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SPRINT CORPORATION

CONSOLIDATED BALANCE SHEETS  

	March 31,
	2020				2019
	(in millions, except share and per share data)
ASSETS
Current assets:
Cash and cash equivalents	$	2,214			$	6,982
Short-term investments	—				67
Accounts and notes receivable, net	3,651				3,554
Device and accessory inventory	898				999
Prepaid expenses and other current assets	1,243				1,289
Total current assets	8,006				12,891
Property, plant and equipment, net	20,113				21,201
Costs to acquire a customer contract	1,805				1,559
Operating lease right-of-use assets	6,567				—
Intangible assets
Goodwill	4,598				4,598
FCC licenses and other	41,506				41,465
Definite-lived intangible assets, net	800				1,769
Other assets	1,164				1,118
Total assets	$	84,559			$	84,601
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	3,166			$	3,961
Accrued expenses and other current liabilities	3,003				3,597
Current operating lease liabilities	1,905				—
Current portion of long-term debt, financing and finance lease obligations	3,058				4,557
Total current liabilities	11,132				12,115
Long-term debt, financing and finance lease obligations	33,034				35,366
Long-term operating lease liabilities	5,185				—
Deferred tax liabilities	6,428				7,556
Other liabilities	2,925				3,437
Total liabilities	58,704				58,474
Commitments and contingencies
Stockholders' equity:
Common stock, voting, par value $0.01 per share, 9.0 billion authorized, 4.116 billion and 4.081 billion issued at March 31, 2020 and 2019	41				41
Paid-in capital	28,439				28,306
Accumulated deficit	(2,059		)		(1,883		)
Accumulated other comprehensive loss	(566		)		(392		)
Total stockholders' equity	25,855				26,072
Noncontrolling interests	—				55
Total equity	25,855				26,127
Total liabilities and equity	$	84,559			$	84,601

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SPRINT CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

	Year Ended March 31,
	2020				2019				2018
	(in millions, except per share amounts)
Net operating revenues:
Service	$	21,604			$	22,857			$	23,834
Equipment sales	4,999				5,606				4,524
Equipment rentals	5,218				5,137				4,048
	31,821				33,600				32,406
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	6,852				6,664				6,801
Cost of equipment sales	5,764				6,082				6,109
Cost of equipment rentals (exclusive of depreciation below)	816				643				493
Selling, general and administrative	7,909				7,774				8,087
Depreciation - network and other	4,416				4,245				3,976
Depreciation - equipment rentals	4,166				4,538				3,792
Amortization	811				608				812
Goodwill impairment	—				2,000				—
Other, net	156				648				(391		)
	30,890				33,202				29,679
Operating income	931				398				2,727
Other (expense) income:
Interest expense	(2,392		)		(2,563		)		(2,365		)
Other income (expense), net	41				187				(59		)
	(2,351		)		(2,376		)		(2,424		)
(Loss) income before income taxes	(1,420		)		(1,978		)		303
Income tax benefit	1,073				35				7,074
Net (loss) income	(347		)		(1,943		)		7,377
Less: Net loss attributable to noncontrolling interests	9				—				12
Net (loss) income attributable to Sprint Corporation	$	(338	)		$	(1,943	)		$	7,389
Basic net (loss) income per common share attributable to Sprint Corporation	$	(0.08	)		$	(0.48	)		$	1.85
Diluted net (loss) income per common share attributable to Sprint Corporation	$	(0.08	)		$	(0.48	)		$	1.81
Basic weighted average common shares outstanding	4,102				4,057				3,999
Diluted weighted average common shares outstanding	4,102				4,057				4,078

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SPRINT CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

	Year Ended March 31,
	2020				2019				2018
	(in millions)
Net (loss) income	$	(347	)		$	(1,943	)		$	7,377
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustment	(3		)		(8		)		14
Net unrealized holding (losses) gain on derivatives	(47		)		(22		)		36
Net unrealized holding gain on securities	1				1				12
Unrecognized net periodic pension and other postretirement benefits:
Net actuarial loss	(146		)		(49		)		(30		)
Less: Amortization of actuarial gain (loss), included in net (loss) income	21				7				(1		)
Net unrecognized net periodic pension and other postretirement benefits	(125		)		(42		)		(31		)
Other comprehensive (loss) income	(174		)		(71		)		31
Comprehensive (loss) income	$	(521	)		$	(2,014	)		$	7,408

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SPRINT CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Year Ended March 31,
	2020				2019				2018
	(in millions)
Cash flows from operating activities:
Net (loss) income	$	(347	)		$	(1,943	)		$	7,377
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:
Goodwill and other asset impairments	237				2,000				—
Depreciation and amortization	9,393				9,391				8,580
Provision for losses on accounts receivable	559				394				362
Share-based and long-term incentive compensation expense	115				132				182
Deferred income tax benefit	(1,110		)		(85		)		(7,119		)
Gains from asset dispositions and exchanges	—				—				(479		)
Loss on early extinguishment of debt	—				—				65
Amortization of long-term debt premiums, net	(62		)		(112		)		(158		)
Loss on disposal of property, plant and equipment	887				1,135				868
Litigation and other contingencies	—				74				(13		)
Contract terminations	—				—				(5		)
Deferred purchase price from sale of receivables	—				(223		)		(1,140		)
Other changes in assets and liabilities:
Accounts and notes receivable	(656		)		(150		)		83
Inventories and other current assets	1,027				279				705
Operating lease right-of-use assets	1,785				—				—
Accounts payable and other current liabilities	(802		)		(142		)		57
Current and long-term operating lease liabilities	(1,990		)		—				—
Non-current assets and liabilities, net	(59		)		(728		)		271
Other, net	315				407				426
Net cash provided by operating activities	9,292				10,429				10,062
Cash flows from investing activities:
Capital expenditures - network and other	(4,282		)		(4,963		)		(3,319		)
Capital expenditures - leased devices	(6,865		)		(7,441		)		(7,461		)
Expenditures relating to FCC licenses	(157		)		(163		)		(115		)
Proceeds from sales and maturities of short-term investments	141				7,197				7,202
Purchases of short-term investments	(74		)		(5,165		)		(4,112		)
Proceeds from sales of assets and FCC licenses	1,024				591				527
Proceeds from deferred purchase price from sale of receivables	—				223				1,140
Proceeds from corporate owned life insurance policies	5				110				2
Other, net	(39		)		69				1
Net cash used in investing activities	(10,247		)		(9,542		)		(6,135		)
Cash flows from financing activities:
Proceeds from debt and financings	5,749				9,307				8,529
Repayments of debt, financing and finance lease obligations	(9,482		)		(9,764		)		(8,518		)
Debt financing costs	(41		)		(321		)		(93		)
Call premiums paid on debt redemptions	—				—				(131		)
Proceeds from issuance of common stock, net	(8		)		291				21
Acquisition of noncontrolling interest	(33		)		—				—
Other, net	1				4				(18		)
Net cash used in financing activities	(3,814		)		(483		)		(210		)
Net (decrease) increase in cash, cash equivalents and restricted cash	(4,769		)		404				3,717
Cash, cash equivalents and restricted cash, beginning of period	7,063				6,659				2,942
Cash, cash equivalents and restricted cash, end of period	$	2,294			$	7,063			$	6,659

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SPRINT CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(in millions)

	Common Stock							Paid-in Capital				(Accumulated Deficit) Retained Earnings				Accumulated Other Comprehensive (Loss) Income				Noncontrolling Interests				Total
	Shares			Amount
Balance, March 31, 2017	3,989			$	40			$	27,756			$	(8,584	)		$	(404	)		$	—			$	18,808
Net income (loss)												7,389								(12		)		7,377
Other comprehensive income, net of tax																31								31
Issuance of common stock, net	16							21																21
Share-based compensation expense								182																182
Capital contribution by SoftBank								6																6
Other, net								(54		)														(54		)
Reclassification of certain tax effects												(60		)		60								—
(Decrease) increase attributable to noncontrolling interests								(27		)										75				48
Balance, March 31, 2018	4,005			40				27,884				(1,255		)		(313		)		63				26,419
Net loss												(1,943		)										(1,943		)
Other comprehensive loss, net of tax																(71		)						(71		)
Issuance of common stock, net	76			1				290																291
Share-based compensation expense								132																132
Capital contribution by SoftBank								6																6
Cumulative effect of accounting changes												1,315				(8		)						1,307
Other, net								(14		)														(14		)
Increase (decrease) attributable to noncontrolling interests								8												(8		)		—
Balance, March 31, 2019	4,081			41				28,306				(1,883		)		(392		)		55				26,127
Net loss												(338		)						(9		)		(347		)
Other comprehensive loss, net of tax																(174		)						(174		)
Issuance of common stock, net	35							(8		)														(8		)
Share-based compensation expense								115																115
Capital contribution by SoftBank								1																1
Other, net								(3		)														(3		)
Cumulative effect of accounting change												162												162
Acquisition of noncontrolling interest(1)								28												(46		)		(18		)
Balance, March 31, 2020	4,116			$	41			$	28,439			$	(2,059	)		$	(566	)		$	—			$	25,855

