|
x
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from to
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KANSAS
|
48-0457967
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
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6200 Sprint Parkway, Overland Park, Kansas
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66251
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
o
|
VOTING COMMON STOCK
|
|
|
Series 1
|
3,017,997,967
|
|
|
Item 1.
|
Financial Statements
(Unaudited)
|
|
March 31, 2013
|
|
December 31, 2012
|
||||
|
(in millions, except share and
per share data)
|
||||||
ASSETS
|
|||||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
6,275
|
|
|
$
|
6,351
|
|
Short-term investments
|
1,494
|
|
|
1,849
|
|
||
Accounts and notes receivable, net of allowance for doubtful accounts of $164 and $183
|
3,352
|
|
|
3,658
|
|
||
Device and accessory inventory
|
843
|
|
|
1,200
|
|
||
Prepaid expenses and other current assets
|
805
|
|
|
701
|
|
||
Total current assets
|
12,769
|
|
|
13,759
|
|
||
Investments
|
866
|
|
|
1,053
|
|
||
Property, plant and equipment, net
|
14,025
|
|
|
13,607
|
|
||
Intangible assets
|
|
|
|
||||
Goodwill
|
359
|
|
|
359
|
|
||
FCC licenses and other
|
20,722
|
|
|
20,677
|
|
||
Definite-lived intangible assets, net
|
1,271
|
|
|
1,335
|
|
||
Other assets
|
745
|
|
|
780
|
|
||
Total assets
|
$
|
50,757
|
|
|
$
|
51,570
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|||||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
2,963
|
|
|
$
|
3,487
|
|
Accrued expenses and other current liabilities
|
5,176
|
|
|
5,008
|
|
||
Current portion of long-term debt, financing and capital lease obligations
|
428
|
|
|
379
|
|
||
Total current liabilities
|
8,567
|
|
|
8,874
|
|
||
Long-term debt, financing and capital lease obligations
|
24,072
|
|
|
23,962
|
|
||
Deferred tax liabilities
|
7,131
|
|
|
7,047
|
|
||
Other liabilities
|
4,513
|
|
|
4,600
|
|
||
Total liabilities
|
44,283
|
|
|
44,483
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
||||
Common shares, voting, par value $2.00 per share, 6.5 billion shares authorized,
3.013 and 3.010 billion shares issued
|
6,026
|
|
|
6,019
|
|
||
Paid-in capital
|
47,026
|
|
|
47,016
|
|
||
Accumulated deficit
|
(45,459
|
)
|
|
(44,815
|
)
|
||
Accumulated other comprehensive loss
|
(1,119
|
)
|
|
(1,133
|
)
|
||
Total shareholders' equity
|
6,474
|
|
|
7,087
|
|
||
Total liabilities and shareholders' equity
|
$
|
50,757
|
|
|
$
|
51,570
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(in millions, except per share amounts)
|
||||||
Net operating revenues
|
$
|
8,793
|
|
|
$
|
8,734
|
|
Net operating expenses:
|
|
|
|
||||
Cost of services and products (exclusive of depreciation and amortization included below)
|
4,933
|
|
|
5,085
|
|
||
Selling, general and administrative
|
2,336
|
|
|
2,436
|
|
||
Severance, exit costs and asset impairments
|
25
|
|
|
84
|
|
||
Depreciation and amortization
|
1,492
|
|
|
1,666
|
|
||
Other, net
|
(22
|
)
|
|
(282
|
)
|
||
|
8,764
|
|
|
8,989
|
|
||
Operating income (loss)
|
29
|
|
|
(255
|
)
|
||
Other expense:
|
|
|
|
||||
Interest expense
|
(432
|
)
|
|
(298
|
)
|
||
Equity in losses of unconsolidated investments and other, net
|
(202
|
)
|
|
(273
|
)
|
||
|
(634
|
)
|
|
(571
|
)
|
||
Loss before income taxes
|
(605
|
)
|
|
(826
|
)
|
||
Income tax expense
|
(38
|
)
|
|
(37
|
)
|
||
Net loss
|
$
|
(643
|
)
|
|
$
|
(863
|
)
|
|
|
|
|
||||
Basic and diluted net loss per common share
|
$
|
(0.21
|
)
|
|
$
|
(0.29
|
)
|
Basic and diluted weighted average common shares outstanding
|
3,013
|
|
|
2,999
|
|
||
|
|
|
|
||||
Other comprehensive income, net of tax:
|
|
|
|
||||
Net unrealized holding (losses) gains on securities and other
|
$
|
(1
|
)
|
|
$
|
7
|
|
Net unrecognized net periodic pension and other postretirement benefits
|
15
|
|
|
10
|
|
||
Other comprehensive income
|
14
|
|
|
17
|
|
||
Comprehensive loss
|
$
|
(629
|
)
|
|
$
|
(846
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(643
|
)
|
|
$
|
(863
|
)
|
Adjustments to reconcile net loss to net cash provided by operating activities:
|
|
|
|
||||
Asset impairments
|
—
|
|
|
84
|
|
||
Depreciation and amortization
|
1,492
|
|
|
1,666
|
|
||
Provision for losses on accounts receivable
|
83
|
|
|
136
|
|
||
Share-based and long-term incentive compensation expense
|
17
|
|
|
17
|
|
||
Deferred income tax expense
|
24
|
|
|
32
|
|
||
Equity in losses of unconsolidated investments and other, net
|
202
|
|
|
273
|
|
||
Gains from asset dispositions and exchanges
|
—
|
|
|
(29
|
)
|
||
Contribution to pension plan
|
—
|
|
|
(92
|
)
