
Note 15.	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, Inc. (Subsidiary Guarantor), which is a 100 percent owned subsidiary of Sprint Corporation (Parent/Issuer). In connection with the foregoing, the registration rights agreements with respect to the notes required the Company and Sprint Communications, Inc. to use their reasonable best efforts to cause an offer to exchange the notes for a new issue of substantially identical exchange notes registered under the Securities Act of 1933. Accordingly, in November 2014, we completed an exchange offer for these notes in compliance with our registration obligations. 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, which are fully and unconditionally guaranteed by Sprint Communications, Inc.

During the three-month period ended June 30, 2016, there was a non-cash equity contribution from the Subsidiary Guarantor to the non-guarantor subsidiaries as a result of organizational restructuring for tax purposes in the amount of $563 million.

Under the Subsidiary Guarantor's revolving bank credit facility and certain other finance agreements, the Subsidiary Guarantor is currently restricted from paying cash dividends to the Parent/Issuer 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 November 2015, Sprint also entered into the Tranche 1 transaction to sell and leaseback certain leased devices. In April 2016, Sprint entered into the Tranche 2 transaction to sell and leaseback certain leased devices and a Network Equipment Sale-Leaseback to sell and leaseback certain network equipment. In connection with the Receivables Facility, Tranches 1 and 2 and the Network Equipment Sale-Leaseback, Sprint formed certain wholly-owned consolidated bankruptcy-remote SPEs and SPE Lessees that are included in the non-guarantor subsidiaries condensed consolidated financial information. Each SPE and SPE Lessee is a separate legal entity with its own separate creditors who will be entitled, prior to and upon the liquidation of the SPE or SPE Lessee, to be satisfied out of the SPE or SPE Lessee’s assets prior to any assets in the SPE and SPE Lessee becoming available to Sprint (see Note 3. Funding Sources).

We have accounted for investments in subsidiaries using the equity method. Presented below is the condensed consolidating financial information.

CONDENSED CONSOLIDATING BALANCE SHEET



	As of June 30, 2016
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	3,338	$	442	$	—		$	3,780
Short-term investments	—		1,269		35		—			1,304
Accounts and notes receivable, net	196		—		1,113		(196		)	1,113
Device and accessory inventory	—		—		816		—			816
Prepaid expenses and other current assets	—		15		1,934		—			1,949
Total current assets	196		4,622		4,340		(196		)	8,962
Investments in subsidiaries	19,502		23,727		—		(43,229		)	—
Property, plant and equipment, net	—		—		19,715		—			19,715
Due from consolidated affiliate	42		17,055		—		(17,097		)	—
Note receivable from consolidated affiliate	10,381		272		—		(10,653		)	—
Intangible assets
Goodwill	—		—		6,575		—			6,575
FCC licenses and other	—		—		40,175		—			40,175
Definite-lived intangible assets, net	—		—		4,157		—			4,157
Other assets	—		197		614		—			811
Total assets	$	30,121	$	45,873	$	75,576	$	(71,175	)	$	80,395

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	1,841	$	—		$	1,841
Accrued expenses and other current liabilities	238		571		3,632		(196		)	4,245
Current portion of long-term debt, financing and capital lease obligations	—		3,045		2,558		—			5,603
Total current liabilities	238		3,616		8,031		(196		)	11,689
Long-term debt, financing and capital lease obligations	10,381		11,447		9,526		—			31,354
Deferred tax liabilities	—		—		14,006		—			14,006
Note payable due to consolidated affiliate	—		10,381		272		(10,653		)	—
Other liabilities	—		927		2,917		—			3,844
Due to consolidated affiliate	—		—		17,097		(17,097		)	—
Total liabilities	10,619		26,371		51,849		(27,946		)	60,893
Commitments and contingencies
Total stockholders' equity	19,502		19,502		23,727		(43,229		)	19,502
Total liabilities and stockholders' equity	$	30,121	$	45,873	$	75,576	$	(71,175	)	$	80,395

