SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 4, 2002
SPRINT CORPORATION
(Exact name of Registrant as specified in its charter)
Kansas 1-04721 48-0457967
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
2330 Shawnee Mission Parkway, Westwood, Kansas 66205
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (913) 624-3000
(Former name or former address, if changed since last report)
P. O. Box 11315, Kansas City, Missouri 64112
(Mailing address of principal executive offices)
Item 5. Other Events.
1. Press Release. On February 4, 2002, the registrant
("Sprint") announced its fourth quarter and annual results for
the fiscal year ending December 31, 2001. The press release was
as follows:
Sprint Announces Fourth Quarter and Full-Year 2001 Results
The Sprint FON Group (NYSE: FON) is comprised of Sprint's Global Markets
Division, Local Telecommunications Division and product distribution and
directory publishing businesses.
The Sprint PCS Group (NYSE: PCS) consists of Sprint's mobile
wireless operations.
EXPLANATORY COMMENT: In the fourth quarter of 2001, Sprint recorded one-time
items related to the write-down of assets supporting its integrated on-demand
network (ION), costs associated with its corporate restructuring as well as
litigation in its Global Markets Division. These charges reduced FON Group 2001
fourth quarter operating income and EBITDA (as measured by operating income or
loss plus depreciation and amortization) by $1.8 billion, income from continuing
operations by $1.1 billion and diluted earnings per share by $1.29. These
charges increased PCS Group 2001 fourth quarter operating loss by $10 million
and loss from continuing operations by $7 million and reduced EBITDA by $10
million. In prior 2001 quarters, the FON Group recorded one-time items
associated with the write-down or sale of equity investments as well as a
benefit plan curtailment gain. Total 2001 one-time items reduced FON Group
operating income and EBITDA by $1.8 billion, income from continuing operations
by $1.2 billion and diluted earnings per share by $1.38.
In the fourth quarter of 2000, the FON Group recorded one-time items related to
the write-down of goodwill and other related assets of its professional services
business and certain equity investments. These charges reduced FON Group 2000
fourth quarter operating income and EBITDA as measured by operating income or
loss plus depreciation and amortization by $238 million, income from continuing
operations by $261 million and diluted earnings per share by 30 cents. In prior
2000 quarters, the FON Group recorded one-time items associated with the
terminated WorldCom merger, a gain on the sale of an independent directory
publishing business and net gains on investing activities. Total 2000 one-time
items reduced FON Group operating income and EBITDA by $401 million, income from
continuing operations by $322 million and diluted earnings per share by 36
cents. Total 2000 one-time items associated with the terminated WorldCom merger
increased PCS Group operating loss and reduced EBITDA by $24 million.
The accompanying discussion of operating results excludes these one-time items.
Kansas City, Mo., - February 4, 2002 - Sprint today announced record
consolidated revenues for the fourth quarter and full-year 2001. Fourth quarter
consolidated revenues were $6.66 billion, up 7 percent from the fourth quarter
of last year. Full year 2001 consolidated revenues were $26.07 billion, a 10
percent increase from $23.61 billion last year.
"2001 has been a year of significant challenges with the economy impacting all
segments of our business. Some areas of our company have grown remarkably well,
while others fell short of expectations," said William T. Esrey, Sprint's
chairman and chief executive officer. "Despite this difficult environment,
our wireless division led the industry in customer growth for the third year in
a row, and our plans to introduce third generation wireless services nationwide
are on target for later this year. Our local operation this year consistently
delivered strong operating performance and bottom line improvement. Our Global
Markets Division bore the brunt of the past year's economic downturn, excess
capacity and pricing pressures. Overall, the industry continues to experience
unprecedented change. While traditional voice services have been impacted, we
continue to invest in building our Internet and data capabilities, positioning
Sprint in the fastest growing industry segments - wireless, data services and
the Internet."
SPRINT PCS GROUP HIGHLIGHTS
o The PCS Group, with its affiliate partners, reported 1.5 million new
customers, leading the U.S. wireless industry in net customer growth for
the 14th consecutive quarter. The fourth-quarter subscriber growth
included 1.11 million direct customer additions and 381,000 affiliate
customer additions. For the full year, Sprint PCS and its affiliates
added more than 5 million customers, nearly 500,000 more customers than
were added in 2000. Sprint's wireless division ended 2001 with more than
15.8 million customers, including affiliates, who account for just over 2
million of that total.
o Total revenues increased 42 percent to $2.76 billion in the fourth
quarter compared to $1.94 billion a year ago. Total 2001 revenues rose 53
percent to $9.73 billion from $6.34 billion in 2000.
o Average monthly revenue per user (ARPU) for the quarter grew to
approximately $61, compared to $60 a year ago. For the year, ARPU was
$61, up 3 percent from $59 last year.
o EBITDA was $367 million compared to $21 million in the fourth quarter of
2000. For the year, EBITDA was $1.51 billion compared to a $27 million
loss for 2000. The PCS Group has now achieved positive EBITDA for seven
consecutive quarters.
o Customer churn rate during the quarter was 3 percent compared to 2.8
percent in the fourth quarter a year ago. The full year churn rate for
2001 was 2.6 percent compared to 2.8 percent in 2000.
o Capital expenditures were $890 million for the quarter and $3.75 billion
in 2001.
Sprint operates the nation's largest all-digital, single-frequency PCS wireless
network with coverage now extending to a population of more than 247 million, or
approximately 85 percent of the country after the inclusion of affiliates. A key
driver of customer growth is the continued expansion of national distribution
channels. By the end of the year, Sprint wireless products and services were
sold in more than 17,000 locations, including more than 400 Sprint stores
nationwide.
"Sprint's customer growth in wireless is truly unmatched," Esrey said. "Our
focus this year will be to continue to increase profitability, build upon
Sprint's unsurpassed clarity in voice services and make third-generation (3G)
data simple, accessible, fast, clear and valuable for consumers and businesses
across the country."
Third Generation wireless is expected to allow Sprint to offer data services at
peak speeds of 144 kbps per second this year and more than 3 megabits per second
within two years, eclipsing standard 56 kbps dial-up Internet connections.
Sprint continues to be on track in preparing its network infrastructure for the
upcoming launch of 3G services.
To help boost the productivity of business customers, Sprint announced several
alliances in the quarter that expand the suite of wireless data products and
services offered as part of Sprint PCS Wireless Web for Business. One new
solution, Sprint PCS Business Connection (SM) Personal Edition, will allow
customers to access corporate e-mail, calendar and contacts real-time anywhere
on the Sprint nationwide wireless network.
