[Sprint Logo]
Exhibit 99
Investor Update
1Q 2004
Sprint Reports First Quarter Results
o Strong revenue and operating income performance drives growth in income
from continuing operations
o Solid wireless and DSL customer gains
o Significant growth in wireless data customers and revenues
OVERLAND PARK, Kan. - April 20, 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.
On April 23, 2004, Sprint will recombine its two tracking stocks, and each share
of PCS stock will automatically convert into 0.5 shares of FON stock. As of
April 23, 2004, the FON Group and the PCS Group will no longer exist, and FON
stock will represent all of the operations and net assets of Sprint, including
the global markets division, the local division and the PCS wireless division.
Sprint today announced first quarter 2004 financial results. The results include
strong revenue and operating income performance, strong cash flow production,
excellent operational performance including solid gains in wireless and DSL
customers, and significant growth in wireless data customers and revenues.
Under Sprint's tracking stock structure, fully diluted Earnings per share from
continuing operations for the FON Group in the first quarter was 34 cents
compared to 31 cents in the first quarter of 2003. Before special items, FON
Group's Adjusted EPS* was 36 cents versus 34 cents in the year-ago period, a 6%
increase. The PCS Group reported a loss from continuing operations of 9 cents
per share for the first quarter, compared to a loss of 18 cents per share in the
first quarter of 2003. Before special items, the PCS Group reported an 8 cent
Adjusted loss per share* versus a 16 cent loss in the year-ago period, a 50%
improvement.
Assuming the recombination of the tracking stocks occurred at the beginning of
2003 at the same conversion ratio, Sprint's pro forma consolidated Earnings per
share from continuing operations in the first quarter of 2004 was 15 cents
compared to 7 cents per share in the first quarter of 2003. Before special
items, Sprint's pro forma Adjusted EPS* was 17 cents versus 10 cents in the
year-ago period, a 70% increase.
In the quarter, Sprint's total net operating revenues increased 6% compared to
the first quarter of 2003; total Adjusted Operating Income* was up 21%; total
Adjusted EBITDA* increased 7%; and first quarter Free Cash Flow* totaled $242
million. Free Cash Flow* in the quarter is net of a $300 million contribution to
Sprint's employee pension fund.
1
In the quarter, each of Sprint's business units contributed to the solid overall
performance. The PCS wireless division reported strong financial results and
added 972,000 customers, consisting of 414,000 net direct customer additions
combined with 558,000 from wholesale and affiliate partners. PCS also built on
its data leadership adding one million new Sprint PCS VisionSM subscribers.
Annualized data revenues were $713 million, a 32 percent improvement from the
fourth quarter. The local division delivered steady financial performance
including solid cash production, and added a record 45,000 DSL subscribers,
driving a 13% year-over-year improvement in data revenues. Despite a challenging
operating environment, the global markets division reported revenue performance
that is expected to exceed top-line results for major backbone competitors, a
year-over-year gain in operating income, and Adjusted EBITDA* that exceeded
capital expenditures by nearly $290 million.
"In the first quarter, Sprint demonstrated the strength of our transformed
business," said Gary Forsee, Sprint chairman and chief executive officer. "We
have widened our industry lead in wireless data, we have aggressively added
customers in DSL, and we added game-changing alliances that will help grow the
scale of our operations and improve our customer experience."
"I am very encouraged that our associates have been able to jump start our new
organization and a new year," Forsee added. "We clearly have a solid footing for
strong performance throughout 2004."
Sprint Consolidated Highlights
- -------------------------------------------------------------------------------
Sprint Corporation
Selected Financial Data
(millions) Quarters Ended
March 31, March 31, Percent
2004 2003 Change
- -------------------------------------------------------------------------------
Net operating revenues $6,707 $6,339 5.8%
Operating income 714 604 18.2%
Adjusted operating income 744 614 21.2%
Adjusted income from
continuing operations 241 147 63.9%
Income from continuing
operations 222 97
Discontinued operation,
net - 1,313
Cumulative effect of
change in accounting
principle, net - 258
Net income $222 $1,668 (86.7%)
Free Cash Flow $242 $388 (37.6%)
- -------------------------------------------------------------------------------
First quarter consolidated net operating revenues were $6.7 billion, compared to
$6.3 billion in the same period last year. Net income for the first quarter was
$222 million versus net income of $1.67 billion for the same period last year
which included a gain of $1.31 billion from a discontinued operation and a
cumulative effect of change in accounting of $258 million. Operating income was
$714 million in the first quarter compared with operating income of $604 million
a year ago. Adjusted Operating Income* was up 21% to $744 million this quarter,
compared with $614 million a year ago.
At March 31, cash on hand was $2.7 billion as Sprint continues to track well
against its planned net debt reduction. In the quarter, Net Debt* was cut by
$296 million and now stands at $16.4 billion.
The difference between reported Sprint operating income and Adjusted operating
income* is the result of a pre-tax charge of $30 million recorded in the first
quarter of 2004 primarily related to severance costs associated with Sprint's
transformation and Web Hosting. A pre-tax charge of $10 million was recorded in
the first quarter of 2003 associated with the termination of a software
development project.
The difference between reported income from continuing operations and Adjusted
income from continuing operations* includes the impacts of these charges, as
well as the following additional special items:
o Shareholder litigation charge - a pre-tax charge of $50 million was
recorded in the first quarter of 2003 for a shareholder litigation
settlement.
2
o Premium on early retirement of debt - a pre-tax charge of $19 million was
recorded in the first quarter of 2003 related to the early retirement of
approximately $1.1 billion of long-term debt.
Additionally, Sprint reported two items below the continuing operations line in
the first quarter of 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 - reflects a pre-tax
gain of $420 million recorded upon adoption of Statement of Financial
Accounting Standards No. 143, Accounting for Asset Retirement Obligations.