CONDENSED CONSOLIDATING BALANCE SHEET



	As of March 31, 2016
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	2,154	$	487	$	—		$	2,641
Accounts and notes receivable, net	87		27		1,099		(114		)	1,099
Device and accessory inventory	—		—		1,173		—			1,173
Prepaid expenses and other current assets	—		12		1,908		—			1,920
Total current assets	87		2,193		4,667		(114		)	6,833
Investments in subsidiaries	19,783		23,129		—		(42,912		)	—
Property, plant and equipment, net	—		—		20,297		—			20,297
Due from consolidated affiliate	50		19,518		—		(19,568		)	—
Note receivable from consolidated affiliate	10,377		245		—		(10,622		)	—
Intangible assets
Goodwill	—		—		6,575		—			6,575
FCC licenses and other	—		—		40,073		—			40,073
Definite-lived intangible assets, net	—		—		4,469		—			4,469
Other assets	—		1,127		620		(1,019		)	728
Total assets	$	30,297	$	46,212	$	76,701	$	(74,235	)	$	78,975

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	2,899	$	—		$	2,899
Accrued expenses and other current liabilities	137		531		3,820		(114		)	4,374
Current portion of long-term debt, financing and capital lease obligations	—		3,065		1,625		—			4,690
Total current liabilities	137		3,596		8,344		(114		)	11,963
Long-term debt, financing and capital lease obligations	10,377		11,495		8,415		(1,019		)	29,268
Deferred tax liabilities	—		—		13,959		—			13,959
Note payable due to consolidated affiliate	—		10,377		245		(10,622		)	—
Other liabilities	—		961		3,041		—			4,002
Due to consolidated affiliate	—		—		19,568		(19,568		)	—
Total liabilities	10,514		26,429		53,572		(31,323		)	59,192
Commitments and contingencies
Total stockholders' equity	19,783		19,783		23,129		(42,912		)	19,783
Total liabilities and stockholders' equity	$	30,297	$	46,212	$	76,701	$	(74,235	)	$	78,975

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME



	For the Three Months Ended June 30, 2016
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues	$	—		$	—		$	8,012		$	—		$	8,012
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			2,099			—			2,099
Cost of products (exclusive of depreciation and amortization included below)	—			—			1,419			—			1,419
Selling, general and administrative	—			—			1,917			—			1,917
Severance and exit costs	—			—			16			—			16
Depreciation	—			—			1,680			—			1,680
Amortization	—			—			287			—			287
Other, net	—			—			233			—			233
	—			—			7,651			—			7,651
Operating income	—			—			361			—			361
Other income (expense):
Interest income	198			28			3			(219		)	10
Interest expense	(198		)	(423		)	(213		)	219			(615		)
(Losses) earnings of subsidiaries	(302		)	94			—			208			—
Other expense, net	—			(1		)	(1		)	—			(2		)
	(302		)	(302		)	(211		)	208			(607		)
(Loss) income before income taxes	(302		)	(302		)	150			208			(246		)
Income tax expense	—			—			(56		)	—			(56		)
Net (loss) income	(302		)	(302		)	94			208			(302		)
Other comprehensive (loss) income	(1		)	(1		)	1			—			(1		)
Comprehensive (loss) income	$	(303	)	$	(303	)	$	95		$	208		$	(303	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME



	For the Three Months Ended June 30, 2015
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues	$	—		$	—		$	8,027		$	—		$	8,027
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			2,393			—			2,393
Cost of products (exclusive of depreciation and amortization included below)	—			—			1,365			—			1,365
Selling, general and administrative	—			—			2,187			—			2,187
Severance and exit costs	—			—			13			—			13
Depreciation	—			—			1,241			—			1,241
Amortization	—			—			347			—			347
Other, net	—			—			(20		)	—			(20		)
	—			—			7,526			—			7,526
Operating income	—			—			501			—			501
Other income (expense):
Interest income	198			39			1			(235		)	3
Interest expense	(198		)	(407		)	(172		)	235			(542		)
(Losses) earnings of subsidiaries	(20		)	348			—			(328		)	—
Other income, net	—			—			1			—			1
	(20		)	(20		)	(170		)	(328		)	(538		)
(Loss) income before income taxes	(20		)	(20		)	331			(328		)	(37		)
Income tax benefit	—			—			17			—			17
Net (loss) income	(20		)	(20		)	348			(328		)	(20		)
Other comprehensive income (loss)	4			4			4			(8		)	4
Comprehensive (loss) income	$	(16	)	$	(16	)	$	352		$	(336	)	$	(16	)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	For the Three Months Ended June 30, 2016
	Parent/Issuer		Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	—	$	(337	)	$	943		$	(64	)	$	542
Cash flows from investing activities:
Capital expenditures - network and other	—		—			(473		)	—			(473		)
Capital expenditures - leased devices	—		—			(405		)	—			(405		)
Expenditures relating to FCC licenses	—		—			(15		)	—			(15		)
Purchases of short-term investments	—		(1,269		)	(35		)	—			(1,304		)
Change in amounts due from/due to consolidated affiliates	—		2,924			—			(2,924		)	—
Proceeds from sales of assets and FCC licenses	—		—			27			—			27
Intercompany note advance to consolidated affiliate	—		(50		)	—			50			—
Proceeds from intercompany note advance to consolidated affiliate	—		24			—			(24		)	—
Other, net	—		—			(25		)	—			(25		)
Net cash provided by (used in) investing activities	—		1,629			(926		)	(2,898		)	(2,195		)
Cash flows from financing activities:
Proceeds from debt and financings	—		—			3,255			—			3,255
Repayments of debt, financing and capital lease obligations	—		—			(294		)	—			(294		)
Debt financing costs	—		(110		)	(65		)	—			(175		)
Intercompany dividends paid to parent	—		—			(64		)	64			—
Change in amounts due from/due to consolidated affiliates	—		—			(2,924		)	2,924			—
Intercompany note advance from parent	—		—			50			(50		)	—
Repayments of intercompany note advance from parent	—		—			(24		)	24			—
Other, net	—		2			4			—			6
Net cash (used in) provided by financing activities	—		(108		)	(62		)	2,962			2,792
Net increase (decrease) in cash and cash equivalents	—		1,184			(45		)	—			1,139
Cash and cash equivalents, beginning of period	—		2,154			487			—			2,641
Cash and cash equivalents, end of period	$	—	$	3,338		$	442		$	—		$	3,780

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	For the Three Months Ended June 30, 2015
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	—		$	(405	)	$	533		$	—		$	128
Cash flows from investing activities:
Capital expenditures - network and other	—			—			(1,802		)	—			(1,802		)
Capital expenditures - leased devices	—			—			(544		)	—			(544		)
Expenditures relating to FCC licenses	—			—			(26		)	—			(26		)
Proceeds from sales and maturities of short-term investments	—			118			20			—			138
Purchases of short-term investments	—			(135		)	(40		)	—			(175		)
Change in amounts due from/due to consolidated affiliates	1			(1,498		)	—			1,497			—
Proceeds from sales of assets and FCC licenses	—			—			1			—			1
Intercompany note advance to consolidated affiliate	—			(55		)	—			55			—
Other, net	—			—			(3		)	—			(3		)
Net cash provided by (used in) investing activities	1			(1,570		)	(2,394		)	1,552			(2,411		)
Cash flows from financing activities:
Proceeds from debt and financings	—			—			346			—			346
Repayments of debt, financing and capital lease obligations	—			—			(26		)	—			(26		)
Debt financing costs	(1		)	—			—			—			(1		)
Change in amounts due from/due to consolidated affiliates	—			—			1,497			(1,497		)	—
Intercompany note advance from parent	—			—			55			(55		)	—
Other, net	—			4			10			—			14
Net cash (used in) provided by financing activities	(1		)	4			1,882			(1,552		)	333
Net (decrease) increase in cash and cash equivalents	—			(1,971		)	21			—			(1,950		)
Cash and cash equivalents, beginning of period	—			3,492			518			—			4,010
Cash and cash equivalents, end of period	$	—		$	1,521		$	539		$	—		$	2,060