SPRINT FON GROUP HIGHLIGHTS
o Fourth quarter revenues were $4.01 billion compared to $4.39 billion in the
same period a year ago. For the year, revenues were $16.92 billion, a
decrease of 4 percent from $17.69 billion in 2000.
o FON Group operating income in the quarter decreased 38 percent to $371
million from $598 million a year ago. In the fourth quarter, Sprint
announced the discontinuation of ION consumer and business offerings and a
corporate restructuring. Excluding losses for ION, operating income for the
quarter would have been $428 million compared to $758 million a year ago.
Operating income fell 36 percent in 2001 to $1.81 billion from $2.83
billion in the prior year.
o EBITDA was $975 million, down 18 percent from $1.20 billion in the fourth
quarter a year ago. Excluding losses for ION, EBITDA for the quarter would
have been $1.03 billion compared to $1.33 billion a year ago. For the year,
EBITDA was $4.26 billion compared to $5.10 billion in 2000.
o Income from continuing operations was $238 million in the fourth quarter, a
decline of 34 percent from $359 million a year ago. Income from continuing
operations for the year decreased 33 percent to $1.08 billion from $1.61
billion in 2000.
o Fourth quarter diluted earnings per share was 27 cents compared to 41 cents
a year ago. Excluding losses for ION, diluted earnings per share for the
quarter would have been 31 cents compared to 53 cents a year ago. For the
year, diluted earnings per share was $1.22 compared to $1.81 in 2000.
Excluding losses from ION, diluted earnings per share for the year would
have been $1.60 compared to $2.18 a year ago.
o Capital expenditures were $1.40 billion for the quarter and $5.30 billion
for 2001.
"While 2001 has clearly been a challenging year, I believe the FON Group is
positioned well in the local service market and in the high-growth Internet and
data segments," Esrey said. "The local division has generated strong returns
and steady growth, and its $6 billion revenue stream and solid operating
margins provide a firm underpinning for the FON Group.
"Following a year in which we made the difficult decision to abandon our ION
initiatives, we have sharpened our focus on enterprise data and Internet
services in 2002 as we attempt to better balance our revenue mix between data
and voice. At the same time, we will aggressively manage operating costs to
improve our profit trajectory."
Local Telecommunications Division (The following discussion assumes that the
transfer of a customer service operation to the PCS Group in the 2000 second
quarter and a change to transfer pricing for certain transactions between the
local division and the directory publishing business in the 2000 third quarter
occurred at the beginning of 2000.)
o Revenues were up 1 percent for the quarter compared to the same period last
year and 2 percent in 2001 compared to 2000. For the quarter, revenues were
$1.58 billion compared to $1.56 billion a year ago. For the year, revenues
were $6.25 billion compared to $6.11 billion in 2000.
o Operating income increased 15 percent in the quarter to $511 million from
$443 million a year ago. Operating income for 2001 was $1.89 billion, up 9
percent from $1.74 billion in 2000.
o Total access lines declined 1 percent during the last 12 months. Voice
grade equivalent lines grew 13 percent from a year ago.
o EBITDA in the quarter increased 7 percent to $791 million from $737 million
in the previous fourth quarter. EBITDA for the year was $3.01 billion, a 5
percent increase from $2.88 billion last year.
The Local Telecommunications Division increased sales of DSL services to both
residential and business customers in the quarter and the year. DSL capable
lines increased to 2.9 million by the year's end and penetration reached 1.9
percent of capable lines in Sprint's local territories.
The local division announced during the quarter a four-year $1.1 billion dollar
contract with Nortel Networks to provide equipment for phase one of a circuit to
packet network conversion project. The project calls for the conversion of the
existing digital circuit switched network to a packet switched network beginning
in January 2003.
The division also continued to increase its base of bundled service plan
customers during the quarter and the year. Approximately 25 percent of Sprint's
local residential customers and 16 percent of its business customers subscribed
to a bundled service plan by year's end. As a result of successful bundling, the
local division continued to grow customer share in the long distance market. At
the end of the fourth quarter, just over 45 percent of Sprint's local
residential customers and 37 percent of its business customers subscribed to
Sprint long distance.
Global Markets Division (The following discussion assumes that the Sprint ION
termination occurred at the beginning of 2000.)
o Revenues in the Global Markets Division for the quarter were down from a
year ago due largely to increased pricing pressures in the long distance
voice segment, declines in higher margin consumer services revenues and
wireless replacement. Fourth quarter revenues were $2.28 billion compared
to $2.57 billion a year ago. In 2001, revenues were $9.90 billion compared
to $10.52 billion in 2000.
o Operating loss for the quarter was $139 million compared to operating
income of $252 million a year ago. Operating income for 2001 was $201
million compared to operating income of $1.36 billion in 2000.
o EBITDA in the fourth quarter was $187 million compared to $527 million for
the same period last year. For the year, EBITDA was $1.40 billion compared
to $2.40 billion in 2000.
o Long distance calling volumes rose 19 percent for the quarter and 20
percent for the year.
In the Global Markets division, fourth quarter voice revenues declined 13
percent compared to a year ago, due primarily to continued pricing pressures.
For the full year, voice revenues were down 6 percent compared to 2000.
Aggressive pricing and a sagging economy impacted enterprise data revenues as
well. Overall, data revenues declined by approximately 13 percent in the fourth
quarter and were flat for 2001 compared to 2000. While quarterly revenues for
ATM increased at a mid-single digit rate and 2001 ATM revenues increased 21
percent for the year compared to 2000, Frame Relay and Private Line revenues
declined compared to the same quarter a year ago and full-year 2000.
In the Internet market, dedicated IP revenues increased in the quarter by 20
percent compared to the same period a year ago and 34 percent in 2001 compared
to 2000. However, overall IP revenues for the quarter were impacted by lower
Dial IP revenues and were flat compared to the same period last year. For the
year, overall IP revenues were up 9 percent to $1 billion compared to $920
million in 2000.
During the quarter, Sprint announced that eBay had chosen Sprint to handle its
web hosting services as a manageable and cost-effective solution to provide
additional redundancy and recovery capabilities. Also during the year, Sprint
announced strategic alliances with Sun, iPlanet, BroadVision, I2 and Cisco to
strengthen the delivery of end-to-end Internet and data solutions for business
customers.
Product Distribution and Directory Publishing
o Revenues in the quarter were $360 million compared to $508 million a year
ago. Annual revenues were $1.76 billion compared to $1.94 billion in 2000.
o Operating income decreased 18 percent to $61 million in the fourth quarter
from $74 million a year ago. Annual operating income increased to $291
million in 2001 compared to $284 million in 2000. Declines in revenues and
operating income during the quarter and for the full year were largely
attributable to reduced equipment sales.
