximately 1 percent sequentially. Quarterly year-over-year SG&A expenses increased primarily due to higher bad debt and selling expenses, partially offset by lower marketing costs. Sales expenses |
• | Wireless depreciation and amortization expense increased $421 million year-over-year and $494 million sequentially primarily related to a reduction in estimated useful lives of certain assets. The year-over-year and sequential increase is primarily associated with accelerated depreciation on Nextel platform assets related to our decision to decommission that platform. |
Quarter To Date | ||||||||||
Financial Data | March 31, 2012 | March 31, 2011 | % r | |||||||
Net operating revenues | $ | 998 | $ | 1,120 | (11) % | |||||
Operating income | $ | 78 | $ | 119 | (35) % | |||||
Adjusted OIBDA* | $ | 161 | $ | 228 | (29) % | |||||
Adjusted OIBDA margin* | 16.1 % | 20.4 % | ||||||||
Capital expenditures (2) | $ | 45 | $ | 53 | (15) % |
• | Wireline revenues of $1 billion for the quarter declined 11 percent year-over-year primarily as a result of an intercompany rate reduction based on current market prices for voice and IP services sold to the wireless segment as well as the scheduled migration of wholesale cable VoIP customers off of Sprint's IP platform. Sequentially, first quarter wireline revenues declined 5 percent primarily due to a reduction in intercompany rates resulting from the decline in market-based prices for wireline services. |
• | Total wireline net operating expenses were $920 million in the first quarter of 2012. Net operating expenses declined approximately 8 percent year-over-year and 7 percent sequentially due to lower cost of service from continued declines in voice and cable IP volumes, improvement in SG&A expenses and lower depreciation expenses. |
TABLE NO. 5 | ||||||||||||
Quarter To Date | ||||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Net Operating Revenues | $ | 8,734 | $ | 8,722 | $ | 8,313 | ||||||
Net Operating Expenses | ||||||||||||
Cost of services | 2,787 | 2,788 | 2,584 | |||||||||
Cost of products | 2,298 | 2,631 | 1,812 | |||||||||
Selling, general and administrative | 2,436 | 2,461 | 2,403 | |||||||||
Depreciation | 1,590 | 1,098 | 1,122 | |||||||||
Amortization | 76 | 76 | 133 | |||||||||
Other, net | (198 | ) | 106 | — | ||||||||
Total net operating expenses | 8,989 | 9,160 | 8,054 | |||||||||
Operating (Loss) Income | (255 | ) | (438 | ) | 259 | |||||||
Interest expense | (298 | ) | (287 | ) | (249 | ) | ||||||
Equity in losses of unconsolidated investments and other, net (3) | (273 | ) | (472 | ) | (412 | ) | ||||||
Loss before Income Taxes | (826 | ) | (1,197 | ) | (402 | ) | ||||||
Income tax expense | (37 | ) | (106 | ) | (37 | ) | ||||||
Net Loss (1) | $ | (863 | ) | $ | (1,303 | ) | $ | (439 | ) | |||
Basic and Diluted Net Loss Per Common Share (1) | $ | (0.29 | ) | $ | (0.43 | ) | $ | (0.15 | ) | |||
Weighted Average Common Shares outstanding | 2,999 | 2,997 | 2,992 | |||||||||
Effective Tax Rate | -4.5 | % | -8.9 | % | -9.2 | % |
TABLE NO. 6 | ||||||||||||
Quarter To Date | ||||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Net Loss (1) | $ | (863 | ) | $ | (1,303 | ) | $ | (439 | ) | |||
Income tax expense | (37 | ) | (106 | ) | (37 | ) | ||||||
Loss before Income Taxes | (826 | ) | (1,197 | ) | (402 | ) | ||||||
Equity in losses of unconsolidated investments and other, net (3) | 273 | 472 | 412 | |||||||||
Interest expense | 298 | 287 | 249 | |||||||||
Operating (Loss) Income | (255 | ) | (438 | ) | 259 | |||||||
