EX-99 2 dex99.htm PRO FORMA CONSOLIDATED STATEMENTS OF OPERATION Pro Forma Consolidated Statements of Operation

Exhibit 99

 

Sprint Nextel Corporation

PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(millions, except share data)

 

Quarters Ended


   September 30,
2005


    June 30,
2005


    March 31,
2005


    December 31,
2004


    September 30,
2004


    June 30,
2004


    March 31,
2004


 

Net Operating Revenues

   $ 11,209     $ 10,978     $ 10,586     $ 10,539     $ 10,349     $ 10,183     $ 9,831  
    


 


 


 


 


 


 


Operating Expenses

                                                        

Costs of services and products

     4,472       4,230       4,094       4,152       4,002       3,851       3,776  

Selling, general and administrative

     3,473       3,160       3,191       3,095       3,045       3,117       2,953  

Depreciation

     1,512       1,500       1,470       1,424       1,603       1,622       1,601  

Amortization

     839       821       822       823       826       826       826  

Restructuring and asset impairments

     38       33       —         46       3,559       96       30  
    


 


 


 


 


 


 


Total operating expenses

     10,334       9,744       9,577       9,540       13,035       9,512       9,186  
    


 


 


 


 


 


 


Operating Income (Loss)

     875       1,234       1,009       999       (2,686 )     671       645  

Interest expense

     (406 )     (405 )     (422 )     (435 )     (446 )     (466 )     (475 )

Premium on early retirement of debt

     —         —         (37 )     (34 )     (72 )     (54 )     (17 )

Other income (expense), net

     205       92       51       39       22       (3 )     7  
    


 


 


 


 


 


 


Income (loss) before income taxes

     674       921       601       569       (3,182 )     148       160  

Income tax (expense) benefit

     (265 )     (328 )     (221 )     (194 )     1,191       (64 )     (56 )
    


 


 


 


 


 


 


Net Income (Loss)

     409       593       380       375       (1,991 )     84       104  

Earnings allocated to participating securities

     —         —         —         —         (3 )     (6 )     —    

Preferred stock dividends paid

     (2 )     (1 )     (2 )     (2 )     (2 )     (1 )     (2 )
    


 


 


 


 


 


 


Earnings (Loss) Applicable to Common Stock

   $ 407     $ 592     $ 378     $ 373     $ (1,996 )   $ 77     $ 102  
    


 


 


 


 


 


 


Diluted Earnings per Common Share - PRO FORMA

                                                        

Diluted earnings (loss) per share

   $ 0.14     $ 0.20     $ 0.13     $ 0.13     $ (0.70 )   $ 0.03     $ 0.03  

Special items

     0.08       0.02       0.01       0.02       0.80       0.03       0.01  
    


 


 


 


 


 


 


Adjusted EPS * (1)

     0.22       0.22       0.14       0.14       0.11       0.06       0.04  
    


 


 


 


 


 


 


Diluted weighted average common shares

     2,976.1       2,950.1       2,944.8       2,928.8       2,868.6       2,931.1       2,927.2  
    


 


 


 


 


 


 


Special Item Reconciliations

                                                        

Operating income (loss) - PRO FORMA

   $ 875     $ 1,234     $ 1,009     $ 999     $ (2,686 )   $ 671     $ 645  

Special items:

                                                        

Restructuring and asset impairments

     38       33       —         46       3,559       96       30  

Merger and integration expense

     325       62       10       —         —         —         —    

Hurricane charges (excluding asset impairments)

     82       —         —         —         30       —         —    

MCI (WorldCom) bad debt

     —         —         —         —         —         (14 )     —    
    


 


 


 


 


 


 


Adjusted operating income *

     1,320       1,329       1,019       1,045       903       753       675  

Depreciation and amortization

     2,351       2,321       2,292       2,247       2,429       2,448       2,427  
    


 


 


 


 


 


 


Adjusted OIBDA *

   $ 3,671     $ 3,650     $ 3,311     $ 3,292     $ 3,332     $ 3,201     $ 3,102  
    


 


 


 


 


 


 


Net income (loss) - PRO FORMA

   $ 409     $ 593     $ 380     $ 375     $ (1,991 )   $ 84     $ 104  

Special items (net of tax):

                                                        

Total special items included in operating income

     284       58       6       30       2,253       49       19  

Gains on investment activities and equity in earnings

     (90 )     —         —         —         —         —         —    

Motorola consent fee

     50       —         —         —         —         —         —    

Premium on early retirement of debt

     —         —         22       20       46       39       10  
    


 


 


 


 


 


 


Adjusted net income *

   $ 653     $ 651     $ 408     $ 425     $ 308     $ 172     $ 133  
    


 


 


 


 


 


 


 

Pro Forma consolidated statements of operations have been presented as if the Sprint Nextel merger occurred at the beginning of each period presented.

 

* Financial Measures

 

Sprint Nextel provides financial measures generated using generally accepted accounting principles (GAAP) and using adjustments to 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 non-GAAP measures are not measurements under accounting principles generally accepted in the United States. These measurements should be considered in addition to, but not as a substitute for, the information contained in our financial statements 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 include the following:

 

Adjusted Operating Income (Loss) is defined as operating income plus special items. This non-GAAP measure should be used in addition to, but not as a substitute for, the analysis provided in the statement of operations. We believe this measure is useful because it allows investors to evaluate our operating results for different periods on a more comparable basis by excluding special items.

 

Adjusted Net Income (Loss) and Adjusted Earnings per Share (EPS) or Adjusted Loss per Share are defined as net income or loss plus special items, net of tax and the diluted EPS calculated thereon. These non-GAAP measures should be used in addition to, but not as a substitute for, the analysis provided in the statement of operations. We believe that these measures are useful because they allow investors to evaluate our performance for different periods on a more comparable basis by excluding items that do not relate to the ongoing operations of our businesses.

 

Adjusted OIBDA is defined as operating income plus depreciation, amortization and special items. Although we have used substantively similar measures in the past, which we called “Adjusted EBITDA,” we now use the term Adjusted OIBDA to describe the measure we use as it more clearly reflects the elements of the measure. These non-GAAP measures should be used in addition to, but not as a substitute for, the analysis provided in the statement of operations. We believe that Adjusted OIBDA provides 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 generally accepted accounting principles, these expenses primarily represent non-cash current period allocation of costs associated with long-lived assets acquired or constructed in prior periods. Adjusted OIBDA is a calculation 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.

 

(1) Totals may not foot due to rounding.