The company's third quarter earnings conference call will be held at 8 a.m. EDT today. Participants may dial 800-938-1120 in the U.S. or Canada (706-634-7849 internationally) and provide the following ID: 29897906, or may listen via the Internet at www.sprint.com/investor [1].
OVERLAND PARK, Kan.--(BUSINESS WIRE)--Oct. 29, 2009-- Sprint Nextel Corp. (NYSE: S) today reported third quarter 2009 financial results that included consolidated net operating revenues of $8.0 billion, a net loss of $478 million and a diluted loss per share of 17 cents. The company generated Free Cash Flow* of $664 million in the quarter and $2.1 billion year-to-date in 2009. As of September 30, 2009, the company had $5.9 billion in cash, cash equivalents and short-term investments and $1.6 billion in borrowing capacity available under its revolving bank credit facility, for total liquidity of $7.5 billion.
Sprint lost a total of 135,000 net retail subscribers in the quarter. The company's year-over-year post-paid gross addition improvement was the best in Sprint Nextel history, and the sequential improvement was the best in more than five years. Net post-paid subscriber losses have improved by approximately 20 percent in each of the second and third quarters of 2009.
"Sprint achieved its best net retail subscriber results in more than two years and improvement in both post-paid and prepaid gross subscriber additions in the third quarter," said Dan Hesse, Sprint Nextel CEO. "Sprint is beginning to attract more customers with the industry's best device line-up and the clarity and simplicity of our offers, seven sequential quarters of improvement in customer care satisfaction, a network declared to be most reliable by PC World magazine, and recognition from Newsweek magazine which ranked Sprint 15th of 500 companies on its 2009 Green Ratings list -- the only telecom company in the Top 100.
"The company again generated strong cash flow, and while Operating Income Before Depreciation and Amortization* (OIBDA) was impacted by costs associated with growth in customer additions, previous quarters' subscriber losses and certain seasonal costs in the quarter, Sprint continues to manage costs rigorously. We expect to see sequential quarterly improvement in both post-paid and total net subscriber losses in the fourth quarter of 2009," Hesse said.
In 2009 Sprint has launched or announced 16 new touch, QWERTY and smart devices with a full selection of operating systems. They include Palm® PreTM and Palm® PixiTM, Blackberry® TourTM; HTC HeroTM and Samsung MomentTM -- which are both based on Google's AndroidTM platform; HTC Touch Pro 2, Samsung Instinct® HD, and Samsung IntrepidTM, which offers the new Windows Mobile® 6.5 Professional operating system. In addition, Sprint launched the nation's first full-featured, eco-friendly phone, Samsung ReclaimTM which earlier this month was given the "Hottest in Show" award at the CTIA Convention in San Diego.
Additionally, Sprint 4G is now available in 17 markets, including Philadelphia, PA, which launched earlier this week. Sprint 4G coverage should serve a population of more than 30 million people by the end of 2009, and cover a population of up to 120 million people in about 80 markets by the end of 2010. Sprint 4G service is planned for deployment in these additional markets in 2009: Austin, TX; Charlotte, NC; Chicago, IL; Dallas/Ft. Worth, TX; Greensboro, NC; Honolulu, HI; Maui, HI; Raleigh, NC; San Antonio, TX; and Seattle, WA.
CONSOLIDATED RESULTS
| TABLE NO. 1 Selected Unaudited Financial Data (dollars in millions, except per share data) | ||||||||||||||||
| Quarter Ended | Year To Date | |||||||||||||||
| September 30, | September 30, |
% |
September 30, | September 30, | % | |||||||||||
| Financial Data | 2009 | 2008 |
∆ |
2009 | 2008 |
∆ |
||||||||||
| Net operating revenues | $ | 8,042 | $ | 8,816 | (9) % | $ | 24,392 | $ | 27,205 | (10) % | ||||||
| Adjusted OIBDA*, (1) | 1,506 | 1,824 | (17) % | 4,998 | 5,929 | (16) % | ||||||||||
| Adjusted OIBDA margin*, (1) | 20.0% | 21.9% | 21.8% | 23.1% | ||||||||||||
| Net loss | (478) | (326) | (47) % | (1,456) | (1,175) | (24) % | ||||||||||
| Diluted loss per common share | $ | (0.17) | $ | (0.11) | (55) % | $ | (0.51) | $ | (0.41) | (24) % | ||||||
|
Capital Expenditures (1), (2) |
$ | 431 | $ | 485 | (11) % | $ | 1,043 | $ | 2,491 | (58) % | ||||||
| Free cash flow* | $ | 664 | $ | 1,059 | (37) % | $ | 2,136 | $ | 1,240 | 72 % | ||||||
WIRELESS RESULTS
| TABLE NO. 2 Selected Unaudited Financial Data (dollars in millions) | ||||||||||||||||
| Quarter Ended | Year To Date | |||||||||||||||
