XML 26 R22.htm IDEA: XBRL DOCUMENT v3.19.3
Guarantor Financial Information
6 Months Ended
Sep. 30, 2019
Condensed Financial Information Disclosure [Abstract]  
Guarantor Financial Information
Guarantor Financial Information
On September 11, 2013, Sprint Corporation issued $2.25 billion aggregate principal amount of 7.250% notes due 2021 and $4.25 billion aggregate principal amount of 7.875% notes due 2023 in a private placement transaction with registration rights. On December 12, 2013, Sprint Corporation issued $2.5 billion aggregate principal amount of 7.125% notes due 2024 in a private placement transaction with registration rights. Each of these issuances is fully and unconditionally guaranteed by Sprint Communications (Subsidiary Guarantor), which is a 100% owned subsidiary of Sprint Corporation (Parent/Issuer). In connection with the foregoing, in November 2014, the Company and Sprint Communications completed an offer to exchange the notes for a new issue of substantially identical exchange notes registered under the Securities Act of 1933. We did not receive any proceeds from this exchange offer. In addition, on February 24, 2015, Sprint Corporation issued $1.5 billion aggregate principal amount of 7.625% notes due 2025, and on February 20, 2018, Sprint Corporation issued $1.5 billion aggregate principal amount of 7.625% senior notes due 2026, which are fully and unconditionally guaranteed by Sprint Communications.
During the six-month periods ended September 30, 2019 and 2018, there were non-cash equity distributions from the non-guarantor subsidiaries to Subsidiary Guarantor of approximately $31 million and $1.3 billion, respectively, as a result of organizational restructuring for tax purposes. As of September 30, 2019, there were $23.6 billion of intercompany notes issued by the Subsidiary Guarantor to the non-guarantor subsidiaries. The notes are subordinated to all unaffiliated third-party obligations of Sprint Corporation and its subsidiaries.
Under the Subsidiary Guarantor's secured revolving bank credit facility, the Subsidiary Guarantor is currently restricted from paying cash dividends to the Parent/Issuer or any non-guarantor subsidiary because the ratio of total indebtedness to adjusted EBITDA (each as defined in the applicable agreement) exceeds 2.5 to 1.0.
Sprint has a Receivables Facility providing for the sale of eligible wireless service, installment and certain future lease receivables. In October 2016, Sprint transferred certain directly held and third-party leased spectrum licenses to wholly-owned bankruptcy-remote special purpose entities as part of the spectrum financing transaction. In connection with both the Receivables Facility and the spectrum financing transactions, Sprint formed certain wholly-owned bankruptcy-remote subsidiaries that are included in the non-guarantor subsidiaries' condensed consolidated financial information. Each of these is a separate legal entity with its own separate creditors who will be entitled, prior to and upon its liquidation, to be satisfied out of its assets prior to any assets becoming available to Sprint. See Note 8. Long-Term Debt, Financing and Finance Lease Obligations for additional information.
We have accounted for investments in subsidiaries using the equity method. Presented below is the condensed consolidating financial information.
CONDENSED CONSOLIDATING BALANCE SHEET
 
September 30, 2019
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
ASSETS
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
3,876

 
$
386

 
$

 
$
4,262

Short-term investments

 
61

 

 

 
61

Accounts and notes receivable, net
96

 
220

 
3,723

 
(316
)
 
3,723

Current portion of notes receivable from consolidated affiliates

 
424

 

 
(424
)
 

Device and accessory inventory

 

 
963

 

 
963

Prepaid expenses and other current assets

 
9

 
1,188

 

 
1,197

Total current assets
96

 
4,590

 
6,260

 
(740
)
 
10,206

Investments in subsidiaries
25,567

 
17,144

 

 
(42,711
)
 

Property, plant and equipment, net

 

 
20,562

 

 
20,562

Costs to acquire a customer contract

 

 
1,712

 

 
1,712

Operating lease right-of-use assets

 

 
6,885

 

 
6,885

Due from consolidated affiliates
290

 
5,215

 

 
(5,505
)
 

Notes receivable from consolidated affiliates
11,895

 
23,143

 

 
(35,038
)
 

Intangible assets
 
 
 
 
 
 
 
 
 
Goodwill

 

 
4,598

 

 
4,598

FCC licenses and other

 

 
41,481

 

 
41,481

Definite-lived intangible assets, net

 

