UNITED STATES OF AMERICA v. AT&T INC. et al

Filing 69

Memorandum in opposition to re 67 MOTION to Quash Subpoena filed by AT&T INC.. (Attachments: # 1 Exhibit A, # 2 Exhibit B (Declaration of Steven F. Benz), # 3 Exhibit 1, # 4 Exhibit 2, # 5 Exhibit 3, # 6 Exhibit 4, # 7 Exhibit 5, # 8 Exhibit 6, # 9 Notice Regarding Filing of Sealed Material, # 10 Text of Proposed Order)(Benz, Steven) (Additional attachment(s) added on 11/3/2011: # 11 Exhibit 4 (FILED UNDER SEAL), # 12 Exhibit 5 (FILED UNDER SEAL) , # 13 Exhibit 6 (FILED UNDER SEAL)) (jf, ).

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

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Exhibit 2, Case No. 1:11-cv-01560
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26 October 2011

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Sprint Nextel Reports Third Quarter 2011 Results

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Year-over-year and sequential Adjusted OIBDA* growth driven by ARPU strength and continued wireless
subscriber growth

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• Postpaid ARPU growth of $1 sequentially; $3 year-over-year improvement best in almost 12

Awards and Recognition

years

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• Nearly 1.3 million total net new wireless subscriber additions – best in more than five years

Public Policy

• Eight consecutive quarters of net postpaid subscriber growth for the Sprint brand and also for

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year-over-year improvement in postpaid churn
The company’s third quarter 2011 earnings conference call will be held at 8 a.m. EDT today.
Participants may dial 800-938-1120 in the U.S. or Canada (706-634-7849 internationally) and provide
the following ID: 15483737 or may listen via the Internet at www.sprint.com/investor.
OVERLAND PARK, Kan. (BUSINESS WIRE), October 26, 2011 - Sprint Nextel Corp. (NYSE: S) today reported
that during the third quarter of 2011, the company generated net operating revenues of $8.3 billion and
Adjusted OIBDA* of $1.4 billion. Adjusted OIBDA* grew sequentially and year-over-year driven primarily by
strength in postpaid ARPU and continued growth in the prepaid wireless customer base. Postpaid wireless
ARPU increased $3 from the year-ago period and the prepaid subscriber base has grown 23 percent since the
third quarter of 2010.
The company achieved its best total company wireless net subscriber additions in more than five years. The
company added nearly 1.3 million total net wireless subscribers, primarily driven by 304,000 net postpaid
additions for the Sprint brand, net prepaid additions of 485,000 and net wholesale and affiliate additions of
835,000.
Growth in Sprint brand net additions was achieved without the benefit of Apple’s iPhone 4S and iPhone 4,
which launched Oct. 14. The launch of this iconic device resulted in Sprint’s best ever day of sales in retail,
web and telesales for a device family in Sprint history. The response to this device by current and new
customers has surpassed initial expectations. The iPhone is expected to be accretive for Sprint, and iPhone
users are expected to be among Sprint’s most profitable customers.
Additionally, the company reported operating income of $208 million, a net loss of $301 million and a
diluted loss of $.10 per share for the quarter, which includes $261 million in equity losses of unconsolidated
investments and other. This compares to an operating loss of $213 million, a net loss of $911 million and a
diluted loss of $.30 per share, which included $284 million in equity losses of unconsolidated investments
and other in the third quarter of 2010.
“Sprint’s focus on creating the best customer experience with simple, unlimited plans and innovative
products and services continues to strengthen our brand and drive positive results,” said Dan Hesse, Sprint
CEO. “We are adding to our customer base, our ARPU is increasing, and as a result our wireless revenues are
growing.”

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10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 2 of 16

As of Sept. 30, 2011, the company’s total liquidity was approximately $5 billion, consisting of $4 billion in
cash, cash equivalents and short-term investments and $1 billion of undrawn borrowing capacity available
under its revolving bank credit facility. The company’s next scheduled debt maturities of $2.3 billion are
due in March 2012.
During the third quarter, third parties continued to validate Sprint’s progress. Sprint was ranked highest by
J.D. Power and Associates among full-service providers in a tie in its 2011 Wireless Purchase Experience
Study, Volume 2. The study also found Sprint led the industry in its website buying experience. Boost Mobile
was ranked by J.D. Power and Associates as highest in the Wireless Purchase Experience Study, Volume 2 as
well as highest in 2011 Wireless Customer Care Performance, Volume 2 with Non-Contract Service.
Additionally, Sprint earned the No. 3 spot among the largest U.S. companies on Newsweek’s 2011 Green
Rankings. This is the second straight year that Sprint has ranked in the top 10, up from No. 6 last year.
Sprint also added to its innovative portfolio of products and services. It launched three additional 4G
– Samsung Conquer™ 4G, Motorola PHOTON™ 4G and the first Samsung Galaxy S™ II product available in the
U.S., Samsung Galaxy S™ II, Epic™ 4G Touch. This week Sprint launched its 25th 4G device – HTC EVO Design
4G™. Sprint also added the BlackBerry® Torch™ 9850, the first all-touch BlackBerry® smartphone from Sprint,
BlackBerry® Bold™ 9930, the thinnest BlackBerry® smartphone ever and the BlackBerry® Curve™ 9350. Boost
Mobile grew its smartphone lineup of Android™ devices with the launch of the Samsung Transform™ Ultra,
and Virgin Mobile USA launched the Android-powered Motorola TRIUMPH™ and announced the coming
availability of the LG® Optimus™ Slider.
CONSOLIDATED RESULTS
TABLE NO. 1 Selected Unaudited Financial Data (dollars in millions, except per share data)
Quarter To Date

Year To Date

September 30, September 30, % September 30, September 30,
Financial Data

2011

Net operating revenues
Adjusted OIBDA*
Adjusted OIBDA margin*

2010

?