|
||
Spectrum hosting contract termination
|
—
|
|
|
(236
|
)
|
||
Other changes in assets and liabilities:
|
|
|
|
||||
Accounts and notes receivable
|
215
|
|
|
(78
|
)
|
||
Inventories and other current assets
|
243
|
|
|
52
|
|
||
Accounts payable and other current liabilities
|
(734
|
)
|
|
52
|
|
||
Non-current assets and liabilities, net
|
16
|
|
|
(63
|
)
|
||
Other, net
|
25
|
|
|
27
|
|
||
Net cash provided by operating activities
|
940
|
|
|
978
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(1,381
|
)
|
|
(783
|
)
|
||
Expenditures relating to FCC licenses
|
(55
|
)
|
|
(56
|
)
|
||
Investment in Clearwire (including debt securities)
|
(80
|
)
|
|
(128
|
)
|
||
Proceeds from sales and maturities of short-term investments
|
1,281
|
|
|
150
|
|
||
Purchases of short-term investments
|
(926
|
)
|
|
(477
|
)
|
||
Other, net
|
3
|
|
|
(1
|
)
|
||
Net cash used in investing activities
|
(1,158
|
)
|
|
(1,295
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from debt and financings
|
204
|
|
|
2,000
|
|
||
Repayments of debt and capital lease obligations
|
(59
|
)
|
|
(2
|
)
|
||
Debt financing costs
|
(10
|
)
|
|
(36
|
)
|
||
Other, net
|
7
|
|
|
3
|
|
||
Net cash provided by financing activities
|
142
|
|
|
1,965
|
|
||
Net (decrease) increase in cash and cash equivalents
|
(76
|
)
|
|
1,648
|
|
||
Cash and cash equivalents, beginning of period
|
6,351
|
|
|
5,447
|
|
||
Cash and cash equivalents, end of period
|
$
|
6,275
|
|
|
$
|
7,095
|
|
|
Common Shares
|
|
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
|
|||||||||||||
|
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance, December 31, 2012
|
3,010
|
|
|
$
|
6,019
|
|
|
$
|
47,016
|
|
|
$
|
(44,815
|
)
|
|
$
|
(1,133
|
)
|
|
$
|
7,087
|
|
Net loss
|
|
|
|
|
|
|
(643
|
)
|
|
|
|
(643
|
)
|
|||||||||
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
14
|
|
|
14
|
|
|||||||||
Issuance of common shares, net
|
3
|
|
|
7
|
|
|
1
|
|
|
(1
|
)
|
|
|
|
7
|
|
||||||
Share-based compensation expense
|
|
|
|
|
9
|
|
|
|
|
|
|
9
|
|
|||||||||
Balance, March 31, 2013
|
3,013
|
|
|
$
|
6,026
|
|
|
$
|
47,026
|
|
|
$
|
(45,459
|
)
|
|
$
|
(1,119
|
)
|
|
$
|
6,474
|
|
|
|
Page
Reference
|
1.
|
||
|
|
|
2.
|
||
|
|
|
3.
|
||
|
|
|
4.
|
||
|
|
|
5.
|
||
|
|
|
6.
|
||
|
|
|
7.
|
||
|
|
|
8.
|
||
|
|
|
9.
|
||
|
|
|
10.
|
||
|
|
|
11.
|
||
|
|
|
12.
|
||
|
|
|
13.
|
||
|
|
|
14.
|
Note 1.
|
Basis of Presentation
|
Note 2.
|
New Accounting Pronouncements
|
Note 3.
|
Proposed Business Transactions
|
Note 4.
|
Investments
|
|
March 31, 2013
|
|
December 31, 2012
|
||||
|
(in millions)
|
||||||
Marketable equity securities
|
$
|
45
|
|
|
$
|
45
|
|
Equity method and other investments
|
821
|
|
|
1,008
|
|
||
|
$
|
866
|
|
|
$
|
1,053
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Revenues
|
$
|
318
|
|
|
$
|
323
|
|
Operating expenses
|
(622
|
)
|
|
(745
|
)
|
||
Operating loss
|
$
|
(304
|
)
|
|
$
|
(422
|
)
|
Net loss from continuing operations before non-controlling interests
|
$
|
(462
|
)
|
|
$
|
(561
|
)
|
Net income from discontinued operations before non-controlling interests
|
$
|
—
|
|
|
$
|
1
|
|
Note 5.
|
Financial Instruments
|
|
Carrying amount at March 31, 2013
|
|
Estimated Fair Value Using Input Type
|
||||||||||||||||
|
|
Quoted prices in active markets
|
|
Observable
|
|
Unobservable
|
|
Total estimated fair value
|
|||||||||||
|
(in millions)
|
||||||||||||||||||
Exchangeable Notes
|
$
|
80
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
80
|
|
|
$
|
80
|
|
Current and long-term debt
|
$
|
23,733
|
|
|
$
|
17,399
|
|
|
$
|
5,352
|
|
|
$
|
4,048
|
|
|
$
|
26,799
|
|
|
Carrying amount at December 31, 2012
|
|
Estimated Fair Value Using Input Type
|
||||||||||||||||
|
|
Quoted prices in active markets
|
|
Observable
|
|
Unobservable
|
|
Total estimated fair value
|
|||||||||||
|
(in millions)
|
||||||||||||||||||
Exchangeable Notes
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Current and long-term debt
|
$
|
23,569
|
|
|
$
|
17,506
|
|
|
$
|
6,118
|
|
|
$
|
3,104
|
|
|
$
|
26,728
|
|
Note 6.
|
Property, Plant and Equipment
|
|
March 31,
2013 |
|
December 31,
2012 |
||||
|
(in millions)
|
||||||
Land
|
$
|
330
|
|
|
$
|
330
|
|
Network equipment, site costs and related software
|
38,663
|
|
|
37,692
|
|
||
Buildings and improvements
|
4,901
|
|
|
4,893
|
|
||
Non-network internal use software, office equipment and other
|
1,835
|
|
|
1,860
|
|
||
Construction in progress
|
3,420
|
|
|
3,123
|
|
||
Less accumulated depreciation
|
(35,124
|
)
|
|
(34,291
|
)
|
||
Property, plant and equipment, net
|
$
|
14,025
|
|
|
$
|
13,607
|
|
Note 7.