_________________

(1)	On November 1, 2019, we acquired PRWireless PR, Inc’s. member shares in PRWireless Holdco, LLC for cash consideration of $33 million making Sprint the sole shareholder of PRWireless Holdco, LLC and removing the noncontrolling interest.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

INDEX

 

		Page Reference
1.	Description of Operations	10
2.	Summary of Significant Accounting Policies and Other Information	11
3.	Installment Receivables	22
4.	Financial Instruments	23
5.	Property, Plant and Equipment	24
6.	Intangible Assets	25
7.	Leases	27
8.	Long-Term Debt, Financing and Capital Lease Obligations	31
9.	Revenue from Contracts with Customers	37
10.	Severance and Exit Costs	39
11.	Supplemental Financial Information	40
12.	Income Taxes	41
13.	Commitments and Contingencies	44
14.	Stockholders' Equity and Per Share Data	47
15.	Segments	48
16.	Quarterly Financial Data	52
17.	Related-Party Transactions	52
18.	Guarantor Financial Information	54
19.	Subsequent Event	63

9

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1.	Description of Operations

Overview

As of March 31, 2020, Sprint Corporation, including its consolidated subsidiaries, is a communications company offering a comprehensive range of wireless and wireline communications products and services that are designed to meet the needs of individual consumers, businesses, government subscribers and resellers. Unless the context otherwise requires, references to "Sprint," "we," "us," "our" and the "Company" mean Sprint Corporation and its consolidated subsidiaries for all periods presented, and references to "Sprint Communications" are to Sprint Communications, Inc. and its consolidated subsidiaries.

The Wireless segment includes retail, wholesale, and affiliate service revenue from a wide array of wireless voice and data transmission services and equipment sales or rentals from the sale or lease of wireless devices and the sale of accessories in the U.S., Puerto Rico and the U.S. Virgin Islands. The Wireline segment includes revenue from domestic and international wireline data communication services in addition to data and all-internet protocol (IP) communication services provided to our Wireless segment.

On July 10, 2013, SoftBank Corp., which subsequently changed its name to SoftBank Group Corp., and certain of its wholly-owned subsidiaries (together, SoftBank) completed the merger (SoftBank Merger) with Sprint Nextel as contemplated by the Agreement and Plan of Merger, dated as of October 15, 2012 (as amended, the Merger Agreement) and the Bond Purchase Agreement, dated as of October 15, 2012. As a result of the SoftBank Merger, Starburst II, Inc. (Starburst II) became the parent company of Sprint Nextel. Immediately thereafter, Starburst II changed its name to Sprint Corporation and Sprint Nextel changed its name to Sprint Communications, Inc. (Sprint Communications). As a result of the completion of the SoftBank Merger in which SoftBank acquired an approximate 78% interest in Sprint Corporation and subsequent open market stock purchases, SoftBank owned nearly 85% of the outstanding common stock of Sprint Corporation as of March 31, 2020.

Business Combination Agreement

On April 29, 2018, we announced that we entered into a Business Combination Agreement (BCA) with T-Mobile US, Inc. (T-Mobile) to merge in an all-stock transaction for a fixed exchange ratio of 0.10256 of T-Mobile shares for each Sprint share, or the equivalent of 9.75 Sprint shares for each T-Mobile share (Merger Transaction).

On July 26, 2019, Sprint and T-Mobile announced agreements with DISH Network Corporation (DISH) in which new T-Mobile will divest Sprint’s prepaid assets (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Telecommunications Company and Swiftel Communications, Inc.) and Sprint’s 800 MHz spectrum assets to DISH for a total of approximately $5.0 billion. In connection with the execution of the firm agreements by and between DISH and the Company, as well as the agreements with the DOJ, as of March 31, 2020, Sprint had not lost a controlling financial interest in Sprint's prepaid assets.

On April 1, 2020, T-Mobile closed on its previously announced business combination with Sprint. After adjustments, the total aggregate consideration payable was approximately 373 million shares of T-Mobile common stock to Sprint shareholders at an exchange ratio of 0.10256 T-Mobile shares for every share of Sprint common stock. Immediately following the Merger Transaction and share adjustments, Deutsche Telekom AG and SoftBank Group Corp. hold approximately 43.6% and 24.7% of fully-diluted shares of the combined company, respectively, with the remaining 31.7% of the fully-diluted shares of the combined company held by public stockholders. As a result of completing the Merger Transaction, a change in control of the Company occurred and we are now a wholly-owned subsidiary of T-Mobile. Concurrent with the close of the merger, certain of Sprint’s debt instruments were repaid by Sprint and T-Mobile under various agreements with the debtholders.

COVID-19

The global outbreak of coronavirus (COVID-19) has led to severe disruptions in general economic activities, particularly retail operations, as businesses and federal, state, and local governments took broad actions to mitigate this public health crisis. The impact of COVID-19 and measures to prevent its spread affected our business in a number of ways. As we focused on our community and doing our part to stop the spread of COVID-19, we closed or limited operations at many of our retail locations. For stores that remain open, consumer demand has declined.

10

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The ultimate significance of the impact of COVID-19 on our business is uncertain at this time. The impact will depend, in part, on the extent of governmental measures affecting day-to-day life and the duration that such measures remain in place to respond to COVID-19. As the Merger Transaction has now been completed, T-Mobile will provide more information about its views regarding the business outlook for the combined company in its future public filings.

See Note 15. Segments for selling, general and administrative expenses primarily related to sales commissions and other labor costs paid to employees at closed retail stores resulting from the COVID-19 pandemic for the year ended March 31, 2020.

Note 2.	Summary of Significant Accounting Policies and Other Information

Basis of Consolidation and Estimates

The consolidated financial statements include our accounts, those of our 100% owned subsidiaries, and subsidiaries we control or in which we have a controlling financial interest. All intercompany transactions and balances have been eliminated in consolidation.

The consolidated financial statements are prepared in conformity with accounting principles generally accepted in the United States (U.S. GAAP). This requires management of the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities as of the date of the consolidated financial statements. Significant estimates and assumptions are used for, but are not limited to, allowance for doubtful accounts, estimated economic lives and residual values of property, plant and equipment, fair value of identified purchased tangible and intangible assets in a business combination and fair value assessments for purposes of impairment testing.

Certain prior period amounts have been reclassified to conform to the current period presentation.

Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash equivalents generally include highly liquid investments with maturities at the time of purchase of three months or less. These investments may include money market funds, certificates of deposit, U.S. government and government-sponsored debt securities, corporate debt securities, municipal securities, bank-related securities, and credit and debit card transactions in process. The carrying amounts approximate fair value.

Short-Term Investments

Short-term investments generally include time deposits, corporate debt securities and commercial paper with terms greater than three months but less than one year at the date of purchase. The carrying amounts are recorded at amortized cost and approximate fair value. The interest earned is recognized in the consolidated statements of operations over the contractual term of the short-term investments.

Installment Receivables

The carrying value of installment receivables generally approximates fair value because the receivables are recorded at their present value, net of the deferred interest and allowance for credit losses. For certain installment sales in our indirect channel, we impute interest on the installment receivable and record a corresponding contract asset and deferred interest as a reduction to the related receivable. Interest income is recognized over the term of the installment contract in service revenue.

We categorize our installment receivables as prime and subprime based upon subscriber credit profiles and as unbilled, billed-current and billed-past due based upon the age of the receivable. We use proprietary scoring systems that measure the credit quality of our receivables using several factors, such as credit bureau information, subscriber credit risk scores and service plan characteristics. Payment history is subsequently monitored to further evaluate credit profiles. Prime subscriber receivables are those with lower delinquency risk and subprime subscriber receivables are those with higher delinquency risk. Subscribers within the subprime category may be required to make a down payment on their device and accessory purchases. Installment receivables for which invoices have not yet generated for the customer are considered unbilled. Installment receivables for which invoices have been generated but are not past the contractual due date are

11

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

considered billed-current. Installment receivables for which invoices have been generated and the payment is approximately ten days past the contractual due date are considered billed-past due. Account balances are written off if collection efforts are unsuccessful and future collection is unlikely based on the length of time from the day accounts become past due.

Allowance for Doubtful Accounts

An allowance for doubtful accounts is established to cover probable and reasonably estimable losses. Because of the number of subscriber accounts, it is not practical to review the collectability of each of those accounts individually to determine the amount of allowance for doubtful accounts each period, although some account level analysis is performed with respect to large wireless and wireline subscribers. The estimate of allowance for doubtful accounts considers a number of factors, including collection experience, aging of the remaining accounts receivable portfolios, credit quality of the subscriber base and other qualitative considerations, including macroeconomic factors such as COVID-19. Account balances are written off if collection efforts are unsuccessful and future collection is unlikely based on the length of time from the day accounts become past due. Amounts written off against the allowance for doubtful accounts, net of recoveries and other adjustments, were $539 million, $360 million, and $451 million for the years ended March 31, 2020, 2019, and 2018, respectively. See Note 3. Installment Receivables for additional information as it relates to the allowance for doubtful accounts specifically attributable to installment receivables.