Business Outlook
The following statements are based on current expectations. These statements are
forward-looking, and actual results may differ materially.
Sprint expects FON Group earnings per share, excluding losses for ION, to
approach $1.40 for the full year, which would be at the low end of previous
guidance. The current mean analyst estimate for FON Group earnings is $1.35,
which Sprint believes could include as much as five cents of losses related to
ION. The company currently expects FON Group EBITDA to approach $4.6 million for
the year 2002. FON Group capital expenditures are expected to be around $3.4
billion.
Fourth quarter results for the PCS Group and the industry suggest that growth in
the near-term will be slower than anticipated just a few months ago. Previous
estimates for PCS subscriber growth for 2002 of 3.6 million to 3.7 million net
customer additions were largely based on what was then a consensus forecast of
incremental industry penetration of about 22 million new users. This industry
consensus is now closer to 17 million. Assuming Sprint maintains a consistent
share of customer acquisitions with this lower industry forecast, PCS subscriber
growth would be forecasted to be approximately 3 million net additions or
slightly better for 2002.
In response to an expected lower level of near-term growth, Sprint expects to
adjust spending and investment to continue focusing on profitability. Full-year
PCS Group EBITDA expectations continue to be approximately $3 billion, or
roughly double 2001 levels.
Full-year 2002 capital expenditures are now expected to be approximately $3.4
billion, compared to previous guidance of around $3.5 billion. Sprint will
continue to monitor economic developments closely and intends to adjust spending
and capital investment in concert with growth.
Sprint's overall incremental cash requirements in 2002 are now expected to be
approximately $1.7 billion and without any NextWave spectrum requirements, this
would be reduced to about $1.4 billion. Sprint continues to have flexibility in
terms of access to the capital markets and can readily meet its funding needs.
The company also continues to believe financing can be partially sourced through
asset monetization.
CONFERENCE CALL INFORMATION
Conference calls elaborating on the company's fourth quarter and 2001 results
and the business outlook are scheduled for the afternoon of February 4.
Management will discuss PCS Group earnings at 4:30 p.m. EST in a conference call
with a live Q&A session. The call-in numbers are (toll free) 866-215-1938 or
800-377-4273. For international callers, call 816-650-0742 or 816-650-0771. A
continuous replay will be available immediately following the conference call
and can be accessed by dialing (toll free) 888-775-8673 or, internationally,
402-220-1325. Replays of the call can also be accessed through our web site at
www.sprint.com. This replay will be available through February 18, 2002.
The FON Group earnings report will be discussed in a conference call with a live
Q&A session at 5:30 p.m. EST. The call-in numbers are (toll free) 1-800-377-4273
or 866-215-1938. For international callers, call 816-650-0771 or 816-650-0742. A
continuous replay will be available immediately following the conference call
and can be assessed by dialing 888-775-8696 (toll free) or 402-220-1326
internationally. Replays also can be accessed through our web site,
www.sprint.com This replay will be available through February 18, 2002.
Audiocasts of the conference calls will be available simultaneously on our web
site, www.sprint.com. A link to the audiocast will be posted on our web site in
advance of the release date. Please note that questions may only be submitted
through the conference call option.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This press release includes "forward-looking statements" within the meaning of
securities laws. The statements in this press release regarding the business
outlook as well as other statements that are not historical facts are
forward-looking statements. The words "estimate," "project," "intend,"
"expect," "believe," and similar expressions identify forward-looking
statements. Forward-looking statements are estimates and projections reflecting
management's judgment and involve a number of risks and uncertainties that
could cause actual results to differ materially from those suggested by the
forward-looking statements. With respect to these forward-looking statements,
Sprint has made assumptions regarding, among other things, customer and network
usage, customer growth, pricing, costs to acquire customers and to provide
services, and the economic environment. Important factors that could cause
actual results to differ materially from estimates or projections contained in
the forward-looking statements include:
o the effects of vigorous competition in the markets in which Sprint
operates;
o the costs and business risks associated with providing new services and
entering new markets necessary to provide nationwide or global services;
o the ability of the PCS Group to continue to grow a significant market
presence;
o the effects of mergers and consolidations within the telecommunications
industry;
o the uncertainties related to Sprint's strategic investments;
o the impact of any unusual items resulting from ongoing evaluations of
Sprint's business strategies;
o the impact of new technologies on Sprint's business;
o unexpected results of litigation filed against Sprint;
o the possibility of one or more of the markets in which Sprint competes
being impacted by changes in political, economic or other factors such as
monetary policy, legal and regulatory changes including the impact of the
Telecommunications Act of 1996, or other external factors over which Sprint
has no control;
o and other risks referenced from time to time in Sprint's filings with the
Securities and Exchange Commission ("SEC").
Sprint believes these forward-looking statements are reasonable; however, you
should not place undue reliance on forward-looking statements, which are based
on current expectations and speak only as of the date of this release. Sprint is
not obligated to publicly release any revisions to forward-looking statements to
reflect events after the date of this release. Sprint provides a detailed
discussion of risk factors in periodic SEC filings as well as its registration
statements (see Registration No. 333-75578) and you are encouraged to review
these filings.
About Sprint
Sprint is a global communications company serving over 23 million business and
residential customers in more than 70 countries. With more than 80,000 employees
worldwide and over $26 billion in annual revenues, Sprint is widely recognized
for developing, engineering and deploying state of the art network technologies,
including the United States' first nationwide all-digital, fiber-optic network.
Sprint's award-winning Tier 1 Internet backbone is being extended to key global
markets to provide customers with a broad portfolio of scalable IP products.
Sprint's high-capacity, high-speed network gives customers fast, dependable,
non-stop access to the vast majority of the world's Internet content. Sprint
also operates the largest 100-percent digital, nationwide PCS wireless network
in the United States, already serving the majority of the nation's metropolitan
areas including more than 4,000 cities and communities.
Sprint Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
Sprint Corporation
-----------------------------------
Consolidated
-------------------------------------------------------------------------------------------------------------------------
Quarters Ended December 31, 2001 2000
-------------------------------------------------------------------------------------------------------------------------
Net operating revenues $ 6,656 $ 6,223
-------------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 3,347 3,079
Selling, general and administrative (1) 1,991 1,927
Depreciation 1,093 957
Amortization 60 152
Restructuring and asset impairments (2) 1,814 238
-------------------------------------------------------------------------------------------------------------------------
Total operating expenses 8,305 6,353
-------------------------------------------------------------------------------------------------------------------------
Operating income (loss) (1,649) (130)
Interest expense (274) (273)
Intergroup interest charge - -
Other expense, net (3) (46) (169)
-------------------------------------------------------------------------------------------------------------------------
Income (loss) before income taxes (1,969) (572)
Income tax (expense) benefit 735 158
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations (1,234) (414)
Extraordinary items, net - (1)
-------------------------------------------------------------------------------------------------------------------------
Net income (loss) (1,234) (415)
Preferred stock dividends (paid) received (2) (1)
-------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) applicable to common stock $ (1,236) $ (416)
-----------------------------------
Diluted earnings (loss) per common share (4)
Net income - excluding one-time items
One-time items (1,2,3)
-------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
Extraordinary items
-------------------------------------------------------------------------------------------------------------------------
Total
Diluted weighted average common shares outstanding (5)
Basic earnings (loss) per common share
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
(1) In the fourth quarter of 2001, Sprint recorded a charge for litigation in the Global Markets Division which reduced operating
income by $24 million and income from continuing operations by $15 million, or $0.02 per share.