|
Intangible Assets
|
|
December 31,
2012 |
|
Net
Additions
|
|
March 31,
2013 |
||||||
|
|
|
(in millions)
|
|
|
||||||
FCC licenses
|
$
|
20,268
|
|
|
$
|
45
|
|
|
$
|
20,313
|
|
Trademarks
|
409
|
|
|
—
|
|
|
409
|
|
|||
Goodwill
|
359
|
|
|
—
|
|
|
359
|
|
|||
|
$
|
21,036
|
|
|
$
|
45
|
|
|
$
|
21,081
|
|
|
|
|
March 31, 2013
|
|
December 31, 2012
|
||||||||||||||||||||
|
Useful Lives
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
|
Gross
Carrying
Value
|
|
Accumulated
Amortization
|
|
Net
Carrying
Value
|
||||||||||||
|
|
|
|
|
|
|
(in millions)
|
|
|
|
|
||||||||||||||
Customer relationships
|
4 years
|
|
$
|
234
|
|
|
$
|
(233
|
)
|
|
$
|
1
|
|
|
$
|
234
|
|
|
$
|
(230
|
)
|
|
$
|
4
|
|
Other intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Trademarks
|
10 to 37 years
|
|
1,168
|
|
|
(705
|
)
|
|
463
|
|
|
1,168
|
|
|
(681
|
)
|
|
487
|
|
||||||
Reacquired rights
|
9 to 14 years
|
|
1,571
|
|
|
(818
|
)
|
|
753
|
|
|
1,571
|
|
|
(785
|
)
|
|
786
|
|
||||||
Other
|
9 to 10 years
|
|
141
|
|
|
(87
|
)
|
|
54
|
|
|
138
|
|
|
(80
|
)
|
|
58
|
|
||||||
Total other intangible assets
|
|
|
2,880
|
|
|
(1,610
|
)
|
|
1,270
|
|
|
2,877
|
|
|
(1,546
|
)
|
|
1,331
|
|
||||||
Total definite-lived intangible assets
|
|
|
$
|
3,114
|
|
|
$
|
(1,843
|
)
|
|
$
|
1,271
|
|
|
$
|
3,111
|
|
|
$
|
(1,776
|
)
|
|
$
|
1,335
|
|
Note 8.
|
Accounts Payable
|
Note 9.
|
Long-Term Debt, Financing and Capital Lease Obligations
|
|
Interest Rates
|
|
Maturities
|
|
March 31,
2013 |
|
December 31,
2012 |
||||||||
|
|
|
|
|
|
|
|
|
(in millions)
|
||||||
Notes
|
|
|
|
|
|
|
|
|
|
|
|
||||
Senior notes
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sprint Nextel Corporation
|
6.00
|
-
|
11.50%
|
|
2016
|
-
|
2022
|
|
$
|
9,280
|
|
|
$
|
9,280
|
|
Sprint Capital Corporation
|
6.88
|
-
|
8.75%
|
|
2019
|
-
|
2032
|
|
6,204
|
|
|
6,204
|
|
||
Guaranteed notes
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sprint Nextel Corporation
|
7.00
|
-
|
9.00%
|
|
2018
|
-
|
2020
|
|
4,000
|
|
|
4,000
|
|
||
Secured notes
|
|
|
|
|
|
|
|
|
|
|
|
||||
iPCS, Inc.
|
2.42
|
-
|
3.55%
|
|
2013
|
-
|
2014
|
|
481
|
|
|
481
|
|
||
Convertible bonds
|
|
|
|
|
|
|
|
|
|
|
|
||||
Sprint Nextel Corporation
|
1.00%
|
|
2019
|
|
3,100
|
|
|
3,100
|
|
||||||
Credit facilities
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bank credit facility
|
3.31%
|
|
2018
|
|
—
|
|
|
—
|
|
||||||
Export Development Canada
|
4.20%
|
|
2015
|
|
500
|
|
|
500
|
|
||||||
Secured equipment credit facility
|
2.03%
|
|
2017
|
|
445
|
|
|
296
|
|
||||||
Financing obligation
|
9.50%
|
|
2030
|
|
697
|
|
|
698
|
|
||||||
Capital lease obligations and other
|
4.11
|
-
|
15.49%
|
|
2014
|
-
|
2022
|
|
70
|
|
|
74
|
|
||
Net discount from beneficial conversion feature on convertible bond
|
|
|
|
|
|
|
|
|
(238
|
)
|
|
(247
|
)
|
||
Net discounts
|
|
|
|
|
|
|
|
|
(39
|
)
|
|
(45
|
)
|
||
|
|
|
|
|
|
|
|
|
24,500
|
|
|
24,341
|
|
||
Less current portion
|
|
|
|
|
|
|
|
|
(428
|
)
|
|
(379
|
)
|
||
Long-term debt, financing and capital lease obligations
|
|
|
|
|
|
|
|
|
$
|
24,072
|
|
|
$
|
23,962
|
|
Note 10.
|
Severance, Exit Costs and Asset Impairments
|
|
|
|
2013 Activity
|
|
|
||||||||||
|
December 31, 2012
|
|
Net
Expense
|
|
Cash Payments
and Other
|
|
March 31, 2013
|
||||||||
|
(in millions)
|
||||||||||||||
Lease exit costs
|
$
|
190
|
|
|
$
|
8
|
|
|
$
|
(31
|
)
|
|
$
|
167
|
|
Severance costs
|
11
|
|
|
17
|
|
|
(6
|
)
|
|
22
|
|
||||
Access exit costs
|
43
|
|
|
7
|
|
|
(1
|
)
|
|
49
|
|
||||
|
$
|
244
|
|
|
$
|
32
|
|
|
$
|
(38
|
)
|
|
$
|
238
|
|
Note 11.
|
Income Taxes
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Income tax benefit at the federal statutory rate
|
$
|
212
|
|
|
$
|
289
|
|
Effect of:
|
|
|
|
||||
State income taxes, net of federal income tax effect
|
16
|
|
|
25
|
|
||
Change in valuation allowance
|
(265
|
)
|
|
(348
|
)
|
||
Other, net
|
(1
|
)
|
|
(3
|
)
|
||
Income tax expense
|
$
|
(38
|
)
|
|
$
|
(37
|
)
|
Effective income tax rate
|
(6.3
|
)%
|
|
(4.5
|
)%
|
Note 12.
|
Commitments and Contingencies
|
Note 13.
|
Per Share Data
|
Note 14.
|
Segments
|
•
|
Wireless primarily includes retail, wholesale, and affiliate revenue from a wide array of wireless voice and data transmission services and equipment revenue from the sale of wireless devices and accessories in the U.S., Puerto Rico and the U.S. Virgin Islands.