| September 30, | September 30, | % | September 30, | September 30, | % | |||||||||||
| Financial Data | 2009 | 2008 |
∆ |
2009 | 2008 |
∆ |
||||||||||
| Net operating revenues | $ | 6,931 | $ | 7,536 | (8) % | $ | 20,970 | $ | 23,235 | (10) % | ||||||
| Adjusted OIBDA* | 1,184 | 1,646 | (28) % | 4,046 | 5,315 | (24) % | ||||||||||
| Adjusted OIBDA margin* | 18.5% | 23.4% | 20.8% | 24.5% | ||||||||||||
| Capital Expenditures (2) | $ | 310 | $ | 217 | 43 % | $ | 734 | $ | 1,528 | (52) % | ||||||
Wireless Customers
Wireless Churn
Wireless Service Revenues
Wireless Operating Expenses and Adjusted OIBDA*
Wireless Capital Spending
Wireless capital expenditures were $310 million in the third quarter of 2009, compared to $217 million spent in the third quarter of 2008 and $227 million in the second quarter of 2009. The company continues to invest capital in the quality and performance of its networks. At the end of the third quarter of 2009, Sprint's networks continue to operate at best-ever levels and, according to third-party data, Sprint has the most dependable+ 3G network in the country.
WIRELINE RESULTS
| TABLE NO. 3 Selected Unaudited Financial Data (dollars in millions) | ||||||||||||||||
| Quarter Ended | Year To Date | |||||||||||||||
| September 30, | September 30, | % | September 30, | September 30, | % | |||||||||||
| Financial Data | 2009 | 2008 |
∆ |
2009 | 2008 |
∆ |
||||||||||
| Net operating revenues | $ | 1,411 | $ | 1,576 | (10) % | $ | 4,304 | $ | 4,811 | (11) % | ||||||
| Adjusted OIBDA* | 324 | 263 | 23 % | 962 | 849 | 13 % | ||||||||||
| Adjusted OIBDA margin* | 23.0% | 16.7% | 22.4% | 17.6% | ||||||||||||
| Capital Expenditures (2) | $ | 72 | $ | 81 | (11) % | $ | 196 | $ | 342 | (43) % | ||||||
Forecast
Sprint Nextel continues to expect that both post-paid and total subscriber full-year losses should improve in 2009 as compared to 2008. The company also expects both post-paid and total subscriber net losses to improve sequentially from 3Q to 4Q of 2009. In addition, Sprint Nextel expects that full-year capital expenditures in 2009 will be less than $1.7 billion. The company expects to continue to generate positive Free Cash Flow* during the fourth quarter of 2009.
*FINANCIAL MEASURES
Sprint Nextel provides financial measures determined in accordance with accounting principles generally accepted in the United States (GAAP) and adjusted GAAP (non-GAAP). The non-GAAP financial measures reflect industry conventions, or standard measures of liquidity, profitability or performance commonly used by the investment community for comparability purposes. These measurements should be considered in addition to, but not as a substitute for, financial information prepared in accordance with GAAP. We have defined below each of the non-GAAP measures we use, but these measures may not be synonymous to similar measurement terms used by other companies.
Sprint Nextel provides reconciliations of these non-GAAP measures in its financial reporting. Because Sprint Nextel does not predict special items that might occur in the future, and our forecasts are developed at a level of detail different than that used to prepare GAAP-based financial measures, Sprint Nextel does not provide reconciliations to GAAP of its forward-looking financial measures.
The measures used in this release include the following:
OIBDA is operating income/(loss) before depreciation, amortization, asset impairments and abandonments. Adjusted OIBDA is OIBDA excluding severance, exit costs, and other special items. Adjusted OIBDA Margin represents Adjusted OIBDA divided by non-equipment net operating revenues adjusted for certain non-recurring revenue adjustments for Wireless and Adjusted OIBDA divided by net operating revenues for Wireline. We believe that Adjusted OIBDA and Adjusted OIBDA Margin provide useful information to investors because they are an indicator of the strength and performance of our ongoing business operations, including our ability to fund discretionary spending such as capital expenditures, spectrum acquisitions and other investments and our ability to incur and service debt. While depreciation and amortization are considered operating costs under GAAP, these expenses primarily represent non-cash current period costs associated with the use of long-lived tangible and intangible assets. Adjusted OIBDA and Adjusted OIBDA Margin are calculations commonly used as a basis for investors, analysts and credit rating agencies to evaluate and compare the periodic and future operating performance and value of companies within the telecommunications industry.