(2) In the 2001 fourth quarter, Sprint recorded a restructuring charge and asset impairment of $1,814 million representing the
termination of Sprint ION, as well as additional steps to reduce overall operating costs. The charge to the FON Group was
$1,804 million which reduced income from continuing operations by $1,129 million, or $1.27 per share. The charge to the PCS
group was $10 million which increased loss from continuing operations by $7 million.
In the 2000 fourth quarter, Sprint recorded a $238 million asset impairment representing the write-down of the Global
Markets Division's Paranet operations which reduced the FON Group's income from continuing operations by $152 million, or
$0.17 per share.
(3) In the 2000 fourth quarter, the FON Group recorded one-time charges of $122 million related to write-downs of certain equity
investments which reduced income from continuing operations by $109 million, or $0.13 per share.
(4) As the effects of including the incremental shares associated with options and ESPP shares are antidilutive, both basic
earnings per share and diluted earnings per share reflect the same calculation in these condensed statements of consolidated
operations for the fourth quarter ended December 31, 2001 and PCS's fourth quarter ended December 31, 2000.
(5) As the effects of including the incremental shares associated with options and ESPP shares are antidilutive, they are not
included in the weighted average common shares outstanding for the fourth quarter ended December 31, 2001 and PCS's fourth
quarter ended December 31, 2000.
Eliminations/Reclassifications Sprint FON Group Sprint PCS Group
-------------------------------------- ---------------------------------- ------------------------------------
2001 2000 2001 2000 2001 2000
-------------------------------------- ---------------------------------- ------------------------------------
$ (115) $ (109) $ 4,012 $ 4,394 $ 2,759 $ 1,938
-------------------------------------- ---------------------------------- ------------------------------------
(115) (109) 1,978 2,059 1,484 1,129
- - 1,083 1,139 908 788
- - 604 581 489 376
- - - 17 60 135
- - 1,804 238 10 -
-------------------------------------- ---------------------------------- ------------------------------------
(115) (109) 5,469 4,034 2,951 2,428
-------------------------------------- ---------------------------------- ------------------------------------
- - (1,457) 360 (192) (490)
- 5 (75) (79) (199) (199)
- - 74 61 (74) (61)
(11) (5) (4) (137) (31) (27)
-------------------------------------- ---------------------------------- ------------------------------------
(11) - (1,462) 205 (496) (777)
4 - 556 (107) 175 265
-------------------------------------- ---------------------------------- ------------------------------------
(7) - (906) 98 (321) (512)
7 - - (1) (7) -
-------------------------------------- ---------------------------------- ------------------------------------
- - (906) 97 (328) (512)
- - 2 2 (4) (3)
-------------------------------------- ---------------------------------- ------------------------------------
$ - $ - $ (904) $ 99 $ (332) $ (515)
-------------------------------------- ---------------------------------- ------------------------------------
$ 0.27 $ 0.41 $ (0.32) $ (0.53)
(1.29) (0.30) - -
-------------------------------------- ---------------------------------- ------------------------------------
(1.02) 0.11 (0.32) (0.53)
- - (0.01) -
-------------------------------------- ---------------------------------- ------------------------------------
$ (1.02) $ 0.11 $ (0.33) $ (0.53)
---------------------------------- ------------------------------------
888.4 886.8 1,007.5 975.4
---------------------------------- ------------------------------------
$ (1.02) $ 0.11 $ (0.33) $ (0.53)
---------------------------------- ------------------------------------
Sprint Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(millions, except per share data)
Sprint Corporation
---------------------------------------
Consolidated
---------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Year-to-Date December 31, 2001 2000
------------------------------------------------------------------------------------------------------------------------------
Net operating revenues $ 26,071 $ 23,613
------------------------------------------------------------------------------------------------------------------------------
Operating expenses
Costs of services and products 12,995 11,620
Selling, general and administrative (1) 7,325 6,919
Depreciation 4,217 3,538
Amortization 382 606
Restructuring and asset impairments (2) 1,814 238
Merger related costs (3) - 187
------------------------------------------------------------------------------------------------------------------------------
Total operating expenses 26,733 23,108
------------------------------------------------------------------------------------------------------------------------------
Operating income (loss) (662) 505
Interest expense (1,181) (990)
Intergroup interest charge - -
Other expense, net (4) (183) (217)
------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before income taxes (2,026) (702)
Income tax (expense) benefit 624 126
------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations (1,402) (576)
Discontinued operation, net - 675
Extraordinary items, net (1) (4)
Cumulative effect of changes in accounting principles, net 2 (2)
------------------------------------------------------------------------------------------------------------------------------
Net income (loss) (1,401) 93
Preferred stock dividends (paid) received (7) (7)
------------------------------------------------------------------------------------------------------------------------------
Earnings (Loss) applicable to common stock $ (1,408) $ 86
---------------------------------------
Diluted earnings (loss) per common share (5)
Net income - excluding one-time items
One-time items (1,2,3,4)
------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations
Discontinued operation
Extraordinary items
------------------------------------------------------------------------------------------------------------------------------
Total
Diluted weighted average common shares outstanding (6)
Basic earnings (loss) per common share
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
(1) In the fourth quarter of 2001, Sprint recorded a charge for litigation in the Global Markets Division which reduced
operating income by $24 million and income from continuing operations by $15 million, or $0.02 per share.
(2) In the 2001 fourth quarter, Sprint recorded a restructuring charge and asset impairment of $1,814 million representing the
termination of Sprint ION, as well as additional steps to reduce overall operating costs. The charge to the FON Group was
$1,804 million which reduced income from continuing operations by $1,129 million, or $1.27 per share. The charge to the PCS
group was $10 million which increased loss from continuing operations by $7 million.
In the 2000 fourth quarter, Sprint recorded a $238 million asset impairment representing the write-down of the Global Markets
Division's Paranet operations which reduced the FON Group's income from continuing operations by $152 million, or $0.17 per
share.