|
•
|
Wireline primarily includes revenue from domestic and international wireline voice and data communication services, including services to the cable multiple systems operators that resell our local and long distance services and use our back office systems and network assets in support of their telephone services provided over cable facilities primarily to residential end-use subscribers.
|
|
|
|
|
|
|
|
|
Statement of Operations Information
|
Wireless
|
|
Wireline
|
|
Corporate,
Other and
Eliminations
|
|
Consolidated
|
||||||||
|
(in millions)
|
||||||||||||||
Three Months Ended March 31, 2013
|
|
|
|
|
|
|
|
||||||||
Net operating revenues
|
$
|
8,089
|
|
|
$
|
702
|
|
|
$
|
2
|
|
|
$
|
8,793
|
|
Inter-segment revenues
(1)
|
—
|
|
|
191
|
|
|
(191
|
)
|
|
—
|
|
||||
Total segment operating expenses
|
(6,694
|
)
|
|
(765
|
)
|
|
190
|
|
|
(7,269
|
)
|
||||
Segment earnings
|
$
|
1,395
|
|
|
$
|
128
|
|
|
$
|
1
|
|
|
1,524
|
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
|
|
|
|
|
(1,492
|
)
|
|||||||
Other, net
(2)
|
|
|
|
|
|
|
(3
|
)
|
|||||||
Operating loss
|
|
|
|
|
|
|
29
|
|
|||||||
Interest expense
|
|
|
|
|
|
|
(432
|
)
|
|||||||
Equity in losses of unconsolidated investments and other, net
|
|
|
|
|
$
|
(202
|
)
|
|
(202
|
)
|
|||||
Loss before income taxes
|
|
|
|
|
|
|
$
|
(605
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||
Statement of Operations Information
|
Wireless
|
|
Wireline
|
|
Corporate,
Other and
Eliminations
|
|
Consolidated
|
||||||||
|
(in millions)
|
||||||||||||||
Three Months Ended March 31, 2012
|
|
|
|
|
|
|
|
||||||||
Net operating revenues
|
$
|
7,950
|
|
|
$
|
781
|
|
|
$
|
3
|
|
|
$
|
8,734
|
|
Inter-segment revenues
(1)
|
—
|
|
|
217
|
|
|
(217
|
)
|
|
—
|
|
||||
Total segment operating expenses
|
(6,898
|
)
|
|
(837
|
)
|
|
214
|
|
|
(7,521
|
)
|
||||
Segment earnings
|
$
|
1,052
|
|
|
$
|
161
|
|
|
$
|
—
|
|
|
1,213
|
|
|
Less:
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
|
|
|
|
|
|
(1,666
|
)
|
|||||||
Other, net
(2)
|
|
|
|
|
|
|
198
|
|
|||||||
Operating income
|
|
|
|
|
|
|
(255
|
)
|
|||||||
Interest expense
|
|
|
|
|
|
|
(298
|
)
|
|||||||
Equity in losses of unconsolidated investments and other, net
|
|
|
|
|
$
|
(273
|
)
|
|
(273
|
)
|
|||||
Loss before income taxes
|
|
|
|
|
|
|
$
|
(826
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||
Other Information
|
Wireless
|
|
Wireline
|
|
Corporate and
Other
|
|
Consolidated
|
||||||||
|
(in millions)
|
||||||||||||||
Capital expenditures for the three months ended March 31, 2013
|
$
|
1,270
|
|
|
$
|
64
|
|
|
$
|
47
|
|
|
$
|
1,381
|
|
Capital expenditures for the three months ended March 31, 2012
|
$
|
678
|
|
|
$
|
47
|
|
|
$
|
58
|
|
|
$
|
783
|
|
(1)
|
Inter-segment revenues consist primarily of wireline services provided to the Wireless segment for resale to or use by wireless subscribers.
|
(2)
|
Other, net for the
three-month period ended
March 31, 2013
consists of severance and exit costs, partially offset by favorable developments in connection with an E911 regulatory tax-related contingency. Other, net for the
three-month period ended
March 31, 2012
consists of net operating income of
$236 million
associated with the termination of the spectrum hosting arrangement with LightSquared, a gain of
$29 million
on spectrum swap transactions, and a benefit of
$17 million
resulting from favorable developments relating to access cost disputes associated with prior periods, partially offset by asset impairments totaling
$84 million
.
|
Operating Revenues by Service and Products
|
Wireless
|
|
Wireline
|
|
Corporate,
Other and
Eliminations
(1)
|
|
Consolidated
|
||||||||
|
(in millions)
|
||||||||||||||
Three Months Ended March 31, 2013
|
|
|
|
|
|
|
|
||||||||
Wireless services
|
$
|
7,143
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,143
|
|
Wireless equipment
|
813
|
|
|
—
|
|
|
—
|
|
|
813
|
|
||||
Voice
|
—
|
|
|
352
|
|
|
(99
|
)
|
|
253
|
|
||||
Data
|
—
|
|
|
94
|
|
|
(46
|
)
|
|
48
|
|
||||
Internet
|
—
|
|
|
434
|
|
|
(47
|
)
|
|
387
|
|
||||
Other
|
133
|
|
|
13
|
|
|
3
|
|
|
149
|
|
||||
Total net operating revenues
|
$
|
8,089
|
|
|
$
|
893
|
|
|
$
|
(189
|
)
|
|
$
|
8,793
|
|
|
|
|
|
|
|
|
|
||||||||
|
Wireless
|
|
Wireline
|
|
Corporate,
Other and
Eliminations
(1)
|
|
Consolidated
|
||||||||
|
(in millions)
|
||||||||||||||
Three Months Ended March 31, 2012
|
|
|
|
|
|
|
|
||||||||
Wireless services
|
$
|
7,112
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,112
|
|
Wireless equipment
|
735
|
|
|
—
|
|
|
—
|
|
|
735
|
|
||||
Voice
|
—
|
|
|
417
|
|
|
(127
|
)
|
|
290
|
|
||||
Data
|
—
|
|
|
108
|
|
|
(44
|
)
|
|
64
|
|
||||
Internet
|
—
|
|
|
453
|
|
|
(46
|
)
|
|
407
|
|
||||
Other
|
103
|
|
|
20
|
|
|
3
|
|
|
126
|
|
||||