PCS Wireless Division
- -------------------------------------------------------------------------------
PCS
Selected Financial Data
(millions) Quarters Ended
March 31, March 31, Percent
2004 2003 Change
- -------------------------------------------------------------------------------
Net operating revenues $3,437 $2,947 16.6%
Operating expenses
Cost of services &
products 1,744 1,448 20.4%
Selling, general &
administrative 778 741 5.0%
Depreciation 654 608 7.6%
Restructuring and
asset impairment 4 10 (60.0%)
Total operating
expenses 3,180 2,807 13.3%
Operating Income $257 $140 83.6%
Capex $412 $187 120.3%
- -------------------------------------------------------------------------------
o First quarter net subscriber additions include 414,000 post-paid retail,
420,000 from wholesale channels and 138,000 from affiliates. At the end of
the period, PCS wireless was serving a total of 21.3 million customers,
consisting of 16.3 million direct, 3.0 million affiliates and 2.0 million
wholesale.
o In the first quarter, direct gross customer additions and net additions
grew sequentially from the fourth quarter. Direct gross customer additions
were 1.8 million in the quarter, a more than 14% year-over-year increase.
o Net operating revenues were up nearly 17% year-over-year. Service revenues
increased 14%.
o First quarter Adjusted Operating Income* was $261 million, an increase of
74% compared to $150 million in the year-ago period. In the 2003 fourth
quarter, Adjusted Operating Income* was $237 million.
o Adjusted EBITDA* in the first quarter was $915 million, a 21% improvement
from $758 million a year ago.
o Average monthly service revenue per user (ARPU)* was $61 in the first
quarter compared to $59 in the year-ago period. During the quarter, average
customer usage was approximately 15 hours per month.
o Churn was 2.9% this quarter compared to 3.1% reported a year ago, and 2.7%
in the 2003 fourth quarter.
At the end of the period more than six million customers were subscribing to
Sprint PCS data services, including more than four million Sprint PCS Vision
customers. For the full quarter, data contributed just over 6% to overall ARPU*.
Total first quarter operating expenses increased 13% compared to the year-ago
period. The increase was driven by sales and distribution costs resulting from
higher additions. Equipment costs also increased due to higher gross additions
and handset upgrades, as well as a decline in availability of refurbished
handsets for use in equipment replacement programs.
The PCS wireless division continues to enhance growth potential through
strategic alliances. These alliances leverage Sprint's network assets and expand
its sales channels. In total, affiliates had their strongest showing for
customer additions since the fourth quarter of 2002. The Virgin Mobile joint
venture had strong performance in the quarter, and Qwest, a new wholesaler,
began to add new customers in the quarter.
3
Local Division
- -------------------------------------------------------------------------------
Local
Selected Financial Data
(millions) Quarters Ended
March 31, March 31, Percent
2004 2003 Change
- -------------------------------------------------------------------------------
Net operating revenues
Voice $1,147 $1,183 (3.0%)
Data 195 173 12.7%
Other 164 176 (6.8%)
Net operating revenues 1,506 1,532 (1.7%)
Operating expenses
Cost of services &
products 451 487 (7.4%)
Selling, general &
administrative 327 318 2.8%
Depreciation 268 265 1.1%
Restructuring and
asset impairments 14 -
Total operating
expenses 1,060 1,070 (0.9%)
Operating Income $446 $462 (3.5%)
Capex $209 $281 (25.6%)
- -------------------------------------------------------------------------------
o First quarter revenues of $1.51 billion declined 2% from $1.53 billion in
the year-ago period.
o Adjusted EBITDA* was $728 million for the quarter compared to $727 million
last year.
o Adjusted Operating Income* was $460 million for the first quarter compared
to $462 million a year ago.
o The local division ended the quarter with nearly 350,000 DSL customers.
o Total access lines declined 2.2% from the year-ago period.
In addition to strong DSL growth, the local division continues to increase
penetration of strategic products via bundled service offerings. During the
quarter, switched access minutes of use and consumer long distance minutes of
use both increased on a year-over-year basis.
Total first quarter operating expenses decreased 1% compared to a year ago
driven by a continued focus on expense reduction and operating efficiencies
somewhat offset by a $14 million increase in post-retirement benefit expenses.
Restructuring charges increased operating expenses by $14 million in the first
quarter of 2004.
Global Markets Division
- -------------------------------------------------------------------------------
Global Markets
Selected Financial Data
(millions) Quarters Ended
March 31, March 31, Percent
2004 2003 Change
- -------------------------------------------------------------------------------
Net operating revenues
Voice $1,186 $1,293 (8.3%)
Data 452 462 (2.2%)
Internet 223 243 (8.2%)
Other 51 48 6.3%
Net operating revenues 1,912 2,046 (6.5%)
Operating expenses
Cost of services &
products 1,053 1,106 (4.8%)
Selling, general &
administrative 516 575 (10.3%)
Depreciation 320 361 (11.4%)
Restructuring and
asset impairments 12 -
Total operating
expenses 1,901 2,042 (6.9%)
Operating income $11 $4
Capex $56 $61 (8.2%)
- -------------------------------------------------------------------------------
o Net operating revenues declined nearly 7% to $1.91 billion from $2.05
billion a year ago.
o Adjusted Operating Income* for the quarter was $23 million compared to $4
million in the year-ago period.
o Adjusted EBITDA* was $343 million in the quarter, down 6% from the year-ago
period.
In the quarter, total voice revenues decreased 8% from the year-ago period.
Consumer voice revenues declined 21% while business voice revenues, including
wholesale and affiliates, declined by nearly 5% from the year-ago period.
Data revenues decreased 2% from the first quarter of 2003, and 2% sequentially.
Frame Relay, ATM and Private Line services each grew modestly on a sequential
basis. In the quarter, dedicated IP revenue rose 10% year-over-year and 8% from
the fourth quarter of 2003, driven by gains in Global IP service. Overall IP
revenues continue to be impacted by declining dial IP usage and Sprint's exit
from the Web Hosting business.
Total first quarter operating expenses declined 7% compared to the year-ago
period. Initiatives to streamline processes, reduce access unit costs,
rationalize the product portfolio, and lower bad debt expense continue to be the
drivers behind the expense reductions. Restructuring charges increased operating
expenses by $12 million in the first quarter of 2004. There were no special
items in the first quarter of 2003.
4
Forward-looking Guidance
On February 29, 2004, Sprint announced its decision to recombine its tracking
stocks. This release also contained financial guidance for 2004 and 2005. Based
upon first quarter earnings results, Sprint is updating its consolidated
financial guidance for 2004 as follows:
Total net operating revenues are now expected to grow 3 to 4 percent in 2004
versus previous guidance of 2 to 3 percent.
We are reiterating our full year 2004 guidance for all other items that were
forecast in the February 29, 2004 release. These include Adjusted Operating
Income* in a range of $3.0 billion to $3.1 billion, Adjusted EBITDA* in a range
of $8.1 billion to $8.2 billion, pro forma Adjusted EPS* in a range of 70 cents
to 75 cents, Free Cash Flow* of approximately $1.8 billion and capital
expenditures of $4.0 billion. We are also reiterating our 2005 guidance.