Device and Other Inventory

Inventories are stated at the lower of cost or market. Cost is determined by the first-in, first-out (FIFO) method. The Company sells wireless devices separately or in conjunction with a service contract. A device sold with a service contract may be sold below cost, as any promotional discounts on the device are expected to be recovered through the service contract.

The net realizable value of devices and other inventory is analyzed on a regular basis. This analysis includes assessing obsolescence, sales forecasts, product life cycle, marketplace and other considerations. If assessments regarding the above factors adversely change, we may sell devices at lower prices or record a write-down to inventory for obsolete or slow-moving items prior to the point of sale.

Property, Plant and Equipment

Property, plant and equipment (PP&E), including improvements that extend useful lives, are recognized at cost. Depreciation on PP&E is generally calculated using the straight-line method based on estimated economic useful lives of 3 to 30 years for buildings and improvements and network equipment, site costs and related software and 3 to 12 years for non-network internal use software, office equipment and other. Leasehold improvements are depreciated over the shorter of the lease term or the estimated useful life of the respective assets. Leased devices are depreciated using the straight-line method to their estimated residual value generally over the term of the lease. We calculate depreciation on certain network assets using the group life method. Accordingly, ordinary asset retirements and disposals on those assets are charged against accumulated depreciation with no gain or loss recognized. Gains or losses associated with all other asset retirements or disposals are recognized in "Other, net" in the consolidated statements of operations. Depreciation rates for assets are revised periodically to account for changes, if any, related to management's strategic objectives, technological changes, changes in estimated residual values, or obsolescence. Changes in our estimates will result in adjustments to depreciation expense prospectively over the estimated useful lives of our non-leased assets and over the remaining period of benefit for devices leased to our customers. Repair and maintenance costs and research and development costs are expensed as incurred.

We capitalize costs for network and non-network software developed or obtained for internal use during the application development stage. These costs are included in PP&E and, when the software is placed in service, are depreciated over estimated useful lives of three to five years. Costs incurred during the preliminary project and post-implementation stage, as well as maintenance and training costs, are expensed as incurred.

Long-Lived Asset Impairment

Sprint evaluates long-lived assets, including intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Asset groups are determined at the lowest level for which identifiable cash flows are largely independent of cash flows of other groups of assets and liabilities. When the carrying amount of a long-lived asset group is not recoverable and exceeds its fair

12

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

value, an impairment loss is recognized equal to the excess of the asset group’s carrying value over the estimated fair value. See Note 5. Property, Plant and Equipment for additional information on long-lived asset impairments.

Certain assets that have not yet been deployed in the business, including network equipment, cell site development costs and software in development, are periodically assessed to determine recoverability. Network equipment and cell site development costs are expensed whenever events or changes in circumstances cause the Company to conclude the assets are no longer needed to meet management's strategic network plans and will not be deployed. Software development costs are expensed when it is no longer probable that the software project will be deployed. Network equipment that has been removed from the network is also periodically assessed to determine recoverability. If we experience significant operational challenges, including retaining and attracting subscribers, future cash flows of the Company may not be sufficient to recover the carrying value of our assets or asset groups, and we could record asset impairments that are material to Sprint's consolidated results of operations and financial condition.

Indefinite-Lived Intangible Assets

Our indefinite-lived intangible assets primarily consist of goodwill, certain of our trademarks and FCC licenses. Goodwill represents the excess of consideration paid over the estimated fair value of the net tangible and identifiable intangible assets acquired in business combinations. In determining whether an intangible asset, other than goodwill, is indefinite-lived, we consider the expected use of the assets, the regulatory and economic environment within which they are being used, and the effects of obsolescence on their use. We assess our indefinite-lived intangible assets, including goodwill, for impairment at least annually or, if necessary, more frequently, whenever events or changes in circumstances indicate the asset may be impaired.

These evaluations, which include the determination of fair value, require considerable judgment and are highly sensitive to changes in underlying assumptions. Consequently, there can be no assurance that the estimates and assumptions made for the purposes of estimating the fair values of our indefinite-lived assets, including goodwill, will prove to be an accurate prediction of the future. Significant changes within the macroeconomic environment, discount rates, growth rates, and uncertainties surrounding forecasted growth could impact the underlying key assumptions and our estimated fair values, potentially leading to a future material impairment of goodwill or other indefinite-lived intangible assets. See Note 6. Intangible Assets for additional information on indefinite-lived intangible asset impairments.

Derivatives and Hedging

The Company uses derivative instruments to hedge its exposure to interest rate risks arising from operating and financing activities. In accordance with its risk management policies, the Company generally does not hold or issue derivative instruments for trading or speculative purposes.

Derivatives are recognized in the consolidated balance sheets at their fair values. When the Company becomes a party to a derivative instrument and intends to apply hedge accounting, it formally documents the hedge relationship and the risk management objective for undertaking the hedge which includes designating the instrument for financial reporting purposes as a fair value hedge, a cash flow hedge, or a net investment hedge. The accounting for changes in fair value of a derivative instrument depends on whether the Company had designated it in a qualifying hedging relationship and further, on the type of hedging relationship. At March 31, 2020, the Company only held and applied hedge accounting for derivatives designated as cash flow hedges.

Changes in the fair value of a derivative not designated in a hedging relationship are recognized in the consolidated statements of operations. The changes in the fair value of a derivative designated as a cash flow hedge is recorded in "Other comprehensive (loss) income" in the consolidated statements of comprehensive (loss) income and reclassified into earnings in the period or periods during which the hedged item affects earnings.

For derivative instruments designated as hedges, the Company assesses, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. Highly effective means that cumulative changes in the fair value of the derivative are between 80% and 125% of the cumulative changes in the fair value of the hedged item. In addition, when the Company determines that a derivative is not highly effective as a hedge, hedge accounting is discontinued. When it is probable that a hedged forecasted transaction will not occur, the Company discontinues hedge accounting for the affected portion of the forecasted transaction, and reclassifies any gains or losses in "Accumulated other comprehensive loss" to earnings in the

13

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

consolidated statements of operations. When a derivative in a hedge relationship is terminated or the hedged item is sold, extinguished or terminated, hedge accounting is discontinued prospectively.

Benefit Plans

We provide a defined benefit pension plan and other postretirement benefits to certain employees, and we sponsor a defined contribution plan for all employees.

In November 2019, the Company's Board of Directors approved a plan amendment to the Sprint Retirement Pension Plan (the Plan) to offer certain terminated participants, who had not begun to receive Plan benefits, the opportunity to voluntarily elect to receive their benefits as an immediate lump sum distribution. Upon expiration of the election period and completion of cash payments during the three-month period ended December 31, 2019, the lump sum distribution, totaling $257 million, created a settlement event that resulted in a $57 million charge, which is reflected in "Other, net" in the consolidated statements of operations, and a reduction in the projected benefit obligation of $115 million, impacted by the settlement as well as a change in the mortality tables and a change in the discount rate used to estimate the projected benefit obligation.

As of March 31, 2020 and 2019, the fair value of our pension plan assets and certain other postretirement benefit plan assets in aggregate was $1.2 billion and $1.4 billion, respectively, and the fair value of our projected benefit obligations in aggregate was $2.1 billion and $2.2 billion, respectively. As a result, the plans were underfunded by approximately $900 million and $800 million as of March 31, 2020 and 2019, respectively, and were recorded as a net liability in our consolidated balance sheets. Estimated contributions totaling $82 million are expected to be paid during fiscal year 2020.

The offset to the pension liability is recorded in equity as a component of "Accumulated other comprehensive loss," net of tax, including net actuarial losses of $146 million, $49 million and $30 million for the years ended March 31, 2020, 2019 and 2018, respectively, which is amortized to "Other income (expense), net" in our consolidated statements of operations. The change in the net liability of the Plan in the year ended March 31, 2020 was affected by a change in the discount rate used to estimate the projected benefit obligation, decreasing from 4.1% for the year ended March 31, 2019 to 3.4% for the year ended March 31, 2020. The change in the net liability of the Plan in the year ended March 31, 2019 was affected by the lower than expected actual rate of return on Plan assets experienced during the year. There was no change in the discount rate used to estimate the projected benefit obligation during the year ended March 31, 2019. The change in the net liability of the Plan in the year ended March 31, 2018 was affected by a change in the discount rate used to estimate the projected benefit obligation, decreasing from 4.3% for the year ended March 31, 2017 to 4.1% for the year ended March 31, 2018. Future cash contributions are expected to be made to the Plan in an amount necessary to meet minimum funding requirements according to applicable benefit plan regulations.