Total net operating revenues
|
$
|
7,950
|
|
|
$
|
998
|
|
|
$
|
(214
|
)
|
|
$
|
8,734
|
|
(1)
|
Revenues eliminated in consolidation consist primarily of wireline services provided to the Wireless segment for resale to or use by wireless subscribers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Improve the customer experience;
|
•
|
Strengthen our brands; and
|
•
|
Generate operating cash flow.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Wireless segment earnings
|
$
|
1,395
|
|
|
$
|
1,052
|
|
Wireline segment earnings
|
128
|
|
|
161
|
|
||
Corporate, other and eliminations
|
1
|
|
|
—
|
|
||
Consolidated segment earnings
|
1,524
|
|
|
1,213
|
|
||
Depreciation and amortization
|
(1,492
|
)
|
|
(1,666
|
)
|
||
Other, net
|
(3
|
)
|
|
198
|
|
||
Operating income (loss)
|
29
|
|
|
(255
|
)
|
||
Interest expense
|
(432
|
)
|
|
(298
|
)
|
||
Equity in losses of unconsolidated investments and other, net
|
(202
|
)
|
|
(273
|
)
|
||
Income tax expense
|
(38
|
)
|
|
(37
|
)
|
||
Net loss
|
$
|
(643
|
)
|
|
$
|
(863
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Severance, exit costs and asset impairments
|
$
|
(25
|
)
|
|
$
|
(84
|
)
|
Spectrum hosting contract termination
|
—
|
|
|
236
|
|
||
Gains from asset dispositions and exchanges
|
—
|
|
|
29
|
|
||
Other
|
22
|
|
|
17
|
|
||
Total
|
$
|
(3
|
)
|
|
$
|
198
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
Wireless Segment Earnings
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Sprint platform
|
$
|
5,773
|
|
|
$
|
5,408
|
|
Nextel platform
|
143
|
|
|
500
|
|
||
Total postpaid
|
5,916
|
|
|
5,908
|
|
||
Sprint platform
|
1,194
|
|
|
1,016
|
|
||
Nextel platform
|
33
|
|
|
188
|
|
||
Total prepaid
|
1,227
|
|
|
1,204
|
|
||
Retail service revenue
|
7,143
|
|
|
7,112
|
|
||
Wholesale, affiliate and other revenue
|
133
|
|
|
103
|
|
||
Total service revenue
|
7,276
|
|
|
7,215
|
|
||
Cost of services (exclusive of depreciation and amortization)
|
(2,171
|
)
|
|
(2,289
|
)
|
||
Service gross margin
|
5,105
|
|
|
4,926
|
|
||
Service gross margin percentage
|
70
|
%
|
|
68
|
%
|
||
Equipment revenue
|
813
|
|
|
735
|
|
||
Cost of products
|
(2,293
|
)
|
|
(2,298
|
)
|
||
Equipment net subsidy
|
(1,480
|
)
|
|
(1,563
|
)
|
||
Equipment net subsidy percentage
|
(182
|
)%
|
|
(213
|
)%
|
||
Selling, general and administrative expense
|
(2,230
|
)
|
|
(2,311
|
)
|
||
Wireless segment earnings
|
$
|
1,395
|
|
|
$
|
1,052
|
|
•
|
revenue generated from each subscriber, which in turn is a function of the types and amount of services utilized by each subscriber and the rates charged for those services; and
|
•
|
the number of subscribers that we serve, which in turn is a function of our ability to retain existing and acquire new subscribers.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(subscribers in thousands)
|
||||||
Average postpaid subscribers
|
31,566
|
|
|
32,893
|
|
||
Average prepaid subscribers
|
15,686
|
|
|
14,965
|
|
||
Average retail subscribers
|
47,252
|
|
|
47,858
|
|
||
ARPU
(1)
:
|
|
|
|
||||
Postpaid
|
$
|
62.47
|
|
|
$
|
59.88
|
|
Prepaid
|
$
|
26.08
|
|
|
$
|
26.82
|
|
Average retail
|
$
|
50.39
|
|
|
$
|
49.54
|
|
(1)
|
ARPU is calculated by dividing service revenue by the sum of the average number of subscribers in the applicable service category. Changes in average monthly service revenue reflect subscribers for either the postpaid or prepaid service category who change rate plans, the level of voice and data usage, the amount of service credits which are offered to subscribers, plus the net effect of average monthly revenue generated by new subscribers and deactivating subscribers.
|
(1)
|
Subscribers that transfer from their original service category classification to another platform, or another service line within the same platform, are reflected as a net loss to the original service category and a net addition to their new service category. There is no net effect for such subscriber changes to the total wireless net additions (losses) or end of period subscribers.
|
(2)
|
Subscribers through some of our MVNO relationships have inactivity either in voice usage or primarily as a result of the nature of the device, where activity only occurs when data retrieval is initiated by the end-user and may occur infrequently. Although we continue to provide these subscribers access to our network through our MVNO relationships, approximately
907,000
subscribers at
March 31, 2013
through these MVNO relationships have been inactive for at least six months, with no associated revenue during the
three-month period ended
March 31, 2013
.
|
(3)
|
End of period connected devices are included in total retail postpaid or wholesale and affiliates end of period subscriber totals for all periods presented.