*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 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 income (loss) from continuing operations is defined as income or loss
from continuing operations plus special items, net of tax. 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 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
statements of financial position and 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.
Conference Call and Webcast Information
Sprint management will provide an overview of the company's performance and
participate in an interactive Q&A via conference call on Tuesday, April 20,
2004, beginning at 7:00 a.m. CT. Call-in numbers are 866-215-1938 (toll free)
and 816-650-0742 (international). Please plan on gaining access 10 minutes prior
to the start of the call.
A simultaneous webcast will be available at
www.sprint.com/sprint/ir/ai/web.html.
A continuous replay of the call will be available through May 4, 2004, and can
be accessed by dialing 888-775-8696 (toll free) or 402-220-1326 (international).
5
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 wireless division and the global markets division to
continue to grow a significant market presence;
o the ability of the PCS wireless division 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 wireless division'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 wireless
division'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 2003 Form
10-K, and you are encouraged to review these filings.
6
About Sprint
Sprint is a global integrated communications provider serving more than 26
million customers in over 100 countries. With approximately 65,000 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:
o Media Relations:
Scott Stoffel
913-794-3603
scott.e.stoffel@mail.sprint.com
o Investor Relations:
Kurt Fawkes
913-794-1126
Investorrelation.sprintcom@
mail.sprint.com
7
Sprint Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
Sprint Corporation
-----------------------------------
Consolidated Eliminations/Reclassifications
- -------------------------------------------------------------------------------------- ------------------------------------
Quarters Ended March 31, 2004 2003 2004 2003
- -------------------------------------------------------------------------------------- ------------------------------------
Net operating revenues $ 6,707 $ 6,339 $ (168) $ (189)
- -------------------------------------------------------------------------------------- ------------------------------------
Operating expenses
Costs of services and products 3,083 2,839 (168) (189)
Selling, general and administrative 1,637 1,650 (10) (10)
Depreciation 1,243 1,236 - -
Restructuring and asset impairments (1) 30 10 - -
- -------------------------------------------------------------------------------------- -----------------------------------
Total operating expenses 5,993 5,735 (178) (199)
- -------------------------------------------------------------------------------------- -----------------------------------
Operating income 714 604 10 10
Interest expense (320) (366) - -
Intergroup interest charge - - - -
Premium on early retirement of debt (2) - (19) - -
Other income (expense), net (3) (26) (61) (10) (10)
- -------------------------------------------------------------------------------------- -----------------------------------
Income (loss) before income taxes 368 158 - -
Income tax (expense) benefit (146) (61) - -
- -------------------------------------------------------------------------------------- -----------------------------------
Income (loss) from continuing operations 222 97 - -
Discontinued operation, net (4) - 1,313 - -
Cumulative effect of change in accounting principle,
net (5) - 258 - -
- --------------------------------------------------------------------------------------- -----------------------------------
Net income (loss) 222 1,668 - -
Preferred stock dividends (paid) received (2) (2) - -
- --------------------------------------------------------------------------------------- ------------------------------------
Earnings (Loss) applicable to common stock $ 220 $ 1,666 $ - $ -
----------------------------------- ------------------------------------
Diluted earnings (loss) per common share (6)
Income (loss) from continuing operations
Discontinued operation
Cumulative effect of change in accounting principle
- --------------------------------------------------------------------------------------- ------------------------------------
Total
Diluted weighted average common shares outstanding (7)
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. On
April 23, 2004, Sprint will recombine its two tracking stocks, and each share of PCS stock will automatically convert into 0.5
shares of FON stock. As of April 23, 2004, the FON Group and the PCS Group will no longer exist, and FON stock will represent
all of the operations and net assets of Sprint, including the global markets division, the local division and the PCS wireless
division.
See accompanying footnotes.
Sprint Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
Sprint FON Group Sprint PCS Group
- -------------------------------------------------------------------------------------- -------------------------------------
Quarters Ended March 31, 2004 2003 2004 2003
- -------------------------------------------------------------------------------------- -------------------------------------
Net operating revenues $ 3,438 $ 3,581 $ 3,437 $ 2,947
- -------------------------------------------------------------------------------------- -------------------------------------
Operating expenses
Costs of services and products 1,507 1,580 1,744 1,448
Selling, general and administrative 869 919 778 741
Depreciation 589 628 654 608
Restructuring and asset impairments (1) 26 - 4 10
- -------------------------------------------------------------------------------------- -------------------------------------
Total operating expenses 2,991 3,127 3,180 2,807
- -------------------------------------------------------------------------------------- -------------------------------------
Operating income 447 454 257 140
Interest expense (52) (65) (268) (301)
Intergroup interest charge 94 82 (94) (82)
Premium on early retirement of debt (2) - (19) - -
Other income (expense), net (3) 13 (4) (29) (47)
- -------------------------------------------------------------------------------------- -------------------------------------
Income (loss) before income taxes 502 448 (134) (290)
Income tax (expense) benefit (194) (169) 48 108
- -------------------------------------------------------------------------------------- -------------------------------------
Income (loss) from continuing operations 308 279 (86) (182)
Discontinued operation, net (4) - 1,313 - -
Cumulative effect of change in accounting principle,
net (5) - 258 - -
- -------------------------------------------------------------------------------------- -------------------------------------
Net income (loss) 308 1,850 (86) (182)
Preferred stock dividends (paid) received 2 2 (4) (4)
- -------------------------------------------------------------------------------------- -------------------------------------
Earnings (Loss) applicable to common stock $ 310 $ 1,852 $ (90) $ (186)
--------------------------------- -------------------------------------
Diluted earnings (loss) per common share (6)
Income (loss) from continuing operations $ 0.34 $ 0.31 $ (0.09) $ (0.18)
Discontinued operation - 1.46 - -
Cumulative effect of change in accounting principle - 0.29 - -
- -------------------------------------------------------------------------------------- -------------------------------------
Total $ 0.34 $ 2.06 $ (0.09) $ (0.18)
Diluted weighted average common shares outstanding (7) 913.8 899.5 1,036.3 1,022.1
---------------------------------- -------------------------------------
Basic earnings (loss) per common share $ 0.34 $ 2.07 $ (0.09) $ (0.18)
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities. On
April 23, 2004, Sprint will recombine its two tracking stocks, and each share of PCS stock will automatically convert into 0.5
shares of FON stock. As of April 23, 2004, the FON Group and the PCS Group will no longer exist, and FON stock will represent
all of the operations and net assets of Sprint, including the global markets division, the local division and the PCS wireless
division.