Depreciation and amortization | 1,666 | 1,174 | 1,255 | |||||||||
OIBDA* | 1,411 | 736 | 1,514 | |||||||||
Severance and exit costs (4) | — | 28 | — | |||||||||
Gains from asset dispositions and exchanges (5) | (29 | ) | — | — | ||||||||
Asset impairments and abandonments (6) | 18 | 78 | — | |||||||||
Spectrum hosting contract termination, net (7) | (170 | ) | — | — | ||||||||
Access costs (8) | (17 | ) | — | — | ||||||||
Adjusted OIBDA* | 1,213 | 842 | 1,514 | |||||||||
Capital expenditures (2) | 800 | 900 | 555 | |||||||||
Adjusted OIBDA* less Capex | $ | 413 | $ | (58 | ) | $ | 959 | |||||
Adjusted OIBDA Margin* | 15.2 | % | 10.8 | % | 19.9 | % | ||||||
Selected item: | ||||||||||||
Deferred tax asset valuation allowance | $ | 348 | $ | 569 | $ | 196 |
TABLE NO. 7 | ||||||||||||
Quarter To Date | ||||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Net Operating Revenues | ||||||||||||
Service revenue | ||||||||||||
Sprint platform: | ||||||||||||
Postpaid (a) | $ | 5,408 | $ | 5,217 | $ | 4,842 | ||||||
Prepaid (b) | 1,016 | 929 | 712 | |||||||||
Wholesale, affiliate and other | 103 | 74 | 69 | |||||||||
Total Sprint platform | 6,527 | 6,220 | 5,623 | |||||||||
Nextel platform: | ||||||||||||
Postpaid (a) | 500 | 563 | 729 | |||||||||
Prepaid (b) | 188 | 227 | 366 | |||||||||
Total Nextel platform | 688 | 790 | 1,095 | |||||||||
Equipment revenue | 735 | 910 | 695 | |||||||||
Total net operating revenues | 7,950 | 7,920 | 7,413 | |||||||||
Net Operating Expenses | ||||||||||||
Cost of services | 2,289 | 2,291 | 2,047 | |||||||||
Cost of products | 2,298 | 2,631 | 1,812 | |||||||||
Selling, general and administrative | 2,311 | 2,330 | 2,271 | |||||||||
Depreciation | 1,488 | 988 | 1,012 | |||||||||
Amortization | 76 | 82 | 131 | |||||||||
Other, net | (181 | ) | 98 | — | ||||||||
Total net operating expenses | 8,281 | 8,420 | 7,273 | |||||||||
Operating (Loss) Income | $ | (331 | ) | $ | (500 | ) | $ | 140 | ||||
Supplemental Revenue Data | ||||||||||||
Total retail service revenue | $ | 7,112 | $ | 6,936 | $ | 6,649 | ||||||
Total service revenue | $ | 7,215 | $ | 7,010 | $ | 6,718 |
NON-GAAP RECONCILIATION | Quarter To Date | |||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Operating (Loss) Income | $ | (331 | ) | $ | (500 | ) | $ | 140 | ||||
Severance and exit costs (4) | — | 25 | — | |||||||||
Gains from asset dispositions and exchanges (5) | (29 | ) | — | — | ||||||||
Asset impairments and abandonments (6) | 18 | 73 | — | |||||||||
Spectrum hosting contract termination, net (7) | (170 | ) | — | — | ||||||||
Depreciation | 1,488 | 988 | 1,012 | |||||||||
Amortization | 76 | 82 | 131 | |||||||||
Adjusted OIBDA* | 1,052 | 668 | 1,283 | |||||||||
Capital expenditures (2) | 710 | 774 | 449 | |||||||||
Adjusted OIBDA* less Capex | $ | 342 | $ | (106 | ) | $ | 834 | |||||
Adjusted OIBDA Margin* | 14.6 | % | 9.5 | % | 19.1 | % |
TABLE NO. 8 | ||||||||||||
Quarter To Date | ||||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Net Operating Revenues | ||||||||||||
Voice | $ | 417 | $ | 475 | $ | 486 | ||||||
Data | 108 | 103 | 116 | |||||||||
Internet | 453 | 459 | 497 | |||||||||
Other | 20 | 17 | 21 | |||||||||
Total net operating revenues | 998 | 1,054 | 1,120 | |||||||||
Net Operating Expenses | ||||||||||||
Cost of services and products | 716 | 748 | 759 | |||||||||
Selling, general and administrative | 121 | 128 | 133 | |||||||||
Depreciation | 100 | 109 | 109 | |||||||||
Other, net | (17 | ) | 9 | — | ||||||||
Total net operating expenses | 920 | 994 | 1,001 | |||||||||