|
|
March 31,
2012
|
|
June 30,
2012
|
|
September 30,
2012
|
|
December 30,
2012 |
|
March 31,
2013
|
||||||||||
Monthly subscriber churn rate
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
Sprint platform:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postpaid
|
2.00
|
%
|
|
1.69
|
%
|
|
1.88
|
%
|
|
1.98
|
%
|
|
1.84
|
%
|
|||||
Prepaid
|
2.92
|
%
|
|
3.16
|
%
|
|
2.93
|
%
|
|
3.02
|
%
|
|
3.05
|
%
|
|||||
Nextel platform:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postpaid
|
2.09
|
%
|
|
2.56
|
%
|
|
4.38
|
%
|
|
5.27
|
%
|
|
7.57
|
%
|
|||||
Prepaid
|
8.73
|
%
|
|
7.18
|
%
|
|
9.39
|
%
|
|
9.79
|
%
|
|
12.46
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total retail postpaid
|
2.01
|
%
|
|
1.79
|
%
|
|
2.09
|
%
|
|
2.18
|
%
|
|
2.09
|
%
|
|||||
Total retail prepaid
|
3.61
|
%
|
|
3.53
|
%
|
|
3.37
|
%
|
|
3.30
|
%
|
|
3.26
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Nextel platform subscriber recaptures
|
|
|
|
|
|
|
|
|
|||||||||||
Rate
(2)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postpaid
|
46
|
%
|
|
60
|
%
|
|
59
|
%
|
|
51
|
%
|
|
46
|
%
|
|||||
Prepaid
|
23
|
%
|
|
32
|
%
|
|
34
|
%
|
|
50
|
%
|
|
34
|
%
|
|||||
Subscribers
(3)
:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postpaid
|
228
|
|
|
431
|
|
|
516
|
|
|
333
|
|
|
264
|
|
|||||
Prepaid
|
137
|
|
|
143
|
|
|
152
|
|
|
188
|
|
|
67
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
ARPU
|
|
|
|
|
|
|
|
|
|
||||||||||
Sprint platform:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postpaid
|
$
|
62.55
|
|
|
$
|
63.38
|
|
|
$
|
63.21
|
|
|
$
|
63.04
|
|
|
$
|
63.67
|
|
Prepaid
|
$
|
25.64
|
|
|
$
|
25.49
|
|
|
$
|
26.19
|
|
|
$
|
26.30
|
|
|
$
|
25.95
|
|
Nextel platform:
|
|
|
|
|
|
|
|
|
|
||||||||||
Postpaid
|
$
|
40.94
|
|
|
$
|
40.25
|
|
|
$
|
38.65
|
|
|
$
|
37.27
|
|
|
$
|
35.43
|
|
Prepaid
|
$
|
35.68
|
|
|
$
|
37.20
|
|
|
$
|
34.73
|
|
|
$
|
35.59
|
|
|
$
|
31.75
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total retail postpaid
|
$
|
59.88
|
|
|
$
|
60.88
|
|
|
$
|
61.18
|
|
|
$
|
61.47
|
|
|
$
|
62.47
|
|
Total retail prepaid
|
$
|
26.82
|
|
|
$
|
26.59
|
|
|
$
|
26.77
|
|
|
$
|
26.69
|
|
|
$
|
26.08
|
|
(1)
|
Churn is calculated by dividing net subscriber deactivations for the quarter by the sum of the average number of subscribers for each month in the quarter. For postpaid accounts comprising multiple subscribers, such as family plans and enterprise accounts, net deactivations are defined as deactivations in excess of subscriber activations in a particular account within 30 days. Postpaid and Prepaid churn consist of both voluntary churn, where the subscriber makes his or her own determination to cease being a subscriber, and involuntary churn, where the subscriber's service is terminated due to a lack of payment or other reasons.
|
(2)
|
Represents the recapture rate defined as the Nextel platform postpaid or prepaid subscribers, as applicable, that switched from the Nextel platform during each period but activated service on the Sprint platform over the total Nextel platform subscriber deactivations in the period for postpaid and prepaid, respectively.
|
(3)
|
Represents the Nextel platform postpaid and prepaid subscribers, as applicable, that switched from the Nextel platform during each period but remained with the Company as subscribers on the Sprint platform. Subscribers that deactivate service on the Nextel platform and activate service on the Sprint platform are included in the Sprint platform net additions for the applicable period.
|
•
|
costs to operate and maintain our networks, including direct switch and cell site costs, such as rent, utilities, maintenance, labor costs associated with network employees, and spectrum frequency leasing costs;
|
•
|
fixed and variable interconnection costs, the fixed component of which consists of monthly flat-rate fees for facilities leased from local exchange carriers based on the number of cell sites and switches in service in a particular period and the related equipment installed at each site, and the variable component of which generally consists of per-minute use fees charged by wireline providers for calls terminating on their networks, which fluctuate in relation to the level and duration of those terminating calls;
|
•
|
long distance costs paid to the Wireline segment;
|
•
|
costs to service and repair devices;
|
•
|
regulatory fees;
|
•
|
roaming fees paid to other carriers; and
|
•
|
fixed and variable costs relating to payments to third parties for the use of their proprietary data applications, such as messaging, music, TV, and navigation services by our subscribers.
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
Wireline Segment Earnings
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Voice
|
$
|
352
|
|
|
$
|
417
|
|
Data
|
94
|
|
|
108
|
|
||
IP-Based Data Services
|
434
|
|
|
453
|
|
||
Other
|
13
|
|
|
20
|
|
||
Total net service revenue
|
893
|
|
|
998
|
|
||
Cost of services and products
|
(661
|
)
|
|
(716
|
)
|
||
Service gross margin
|
232
|
|
|
282
|
|
||
Service gross margin percentage
|
26
|
%
|
|
28
|
%
|
||
Selling, general and administrative expense
|
(104
|
)
|
|
(121
|
)
|
||
Wireline segment earnings
|
$
|
128
|
|
|
$
|
161
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2013
|
|
2012
|
||||
|
(in millions)
|
||||||
Net cash provided by operating activities
|
$
|
940
|
|
|
$
|
978
|
|
Net cash used in investing activities
|
$
|
(1,158
|
)
|
|
$
|
(1,295
|
)
|
Net cash provided by financing activities
|
$
|
142
|
|
|
$
|
1,965
|
|
•
|
projected revenues and expenses relating to our operations;
|
•
|
continued availability of a revolving bank credit facility in the amount of
$3.0 billion
, which expires in February 2018;
|
•
|
anticipated levels and timing of capital expenditures, including the capacity and upgrading of our networks and the deployment of new technologies in our networks, and FCC license acquisitions;
|
•
|
anticipated payments under the Report and Order, as supplemented;
|
•
|
any additional contributions we may make to our pension plan;
|
•
|
scheduled principal payments of
$428 million
;
|
•
|
payment of $480 million to acquire certain assets of U.S. Cellular;
|
•
|
additional financing in the form of exchangeable notes to Clearwire not to exceed Sprint's minimum contractual commitment; and
|
•
|
other future contractual obligations, including decommissioning obligations associated with Network Vision, and general corporate expenditures.