(3) Represents costs recorded in the 2000 second quarter associated with the proposed WorldCom merger, which was terminated.
These charges reduced FON Group income from continuing operations by $105 million, or $0.12 per share and increased PCS Group
loss from continuing operations by $16 million, or $0.02 per share.
(4) In the 2001 third quarter, the FON Group recorded in Other expense, net, one-time charges of $62 million which reduced income
from continuing operations of $90 million or $0.10 per share. These amounts included a write-down of an equity investment for
$157 million with the same impact on income from continuing operations or $0.18 per share, and a loss on the sale of an
investment of $25 million which reduced income from continuing operations of $8 million or $0.01 per share. Additionally,
Sprint modified certain retirement plan benefits resulting in a curtailment gain of $120 million which increased income from
continuing operations of $75 million or $0.09 per share. In the 2001 first quarter, the FON Group recorded net gains on
investment activities of $14 million which increased income from continuing operations by $9 million or $0.01 per share.
In the 2000 fourth quarter, the FON Group recorded one-time charges of $122 million related to write-downs of certain equity
investments which reduced income from continuing operations by $109 million, or $0.12 per share. In the 2000 second quarter,
the FON Group recorded a gain on sale of an independent directory publishing operation of $45 million, which increased income
from continuing operations by $27 million, or $0.03 per share. In the 2000 first quarter, the FON Group recorded net gains on
investment activities of $26 million, which increased income from continuing operations by $17 million, or $0.02 per share.
In the 2000 first quarter, the PCS Group recorded a gain on sale of network infrastructure and the right to manage customers
to a PCS affiliate of $28 million, which decreased PCS Group loss from continuing operations by $18 million, or $0.02 per
share.
(5) As the effects of including the incremental shares associated with options and ESPP shares are antidilutive, both basic
earnings per share and diluted earnings per share reflect the same calculation in these condensed statements of consolidated
operations for the year ended December 31, 2001 and PCS's year ended December 31, 2000.
(6) As the effects of including the incremental shares associated with options and ESPP shares are antidilutive, they are not
included in the weighted average common shares outstanding for the year ended December 31, 2001 and PCS's year ended December
31, 2000.
Eliminations/Reclassifications Sprint FON Group Sprint PCS Group
------------------------------------- ----------------------------------- -----------------------------------
2001 2000 2001 2000 2001 2000
------------------------------------- ----------------------------------- -----------------------------------
$ (578) $ (416) $ 16,924 $ 17,688 $ 9,725 $ 6,341
------------------------------------- ----------------------------------- -----------------------------------
(578) (416) 8,278 8,094 5,295 3,942
- - 4,408 4,493 2,917 2,426
- - 2,431 2,199 1,786 1,339
- - 18 68 364 538
- - 1,804 238 10 -
- - - 163 - 24
------------------------------------- ----------------------------------- -----------------------------------
(578) (416) 16,939 15,255 10,372 8,269
------------------------------------- ----------------------------------- -----------------------------------
- - (15) 2,433 (647) (1,928)
15 19 (345) (313) (851) (696)
- - 288 237 (288) (237)
(26) (19) (56) (187) (101) (11)
------------------------------------- ----------------------------------- -----------------------------------
(11) - (128) 2,170 (1,887) (2,872)
4 - (18) (878) 638 1,004
------------------------------------- ----------------------------------- -----------------------------------
(7) - (146) 1,292 (1,249) (1,868)
- - - 675 - -
7 - (1) (1) (7) (3)
- - - (2) 2 -
------------------------------------- ----------------------------------- -----------------------------------
- - (147) 1,964 (1,254) (1,871)
- - 7 7 (14) (14)
------------------------------------- ----------------------------------- -----------------------------------
$ - $ - $ (140) $ 1,971 $ (1,268) $ (1,885)
------------------------------------- ----------------------------------- -----------------------------------
$ 1.22 $ 1.81 $ (1.27) $ (1.95)
(1.38) (0.36) - -
------------------------------------- ----------------------------------- -----------------------------------
(0.16) 1.45 (1.27) (1.95)
- 0.76 - -
- - (0.01) -
------------------------------------- ----------------------------------- -----------------------------------
$ (0.16) $ 2.21 $ (1.28) $ (1.95)
----------------------------------- -----------------------------------
886.8 892.4 989.7 966.5
----------------------------------- -----------------------------------
$ (0.16) $ 2.24 $ (1.28) $ (1.95)
----------------------------------- -----------------------------------
Sprint Corporation
SELECTED OPERATING RESULTS
(millions)
Quarters Ended Year-to-Date
December 31, December 31,
--------------------------------------- --------------------------------------
2001 2000 2001 2000
--------------------------------------- --------------------------------------
Global Markets Division
Net operating revenues
Voice $ 1,508 $ 1,724 $ 6,644 $ 7,094
Data 444 508 1,956 1,937
Internet 244 244 1,003 920
Other 85 92 313 577
------------------------------------------------------------------------------------ --------------------------------------
Net operating revenues 2,281 2,568 9,916 10,528
------------------------------------------------------------------------------------ --------------------------------------
Operating expenses
Costs of services and products 1,443 1,409 6,004 5,558
Selling, general and administrative (1) 732 765 2,955 3,026
Depreciation and amortization 326 302 1,318 1,121
Restructuring and asset impairments (2) 1,688 238 1,688 238
------------------------------------------------------------------------------------ --------------------------------------
Total operating expenses 4,189 2,714 11,965 9,943
------------------------------------------------------------------------------------ --------------------------------------
Operating income (loss) $ (1,908) $ (146) $ (2,049) $ 585
--------------------------------------- --------------------------------------
Local Division
Net operating revenues
Local service $ 740 $ 725 $ 2,939 $ 2,846
Network access 511 490 2,032 1,987
Long distance 182 181 731 717
Other 145 162 545 605
------------------------------------------------------------------------------------- --------------------------------------
Net operating revenues 1,578 1,558 6,247 6,155
------------------------------------------------------------------------------------- --------------------------------------
Operating expenses
Costs of services and products 479 501 1,955 1,965
Selling, general and administrative 308 320 1,280 1,288
Depreciation 280 294 1,120 1,139
Restructuring and asset impairments (2) 109 - 109 -
-------------------------------------------------------------------------------------- --------------------------------------
Total operating expenses 1,176 1,115 4,464 4,392
-------------------------------------------------------------------------------------- --------------------------------------
Operating income $ 402 $ 443 $ 1,783 $ 1,763
--------------------------------------- --------------------------------------
Product Distribution and Directory Publishing
Net operating revenues $ 360 $ 508 $ 1,762 $ 1,936
--------------------------------------- --------------------------------------
Operating income $ 54 $ 74 $ 284 $ 284
--------------------------------------- --------------------------------------
See description of footnotes on the following page.