2011

$
$

8,333
1,402
18.2%

$
$

8,152
1,339
18.1%

2% $
5% $

Operating income (loss)
$
Net loss
$
Diluted loss per common share $

208
(301)
(0.10)

$
$
$

(213)
(911)
(0.30)

$

760

$

$

(273)

$

Capital Expenditures
Free Cash Flow*

(1)

2010

24,957 $
4,230 $
18.4%

24,262
4,318
19.3

NM $
67% $
67% $

546
(1,587)
(0.53)

$
$
$

(456
(2,536
(0.85

462

65% $

1,955

$

1,318

384

NM

172

$

1,599

$

• Consolidated net operating revenues of $8.3 billion for the quarter were 2 percent higher than in
the third quarter of 2010 and remained relatively flat as compared to the second quarter of 2011. The
quarterly year-over-year improvement was primarily due to higher postpaid ARPU and growth in the
number of net prepaid subscribers, partially offset by lower wireline revenues and lower wireless
equipment revenues.
• Adjusted OIBDA* was $1.4 billion for the quarter, compared to $1.3 billion for the third quarter
2010 and the second quarter of 2011. The quarterly year-over-year improvement in Adjusted OIBDA*
was primarily due to higher postpaid and prepaid wireless service revenues, partially offset by an
increase in wireless cost of service, higher equipment net subsidy, and lower wireline revenues.
Sequentially, quarterly Adjusted OIBDA* improved primarily as a result of higher postpaid and prepaid
wireless service revenues, reduced marketing expenses, and partially offset by higher wireless cost of
service.
• Capital expenditures(1) , excluding capitalized interest of $103 million, were $760 million in the
quarter, compared to $462 million in the third quarter of 2010 and $640 million in the second quarter

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Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 3 of 16

of 2011. Wireless capital expenditures were $647 million in the third quarter of 2011, compared to
$341 million in the third quarter of 2010 and $546 million in the second quarter of 2011. During the
quarter, the company invested in data capacity as a result of increased data usage, as well as
approximately $115 million for our Network Vision plan. Wireline capital expenditures were $36
million in the third quarter of 2011, compared to $59 million in the third quarter of 2010 and $35
million in the second quarter of 2011. Corporate capital expenditures were $77 million in the third
quarter of 2011, compared to $62 million in the third quarter of 2010 and $59 million in the second
quarter of 2011, primarily related to infrastructure to support our Wireless and Wireline businesses.
• Free Cash Flow* was negative $273 million for the quarter, compared to $384 million for the third
quarter of 2010 and $267 million for the second quarter of 2011. While Adjusted OIBDA* was relatively
stable for the quarterly year-over-year and sequential periods, Free Cash Flow* was reduced by
quarterly year-over-year increases in capital expenditures of $328 million as well as year-over-year
and sequential increases in working capital of $483 million and $697 million, respectively, partially
offset by spectrum hosting prepayments. The quarterly year-over-year change in working capital is
primarily associated with increased inventory balances and reductions in accounts payable. The
quarterly sequential change in working capital is primarily associated with the reduction in accounts
payable associated with the second quarter build-up of inventory partially offset by reduced inventory
purchases during the third quarter of 2011.
WIRELESS RESULTS
TABLE NO. 2 Selected Unaudited Financial Data (dollars in millions)
Quarter To Date
Financial Data

Net operating revenues $
Adjusted OIBDA*
$
Adjusted OIBDA margin*
Capital Expenditures

Year To Date

September 30, September 30, % September 30, September 30, %
2011
2010
?
2011
2010
?

(1)