Free Cash Flow is the cash provided by operating activities less the cash used in investing activities other than short-term investments during the period. Free cash flow results in the change in cash, cash equivalents and short-term investments less the change in debt and proceeds from other financing activities, net. We believe that Free Cash Flow provides useful information to investors, analysts and our management about the cash generated by our core operations after interest and dividends and our ability to fund scheduled debt maturities and other financing activities, including discretionary refinancing and retirement of debt and purchase or sale of investments.
Net Debt is consolidated debt, including current maturities, less cash and cash equivalents, short-term investments and 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 news release includes "forward-looking statements" within the meaning of the securities laws. The statements in this news release regarding the business outlook, expected performance and forward-looking guidance, as well as other statements that are not historical facts, are forward-looking statements. The words "estimate," "project," "forecast," "intend," "expect," "believe," "target," "providing guidance" and similar expressions are intended to identify forward-looking statements. Forward-looking statements are estimates and projections reflecting management's judgment based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. With respect to these forward-looking statements, management has made assumptions regarding, among other things, customer and network usage, customer growth and retention, pricing, operating costs, the timing of various events and the economic and regulatory environment.
Future performance cannot be assured. Actual results may differ materially from those in forward-looking statements. Some factors that could cause actual results to differ include:
Sprint Nextel believes these forward-looking statements are reasonable; however, you should not place undue reliance on forward-looking statements, which are based on current expectations and speak only as of the date of this release. Sprint Nextel is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of this release.
+ "Dependable" based on independent third-party drive tests for 3G data connection success, session reliability and signal strength for the top 50 most populous markets, January 2008 to July 2009. Not all services available on 3G and coverage may default to separate network when 3G unavailable.
ABOUT SPRINT NEXTEL
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel is widely recognized for developing, engineering and deploying innovative technologies, including two wireless networks serving more than 48 million customers at the end of the third quarter of 2009 and the first and only 4G service from a national carrier in the United States; industry-leading mobile data services; instant national and international walkie-talkie capabilities; and a global Tier 1 Internet backbone. The company's customer-focused strategy has led to improved first call resolution and customer care satisfaction scores. For more information, visit www.sprint.com [2].
| Sprint Nextel Corporation | ||||||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||||||||
| (Millions, except per Share Data) | ||||||||||||||||||||
| TABLE NO. 4 | ||||||||||||||||||||
| Quarter Ended | Year To Date | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Net Operating Revenues | $ | 8,042 | $ | 8,141 | $ | 8,816 | $ | 24,392 | $ | 27,205 | ||||||||||
| Net Operating Expenses | ||||||||||||||||||||
| Cost of services | 2,787 | 2,719 | 3,043 | 8,241 | 8,968 | |||||||||||||||
| Cost of products | 1,482 | 1,342 | 1,181 | 4,115 | 3,656 | |||||||||||||||
| Selling, general and administrative | 2,267 | 2,311 | 2,768 | 7,038 | 8,782 | |||||||||||||||
| Depreciation | 1,476 | 1,453 | 1,488 | 4,346 | 4,460 | |||||||||||||||