See accompanying footnotes.
8
Sprint Corporation
FOOTNOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
(1) In the 2004 first quarter, Sprint recorded a $30 million restructuring
charge, which reduced income from continuing operations by $19 million. The
FON Group recorded a charge of $26 million representing severance
associated with Sprint's transformation to a customer-focused
organizational design and the termination of the Web Hosting business. This
charge reduced FON Group income from continuing operations by $17 million.
The PCS Group recorded a charge of $4 million representing severance
associated with Sprint's transformation to a customer-focused
organizational design. This increased PCS Group loss from continuing
operations by $2 million.
In the 2003 first quarter, the PCS Group recorded a charge of $10 million
associated with the termination of a software development project. This
increased loss from continuing operations by $6 million.
(2) In the 2003 first quarter, the FON Group recorded a $19 million charge
reflecting the premiums paid on the early retirement of long-term debt.
This decreased income from continuing operations by $12 million.
(3) In the 2003 first quarter, Sprint recorded a $50 million aggregate charge
to settle a securities class action and derivative lawsuit relating to the
failed merger with WorldCom. The charge to the FON Group was $24 million
which reduced income from continuing operations by $15 million. The charge
to the PCS Group was $26 million which increased loss from continuing
operations by $17 million.
(4) 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.
(5) Sprint adopted Statement of Financial Accounting Standards (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 cumulative
effect of change in accounting principle credit of $258 million, net of
tax.
(6) As the effects of including the incremental shares associated with options
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 of the PCS Group.
(7) As the effects of including the incremental shares associated with options
and ESPP shares are antidilutive, they are not included in the weighted
average common shares outstanding for the PCS Group.
9
Sprint Corporation
CONSOLIDATED BALANCE SHEETS
(millions)
Sprint Corporation
--------------------------------------------
Consolidated Eliminations/Reclassifications
-------------------------------------------- ----------------------------------
March 31, December 31, March 31, December 31,
2004 2003 2004 2003
-------------------------------------------- ----------------------------------
Assets
Current assets
Cash and equivalents $ 2,728 $ 2,424 $ - $ -
Accounts receivable, net 2,927 2,876 - -
Inventories 513 582 - -
Deferred tax asset - 26 - -
Current tax benefit receivable from the FON Group - - (33) -
Intergroup receivable - - (568) (532)
Prepaid expenses and other 738 703 - -
- ---------------------------------------------------------------------------------------------- ----------------------------------
Total current assets 6,906 6,611 (601) (532)
Net property, plant and equipment 26,641 27,276 (47) (47)
Net intangible assets 7,810 7,815 - -
Other 1,099 1,148 (279) (279)
- ---------------------------------------------------------------------------------------------- ----------------------------------
Total $ 42,456 $ 42,850 $ (927) $ (858)
-------------------------------------------- ----------------------------------
Liabilities and shareholders' equity
Current liabilities
Short-term borrowings including current maturities
of long-term debt $ 1,621 $ 594 $ - $ -
Current maturities intergroup debt - - - -
Accounts payable and accrued interconnection costs 2,640 2,700 - -
Accrued restructuring costs 111 117 - -
Intergroup payable - - (568) (532)
Other 2,665 3,065 (80) (47)
- ---------------------------------------------------------------------------------------------- ----------------------------------
Total current liabilities 7,037 6,476 (648) (579)
Noncurrent liabilities
Long-term debt and capital lease obligations 15,822 16,841 - -
Intergroup debt - - - -
Equity unit notes 1,725 1,725 - -
Deferred income taxes 1,904 1,789 - -
Other 2,317 2,548 - -
- ---------------------------------------------------------------------------------------------- ----------------------------------
Total noncurrent liabilities 21,768 22,903 - -
Redeemable preferred stock 247 247 (279) (279)
Common stock and other shareholders' equity
Common stock
FON 1,814 1,809 1,814 1,809
PCS 1,037 1,035 1,037 1,035
Other shareholders' equity 10,553 10,380 10,553 10,380
Combined attributed net assets - - (13,404) (13,224)
- ---------------------------------------------------------------------------------------------- ----------------------------------
Total shareholders' equity 13,404 13,224 - -
- ---------------------------------------------------------------------------------------------- ----------------------------------
Total $ 42,456 $ 42,850 $ (927) $ (858)
-------------------------------------------- ----------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities. On
April 23, 2004, Sprint will recombine its two tracking stocks, and each share of PCS stock will automatically
convert into 0.5 shares of FON stock. As of April 23, 2004, the FON Group and the PCS Group will no longer exist, and FON
stock will represent all of the operations and net assets of Sprint, including the global markets division, the local
division and the PCS wireless division.
Sprint Corporation
CONSOLIDATED BALANCE SHEETS
(millions)
Sprint FON Group Sprint PCS Group
-------------------------------------------- ----------------------------------
March 31, December 31, March 31, December 31,
2004 2003 2004 2003
-------------------------------------------- ----------------------------------
Assets
Current assets
Cash and equivalents $ 1,726 $ 1,635 $ 1,002 $ 789
Accounts receivable, net 1,541 1,516 1,386 1,360
Inventories 228 205 285 377
Deferred tax asset - 26 - -
Current tax benefit receivable from the FON Group - - 33 -
Intergroup receivable 568 532 - -
Prepaid expenses and other 485 464 253 239
- ----------------------------------------------------------------------------------------------- ----------------------------------
Total current assets 4,548 4,378 2,959 2,765
Net property, plant and equipment 15,718 16,050 10,970 11,273
Net intangible assets 352 352 7,458 7,463
Other 1,067 1,082 311 345
- ----------------------------------------------------------------------------------------------- ----------------------------------
Total $ 21,685 $ 21,862 $ 21,698 $ 21,846
-------------------------------------------- ----------------------------------
Liabilities and shareholders' equity
Current liabilities
Short-term borrowings including current maturities
of long-term debt $ 263 $ 190 $ 1,358 $ 404
Current maturities intergroup debt (1,072) (1,072) 1,072 1,072
Accounts payable and accrued interconnection costs 1,323 1,381 1,317 1,319
Accrued restructuring costs 109 105 2 12
Intergroup payable - - 568 532
Other 1,474 1,755 1,271 1,357
- ----------------------------------------------------------------------------------------------- ----------------------------------
Total current liabilities 2,097 2,359 5,588 4,696
Noncurrent liabilities
Long-term debt and capital lease obligations 2,581 2,627 13,241 14,214
Intergroup debt - - - -
Equity unit notes - - 1,725 1,725
Deferred income taxes 1,754 1,633 150 156
Other 1,625 1,871 692 677
- ----------------------------------------------------------------------------------------------- ----------------------------------
Total noncurrent liabilities 5,960 6,131 15,808 16,772
Redeemable preferred stock - - 526 526
Common stock and other shareholders' equity
Common stock
FON - - - -
PCS - - - -
Other shareholders' equity - - - -
Combined attributed net assets 13,628 13,372 (224) (148)
- ----------------------------------------------------------------------------------------------- ----------------------------------
Total shareholders' equity - - - -
- ----------------------------------------------------------------------------------------------- ----------------------------------
Total $ 21,685 $ 21,862 $ 21,698 $ 21,846
-------------------------------------------- ----------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities. On
April 23, 2004, Sprint will recombine its two tracking stocks, and each share of PCS stock will automatically
convert into 0.5 shares of FON stock. As of April 23, 2004, the FON Group and the PCS Group will no longer exist, and FON
stock will represent all of the operations and net assets of Sprint, including the global markets division, the local
division and the PCS wireless division.