$

7,516
1,214
17.6%

$
$

647

$

7,175
5% $
1,065 14% $
16.6%
341

90% $

22,381 $
3,599 $
17.7%
1,642

$

21,237
3,485
18.0%
971

5%
3%

69%

Wireless Customers
• The company served more than 53 million customers at the end of the third quarter of 2011. This
includes 32.9 million postpaid subscribers (28 million via the Sprint brand on CDMA, 4.7 million on
iDEN, and 229,000 Nextel PowerSource users who utilize both networks), 14.3 million prepaid
subscribers (11.9 million on CDMA and 2.4 million on iDEN) and approximately 6.3 million wholesale
and affiliate subscribers, all of whom utilize our CDMA network.
• For the quarter, Sprint added nearly 1.3 million net wireless customers, including net additions of
441,000 retail subscribers and net additions of 835,000 wholesale and affiliate subscribers as a result
of growth in MVNOs reselling prepaid services.
• Sprint lost approximately 44,000 net postpaid subscribers during the quarter compared to a loss of
107,000 in the third quarter of 2010, representing a 59 percent improvement year-over-year.
• The CDMA network added approximately 265,000 net postpaid customers during the quarter, which
includes net losses of 39,000 Nextel PowerSource customers. Excluding Nextel PowerSource customer
losses, the Sprint brand added 304,000 net postpaid wireless subscribers. The iDEN network lost
309,000 net postpaid customers in the quarter.
• The company added 485,000 net prepaid subscribers during the quarter, which includes net additions
of 839,000 prepaid CDMA customers, offset by losses of 354,000 net prepaid iDEN customers.
• The credit quality of Sprint’s end-of-period postpaid customers was approximately 83 percent prime.

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Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 4 of 16

Wireless Churn
• For the quarter, Sprint reported postpaid churn of 1.91 percent, compared to 1.93 percent for the
year-ago period and 1.75 percent for the second quarter of 2011. Quarterly postpaid churn improved
year-over-year primarily as a result of a larger base of customers on fixed rate bundled plans or 4G
handsets, which typically have a lower deactivation rate. Sequentially, postpaid churn was impacted
by historical third quarter seasonality.
• Approximately 8 percent of postpaid customers upgraded their handsets during the third quarter.
Upgrades as a percentage of our subscriber base declined slightly, likely due to customer expectations
of a fourth quarter iPhone launch.
• Prepaid churn for the third quarter of 2011 was 4.07 percent, compared to 5.32 percent for the
ago period and 4.14 percent for the second quarter of 2011. The quarterly year-over-year and
sequential improvements in prepaid churn were primarily a result of the predominance of Assurance
WirelessSM customers, who on average have lower churn than that of the remainder of our prepaid
subscriber base. Year-over-year, prepaid churn also benefited from improvement in churn for both
the Virgin Mobile and Boost Mobile brands.
Wireless Service Revenues
• Wireless retail service revenues of $6.8 billion for the quarter represent an increase of more than 7
percent compared to the third quarter of 2010 and almost 2 percent compared to the second quarter
of 2011. The quarterly year-over-year improvement is primarily due to higher postpaid ARPU as well
as an increased number of net prepaid subscribers as a result of the Boost Monthly Unlimited offering,
additional market launches of Assurance WirelessSM and the re-launch of the Virgin Mobile brand,
partially offset by net losses of postpaid subscribers since the third quarter of 2010. Sequentially,
wireless retail service revenues increased, primarily as a result of higher postpaid ARPU and growth in
net prepaid subscribers.
• Wireless postpaid ARPU increased year-over-year from $55 to $58, the largest year-over-year postpaid
ARPU growth in almost 12 years, while sequentially ARPU increased from $57 to $58. Quarterly year
over-year and sequential ARPU benefited from higher monthly recurring revenues as a result of the
premium data add-on charges for smartphones and higher device insurance revenue.
• Prepaid ARPU of $27 for the quarter declined from $28 in the third quarter of 2010 and the second
quarter of 2011 as a result of a greater mix of Assurance WirelessSM customers who on average have
lower ARPU than the remainder of our prepaid subscriber base.
• Quarterly wholesale, affiliate and other revenues were up $9 million, compared to the year-ago
period, and up $10 million sequentially, resulting primarily from growth in MVNOs reselling prepaid
services.
Wireless Operating Expenses and Adjusted OIBDA*
• Total wireless net operating expenses were $7.4 billion in the third quarter, compared to $7.5 billion
in the year-ago period and in the second quarter of 2011.
• Wireless equipment net subsidy in the third quarter was almost $1.2 billion (equipment revenue of
$616 million, less cost of products of $1.8 billion), compared to almost $1.1 billion in the year-ago
period and approximately $1.1 billion in the second quarter of 2011. The quarterly year-over-year
increase in net subsidy is associated with postpaid customers due to an increased mix of 4G
smartphone sales, which on average carry a higher subsidy rate per handset, partially offset by
decreased handset sales volume. Sequentially, total net subsidy increased as a result of higher
average subsidy rate per postpaid handset due to a greater mix of 4G smartphones, partially offset by
lower volume of postpaid and prepaid handset sales.