|
•
|
acquisition of the remaining equity interests of Clearwire Corporation that Sprint does not currently own for approximately $2.2 billion;
|
•
|
payment of any outstanding balances of our secured equipment facility, which become due upon a change of control and totaled
$445 million
as of
March 31, 2013
; and/or
|
•
|
any optional repurchase requirement of the non-Sprint holders of Clearwire Exchangeable Notes, which could result in a principal repayment of up to $629 million.
|
|
|
|
|
|
|
Rating
|
|
|
|
|
|
|
Rating Agency
|
|
Issuer Rating
|
|
Unsecured Notes
|
|
Guaranteed Notes
|
|
Bank Credit
Facility
|
|
March 31, 2013 Outlook
|
|
April 24, 2013 Outlook
|
Moody's
|
|
B1
|
|
B3
|
|
Ba3
|
|
Ba1
|
|
Review for Upgrade
|
|
Uncertain
|
Standard and Poor's
|
|
B+
|
|
B+
|
|
BB-
|
|
BB-
|
|
Review for Upgrade
|
|
Developing
|
Fitch
|
|
B+
|
|
B+
|
|
BB
|
|
BB
|
|
Review for Upgrade
|
|
Developing
|
•
|
our ability to retain and attract subscribers; and to manage credit risks associated with our subscribers;
|
•
|
the ability of our competitors to offer products and services at lower prices due to lower cost structures;
|
•
|
the uncertainties related to our proposed transactions with SoftBank and Clearwire;
|
•
|
the uncertainties related to certain restrictions placed on Sprint under the Merger Agreement with SoftBank;
|
•
|
the effects of vigorous competition on a highly penetrated market, including the impact of competition on the price we are able to charge subscribers for services and equipment we provide and on the geographic areas served by Sprint's wireless networks;
|
•
|
the impact of equipment net subsidy costs; the impact of increased purchase commitments; the overall demand for our service offerings, including the impact of decisions of new or existing subscribers between our postpaid and prepaid service offerings and between our two network platforms; and the impact of new, emerging and competing technologies on our business;
|
•
|
our ability to provide the desired mix of integrated services to our subscribers;
|
•
|
the ability to generate sufficient cash flow to fully implement our network modernization plan, Network Vision, to improve and enhance our networks and service offerings, improve our operating margins, implement our business strategies and provide competitive new technologies;
|
•
|
the effective implementation of Network Vision, including timing, execution, technologies, costs, and performance of our network;
|
•
|
our ability to retain Nextel platform subscribers on the Sprint platform and mitigate related increases in churn;
|
•
|
our ability to access additional spectrum capacity, including through Clearwire;
|
•
|
changes in available technology and the effects of such changes, including product substitutions and deployment costs;
|
•
|
our ability to obtain additional financing on terms acceptable to us, or at all;
|
•
|
volatility in the trading price of our common stock and expected volatility in the trading price of New Sprint common stock after consummation of the SoftBank Merger, current economic conditions and our ability to access capital;
|
•
|
the impact of unrelated parties not meeting our business requirements, including a significant adverse change in the ability or willingness of such parties to provide devices or infrastructure equipment for our networks;
|
•
|
the costs and business risks associated with providing new services and entering new geographic markets;
|
•
|
the financial performance of Clearwire and its ability to fund, build, operate, and maintain its 4G network, including an LTE network;
|
•
|
the compatibility of Sprint's LTE network with Clearwire's LTE network;
|
•
|
the effects of mergers and consolidations and new entrants in the communications industry and unexpected announcements or developments from others in the communications industry;
|
•
|
unexpected results of litigation filed against us or our suppliers or vendors;
|
•
|
the impact of adverse network performance;
|
•
|
the costs or potential customer impacts of compliance with regulatory mandates including, but not limited to, compliance with the FCC's Report and Order to reconfigure the 800 MHz band and government regulation regarding "net neutrality" and conflict minerals;
|
•
|
equipment failure, natural disasters, terrorist acts or other breaches of network or information technology security;
|
•
|
one or more of the markets in which we compete being impacted by changes in political, economic or other factors such as monetary policy, legal and regulatory changes, or other external factors over which we have no control; and
|
•
|
other risks referenced from time to time in this report and other filings of ours with the Securities and Exchange Commission (SEC), including in Part I, Item 1A “Risk Factors” of our Annual Report on Form 10-K for the year ended
December 31, 2012
.
|
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
Item 4.
|
Controls and Procedures
|
Item 1.
|
Legal Proceedings
|
Item 1A.
|
Risk Factors
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
Item 3.
|
Defaults Upon Senior Securities
|
Item 4.
|
Mine Safety Disclosures
|
Item 5.
|
Other Information
|
Item 6.
|
Exhibits
|
SPRINT NEXTEL CORPORATION
|
(Registrant)
|
|
/s/ Ryan H. Siurek
|
Ryan H. Siurek
Vice President and Controller
(Principal Accounting Officer)
|
*
|
Filed or furnished, as required.
|
**
|
Schedules and/or exhibits not filed will be furnished to the SEC upon request, pursuant to Item 601(b)(2) of Regulation S-K.
|
2.
|
GENERAL
|
By:
|
/s/ Masayoshi Son
|
Name:
|
Masayoshi Son
|
Title:
|
Chairman & CEO
|
By:
|
/s/ Ronald D. Fisher
|
Name:
|
Ronald D. Fisher
|
Title:
|
President
|
By:
|
/s/ Ronald D. Fisher
|
Name:
|
Ronald D. Fisher
|
Title:
|
President
|
By:
|
/s/ Ronald D. Fisher
|
Name:
|
Ronald D. Fisher
|
Title:
|
President
|
By:
|
/s/ Charles R. Wunsch
|
Title:
|
General Counsel, Senior Vice President and
|
1.
|
INTERPRETATION
|
SOFTBANK CORP.
|
STARBURST I, INC.
|
By:
/s/ Masayoshi Son
Name: Masayoshi Son
Title: Chairman & CEO
|
By:
/s/ Ronald D. Fisher
Name: Ronald D. Fisher
Title: Director & President
|
SPRINT NEXTEL CORPORATION
|
STARBURST II, INC.
|
By:
/s/ Charles Wunsch
Name: Charles Wunsch
Title: Senior Vice President, General Counsel
and Corporate Secretary
|
By:
/s/ Ronald D. Fisher
Name: Ronald D. Fisher
Title: Director & President
|
|
STARBURST III, INC.