10
Sprint Corporation
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(millions)
Sprint Corporation
-------------------------------------
Consolidated
- --------------------------------------------------------------------------------------------------------------------------
Year-to-Date March 31, 2004 2003
- --------------------------------------------------------------------------------------------------------------------------
Operating Activities
Net income (loss) $ 222 $ 1,668
Discontinued operation, net - (1,313)
Cumulative effect of change in accounting principle, net - (258)
Depreciation 1,243 1,236
Deferred income taxes 145 736
Changes in assets and liabilities (615) (1,084)
Other, net 49 73
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities of continuing operations 1,044 1,058
- --------------------------------------------------------------------------------------------------------------------------
Investing Activities
Capital expenditures (689) (547)
Investments in affiliates, net (2) (12)
Investments in debt securities, net 34 -
Other, net 5 3
- --------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities of continuing operations (652) (556)
- --------------------------------------------------------------------------------------------------------------------------
Financing Activities
Change in debt, net (22) (1,555)
Dividends paid (116) (114)
Other, net 50 12
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities of continuing operations (88) (1,657)
- --------------------------------------------------------------------------------------------------------------------------
Cash from discontinued operation - 2,215
- --------------------------------------------------------------------------------------------------------------------------
Change in cash and equivalents 304 1,060
Cash and equivalents at beginning of period 2,424 1,035
- --------------------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of period $ 2,728 $ 2,095
-------------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities. On
April 23, 2004, Sprint will recombine its two tracking stocks, and each share of PCS stock will automatically convert into 0.5
shares of FON stock. As of April 23, 2004, the FON Group and the PCS Group will no longer exist, and FON stock will represent
all of the operations and net assets of Sprint, including the global markets division, the local division and the PCS wireless
division.
Sprint Corporation
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(millions)
Sprint FON Group Sprint PCS Group
- ----------------------------------------------------------------------------------------- --------------------------------------
Year-to-Date March 31, 2004 2003 2004 2003
- ----------------------------------------------------------------------------------------- --------------------------------------
Operating Activities
Net income (loss) $ 308 $ 1,850 $ (86) $ (182)
Discontinued operation, net - (1,313) - -
Cumulative effect of change in accounting
principle, net - (258) - -
Depreciation 589 628 654 608
Deferred income taxes 151 81 (6) 655
Changes in assets and liabilities (679) (237) 64 (847)
Other, net 32 21 17 52
- ----------------------------------------------------------------------------------------- --------------------------------------
Net cash provided by operating activities of
continuing operations 401 772 643 286
- ----------------------------------------------------------------------------------------- --------------------------------------
Investing Activities
Capital expenditures (277) (360) (412) (187)
Investments in affiliates, net - - (2) (12)
Investments in debt securities, net 34 - - -
Other, net 5 3 - -
- ----------------------------------------------------------------------------------------- --------------------------------------
Net cash used by investing activities of
continuing operations (238) (357) (414) (199)
- ----------------------------------------------------------------------------------------- --------------------------------------
Financing Activities
Change in debt, net (2) (1,534) (20) (21)
Dividends paid (112) (110) (4) (4)
Other, net 42 11 8 1
- ----------------------------------------------------------------------------------------- --------------------------------------
Net cash provided (used) by financing activities
of continuing operations (72) (1,633) (16) (24)
- ----------------------------------------------------------------------------------------- --------------------------------------
Cash from discontinued operation - 2,215 - -
- ----------------------------------------------------------------------------------------- --------------------------------------
Change in cash and equivalents 91 997 213 63
Cash and equivalents at beginning of period 1,635 641 789 394
- ----------------------------------------------------------------------------------------- --------------------------------------
Cash and equivalents at end of period $ 1,726 $ 1,638 $ 1,002 $ 457
----------------------------------- --------------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities. On
April 23, 2004, Sprint will recombine its two tracking stocks, and each share of PCS stock will automatically convert into 0.5
shares of FON stock. As of April 23, 2004, the FON Group and the PCS Group will no longer exist, and FON stock will represent
all of the operations and net assets of Sprint, including the global markets division, the local division and the PCS wireless
division.