| Amortization | 344 | 458 | 569 | 1,268 | 1,955 | |||||||||||||||
| Other, net | (60 | ) | (29 | ) | (28 | ) | 238 | 297 | ||||||||||||
| Total net operating expenses | 8,296 | 8,254 | 9,021 | 25,246 | 28,118 | |||||||||||||||
| Operating Loss | (254 | ) | (113 | ) | (205 | ) | (854 | ) | (913 | ) | ||||||||||
| Interest expense, net | (355 | ) | (350 | ) | (318 | ) | (1,057 | ) | (951 | ) | ||||||||||
| Equity in losses of unconsolidated investments and other, net (3) | (156 | ) | (146 | ) | 8 | (587 | ) | (17 | ) | |||||||||||
| Loss before Income Taxes | (765 | ) | (609 | ) | (515 | ) | (2,498 | ) | (1,881 | ) | ||||||||||
| Income tax benefit | 287 | 225 | 189 | 1,042 | 706 | |||||||||||||||
| Net Loss | $ | (478 | ) | $ | (384 | ) | $ | (326 | ) | $ | (1,456 | ) | $ | (1,175 | ) | |||||
| Basic and Diluted Loss Per Common Share | $ | (0.17 | ) | $ | (0.13 | ) | $ | (0.11 | ) | $ | (0.51 | ) | $ | (0.41 | ) | |||||
| Weighted Average Common Shares outstanding | 2,877 | 2,872 | 2,855 | 2,872 | 2,852 | |||||||||||||||
| Effective Tax Rate | 37.5 | % | 36.9 | % | 36.7 | % | 41.7 | % | 37.5 | % | ||||||||||
| NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED OIBDA* (Unaudited) | ||||||||||||||||||||
| (Millions) | ||||||||||||||||||||
| TABLE NO. 5 | ||||||||||||||||||||
| Quarter Ended | Year To Date | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Net Loss | $ | (478 | ) | $ | (384 | ) | $ | (326 | ) | $ | (1,456 | ) | $ | (1,175 | ) | |||||
| Income tax benefit | 287 | 225 | 189 | 1,042 | 706 | |||||||||||||||
| Loss before Income Taxes | (765 | ) | (609 | ) | (515 | ) | (2,498 | ) | (1,881 | ) | ||||||||||
| Depreciation | 1,476 | 1,453 | 1,488 | 4,346 | 4,460 | |||||||||||||||
| Amortization | 344 | 458 | 569 | 1,268 | 1,955 | |||||||||||||||
| Interest expense, net | 355 | 350 | 318 | 1,057 | 951 | |||||||||||||||
| Equity in losses of unconsolidated investments and other, net (3) | 156 | 146 | (8 | ) | 587 | 17 | ||||||||||||||
| OIBDA* | 1,566 | 1,798 | 1,852 | 4,760 | 5,502 | |||||||||||||||
| Severance and exit costs (4) | 25 | (29 | ) | 10 | 323 | 335 | ||||||||||||||
| Gains from asset dispositions and exchanges (5) | (60 | ) | - | (29 | ) | (60 | ) | (29 | ) | |||||||||||
| Asset impairments and abandonments | - | - | (9 | ) | - | (9 | ) | |||||||||||||
| Access costs (6) | (25 | ) | - | - | (25 | ) | - | |||||||||||||
| Merger and integration expense (7) | - | - | - | - | 130 | |||||||||||||||
| Adjusted OIBDA*, (1) | 1,506 | 1,769 | 1,824 | 4,998 | 5,929 | |||||||||||||||
| Capital expenditures (1), (2) | 431 | 321 | 485 | 1,043 | 2,491 | |||||||||||||||
| Adjusted OIBDA* less Capex | $ | 1,075 | $ | 1,448 | $ | 1,339 | $ | 3,955 | $ | 3,438 | ||||||||||
| Adjusted OIBDA Margin*, (1) | 20.0 | % | 23.1 | % | 21.9 | % | 21.8 | % | 23.1 | % | ||||||||||
| Selected items (net of taxes): | ||||||||||||||||||||
| Severance and exit costs (4) | 15 | (18 | ) | 6 | 199 | 207 | ||||||||||||||
| Gains from asset dispositions and exchanges (5) | (37 | ) | - | (18 | ) | (37 | ) | (18 | ) | |||||||||||
| Asset impairments and abandonments | - | - | (5 | ) | 8 | 1 | ||||||||||||||
| Amortization | 209 | 278 | 344 | 770 | 1,181 | |||||||||||||||
| Access costs (6) | (16 | ) | - | - | (16 | ) | - | |||||||||||||
| Merger and integration expenses (7) | - | - | - | - | 80 | |||||||||||||||
| Equity in losses of unconsolidated investments and other, net (3) | 97 | 83 | - | 355 | - | |||||||||||||||
| Sprint Nextel Corporation | ||||||||||||||||||||
| WIRELESS STATEMENTS OF OPERATIONS AND STATISTICS (Unaudited) | ||||||||||||||||||||
| (Millions, except subscriber counts and metrics) | ||||||||||||||||||||
| TABLE NO. 6 | ||||||||||||||||||||
| Quarter Ended | Year To Date | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Net Operating Revenues | ||||||||||||||||||||
| Service | $ | 6,261 | $ | 6,366 | $ | 6,803 | $ | 19,047 | $ | 20,931 | ||||||||||