As of December 31, 2005, the Plan was amended to freeze benefit plan accruals for participants. The objective for the investment portfolio of the pension plan is to achieve a long-term nominal rate of return, net of fees, which exceeds the plan's long-term expected rate of return on investments for funding purposes, which was 7.00% and 7.25% for the years ended March 31, 2020 and 2019, respectively. To meet this objective, our investment strategy for the seven-month period ended October 31, 2018 was governed by an asset allocation policy, whereby a targeted allocation percentage is assigned to each asset class as follows: 38% to U.S. equities; 16% to international equities; 28% to fixed income investments; 9% to real estate investments; and 9% to other investments including hedge funds. Actual allocations are allowed to deviate from target allocation percentages within a range for each asset class as defined in the investment policy. As of March 31, 2020, the target allocation percentage assigned to each asset class was revised as follows: 24% to U.S. equities; 17% to non-U.S. equities; 44% to fixed income investments; 11% to real estate, infrastructure and private assets; and 4% to other investments. The Company has not yet selected a long-term expected rate of return on investments for funding purposes for the year ended March 31, 2021.

Investments of the Plan are measured at fair value on a recurring basis, which is determined using quoted market prices or estimated fair values. As of March 31, 2020, 21% of the investment portfolio was valued at quoted prices in active markets for identical assets; 74% was valued using quoted prices for similar assets in active or inactive markets, or other observable inputs; and 5% was valued using unobservable inputs that are supported by little or no market activity, the majority of which used the net asset value per share (or its equivalent) as a practical expedient to measure the fair value.

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Under Sprint's defined contribution plan, participants may contribute a portion of their eligible pay to the plan through payroll withholdings. The Company will match 100% of the participants' pre-tax and Roth contribution (in aggregate) on the first 3% of eligible compensation and 50% of the participants' pre-tax and Roth contribution (in aggregate) on the next 2% of eligible compensation for the calendar year 2020. The Company matched 100% of the participants' pre-tax and Roth contribution (in aggregate) on the first 3% of eligible compensation for the calendar years 2019 and 2018. Fixed matching contributions totaled $52 million, $47 million, and $38 million for the fiscal years ended March 31, 2020, 2019, and 2018, respectively.

Revenue Recognition

We earn revenue from contracts with customers, primarily through the provision of telecommunications and other services and the sale or rental of wireless devices and accessories. Net operating revenues primarily consist of Wireless and Wireline service revenues, revenues generated from device and accessory sales, revenues from wholesale operators and third-party affiliates. Our contracts with customers may involve multiple performance obligations, which include services, wireless devices or a combination thereof, and we allocate the transaction price between each performance obligation based on its relative standalone selling price.

Contracts with Customers

Service-related components of the total transaction price typically consist of fixed monthly recurring charges, variable usage charges and miscellaneous fees such as activation fees, international long distance and roaming, commissions on the device insurance program, late payment and administrative fees, and certain regulatory-related fees, net of service credits. For contracts involving multiple performance obligations, such as equipment and service, revenue is allocated based on relative standalone selling price of each performance obligation. We generally recognize revenue allocated to service performance obligations as those services are rendered. As a result of the timing of our multiple billing cycles throughout each month, we are required to estimate the amount of subscriber revenues earned but not billed from the end of each billing cycle to the end of each reporting period, and to estimate and defer amounts billed but not earned as of the end of each reporting period. These estimates are based primarily on rate plans in effect and our historical usage and billing patterns. Regulatory fees and costs are recorded gross. The largest component of regulatory fees is the Universal Service Fund, which represented approximately 1% of net operating revenues for the each of the years ended March 31, 2020, 2019 and 2018, in the consolidated statements of operations.

We recognize equipment sales and corresponding costs of equipment sales when title and risk of loss passes to the indirect dealer or end-use subscriber, assuming all other revenue recognition criteria are met. This typically occurs at the point of sale for direct channel sales and freight-on-board dealer destination for indirect channel sales. For the years ended March 31, 2020 and March 31, 2019, equipment sales to our indirect dealers were approximately $3.0 billion and $3.5 billion, respectively. In subsidized postpaid and prepaid Wireless contracts, we subsidize the cost of the device as an incentive to retain and acquire subscribers.

We recognize revenue on equipment rentals subject to leasing contracts in accordance with the classification of the lease, which is over the lease term for operating leases or upon transfer of control over the equipment for most finance leases. Qualified subscribers can lease a device for a contractual period of time. At the end of the lease term, subscribers have the option to return the device, continue leasing the device or purchase the device. Accounting for device leases involves specific determinations under applicable lease accounting standards, which involve complex and prescriptive provisions. These provisions impact the timing and amount of revenue recognized for our leased devices. The critical elements that are considered with respect to our lease accounting are the economic life of the device and the fair value of the device, including the residual value. We only lease devices to qualifying subscribers that also purchase a service plan. To date, substantially all of our device leases were classified as operating leases. Revenues under these arrangements are allocated amongst the deliverables in the multiple-element arrangement considering the relative fair values of the lease and non-lease elements. The amount allocable to the operating lease element is included within "Equipment rentals" in the consolidated statements of operations and is recognized ratably over the lease term, which is typically two years or less.

If a multiple-element arrangement includes an option to purchase, on a monthly basis, an annual trade-in right, the amount of the total arrangement consideration is reduced by the estimated fair value of the trade-in right or the guarantee and the remaining proceeds are then allocated amongst the other deliverables in the arrangement.

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Performance Obligations

Performance obligations related to our Wireless segment involve the provision of equipment and service. In most circumstances, equipment performance obligations provided to the customer as part of subsidized and installment billing contracts, or as part of standalone equipment sales, are satisfied when title and risk of loss passes to the indirect dealer or end-use subscriber, assuming all other revenue recognition criteria are met. This typically occurs at the point of sale for direct channel sales and freight-on-board dealer destination for indirect channel sales. We recognize revenue on equipment rentals subject to leasing contracts in accordance with the classification of the lease, which is over the lease term for operating leases or upon transfer of control over the equipment for most capital leases. Wireless service performance obligations are typically satisfied over 24 months for subsidized and installment billing contracts with substantive termination penalties such as Buy-One-Get-One (BOGO) contracts, over 18 to 30 months for leasing contracts, and over one month for traditional installment billing contracts. Amounts due for subsidized equipment are due at point of sale. Amounts due for equipment subject to an operating or capital lease are invoiced and collected monthly over the term of the lease. Amounts due for equipment subject to an installment billing note are invoiced and collected monthly over the term of the note, typically between 24 and 30 months for handsets and 12 to 18 months for accessories. A financing component exists in relation to subsidized and installment billing Wireless contracts. However, we do not consider the financing component to be quantitatively or qualitatively significant for installment billing contracts with durations longer than one year. For those installment billing contracts with durations of one year or less, we have elected to apply the practical expedient and not adjust the transaction price for the effects of a financing component. Amounts due for Wireless services are typically invoiced and collected monthly over the relevant service period. Wireless contracts generally do not involve variable consideration, other than expected adjustments to the total transaction price related to expected future price concessions and product returns and service refunds. Our Wireless contracts include consideration resulting from monthly customer charges intended to partially recover taxes imposed on the Company, including fees related to the Universal Service Fund. These fees are based on the customer's estimated monthly voice usage and are therefore allocated to corresponding distinct months of Wireless services. We update our estimates related to return and refund obligations for Wireless equipment and services on a quarterly basis. Returns and refunds are typically provided for up to 14 days after contract inception for individual customers and for 30 days for business customers.

Performance obligations related to our Wireline business involve the provision of services to corporate customers. Wireline service performance obligations are typically satisfied over a period between 24 and 36 months. Amounts due for services are invoiced and collected periodically over the relevant service period. Wireline contracts are not subject to significant amounts of variable consideration, other than charges intended to partially recover taxes imposed on the Company, including fees related to the Universal Service Fund. Such fees are based on the customer's estimated monthly usage and are therefore allocated to corresponding distinct months of Wireline services. Our Wireline contracts do provide the customer with monthly options to purchase goods or services at prices commensurate with the standalone selling prices for those goods or services, as determined at contract inception.

Significant Judgments

The accounting estimates and judgments related to the recognition of revenue require us to make assumptions about numerous factors such as future billing adjustments, future returns, and the total contract consideration (e.g., for contracts which include customer incentives or consideration payable to the customer).

We use output methods to recognize revenue for performance obligations satisfied over time (i.e., service performance obligations). Output methods measure progress toward satisfying a performance obligation on the basis of direct measurements of the goods or services transferred to date, relative to the remaining goods or services promised under a contract. Management asserts that this method most reasonably represents the transfer of goods or services to the customer. For prepaid contracts which provide the customer with the ability to redeem fixed prepayments for future goods or services, we utilize the proportional amount of redemptions from the customer in comparison to the total expected amount of redemptions as an estimate of our progress toward satisfaction of our performance obligations. For postpaid contracts with unlimited amounts of monthly service and for Wireline contracts, we utilize the time elapsed in relation to the total contract duration as an estimate of our progress toward satisfaction of our performance obligations.