11
Sprint Corporation
Reconciliation of Non-GAAP Liquidity Measures
(millions)
----------------------------------------------------------------------------
Year-to-date March 31, 2004
PCS FON
Consolidated Eliminations Group Group
----------------------------------------------------------------------------
Operating income (loss) $ 714 $ 10 $ 257 $ 447
Special items 30 - 4 26
----------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 744 10 261 473
Depreciation 1,243 - 654 589
----------------------------------------------------------------------------
Adjusted EBITDA* 1,987 10 915 1,062
Adjust for special items (30) - (4) (26)
Other operating activities, net (1) (913) (10) (268) (635)
----------------------------------------------------------------------------
Cash provided by operating activities-GAAP 1,044 - 643 401
Capital expenditures (689) - (412) (277)
Dividends paid (116) - (4) (112)
Investments in affilates, net (2) - (2) -
Other investing activities, net 5 - - 5
----------------------------------------------------------------------------
Free Cash Flow* 242 - 225 17
Discontinued operation - - - -
Decrease in debt, net (22) - (20) (2)
Investments in debt securities 34 - - 34
Other financing activities, net 50 - 8 42
----------------------------------------------------------------------------
Change in cash and equivalents - GAAP $ 304 $ - $ 213 $ 91
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Year-to-date March 31, 2003
PCS FON
Consolidated Eliminations Group Group
----------------------------------------------------------------------------
Operating income (loss) $ 604 $ 10 $ 140 $ 454
Special items 10 - 10 -
----------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 614 10 150 454
Depreciation 1,236 - 608 628
----------------------------------------------------------------------------
Adjusted EBITDA* 1,850 10 758 1,082
Adjust for special items (10) - (10) -
Other operating activities, net (1) (782) (10) (462) (310)
----------------------------------------------------------------------------
Cash provided by operating activities-GAAP 1,058 - 286 772
Capital expenditures (547) - (187) (360)
Dividends paid (114) - (4) (110)
Investments in affilates, net (12) - (12) -
Other investing activities, net 3 - - 3
----------------------------------------------------------------------------
Free Cash Flow* 388 - 83 305
Discontinued operation 2,215 - - 2,215
Decrease in debt, net (1,555) - (21) (1,534)
Other financing activities, net 12 - 1 11
----------------------------------------------------------------------------
Change in cash and equivalents - GAAP $ 1,060 $ - $ 63 $ 997
----------------------------------------------------------------------------
(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 March 31, 2004 Global
Local Markets
Division Division Other
-----------------------------------------------------------------------------
Operating income (loss) $ 446 $ 11 $ (10)
Special items 14 12 -
-----------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 460 23 (10)
Depreciation 268 320 1
-----------------------------------------------------------------------------
Adjusted EBITDA* $ 728 $ 343 $ (9)
Adjust for special items -----------------------------------------------------------------------------
Other operating activities, net (1)
Cash provided by operating activities-GAAP
Capital expenditures
Dividends paid
Investments in affilates, net
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 March 31, 2003 Global
Local Markets
Division Division Other
-----------------------------------------------------------------------------
Operating income (loss) $ 462 $ 4 $ (12)
Special items - - -
-----------------------------------------------------------------------------
Adjusted Operating Income (Loss)* 462 4 (12)
Depreciation 265 361 2
-----------------------------------------------------------------------------
Adjusted EBITDA* $ 727 $ 365 $ (10)
Adjust for special items -----------------------------------------------------------------------------
Other operating activities, net (1)
Cash provided by operating activities-GAAP
Capital expenditures
Dividends paid
Investments in affilates, net
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
12
Sprint Corporation
OPERATING STATISTICS
- ----------------------------------------------------------------------------------------------------------------------------------
Financial statistics in millions, except per share data 1Q04 2Q04 3Q04 4Q04 YTD 2004
- ----------------------------------------------------------------------------------------------------------------------------------
Sprint Local Division
Financial Statistics
Total Local Division net operating revenues $ 1,506 $ 1,506
Voice net operating revenue $ 1,147 $ 1,147
Data net operating revenue $ 195 $ 195
Other net operating revenue $ 164 $ 164
Operating income $ 446 $ 446
Adjusted EBITDA* $ 728 $ 728
Capital expenditures $ 209 $ 209
Other Statistics
Total access lines (thousands) 7,876
Residential access lines 5,507
Business access lines 2,142
Wholesale access lines 227
Resold lines 151
UNE-P lines 76
YOY Access line growth (decline) -2.2%
Percentage of Sprint local customer lines with
Sprint long distance service 51%
Bundle penetration - residential 67%
Percentage of Sprint local residential customers
with voicemail service 15%
Percentage of Sprint local residential customers
with call waiting service 43%
Percentage of Sprint local residential customers
with caller ID service 46%
DSL lines in service (thousands) 349
DSL capable lines (thousands) 4,910
This information should be reviewed in connection with Sprint's consolidated financial statements.
Sprint Corporation
OPERATING STATISTICS
- ----------------------------------------------------------------------------------------------------------------------------------
Financial statistics in millions, except per share data 1Q04 2Q04 3Q04 4Q04 YTD 2004
- ----------------------------------------------------------------------------------------------------------------------------------
Global Markets Division
Financial Statistics
Total Global Markets net operating revenues $ 1,912 $ 1,912
Voice net operating revenue $ 1,186 $ 1,186
Data net operating revenue $ 452 $ 452
Internet net operating revenue $ 223 $ 223
Other net operating revenue $ 51 $ 51
Operating income $ 11 $ 11
Adjusted EBITDA* $ 343 $ 343
Capital expenditures $ 56 $ 56
Other Statistics
YOY Global Markets voice volume growth 9% 9%
This information should be reviewed in connection with Sprint's consolidated financial statements.
13
Sprint Corporation
OPERATING STATISTICS (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
1Q04 2Q04 3Q04 4Q04 YTD 2004
- ----------------------------------------------------------------------------------------------------------------------------------
PCS Wireless Division
Net operating revenue (M) $ 3,437 $ 3,437
Service revenues (M) $ 3,060 $ 3,060
Wholesale and affiliate revenues (M) $ 121 $ 121
Equipment revenues (M) $ 377 $ 377
Equipment costs (M) $ 720 $ 720
Operating income (M) $ 257 $ 257
Adjusted EBITDA (M) $ 915 $ 915
Capital expenditures (M) $ 412 $ 412
Bad debt % of net operating revenues 1.1% 1.1%
Customer Additions
Post-paid retail net adds 414,000 414,000
Affiliate net adds 138,000 138,000
Reseller net adds 420,000 420,000
Net gross adds (excluding deactivations within 30 days) (M) 1.80 1.80
% of gross adds sold through post-paid retail channels ~51%
% of post-paid retail base that upgraded phones in the quarter > 7%
(M) - in millions
This information should be reviewed in connection with Sprint's consolidated financial statements.
Sprint Corporation
OPERATING STATISTICS (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
1Q04 2Q04 3Q04 4Q04 YTD 2004
- ----------------------------------------------------------------------------------------------------------------------------------
Other Wireless Statistics (approximate)
Average revenue per user $ 61 $ 61
Customer churn 2.9% 2.9%
Average monthly customer usage (hours) 15
Total minutes provided (billions) 45 45
Number of cell sites on air 21,800
Number of carriers on air 39,500
Sprint PCS covered POPs (M) 191
Sprint PCS and affiliate covered POPs (M) 246
PCS Vision/Wireless Web/Data/3G
Total Vision subscribers (approximate) (M) 4.2
Vision % of gross adds >55%
Total PCS Vision and Wireless Web subscribers (M) 6.2
Data ARPU nearly $4
% of post-paid retail customer base using 1xRTT handsets 80%
% of post-paid retail customer base using PCS Vision handsets 48%
Marketing and Distribution
Total number of customers on Sprint PCS network (thousands) 21,329
Total post-paid retail subscribers (thousands) 16,281
Total affiliate customers (thousands) 3,017
Total wholesale/reseller customers (thousands) 2,031
Number of PCS stores and kiosks 660
Total number of distribution points ~17,400
(M) - in millions
This information should be reviewed in connection with Sprint's consolidated financial statements.