 
1,413

 

 
1,413

Other assets

 
40

 
1,031

 

 
1,071

Total assets
$
37,848

 
$
50,132

 
$
83,942

 
$
(83,994
)
 
$
87,928

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$

 
$
3,918

 
$

 
$
3,918

Accrued expenses and other current liabilities
103

 
228

 
3,183

 
(316
)
 
3,198

Current operating lease liabilities

 

 
1,835

 

 
1,835

Current portion of long-term debt, financing and finance lease obligations

 
2,574

 
1,527

 

 
4,101

Current portion of notes payable to consolidated affiliates

 

 
424

 
(424
)
 

Total current liabilities
103

 
2,802

 
10,887

 
(740
)
 
13,052

Long-term debt, financing and finance lease obligations
11,895

 
9,105

 
12,268

 

 
33,268

Long-term operating lease liabilities

 

 
5,667

 

 
5,667

Notes payable to consolidated affiliates

 
11,895

 
23,143

 
(35,038
)
 

Deferred tax liabilities

 

 
7,489

 

 
7,489

Other liabilities

 
763

 
1,792

 

 
2,555

Due to consolidated affiliates

 

 
5,505

 
(5,505
)
 

Total liabilities
11,998

 
24,565

 
66,751

 
(41,283
)
 
62,031

Commitments and contingencies

 

 

 

 

Total stockholders' equity
25,850

 
25,567

 
17,144

 
(42,711
)
 
25,850

Noncontrolling interests

 

 
47

 

 
47

Total equity
25,850

 
25,567

 
17,191

 
(42,711
)
 
25,897

Total liabilities and equity
$
37,848

 
$
50,132

 
$
83,942

 
$
(83,994
)
 
$
87,928

CONDENSED CONSOLIDATING BALANCE SHEET
 
March 31, 2019
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
ASSETS
Current assets:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
$

 
$
6,605

 
$
377

 
$

 
$
6,982

Short-term investments

 
67

 

 

 
67

Accounts and notes receivable, net
96

 
233

 
3,554

 
(329
)
 
3,554

Current portion of notes receivable from consolidated affiliates

 
424

 

 
(424
)
 

Device and accessory inventory

 

 
999

 

 
999

Prepaid expenses and other current assets

 
9

 
1,280

 

 
1,289

Total current assets
96

 
7,338

 
6,210

 
(753
)
 
12,891

Investments in subsidiaries
25,785

 
17,363

 

 
(43,148
)
 

Property, plant and equipment, net

 

 
21,201

 

 
21,201

Costs to acquire a customer contract

 

 
1,559

 

 
1,559

Due from consolidated affiliates
288

 
2,418

 

 
(2,706
)
 

Notes receivable from consolidated affiliates
11,883

 
23,567

 

 
(35,450
)
 

Intangible assets
 
 
 
 
 
 
 
 
 
Goodwill

 

 
4,598

 

 
4,598

FCC licenses and other

 

 
41,465

 

 
41,465

Definite-lived intangible assets, net

 

 
1,769

 

 
1,769

Other assets

 
52

 
1,066

 

 
1,118

Total assets
$
38,052

 
$
50,738

 
$
77,868

 
$
(82,057
)
 
$
84,601

 
 
 
 
 
 
 
 
 
 
LIABILITIES AND EQUITY
Current liabilities:
 
 
 
 
 
 
 
 
 
Accounts payable
$

 
$

 
$
3,961

 
$

 
$
3,961

Accrued expenses and other current liabilities
97

 
230

 
3,599

 
(329
)
 
3,597

Current portion of long-term debt, financing and finance lease obligations

 
1,373

 
3,184

 

 
4,557

Current portion of notes payable to consolidated affiliates

 

 
424

 
(424
)
 

Total current liabilities
97

 
1,603


11,168


(753
)

12,115

Long-term debt, financing and finance lease obligations
11,883

 
10,660

 
12,823

 

 
35,366

Notes payable to consolidated affiliates

 
11,883

 
23,567

 
(35,450
)
 

Deferred tax liabilities

 

 
7,556

 

 
7,556

Other liabilities

 
807

 
2,630

 

 
3,437

Due to consolidated affiliates

 

 
2,706

 
(2,706
)
 

Total liabilities
11,980

 
24,953

 
60,450

 
(38,909
)
 
58,474

Commitments and contingencies

 