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

In determining the amounts of revenue to recognize, we use the following methods, inputs, and assumptions:

•

Determination of transaction price - we include any fixed and determinable charges per our contracts as part of the total transaction price. To the extent that variable consideration is not constrained, we include a probability-weighted estimate of the variable amount within the total transaction price and update our assumptions over the duration of the contract. We do not accept non-cash consideration from our customers as direct payment for the purchase of equipment at contract inception or for the purchase of ongoing services. Subject to certain restrictions, we may purchase used equipment from customers entering into a new subscriber contract. Our payment for the purchase of this used equipment may not equal its market value. In those circumstances, the expected difference between the purchase price and the market value of the used equipment is treated as an adjustment to the total transaction price of the customer's contract at contract inception.

•

Assessment of estimates of variable consideration - our Wireless contracts generally do not involve variable consideration which must be allocated amongst performance obligations at contract inception, other than expected adjustments to the total transaction price related to (a) customer equipment rebates; (b) customer retention credits; and (c) product returns and service refunds, all of which we are able to reasonably estimate at contract inception based upon historical experience with similar or identical contracts and similar or identical customers. Our Wireline contracts are generally not subject to significant amounts of variable consideration. We do not consider any of our variable consideration to be constrained for the purpose of estimating the total transaction price to be allocated to our performance obligations.

•

Allocation of transaction price - we allocate the total transaction price in our contracts amongst performance obligations based upon the relative standalone selling prices of those performance obligations. We use observable external pricing of performance obligations when sold on a standalone basis as evidence of standalone selling prices. Discounts and premiums built into our transaction prices are typically allocated proportionately to all performance obligations within the contracts, exclusive of performance obligations for the delivery of accessories, which are consistently sold at a standalone selling price regardless of bundling, and with the exception of estimated Wireless customer retention credits, which are treated as a reduction in the portion of the total transaction price allocated to service revenue.

•

Measurement of returns, refunds, and other similar obligations are estimated separately for separate product and service types based upon historical experience with similar contracts and similar types of customers. The total transaction price is reduced by the amount estimated as a return, refund, or other similar obligation in relation to the sale. This amount is recorded as a current liability, unless and until our estimates have changed or the relevant obligation has been satisfied.

Costs to Acquire a Customer Contract

We compensate our dealers and retail employees using specific compensation programs. Sales commissions through these compensation programs are generally earned upon the sale of our devices, service contracts, or both, to an end-use subscriber. Incremental and direct costs to obtain and fulfill contracts with customers, such as sales commissions, are deferred and amortized consistent with the transfer of the related good or service. We capitalize incremental commissions directly related to the acquisition or renewal of customer contracts, to the extent that the costs are expected to be recovered. Capitalized costs are amortized on a straight-line basis over the shorter of the expected customer life or the expected benefit related directly to those costs.

We assess our capitalized contract acquisition asset for impairment on a quarterly basis. We impair our capitalized costs to the extent that the carrying amount of a capitalized cost exceeds (a) the remaining amount of consideration we expect to receive in exchange for the goods and services related to the cost, less (b) the expected costs related directly to providing those goods and services that have not yet been recognized as expenses.

Severance and Exit Costs

Liabilities for severance and exit costs are recognized based upon the nature of the cost to be incurred. For involuntary separation plans that are completed within the guidelines of our written involuntary separation plan, a liability is recognized when it is probable and reasonably estimable. For voluntary separation plans (VSP), a liability is recognized when

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

the VSP is irrevocably accepted by the employee. For one-time termination benefits, such as additional severance pay or benefit payouts, and other exit costs, the liability is measured and recognized initially at fair value in the period in which the liability is incurred, with subsequent changes to the liability recognized as adjustments in the period of change. Severance and exit costs associated with business combinations are recorded in the results of operations when incurred.

Compensation Plans

As of March 31, 2020, Sprint sponsored three incentive plans: the Amended and Restated 2015 Omnibus Incentive Plan (2015 Plan); the 2007 Omnibus Incentive Plan (2007 Plan); and the 1997 Long-Term Incentive Program (1997 Program) (together, Compensation Plans). Sprint also sponsored an Employee Stock Purchase Plan (ESPP) as of March 31, 2020. Under the 2015 Plan, we granted share and non-share based awards, including stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other equity-based and cash awards to employees, outside directors and other eligible individuals as defined by the plan. As of March 31, 2020, the number of shares available and reserved for future grants under the 2015 Plan and ESPP totaled approximately 182 million common shares. The Compensation Committee of Sprint's board of directors, or one or more executive officers should the Compensation Committee so authorize, as provided in the 2015 Plan, determined the terms of each share and non-share based award. No new grants can be made under the 2007 Plan or the 1997 Program. We use new shares to satisfy share-based awards or treasury shares, if available.

The fair value of each option award is estimated on the grant date using the Black-Scholes option valuation model, based on several assumptions including the risk-free interest rate, volatility, expected dividend yield and expected term. During the year ended March 31, 2018, the Company granted approximately 3 million stock options with a weighted average grant date fair value of $3.98 per share based upon assumptions of a risk-free interest rate from 1.93% to 2.65%, expected volatility from 41.9% to 51.8%, expected dividend yield of 0% and expected term from 5.5 to 6.5. In general, options are granted with an exercise price equal to the market value of the underlying shares on the grant date, vest on an annual basis over three years, and have a contractual term of ten years. The Company did not grant any stock options during the years ended March 31, 2020 and 2019. As of March 31, 2020, 16 million options were outstanding, of which 15 million options were exercisable.

We generally determine the fair value of each restricted stock unit award based on the closing price of the Company's common stock on the date of grant. Restricted stock units generally have performance and service requirements or service requirements only with vesting periods ranging from one to three years.

During the year ended March 31, 2018, we also granted performance-based restricted stock units to executive and non-executive employees that are earned (Earned Shares) based upon the achievement of certain market conditions equal to specified volume-weighted average prices of the Company's common stock during regular trading on the New York Stock Exchange over any 150-day calendar period during a performance period specific to each grant (Performance Period). For these awards granted in the year ended March 31, 2018, the specified market criteria has not yet been achieved within the Performance Period. Upon achievement, the Earned Shares will generally vest 50% over four years from the grant date and 50% over five years from the grant date, with continuous service required through each vesting date. During the year ended March 31, 2018, the vesting schedule for Earned Shares was modified, with no incremental impact on compensation expense, to generally vest one-third over two years from the grant date, one-third over three years from the grant date, and one-third over four years from the grant date, with continuous service required through each vesting date. The fair value of these market-based restricted stock units is estimated at the date of grant using a Monte Carlo valuation methodology, which incorporates into the valuation the possibility that the market condition may not be satisfied. For the year ended March 31, 2018, assumptions used in the Monte Carlo valuation model are consistent with those we use to value stock options and include a risk-free interest rate from 1.79% to 2.42%, expected volatility from 41.9% to 51.8%, and expected dividend yield of 0%. The number of restricted stock units that ultimately vest can increase depending upon the future performance of the Company's common stock and the achievement of a higher threshold price target during the Performance Period, with a maximum payout of 120%. Compensation cost related to the share-based awards with market conditions is recognized regardless of the level of threshold price target achievement. No such awards were granted during the years ended March 31, 2020 and 2019.

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Employees and directors who are granted restricted stock units are not required to pay for the shares but generally must remain employed with us, or continue to serve as a member of our board of directors, until the restrictions lapse, which is typically three years for employees and one year for directors. Certain restricted stock units outstanding as of March 31, 2020, are entitled to dividend equivalents paid in cash, if dividends are declared and paid on common shares, but performance-based restricted stock units are not entitled to dividend equivalent payments until the applicable performance and service criteria have been met. During the year ended March 31, 2020, the Company granted approximately 14 million service only and performance-based restricted stock units, including those with market conditions, with a weighted average grant date fair value of $6.06 per share. At March 31, 2020, approximately 52 million restricted stock unit awards were outstanding.

Compensation Costs

The cost of employee services received in exchange for share-based awards classified as equity is measured using the estimated fair value of the award on the date of the grant, and that cost is recognized over the period that the award recipient is required to provide service in exchange for the award. Awards of instruments classified as liabilities are measured at the estimated fair value at each reporting date through settlement.

Pre-tax share and non-share based compensation charges from our incentive plans included in net (loss) income were $115 million, $132 million, and $182 million for the years ended March 31, 2020, 2019, and 2018, respectively. The net income tax benefit recognized in the consolidated financial statements for share-based compensation awards was $38 million, $30 million, and $65 million for the years ended March 31, 2020, 2019, and 2018, respectively. As of March 31, 2020, there was $59 million of total unrecognized compensation cost related to non-vested incentive awards that are expected to be recognized over a weighted average period of 1.28 years.

Advertising Costs

We recognize advertising expense when incurred as selling, general and administrative expense. Advertising expenses totaled $1.1 billion for each of the years ended March 31, 2020 and 2019, and $1.3 billion for the year ended March 31, 2018.

