Exhibit 99
Sprint Reports Fourth Quarter and Full-Year 2003 Results
o Sprint reports full-year Free Cash Flow* of $2.3 billion
o FON Group reports improving revenue comparisons, strong cash flows
o PCS Group delivers strong operating and financial performance
OVERLAND PARK, Kan. - Feb. 3, 2004:
The Sprint FON Group (NYSE: FON) is comprised of Sprint's global markets
division, local division and other businesses consisting primarily of wholesale
distribution of telecommunications products.
The Sprint PCS Group (NYSE: PCS) consists of Sprint's mobile wireless
operations.
Sprint today announced fourth quarter and full-year 2003 financial results.
Sprint completed the year with improving top-line performance, substantial
progress on profitability and excellent cash flow generation. In the quarter,
Sprint's total net operating revenues increased 2% compared to the fourth
quarter of 2002; total Adjusted Operating Income* was up 20%; and fourth quarter
Free Cash Flow* totaled $581 million.
In the quarter, Sprint made strong gains in key growth metrics. The PCS Group
added over one million net customers in the fourth quarter, consisting of
390,000 net direct customer additions combined with 640,000 from our wholesale
and affiliate partners. The PCS Group, through all channels, was serving a total
of 20.4 million customers at the end of the year, an increase of more than 2.6
million, or 15%, from a year ago.
The Local Division surpassed 300,000 DSL subscribers, and sales of Sprint
Complete Sense, Sprint's bundle of communication services including competitive
local service, topped 280,000 following its second quarter launch. On the
strength of its product bundling expertise, Sprint improved product penetration
in its local customer base, exiting the year with two out of three local
consumer customers taking one or more of Sprint's strategic products in addition
to local phone service.
The FON Group reported earnings per share from continuing operations of 40 cents
for the fourth quarter, compared to 28 cents in the fourth quarter of 2002.
Before special items described in the FON discussion below, FON Group's Adjusted
EPS* was 39 cents versus 37 cents in the year-ago period, a 5% increase.
The PCS Group reported a loss from continuing operations of 31 cents per share
for the fourth quarter, compared to a loss of 25 cents per share in the fourth
quarter of 2002. Before special items described in the PCS discussion below, the
PCS Group reported a 10 cent Adjusted loss per share* versus an 18 cent loss in
the year-ago period, a 44% improvement.
"I'm pleased with our operational and financial performance in the period," said
Gary Forsee, Sprint chairman and chief executive officer. "Our results
demonstrate that we kept our eye focused on execution even as we worked
extensively to transform our organization to market-facing units for the
business and consumer segments.
"We achieved good progress in 2003 on profitability within both the FON Group
and PCS Group. FON Group exceeded the original Adjusted EPS* goal for the year,
and the PCS Group exceeded the Adjusted EBITDA* goal for the year," Forsee
added. "Our momentum is also evident in our growing financial strength and
flexibility as we reduced Net Debt* for the full year by $4.2 billion and
significantly improved credit ratios. Throughout 2003 the Sprint team was able
to overcome market challenges, and I am delighted to report that we enter 2004
with a streamlined, customer-driven organization that is eager to build on these
successes."
Sprint Consolidated Highlights
Sprint Corporation
Selected Financial Data
(millions)
- ------------------------------------------------------------------------------
Quarters Ended
December 31, December 31, Percent
2003 2002 Change
- ------------------------------------------------------------------------------
Net operating revenues $6,681 $6,541 2.1%
Operating income (loss) 325 388 (16.2%)
Income (loss) from
continuing operations 35 -
Net income (loss) $38 $39 (2.6%)
Year-to-Date
December 31, December 31, Percent
2003 2002 Change
- ------------------------------------------------------------------------------
Net operating revenues $26,197 $26,679 (1.8%)
Operating income (loss) 861 2,100 (59.0%)
Income (loss) from
continuing operations (367) 471
Net income (loss) $1,215 $630 92.9%
- ------------------------------------------------------------------------------
Fourth quarter consolidated net operating revenues were $6.7 billion, compared
to $6.5 billion in the same period last year. Net income for the fourth quarter
was $38 million versus net income of $39 million for the same period last year.
Operating income was $325 million in the fourth quarter compared with operating
income of $388 million a year ago. Adjusted Operating Income* was up 20% to $759
million this quarter, compared with $633 million a year ago. Full year Adjusted
Operating Income* was $2.9 billion, up 16% from $2.5 billion in 2002.
At year-end 2003, cash on hand was $2.4 billion as Sprint continues to be ahead
of schedule on planned debt reduction. In the quarter, Net Debt* was cut by $392
million and now stands at $16.7 billion.
Sprint FON Group Highlights
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Sprint FON Group
Selected Financial Data
(millions, except
per share data) Quarters Ended
December 31, December 31, Percent
2003 2002 Change
- ------------------------------------------------------------------------------
Net operating revenues $3,536 $3,668 (3.6%)
Operating income (loss) 438 379 15.6%
Income (loss) from
continuing operations 357 255 40.0%
Discontinued operation, net 3 39 (92.3%)
Net income (loss) $360 $294 22.4%
Earnings per share $0.40 $0.33 21.2%
Capex $533 $631 (15.5%)
Free Cash Flow* $821 $850 (3.4%)
Year-to-Date
December 31, December 31, Percent
2003 2002 Change
- ------------------------------------------------------------------------------
Net operating revenues $14,185 $15,227 (6.8%)
Operating income (loss) 268 1,592 (83.2%)
Income (loss) from
continuing operations 294 1,049 (72.0%)
Discontinued operation, net 1,324 159
Cumulative effect of change in
accounting principle, net 258 -
Net income (loss) $1,876 $1,208 55.3%
Earnings per share $2.09 $1.36 53.7%
Capex $1,674 $2,181 (23.2%)
Free Cash Flow* $2,022 $1,749 15.6%
- -----------------------------------------------------------------------------
o In the quarter, FON Group revenues declined 4% from the same period a year
ago. Revenues were flat compared to the third quarter and full-year
revenues declined 7% compared to last year.
o In the quarter, FON Group Adjusted Operating Income* increased 1% compared
to last year. Sequentially, this measure was up 4%.
o FON Group Adjusted EBITDA* for the quarter of $1.14 billion decreased 3%
compared to last year and increased 3% on a sequential basis.
o FON Group's Free Cash Flow* of $821 million decreased by $29 million
compared to $850 million in the year-ago quarter. Full-year Free Cash Flow*
of $2 billion increased 16%. The FON Group's 2003 Free Cash Flow* reflects
a $400 million pension contribution made in the third quarter.
Sprint FON Group Earnings
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Sprint FON Group
Earnings per share Quarters Ended
December 31, December 31, Percent
2003 2002 Change
- ----------------------------------------------------------------------------
GAAP earnings (loss) per
share $0.40 $0.33 21.2%
Discontinued operation - 0.05
Income (loss) from
continuing operations $0.40 $0.28 42.9%
Special items
Restructuring and
asset impairments 0.01 0.09
WorldCom bad debt (0.03) -
Long term disability 0.07 -
Shareholder
litigation charge (0.01) -
Tax benefits (0.05) -
Adjusted earnings per
share* $0.39 $0.37 5.4%
Year-to-Date
December 31, December 31, Percent
2003 2002 Change
- ----------------------------------------------------------------------------
GAAP earnings per share $2.09 $1.36 53.7%
Discontinued operation 1.47 0.18
Cumulative effect of a
change in accounting
principle 0.29 -
Income (loss) from
continuing operations $0.33 $1.18 (72.0%)
Special items
Restructuring and
asset impairments 1.11 0.18
Executive separation 0.01 -
WorldCom bad debt (0.03) 0.02
Long term disability 0.07 -
Shareholder
litigation charge - -
Premium on early
retirement of debt 0.02 -
Tax benefits (0.05) (0.26)
EarthLink impairment - 0.27
Sale of customer
contracts - (0.03)
Adjusted earnings per
share* $1.46 $1.36 7.4%
- ----------------------------------------------------------------------------
The difference between reported FON Group EPS and Adjusted EPS*, is the result
of the following special items in 2003:
o Discontinued operation - reflects the operational activity and gain on sale
of Sprint's directory publishing business.
o Cumulative effect of a change in accounting principle - a pre-tax gain of
$420 million was recorded in the first quarter of 2003 upon adoption of
Statement of Financial Accounting Standards No. 143, Accounting for Asset
Retirement Obligations.
o Restructuring and asset impairments - a pre-tax charge of $18 million was
recorded in the fourth quarter of 2003 primarily related to severance costs
associated with Sprint's transformation to a customer-focused
organizational design and additional Web hosting activity offset by
true-ups related to the finalization of Sprint's 2001 and 2002
restructuring activities. A pre-tax charge of $1.22 billion was recorded in
the third quarter of 2003 related to a revaluation of the fair value of
Sprint's MMDS spectrum. A pre-tax charge of $348 million was recorded in
the second quarter of 2003 along with an additional $2 million in the third
quarter of 2003 primarily associated with the decision to wind down
Sprint's Web hosting business.
o Executive separation agreements - a pre-tax charge of $17 million was
recorded in the second quarter of 2003 for the FON Group's share of charges
associated with executive separation agreements.
o WorldCom bad debt - a pre-tax benefit of $50 million was recorded in the
fourth quarter of 2003 as a result of a bankruptcy settlement reached with
MCI (WorldCom).
o Long-term disability - a pre-tax charge of $105 million was recorded in the
fourth quarter of 2003 after determining an understatement of costs for
medical coverage for participants in the long-term disability plan occurred
in periods before 2003.
o Shareholder litigation charge - a pre-tax charge of $24 million was
recorded in the first quarter of 2003 for the FON Group's share of a
shareholder litigation settlement. This charge was partially offset by $8
million of insurance settlements in the third quarter of 2003 and insurance
settlements of $9 million in the fourth quarter of 2003.
o Premium on early retirement of debt - a pre-tax charge of $19 million was
recorded in the first quarter of 2003 and $2 million in the third quarter
of 2003 related to the early retirement of approximately $1.2 billion of
long-term debt.
o Tax benefits - tax benefits of $44 million were recorded in the fourth
quarter of 2003 related to the recognition of certain federal and state
income tax credits and the cumulative impact of changes in state income tax
apportionments.