 

 

 

Total stockholders' equity
26,072

 
25,785

 
17,363

 
(43,148
)
 
26,072

Noncontrolling interests

 

 
55

 

 
55

Total equity
26,072

 
25,785

 
17,418

 
(43,148
)
 
26,127

Total liabilities and equity
$
38,052

 
$
50,738

 
$
77,868

 
$
(82,057
)
 
$
84,601


CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME
 
Three Months Ended September 30, 2019
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Net operating revenues:
 
 
 
 
 
 
 
 
 
Service
$

 
$

 
$
5,273

 
$

 
$
5,273

Equipment sales

 

 
1,192

 

 
1,192

Equipment rentals

 

 
1,330

 

 
1,330

 

 

 
7,795

 

 
7,795

Net operating expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)

 

 
1,775

 

 
1,775

Cost of equipment sales

 

 
1,359

 

 
1,359

Cost of equipment rentals (exclusive of depreciation below)

 

 
240

 

 
240

Selling, general and administrative

 

 
1,936

 

 
1,936

Depreciation - network and other

 

 
1,065

 

 
1,065

Depreciation - equipment rentals

 

 
1,056

 

 
1,056

Amortization

 

 
106

 

 
106

Other, net

 

 
21

 

 
21

 

 

 
7,558

 

 
7,558

Operating income

 

 
237

 

 
237

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
226

 
509

 
118

 
(837
)
 
16

Interest expense
(226
)
 
(522
)
 
(683
)
 
837

 
(594
)
(Losses) earnings of subsidiaries
(274
)
 
(260
)
 

 
534

 

Other expense, net

 
(1
)
 
(1
)
 

 
(2
)
 
(274
)
 
(274
)
 
(566
)
 
534

 
(580
)
(Loss) income before income taxes
(274
)
 
(274
)
 
(329
)
 
534

 
(343
)
Income tax benefit

 

 
64

 

 
64

Net (loss) income
(274
)
 
(274
)
 
(265
)
 
534

 
(279
)
Less: Net loss attributable to noncontrolling interests

 

 
5

 

 
5

Net (loss) income attributable to Sprint Corporation
(274
)
 
(274
)
 
(260
)
 
534

 
(274
)
Other comprehensive (loss) income
(4
)
 
(4
)
 
1

 
3

 
(4
)
Comprehensive (loss) income
$
(278
)
 
$
(278
)
 
$
(264
)
 
$
537

 
$
(283
)
CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
 
Three Months Ended September 30, 2018
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Net operating revenues:
 
 
 
 
 
 
 
 
 
Service
$

 
$

 
$
5,762

 
$

 
$
5,762

Equipment sales

 

 
1,418

 

 
1,418

Equipment rentals

 

 
1,253

 

 
1,253

 

 

 
8,433

 

 
8,433

Net operating expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)

 

 
1,694

 

 
1,694

Cost of equipment sales

 

 
1,517

 

 
1,517

Cost of equipment rentals (exclusive of depreciation below)

 

 
151

 

 
151

Selling, general and administrative

 

 
1,861

 

 
1,861

Depreciation - network and other

 

 
1,021

 

 
1,021

Depreciation - equipment rentals

 

 
1,181

 

 
1,181

Amortization

 

 
159

 

 
159

Other, net

 

 
71

 

 
71

 

 

 
7,655

 

 
7,655

Operating income

 

 
778

 

 
778

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
226

 
545

 
340

 
(1,062
)
 
49

Interest expense
(226
)
 
(638
)
 
(831
)
 
1,062

 
(633
)
Earnings (losses) of subsidiaries
196

 
267

 

 
(463
)
 

Other income, net

 
22

 
8

 

 
30

 
196

 
196

 
(483
)
 
(463
)
 
(554
)
Income (loss) before income taxes
196

 
196

 
295

 
(463
)
 
224

Income tax expense

 

 
(17
)
 

 
(17
)
Net income (loss)
196

 
196

 
278

 
(463
)
 
207

Less: Net income attributable to noncontrolling interests

 

 
(11
)
 

 
(11
)
Net income (loss) attributable to Sprint Corporation
196

 
196

 
267

 
(463
)
 
196

Other comprehensive income (loss)
9

 
9

 
3

 
(12
)
 
9

Comprehensive income (loss)
$
205

 
$
205

 
$
281

 
$
(475
)
 
