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, which are fully and unconditionally guaranteed by Sprint Communications.

During the six-month periods ended September 30, 2017 and 2016, there were non-cash equity contributions from the Subsidiary Guarantor to the Non-Guarantor Subsidiaries as a result of organizational restructuring for tax purposes of $231 million and $563 million, respectively. We also replaced $11.1 billion of short-term payables with intercompany notes issued by the Subsidiary Guarantor to the Non-Guarantor Subsidiaries during the six-month period ended September 30, 2017. 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 April 2016, Sprint entered into the Tranche 2 transaction to sell and leaseback certain leased devices and a separate network equipment sale-leaseback transaction to sell and leaseback certain network equipment. 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 each of the Receivables Facility, Tranche 2, and the spectrum financing transaction, Sprint formed certain wholly-owned bankruptcy-remote subsidiaries that are included in the non-guarantor subsidiaries' condensed consolidated financial information. In addition, the bankruptcy-remote special purpose entities formed in connection with the network equipment sale-leaseback transaction, but which are not Sprint subsidiaries, 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 Capital Lease Obligations).

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, 2017
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	4,319	$	483	$	—		$	4,802
Short-term investments	—		1,610		—		—			1,610
Accounts and notes receivable, net	87		236		4,118		(323		)	4,118
Current portion of notes receivable from consolidated affiliate	—		424		—		(424		)	—
Device and accessory inventory	—		—		751		—			751
Prepaid expenses and other current assets	—		12		642		—			654
Total current assets	87		6,601		5,994		(747		)	11,935
Investments in subsidiaries	19,012		24,684		—		(43,696		)	—
Property, plant and equipment, net	—		—		18,901		—			18,901
Due from consolidated affiliates	9		204		—		(213		)	—
Notes receivable from consolidated affiliate	10,402		11,256		—		(21,658		)	—
Intangible assets
Goodwill	—		—		6,578		—			6,578
FCC licenses and other	—		—		41,072		—			41,072
Definite-lived intangible assets, net	—		—		2,848		—			2,848
Other assets	—		192		940		—			1,132
Total assets	$	29,510	$	42,937	$	76,333	$	(66,314	)	$	82,466

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	2,947	$	—		$	2,947
Accrued expenses and other current liabilities	88		338		3,705		(323		)	3,808
Current portion of long-term debt, financing and capital lease obligations	—		40		4,102		—			4,142
Current portion of notes payable to consolidated affiliate	—		—		424		(424		)	—
Total current liabilities	88		378		11,178		(747		)	10,897
Long-term debt, financing and capital lease obligations	10,402		12,303		11,531		—			34,236
Notes payable to consolidated affiliate	—		10,402		11,256		(21,658		)	—
Deferred tax liabilities	—		—		14,780		—			14,780
Other liabilities	—		842		2,691		—			3,533
Due to consolidated affiliates	—		—		213		(213		)	—
Total liabilities	10,490		23,925		51,649		(22,618		)	63,446
Commitments and contingencies
Total stockholders' equity	19,020		19,012		24,684		(43,696		)	19,020
Total liabilities and stockholders' equity	$	29,510	$	42,937	$	76,333	$	(66,314	)	$	82,466

CONDENSED CONSOLIDATING BALANCE SHEET



	March 31, 2017
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	2,461	$	409	$	—		$	2,870
Short-term investments	—		5,444		—		—			5,444
Accounts and notes receivable, net	86		1		4,137		(86		)	4,138
Device and accessory inventory	—		—		1,064		—			1,064
Prepaid expenses and other current assets	—		11		590		—			601
Total current assets	86		7,917		6,200		(86		)	14,117
Investments in subsidiaries	18,800		23,854		—		(42,654		)	—
Property, plant and equipment, net	—		—		19,209		—			19,209
Due from consolidated affiliates	25		13,032		—		(13,057		)	—
Notes receivable from consolidated affiliate	10,394		575		—		(10,969		)	—
Intangible assets
Goodwill	—		—		6,579		—			6,579
FCC licenses and other	—		—		40,585		—			40,585
Definite-lived intangible assets, net	—		—		3,320		—			3,320
Other assets	—		134		1,179		—			1,313
Total assets	$	29,305	$	45,512	$	77,072	$	(66,766	)	$	85,123

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	3,281	$	—		$	3,281
Accrued expenses and other current liabilities	103		478		3,646		(86		)	4,141
Current portion of long-term debt, financing and capital lease obligations	—		1,356		3,680		—			5,036
Total current liabilities	103		1,834		10,607		(86		)	12,458
Long-term debt, financing and capital lease obligations	10,394		13,647		11,837		—			35,878
Notes payable to consolidated affiliate	—		10,394		575		(10,969		)	—
Deferred tax liabilities	—		—		14,416		—			14,416
Other liabilities	—		837		2,726		—			3,563
Due to consolidated affiliates	—		—		13,057		(13,057		)	—
Total liabilities	10,497		26,712		53,218		(24,112		)	66,315
Commitments and contingencies
Total stockholders' equity	18,808		18,800		23,854		(42,654		)	18,808
Total liabilities and stockholders' equity	$	29,305	$	45,512	$	77,072	$	(66,766	)	$	85,123