14
Sprint Corporation
Reconciliations of Earnings Per Share
(millions, except per share date)
FON Group PCS Group
------------------------------------- ----------------------------------
Quarters Ended March 31, Quarters Ended March 31,
------------------------------------- ----------------------------------
2004 2003 2004 2003
------------------------------------- ----------------------------------
Earnings (Loss) Applicable to Common Stock $ 310 $ 1,852 $ (90) $ (186)
Preferred stock dividends paid (received) (2) (2) 4 4
- ------------------------------------------------------- ------------------------------------- ----------------------------------
GAAP Net income (loss) 308 1,850 (86) (182)
Discontinued operation - (1,313) - -
Cumulative effect of change in accounting principle - (258) - -
- ------------------------------------------------------- ------------------------------------- ----------------------------------
Income (loss) from continuing operations 308 279 (86) (182)
Special items (net of taxes)
Restructuring and asset impairments 17 - 2 6
Premium on early retirement of debt - 12 - -
Shareholder litigation charge - 15 - 17
- ------------------------------------------------------- ------------------------------------- ----------------------------------
Adjusted income (loss) from continuing operations $ 325 $ 306 $ (84) $ (159)
- ------------------------------------------------------- ------------------------------------- ----------------------------------
FON Group diluted weighted average common shares
outstanding 913.8 899.5
-------------------------------------
PCS Group basic weighted average common shares
outstanding 1,036.3 1,022.1
----------------------------------
Pro Forma share calculation
Additional PCS shares considered antidilutive for PCS
stand-alone calculation
- -------------------------------------------------------
PCS Group diluted weighted average common shares
outstanding
PCS conversion factor
- -------------------------------------------------------
Pro forma PCS Group diluted weighted average common
shares outstanding
- -------------------------------------------------------
Pro Forma diluted weighted average common shares
outstanding (1)
- -------------------------------------------------------
GAAP earnings (loss) per share $ 0.34 $ 2.06 $ (0.09) $ (0.18)
Discontinued operation - (1.46) - -
Cumulative effect of change in accounting principle - (0.29) - -
- ------------------------------------------------------- ------------------------------------- ----------------------------------
Earnings (loss) from continuing operations 0.34 0.31 (0.09) (0.18)
Special items 0.02 0.03 - 0.02
- ------------------------------------------------------- ------------------------------------- ----------------------------------
Adjusted Earnings (Loss) Per Share (2) $ 0.36 $ 0.34 $ (0.08) $ (0.16)
- ------------------------------------------------------- ------------------------------------- ----------------------------------
Pro Forma GAAP earnings (loss) per share
Discontinued operation
Cumulative effect of change in accounting principle
- -------------------------------------------------------
Pro Forma Earnings (loss) from continuing operations
Special items
- -------------------------------------------------------
Pro Forma Adjusted Earnings Per Share (2)
- -------------------------------------------------------
Pro Forma Sprint Earnings (Loss) per share (2) Quarters Ended
--------------------------------------------------------------------------
Mar 31, Mar 31, Jun 30, Sep 30,
2004 2003 2003 2003
--------------------------------------------------------------------------
Pro Forma GAAP earnings (loss) per share $ 0.15 $ 1.18 $ - $ (0.35)
Discontinued operation - (0.93) (0.01) -
Cumulative effect of change in accounting principle - (0.18) - -
- -----------------------------------------------------------------------------------------------------------------------------------
Pro Forma Earnings (loss) from continuing operations 0.15 0.07 - (0.35)
Special items 0.01 0.04 0.17 0.54
- -----------------------------------------------------------------------------------------------------------------------------------
Pro Forma Adjusted Earnings Per Share $ 0.17 $ 0.10 $ 0.17 $ 0.19
- -----------------------------------------------------------------------------------------------------------------------------------
Pro Forma diluted weighted average common shares
outstanding (1) 1,436.1 1,411.5 1,415.7 1,423.5
- ------------------------------------------------------- --------------------------------------------------------------------------
(1) Pro Forma diluted weighted average common shares outstanding for Sprint Consolidated is computed assuming the recombination
of the tracking stocks occurred at the beginning of 2003 at the same conversion ratio. Certain shares of PCS stock
considered to be antidilutive for the PCS stand-alone calculation are dilutive for the Sprint Consolidated calculation.
Pro Forma diluted weighted average common shares outstanding may not add due to rounding.
(2) Earnings per share data may not add due to rounding.