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Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

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• Wireless cost of service increased approximately 9 percent and 4 percent for the quarterly yearyear and sequential periods, respectively. The quarterly year-over-year and sequential increases
primarily resulted from higher customer data usage, higher roaming expenses, and higher service and
repair costs as a growing percentage of our customer base is on smartphones.
• Wireless SG&A expenses increased approximately 1 percent year-over-year but decreased
approximately 4 percent sequentially. Quarterly year-over-year SG&A expenses increased, primarily
due to higher selling and bad debt expenses, partially offset by lower marketing and customer care
costs. Sequentially, SG&A decreased primarily as a result of lower marketing expenses, partially
offset by higher bad debt expenses. Bad debt expenses were higher year-over-year and sequentially
due to an increase in the agings of accounts receivable outstanding combined with higher average
write-off per account.
• Wireless depreciation and amortization expense decreased $327 million year-over-year, primarily due
to the absence of amortization for customer relationship intangible assets related to previous
acquisitions, which have become fully amortized, as well as the company’s annual depreciable life
study reflecting a reduction in the replacement rate of capital additions.
• Wireless Adjusted OIBDA* of $1.2 billion in the third quarter of 2011 compares to $1.1 billion in the
third quarter of 2010 and in the second quarter of 2011. The year-over-year improvement in quarterly
Adjusted OIBDA* was primarily due to higher postpaid and prepaid service revenues, partially offset
by increases in cost of service and equipment net subsidy. Quarterly Adjusted OIBDA* improved
sequentially primarily as a result of higher postpaid and prepaid service revenues, lower SG&A
expenses, partially offset by higher cost of service.
WIRELINE RESULTS
TABLE NO. 3 Selected Unaudited Financial Data (dollars in millions)
Quarter To Date
Financial Data

Net operating revenues $
Adjusted OIBDA*
$
Adjusted OIBDA margin*
Capital Expenditures

Year To Date

September 30, September 30,
2011
2010

(1)

$

1,062
184
17.3%
36

$
$

$

%
?

September 30, September 30,
2011
2010

1,245 (15) % $
271 (32) % $
21.8%
59

(39) % $

3,272
622
19.0%

$
$

124

$

3,814 (14
823 (24
21.6%
164

(24

• Wireline revenues of $1.1 billion for the quarter declined 15 percent year-over-year primarily as a
result of an annual intercompany rate reduction based on market prices for voice and IP and the
scheduled migration of wholesale cable VoIP customers off of Sprint’s IP platform. Sequentially, third
quarter wireline revenues declined almost 3 percent, primarily as a result of continued migration of
wholesale cable VoIP customers off of Sprint’s IP platform.
• Total wireline net operating expenses were almost $1 billion in the third quarter of 2011. Total
operating expenses declined approximately 11 percent year-over-year due to lower cost of service
from continued declines in voice and cable IP volumes, improvement in SG&A expenses and lower
depreciation expenses. Sequentially, third quarter total net operating expenses remained relatively
flat.
• Wireline Adjusted OIBDA* was $184 million for the quarter, compared to $271 million in the third
quarter of 2010 and $210 million reported for the second quarter of 2011. Quarterly wireline Adjusted
OIBDA* declined year-over-year as a result of lower revenues, partially offset by cost
reductions. Sequentially, quarterly wireline Adjusted OIBDA* declined as a result of lower revenues.
Forecast

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Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 6 of 16

Sprint Nextel expects net postpaid subscriber additions for the full year 2011 and to improve total net
wireless subscriber additions in 2011, as compared to 2010. The company expects full year capital
expenditures in 2011, excluding capitalized interest, to be approximately $3 billion. In addition, the
company expects Free Cash Flow* between negative $200 million and positive $100 million for 2011.
*FINANCIAL MEASURES
Sprint Nextel provides financial measures determined in accordance with accounting principles generally
accepted in the United States (GAAP) and adjusted GAAP (non-GAAP). The non-GAAP financial measures
reflect industry conventions, or standard measures of liquidity, profitability or performance commonly used
by the investment community for comparability purposes. These measurements should be considered in
addition to, but not as a substitute for, financial information prepared in accordance with GAAP. We have
defined below each of the non-GAAP measures we use, but these measures may not be synonymous to
similar measurement terms used by other companies.
Sprint Nextel provides reconciliations of these non-GAAP measures in its financial reporting. Because Sprint
Nextel does not predict special items that might occur in the future, and our forecasts are developed at a
level of detail different than that used to prepare GAAP-based financial measures, Sprint Nextel does not
provide reconciliations to GAAP of its forward-looking financial measures.
The measures used in this release include the following:
OIBDA is operating income/(loss) before depreciation and amortization. Adjusted OIBDA is OIBDA excluding
severance, exit costs, and other special items. Adjusted OIBDA Margin represents Adjusted OIBDA divided
by non-equipment net operating revenues for Wireless and Adjusted OIBDA divided by net operating
revenues for Wireline. We believe that Adjusted OIBDA and Adjusted OIBDA Margin provide useful
information to investors because they are an indicator of the strength and performance of our ongoing
business operations, including our ability to fund discretionary spending such as capital expenditures,
spectrum acquisitions and other investments and our ability to incur and service debt. While depreciation
and amortization are considered operating costs under GAAP, these expenses primarily represent non
current period costs associated with the use of long-lived tangible and definite-lived intangible assets.
Adjusted OIBDA and Adjusted OIBDA Margin are calculations commonly used as a basis for investors, analysts
and credit rating agencies to evaluate and compare the periodic and future operating performance and
value of companies within the telecommunications industry.
Free Cash Flow is the cash provided by operating activities less the cash used in investing activities other
than short-term investments and equity method investments during the period. We believe that Free Cash
Flow provides useful information to investors, analysts and our management about the cash generated by
our core operations after interest and dividends and our ability to fund scheduled debt maturities and other
financing activities, including discretionary refinancing and retirement of debt and purchase or sale
investments.
Net Debt is consolidated debt, including current maturities, less cash and cash equivalents, short-term
investments and if any, restricted cash. We believe that Net Debt provides useful information to investors,
analysts and credit rating agencies about the capacity of the company to reduce the debt load and improve
its capital structure.
SAFE HARBOR
This news release includes “forward-looking statements” within the meaning of the securities laws. The
statements in this news release regarding the business outlook, expected performance and forwardguidance, as well as other statements that are not historical facts, are forward-looking statements. The
words "estimate," "project," "forecast," "intend," "expect," "believe," "target," "providing guidance" and
similar expressions are intended to identify forward-looking statements.