$
216

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME
 
Six Months Ended September 30, 2019
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Net operating revenues:
 
 
 
 
 
 
 
 
 
Service
$

 
$

 
$
10,836

 
$

 
$
10,836

Equipment sales

 

 
2,412

 

 
2,412

Equipment rentals

 

 
2,689

 

 
2,689

 

 

 
15,937

 

 
15,937

Net operating expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)

 

 
3,485

 

 
3,485

Cost of equipment sales

 

 
2,700

 

 
2,700

Cost of equipment rentals (exclusive of depreciation below)

 

 
465

 

 
465

Selling, general and administrative

 

 
3,843

 

 
3,843

Depreciation - network and other

 

 
2,185

 

 
2,185

Depreciation - equipment rentals

 

 
2,085

 

 
2,085

Amortization

 

 
224

 

 
224

Other, net

 

 
258

 

 
258

 

 

 
15,245

 

 
15,245

Operating income

 

 
692

 

 
692

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
452

 
1,035

 
259

 
(1,700
)
 
46

Interest expense
(452
)
 
(1,072
)
 
(1,389
)
 
1,700

 
(1,213
)
(Losses) earnings of subsidiaries
(385
)
 
(346
)
 

 
731

 

Other expense, net

 
(2
)
 
(2
)
 

 
(4
)
 
(385
)
 
(385
)
 
(1,132
)
 
731

 
(1,171
)
(Loss) income before income taxes
(385
)
 
(385
)
 
(440
)
 
731

 
(479
)
Income tax benefit

 

 
86

 

 
86

Net (loss) income
(385
)
 
(385
)
 
(354
)
 
731

 
(393
)
Less: Net loss attributable to noncontrolling interests

 

 
8

 

 
8

Net (loss) income attributable to Sprint Corporation
(385
)
 
(385
)
 
(346
)
 
731

 
(385
)
Other comprehensive (loss) income
(26
)
 
(26
)
 
1

 
25

 
(26
)
Comprehensive (loss) income
$
(411
)
 
$
(411
)
 
$
(353
)
 
$
756

 
$
(419
)



CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)
 
Six Months Ended September 30, 2018
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Net operating revenues:
 
 
 
 
 
 
 
 
 
Service
$

 
$

 
$
11,502

 
$

 
$
11,502

Equipment sales

 

 
2,591

 

 
2,591

Equipment rentals

 

 
2,465

 

 
2,465

 

 

 
16,558

 

 
16,558

Net operating expenses:
 
 
 
 
 
 
 
 
 
Cost of services (exclusive of depreciation and amortization included below)

 

 
3,371

 

 
3,371

Cost of equipment sales

 

 
2,787

 

 
2,787

Cost of equipment rentals (exclusive of depreciation below)

 

 
275

 

 
275

Selling, general and administrative

 

 
3,728

 

 
3,728

Depreciation - network and other

 

 
2,044

 

 
2,044

Depreciation - equipment rentals

 

 
2,317

 

 
2,317

Amortization

 

 
330

 

 
330

Other, net

 

 
113

 

 
113

 

 

 
14,965

 

 
14,965

Operating income

 

 
1,593

 

 
1,593

Other income (expense):
 
 
 
 
 
 
 
 
 
Interest income
452

 
1,092

 
342

 
(1,795
)
 
91

Interest expense
(452
)
 
(1,209
)
 
(1,404
)
 
1,795

 
(1,270
)
Earnings (losses) of subsidiaries
372

 
469

 

 
(841
)
 

Other income, net

 
20

 
10

 

 
30

 
372

 
372

 
(1,052
)
 
(841
)
 
(1,149
)
Income (loss) before income taxes
372

 
372

 
541

 
(841
)
 
444

Income tax expense

 

 
(64
)
 

 
(64
)
Net income (loss)
372

 
372

 
477

 
(841
)
 
380

Less: Net income attributable to noncontrolling interests

 

 
(8
)
 

 
(8
)
Net income (loss) attributable to Sprint Corporation
$
372

 
$
372

 
$
469

 
$
(841
)
 
$
372

Other comprehensive income (loss)
5

 
5

 
(10
)
 
5

 
5

Comprehensive income (loss)
$
377

 
$
377

 
$
467

 
$
(836
)
 
$
385




CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 
Six Months Ended September 30, 2019
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$