Operating Income | $ | 78 | $ | 60 | $ | 119 |
NON-GAAP RECONCILIATION | Quarter To Date | |||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Operating Income | $ | 78 | $ | 60 | $ | 119 | ||||||
Severance and exit costs (4) | — | 3 | — | |||||||||
Asset impairments and abandonments (6) | — | 6 | — | |||||||||
Access costs (8) | (17 | ) | — | — | ||||||||
Depreciation | 100 | 109 | 109 | |||||||||
Adjusted OIBDA* | 161 | 178 | 228 | |||||||||
Capital expenditures (2) | 45 | 34 | 53 | |||||||||
Adjusted OIBDA* less Capex | $ | 116 | $ | 144 | $ | 175 | ||||||
Adjusted OIBDA Margin* | 16.1 | % | 16.9 | % | 20.4 | % |
TABLE NO. 9 | Quarter Ended | |||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Operating Activities | ||||||||||||
Net loss | $ | (863 | ) | $ | (1,303 | ) | $ | (439 | ) | |||
Asset impairments | 18 | 78 | — | |||||||||
Depreciation and amortization | 1,666 | 1,174 | 1,255 | |||||||||
Provision for losses on accounts receivable | 136 | 189 | 73 | |||||||||
Share-based compensation expense | 17 | 22 | 18 | |||||||||
Deferred income taxes | 32 | 117 | 27 | |||||||||
Equity in losses of unconsolidated investments and other, net (3) | 273 | 472 | 412 | |||||||||
Gains from asset dispositions and exchanges | (29 | ) | — | — | ||||||||
Contribution to pension plan | (92 | ) | (12 | ) | (100 | ) | ||||||
Spectrum hosting contract termination, net (7) | (170 | ) | — | — | ||||||||
Other working capital changes, net | 26 | 640 | (369 | ) | ||||||||
Other, net | (36 | ) | (288 | ) | 42 | |||||||
Net cash provided by operating activities | 978 | 1,089 | 919 | |||||||||
Investing Activities | ||||||||||||
Capital expenditures (2) | (783 | ) | (909 | ) | (644 | ) | ||||||
Expenditures relating to FCC licenses | (56 | ) | (59 | ) | (74 | ) | ||||||
Reimbursements relating to FCC licenses (9) | — | 135 | — | |||||||||
Change in short-term investments, net | (327 | ) | 90 | (40 | ) | |||||||
Investment in Clearwire | (128 | ) | (331 | ) | — | |||||||
Other, net | (1 | ) | 1 | (23 | ) | |||||||
Net cash used in investing activities | (1,295 | ) | (1,073 | ) | (781 | ) | ||||||
Financing Activities | ||||||||||||
Proceeds from debt and financings | 2,000 | 4,000 | — | |||||||||
Debt financing costs | (36 | ) | (83 | ) | (3 | ) | ||||||
Repayments of debt and capital lease obligations | (2 | ) | (2,251 | ) | (1,652 | ) | ||||||
Other, net | 3 | 4 | 2 | |||||||||
Net cash provided by (used in) financing activities | 1,965 | 1,670 | (1,653 | ) | ||||||||
Net Increase (Decrease) in Cash and Cash Equivalents | 1,648 | 1,686 | (1,515 | ) | ||||||||
Cash and Cash Equivalents, beginning of period | 5,447 | 3,761 | 5,173 | |||||||||
Cash and Cash Equivalents, end of period | $ | 7,095 | $ | 5,447 | $ | 3,658 |
TABLE NO. 10 | ||||||||||||
Quarter Ended | ||||||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | ||||||||||
Net Cash Provided by Operating Activities | $ | 978 | $ | 1,089 | $ | 919 | ||||||
Capital expenditures (2) | (783 | ) | (909 | ) | (644 | ) | ||||||
Expenditures relating to FCC licenses, net (9) | (56 | ) | 76 | (74 | ) | |||||||
Other investing activities, net | (1 | ) | 1 | (23 | ) | |||||||
Free Cash Flow* | 138 | 257 | 178 | |||||||||
Debt financing costs | (36 | ) | (83 | ) | (3 | ) | ||||||
Increase (decrease) in debt and other, net | 1,998 | 1,749 | (1,652 | ) | ||||||||
Investment in Clearwire | (128 | ) | (331 | ) | — | |||||||
Other financing activities, net | 3 | 4 | 2 | |||||||||