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Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 7 of 16

Forward-looking statements are estimates and projections reflecting management's judgment based on
currently available information and involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the forward-looking statements. With respect to these
forward-looking statements, management has made assumptions regarding, among other things, customer
and network usage, customer growth and retention, pricing, operating costs, the timing of various events
and the economic and regulatory environment.
Future performance cannot be assured. Actual results may differ materially from those in the forward
looking statements. Some factors that could cause actual results to differ include:
• our ability to attract and retain subscribers;
• the ability of our competitors to offer products and services at lower prices due to lower cost
structures;
• the effects of vigorous competition on a highly penetrated market, including the impact of
competition on the price we are able to charge subscribers for services and equipment we provide
and our ability to attract new subscribers and retain existing subscribers; the impact of subsidy costs;
the impact of increased purchase commitments; the overall demand for our service offerings,
including the impact of decisions of new or existing subscribers between our postpaid and prepaid
services offerings and between our two network platforms; and the impact of new, emerging and
competing technologies on our business;
• the ability to generate sufficient cash flow to fully implement our network modernization plan,
Network Vision, to improve and enhance our networks and service offerings, implement our business
strategies and provide competitive new technologies;
• the effective implementation of Network Vision, including timing, execution, technologies, and costs;
• the ability to consummate the LightSquared transaction and obtain the associated financial benefits;
• changes in available technology and the effects of such changes, including product substitutions and
deployment costs;
• our ability to obtain additional financing on terms acceptable to us, or at all;
• volatility in the trading price of our common stock, current economic conditions and our ability
access capital;
• the impact of unrelated parties not meeting our business requirements, including a significant adverse
change in the ability or willingness of such parties to provide devices or infrastructure equipment for
our CDMA network, or Motorola Mobility, Inc.'s or Motorola Solutions Inc.'s ability or willingness to
provide related devices, infrastructure equipment and software applications for our iDEN network;
• the costs and business risks associated with providing new services and entering new geographic
markets;
• the financial performance of Clearwire and its ability to operate and maintain its 4G network;
• the effects of mergers and consolidations and new entrants in the communications industry and
unexpected announcements or developments from others in the communications industry;
• unexpected results of litigation filed against us or our suppliers or vendors;
• the impact of adverse network performance;
• the costs or potential customer impacts of compliance with regulatory mandates including, but not
limited to, compliance with the FCC's Report and Order to reconfigure the 800 MHz band;
• equipment failure, natural disasters, terrorist acts or other breaches of network or information
technology security;

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Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 8 of 16

• one or more of the markets in which we compete being impacted by changes in political, economic or
other factors such as monetary policy, legal and regulatory changes or other external factors over
which we have no control; and
• other risks referenced from time to time in our filings with the Securities and Exchange Commission,
including in Part I, Item IA “Risk Factors” of our annual report on Form 10-K for the year ended
December 31, 2010 and, when filed, Part II, Item 1A “Risk Factors” of our quarterly report on Form 10
-Q for the quarter ended September 30, 2011.
Sprint Nextel believes these forward-looking statements are reasonable; however, you should not place
undue reliance on forward-looking statements, which are based on current expectations and speak only as of
the date of this release. Sprint Nextel is not obligated to publicly release any revisions to forward-looking
statements to reflect events after the date of this release.
Clearwire’s third quarter 2011 results from operations have not yet been finalized. As a result, the amount
reflected for Sprint’s share of Clearwire’s results of operations for the quarter ended Sept. 30, 2011, is an
estimate and, based upon the finalization of Clearwire’s results, may need to be revised if our estimate
materially differs from Clearwire’s actual results. Changes in our estimate, if any, would affect the carrying
value of our investment in Clearwire, net loss and basic and diluted loss per common share but would have
no effect on Sprint’s operating income, OIBDA*, Adjusted OIBDA* or consolidated statement of cash flows.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the
freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 53
million customers at the end of 3Q 2011 and is widely recognized for developing, engineering and deploying
innovative technologies, including the first wireless 4G service from a national carrier in the United States;
offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost
Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global
Tier 1 Internet backbone. Newsweek ranked Sprint No. 3 in its 2011 Green Rankings, listing it as one of the
nation’s greenest companies, the highest of any telecommunications company. You can learn more and visit
Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.