 
$
(88
)
 
$
4,898

 
$

 
$
4,810

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Capital expenditures - network and other

 

 
(2,298
)
 

 
(2,298
)
Capital expenditures - leased devices

 

 
(3,302
)
 

 
(3,302
)
Expenditures relating to FCC licenses

 

 
(16
)
 

 
(16
)
Proceeds from sales and maturities of short-term investments

 
67

 

 

 
67

Purchases of short-term investments

 
(61
)
 

 

 
(61
)
Change in amounts due from/due to consolidated affiliates
33

 
(2,743
)
 

 
2,710

 

Proceeds from sales of assets and FCC licenses

 

 
599

 

 
599

Proceeds from intercompany note advance to consolidated affiliate

 
424

 

 
(424
)
 

Other, net

 
3

 
(12
)
 

 
(9
)
Net cash provided by (used in) investing activities
33

 
(2,310
)
 
(5,029
)
 
2,286

 
(5,020
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from debt and financings

 

 
3,364

 

 
3,364

Repayments of debt, financing and finance lease obligations

 
(330
)
 
(5,496
)
 

 
(5,826
)
Debt financing costs

 
(2
)
 
(10
)
 

 
(12
)
Proceeds from issuance of common stock, net
(33
)
 

 

 

 
(33
)
Change in amounts due from/due to consolidated affiliates

 

 
2,710

 
(2,710
)
 

Repayments of intercompany note advance from parent

 

 
(424
)
 
424

 

Net cash (used in) provided by financing activities
(33
)
 
(332
)
 
144

 
(2,286
)
 
(2,507
)
Net (decrease) increase in cash, cash equivalents and restricted cash

 
(2,730
)
 
13

 

 
(2,717
)
Cash, cash equivalents and restricted cash, beginning of period

 
6,606

 
457

 

 
7,063

Cash, cash equivalents and restricted cash, end of period
$

 
$
3,876

 
$
470

 
$

 
$
4,346


CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 
Six Months Ended September 30, 2018
 
Parent/Issuer
 
Subsidiary Guarantor
 
Non-Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
(in millions)
Cash flows from operating activities:
 
 
 
 
 
 
 
 
 
Net cash (used in) provided by operating activities
$

 
$
(209
)
 
$
5,566

 
$

 
$
5,357

Cash flows from investing activities:
 
 
 
 
 
 
 
 
 
Capital expenditures - network and other

 

 
(2,398
)
 

 
(2,398
)
Capital expenditures - leased devices

 

 
(3,524
)
 

 
(3,524
)
Expenditures relating to FCC licenses

 

 
(70
)
 

 
(70
)
Proceeds from sales and maturities of short-term investments

 
4,002

 

 

 
4,002

Purchases of short-term investments

 
(4,834
)
 

 

 
(4,834
)
Change in amounts due from/due to consolidated affiliates
(248
)
 
(320
)
 

 
568

 

Proceeds from sales of assets and FCC licenses

 

 
272

 

 
272

Proceeds from deferred purchase price from sale of receivables

 

 
223

 

 
223

Proceeds from intercompany note advance to consolidated affiliate

 
424

 

 
(424
)
 

Other, net

 

 
42

 

 
42

Net cash (used in) provided by investing activities
(248
)
 
(728
)
 
(5,455
)
 
144

 
(6,287
)
Cash flows from financing activities:
 
 
 
 
 
 
 
 
 
Proceeds from debt and financings

 

 
2,944

 

 
2,944

Repayments of debt, financing and finance lease obligations

 
(20
)
 
(2,908
)
 

 
(2,928
)
Debt financing costs
(28
)
 
(9
)
 
(211
)
 

 
(248
)
Proceeds from issuance of common stock, net
276

 

 

 

 
276

Change in amounts due from/due to consolidated affiliates

 

 
568

 
(568
)
 

Repayments of intercompany note advance from parent

 

 
(424
)
 
424

 

Net cash provided by (used in) financing activities
248

 
(29
)
 
(31
)
 
(144
)
 
44

Net (decrease) increase in cash, cash equivalents and restricted cash

 
(966
)
 
80

 

 
(886
)
Cash, cash equivalents and restricted cash, beginning of period

 
6,222

 
437

 

 
6,659

Cash, cash equivalents and restricted cash, end of period
$

 
$
5,256

 
$
517

 
$

 
$
5,773