Net Increase (Decrease) in Cash, Cash Equivalents and | ||||||||||||
Short-Term Investments | $ | 1,975 | $ | 1,596 | $ | (1,475 | ) |
TABLE NO. 11 | ||||||||
March 31, 2012 | December 31, 2011 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 7,095 | $ | 5,447 | ||||
Short-term investments | 477 | 150 | ||||||
Accounts and notes receivable, net | 3,216 | 3,206 | ||||||
Device and accessory inventory | 693 | 913 | ||||||
Deferred tax assets | 115 | 130 | ||||||
Prepaid expenses and other current assets | 628 | 491 | ||||||
Total current assets | 12,224 | 10,337 | ||||||
Investments and other assets | 2,453 | 2,609 | ||||||
Property, plant and equipment, net | 13,500 | 14,009 | ||||||
Goodwill | 359 | 359 | ||||||
FCC licenses and other | 20,540 | 20,453 | ||||||
Definite-lived intangible assets, net | 1,541 | 1,616 | ||||||
Total | $ | 50,617 | $ | 49,383 | ||||
Liabilities and Shareholders' Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 2,847 | $ | 2,495 | ||||
Accrued expenses and other current liabilities | 3,584 | 3,996 | ||||||
Current portion of long-term debt, financing and capital lease obligations | 8 | 8 | ||||||
Total current liabilities | 6,439 | 6,499 | ||||||
Long-term debt, financing and capital lease obligations | 22,260 | 20,266 | ||||||
Deferred tax liabilities | 7,013 | 6,986 | ||||||
Other liabilities | 4,314 | 4,205 | ||||||
Total liabilities | 40,026 | 37,956 | ||||||
Shareholders' equity | ||||||||
Common shares | 5,995 | 5,992 | ||||||
Paid-in capital | 46,723 | 46,716 | ||||||
Accumulated deficit | (41,352 | ) | (40,489 | ) | ||||
Accumulated other comprehensive loss | (775 | ) | (792 | ) | ||||
Total shareholders' equity | 10,591 | 11,427 | ||||||
Total | $ | 50,617 | $ | 49,383 |
TABLE NO. 12 | ||||||||
March 31, 2012 | December 31, 2011 | |||||||
Total Debt | $ | 22,268 | $ | 20,274 | ||||
Less: Cash and cash equivalents | (7,095 | ) | (5,447 | ) | ||||
Less: Short-term investments | (477 | ) | (150 | ) | ||||
Net Debt* | $ | 14,696 | $ | 14,677 |
TABLE NO. 13 | ||||||
March 31, 2012 | ||||||
ISSUER | COUPON | MATURITY | PRINCIPAL | |||
Sprint Nextel Corporation | ||||||
Export Development Canada Facility (Tranche 2) | 5.486% | 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 | |||
11.5% Senior Notes due 2021 | 11.500% | 11/15/2021 | 1,000 | |||
9.25% Debentures due 2022 | 9.250% | 04/15/2022 | 200 | |||
Sprint Nextel Corporation | 10,000 | |||||
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 | |||||
Nextel Communications Inc. | ||||||
6.875% Senior Serial Redeemable Notes due 2013 | 6.875% | 10/31/2013 | 1,473 | |||
5.95% Senior Serial Redeemable Notes due 2014 | 5.950% | 03/15/2014 | 1,170 | |||
7.375% Senior Serial Redeemable Notes due 2015 | 7.375% | 08/01/2015 | 2,137 | |||
Nextel Communications Inc. | 4,780 | |||||
iPCS Inc. | ||||||
First Lien Senior Secured Floating Rate Notes due 2013 | 2.672% | 05/01/2013 | 300 | |||
Second Lien Senior Secured Floating Rate Notes due 2014 | 3.797% | 05/01/2014 | 181 | |||
iPCS Inc. | 481 | |||||
Tower financing obligation | 9.500% | 01/15/2030 | 698 | |||
Capital lease obligations and other | 2014 - 2022 | 69 | ||||
TOTAL PRINCIPAL | 22,232 | |||||
Net premiums | 36 | |||||
TOTAL DEBT | $ | 22,268 |
TABLE NO. 14 | |||||||||
Quarter To Date | |||||||||
March 31, 2012 | December 31, 2011 | March 31, 2011 | |||||||
Retail postpaid net (losses) additions | (192 | ) | 161 | (114 | ) | ||||
Less: Nextel platform net losses | (455 | ) | (378 | ) | (367 | ) | |||
Sprint platform net additions | 263 | 539 | 253 | ||||||