Sprint Corporation
SELECTED OPERATING RESULTS
(millions)
Quarters Ended Year-to-Date
December 31, December 31,
--------------------------------------- --------------------------------------
2001 2000 2001 2000
--------------------------------------- --------------------------------------
PCS Group
Net operating revenues $ 2,759 $ 1,938 $ 9,725 $ 6,341
-------------------------------------------------------------------------------------- --------------------------------------
Operating expenses
Costs of services and products 1,484 1,129 5,295 3,942
Selling, general and administrative 908 788 2,917 2,426
Depreciation 489 376 1,786 1,339
Amortization 60 135 364 538
Restructuring and asset impairments (2) 10 - 10 -
Merger related costs - - - 24
-------------------------------------------------------------------------------------- --------------------------------------
Total operating expenses 2,951 2,428 10,372 8,269
-------------------------------------------------------------------------------------- --------------------------------------
Operating loss $ (192) $ (490) $ (647) $ (1,928)
--------------------------------------- --------------------------------------
Unallocated Corporate Operations and
Intercompany Eliminations
Net operating revenues $ (322) $ (349) $ (1,579) $ (1,347)
--------------------------------------------------------------------------------
Operating income (3) $ (5) $ (11) $ (33) $ (199)
--------------------------------------- --------------------------------------
Sprint's FON Group reporting segments are intended to reflect the operating results of its global markets, local services, and
product distribution and directory publishing businesses. The Global Markets segment includes domestic and international voice
services (except for consumer services provided to customers within Sprint's local franchise territories); data communications
services such as frame relay access and transport, web hosting, collocation, security services, and broadband fixed wireless
services; and Internet services. The Local Services segment includes local phone services, access to its local network, consumer
long distance services provided to customers within our local franchise territories, and sales of telecommunications equipment.
The Product Distribution and Directory Publishing segment provides wholesale distribution services of telecommunications products
and publishes and markets white and yellow page phone directories. The FON Group is an integrated business of Sprint Corporation
and does not constitute a stand-alone entity.
Sprint's PCS Group includes Sprint's wireless personal communications services operations. The PCS Group is an integrated business
of Sprint Corporation and does not constitute a stand-alone entity.
(1) In the fourth quarter of 2001, Sprint recorded a charge for litigation in the Global Markets Division which reduced operating
income by $24 million.
(2) In the 2001 fourth quarter, Sprint recorded an asset impairment and restructuring charge that represents the termination of
Sprint ION as well as additional steps to reduce overall operating costs.
In the 2000 fourth quarter, Sprint recorded a $238 million asset impairment representing the writedown of the Global Markets
Division's Paranet operations.
(3) Includes FON Group merger costs of $163 million in the 2000 second quarter related to the proposed WorldCom merger, which was
terminated.
Sprint Corporation
CONSOLIDATED BALANCE SHEETS
(millions)
Sprint Corporation
--------------------------------------
Consolidated
--------------------------------------
December 31, December 31,
2001 2000
--------------------------------------
Assets
Current Assets
Cash and equivalents $ 330 $ 239
Accounts receivable, net 3,806 4,028
Inventories 690 949
Receivables from the PCS Group - -
Prepaid expenses and other 753 757
------------------------------------------------------------------------------------------------------------------------
Total current assets 5,579 5,973
Net property, plant and equipment 28,977 25,316
Net intangible assets 8,909 9,405
Other 2,385 2,374
------------------------------------------------------------------------------------------------------------------------
Total $ 45,850 $ 43,068
--------------------------------------
Liabilities and shareholders' equity
Current liabilities
Short-term borrowings including current maturites of long-term debt $ 4,401 $ 1,205
Accounts payable and accrued interconnection costs 2,699 2,832
Construction obligations 577 997
Accrued restructuring costs 430 -
Payables to the FON Group - -
Other 3,386 2,934
------------------------------------------------------------------------------------------------------------------------
Total current liabilities 11,493 7,968
Noncurrent liabilities
Long-term debt and capital lease obligations 16,501 17,514
Equity unit notes 1,725 -
Deferred income taxes and investment tax credits 1,553 1,827
Other 1,706 1,787
------------------------------------------------------------------------------------------------------------------------
Total noncurrent liabilities 21,485 21,128
Redeemable preferred stock 256 256
Common stock and other shareholders' equity
Common stock
Class A FT 22 108
Class A DT - 108
FON 1,778 1,598
PCS 987 933
Other shareholders' equity 9,829 10,969
Combined attributed net assets - -
------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 12,616 13,716
------------------------------------------------------------------------------------------------------------------------
Total $ 45,850 $ 43,068
--------------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
Eliminations/Reclassifications Sprint FON Group Sprint PCS Group
-------------------------------------- -------------------------------------- --------------------------------------
December 31, December 31, December 31, December 31, December 31, December 31,
2001 2000 2001 2000 2001 2000
-------------------------------------- -------------------------------------- --------------------------------------
$ - $ - $ 151 $ 122 $ 179 $ 117
- - 2,415 3,126 1,391 902
- - 248 434 442 515
(234) (334) 234 334 - -
- (28) 454 469 299 316
------------------- ----------------- ----------------- ----------------- ----------------- -----------------
(234) (362) 3,502 4,485 2,311 1,850
(47) (39) 17,508 15,833 11,516 9,522
- - 1,567 1,671 7,342 7,734
(280) (383) 1,644 2,100 1,021 657
-------------------------------------- -------------------------------------- --------------------------------------
$ (561) $ (784) $ 24,221 $ 24,089 $ 22,190 $ 19,763
-------------------------------------- -------------------------------------- --------------------------------------
$ - $ (65) $ 2,056 $ 1,026 $ 2,345 $ 244
- - 2,018 2,145 681 687
- - - - 577 997
- - 430 - - -
(234) (269) - - 234 269
(47) (67) 1,851 1,806 1,582 1,195
-------------------------------------- -------------------------------------- --------------------------------------
(281) (401) 6,355 4,977 5,419 3,392
- (104) 3,258 3,482 13,243 14,136
- - - - 1,725 -
- (6) 1,552 1,743 1 90
- - 1,342 1,534 364 253
-------------------------------------- -------------------------------------- --------------------------------------
- (110) 6,152 6,759 15,333 14,479
(280) (280) 10 10 526 526
22 108 - - - -
- 108 - - - -
1,778 1,598 - - - -
987 933 - - - -
9,829 10,969 - - - -
(12,616) (13,709) 11,704 12,343 912 1,366
-------------------------------------- -------------------------------------- --------------------------------------
- 7 - - - -
-------------------------------------- -------------------------------------- --------------------------------------
$ (561) $ (784) $ 24,221 $ 24,089 $ 22,190 $ 19,763
-------------------------------------- -------------------------------------- --------------------------------------
Sprint Corporation
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(millions)
Sprint Corporation
-------------------------------------
Consolidated
----------------------------------------------------------------------------------------------------------------------
Year-to-Date December 31, 2001 2000
----------------------------------------------------------------------------------------------------------------------