| Equipment | 529 | 497 | 492 | 1,479 | 1,558 | |||||||||||||||
| Wholesale, affiliate and other | 141 | 141 | 241 | 444 | 746 | |||||||||||||||
| Total net operating revenues | 6,931 | 7,004 | 7,536 | 20,970 | 23,235 | |||||||||||||||
| Net Operating Expenses | ||||||||||||||||||||
| Cost of services | 2,164 | 2,113 | 2,268 | 6,349 | 6,589 | |||||||||||||||
| Cost of products | 1,482 | 1,342 | 1,181 | 4,115 | 3,622 | |||||||||||||||
| Selling, general and administrative | 2,101 | 2,136 | 2,441 | 6,460 | 7,709 | |||||||||||||||
| Depreciation | 1,331 | 1,296 | 1,327 | 3,915 | 4,025 | |||||||||||||||
| Amortization | 343 | 458 | 569 | 1,266 | 1,954 | |||||||||||||||
| Merger and integration expenses (7) | - | - | - | - | 101 | |||||||||||||||
| Other, net | (42 | ) | (27 | ) | (30 | ) | 185 | 225 | ||||||||||||
| Total net operating expenses | 7,379 | 7,318 | 7,756 | 22,290 | 24,225 | |||||||||||||||
| Operating Loss | $ | (448 | ) | $ | (314 | ) | $ | (220 | ) | $ | (1,320 | ) | $ | (990 | ) | |||||
| NON-GAAP RECONCILIATION | Quarter Ended | Year To Date | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Operating Loss | $ | (448 | ) | $ | (314 | ) | $ | (220 | ) | $ | (1,320 | ) | $ | (990 | ) | |||||
| Severance and exit costs (4) | 18 | (27 | ) | 8 | 245 | 263 | ||||||||||||||
| Gains from asset dispositions and exchanges (5) | (60 | ) | - | (29 | ) | (60 | ) | (29 | ) | |||||||||||
| Asset impairments and abandonments | - | - | (9 | ) | - | (9 | ) | |||||||||||||
| Merger and integration expenses (7) | - | - | - | - | 101 | |||||||||||||||
| Depreciation | 1,331 | 1,296 | 1,327 | 3,915 | 4,025 | |||||||||||||||
| Amortization | 343 | 458 | 569 | 1,266 | 1,954 | |||||||||||||||
| Adjusted OIBDA* | 1,184 | 1,413 | 1,646 | 4,046 | 5,315 | |||||||||||||||
| Capital expenditures (2) | 310 | 227 | 217 | 734 | 1,528 | |||||||||||||||
| Adjusted OIBDA* less Capex | $ | 874 | $ | 1,186 | $ | 1,429 | $ | 3,312 | $ | 3,787 | ||||||||||
| Adjusted OIBDA Margin* | 18.5 | % | 21.7 | % | 23.4 | % | 20.8 | % | 24.5 | % | ||||||||||
| OPERATING STATISTICS | Quarter Ended | Year To Date | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Retail Post-Paid Subscribers | ||||||||||||||||||||
| Service revenue (in millions) | $ | 5,699 | $ | 5,897 | $ | 6,423 | $ | 17,659 | $ | 19,770 | ||||||||||
| ARPU | $ | 56 | $ | 56 | $ | 56 | $ | 56 | $ | 56 | ||||||||||
| Churn | 2.17 | % | 2.05 | % | 2.15 | % | 2.16 | % | 2.19 | % | ||||||||||
| Net losses (in thousands) | (801 | ) | (991 | ) | (1,122 | ) | (3,042 | ) | (2,968 | ) | ||||||||||
| End of period subscribers (in thousands) | 33,636 | 34,437 | 37,783 | 33,636 | 37,783 | |||||||||||||||
| Hours per subscriber | 15 | 15 | 16 | 15 | 15 | |||||||||||||||
| Retail Prepaid Subscribers | ||||||||||||||||||||
| Service revenue (in millions) | $ | 562 | $ | 469 | $ | 380 | $ | 1,388 | $ | 1,161 | ||||||||||
| ARPU | $ | 35 | $ | 34 | $ | 31 | $ | 33 | $ | 30 | ||||||||||
| Churn | 6.65 | % | 6.38 | % | 8.16 | % | 6.62 | % | 8.51 | % | ||||||||||
| Net additions (losses) (in thousands) | 666 | 777 | (329 | ) | 2,117 | (667 | ) | |||||||||||||
| End of period subscribers (in thousands) | 5,714 | 5,048 | 3,911 | 5,714 | 3,911 | |||||||||||||||
| Hours per subscriber | 22 | 19 | 14 | 19 | 13 | |||||||||||||||
| Wholesale and Affiliate Subscribers | ||||||||||||||||||||
| Net (losses) additions (in thousands) | (410 | ) | (43 | ) | 130 | (59 | ) | 326 | ||||||||||||
| End of period subscribers (in thousands) | 8,931 | 9,341 | 8,844 | 8,931 | 8,844 | |||||||||||||||
| Total Subscribers | ||||||||||||||||||||
| Net losses (in thousands) | (545 | ) | (257 | ) | (1,321 | ) | (984 | ) | (3,309 | ) | ||||||||||
| End of period subscribers (in thousands) | 48,281 | 48,826 | 50,538 | 48,281 | 50,538 | |||||||||||||||
| Sprint Nextel Corporation | ||||||||||||||||||||
| WIRELINE STATEMENTS OF OPERATIONS AND STATISTICS (Unaudited) | ||||||||||||||||||||