Less adjustments: | |||||||||
Nextel PowerSource | (30 | ) | (33 | ) | (57 | ) | |||
Adjusted Sprint platform net additions | 293 | 572 | 310 |
• | our ability to retain and attract subscribers; |
• | the ability of our competitors to offer products and services at lower prices due to lower cost structures; |
• | the effects of vigorous competition on a highly penetrated market, including the impact of competition on the price we are able to charge subscribers for services and equipment we provide and our ability to retain existing subscribers and attract new subscribers; the impact of equipment net subsidy costs; the impact of increased purchase commitments; the overall demand for our service offerings, including the impact of decisions of new or existing subscribers between our postpaid and prepaid services offerings and between our two network platforms; and the impact of new, emerging and competing technologies on our business; |
• | the ability to generate sufficient cash flow to fully implement our network modernization plan, Network Vision, to improve and enhance our networks and service offerings, improve our operating margins, implement our business strategies and provide competitive new technologies; |
• | the effective implementation of Network Vision, including timing, execution, technologies, and costs; |
• | our ability to migrate subscribers off the Nextel platform and mitigate related increases in churn; |
• | our ability to access additional spectrum capacity, including through spectrum hosting arrangements; |
• | changes in available technology and the effects of such changes, including product substitutions and deployment costs; |
• | our ability to obtain additional financing on terms acceptable to us, or at all; |
• | volatility in the trading price of our common stock, current economic conditions and our ability to access capital; |
• | the impact of unrelated parties not meeting our business requirements, including a significant adverse change in the ability or willingness of such parties to provide devices or infrastructure equipment for our networks; |
• | the costs and business risks associated with providing new services and entering new geographic markets; |
• | the financial performance of Clearwire and its ability to fund, build, operate, and maintain its 4G network, including an LTE network; |
• | our ability to access Clearwire's spectrum capacity; |
• | the compatibility of Sprint's LTE network with Clearwire's LTE network; |
• | the effects of mergers and consolidations and new entrants in the communications industry and unexpected announcements or developments from others in the communications industry; |
• | unexpected results of litigation filed against us or our suppliers or vendors; |
• | the impact of adverse network performance; |
• | the costs or potential customer impacts of compliance with regulatory mandates including, but not limited to, compliance with the FCC's Report and Order to reconfigure the 800 MHz band; |
• | equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security; |
• | one or more of the markets in which we compete being impacted by changes in political, economic or other factors such as monetary policy, legal and regulatory changes or other external factors over which we have no control; and |
• | other risks referenced from time to time in our filings with the Securities and Exchange Commission, including the “Risk Factors” described in our annual report on Form 10-K for the year ended Dec. 31, 2011. |