Variable Interest Entities (VIE)

VIEs are entities which lack sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties, have equity investors which do not have the ability to make significant decisions relating to the entity's operations through voting rights, do not have the obligation to absorb the expected losses, or do not have the right to receive the residual returns of the entity. A common type of VIE is a special purposes entity (SPE). SPEs are commonly used in securitization transactions in order to isolate certain assets and distribute the cash flows from those assets to investors. SPEs are generally structured to insulate investors from claims on the SPE's assets by creditors of other entities, including the creditors of the seller of the assets.

We are required to consolidate the assets and liabilities of VIEs when we are deemed to be the primary beneficiary. The primary beneficiary is the party which has the power to make the decisions that most significantly affect the economic performance of the VIE and has the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

New Accounting Pronouncements

Accounting Pronouncements Adopted During the Current Year

In February 2016, the Financial Accounting Standards Board (FASB) issued new authoritative literature, Leases (Topic 842), and has subsequently modified several areas of the standard in order to provide additional clarity and improvements. The new standard supersedes much of the existing lease guidance (Topic 840) to enhance the transparency and comparability of financial reporting related to leasing arrangements. This guidance requires lessees, among other things, to recognize right-of-use (ROU) assets and lease liabilities on their balance sheet for all leases. The criteria for distinguishing leases between finance and operating are substantially similar to criteria for distinguishing between capital leases and operating leases in previous lease guidance. In July 2018, the FASB made targeted improvements to the standard, including providing an additional and optional transition method. Under this method, an entity initially applies the standard at the

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

adoption date, including the election of certain transition reliefs, and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption.

The Company adopted this standard beginning on April 1, 2019 using the modified retrospective transition method such that the comparative period financial statements and disclosures were not adjusted. Results for reporting periods beginning after April 1, 2019 are presented under Topic 842, while amounts reported under prior periods have not been adjusted and continue to be reported under accounting standards in effect for those periods. See Note 7. Leases for additional

information related to operating and financing leases, including qualitative and quantitative disclosures required under Topic

842.

The new standard provides for a number of optional practical expedients in transition. We elected the package of practical expedients as defined by the standard that allows an entity not to reassess:

•	whether expired or existing contracts contain leases under the new definition of a lease;

•	lease classification for expired or existing leases; and

•	whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.

Additionally, the Company elected the permitted practical expedient to use hindsight in determining the lease term under the new standard and the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements under existing agreements.

The most significant change from adopting the new standard involved recognizing ROU assets and lease liabilities for operating leases which resulted in a material impact to our consolidated balance sheet. As of the adoption date, we recognized ROU assets in the amount of $7.4 billion and related liabilities in current liabilities of $1.8 billion and a long-term lease liability in the amount of $6.3 billion. This impact is inclusive of the following:

•	the recognition of the lease liability and ROU assets for operating leases that were not previously recorded. The ROU asset was adjusted for recognized balances associated with operating leases, including prepaid and deferred rent, cease-use liabilities and favorable or unfavorable intangible assets; and

•	the impact of our election to apply hindsight in determining the lease term, such that our lease liability generally only includes payments for the initial non-cancelable lease term.

As the Company has elected the modified retrospective transition method, any assets and liabilities that were recognized solely as a result of a transaction where the Company was the deemed owner during construction were derecognized at transition for completed construction sites. The Company funded construction costs for a certain population of owner during construction cell sites (ODC sites). These costs were concluded to be prepaid lease payments; consequently, such amounts were carried over at their depreciated balance of approximately $0.6 billion and included in the associated finance lease ROU assets, which is included within "Property, Plant and Equipment, net" in the consolidated balance sheets. The remaining lease obligations for these ODC sites were immaterial.

Additionally, the Company is party to several leaseback arrangements. Under the transition provision of Topic 842, we were required to reassess the previously failed sale-leasebacks of certain Sprint-owned wireless communication tower sites and determine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and the new leasing standard and whether a sale should be recognized. We concluded that a sale should be recognized for the approximately 1,750 remaining tower sites transferred to a third-party under an agreement that closed in 2008. Upon adoption on April 1, 2019, we derecognized our existing long-term financial obligation and the tower-related property and equipment associated with these previously failed sale-leaseback tower sites and recognized a lease liability and ROU asset for the leaseback of the tower sites. The impacts from the change in accounting conclusion are a decrease to accumulated deficit of $104 million, a decrease in liabilities of $108 million and a decrease in property, plant and equipment, net of $4 million upon transition to Topic 842.

For lease arrangements where we are the lessor, the adoption of the standard did not have a material impact. While the standard modifies the classification and accounting for sales-type and direct finance leases, substantially all of the Company's current handset leases are classified as operating leases. If terms remain consistent with the Company’s current leasing program, we do not expect material sales-type or direct financing leases in future periods.

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The cumulative after-tax effect of the changes made to our consolidated balance sheet for the adoption of Topic 842 effective for the Company on April 1, 2019 were as follows:

	March 31, 2019				Effects of the adoption of Topic 842				April 1, 2019
	(in millions)
ASSETS
Current assets:
Prepaid expenses and other current assets	$	1,289			$	(111	)		$	1,178
Property, plant and equipment	41,740				(31		)		41,709
Accumulated depreciation	(20,539		)		27				(20,512		)
Property, plant and equipment, net	21,201				(4		)		21,197
Operating lease right-of-use assets	—				7,358				7,358
Definite-lived intangible assets, net	1,769				(119		)		1,650
Other assets	1,118				(1		)		1,117
LIABILITIES AND EQUITY
Current liabilities:
Accrued expenses and other current liabilities	$	3,597			$	(178	)		$	3,419
Current operating lease liabilities	—				1,813				1,813
Current portion of long-term debt, financing and finance lease obligations	4,557				(43		)		4,514
Long-term debt, financing and finance lease obligations	35,366				(67		)		35,299
Long-term operating lease liabilities	—				6,263				6,263
Deferred tax liabilities	7,556				46				7,602
Other liabilities	3,437				(873		)		2,564
Stockholders' equity:
(Accumulated deficit) retained earnings	(1,883		)		162				(1,721		)

In June 2018, the FASB issued authoritative guidance regarding Compensation - Stock Compensation, which expands the scope of ASC Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The Company adopted this standard on April 1, 2019 with no impact to our consolidated financial statements at the date of adoption.

Accounting Pronouncements Not Yet Adopted

In June 2016, the FASB issued authoritative guidance regarding Financial Instruments - Credit Losses and has subsequently modified several areas of the standard in order to provide additional clarity and improvements. The new standard requires entities to use a Current Expected Credit Loss impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost within the scope of the standard. The entity's estimate would consider relevant information about past events, current conditions and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses. The standard will be effective for the Company's fiscal year beginning April 1, 2020, including interim reporting periods therein, and will require a cumulative effect adjustment to the opening balance of retained earnings in the period in which the guidance is effective. We have completed a preliminary analysis of the impact of the new standard. Based on our current portfolio of assets within the scope of the standard, we do not expect adoption to have a material impact on our consolidated financial statements. The impact of the Current Expected Credit Loss impairment model on our consolidated financial statements in future reporting periods will depend on changes in macroeconomic factors, as well as changes in our business and investment strategies.

In August 2018, the FASB issued authoritative guidance regarding Fair Value Measurement: Disclosure Framework, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The standard

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Index to Consolidated Financial Statements

SPRINT CORPORATION

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

will be effective for the Company for its fiscal year beginning April 1, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the guidance and assessing its overall impact. However, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued authoritative guidance regarding Intangibles - Goodwill and Other - Internal-Use Software, which aligns the requirements for a customer to capitalize implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard will be effective for the Company for its fiscal year beginning April 1, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the guidance and assessing its overall impact. However, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In December 2019, the FASB issued authoritative guidance regarding Income Taxes, which removes certain exceptions and simplifies the accounting for income taxes by clarifying and amending existing guidance. This standard is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the guidance and assessing its overall impact. However, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

Note 3.Installment Receivables

Certain Sprint subscribers have the option to pay for their devices in installments, generally up to a 24-month period. Short-term installment receivables are recorded in "Accounts and notes receivable, net" and long-term installment receivables are recorded in "Other assets" in the consolidated balance sheets.