|
|
By:
/s/ Ronald D. Fisher
Name: Ronald D. Fisher
Title: Director & President
|
•
|
Involuntary termination without cause:
|
◦
|
In addition to your severance package, if your employment is involuntarily terminated without cause, you will receive the entire award payment as soon as administratively practicable after termination.
|
•
|
Termination for any other reason:
|
◦
|
If you have a termination of employment for any other reason (including voluntary termination, acceptance of a voluntary separation package, termination for cause, or unsatisfactory performance), you will forfeit any unpaid retention award payments in their entirety.
|
SPRINT NEXTEL CORPORATION,
as Borrower
|
|
By:
|
|
|
/s/ Greg D. Block
|
|
Name: Greg D. Block
|
|
Title: Vice President and Treasurer
|
ENTERPRISE COMMUNICATIONS PARTNERSHIP
|
|
|
|
By: SprintCom ECP I, L.L.C.,
its General Partner
|
|
|
|
By:
|
|
|
/s/ Greg D. Block
|
|
Name: Greg D. Block
|
|
Title: Vice President and Treasurer
|
|
|
By: SprintCom ECP II, L.L.C.,
its General Partner
|
|
|
|
By:
|
|
|
/s/ Greg D. Block
|
|
Name: Greg D. Block
|
|
Title: Vice President and Treasurer
|
PHILLIECO EQUIPMENT AND REALTY COMPANY, L.P.
|
|
|
|
By: PhillieCo Sub, L.P.,
its General Partner
|
|
|
|
By:
|
|
|
/s/ Greg D. Block
|
|
Name: Greg D. Block
|
Title: Vice President and Treasurer
|
C FON CORPORATION
UNITED TELECOMMUNICATIONS, INC.
|
|
|
|
By:
|
|
|
/s/ Greg D. Block
|
Name: Greg D. Block
|
|
|
Title: Vice President and Assistant Treasurer
|
EACH OF THE OTHER “SUBSIDIARY GUARANTORS” LISTED ON ANNEX A ATTACHED HERETO
|
|
|
|
By:
|
|
|
/s/ Greg D. Block
|
Name: Greg D. Block
|
|
|
Title: Vice President and Treasurer
|
|
Three Months Ended
|
|
For the Years Ended
|
||||||||||||||||||||||||
|
March 31,
|
|
December 31,
|
||||||||||||||||||||||||
|
2013
|
|
2012
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
|
2008
|
||||||||||||||
|
(in millions)
|
||||||||||||||||||||||||||
Earnings (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Loss from continuing operations before income taxes
|
$
|
(605
|
)
|
|
$
|
(826
|
)
|
|
$
|
(4,172
|
)
|
|
$
|
(2,636
|
)
|
|
$
|
(3,299
|
)
|
|
$
|
(3,494
|
)
|
|
$
|
(4,060
|
)
|
Equity in losses of unconsolidated investments, net
|
202
|
|
|
290
|
|
|
1,114
|
|
|
1,730
|
|
|
1,286
|
|
|
803
|
|
|
64
|
|
|||||||
Fixed charges
|
608
|
|
|
584
|
|
|
2,365
|
|
|
2,068
|
|
|
2,081
|
|
|
2,047
|
|
|
2,094
|
|
|||||||
Interest capitalized
|
(15
|
)
|
|
(115
|
)
|
|
(278
|
)
|
|
(413
|
)
|
|
(13
|
)
|
|
(12
|
)
|
|
(123
|
)
|
|||||||
Amortization of interest capitalized
|
33
|
|
|
12
|
|
|
81
|
|
|
48
|
|
|
85
|
|
|
85
|
|
|
80
|
|
|||||||
Earnings (loss), as adjusted
|
223
|
|
|
(55
|
)
|
|
(890
|
)
|
|
797
|
|
|
140
|
|
|
(571
|
)
|
|
(1,945
|
)
|
|||||||
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense
|
432
|
|
|
298
|
|
|
1,428
|
|
|
1,011
|
|
|
1,464
|
|
|
1,450
|
|
|
1,362
|
|
|||||||
Interest capitalized
|
15
|
|
|
115
|
|
|
278
|
|
|
413
|
|
|
13
|
|
|
12
|
|
|
123
|
|
|||||||
Portion of rentals representative of interest
|
161
|
|
|
171
|
|
|
659
|
|
|
644
|
|
|
604
|
|
|
585
|
|
|
609
|
|
|||||||
Fixed charges
|
608
|
|
|
584
|
|
|
2,365
|
|
|
2,068
|
|
|
2,081
|
|
|
2,047
|
|
|
2,094
|
|
|||||||
Ratio of earnings to fixed charges
|
—
(1)
|
|
|
—
(2)
|
|
|
—
(3)
|
|
|
—
(4)
|
|
|
—
(5)
|
|
|
—
(6)
|
|
|
—
(7)
|
|
(1)
|
Earnings (loss), as adjusted were inadequate to cover fixed charges by $385 million at
March 31, 2013
.
|
(2)
|
Earnings (loss), as adjusted were inadequate to cover fixed charges by $639 million at
March 31, 2012
.
|
(3)
|
Earnings (loss), as adjusted were inadequate to cover fixed charges by $3.3 billion in 2012.
|
(4)
|
Earnings (loss), as adjusted were inadequate to cover fixed charges by $1.3 billion in 2011.
|
(5)
|
Earnings (loss), as adjusted were inadequate to cover fixed charges by $1.9 billion in 2010.
|
(6)
|
Earnings (loss), as adjusted were inadequate to cover fixed charges by $2.6 billion in 2009.
|
(7)
|
Earnings (loss), as adjusted were inadequate to cover fixed charges by $4.0 billion in 2008.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Sprint Nextel Corporation;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
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(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Daniel R. Hesse
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Daniel R. Hesse
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Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Sprint Nextel Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/Joseph J. Euteneuer
|
Joseph J. Euteneuer
|
Chief Financial Officer
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(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Daniel R. Hesse
|
Daniel R. Hesse
|
Chief Executive Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Joseph J. Euteneuer
|
Joseph J. Euteneuer
|
Chief Financial Officer
|