Special items for 2002 are discussed in the attached financial tables.
Local Division
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Local
Selected Financial Data
(millions) Quarters Ended
December 31, December 31, Percent
2003 2002 Change
- ----------------------------------------------------------------------------
Net operating revenues
Voice $1,155 $1,194 (3.3%)
Data 196 168 16.7%
Other 197 202 (2.5%)
Net operating revenues 1,548 1,564 (1.0%)
Operating expenses
Cost of services &
products 477 478 (0.2%)
Selling, general &
administrative 350 323 8.4%
Depreciation 277 292 (5.1%)
Restructuring and
asset impairments 24 53 (54.7%)
Total operating
expenses 1,128 1,146 (1.6%)
Operating Income (loss) $420 $418 0.5%
Capex $389 $415 (6.3%)
Year-to-Date
December 31, December 31, Percent
2003 2002 Change
- ----------------------------------------------------------------------------
Net operating revenues
Voice $4,659 $4,810 (3.1%)
Data 737 646 14.1%
Other 747 801 (6.7%)
Net operating revenues 6,143 6,257 (1.8%)
Operating expenses
Cost of services &
products 1,950 1,945 0.3%
Selling, general &
administrative 1,296 1,269 2.1%
Depreciation 1,085 1,157 (6.2%)
Restructuring and
asset impairments 24 56 (57.1%)
Total operating
expenses 4,355 4,427 (1.6%)
Operating Income (loss) $1,788 $1,830 (2.3%)
Capex $1,240 $1,286 (3.6%)
- ----------------------------------------------------------------------------
o Fourth quarter revenues of $1.55 billion declined 1% from $1.56 billion in
the year-ago period. Revenues increased 1%, sequentially.
o Adjusted EBITDA* was $744 million for the quarter compared to $763 million
last year and $729 million in the third quarter. Full-year Adjusted EBITDA*
of $2.93 billion is 5% below the comparable period in 2002.
o Adjusted Operating Income* was $467 million for the quarter compared to
$471 million a year ago and $459 million in the third quarter. Compared to
the year-ago quarter, incremental pension related costs reduced Adjusted
EBITDA* and Adjusted Operating Income* by $23 million.
o In the quarter, the Local Division added approximately 40,000 DSL customers
to end the year with over 304,000 lines.
o Total switched access lines declined at a 2.2% annual rate, but were flat
sequentially.
In addition to strong DSL growth, the Local Division improved penetration of our
strategic products, expanded Sprint-branded service beyond our existing markets
to Dallas and Kansas City, and made progress in converting circuit-based
networks to next-generation packet technology. At the end of the fourth quarter,
66% of our local consumer customers have one or more of our strategic products
including long-distance, DSL, Sprint PCS wireless service or a premium package
of vertical services. In the quarter, the division successfully converted 20
additional switch complexes to packet technology and had converted a total of
nearly 130,000 lines by the end of the year.
Total fourth quarter expenses decreased 2% compared to a year ago. Special items
accounted for approximately one third of this reduction. Reduced staffing and
tight general expense controls mitigated the pension expense. Lower depreciation
expense in 2003 was due to the adoption of SFAS No. 143 and reduced depreciation
rates on switching equipment.
Global Markets Division
- -----------------------------------------------------------------------------
Global Markets
Selected Financial Data
(millions) Quarters Ended
December 31, December 31, Percent
2003 2002 Change
- -----------------------------------------------------------------------------
Net operating revenues
Voice $1,219 $1,331 (8.4%)
Data 459 451 1.8%
Internet 252 259 (2.7%)
Other 44 54 (18.5%)
Net operating revenues 1,974 2,095 (5.8%)
Operating expenses
Cost of services &
products 1,020 1,076 (5.2%)
Selling, general &
administrative 574 600 (4.3%)
Depreciation 355 380 (6.6%)
Restructuring and
asset impairments (7) 71
Total operating
expenses 1,942 2,127 (8.7%)
Operating income (loss) $32 $(32)
Capex $107 $166 (35.5%)
Year-to-Date
December 31, December 31, Percent
2003 2002 Change
- ----------------------------------------------------------------------------
Net operating revenues
Voice $ 4,994 $ 5,768 (13.4%)
Data 1,845 1,847 (0.1%)
Internet 973 1,009 (3.6%)
Other 180 319 (43.6%)
Net operating revenues 7,992 8,943 (10.6%)
Operating expenses
Cost of services &
products 4,245 5,015 (15.4%)
Selling, general &
administrative 2,227 2,455 (9.3%)
Depreciation 1,428 1,479 (3.4%)
Restructuring and
asset impairments 1,564 194
Total operating
expenses 9,464 9,143 3.5%
Operating income (loss) $ (1,472) $ (200)
Capex $ 325 $ 733 (55.7%)
- -----------------------------------------------------------------------------
o Net operating revenues declined 6% to $1.97 billion from $2.10 billion a
year ago, but were flat sequentially. Without a customer's partial buyout
of its contract for Internet service, fourth quarter revenues would have
declined 7% from the year-ago period and would have decreased 1%
sequentially.
o Adjusted Operating Income* for the quarter was $56 million compared to $39
million in the year-ago period.
o Adjusted EBITDA* was $411 million in the quarter, down 2% from the year-ago
period and up 5% sequentially. Full-year Adjusted EBITDA* of $1.56 billion
is 6% above 2002.
In the quarter, total business revenues, including wholesale and affiliates,
declined 3% from the year-ago period, but were up 1% sequentially. Consumer
revenues were down 19% from the year ago period, and declined 7% sequentially.
Revenue declines in consumer long-distance are beginning to be partially
mitigated by growing competitive local service revenues from Sprint Complete
Sense. This revenue source surpassed $100 million for the year.
In the quarter, total voice revenues decreased 8% compared to the year-ago
period and 2% sequentially. Voice revenues were impacted by ongoing product
substitution and increased competition.
Data revenues increased 2% from the year-ago period but declined 1%
sequentially. Compared to the year ago period, growth in Frame Relay, private
line and managed network services was partially offset by lower ATM revenues. IP
revenues declined 3% compared to the fourth quarter of 2002. Excluding the
customer contract buyout, fourth quarter IP revenue would have declined 12% from
the year-ago period. Within this category, growth in dedicated services was
offset by declines in dial-up and hosting revenues. Other revenues were impacted
by lower sales of early generation data services.
The Global Markets Division total expenses declined 9% compared to the year-ago
period. Special items account for 25% of this decline. The remaining 75% of the
expense decline is being driven by workforce reductions, reduced depreciation,
improvement in bad debt expense and initiatives to improve access unit costs.
Sprint PCS Group Highlights
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Sprint PCS Group
Selected Financial Data
(millions, except
per share data) Quarters Ended
December 31, December 31, Percent
2003 2002 Change
- -----------------------------------------------------------------------------
Net operating revenues $3,307 $3,051 8.4%
Operating expenses
Cost of services &
products 1,558 1,467 6.2%
Selling, general &
administrative 888 855 3.9%
Depreciation &
amortization 633 609 3.9%
Restructuring and
asset impairment 352 120
Total operating
expenses 3,431 3,051 12.5%
Operating Income (loss) $ (124) $ -
Net income (loss) $ (322) $ (255) (26.3)%
Loss per share $(0.31) $(0.25) (24.0)%
Capex $ 939 $ 590 59.2%
Free Cash Flow* $ (240) $ (233) (3.0%)
Year-to-Date
December 31, December 31, Percent
2003 2002 Change
- -----------------------------------------------------------------------------
Net operating revenues $12,690 $12,074 5.1%
Operating expenses
Cost of services &
products 6,155 5,783 6.4%
Selling, general &
administrative 3,136 3,411 (8.1%)
Depreciation &
amortization 2,486 2,267 9.7%
Restructuring & asset
impairments 362 138
Total operating
expenses 12,139 11,599 4.7%
Operating Income (loss) $ 551 $ 475 16.0%
Net income (loss) $ (661) $ (578) (14.4%)
Loss per share $ (0.66) $ (0.58) (13.8%)
Capex $ 2,150 $ 2,668 (19.4%)
Free Cash Flow* $ 308 $ (592)
- ------------------------------------------------------------------------------
o Fourth quarter net subscriber additions include 390,000 post-paid retail,
554,000 from wholesale channels and 86,000 from affiliates. At the end of
the period, the PCS Group was serving a total of 20.4 million customers,
consisting of 15.9 million direct, 2.9 million affiliates and 1.6 million
wholesale.
o Direct gross customer additions were 1.67 million in the quarter, a 7%
year-over-year decline but an 18% sequential improvement.
o Based on strong service revenue, net operating revenues for the PCS Group
were up over 8% year over year. Net operating revenues were down 1%
sequentially due to higher equipment rebates primarily related to increased
take rates on two-year contracts.
o Fourth quarter Adjusted Operating Income* was $237 million, an increase of
98% compared to $120 million in the year-ago period. In the third quarter,
Adjusted Operating Income* was $284 million.
o Adjusted EBITDA* in the fourth quarter was $870 million, a 19% improvement
from $729 million a year ago. Full-year Adjusted EBITDA* of $3.43 billion
was a 20% increase from 2002.
o Average monthly service revenue per user (ARPU)* was $62 in the fourth
quarter. This was even with the year-ago period, but a decline of $1
sequentially. During the quarter, average customer usage was approximately
14 hours per month, up from approximately 11 hours in the fourth quarter of
2002.
o The cost to acquire a new customer (CPGA)* in the fourth quarter was $425,
down sequentially from $465, but above the $370 reported a year ago. CPGA*
was impacted by increased sales and distribution costs, increased marketing
spending, and increased rebates as a result of higher take rates on
two-year contracts. When viewed sequentially, CPGA* declined primarily due
to higher gross additions in the fourth quarter. In the quarter, over 95%
of new customers chose service agreements, and more than 80% of these new
agreements were two years or more in length.
o Cash cost per user (CCPU)* was $31 in the fourth quarter, flat sequentially
and a reduction of $2 from the year-ago period. On a per unit basis, bad
debt, upgrade subsidies and administrative costs were lower while cost of
service and customer care costs were higher.
o Churn was 2.7% this quarter compared to 2.7% in the third quarter and 3.5%
reported a year ago. In late November, wireless local number portability
(WLNP) was instituted for larger markets across the United States. While
the PCS Group experienced an increase in churn in December following WLNP
implementation, the full quarter impact on net additions was immaterial.