| (Millions) | ||||||||||||||||||||
| TABLE NO. 7 | ||||||||||||||||||||
| Quarter Ended | Year To Date | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Net Operating Revenues | ||||||||||||||||||||
| Voice | $ | 648 | $ | 644 | $ | 755 | $ | 1,952 | $ | 2,365 | ||||||||||
| Data | 150 | 171 | 231 | 520 | 750 | |||||||||||||||
| Internet | 585 | 583 | 556 | 1,745 | 1,580 | |||||||||||||||
| Other | 28 | 30 | 34 | 87 | 116 | |||||||||||||||
| Total net operating revenues | 1,411 | 1,428 | 1,576 | 4,304 | 4,811 | |||||||||||||||
| Net Operating Expenses | ||||||||||||||||||||
| Costs of services and products | 924 | 899 | 1,070 | 2,776 | 3,218 | |||||||||||||||
| Selling, general and administrative | 163 | 177 | 243 | 566 | 744 | |||||||||||||||
| Depreciation | 147 | 146 | 143 | 424 | 404 | |||||||||||||||
| Other, net | (18 | ) | (2 | ) | - | 53 | 67 | |||||||||||||
| Total net operating expenses | 1,216 | 1,220 | 1,456 | 3,819 | 4,433 | |||||||||||||||
| Operating Income | $ | 195 | $ | 208 | $ | 120 | $ | 485 | $ | 378 | ||||||||||
| NON-GAAP RECONCILIATION | Quarter Ended | Year To Date | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Operating Income | $ | 195 | $ | 208 | $ | 120 | $ | 485 | $ | 378 | ||||||||||
| Severance and exit costs (4) | 7 | (2 | ) | 2 | 78 | 69 | ||||||||||||||
| Asset impairments and abandonments | - | - | (2 | ) | - | (2 | ) | |||||||||||||
| Depreciation | 147 | 146 | 143 | 424 | 404 | |||||||||||||||
| Access costs (6) | (25 | ) | - | - | (25 | ) | - | |||||||||||||
| Adjusted OIBDA* | 324 | 352 | 263 | 962 | 849 | |||||||||||||||
| Capital expenditures (2) | 72 | 47 | 81 | 196 | 342 | |||||||||||||||
| Adjusted OIBDA* less Capex | $ | 252 | $ | 305 | $ | 182 | $ | 766 | $ | 507 | ||||||||||
| Adjusted OIBDA Margin* | 23.0 | % | 24.6 | % | 16.7 | % | 22.4 | % | 17.6 | % | ||||||||||
| Sprint Nextel Corporation | ||||||||||||||||||||
| CONDENSED CONSOLIDATED CASH FLOW INFORMATION (Unaudited) | ||||||||||||||||||||
| (Millions) | ||||||||||||||||||||
| TABLE NO. 8 | ||||||||||||||||||||
| Year to Date Period Ended | ||||||||||||||||||||
| September 30, | September 30, | |||||||||||||||||||
| 2009 | 2008 | |||||||||||||||||||
| Operating Activities | ||||||||||||||||||||
| Net loss | $ | (1,456 | ) | $ | (1,175 | ) | ||||||||||||||
| Depreciation and amortization | 5,614 | 6,415 | ||||||||||||||||||
| Provision for losses on accounts receivable | 266 | 559 | ||||||||||||||||||
| Share-based compensation expense | 61 | 207 | ||||||||||||||||||
| Deferred and other income taxes | (993 | ) | (747 | ) | ||||||||||||||||
| Equity in losses of unconsolidated investments and other, net | 587 | 17 | ||||||||||||||||||
| Gains from asset dispositions and exchanges | (60 | ) | (29 | ) | ||||||||||||||||
| Contribution to pension plan | (200 | ) | - | |||||||||||||||||
| Other, net | (143 | ) | (146 | ) | ||||||||||||||||
| Net cash provided by operating activities | 3,676 | 5,101 | ||||||||||||||||||
| Investing Activities | ||||||||||||||||||||
| Capital expenditures | (1,119 | ) | (3,272 | ) | ||||||||||||||||
| Expenditures relating to FCC licenses | (471 | ) | (655 | ) | ||||||||||||||||
| Proceeds from sales and exchanges of assets | 57 | 76 | ||||||||||||||||||
| Change in short-term investments, net | (532 | ) | 113 | |||||||||||||||||
| Other, net | (7 | ) | (10 | ) | ||||||||||||||||
| Net cash used in investing activities | (2,072 | ) | (3,748 | ) | ||||||||||||||||
| Financing Activities | ||||||||||||||||||||
| Borrowings under credit facility | - | 2,500 | ||||||||||||||||||
| Repayments under credit facility | - | (500 | ) | |||||||||||||||||
| Proceeds from issuance of commercial paper | - | 681 | ||||||||||||||||||
| Maturities of commercial paper | - | (1,060 | ) | |||||||||||||||||
| Proceeds from issuance of debt securities | 1,281 | - | ||||||||||||||||||