Sprint Corporation
Reconciliations of Earnings Per Share
(millions, except per share date)
Sprint Consolidated
------------------------------------------------
Quarters Ended March 31,
------------------------------------------------
2004 2003
------------------------------------------------
Earnings (Loss) Applicable to Common Stock $ 220 $ 1,666
Preferred stock dividends paid (received) 2 2
- ------------------------------------------------------- ------------------------------------------------
GAAP Net income (loss) 222 1,668
Discontinued operation - (1,313)
Cumulative effect of change in accounting principle - (258)
- ------------------------------------------------------- ------------------------------------------------
Income (loss) from continuing operations 222 97
Special items (net of taxes)
Restructuring and asset impairments 19 6
Premium on early retirement of debt - 12
Shareholder litigation charge - 32
- ------------------------------------------------------- ------------------------------------------------
Adjusted income (loss) from continuing operations $ 241 $ 147
- ------------------------------------------------------- ------------------------------------------------
FON Group diluted weighted average common shares
outstanding 913.8 899.5
------------------------------------------------
PCS Group basic weighted average common shares
outstanding 1,036.3 1,022.1
Pro Forma share calculation
Additional PCS shares considered antidilutive
for PCS stand-alone calculation 8.4 2.0
- ------------------------------------------------------- -----------------------------------------------
PCS Group diluted weighted average common
shares outstanding 1,044.7 1,024.1
PCS conversion factor 0.5 0.5
- ------------------------------------------------------- -----------------------------------------------
Pro forma PCS Group diluted weighted average common
shares outstanding 522.4 512.1
- ------------------------------------------------------- -----------------------------------------------
Pro Forma diluted weighted average common shares
outstanding (1) 1,436.1 1,411.5
- ------------------------------------------------------- -----------------------------------------------
GAAP earnings (loss) per share
Discontinued operation
Cumulative effect of change in accounting principle
- -------------------------------------------------------
Earnings (loss) from continuing operations
Special items
- -------------------------------------------------------
Adjusted Earnings (Loss) Per Share (2)
- -------------------------------------------------------
Pro Forma GAAP earnings (loss) per share $ 0.15 $ 1.18
Discontinued operation - (0.93)
Cumulative effect of change in accounting principle - (0.18)
- ------------------------------------------------------- -----------------------------------------------
Pro Forma Earnings (loss) from continuing operations 0.15 0.07
Special items 0.01 0.04
- ------------------------------------------------------- -----------------------------------------------
Pro Forma Adjusted Earnings Per Share (2) $ 0.17 $ 0.10
- ------------------------------------------------------- -----------------------------------------------
Pro Forma Sprint Earnings (Loss) per share (2) Quarters Ended Year-to-Date
----------------------- ----------------------
Dec 31, Dec 31,
2003 2003
----------------------- ----------------------
Pro Forma GAAP earnings (loss) per share $ 0.03 $ 0.85
Discontinued operation - (0.94)
Cumulative effect of change in accounting principle - (0.18)
- ------------------------------------------------------- ----------------------- ----------------------
Pro Forma Earnings (loss) from continuing operations 0.02 (0.26)
Special items 0.15 0.90
- ------------------------------------------------------- ----------------------- ----------------------
Pro Forma Adjusted Earnings Per Share $ 0.17 $ 0.63
- ------------------------------------------------------- ----------------------- ----------------------
Pro Forma diluted weighted average common shares
outstanding (1) 1,426.2 1,418.3
- ------------------------------------------------------- ----------------------- ----------------------
(1) Pro Forma diluted weighted average common shares outstanding for Sprint Consolidated is computed assuming the recombination of
the tracking stocks occurred at the beginning of 2003 at the same conversion ratio. Certain shares of PCS stock considered to
be antidilutive for the PCS stand-alone calculation are dilutive for the Sprint Consolidated calculation. Pro Forma diluted
weighted average common shares outstanding may not add due to rounding.
(2) Earnings per share data may not add due to rounding.
15
Sprint Corporation
Selected Information (1)
(millions)
Global Markets Division Pre Restatement
- ----------------------------------------------------------------------------------------------------------------------------------
YTD
2003 4Q03 3Q03 2Q03 1Q03
- ----------------------------------------------- --------------- ----------- ------------ ----------- -----------
Net operating revenues
Voice $ 4,994 $ 1,219 $ 1,240 $ 1,243 $ 1,292
Data 1,845 459 462 463 461
Internet 973 252 233 245 243
Other 180 44 39 51 46
- -----------------------------------------------------------------------------------------------------------------------------------
Total net operating revenues 7,992 1,974 1,974 2,002 2,042
- -----------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 4,245 1,020 1,059 1,063 1,103
Selling, general and administrative 2,227 574 522 558 573
Depreciation 1,428 355 351 362 360
Restructuring and asset impairments 1,564 (7) 1,223 348 -
- -----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 9,464 - 1,942 3,155 2,331 2,036
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ (1,472) $ 32 $ (1,181) $ (329) $ 6
-------------------------------------------------------------------------------
Local Division Pre Restatement
- ----------------------------------------------------------------------------------------------------------------------------------
YTD
2003 4Q03 3Q03 2Q03 1Q03
- ----------------------------------------------- --------------- ----------- ------------ ----------- -----------
Net operating revenues
Voice $ 4,659 $ 1,155 $ 1,153 $ 1,166 $ 1,185
Data 737 196 188 178 175
Other 747 197 189 185 176
- -----------------------------------------------------------------------------------------------------------------------------------
Total net operating revenues 6,143 1,548 1,530 1,529 1,536
- -----------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 1,950 477 493 490 490
Selling, general and administrative 1,296 350 308 318 320
Depreciation 1,085 277 270 272 266
Restructuring and asset impairments 24 24 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 4,355 1,128 1,071 1,080 1,076
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 1,788 $ 420 $ 459 $ 449 $ 460
-------------------------------------------------------------------------------
(1) The global markets and local division's prior period results have been restated to reflect the transfer of Sprint's CLEC
operations from the local division to the global markets division. This restatement had no effect on consolidated results.
Sprint Corporation
Selected Information (1)
(millions)
Global Markets Division Post Restatement
- ----------------------------------------------------------------------------------------------------------------------------------
YTD
2003 4Q03 3Q03 2Q03 1Q03
- ----------------------------------------------- --------------- ----------- ------------ ----------- -----------
Net operating revenues
Voice $ 4,999 $ 1,219 $ 1,243 $ 1,244 $ 1,293
Data 1,853 462 463 466 462
Internet 973 252 233 245 243
Other 180 44 38 50 48
- -----------------------------------------------------------------------------------------------------------------------------------
Total net operating revenues 8,005 1,977 1,977 2,005 2,046
- -----------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 4,252 1,021 1,061 1,064 1,106
Selling, general and administrative 2,245 581 526 563 575
Depreciation 1,432 356 352 363 361
Restructuring and asset impairments 1,564 (7) 1,223 348 -
- -----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 9,493 1,951 3,162 2,338 2,042
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ (1,488) $ 26 $ (1,185) $ (333) $ 4
-------------------------------------------------------------------------------
Local Division Post Restatement
- ----------------------------------------------------------------------------------------------------------------------------------
YTD
2003 4Q03 3Q03 2Q03 1Q03
- ----------------------------------------------- --------------- ----------- ------------ ----------- -----------
Net operating revenues
Voice $ 4,654 $ 1,154 $ 1,152 $ 1,165 $ 1,183
Data 730 194 187 176 173
Other 746 197 188 185 176
- -----------------------------------------------------------------------------------------------------------------------------------
Total net operating revenues 6,130 1,545 1,527 1,526 1,532
- -----------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 1,943 476 491 489 487
Selling, general and administrative 1,278 343 304 313 318
Depreciation 1,081 276 269 271 265
Restructuring and asset impairments 24 24 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 4,326 1,119 1,064 1,073 1,070
- -----------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) $ 1,804 $ 426 $ 463 $ 453 $ 462
-------------------------------------------------------------------------------
(1) The global markets and local division's prior period results have been restated to reflect the transfer of Sprint's CLEC
operations from the local division to the global markets division. This restatement had no effect on consolidated results.
16