In the fourth quarter, the PCS Group experienced strong demand for data
services. In the period nearly 600,000 net new and existing customers added PCS
Vision SM services. At the end of the period more than 3.2 million customers
were subscribing to PCS Vision and more than 2.2 million customers subscribed to
our first generation data services. Combined, more than a third of the direct
customer base are now subscribing to data services. For the full quarter, data
contributed nearly 5% to overall ARPU*.
The PCS Group continues to enhance its growth potential through strategic
alliances. These alliances leverage Sprint's network assets and expand the
channels for selling our services. The Virgin Mobile joint venture had excellent
growth in the quarter and exited 2003 with more than 1.4 million customers. For
the quarter, wholesale and
affiliate revenues totaled $100 million, which was nearly double the year-ago
period.
In the fourth quarter, the PCS Group made substantial progress in deploying
network capacity and enhancing network quality. Capital spending in the quarter
was $939 million, bringing the full-year investment to $2.15 billion. The PCS
Group added approximately 1,800 cell sites in 2003.
The PCS Group's full-year Free Cash Flow* of $308 million is an increase of $900
million over 2002. The 2003 results exclude $700 million of tax sharing payments
from the FON Group associated with the sale of the directory publishing
business.
Sprint PCS Group Earnings
- ------------------------------------------------------------------------------
Sprint PCS Group
Loss per share
Quarters Ended
December 31, December 31, Percent
2003 2002 Change
- ------------------------------------------------------------------------------
GAAP loss per share
$ (0.31) $ (0.25) (24.0%)
Special items
Restructuring and
asset impairments 0.21 0.07
Long term disability 0.01 -
Shareholder
litigation charge (0.01) -
Adjusted loss per share* $ (0.10) $ (0.18) 44.4%
Year-to-Date
December 31, December 31, Percent
2003 2002 Change
- ------------------------------------------------------------------------------
GAAP loss per share $ (0.66) $ (0.58) (13.8%)
Special items
Restructuring and
asset impairments 0.22 0.07
Executive separation 0.01 -
Long term disability 0.01
Shareholder
litigation charge - -
Pegaso sale - (0.07)
Tax benefit - (0.05)
Adjusted loss per share* $ (0.42) $ (0.63) 33.3%
- ------------------------------------------------------------------------------
The difference between reported PCS Group loss per share and Adjusted loss per
share*, is the result of the following special items in 2003:
o Restructuring and asset impairments - a pre-tax charge of $352 million was
recorded in the fourth quarter of 2003 related to the termination of the
development of a new billing platform, as well as severance costs
associated with Sprint's transformation to a customer-focused
organizational design. These charges were partially offset by a benefit
recorded to finalize Sprint's restructuring activities of 2001 and 2002.
o Executive separation agreements - a pre-tax charge of $19 million was
recorded in the second quarter of 2003 for the PCS Group's share of charges
associated with executive separation agreements.
o Long-term disability - a pre-tax charge of $9 million was recorded in the
fourth quarter of 2003 after determining an understatement of costs for
medical coverage for participants in the long-term disability plan occurred
in periods before 2003.
o Shareholder litigation charge - a pre-tax charge of $26 million was
recorded in the first quarter of 2003 for the PCS Group's share of a
shareholder litigation settlement. This charge was partially offset by $9
million of insurance settlements in both the third and fourth quarters of
2003.
o Tax benefit - a tax benefit of $5 million was recorded in the fourth
quarter of 2003 related to the recognition of federal income tax credits.
This had less than a one cent per share impact on EPS.
Special items for 2002 are discussed in the attached financial tables.
*Financial Measures
Sprint provides readers financial measures generated using generally accepted
accounting principles (GAAP) and using adjustments to 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. The financial measures used in this
release include the following:
Adjusted Operating Income (Loss) is defined as operating income plus special
items. This non-GAAP measure should be used in addition to, but not as a
substitute for, the analysis provided in the statement of operations.
Adjusted earnings per share or Adjusted loss per share is defined as diluted
earnings (loss) per share from continuing operations plus special items. This
non-GAAP measure should be used in addition to, but not as a substitute for, the
analysis provided in the statement of operations.
Adjusted EBITDA is defined as operating income plus depreciation, amortization
and special items. This non-GAAP measure should be used in addition to, but not
as a substitute for, the analysis provided in the statement of cash flows.
Free Cash Flow is defined as the change in cash and equivalents less the change
in discontinued operations, debt, investment in debt securities and other
financing activities, net. This non-GAAP measure should be used in addition to,
but not as a
substitute for, the analysis provided in the statement of cash flows.
Net Debt is consolidated debt, including current maturities, and equity unit
notes, less cash and cash equivalents. This non-GAAP measure should be used in
addition to, but not as a substitute for, the analysis provided in the statement
of cash flows.
ARPU (Average monthly service revenue per user) is calculated by dividing
wireless service revenues by weighted average monthly wireless subscribers. ARPU
is used to measure revenue on a per user basis. This is a measure which uses
GAAP as the basis for calculation.
CCPU (Cash cost per user) is calculated by dividing costs of wireless service
revenues, service delivery and other general and administrative costs by
weighted average monthly wireless subscribers. CCPU is a measure analysts use to
evaluate the cash costs to operate the business on a per user basis. This is a
measure, which uses GAAP as the basis for calculation.
Management is currently re-evaluating this metric relative to the guidance on
non-GAAP measures. If the ultimate result of that re-evaluation finds CCPU to be
a non-GAAP measure, Sprint will no longer provide the metric in its public
discussions.
CPGA (Cost per gross addition) is calculated by dividing the costs of acquiring
a new wireless subscriber, including equipment subsidies, marketing costs and
selling expenses, by gross additional subscribers. Management uses this metric
to provide comparison of the efficiency and effectiveness of Sprint's sales and
marketing efforts against our competitors. Analysts use this measure primarily
to determine the value of a new customer. This metric used in conjunction with
the other measures is the basis for evaluating the profitability of the
operation. This is a measure which uses GAAP as the basis for calculation.
Management is currently re-evaluating this metric relative to the guidance on
non-GAAP measures. If the ultimate result of that re-evaluation finds CPGA to be
a non-GAAP measure, Sprint will no longer provide the metric in its public
discussions.
Conference Call Information
Sprint management will provide an overview of the company's performance and
participate in an interactive Q&A that will be webcast Tuesday, Feb. 3, 2004,
beginning at 7:00 a.m. CDT for PCS and 7:45 a.m. CDT for FON. Investors may
participate by viewing the webcast at www.sprint.com.
Please plan on gaining access 10 minutes prior to the start of the calls.
For PCS Group results, call 866-215-1938 (toll free) or 816-650-0742
(international).
A continuous replay of the PCS Group call will be available through Feb. 17,
2004, at the following numbers: 888-775-8673 (toll free) or 402-220-1325
(international).
For FON Group results, call 866-215-1938 (toll free) or 816-650-0742
(international).
A continuous replay of the FON Group call will be available through Feb. 17,
2004, at the following numbers: 888-775-8696 (toll free) or 402-220-1326
(international).
Cautionary Statement regarding forward-looking information
This news release includes "forward-looking statements" within the meaning of
securities laws. The statements in this news release regarding the business
outlook and expected performance as well as other statements that are not
historical facts are forward-looking statements. The words "estimate,"
"project," "intend," "expect," "believe," "target" and similar expressions
identify forward-looking statements. Forward-looking statements are estimates
and projections reflecting management's judgment 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, Sprint has made assumptions regarding, among other
things, customer and network usage, customer growth, pricing, costs to acquire
customers and to provide services, the timing of various events and the economic
environment. Important factors that could cause actual results to differ
materially from estimates or projections contained in the forward-looking
statements include:
o extent and duration of any economic downturn;
o the effects of vigorous competition and potential consolidation in the
markets in which Sprint operates;
o the costs and business risks associated with providing new services and
entering new markets necessary to provide nationwide or global services;
o adverse change in the ratings afforded our debt securities by ratings
agencies;
o the ability of the PCS Group and the Global Markets Division to continue to
grow a significant market presence;
o the ability of the PCS Group and the Global Markets Division to improve
profitability and reduce cash requirements;
o the effects of mergers and consolidations within the telecommunications
industry and unexpected announcements or developments from others in the
telecommunications industry;
o the uncertainties related to bankruptcies affecting the telecommunications
industry;
o the impact to the PCS Group's network coverage due to financial
difficulties of third-party affiliates;
o the uncertainties related to Sprint's investments in networks, systems and
other businesses;
o the impact of any unusual items resulting from ongoing evaluations of
Sprint's business strategies;
o the impact of new, emerging and competing technologies on Sprint's
business;
o unexpected results of litigation filed against Sprint;
o the impact of wireless local number portability on the PCS Group's growth
and churn rates, revenues and expenses;
o the possibility of one or more of the markets in which Sprint competes
being impacted by changes in political or other factors such as monetary
policy, legal and regulatory changes including the impact of the
Telecommunications Act of 1996 (Telecom Act), or other external factors
over which Sprint has no control; and
o other risks referenced from time to time in Sprint's filings with the
Securities and Exchange Commission (SEC).