The following table summarizes the installment receivables:

	March 31,
	2020				2019
	(in millions)
Installment receivables, gross	$	1,515			$	1,212
Deferred interest	(76		)		(71		)
Installment receivables, net of deferred interest	1,439				1,141
Allowance for credit losses	(213		)		(215		)
Installment receivables, net	$	1,226			$	926
Classified in the consolidated balance sheets as:
Accounts and notes receivable, net	$	963			$	679
Other assets	263				247
Installment receivables, net	$	1,226			$	926

	March 31, 2020												March 31, 2019
	Prime				Subprime				Total				Prime				Subprime				Total
	(in millions)												(in millions)
Unbilled	$	809			$	597			$	1,406			$	667			$	459			$	1,126
Billed - current	51				31				82				43				22				65
Billed - past due	12				15				27				10				11				21
Installment receivables, gross	$	872			$	643			$	1,515			$	720			$	492			$	1,212

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Note 4.	Financial Instruments

	Carrying amount at March 31, 2020				Estimated Fair Value Using Input Type
					Quoted prices in active markets				Observable				Unobservable				Total estimated fair value
	(in millions)
Current and long-term debt and financing obligations	$	36,458			$	35,739			$	—			$	3,097			$	38,836

	Carrying amount at March 31, 2019				Estimated Fair Value Using Input Type
					Quoted prices in active markets				Observable				Unobservable				Total estimated fair value
	(in millions)
Current and long-term debt and financing obligations	$	40,193			$	36,642			$	197			$	3,970			$	40,809

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Note 5.	Property, Plant and Equipment

	March 31,
	2020				2019
	(in millions)
Leased devices	$	10,236			$	10,972
Less: accumulated depreciation	(3,850		)		(4,360		)
Leased devices, net	$	6,386			$	6,612

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Note 6.	Intangible Assets

	March 31, 2019				Net Additions				March 31, 2020
	(in millions)
FCC licenses	$	37,430			$	41			$	37,471
Trademarks	4,035				—				4,035
Goodwill	4,598				—				4,598
	$	46,063			$	41			$	46,104

	March 31, 2018				Net Additions (Impairments)				March 31, 2019
	(in millions)
FCC licenses	$	37,274			$	156			$	37,430
Trademarks	4,035				—				4,035
Goodwill	6,586				(1,988		)	(1)	4,598
	$	47,895			$	(1,832	)		$	46,063

 _________________

(1)	Through March 31, 2019 accumulated impairment losses for goodwill were $2.0 billion. See discussion below. There were no additional accumulated impairment losses for the twelve-month period ended March 31, 2020.

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(1)	During the three-month period ended June 30, 2019, the Company adopted the new leasing standard and as a result, favorable tower leases were reclassed to ROU assets on the consolidated balance sheets. See Note 2. New Accounting Pronouncements and Note 7. Leases for further information.

(2)	During the three-month period ended December 31, 2019, we recognized $19 million of asset impairment charges primarily related to an inbound roaming arrangement with a third party in Puerto Rico.

	Fiscal Year 2020				Fiscal Year 2021				Fiscal Year 2022				Fiscal Year 2023				Fiscal Year 2024
	(in millions)
Estimated amortization expense	$	206			$	52			$	43			$	41			$	40

Note 7.	Leases

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	Year Ended
	March 31, 2020
	(in millions)
Operating lease expense	$	2,162
Finance lease expense:
Amortization of right-to-use assets	74
Interest on lease liabilities	3
Total finance lease expense	77
Variable lease expense	87
Total lease expense	$	2,326

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	Year Ended
	March 31, 2020
Weighted average remaining lease term (years)
Operating leases	4.8
Weighted average remaining discount rate
Operating leases	6.0	%

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Future Minimum Commitments	Operating Leases				Capital Leases and Financing Obligations
	(in millions)
Fiscal year ending March 31, 2020	$	2,277			$	262
Fiscal year ending March 31, 2021	2,199				150
Fiscal year ending March 31, 2022	1,793				92
Fiscal year ending March 31, 2023	1,358				44
Fiscal year ending March 31, 2024	1,039				12
Thereafter	3,101				—
Total lease payments	$	11,767			$	560

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Note 8.	Long-Term Debt, Financing and Finance Lease Obligations

 

	Interest Rates				Maturities				March 31, 2020				March 31, 2019
									(in millions)
Notes
Senior notes
Sprint Corporation	7.13	-	7.88%		2021	-	2028		$	13,000			$	12,000
Sprint Communications, Inc.	6.00	-	11.50%		2020	-	2022		4,780				4,780
Sprint Capital Corporation	6.88	-	8.75%		2028	-	2032		4,475				6,204
Senior secured notes
Sprint Spectrum Co LLC, Sprint Spectrum Co II LLC, Sprint Spectrum Co III LLC	3.36	-	5.15%		2021	-	2028		5,250				6,125
Guaranteed notes
Sprint Communications, Inc.	7.00%				2020				—				1,000
Credit facilities
Secured revolving bank credit facility	3.25%				2021				—				—
Secured term loans	3.50	-	4.00%		2024				5,855				5,915
PRWireless term loan	7.35%				2020				—				198
Export Development Canada (EDC)	4.31%				2019				—				300
Secured equipment credit facilities	3.14	-	3.86%		2021	-	2022		505				661
Accounts receivable facility	2.73	-	2.93%		2021				2,310				2,607
Financing obligations, finance lease and other obligations	2.45	-	12.00%		2020	-	2026		303				538
Net premiums and debt financing costs									(386		)		(405		)
									36,092				39,923
Less current portion									(3,058		)		(4,557		)
Long-term debt, financing and finance lease obligations									$	33,034			$	35,366

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Fiscal year 2020	$	2,848
Fiscal year 2021	5,466
Fiscal year 2022	4,365
Fiscal year 2023	10,830
Fiscal year 2024	4,893
Fiscal year 2025 and thereafter	8,076
	36,478
Net premiums and debt financing costs	(386		)
	$	36,092

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Note 9.	Revenues from Contracts with Customers

	Year Ended March 31,
	2020				2019
	(in millions)
Service revenue
Postpaid	$	16,854			$	16,910
Prepaid	3,062				3,746
Wholesale, affiliate and other	776				1,177
Wireline	912				1,024
Total service revenue	21,604				22,857
Equipment sales	4,999				5,606
Equipment rentals	5,218				5,137
Total revenue	$	31,821			$	33,600

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(1)	The fluctuation correlates directly to the execution of new customer contracts and invoicing and collections from customers in the normal course of business.

Remaining Performance Obligations

The aggregate amount of total transaction price allocated to performance obligations in contracts existing as of the balance sheet date, which are wholly or partially unsatisfied as of the end of the reporting period, and the expected time frame for satisfaction of those wholly or partially unsatisfied performance obligations, are as follows:

	(in millions)
Year ending March 31, 2021	$	7,503
Year ending March 31, 2022	1,006
Total	$	8,509

•	The amounts disclosed above do not include revenue allocated to wholly or partially unsatisfied performance obligations for which the accounting contract duration at contract inception is less than 12 months, which includes expected revenues from traditional installment billing contracts with a one-month accounting contract duration;

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•	The amounts disclosed above do not include variable consideration resulting from monthly customer charges intended to partially recover taxes imposed on the Company, including fees related to the Universal Service Fund. Such fees are based on the customer's estimated monthly voice usage and are therefore allocated to corresponding distinct months of Wireless services; and

•	The amounts disclosed above do not include variable consideration resulting from monthly charges to Wireless wholesale customers. Such fees are based on the customer's monthly usage of capacity and are therefore allocated to corresponding distinct months of Wireless services.

Note 10.	Severance and Exit Costs

	March 31, 2019(1)				Net Expense					Cash Payments and Other				March 31, 2020
	(in millions)
Exit costs	$	61			$	67		(2)		$	(101	)		$	27
Severance costs	6				6			(3)		(7		)		5
	$	67			$	73				$	(108	)		$	32

 _________________

(1)

The Company adopted Topic 842 beginning on April 1, 2019 using the modified retrospective transition method such that the comparative period financial statements and disclosures were not adjusted. Results for reporting periods beginning April 1, 2019 and prospectively are presented under Topic 842, while amounts reported under prior periods have not been adjusted and continue to be reported under accounting standards in effect for those periods. Lease exit costs associated with ROU lease liabilities as of April 1, 2019 were removed from the beginning balance above.

(2)	For the year ended March 31, 2020, we recognized costs of $67 million ($70 million costs Wireless, $3 million benefit Wireline).

(3)	For the year ended March 31, 2020, we recognized costs of $6 million (Wireless only).

	March 31, 2018				Net Expense					Cash Payments and Other				March 31, 2019
	(in millions)
Lease exit costs	$	165			$	25		(4)		$	(59	)		$	131
Severance costs	64				23			(5)		(81		)		6
Access exit costs	19				37			(6)		(20		)		36
	$	248			$	85				$	(160	)		$	173

 _________________

(4)	For the year ended March 31, 2019, we recognized costs of $25 million (Wireless only).

(5)	For the year ended March 31, 2019, we recognized costs of $23 million ($15 million Wireless, $8 million Wireline).

(6)	For the year ended March 31, 2019, we recognized costs of $37 million ($26 million Wireless, $11 million Wireline) as "Other, net" within the consolidated statements of operations.

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Note 11.	Supplemental Financial Information

(1)	Includes liabilities in the amounts of $65 million and $75 million as of March 31, 2020 and 2019, respectively, for payments issued in excess of associated bank balances but not yet presented for collection.