Sprint Nextel Corporation
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Millions, except per Share Data)
TABLE NO. 4
Quarter To Date

Year To Date

September 30, June 30, September 30, September 30, September 30,
2011
Net Operating Revenues
Net Operating Expenses
Cost of services
Cost of products
Selling, general and administrative
Depreciation
Amortization

$

8,333

$ 8,311

2,835
1,776
2,320
1,114
80

2,751
1,838
2,408
1,121
114

Other, net
Total net operating expenses

2011

2010
$

2011

8,152
2,688
1,808
2,317
1,304
248

$

24,957

$

8,170
5,426
7,131
3,357
327

-

-

-

-

8,125

8,232

8,365

24,411

Operating Income (Loss)
Interest expense
Equity in losses of unconsolidated
investments and other, net

http://newsroom.sprint.com/article_display.cfm?article_id=2083

208
(236)

79
(239)

(213)
(361)

546
(724)

(261)

(588)

(284)

(1,261)

10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Loss before Income Taxes
Income tax expense

Page 9 of 16

(289)

(748)

(858)

(1,439)

(12)

(99)

(53)

(148)

Net Loss

$

(301)

$ (847) $

(911)

$

(1,587)

$

Basic and Diluted Loss Per Common
Share

$

(0.10)

$ (0.28) $

(0.30)

$

(0.53)

$

Weighted Average Common Shares
outstanding

2,996

Effective Tax Rate

2,994

-4.2%

2,990

-13.2%

2,994

-6.2%

-10.3%

NON-GAAP RECONCILIATION - NET LOSS TO ADJUSTED OIBDA* (Unaudited)
(Millions)
TABLE NO. 5
Quarter To Date

Year To Date

September 30, June 30, September 30, September 30, September 30,
2011
2011
2010
2011
Net Loss
Income tax expense

$

(301)

$ (847) $

(911)

$

(1,587)

(12)

(99)

(53)

(148)

(289)
1,114

(748)
1,121

(858)
1,304

(1,439)
3,357

80
236

Loss before Income Taxes
Depreciation

114
239

248
361

327
724

Amortization
Interest expense
Equity in losses of unconsolidated
investments and other, net

261

1,261

1,339
-

4,230
-

-

-

-

1,314

1,339

4,230

760

Adjusted OIBDA*

284

1,314
-

-

(2)

588

1,402
1,402

OIBDA*
Severance and exit costs
Access costs (3)

640

462

Capital expenditures (1)
Adjusted OIBDA* less Capex

$

$

642

Adjusted OIBDA Margin*

$

674

$

1,955

877

$

2,275

18.2%

18.1%

18.4%

121

Selected item:
Deferred tax asset valuation
allowance

17.2%

337

365

$

654

Sprint Nextel Corporation
WIRELESS STATEMENTS OF OPERATIONS AND STATISTICS (Unaudited)
(Millions, except subscriber counts and metrics)
TABLE NO. 6
Quarter To Date
September 30,
2011

June 30,
2011

Year To Date

September 30,
2010

September 30,
2011

September 30,
2010

$

$

$

Net Operating Revenues
Retail service revenue
Wholesale, affiliate and
other service revenue
Equipment revenue

$

6,836

$ 6,708

6,380

20,193

64

54

55

187

616

690

740

2,001

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10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Total net operating
revenues

7,516

NON-GAAP
RECONCILIATION

Operating Income (Loss)

2,237
1,838

2,137
1,808

6,616
5,426

2,275
1,018
111

2,165
1,164
246

6,740
3,036
319

-

-

-

7,385
$

22,381

-

Total net operating
expenses

7,175

2,194
1,006
77

administrative
Depreciation
Amortization
Other, net

7,452

2,332
1,776

Net Operating Expenses
Cost of services
Cost of products
Selling, general and

Operating Income (Loss)

Page 10 of 16

7,479

7,520

22,137

131

$

(27) $

(345)

$

Quarter To Date
September 30,
2011
$

Severance and exit costs

131

June 30,
2011
$

$

Year To Date

September 30,
2010

(27) $

244

(345)

September 30,
2011

September 30,
2010

$

$

244

Depreciation

1,006

1,018

1,164

3,036

Amortization

77

111

246

319

1,214

1,102

1,065

3,599

647

546

341

1,642

(2)

Adjusted OIBDA*
Capital expenditures (1)
Adjusted OIBDA* less
Capex

$

Adjusted OIBDA Margin*

567

$

17.6%

OPERATING STATISTICS

$
$

End of period subscribers
(in thousands)
Hours per subscriber
Retail Prepaid Subscribers
Service revenue (in
millions)
ARPU
Churn
Net additions (in
thousands)

$

16.3%

724

$

June 30,
2011

$
$

September 30,
2010

September 30,
2011

September 30,
2010

$
$

$
$

32,897
15

1,147
27

$ 1,114
$
28

Year To Date

5,440
55
1.93%
(107)
33,054
15

$
$

940
28

4.07%

4.14%

5.32%

485

674

471

http://newsroom.sprint.com/article_display.cfm?article_id=2083

$

17.7%

5,689 $ 5,594 $
58 $
57 $
1.91%
1.75%
(44)
(101)
32,853
15

1,957

16.6%

Quarter To Date
September 30,
2011

Retail Postpaid Subscribers
Service revenue (in
millions)
ARPU
Churn
Net losses (in thousands)