Sprint believes these forward-looking statements are reasonable; however, you
should not place undue reliance on forward-looking statements, which are based
on current expectations and speak only as of the date of this release. Sprint is
not obligated to publicly release any revisions to forward-looking statements to
reflect events after the date of this release. Sprint provides a detailed
discussion of risk factors in periodic SEC filings, including its 2002 Form
10-K, and you are encouraged to review these filings.
About Sprint
Sprint is a global integrated communications provider serving more than 26
million customers in over 100 countries. With approximately 67,000 employees
worldwide and over $26 billion in annual revenues in 2003, Sprint is widely
recognized for developing, engineering and deploying state-of-the-art network
technologies, including the United States' first nationwide all-digital,
fiber-optic network and an award-winning Tier 1 Internet backbone. Sprint
provides local communications services in 39 states and the District of Columbia
and operates the largest 100-percent digital, nationwide PCS wireless network in
the United States. For more information, visit www.sprint.com.
For further information, contact Corporate Communications:
- - Media Relations:
Mark Bonavia
913-794-1088
mark.bonavia@mail.sprint.com
- - Investor Relations:
Kurt Fawkes
913-794-1126
Investorrelation.sprintcom@mail.sprint.com
Sprint Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
Sprint Corporation
-----------------------------------
Consolidated Eliminations/Reclassifications
- ------------------------------------------------------------------------------------------- ---------------------------------
Quarters Ended December 31, 2003 2002 2003 2002
- ------------------------------------------------------------------------------------------- ---------------------------------
Net operating revenues $ 6,681 $ 6,541 $ (162) $ (178)
- ------------------------------------------------------------------------------------------- ---------------------------------
Operating expenses
Costs of services and products 2,892 2,830 (162) (178)
Selling, general and administrative (1) 1,828 1,795 (11) (9)
Depreciation and amortization 1,266 1,283 - -
Restructuring and asset impairments (2) 370 245 - -
- ------------------------------------------------------------------------------------------- ---------------------------------
Total operating expenses 6,356 6,153 (173) (187)
- ------------------------------------------------------------------------------------------- ---------------------------------
Operating income (loss) 325 388 11 9
Interest expense (322) (362) - -
Intergroup interest charge - - - -
Discount on early retirement of debt (3) - 4 - -
Other income (expense), net (4) (11) (31) (11) (9)
- ------------------------------------------------------------------------------------------- --------------------------------
Income (loss) before income taxes (8) (1) - -
Income tax (expense) benefit (5) 43 1 - -
- ------------------------------------------------------------------------------------------- ---------------------------------
Income (loss) from continuing operations 35 - - -
Discontinued operation, net (6) 3 39 - -
- ------------------------------------------------------------------------------------------- ---------------------------------
Net income (loss) 38 39 - -
Preferred stock dividends (paid) received (2) (2) - -
- ------------------------------------------------------------------------------------------- ---------------------------------
Earnings (loss) applicable to common stock $ 36 $ 37 $ - $ -
-------------------------------- ---------------------------------
Diluted earnings (loss) per common share (8)
Income (loss) from continuing operations
Discontinued operation
- ------------------------------------------------------------------------------------------- ---------------------------------
Total
Diluted weighted average common shares outstanding (9)
Basic earnings (loss) per common share
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
See accompanying footnotes.
Sprint Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
Sprint FON Group Sprint PCS Group
- ------------------------------------------------------------------------------------------- ---------------------------------
Quarters Ended December 31, 2003 2002 2003 2002
- ------------------------------------------------------------------------------------------- ---------------------------------
Net operating revenues $ 3,536 $ 3,668 $ 3,307 $ 3,051
- ------------------------------------------------------------------------------------------- --------------------------------
Operating expenses
Costs of services and products 1,496 1,541 1,558 1,467
Selling, general and administrative (1) 951 949 888 855
Depreciation and amortization 633 674 633 609
Restructuring and asset impairments (2) 18 125 352 120
- ------------------------------------------------------------------------------------------- --------------------------------
Total operating expenses 3,098 3,289 3,431 3,051
- ------------------------------------------------------------------------------------------- --------------------------------
Operating income (loss) 438 379 (124) -
Interest expense (51) (63) (271) (299)
Intergroup interest charge 96 81 (96) (81)
Discount on early retirement of debt (3) - 4 - -
Other income (expense), net (4) 24 1 (24) (23)
- ------------------------------------------------------------------------------------------- --------------------------------
Income (loss) before income taxes 507 402 (515) (403)
Income tax (expense) benefit (5) (150) (147) 193 148
- ------------------------------------------------------------------------------------------- --------------------------------
Income (loss) from continuing operations 357 255 (322) (255)
Discontinued operation, net (6) 3 39 - -
- ------------------------------------------------------------------------------------------- --------------------------------
Net income (loss) 360 294 (322) (255)
Preferred stock dividends (paid) received 2 2 (4) (4)
- ------------------------------------------------------------------------------------------- --------------------------------
Earnings (loss) applicable to common stock $ 362 $ 296 $ (326) $ (259)
- ------------------------------------------------------------------------------------------- --------------------------------
Diluted earnings (loss) per common share (8)
Income (loss) from continuing operations $ 0.40 $ 0.28 $ (0.31) $ (0.25)
Discontinued operation - 0.05 - -
- ------------------------------------------------------------------------------------------- --------------------------------
Total $ 0.40 $ 0.33 $ (0.31) $ (0.25)
----------------------------------- --------------------------------
Diluted weighted average common shares outstanding (9) 907.8 895.8 1,035.1 1,020.8
----------------------------------- --------------------------------
Basic earnings (loss) per common share $ 0.40 $ 0.34 $ (0.31) $ (0.25)
----------------------------------- --------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
See accompanying footnotes.
Sprint Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
Sprint Corporation
-----------------------------------
Consolidated Eliminations/Reclassifications
- ------------------------------------------------------------------------------------------- --------------------------------
Years Ended December 31, 2003 2002 2003 2002
- ------------------------------------------------------------------------------------------- --------------------------------
Net operating revenues $ 26,197 $ 26,679 $ (678) $ (622)
- ------------------------------------------------------------------------------------------- --------------------------------
Operating expenses
Costs of services and products 11,658 12,076 (678) (622)
Selling, general and administrative (1) 6,722 7,202 (42) (33)
Depreciation and amortization 5,005 4,912 - -
Restructuring and asset impairments (2) 1,951 389 - -
- ------------------------------------------------------------------------------------------- --------------------------------
Total operating expenses 25,336 24,579 (720) (655)
- ------------------------------------------------------------------------------------------- --------------------------------
Operating income (loss) 861 2,100 42 33
Interest expense (1,374) (1,406) - -
Intergroup interest charge - - - -
Discount (premium) on early retirement of debt (3) (21) 4 - -
Other income (expense), net (4) (89) (265) (42) (33)
- ------------------------------------------------------------------------------------------- --------------------------------
Income (loss) before income taxes (623) 433 - -
Income tax (expense) benefit (5) 256 38 - -
- ------------------------------------------------------------------------------------------- --------------------------------
Income (loss) from continuing operations (367) 471 - -
Discontinued operation, net (6) 1,324 159 - -
Cumulative effect of change in accounting principle,
net (7) 258 - - -
- ------------------------------------------------------------------------------------------- --------------------------------
Net income (loss) 1,215 630 - -
Preferred stock dividends (paid) received (7) (7) - -
- ------------------------------------------------------------------------------------------- --------------------------------
Earnings (loss) applicable to common stock $ 1,208 $ 623 $ - $ -
----------------------------------- --------------------------------
Diluted earnings (loss) per common share (8)
Income (loss) from continuing operations
Discontinued operation
Cumulative effect of change in accounting principle
- ------------------------------------------------------------------------------------------- --------------------------------
Total
Diluted weighted average common shares outstanding (9)
Basic earnings (loss) per common share
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
See accompanying footnotes.
Sprint Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
Sprint FON Group Sprint PCS Group
- ------------------------------------------------------------------------------------------- --------------------------------
Years Ended December 31, 2003 2002 2003 2002
- ------------------------------------------------------------------------------------------- --------------------------------
Net operating revenues $ 14,185 $ 15,227 $ 12,690 $ 12,074
- ------------------------------------------------------------------------------------------- --------------------------------
Operating expenses
Costs of services and products 6,181 6,915 6,155 5,783
Selling, general and administrative (1) 3,628 3,824 3,136 3,411
Depreciation and amortization 2,519 2,645 2,486 2,267
Restructuring and asset impairments (2) 1,589 251 362 138
- ------------------------------------------------------------------------------------------- --------------------------------
Total operating expenses 13,917 13,635 12,139 11,599
- ------------------------------------------------------------------------------------------- --------------------------------
Operating income (loss) 268 1,592 551 475
Interest expense (236) (295) (1,138) (1,111)
Intergroup interest charge 374 336 (374) (336)
Discount (premium) on early retirement of debt (3) (21) 4 - -
Other income (expense), net (4) 49 (180) (96) (52)
- ------------------------------------------------------------------------------------------- --------------------------------
Income (loss) before income taxes 434 1,457 (1,057) (1,024)
Income tax (expense) benefit (5) (140) (408) 396 446
- ------------------------------------------------------------------------------------------- --------------------------------
Income (loss) from continuing operations 294 1,049 (661) (578)
Discontinued operation, net (6) 1,324 159 - -
Cumulative effect of change in accounting principle,
net (7) 258 - - -
- ------------------------------------------------------------------------------------------- --------------------------------
Net income (loss) 1,876 1,208 (661) (578)
Preferred stock dividends (paid) received 8 7 (15) (14)
- ------------------------------------------------------------------------------------------- --------------------------------
Earnings (loss) applicable to common stock $ 1,884 $ 1,215 $ (676) $ (592)
----------------------------------- --------------------------------
Diluted earnings (loss) per common share (8)
Income (loss) from continuing operations $ 0.33 $ 1.18 $ (0.66) $ (0.58)
Discontinued operation 1.47 0.18 - -
Cumulative effect of change in accounting principle 0.29 - - -
- ------------------------------------------------------------------------------------------- --------------------------------
Total $ 2.09 $ 1.36 $ (0.66) $ (0.58)
Diluted weighted average common shares outstanding (9) 903.2 893.3 1,028.7 1,015.8
Basic earnings (loss) per common share $ 2.09 $ 1.36 $ (0.66) $ (0.58)
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
See accompanying footnotes.