| Retirements and payments of debt and capital leases | (1,214 | ) | (1,797 | ) | ||||||||||||||||
| Proceeds from financing obligation | 22 | 645 | ||||||||||||||||||
| Proceeds from issuance of common shares, net | - | 48 | ||||||||||||||||||
| Net cash provided by financing activities | 89 | 517 | ||||||||||||||||||
| Net Increase in Cash and Cash Equivalents | 1,693 | 1,870 | ||||||||||||||||||
| Cash and Cash Equivalents, beginning of period | 3,691 | 2,246 | ||||||||||||||||||
| Cash and Cash Equivalents, end of period | $ | 5,384 | $ | 4,116 | ||||||||||||||||
| RECONCILIATION TO FREE CASH FLOW (NON-GAAP) | ||||||||||||||||||||
| (Millions) | ||||||||||||||||||||
| TABLE NO. 9 | ||||||||||||||||||||
| Quarter Ended | Year to Date | |||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | September 30, | ||||||||||||||||
| 2009 | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||
| Net Cash Provided by Operating Activities | $ | 1,161 | $ | 1,152 | $ | 1,915 | $ | 3,676 | $ | 5,101 | ||||||||||
| Capital expenditures | (402 | ) | (340 | ) | (703 | ) | (1,119 | ) | (3,272 | ) | ||||||||||
| Expenditures relating to FCC licenses | (143 | ) | (138 | ) | (187 | ) | (471 | ) | (655 | ) | ||||||||||
| Proceeds from sales and exchanges of assets | 51 | 5 | 40 | 57 | 76 | |||||||||||||||
| Other investing activities, net | (3 | ) | (3 | ) | (6 | ) | (7 | ) | (10 | ) | ||||||||||
| Free Cash Flow* | 664 | 676 | 1,059 | 2,136 | 1,240 | |||||||||||||||
| Increase (decrease) in debt and other, net | 671 | (604 | ) | (393 | ) | 89 | 469 | |||||||||||||
| Proceeds from issuance of common shares, net | - | - | 22 | - | 48 | |||||||||||||||
| Net Increase in Cash, Cash Equivalents and Short-Term Investments | $ | 1,335 | $ | 72 | $ | 688 | $ | 2,225 | $ | 1,757 | ||||||||||
| Sprint Nextel Corporation | ||||||||
| CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||||
| (Millions) | ||||||||
| TABLE NO. 10 | ||||||||
| September 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 5,384 | $ | 3,691 | ||||
| Short-term investments | 559 | 28 | ||||||
| Accounts and notes receivable, net | 3,155 | 3,361 | ||||||
| Device and accessory inventory | 485 | 528 | ||||||
| Deferred tax assets | 98 | 93 | ||||||
| Prepaid expenses and other current assets | 578 | 643 | ||||||
| Total current assets | 10,259 | 8,344 | ||||||
| Investments | 3,732 | 4,241 | ||||||
| Property, plant and equipment, net | 19,100 | 22,373 | ||||||
| FCC licenses and trademarks | 19,790 | 19,320 | ||||||
| Customer relationships, net | 812 | 1,932 | ||||||
| Other intangible assets, net | 1,495 | 1,634 | ||||||
| Other assets | 460 | 408 | ||||||
| Total | $ | 55,648 | $ | 58,252 | ||||
| Liabilities and Shareholders' Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 2,161 | $ | 2,138 | ||||
| Accrued expenses and other current liabilities | 3,422 | 3,525 | ||||||
| Current portion of long-term debt, financing and capital lease obligations | 765 | 618 | ||||||
| Total current liabilities | 6,348 | 6,281 | ||||||
| Long-term debt, financing and capital lease obligations | 20,892 | 20,992 | ||||||
| Deferred tax liabilities | 6,385 | 7,196 | ||||||
| Other liabilities | 3,789 | 4,178 | ||||||
| Total liabilities | 37,414 | 38,647 | ||||||
| Shareholders' equity | ||||||||
| Common shares | 5,872 | 5,902 | ||||||
| Paid-in capital | 47,085 | 47,314 | ||||||
| Treasury shares, at cost | (1,168 | ) | (1,939 | ) | ||||
| Accumulated deficit | (33,067 | ) | (31,148 | ) | ||||
| Accumulated other comprehensive loss | (488 | ) | (524 | ) | ||||
| Total shareholders' equity | 18,234 | 19,605 | ||||||
| Total | $ | 55,648 | $ | 58,252 | ||||
| NET DEBT (NON-GAAP) (Unaudited) | ||||||||
| (Millions) | ||||||||
| TABLE NO. 11 | ||||||||
| September 30, | December 31, | |||||||
| 2009 | 2008 | |||||||
| Total Debt | $ | 21,657 | $ | 21,610 | ||||
| Less: Cash and cash equivalents | (5,384 | ) | (3,691 | ) | ||||