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Note 12.	Income Taxes

	Year Ended March 31,
	2020				2019				2018
	(in millions)
Income tax benefit (expense) at the federal statutory rate	$	298			$	415			$	(95	)
Effect of:
State income taxes, net of federal income tax effect	61				(15		)		(43		)
State law changes, net of federal income tax effect	6				85				9
Increase liability for unrecognized tax benefits	(6		)		(8		)		(29		)
Increase deferred tax liability for business activity changes	—				—				(89		)
Credit for increasing research activities	13				17				15
Tax expense from organizational restructuring	(4		)		(13		)		—
Change in federal and state valuation allowance(1)	701				(8		)		224
Tax benefit from the Tax Act	—				—				7,088
Non-deductible penalties	—				(29		)		—
Goodwill impairment	—				(408		)		—
Other, net	4				(1		)		(6		)
Income tax benefit	$	1,073			$	35			$	7,074
Effective income tax rate	75.6		%		1.8		%		(2,334.7		)%

 _______________

(1)	Exclusive of $2.1 billion federal and state release included in Tax benefit from the Tax Act line for the year ended March 31, 2018.

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(1)	These amounts have been recognized in accumulated other comprehensive loss.

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	Year Ended March 31,
	2020				2019
	(in millions)
Balance at beginning of period	$	242			$	239
Additions based on current year tax positions	17				17
Additions based on prior year tax positions	30				12
Reductions for prior year tax positions	(6		)		(23		)
Reductions for settlements	(3		)		—
Reductions for lapse of statute of limitations	(2		)		(3		)
Balance at end of period	$	278			$	242

Note 13.	Commitments and Contingencies

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Future Minimum Commitments		Total				Fiscal Year 2020				Fiscal Year 2021				Fiscal Year 2022				Fiscal Year 2023				Fiscal Year 2024				Fiscal Year 2025 and thereafter
		(in millions)
Operating lease liabilities, including imputed interest		$	8,352			$	2,264			$	1,788			$	1,271			$	907			$	702			$	1,420
Spectrum leases and service credits		6,605				259				287				274				281				288				5,216
Purchase orders and other commitments		8,754				5,409				782				425				336				320				1,482
Total		$	23,711			$	7,932			$	2,857			$	1,970			$	1,524			$	1,310			$	8,118

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Note 14.	Stockholders' Equity and Per Share Data

•	9,000,000,000 shares of common stock, par value $0.01 per share;

•	1,000,000,000 shares of non-voting common stock, par value $0.01 per share; and

•	20,000,000 shares of preferred stock, par value $0.0001 per share.

	March 31,
	2020				2019
	(in millions)
Unrecognized net periodic pension and postretirement benefit cost	$	(504	)		$	(379	)
Unrealized net gains related to investments	2				1
Unrealized net (losses) gains on derivatives	(37		)		10
Foreign currency translation adjustments	(27		)		(24		)
Accumulated other comprehensive loss	$	(566	)		$	(392	)

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(1)	Potentially dilutive securities were not included in the computation of diluted net loss per common share if to do so would have been antidilutive.

Note 15.	Segments

•	Wireless primarily includes retail, wholesale, and affiliate revenue from a wide array of wireless voice and data transmission services, revenue from the sale of wireless devices (handsets and tablets) and accessories, and equipment rentals from devices leased to customers, all of which are generated in the U.S., Puerto Rico and the U.S. Virgin Islands.

•	Wireline primarily includes revenue from domestic and international wireline communication services provided to other communications companies and targeted business subscribers, in addition to our Wireless segment.

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(1)	Inter-segment revenues consist primarily of wireline services provided to the Wireless segment for resale to, or use by, wireless subscribers.

(2)	The years ended March 31, 2020 and March 31, 2019 include $280 million and $346 million of merger-related costs, respectively, which were recorded in "Selling, general and administrative" in the consolidated statements of operations.

(3)	The year ended March 31, 2020 includes $57 million of expenses primarily related to sales commissions and other labor costs paid to employees at closed retail stores resulting from the COVID-19 pandemic, which were recorded in "Selling, general and administrative" in the consolidated statements of operations.

(4)

Other, net for the year ended March 31, 2020 consists of $73 million of severance and exit costs due to access termination charges and reductions in work force, favorable developments in litigation and other contingencies of $278 million primarily associated with legal recoveries for patent infringement lawsuits, loss on disposal of property, plant and equipment of $71 million primarily related to network costs that are no longer recoverable as a result of changes in our network plans, a $4 million non-cash gain as a result of spectrum license exchanges with other carries and a partial pension settlement of $57 million. In addition, the year ended March 31, 2020 includes $237 million of asset impairment charges primarily related to the sale and leaseback of our Overland Park, Kansas campus. Other, net for the year ended March 31, 2019 consists of $85 million of severance and exit costs primarily due to access termination charges, lease exit costs and reductions in work force. The year ended March 31, 2019 includes $492 million of loss on disposal of property, plant and equipment primarily related to cell site construction costs and network equipment that are no longer recoverable as a result of changes in our network plans. In addition, the year ended March 31, 2019 includes a $15 million gain from the sale of certain assets, $74 million in litigation expense and $34 million associated with the purchase of certain leased spectrum assets, which upon termination of the related spectrum leases resulted in the accelerated recognition of the unamortized favorable lease balances. Other, net for the year ended March 31, 2018 consists of $80 million of severance and exit costs and a $364 million loss on disposal of property, plant and equipment, which consisted of a $370 million loss related to cell site construction costs that are no longer recoverable as a result of changes in our network plans, slightly offset by a $6 million gain. In addition, the year ended March 31, 2018 included a $479 million non-cash gain related to spectrum license exchanges with other carriers, net reductions of $305 million primarily associated with legal settlements or favorable developments in pending legal proceedings, combined with a $5 million reversal of previously accrued contract termination costs related to the termination of our relationship with General Wireless Operations Inc. (RadioShack).

(5)

The year ended March 31, 2019 includes $32 million of hurricane-related reimbursements, which are classified in our consolidated statements of operations as follows: $3 million as revenue in net operating revenues, $6 million as cost of services, $1 million as selling, general and administrative expenses and $22 million as other, net, all within the Wireless segment. The year ended March 31, 2018 includes $107 million of hurricane-related costs which are classified in our consolidated statements of operations as follows: $33 million as contra-revenue in net operating revenues, $48 million as cost of services, $21 million as

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(6)	During the year ended March 31, 2019, the Company completed its annual impairment testing for goodwill assigned to the Wireless reporting unit and as a result, recorded a non-cash impairment charge of $2.0 billion. See Note 6. Intangible Assets.

Operating Revenues by Service and Products	Wireless				Wireline				Corporate, Other and Eliminations(1)				Consolidated
	(in millions)
Year Ended March 31, 2020
Service revenue	$	19,916			$	1,127			$	(294	)		$	20,749
Wireless equipment sales	4,999				—				—				4,999
Wireless equipment rentals	5,218				—				—				5,218
Other	770				79				6				855
Total net operating revenues	$	30,903			$	1,206			$	(288	)		$	31,821
Operating Revenues by Service and Products	Wireless				Wireline				Corporate, Other and Eliminations(1)				Consolidated
	(in millions)
Year Ended March 31, 2019
Service revenue(2)	$	20,653			$	1,211			$	(272	)		$	21,592
Wireless equipment sales	5,606				—				—				5,606
Wireless equipment rentals	5,137				—				—				5,137
Other	1,160				85				17				1,262
Total net operating revenues	$	32,556			$	1,296			$	(255	)		$	33,597
Operating Revenues by Service and Products	Wireless				Wireline				Corporate, Other and Eliminations(1)				Consolidated
	(in millions)
Year Ended March 31, 2018
Service revenue(2)	$	21,400			$	1,514			$	(328	)		$	22,586
Wireless equipment sales	4,524				—				—				4,524
Wireless equipment rentals	4,048				—				—				4,048
Other	1,198				65				18				1,281
Total net operating revenues	$	31,170			$	1,579			$	(310	)		$	32,439

(1)	Revenues eliminated in consolidation consist primarily of wireline services provided to the Wireless segment for resale to or use by wireless subscribers.

(2)

Service revenue related to the Wireless segment for the year ended March 31, 2019 excludes $3 million of hurricane-related revenue reimbursements reflected in net operating revenues in our consolidated statements of operations. Service revenue related to the Wireless segment for the year ended March 31, 2018 excludes $33 million of hurricane-related contra-revenue costs reflected in net operating revenues in our consolidated statements of operations.

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Note 16.	Quarterly Financial Data (Unaudited)

(1)	The sum of the quarterly earnings per share amounts may not equal the annual amount because of the changes in the weighted average number of shares outstanding during the year.

(2)	During the quarter ended March 31, 2019, the Company completed its annual impairment testing for goodwill assigned to the Wireless reporting unit and as a result, recorded a non-cash impairment charge of $2.0 billion. See Note 6. Intangible Assets.

Note 17.	Related-Party Transactions

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	March 31,
Consolidated balance sheets(1):	2020				2019
	(in millions)
Accounts receivable	$	72			$	187
Accounts payable and accrued expenses and other current liabilities	$	63			$	109

	Year Ended March 31,
Consolidated statements of operations(1):	2020				2019				2018
	(in millions)
Equipment sales	$	1,285			$	1,890			$	1,922
Cost of equipment sales	$	1,386			$	1,969			$	1,986

_____________

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Note 18.	Guarantor Financial Information

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Note 19.	Subsequent Event