Sprint Corporation
FOOTNOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
(1) In the 2003 fourth quarter, Sprint determined its liability for medical
coverage for participants in the long-term disability plan was understated
for costs incurred in periods prior to 2003. The expense, properly recorded
in each of the respective prior periods, would have had an immaterial
decrease in both income from continuing operations and earnings per share
in the FON Group, and would have had an immaterial increase in the loss
from continuing operations and loss per share in the PCS Group. As the
impact to prior years' annual financial statements was not material, Sprint
recorded an additional $114 million of expense in the 2003 fourth quarter
to reflect the appropriate estimate of liability as of December 31, 2003.
The FON Group recorded $105 million of this charge resulting in a reduction
of income from continuing operations of $66 million, or $0.07 per share.
The remaining $9 million was recorded by the PCS Group, which increased
loss from continuing operations by $6 million, or $0.01 per share.
Also in the 2003 fourth quarter, the FON Group recognized a $50 million
pre-tax benefit to bad debt expense as a result of the settlement of
accounts receivable claims with MCI (WorldCom) that had previously been
fully reserved. This settlement increased income from continuing operations
by $31 million, or $0.03 per share.
In the 2003 second quarter, Sprint recorded charges of $36 million in
connection with the separation agreements agreed to by Sprint and three
former executive officers. This included a $15 million non-cash charge
associated with accounting for modifications to certain terms of stock
options granted in prior periods. The charge to the FON Group was $17
million, which decreased FON Group's income from continuing operations by
$10 million, or $0.01 per share. The charge to the PCS Group was $19
million, which increased the PCS Group's loss from continuing operations by
$12 million, or $0.01 per share.
In the 2002 third quarter, Sprint recorded a charge to bad debt expense in
connection with the bankruptcy declaration of WorldCom, which reduced
operating income by $36 million and income from continuing operations by
$23 million. The charge to the FON Group was $30 million, which reduced
income from continuing operations by $19 million, or $0.02 per share. The
charge to the PCS Group was $6 million, which increased loss from
continuing operations by $4 million with no per share impact.
(2) In the 2003 fourth quarter, Sprint recorded net restructuring charges and
asset impairments aggregating $370 million, which reduced income from
continuing operations by $233 million. The FON Group recorded net
restructuring charges of $52 million representing severance costs
associated with Sprint's transformation to a customer-focused
organizational design, additional facilities and severance charges
associated the termination of the Web Hosting business, and the
finalization of all 2001 and 2002 restructuring liabilities. Additionally,
the FON Group recorded a $5 million impairment for the termination of
software development projects, which was offset by a favorable adjustment
of $39 million related to previously recognized Web Hosting and high-speed
data impairments. These net charges resulted in a reduction of FON Group
income from continuing operations of $11 million, or $0.01 per share. The
PCS Group recorded net restructuring charges of $13 million for severance
costs associated with Sprint's transformation to a customer-focused
organizational design, contractual obligations related to the terminated
development of a new billing platform and the finalization of all 2001 and
2002 restructuring liabilities. The PCS Group also recorded asset
impairments of $339 million related to the terminated development of a new
billing platform. These net charges increased PCS Group loss from
continuing operations by $222 million, or $0.21 per share, and $0.22 per
share in the year-to-date period.
In the 2003 year-to-date period, Sprint recorded restructuring charges and
asset impairments aggregating $2.0 billion, which reduced income from
continuing operations by $1.2 billion. In addition to the 2003 fourth
quarter charges noted above, the FON Group recorded restructuring charges
of $13 million associated with facilities and severance cost related to the
termination of the Web Hosting business. Asset impairment charges of $1.6
billion were associated with the revaluation of the FON Group's MMDS
spectrum to fair value and impairment charges associated with the
termination of the Web Hosting business. For the 2003 year-to-date period,
FON Group restructuring and asset impairment charges totaled $1.6 billion,
which reduced income from continuing operations by $1.0 billion, or $1.11
per share. In addition to the 2003 fourth quarter charges, the PCS Group
recorded a $10 million asset impairment related to the termination of a
software development project, which increased loss from continuing
operations by $6 million, and had no per share impact.
In the 2002 fourth quarter, Sprint recorded restructuring charges and asset
impairments aggregating $245 million, which reduced income from continuing
operations by $154 million. The FON Group recorded a restructuring charge
of $111 million representing consolidations in Sprint's Network,
Information Technology, and Billing and Accounts Receivable organizations,
as well as additional steps to reduce overall operating costs.
Additionally, the FON Group recorded a network asset impairment related to
the Global Markets Division of $14 million. These charges reduced income
from continuing operations by $78 million, or $0.09 per share. The PCS
Group recorded a restructuring charge of $78 million representing the
consolidations in Sprint's Network, Information Technology, and Billing and
Accounts Receivable organizations, as well as additional steps to reduce
overall operating costs. Additionally, the PCS Group recorded an asset
impairment of $42 million representing abandoned projects. These charges
increased loss from continuing operations by $76 million, or $0.07 per
share.
In the 2002 year-to-date period, Sprint recorded restructuring charges and
asset impairments aggregating $389 million. In addition to the 2002 fourth
quarter charges noted above, the FON Group recorded a restructuring and
asset impairment charge of $202 million representing the termination of
high-speed data services, as well as additional steps to reduce operating
costs. The charge was partially offset by a $76 million adjustment to
finalize the 2001 restructuring charge. For the 2002 year-to-date period,
FON Group restructuring and asset impairment charges were $251 million,
which reduced income from continuing operations by $157 million, or $0.18
per share. In addition to the 2002 fourth quarter items, the PCS Group
recorded a $23 million restructuring charge representing the closing of
five PCS call centers. This charge was offset by favorable accounting
true-ups. Additionally, the PCS Group recorded a $5 million favorable
adjustment to finalize the 2001 restructuring charge. For the 2002
year-to-date period, PCS Group restructuring and asset impairment charges,
together with the favorable accounting true ups, increased loss from
continuing operations by $73 million, or $0.07 per share.
SPRINT CORPORATION
FOOTNOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
(3) In the 2003 first quarter, the FON Group recorded a $19 million charge
reflecting the premiums paid on a debt tender offer. In the 2003 third
quarter, an additional $2 million premium was recorded primarily reflecting
the early retirement of local division debt. For the year ended December
31, 2003, these charges decreased FON Group income from continuing
operations by $13 million, or $0.02 per share.
In the 2002 fourth quarter, the FON Group recorded a $4 million benefit
associated with the repayment of debt prior to scheduled maturity, which
increased income from continuing operations by $3 million, with no per
share impact.
(4) In the 2003 first quarter, Sprint recorded to Other income (expense), a $50
million aggregate charge to settle a securities class action and derivative
lawsuit relating to the failed merger with WorldCom. In the 2003 third
quarter, Sprint recorded $17 million from an insurance settlement related
to this action, and in the 2003 fourth quarter, an $18 million settlement
from a second insurer was recorded. The FON Group and the PCS Group each
recorded $9 million of the fourth quarter recovery, which increased each
group's income from continuing operations by $6 million, or $0.01 per
share. For the year ended December 31, 2003 Sprint attributed $7 million of
the net charge to the FON Group, which decreased income from continuing
operations by $4 million with no per share impact. The remaining net charge
of $8 million was attributed to the PCS Group, which increased loss from
continuing operations by $5 million with no per share impact.
In the 2002 second quarter, the FON Group recorded in Other income
(expense), net, charges of $201 million, which reduced income from
continuing operations by $216 million, or $0.24 per share. These amounts
included a gain from the sale of customer contracts for $40 million with an
impact to income from continuing operations of $25 million, or $0.03 per
share. Also included is a write-down of an investment due to declining
market value of $241 million with the same impact on income from continuing
operations, or $0.27 per share.
In the 2002 third quarter, the PCS Group recorded to Other income
(expense), net, a gain on the sale of an equity method investment of $67
million with the same impact on loss from continuing operations, or $0.07
per share.
(5) In the 2003 fourth quarter, Sprint recognized a tax benefit of $49 million
for recognition of certain federal and state income tax credits relating to
various taxing jurisdictions and the cumulative impact of changes in state
tax apportionments. The benefit to the FON Group was $44 million, or $0.05
per share. The benefit to the PCS Group was $5 million, with less than
$0.01 per share impact.
In the 2002 third quarter, Sprint recognized a tax benefit related to the
capital losses not previously recognized of $292 million. The benefit to
the FON Group was $235 million, or $0.26 per share. The benefit to the PCS
Group was $57 million, or $0.05 per share
(6) In the 2003 first quarter, Sprint recorded an after-tax gain of $1.3
billion associated with the sale of its directory publishing business to
R.H. Donnelley. Activity in subsequent quarters relates to final settlement
activity of the sale.
(7) Sprint adopted SFAS No. 143, Accounting for Asset Retirement Obligations on
January 1, 2003. In the FON Group, the local division historically accrued
costs of removal in its depreciation reserves consistent with industry
practice. These costs of removal do not meet the SFAS No. 143 definition of
an asset retirement obligation. Accordingly, the FON Group recorded a
credit of $420 million to remove the accumulated excess cost of removal
resulting in a favorable cumulative effect of change in accounting
principle of $258 million, net of tax. The ongoing impact of this
accounting change is expected to increase FON Group's net income through
reduced depreciation expense by less than $15 million annually.
(8) As the effects of including the incremental shares associated with options,
restricted stock units and ESPP shares are antidilutive, both basic
earnings per share and diluted earnings per share reflect the same
calculation in these consolidated statements of operations for the PCS
Group.
(9) As the effects of including the incremental shares associated with options,
restricted stock units and ESPP shares are antidilutive, they are not
included in the weighted average common shares outstanding for the PCS
Group.