Operating Activities
Net income (loss) $ (1,401) $ 93
Discontinued operation, net - (675)
Equity in net losses of affiliates 175 256
Depreciation and amortization 4,599 4,144
Deferred income taxes (695) (205)
Losses on write-down of assets 1,498 365
Changes in assets and liabilities 615 427
Other, net (83) (108)
----------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by operating activities 4,708 4,297
----------------------------------------------------------------------------------------------------------------------
Investing Activities
Capital expenditures (9,046) (7,152)
Investments in and loans to affiliates, net (66) (889)
Proceeds from sales of other assets 301 258
Other, net 33 (9)
----------------------------------------------------------------------------------------------------------------------
Net cash used by continuing operations (8,778) (7,792)
Proceeds from the sale of Global One - 1,403
----------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (8,778) (6,389)
----------------------------------------------------------------------------------------------------------------------
Financing Activities
Increase (Decrease) in debt, net 2,263 2,257
Proceeds from equity unit notes 1,725 -
Proceeds from common stock issued 611 281
Dividends paid (451) (448)
Other, net 13 121
----------------------------------------------------------------------------------------------------------------------
Net cash provided (used) by financing activities 4,161 2,211
----------------------------------------------------------------------------------------------------------------------
Increase in cash and equivalents 91 119
Cash and equivalents at beginning of period 239 120
----------------------------------------------------------------------------------------------------------------------
Cash and equivalents at end of period $ 330 $ 239
-------------------------------------
The FON Group and the PCS Group are integrated businesses of Sprint Corporation and do not constitute stand-alone entities.
Eliminations/Reclassifications Sprint FON Group Sprint PCS Group
--------------------------------------- ------------------------------------- -------------------------------------
2001 2000 2001 2000 2001 2000
--------------------------------------- ------------------------------------- -------------------------------------
$ - $ - $ (147) $ 1,964 $ (1,254) $ (1,871)
- - - (675) - -
- - 64 201 111 55
- - 2,449 2,267 2,150 1,877
- - (238) 386 (457) (591)
- - 1,495 365 3 -
(3) - 1,074 (91) (456) 518
3 - (95) (112) 9 4
--------------------------------------- ------------------------------------- -------------------------------------
- - 4,602 4,305 106 (8)
--------------------------------------- ------------------------------------- -------------------------------------
- - (5,295) (4,105) (3,751) (3,047)
- - (37) (686) (29) (203)
- - 263 51 38 207
- - 33 2 - (11)
--------------------------------------- ------------------------------------- -------------------------------------
- - (5,036) (4,738) (3,742) (3,054)
- - - 1,403 - -
--------------------------------------- ------------------------------------- -------------------------------------
- - (5,036) (3,335) (3,742) (3,054)
--------------------------------------- ------------------------------------- -------------------------------------
- - 1,021 (588) 1,242 2,845
- - - - 1,725 -
- - 24 160 587 121
- - (437) (433) (14) (15)
- - (145) (91) 158 212
--------------------------------------- ------------------------------------- -------------------------------------
- - 463 (952) 3,698 3,163
--------------------------------------- ------------------------------------- -------------------------------------
- - 29 18 62 101
- - 122 104 117 16
--------------------------------------- ------------------------------------- -------------------------------------
$ - $ - $ 151 $ 122 $ 179 $ 117
--------------------------------------- ------------------------------------- -------------------------------------
Sprint FON Group
SUMMARY FINANCIAL INFORMATION (1)
(all amounts per share data)
Quarters ended Year-to-date
December 31, December 31,
------------------------------------ ------------------------------------
2001 2000 2001 2000
------------------------------------ ------------------------------------
Diluted earnings per common share (2)
Income from continuing operations - pro forma $ 0.31 $ 0.53 $ 1.60 $ 2.18
Sprint ION losses (0.04) (0.12) (0.38) (0.37)
--------------------------------------------------------------------------------------- ------------------------------------
Income from continuing operations -
excluding one-time items 0.27 0.41 1.22 1.81
One-time items
Restructuring and asset impairments (1.27) (0.30) (1.45) (0.29)
Net gain on sale of Investment - - - 0.05
Benefit Plan Curtailment Gain - - 0.09 -
Litigation Charge (0.02) - (0.02) -
Merger Related Costs - - - (0.12)
---------------------------------------------------------------------------------------- ------------------------------------
Total (1.29) (0.30) (1.38) (0.36)
---------------------------------------------------------------------------------------- ------------------------------------
Income from continuing operations - as reported $ (1.02) $ 0.11 $ (0.16) $ 1.45
------------------------------------ ------------------------------------
(1) Pro forma information is presented as if the Sprint ION termination occurred at the beginning of 2000 and excludes one-time
items. Pro forma results should be viewed in connection with the Consolidated Statements of Operations for the fourth quarter
and years ended December 31 contained in this Press Release.
(2) As the effects of including the incremental shares associated with options and ESPP shares are antidilutive, both basic earnings
per share and diluted earnings per share reflect the same calculation in these condensed statements of consolidated operations
for the fourth quarter and full year ended December 31, 2001.
Sprint FON Group
SUMMARY FINANCIAL INFORMATION (1)
(millions)
Quarters ended Year-to-date
December 31, December 31,
------------------------------ ------------------------------
2001 2000 2001 2000
------------------------------ ------------------------------
Operating Income - pro forma $ 428 $ 758 $ 2,351 $ 3,366
Sprint ION operating loss (57) (160) (538) (532)
--------------------------------------------------------------------------------------------- ------------------------------
Operating income - excluding one-time items 371 598 1,813 2,834
One-time items
Restructuring and asset impairments (1,804) (238) (1,804) (238)
Litigation Charge (24) - (24) -
Merger Related Costs - - - (163)
--------------------------------------------------------------------------------------------- ------------------------------
Total (1,828) (238) (1,828) (401)
--------------------------------------------------------------------------------------------- ------------------------------
Operating income - as reported $ (1,457) $ 360 $ (15) $ 2,433
------------------------------ ------------------------------
EBITDA - pro forma (2) $ 1,032 $ 1,329 $ 4,677 $ 5,554
Sprint ION EBITDA (57) (133) (415) (453)
--------------------------------------------------------------------------------------------- ------------------------------
EBITDA - excluding one-time items 975 1,196 4,262 5,101
One-time items
Restructuring and asset impairments (1,804) (238) (1,804) (238)
Litigation Charge (24) - (24) -
Merger Related Costs - - - (163)
--------------------------------------------------------------------------------------------- ------------------------------
Total (1,828) (238) (1,828) (401)
--------------------------------------------------------------------------------------------- ------------------------------
EBITDA - as reported $ (853) $ 958 $ 2,434 $ 4,700
------------------------------ ------------------------------
(1) Pro forma information is presented as if the Sprint ION termination occurred at the beginning of 2000 and excludes one-time
items. Pro forma results should be viewed in connection with the Consolidated Statements of Operations for the fourth quarter
and years ended December 31 contained in this Press Release.