556

16,854
57
1.82%
(259)
32,853
15

$
$

3,339
28

$
$

4.19%
2,005

10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

End of period subscribers
(in thousands) (a)
Hours per subscriber

Page 11 of 16

14,282
13

13,797
14

11,631
14

14,282
14

835

519

280

1,743

6,264

5,429

4,128

6,264

1,276

1,092

644

3,489

53,399

52,123

48,813

53,399

Wholesale and Affiliate
Subscribers
Net additions (in
thousands)
End of period subscribers
(in thousands) (a)
Total Subscribers
Net additions (in
thousands)
End of period subscribers
(in thousands)
(a)

End of period subscribers reflect the sale and transfer of 49,000 subscribers which are not included
additions, in the third quarter 2010, from Retail Prepaid to Wholesale and Affiliate prospectively from the
date of sale.

Sprint Nextel Corporation
WIRELINE STATEMENTS OF OPERATIONS AND STATISTICS (Unaudited)
(Millions)
TABLE NO. 7
Quarter To Date

Year To Date

September 30, June 30, September 30, September 30, September 30,
2011
2011
2010
2011
2010
Net Operating Revenues
Voice
Data
Internet
Other

$

474
124
447

$

480
117
475

$

554
125
535

$

1,440
357
1,419

17

31

56

1,062

1,090

1,245

3,272

751
127
108

Total net operating revenues

18

747
133
105

822
152
140

$

2,257
393
322

Net Operating Expenses
Costs of services and products
Selling, general and administrative
Depreciation
Other, net

-

Operating Income

$

NON-GAAP RECONCILIATION

-

-

-

986

Total net operating expenses

985

1,114

2,972

76

$

105

$

131

$

Quarter To Date

300

$

Year To Date

September 30, June 30, September 30, September 30, September 30,
2011
2011
2010
2011
2010
Operating Income
Severance and exit costs
Access costs (3)
Depreciation

$
(2)

Adjusted OIBDA*

http://newsroom.sprint.com/article_display.cfm?article_id=2083

76
-

$

105
-

$

131
-

$

300
-

108

105

140

322

184

210

271

$

622

10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Capital expenditures (1)

Page 12 of 16

36

Adjusted OIBDA* less Capex

$

Adjusted OIBDA Margin*

148

35
$

17.3%

59

175

$

19.3%

212
21.8%

124
$

498

$

19.0%

Sprint Nextel Corporation
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(Unaudited)
(Millions)
TABLE NO. 8
Year to Date
September 30, September 30,
2011
2010
Operating Activities
Net loss
Depreciation and
amortization
Provision for losses on
accounts receivable
Share-based compensation
expense
Deferred income taxes
Equity in losses of
unconsolidated investments
and other, net
Contribution to pension plan
Other, net
Net cash provided by operating
activities
Investing Activities
Capital expenditures
Expenditures relating to FCC
licenses
Change in short-term
investments, net
Investment in Clearwire
Other, net
Net cash used in investing
activities
Financing Activities
Debt financing costs
Repayments of debt and
capital lease obligations
Other, net

$

(1,587) $

(2,536)

3,684

4,862

370

317

51
114

55
196

1,261
(124)

795
-

(1,167)

(341)

2,602

3,348

(2,221)

(1,412)

(199)

(356)

60
-

105
(58)

(10)

19

(2,370)

(1,702)

(3)

(51)

(1,655)

(755)

14

7

Net cash used in financing
activities

(1,644)

(799)

Net (Decrease) Increase in Cash
and Cash Equivalents

(1,412)

847

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10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Cash and Cash Equivalents,
beginning of period

5,173

Cash and Cash Equivalents, end
of period
$

3,761

Page 13 of 16

3,819

$

4,666

RECONCILIATION TO FREE CASH FLOW* (NON-GAAP) (Unaudited)
(Millions)
TABLE NO. 9
Quarter Ended
September 30,
2011
Net Cash Provided by
Operating Activities

$

Capital expenditures
Expenditures relating to FCC
licenses
Other investing activities, net

608

June 30,
2011

$

1,075

$

971

$

2,602

(818)

(759)

(490)

(54)

(108)

(199)

8

5

11

(10)

267

384

172

-

-

-

(2)
-

(1)
-

(1)
-

5

7

6

(273)

Debt financing costs
Decrease in debt and other,
net
Investment in Clearwire
Other financing activities,
net

$

$

(2,221)

(71)