Sprint Corporation
CONSOLIDATED BALANCE SHEETS
(millions)
Sprint Corporation
--------------------------------
Consolidated Eliminations/Reclassifications
--------------------------------- ------------------------------------
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
--------------------------------- ------------------------------------
Assets
Current assets
Cash and equivalents $ 2,424 $ 1,035 $ - $ -
Accounts receivable, net 2,876 2,951 - -
Inventories 582 682 - -
Deferred tax asset 26 806 - -
Intergroup receivable - - (532) (536)
Prepaid expenses and other 703 604 - -
- ----------------------------------------------------------------------------------------- ------------------------------------
Total current assets 6,611 6,078 (532) (536)
Assets of discontinued operation - 391 - -
Net property, plant and equipment 27,276 28,745 (47) (46)
Net intangible assets 7,815 9,045 - -
Other 1,148 1,034 (279) (280)
- ----------------------------------------------------------------------------------------- ------------------------------------
Total $ 42,850 $ 45,293 $ (858) $ (862)
--------------------------------- ------------------------------------
Liabilities and shareholders' equity
Current liabilities
Short-term borrowings including current
maturities of long-term debt $ 594 $ 1,887 $ - $ -
Current maturities intergroup debt - - - -
Accounts payable and accrued interconnection costs 2,700 2,777 - -
Accrued restructuring costs 117 277 - -
Intergroup payable - - (532) (536)
Other 3,065 2,867 (47) (46)
- ----------------------------------------------------------------------------------------- ------------------------------------
Total current liabilities 6,476 7,808 (579) (582)
Liabilities of discontinued operation - 299 - -
Noncurrent liabilities
Long-term debt and capital lease obligations 16,841 18,405 - -
Intergroup debt - - - -
Equity unit notes 1,725 1,725 - -
Deferred income taxes 1,789 2,025 - -
Other 2,548 2,481 - -
- ----------------------------------------------------------------------------------------- ------------------------------------
Total noncurrent liabilities 22,903 24,636 - -
Redeemable preferred stock 247 256 (279) (280)
Common stock and other shareholders' equity
Common stock
Class A FT - 22 - 22
FON 1,809 1,790 1,809 1,790
PCS 1,035 1,000 1,035 1,000
Other shareholders' equity 10,380 9,482 10,380 9,482
Combined attributed net assets - - (13,224) (12,294)
- ----------------------------------------------------------------------------------------- ------------------------------------
Total shareholders' equity 13,224 12,294 - -
- ----------------------------------------------------------------------------------------- ------------------------------------
Total $ 42,850 $ 45,293 $ (858) $ (862)
------------------------------------- ------------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
Sprint Corporation
CONSOLIDATED BALANCE SHEETS
(millions)
Sprint FON Group Sprint PCS Group
--------------------------------- -------------------------------------
December 31, December 31, December 31, December 31,
2003 2002 2003 2002
--------------------------------- ------------------------------------
Assets
Current assets
Cash and equivalents $ 1,635 $ 641 $ 789 $ 394
Accounts receivable, net 1,516 1,650 1,360 1,301
Inventories 205 219 377 463
Deferred tax asset 26 42 - 764
Intergroup receivable 532 536 - -
Prepaid expenses and other 464 329 239 275
- ----------------------------------------------------------------------------------------- ------------------------------------
Total current assets 4,378 3,417 2,765 3,197
Assets of discontinued operation - 391 - -
Net property, plant and equipment 16,050 16,894 11,273 11,897
Net intangible assets 352 1,569 7,463 7,476
Other 1,082 862 345 452
- ----------------------------------------------------------------------------------------- ------------------------------------
Total $ 21,862 $ 23,133 $ 21,846 $ 23,022
-------------------------------- ------------------------------------
Liabilities and shareholders' equity
Current liabilities
Short-term borrowings including current
maturities of long-term debt $ 190 $ 1,234 $ 404 $ 653
Current maturities intergroup debt (1,072) - 1,072 -
Accounts payable and accrued interconnection costs 1,381 1,422 1,319 1,355
Accrued restructuring costs 105 251 12 26
Intergroup payable - - 532 536
Other 1,755 1,503 1,357 1,410
- ----------------------------------------------------------------------------------------- ------------------------------------
Total current liabilities 2,359 4,410 4,696 3,980
Liabilities of discontinued operation - 299 - -
Noncurrent liabilities
Long-term debt and capital lease obligations 2,627 3,142 14,214 15,263
Intergroup debt - (406) - 406
Equity unit notes - - 1,725 1,725
Deferred income taxes 1,633 1,825 156 200
Other 1,871 2,039 677 442
- ------------------------------------------------------------------------------------------ ------------------------------------
Total noncurrent liabilities 6,131 6,600 16,772 18,036
Redeemable preferred stock - 10 526 526
Common stock and other shareholders' equity
Common stock
Class A FT - - - -
FON - - - -
PCS - - - -
Other shareholders' equity - - - -
Combined attributed net assets 13,372 11,814 (148) 480
- ------------------------------------------------------------------------------------------ ------------------------------------
Total shareholders' equity - - - -
- ------------------------------------------------------------------------------------------ ------------------------------------
Total $ 21,862 $ 23,133 $ 21,846 $ 23,022
-------------------------------- ------------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
Sprint Corporation
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(millions)
Sprint Corporation
-------------------------
Consolidated Sprint FON Group Sprint PCS Group
- ------------------------------------------------------------------- -------------------------- --------------------------
Year-to-Date December 31, 2003 2002 2003 2002 2003 2002
- ------------------------------------------------------------------- -------------------------- --------------------------
Operating Activities
Net income (loss) $ 1,215 $ 630 $ 1,876 $ 1,208 $ (661) $ (578)
Discontinued operation, net (1,324) (159) (1,324) (159) - -
Cumulative effect of change in
accounting principle, net (258) - (258) - - -
Depreciation and amortization 5,005 4,912 2,519 2,645 2,486 2,267
Deferred income taxes 395 556 (334) 660 729 (104)
Losses on write-down of assets 1,873 418 1,524 375 349 43
Changes in assets and liabilities (578) (228) (60) (510) (518) 282
Other, net 214 77 96 (43) 118 120
- ------------------------------------------------------------------- -------------------------- --------------------------
Net cash provided by operating activities
of continuing operations 6,542 6,206 4,039 4,176 2,503 2,030
- ------------------------------------------------------------------- -------------------------- --------------------------
Investing Activities
Capital expenditures (3,824) (4,849) (1,674) (2,181) (2,150) (2,668)
Investments in affiliates, net (32) 116 - 122 (32) (6)
Investments in debt securities (302) - (302) - - -
Proceeds from sales of other assets 101 138 100 72 1 66
- ------------------------------------------------------------------- -------------------------- --------------------------
Net cash used by investing activities
of continuing operations (4,057) (4,595) (1,876) (1,987) (2,181) (2,608)
- ------------------------------------------------------------------- -------------------------- --------------------------
Financing Activities
Change in debt, net (2,908) (642) (2,255) (1,353) (653) 711
Dividends paid (457) (454) (443) (440) (14) (14)
Other, net 36 53 (4) (43) 40 96
- ------------------------------------------------------------------- -------------------------- --------------------------
Net cash provided (used) by financing
activities of continuing operations (3,329) (1,043) (2,702) (1,836) (627) 793
- ------------------------------------------------------------------- -------------------------- --------------------------
Cash from discontinued operations 2,233 154 1,533 154 700 -
- ------------------------------------------------------------------- -------------------------- --------------------------
Change in cash and equivalents 1,389 722 994 507 395 215
Cash and equivalents at beginning of period 1,035 313 641 134 394 179
- ------------------------------------------------------------------- -------------------------- --------------------------
Cash and equivalents at end of period $ 2,424 $ 1,035 $ 1,635 $ 641 $ 789 $ 394
- ------------------------------------------------------------------- -------------------------- --------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
Sprint Corporation
Reconciliation of Non-GAAP Liquidity Measures
(millions)
-------------------------------------------------------------------------------
Quarter ended December 31, 2003
PCS FON
Consolidated Eliminations Group Group
-------------------------------------------------------------------------------
Operating income (loss) $ 325 $ 11 $ (124) $ 438
Special items 434 - 361 73
-------------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 759 11 237 511
Depreciation and amortization 1,266 - 633 633
-------------------------------------------------------------------------------
Adjusted EBITDA* 2,025 11 870 1,144
Adjust for special items (434) - (361) (73)
Other operating activities, net (1) 572 (11) 209 374
-------------------------------------------------------------------------------
Cash provided by operating activities-GAAP 2,163 - 718 1,445
Capital expenditures (1,472) - (939) (533)
Dividends paid (114) - (3) (111)
Other investing activities, net 4 - (16) 20
-------------------------------------------------------------------------------
Free Cash Flow* 581 - (240) 821
Discontinued operation 3 - 175 (172)
Increase (decrease) in debt, net (566) - (602) 36
Investments in debt securities (211) - - (211)
Other financing activities, net 16 - - 16
-------------------------------------------------------------------------------
Change in cash and equivalents - GAAP $ (177) $ - $ (667) $ 490
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
Quarter ended December 31, 2002
PCS FON
Consolidated Eliminations Group Group
-------------------------------------------------------------------------------
Operating income (loss) $ 388 $ 9 $ - $ 379
Special items 245 - 120 125
-------------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 633 9 120 504
Depreciation and amortization 1,283 - 609 674
-------------------------------------------------------------------------------
Adjusted EBITDA* 1,916 9 729 1,178
Adjust for special items (245) - (120) (125)
Other operating activities, net (1) 109 (9) (266) 384
-------------------------------------------------------------------------------
Cash provided by operating activities-GAAP 1,780 - 343 1,437
Capital expenditures (1,221) - (590) (631)
Dividends paid (113) - (3) (110)
Other investing activities, net 171 - 17 154
-------------------------------------------------------------------------------
Free Cash Flow* 617 - (233) 850
Discontinued operation 50 - - 50
Decrease in debt, net (379) - (9) (370)
Other financing activities, net 9 - (1) 10
-------------------------------------------------------------------------------
Change in cash and equivalents - GAAP $ 297 $ - $ (243) $ 540
-------------------------------------------------------------------------------
(1) Other operating activities, net includes the change in working capital, change in deferred income taxes, miscellaneous
operating activities and non-operating items in income (loss) from continuing operations.