(2) EBITDA represents operating income or loss plus depreciation and amortization.
Sprint Corporation
PRO FORMA SELECTED OPERATING RESULTS (1)
(millions)
------------------------------------------------------------------------------------------------------------------------------------
Quarters Ended, December 31, September 30, June 30, March 31,
-------------------------------------------------------- ---------------------- ------------------------ -----------------------
2001 2000 2001 2000 2001 2000 2001 2000
-------------------------------------------------------- ---------------------- ------------------------ -----------------------
Global Markets Division (2)
Net operating revenues $ 2,276 $ 2,566 $ 2,497 $ 2,644 $ 2,559 $ 2,686 $ 2,564 $ 2,627
------------------------ --------------------- ------------------------ ----------------------
Operating income (loss) $(1,851) $ 14 $ 41 $ 355 $ 129 $ 365 $ 170 $ 383
------------------------ --------------------- ------------------------ ----------------------
EBITDA (4) $ 187 $ 527 $ 349 $ 621 $ 417 $ 620 $ 443 $ 629
------------------------ --------------------- ------------------------ ----------------------
Sprint FON Group (3)
Net operating revenues $ 4,007 $ 4,392 $ 4,236 $ 4,442 $ 4,306 $ 4,445 $ 4,355 $ 4,404
------------------------ --------------------- ------------------------ ----------------------
Operating income (loss) $(1,400) $ 520 $ 582 $ 853 $ 664 $ 716 $ 677 $ 876
------------------------ --------------------- ------------------------ ----------------------
EBITDA (4) $ 1,032 $ 1,329 $ 1,178 $ 1,405 $ 1,233 $ 1,418 $ 1,234 $ 1,402
------------------------ --------------------- ------------------------ ----------------------
(1) Pro forma information is presented as if the Sprint ION termination occurred at the beginning of 2000.
(2) Results should be viewed in connection with the Selected Operating Results contained in this Press Release
(3) Results should be viewed in connection with the Consolidated Statements of Operations for the years ended December 31
contained in this Press Release.
(4) EBITDA represents operating income or loss plus depreciation, amortization and one-time items.
Sprint Corporation
PCS GROUP
NET CUSTOMER ADDITIONS
(thousands)
Quarter ended December 31, 2001
--------------------------------------------------------------
Direct Resale Affiliate Total
-------------- ------------- ------------ ------------
Operational net additions 1,114 (68) 381 1,427
Purchases (Sales), net - - - -
-----------------------------------------------------------------------------------------------------------------------
Reported net additions 1,114 (68) 381 1,427
--------------------------------------------------------------
Year-to-date December 31, 2001
--------------------------------------------------------------
Direct Resale Affiliate Total
-------------- ------------- ------------ ------------
Operational net additions 4,026 (91) 1,219 5,154
Purchases (Sales), net (14) - 14 -
-----------------------------------------------------------------------------------------------------------------------
Reported net additions 4,012 (91) 1,233 5,154
--------------------------------------------------------------
Ending customers - December 31, 1999 5,723 72 193 5,988
Ending customers - December 31, 2000 9,543 310 809 10,662
Ending customers - December 31, 2001 13,555 219 2,042 15,816
--------------------------------------------------------------
2. News Release Correction. Also on February 4, 2002, Sprint notified PR
Newswire, which distributes Sprint's press releases, of an error in the Business
Outlook portion of Sprint's news release regarding earnings. PR Newswire issued
a news release containing the correction. The correcting news release was as
follows:
In the news release, Sprint (NYSE: FON, PCS) Announces Fourth Quarter and
Full-Year 2001 Results, we are advised by the company that the third sentence of
the second paragraph in the section titled "Business Outlook", should read "to
approach $4.6 billion" rather than "$4.6 million" as originally issued
inadvertently. The corrected section "Business Outlook" follows:
Business Outlook
The following statements are based on current expectations. These
statements are forward-looking, and actual results may differ materially.
Sprint expects FON Group earnings per share, excluding losses for ION, to
approach $1.40 for the full year, which would be at the low end of previous
guidance. The current mean analyst estimate for FON Group earnings is $1.35,
which Sprint believes could include as much as five cents of losses related to
ION. The company currently expects FON Group EBITDA to approach $4.6 billion
for the year 2002. FON Group capital expenditures are expected to be around
$3.4 billion.
Fourth quarter results for the PCS Group and the industry suggest that
growth in the near-term will be slower than anticipated just a few months ago.
Previous estimates for PCS subscriber growth for 2002 of 3.6 million to 3.7
million net customer additions were largely based on what was then a consensus
forecast of incremental industry penetration of about 22 million new users. This
industry consensus is now closer to 17 million. Assuming Sprint maintains a
consistent share of customer acquisitions with this lower industry forecast, PCS
subscriber growth would be forecasted to be approximately 3 million net
additions or slightly better for 2002.
In response to an expected lower level of near-term growth, Sprint expects
to adjust spending and investment to continue focusing on profitability.
Full-year PCS Group EBITDA expectations continue to be approximately $3 billion,
or roughly double 2001 levels.
Full-year 2002 capital expenditures are now expected to be approximately
$3.4 billion, compared to previous guidance of around $3.5 billion. Sprint will
continue to monitor economic developments closely and intends to adjust spending
and capital investment in concert with growth.
Sprint's overall incremental cash requirements in 2002 are now expected to
be approximately $1.7 billion and without any NextWave spectrum requirements,
this would be reduced to about $1.4 billion. Sprint continues to have
flexibility in terms of access to the capital markets and can readily meet its
funding needs. The company also continues to believe financing can be partially
sourced through asset monetization.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SPRINT CORPORATION
Date: February 6, 2002 By: /s/ Michael T. Hyde
Michael T. Hyde
Assistant Secretary