Free Cash Flow*

Net (Decrease) Increase in
Cash, Cash Equivalents and
Short-Term Investments

Year to Date
September 30, September 30, September 30,
2010
2011

(270) $

273

$

(3)
(1,655)
14

389

$

(1,472) $

Sprint Nextel Corporation
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Millions)
TABLE NO. 10
September 30, December 31,
2011
2010
Assets
Current assets
Cash and cash equivalents
Short-term investments
Accounts and notes receivable, net
Device and accessory inventory
Deferred tax assets
Prepaid expenses and other current assets
Total current assets
Investments and other assets
Property, plant and equipment, net

http://newsroom.sprint.com/article_display.cfm?article_id=2083

$

3,761 $
240
3,054
923
156
516
8,650
2,620
14,168

10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 14 of 16

Goodwill
FCC licenses and other
Definite-lived intangible assets, net

359
20,529
1,689

Total

$

48,015 $

Current liabilities
Accounts payable
$
Accrued expenses and other current liabilities
Current portion of long-term debt, financing and capital lease obligations

2,188 $
3,237

Liabilities and Shareholders' Equity

Total current liabilities

2,257
7,682

Long-term debt, financing and capital lease obligations
Deferred tax liabilities
Other liabilities

16,272
6,911

Total liabilities

34,974

4,109

Shareholders' equity
Common shares

5,989

Paid-in capital
Treasury shares, at cost
Accumulated deficit
Accumulated other comprehensive loss

46,701
(39,186)

(37,582

(463)

Total shareholders' equity

13,041

Total

$

48,015 $

NET DEBT* (NON-GAAP) (Unaudited)
(Millions)
TABLE NO. 11
September 30, December 31,
2011
2010
Total Debt

$

Less: Cash and cash equivalents
Less: Short-term investments

18,529 $
(3,761)
(240)

Net Debt*

$

14,528 $

Sprint Nextel Corporation
SCHEDULE OF DEBT (Unaudited)
(Millions)
TABLE NO. 12
September 30,
2011
ISSUER
Sprint Nextel Corporation

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COUPON MATURITY

PRINCIPAL

10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 15 of 16

Export Development Canada Facility (tranche 1)
Export Development Canada Facility (tranche 2)
6% Notes due 2016

3.548% 03/30/2012 $
4.248% 12/15/2015
6.000% 12/01/2016

250
500
2,000

8.375% Notes due 2017
9.25% Debentures due 2022

8.375% 08/15/2017
9.250% 04/15/2022

1,300
200

Sprint Nextel Corporation

4,250

Sprint Capital Corporation
8.375% Notes due 2012
6.9% Notes due 2019
6.875% Notes due 2028
8.75% Notes due 2032

8.375%
6.900%
6.875%
8.750%

03/15/2012
05/01/2019
11/15/2028
03/15/2032

2,000
1,729
2,475
2,000

Sprint Capital Corporation

8,204

Nextel Communications Inc.
6.875% Senior Serial Redeemable Notes due 2013
5.95% Senior Serial Redeemable Notes due 2014
7.375% Senior Serial Redeemable Notes due 2015

6.875% 10/31/2013
5.950% 03/15/2014
7.375% 08/01/2015

1,473
1,170
2,137

Nextel Communications Inc.

4,780

iPCS Inc.
First Lien Senior Secured Floating Rate Notes due 2013
Second Lien Senior Secured Floating Rate Notes due 2014

2.379% 05/01/2013
3.504% 05/01/2014

300
181

iPCS Inc.

481

Tower financing obligation

9.500% 01/15/2030

698

2014 - 2022

73

Capital lease obligations and other
TOTAL PRINCIPAL

18,486

Net premiums

43

TOTAL DEBT

$

18,529

Sprint Nextel Corporation
RECONCILIATION OF RETAIL POSTPAID NET LOSSES
TO SPRINT BRANDED POSTPAID NET ADDITIONS
(Thousands)
TABLE NO. 13
Quarter To Date

Year To Date

September 30, June 30, September 30, September 30, September 30,
2011
2011
2010
2011
2010
Retail postpaid net losses
Less: iDEN net losses

(44)

(101)

(107)

(259)

(309)

(327)

(383)

(1,003)

CDMA net additions
Less (non-Sprint branded net losses):
Nextel PowerSource
Helio

265

226

276

744

(39)

(49)

(78)

(145)

-

-

-

-

Sprint branded net additions

304

275

354

889

http://newsroom.sprint.com/article_display.cfm?article_id=2083

(1,194

10/31/2011

Sprint Newsroom | Sprint Nextel Reports Third Quarter 2011 Results

Page 16 of 16

Sprint Nextel Corporation
NOTES TO THE FINANCIAL INFORMATION (Unaudited)
(1)

(2)

Capital expenditures is an accrual based amount that includes the changes in unpaid capital expenditures
and excludes capitalized interest. Cash paid for capital expenditures, which includes $99 million, $102
million and $103 million of total capitalized interest in the first, second and third quarters 2011,
respectively, can be found in the condensed consolidated cash flow information on Table No. 8 and the
reconciliation to Free Cash Flow* on Table No. 9.
Severance and exit costs are primarily related to work force reductions, lease termination charges, and
organizational realignment initiatives.

(3)

Favorable developments during the second quarter of 2010 relating to disagreements with local exchange
carriers resulted in a reduction in expected access costs of $84 million.

Contact(s):
Sprint Nextel Corp.
Media Relations
Scott Sloat, 240-855-0164
[e-mail]
or
Investor Relations
Yijing Brentano, 800-259-3755
[e-mail]

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