See accompanying Footnotes to Consolidated Statements of Operations
Sprint Corporation
Reconciliation of Non-GAAP Liquidity Measures
(millions)
-------------------------------------------------------------------------------
Quarter ended December 31, 2003 Global
Local Markets
Division Division Other
-------------------------------------------------------------------------------
Operating income (loss) $ 420 $ 32 $ (14)
Special items 47 24 2
-------------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 467 56 (12)
Depreciation and amortization 277 355 1
-------------------------------------------------------------------------------
Adjusted EBITDA* $ 744 $ 411 $ (11)
-------------------------------------------------------------------------------
Adjust for special items
Other operating activities, net (1)
Cash provided by operating activities-GAAP
Capital expenditures
Dividends paid
Other investing activities, net
Free Cash Flow*
Discontinued operation
Increase (decrease) in debt, net
Investments in debt securities
Other financing activities, net
Change in cash and equivalents - GAAP
---------------------------------------------------------------------------------
Quarter ended December 31, 2002
Global
Local Markets
Division Division Other
--------------------------------------------------------------------------------
Operating income (loss) $ 418 $ (32) $ (7)
Special items 53 71 1
--------------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 471 39 (6)
Depreciation and amortization 292 380 2
--------------------------------------------------------------------------------
Adjusted EBITDA* $ 763 $ 419 $ (4)
--------------------------------------------------------------------------------
Adjust for special items
Other operating activities, net (1)
Cash provided by operating activities-GAAP
Capital expenditures
Dividends paid
Other investing activities, net
Free Cash Flow*
Discontinued operation
Decrease in debt, net
Other financing activities, net
Change in cash and equivalents - GAAP
(1) Other operating activities, net includes the change in working capital, change in deferred income taxes, miscellaneous
operating activities and non-operating items in income (loss) from continuing operations.
See accompanying Footnotes to Consolidated Statements of Operations
Sprint Corporation
Reconciliation of Non-GAAP Liquidity Measures
(millions)
---------------------------------------------------------------------
Year-to-date December 31, 2003
PCS FON
Consolidated Eliminations Group Group
---------------------------------------------------------------------
Operating income (loss) $ 861 $ 42 $ 551 $ 268
Special items 2,051 - 390 1,661
---------------------------------------------------------------------
Adjusted Operating Income (Loss)* 2,912 42 941 1,929
Depreciation and amortization 5,005 - 2,486 2,519
---------------------------------------------------------------------
Adjusted EBITDA* 7,917 42 3,427 4,448
Adjust for special items (2,051) - (390) (1,661)
Other operating activities, net (1) 676 (42) (534) 1,252
---------------------------------------------------------------------
Cash provided by operating activities-GAAP 6,542 - 2,503 4,039
Capital expenditures (3,824) - (2,150) (1,674)
Dividends paid (457) - (14) (443)
Other investing activities, net 69 - (31) 100
---------------------------------------------------------------------
Free Cash Flow* 2,330 - 308 2,022
Discontinued operation 2,233 - 700 1,533
Decrease in debt, net (2,908) - (653) (2,255)
Investments in debt securities (302) - - (302)
Other financing activities, net 36 - 40 (4)
---------------------------------------------------------------------
Change in cash and equivalents - GAAP $ 1,389 $ - $ 395 $ 994
---------------------------------------------------------------------
---------------------------------------------------------------------
Year-to-date December 31, 2002
PCS FON
Consolidated Eliminations Group Group
---------------------------------------------------------------------
Operating income (loss) $ 2,100 $ 33 $ 475 $ 1,592
Special items 402 - 121 281
---------------------------------------------------------------------
Adjusted Operating Income (Loss)* 2,502 33 596 1,873
Depreciation and amortization 4,912 - 2,267 2,645
---------------------------------------------------------------------
Adjusted EBITDA* 7,414 33 2,863 4,518
Adjust for special items (402) - (121) (281)
Other operating activities, net (1) (806) (33) (712) (61)
---------------------------------------------------------------------
Cash provided by operating activities-GAAP 6,206 - 2,030 4,176
Capital expenditures (4,849) - (2,668) (2,181)
Dividends paid (454) - (14) (440)
Other investing activities, net 254 - 60 194
---------------------------------------------------------------------
Free Cash Flow* 1,157 - (592) 1,749
Discontinued operation 154 - - 154
Increase/(decrease) in debt, net (642) - 711 (1,353)
Other financing activities, net 53 - 96 (43)
---------------------------------------------------------------------
Change in cash and equivalents - GAAP $ 722 $ - $ 215 $ 507
---------------------------------------------------------------------
(1) Other operating activities, net includes the change in working capital, change in deferred income taxes, miscellaneous operating
activities and non-operating items in income (loss) from continuing operations.
See accompanying Footnotes to Consolidated Statements of Operations
Sprint Corporation
Reconciliation of Non-GAAP Liquidity Measures
(millions)
-------------------------------------------------------------------------
Year-to-date December 31, 2003 Global
Local Markets
Division Division Other
-------------------------------------------------------------------------
Operating income (loss) $ 1,788 $ (1,472) $ (48)
Special items 55 1,604 2
------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 1,843 132 (46)
Depreciation and amortization 1,085 1,428 6
------------------------------------------------------------------------
Adjusted EBITDA* $ 2,928 $ 1,560 $ (40)
Adjust for special items
Other operating activities, net (1)
Cash provided by operating activities-GAAP
Capital expenditures
Dividends paid
Other investing activities, net
Free Cash Flow*
Discontinued operation
Decrease in debt, net
Investments in debt securities
Other financing activities, net
Change in cash and equivalents - GAAP
------------------------------------------------------------------------
Year-to-date December 31, 2002 Global
Local Markets
Division Division Other
------------------------------------------------------------------------
Operating income (loss) $ 1,830 $ (200) $ (38)
Special items 83 197 1
------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 1,913 (3) (37)
Depreciation and amortization 1,157 1,479 9
------------------------------------------------------------------------
Adjusted EBITDA* $ 3,070 $ 1,476 $ (28)
Adjust for special items
Other operating activities, net (1)
Cash provided by operating activities-GAAP
Capital expenditures
Dividends paid
Other investing activities, net
Free Cash Flow*
Discontinued operation
Increase/(decrease) in debt, net
Other financing activities, net
Change in cash and equivalents - GAAP
(1) Other operating activities, net includes the change in working capital, change in deferred income taxes, miscellaneous
operating activities and non-operating items in income (loss) from continuing operations.
See accompanying Footnotes to Consolidated Statements of Operations
Sprint Corporation
FON GROUP OPERATING STATISTICS
- -----------------------------------------------------------------------------------------------------------------------------------
Financial statistics in millions, except per share data 1Q03 2Q03 3Q03 4Q03 YTD 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Combined Operations
Financial Statistics
Net operating revenues $ 3,581 $ 3,530 $ 3,538 $ 3,536 $ 14,185
Operating income (loss) $ 454 $ 109 $ (733) $ 438 $ 268
Adjusted EBITDA* $ 1,082 $ 1,109 $ 1,113 $ 1,144 $ 4,448
Diluted weighted average common shares 899.5 901.7 903.0 907.8 $ 903.2
Basic weighted average common shares 896.6 899.9 903.0 904.0 900.9
Adjusted Earnings Per Share* $ 0.34 $ 0.35 $ 0.38 $ 0.39 $ 1.46
Basic earnings (loss) per common share $ 2.07 $ 0.11 $ (0.48) $ 0.40 $ 2.09
Capital expenditures $ 360 $ 412 $ 369 $ 533 $ 1,674
Sprint Local Division
Financial Statistics
Net operating revenues $ 1,536 $ 1,529 $ 1,530 $ 1,548 $ 6,143
Operating income $ 460 $ 449 $ 459 $ 420 $ 1,788
Adjusted EBITDA* $ 726 $ 729 $ 729 $ 744 $ 2,928
Capital expenditures $ 281 $ 297 $ 273 $ 389 $ 1,240
Other Statistics
Total access lines (thousands) 8,066 7,982 7,945 7,907
Residential access lines 5,642 5,575 5,549 5,522
Business access lines 2,202 2,185 2,178 2,164
Wholesale access lines 222 222 218 221
Resold lines 165 160 153 150
UNE-P lines 57 62 65 71
YOY Access line growth (decline) (1.9%) (2.4%) (2.2%) (2.2%)
Percentage of Sprint local customer lines with
Sprint long distance service 47% 48% 49% 49%
Bundle penetration - residential 65% 65% 66% 66%
Bundle penetration - business 24% 25% 26% 28%
This information should be reviewed in connection with Sprint's consolidated financial statements
Sprint Corporation
FON GROUP OPERATING STATISTICS
- -----------------------------------------------------------------------------------------------------------------------------------
Financial statistics in millions, except per share data 1Q03 2Q03 3Q03 4Q03 YTD 2003
- -----------------------------------------------------------------------------------------------------------------------------------
Sprint Local Division (cont.)