| Less: Short-term investments | (559 | ) | (28 | ) | ||||
| Net Debt* | $ | 15,714 | $ | 17,891 | ||||
| Sprint Nextel Corporation | |||||||
| SCHEDULE OF DEBT (Unaudited) | |||||||
| (Millions) | |||||||
| TABLE NO. 12 | |||||||
| September 30, | |||||||
| 2009 | |||||||
|
ISSUER |
COUPON | MATURITY | PRINCIPAL | ||||
| Sprint Nextel Corporation | |||||||
| Floating Rate Notes due 2010 | 0.683 | % | 06/28/2010 | 750 | |||
| Bank Credit Facility | 3.000 | % | 12/19/2010 | 1,000 | |||
| Export Development Canada Facility | 3.389 | % | 03/30/2012 | 750 | |||
| 6% Notes due 2016 | 6.000 | % | 12/01/2016 | 2,000 | |||
| 9.25% Debentures due 2022 | 9.250 | % | 04/15/2022 | 200 | |||
| 8.375% Notes due 2017 | 8.375 | % | 08/15/2017 | 1,300 | |||
| Sprint Nextel Corporation subtotal | 6,000 | ||||||
| Sprint Capital Corporation | |||||||
| 7.625% Notes due 2011 | 7.625 | % | 01/30/2011 | 1,650 | |||
| 8.375% Notes due 2012 | 8.375 | % | 03/15/2012 | 2,000 | |||
| 6.9% Notes due 2019 | 6.900 | % | 05/01/2019 | 1,729 | |||
| 6.875% Notes due 2028 | 6.875 | % | 11/15/2028 | 2,475 | |||
| 8.75% Notes due 2032 | 8.750 | % | 03/15/2032 | 2,000 | |||
| Sprint Capital Corporation subtotal | 9,854 | ||||||
| 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. subtotal | 4,780 | ||||||
| Tower financing obligation | 9.500 | % | 01/15/2030 | 697 | |||
| Capital lease obligations and other | 197 | ||||||
| TOTAL PRINCIPAL | 21,528 | ||||||
| Net premiums | 129 | ||||||
| TOTAL DEBT | $ 21,657 | ||||||
|
Sprint Nextel Corporation |
||
|
NOTES TO THE FINANCIAL INFORMATION (Unaudited) |
||
|
(1) |
In the third quarter 2008 and year to date 2008, Adjusted OIBDA* and capital expenditures include $75 million and $227 million in non-recurring operating expenses and $134 million and $469 million in non-recurring capital expenditures, respectively, associated with the company's WiMAX efforts prior to the closing of the Clearwire transaction in 2008. |
|
|
(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 can be found in the condensed consolidated cash flow information on Table No. 8 and the reconciliation to free cash flow on Table No. 9. | |
|
(3) |
For the nine months ended September 30, 2009, a pre-tax charge of $154 million ($96 million after tax) was recorded related to Clearwire's issuance of shares to other investors, to finalize ownership percentages. |
|
|
(4) |
For the nine months ended September 30, 2009 and 2008, we recorded severance and exit costs primarily related to work force reductions and continued organizational realignment initiatives. | |
|
(5) |
For the quarters ended September 30, 2009 and 2008, gains from asset dispositions and exchanges are primarily due to spectrum exchange transactions. | |
|
(6) |
Favorable developments during the third quarter of 2009 relating to disagreements with local exchange carriers resulted in a reduction of $25 million in expected access costs associated with prior periods. | |
|
(7) |
All merger and integration costs are related to the Sprint-Nextel merger and/or the PCS Affiliates and Nextel Partners' acquisitions and are generally non-recurring in nature. These expenses are classified as selling, general and administrative, cost of products, or equipment revenues, as appropriate, in our consolidated statement of operations. |
|
Source: Sprint Nextel
Sprint Nextel
Media Relations:
James Fisher, 703-433-8677
james.w.fisher@sprint.com [3]
or
Investor Relations:
Yijing Brentano, 800-259-3755
Investor.relations@sprint.com [4]
Links:
[1] http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.sprint.com%2Finvestor&esheet=6086419&lan=en_US&anchor=www.sprint.com%2Finvestor&index=1&md5=67b505f55f6b4fdead63bd6cc82fa773
[2] http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.sprint.com%2F&esheet=6086419&lan=en_US&anchor=www.sprint.com&index=2&md5=68232445bb564aa5f18cb2ec02830fdc
[3] mailto:james.w.fisher@sprint.com
[4] mailto:Investor.relations@sprint.com