Percentage of Sprint local residential customers
with voicemail service 14% 14% 14% 15%
Percentage of Sprint local residential customers
with call waiting service 42% 43% 43% 43%
Percentage of Sprint local residential customers
with caller ID service 44% 45% 45% 46%
YOY Data services revenue growth 14% 11% 15% 17%
DSL lines in service (thousands) 185 223 264 304
DSL capable lines (thousands) 4,039 4,235 4,426 4,754
Global Markets Group
Financial Statistics
Total Global Markets net operating revenues $ 2,042 $ 2,002 $ 1,974 $ 1,974 $ 7,992
Voice net operating revenue $ 1,292 $ 1,243 $ 1,240 $ 1,219 $ 4,994
Data net operating revenue $ 461 $ 463 $ 462 $ 459 $ 1,845
Internet net operating revenue $ 243 $ 245 $ 233 $ 252 $ 973
Other net operating revenue $ 46 $ 51 $ 39 $ 44 $ 180
Operating income (loss) $ 6 $ (329) $(1,181) $ 32 $(1,472)
Adjusted EBITDA* $ 366 $ 390 $ 393 $ 411 $ 1,560
Capital expenditures $ 61 $ 86 $ 71 $ 107 $ 325
Other Statistics
YOY Global Markets voice volume (decline) growth (7%) (7%) (4%) 9% (3%)
This information should be reviewed in connection with Sprint's consolidated financial statements
Sprint Corporation
PCS GROUP OPERATING STATISTICS
- --------------------------------------------------------------------------------------------------------------------------------
Financial statistics in millions, except per share data 1Q03 2Q03 3Q03 4Q03 YTD 2003
- --------------------------------------------------------------------------------------------------------------------------------
Net operating revenue $ 2,947 $ 3,096 $ 3,340 $ 3,307 $ 12,690
Service revenues $ 2,679 $ 2,859 $ 3,000 $ 3,009 $ 11,547
Wholesale and affiliate revenues $ 73 $ 56 $ 100 $ 101 $ 330
Equipment revenues $ 268 $ 237 $ 340 $ 298 $ 1,143
Equipment costs $ 577 $ 545 $ 670 $ 583 $ 2,375
Operating income (loss) $ 140 $ 251 $ 284 $ (124) $ 551
Adjusted EBITDA* $ 758 $ 887 $ 912 $ 870 $ 3,427
Diluted & basic weighted average common shares 1,022.1 1,024.3 1,033.1 1,035.1 1,028.7
GAAP diluted earnings per common share $ (0.18) $ (0.09) $ (0.07) $ (0.31) $ (0.66)
Free Cash Flow* $ 83 $ 192 $ 273 $ (240) $ 308
Capital expenditures $ 187 $ 533 $ 491 $ 939 $ 2,150
Bad debt % of net operating revenues 3.0% 1.8% 2.3% 2.1% 2.3%
Customer Additions
Post-paid retail net adds 199,000 360,000 184,000 390,000 1,133,000
Affiliate net adds 109,000 80,000 22,000 86,000 297,000
Reseller net adds 175,000 177,000 290,000 554,000 1,196,000
Net gross adds (excluding deactivations within 30 days) 1.57 1.46 1.42 1.67 6.12
% of gross adds sold through post-paid retail channels ~48% ~52% ~51% ~48%
% of post-paid retail base that upgraded phones in >6% nearly 7% >7% >6%
the quarter
This information should be reviewed in connection with Sprint's consolidated financial statements
Sprint Corporation
PCS GROUP OPERATING STATISTICS
- --------------------------------------------------------------------------------------------------------------------------------
Financial statistics in millions, except per user data 1Q03 2Q03 3Q03 4Q03 YTD 2003
- --------------------------------------------------------------------------------------------------------------------------------
Other Wireless Statistics (approximate)
Average monthly service revenue per user (ARPU)* $ 59 $ 62 $ 63 $ 62 $ 61
Cost to acquire a new customer (CPGA)* $ 365 $ 415 $ 465 $ 425 $ 415
Cash cost per user (CCPU)* $ 30 $ 31 $ 31 $ 31 $ 31
Customer churn 3.1% 2.4% 2.7% 2.7% 2.7%
Average monthly customer usage (hours) nearly 12 nearly 13.5 nearly 14 ~14
Total minutes provided (billions) 32 37 39 41 149
Number of cell sites on air 19,700 20,100 20,400 21,200
Number of carriers on air 33,600 34,500 35,400 37,200
Sprint PCS covered POPs (millions) 190 190 191 191
Sprint PCS and affiliate covered POPs (millions) 244 245 245 246
Vision/Wireless Web/Data/3G
Total Vision subscribers (approximate) (millions) 1.3 2.1 2.7 3.2
Vision % of gross adds 26% nearly 40% >40% >40%
Total Vision and Wireless Web subscribers (millions) 3.8 4.6 ~5.1 ~5.5
Data ARPU >$1 nearly $2 >$2 nearly $3
% of post-paid retail customer base using 1xRTT handsets ~53% >60% ~69% ~75%
% of post-paid retail customer base using vision handsets ~15% ~23% 31% 38%
Marketing and Distribution
Total number of customers on Sprint PCS network (millions) 18.2 18.8 19.3 20.4
Total post-paid retail subscribers 14.9 15.3 15.5 15.9
Total affiliate customers 2.7 2.8 2.8 2.9
Total wholesale/reseller customers 0.6 0.7 1.0 1.6
Number of PCS stores and kiosks 520 540 570 620
Total number of distribution points ~16,600 ~17,600 ~17,100 ~17,300
This information should be reviewed in connection with Sprint's consolidated financial statements
Sprint Corporation
FON Group -- Local Division Selected Information (1)
(millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Dec 31, Sep 30, Jun 30, Mar 31, Dec 31,
Quarters Ended 2003 2003 2003 2003 2002
- -----------------------------------------------------------------------------------------------------------------------------------
Net operating revenues - old classification
Local service $ 756 $ 757 $ 762 $ 765 $ 765
Network access 532 525 519 523 521
Long distance 135 135 133 144 149
Other 125 113 115 104 129
- -----------------------------------------------------------------------------------------------------------------------------------
Total net operating revenues $ 1,548 $ 1,530 $ 1,529 $ 1,536 $ 1,564
- -----------------------------------------------------------------------------------------------------------------------------------
Net operating revenues - new classification
Voice $ 1,155 $ 1,153 $ 1,166 $ 1,185 $ 1,194
Data 196 188 178 175 168
Other 197 189 185 176 202
- -----------------------------------------------------------------------------------------------------------------------------------
Total net operating revenues $ 1,548 $ 1,530 $ 1,529 $ 1,536 $ 1,564
- -----------------------------------------------------------------------------------------------------------------------------------
Old Revenue classification
---------------------------------------------------------------
Item Description Local Service Network Access Long Distance Other
- -----------------------------------------------------------------------------------------------------------------------------------
Basic local telephone service X
---------------------------------------------------------------
Convenience features X
---------------------------------------------------------------
Local data transport services (Frame Relay, PRI, BRI, etc.) X
---------------------------------------------------------------
Directory assistance X
---------------------------------------------------------------
Resold access lines X
---------------------------------------------------------------
UNE-P and UNE-L Access lines X
---------------------------------------------------------------
DSL revenue X X
---------------------------------------------------------------
Operator services X X
---------------------------------------------------------------
Public payphone services X X
---------------------------------------------------------------
Inside wire maintenance contracts X
---------------------------------------------------------------
Customer premises equipment sales and mntc. services X X
---------------------------------------------------------------
Usage based switched access X
---------------------------------------------------------------
Dedicated transport for special access X
---------------------------------------------------------------
Subscriber Line Charges (SLC) X
---------------------------------------------------------------
Universal service fund - high cost receipts X
---------------------------------------------------------------
Interconnection revenues for terminating wireless traffic X
---------------------------------------------------------------
Long Distance - Interlata / Intralata Voice X
---------------------------------------------------------------
Billing and collection services X
---------------------------------------------------------------
(1) Beginning with the 2003 fourth quarter, Sprint established product-aligned revenue categories for its local division. The
new revenue categories of Voice, Data and Other replaced Local Service, Network Access, Long Distance and Other. The above
table details the components of both the old and new revenue classifications. This change in presentation had no effect on
total net operating revenues.
Sprint Corporation
FON Group -- Local Division Selected Information (1)
(millions)
- -----------------------------------------------------------------------------------------------------------------------------------
Sep 30, Jun 30, Mar 31,
Quarters Ended 2002 2002 2002
- -----------------------------------------------------------------------------------------------------------------------------------
Net operating revenues - old classification
Local service $ 765 $ 763 $ 761
Network access 526 518 518
Long distance 155 156 168
Other 134 111 118
- -----------------------------------------------------------------------------------------------------------------------------------
Total net operating revenues $ 1,580 $ 1,548 $ 1,565
- -----------------------------------------------------------------------------------------------------------------------------------
Net operating revenues - new classification
Voice $ 1,205 $ 1,194 $ 1,217
Data 163 161 154
Other 212 193 194
- -----------------------------------------------------------------------------------------------------------------------------------
Total net operating revenues $ 1,580 $ 1,548 $ 1,565
- -----------------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------
New Revenue classification
---------------------------------------------------------------
Item Description Voice Data Other
- -----------------------------------------------------------------------------------------------------------------------------------
Basic local telephone service X
---------------------------------------------------------------
Convenience features X
---------------------------------------------------------------
Local data transport services (Frame Relay, PRI, BRI, etc.) X
---------------------------------------------------------------
Directory assistance X
---------------------------------------------------------------
Resold access lines X
---------------------------------------------------------------
UNE-P and UNE-L Access lines X
---------------------------------------------------------------
DSL revenue X
---------------------------------------------------------------
Operator services X
---------------------------------------------------------------
Public payphone services X
---------------------------------------------------------------
Inside wire maintenance contracts X
---------------------------------------------------------------
Customer premises equipment sales and mntc. services X
---------------------------------------------------------------
Usage based switched access X
---------------------------------------------------------------
Dedicated transport for special access X
---------------------------------------------------------------
Subscriber Line Charges (SLC) X
---------------------------------------------------------------
Universal service fund - high cost receipts X
---------------------------------------------------------------
Interconnection revenues for terminating wireless traffic X
---------------------------------------------------------------
Long Distance - Interlata / Intralata Voice X X
---------------------------------------------------------------
Billing and collection services X
---------------------------------------------------------------
(1) Beginning with the 2003 fourth quarter, Sprint established product-aligned revenue categories for its local division. The
new revenue categories of Voice, Data and Other replaced Local Service, Network Access, Long Distance and Other. The above
table details the components of both the old and new revenue classifications. This change in presentation had no effect on
total net operating revenues.