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME



	Three Months Ended September 30, 2017
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues	$	—		$	—		$	7,927		$	—		$	7,927
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			1,698			—			1,698
Cost of products (exclusive of depreciation and amortization included below)	—			—			1,404			—			1,404
Selling, general and administrative	—			—			2,013			—			2,013
Depreciation	—			—			1,885			—			1,885
Amortization	—			—			209			—			209
Other, net	—			—			117			—			117
	—			—			7,326			—			7,326
Operating income	—			—			601			—			601
Other (expense) income:
Interest income	197			280			5			(449		)	33
Interest expense	(197		)	(438		)	(409		)	449			(595		)
(Losses) earnings of subsidiaries	(48		)	110			—			(62		)	—
Other income, net	—			—			11			—			11
	(48		)	(48		)	(393		)	(62		)	(551		)
(Loss) income before income taxes	(48		)	(48		)	208			(62		)	50
Income tax expense	—			—			(98		)	—			(98		)
Net (loss) income	(48		)	(48		)	110			(62		)	(48		)
Other comprehensive income (loss)	16			16			7			(23		)	16
Comprehensive (loss) income	$	(32	)	$	(32	)	$	117		$	(85	)	$	(32	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME



	Three Months Ended September 30, 2016
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues	$	—		$	—		$	8,247		$	—		$	8,247
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			2,101			—			2,101
Cost of products (exclusive of depreciation and amortization included below)	—			—			1,693			—			1,693
Selling, general and administrative	—			—			1,995			—			1,995
Severance and exit costs	—			—			(5		)	—			(5		)
Depreciation	—			—			1,710			—			1,710
Amortization	—			—			271			—			271
Other, net	—			—			(140		)	—			(140		)
	—			—			7,625			—			7,625
Operating income	—			—			622			—			622
Other (expense) income:
Interest income	197			34			6			(222		)	15
Interest expense	(197		)	(439		)	(216		)	222			(630		)
(Losses) earnings of subsidiaries	(142		)	264			—			(122		)	—
Other expense, net	—			(1		)	(29		)	—			(30		)
	(142		)	(142		)	(239		)	(122		)	(645		)
(Loss) income before income taxes	(142		)	(142		)	383			(122		)	(23		)
Income tax expense	—			—			(119		)	—			(119		)
Net (loss) income	(142		)	(142		)	264			(122		)	(142		)
Other comprehensive income (loss)	8			8			6			(14		)	8
Comprehensive (loss) income	$	(134	)	$	(134	)	$	270		$	(136	)	$	(134	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Six Months Ended September 30, 2017
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues	$	—		$	—		$	16,084		$	—		$	16,084
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			3,407			—			3,407
Cost of products (exclusive of depreciation and amortization included below)	—			—			2,949			—			2,949
Selling, general and administrative	—			—			3,951			—			3,951
Severance and exit costs	—			—			—			—			—
Depreciation	—			—			3,716			—			3,716
Amortization	—			—			432			—			432
Other, net	—			(55		)	(80		)	—			(135		)
	—			(55		)	14,375			—			14,320
Operating income	—			55			1,709			—			1,764
Other income (expense):
Interest income	395			325			9			(677		)	52
Interest expense	(395		)	(789		)	(701		)	677			(1,208		)
Earnings (losses) of subsidiaries	158			634			—			(792		)	—
Other (expense) income, net	—			(67		)	7			—			(60		)
	158			103			(685		)	(792		)	(1,216		)
Income (loss) before income taxes	158			158			1,024			(792		)	548
Income tax expense	—			—			(390		)	—			(390		)
Net income (loss)	158			158			634			(792		)	158
Other comprehensive income (loss)	12			12			12			(24		)	12
Comprehensive income (loss)	$	170		$	170		$	646		$	(816	)	$	170

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME



	Six Months Ended September 30, 2016
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues	$	—		$	—		$	16,259		$	—		$	16,259
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			4,200			—			4,200
Cost of products (exclusive of depreciation and amortization included below)	—			—			3,112			—			3,112
Selling, general and administrative	—			—			3,912			—			3,912
Severance and exit costs	—			—			11			—			11
Depreciation	—			—			3,390			—			3,390
Amortization	—			—			558			—			558
Other, net	—			—			93			—			93
	—			—			15,276			—			15,276
Operating income	—			—			983			—			983
Other (expense) income:
Interest income	395			62			9			(441		)	25
Interest expense	(395		)	(862		)	(429		)	441			(1,245		)
(Losses) earnings of subsidiaries	(444		)	358			—			86			—
Other expense, net	—			(2		)	(30		)	—			(32		)
	(444		)	(444		)	(450		)	86			(1,252		)
(Loss) income before income taxes	(444		)	(444		)	533			86			(269		)
Income tax expense	—			—			(175		)	—			(175		)
Net (loss) income	(444		)	(444		)	358			86			(444		)
Other comprehensive income (loss)	7			7			7			(14		)	7
Comprehensive (loss) income	$	(437	)	$	(437	)	$	365		$	72		$	(437	)

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Six Months Ended September 30, 2017
	Parent/Issuer		Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	—	$	(1,076	)	$	4,315		$	—		$	3,239
Cash flows from investing activities:
Capital expenditures - network and other	—		—			(1,803		)	—			(1,803		)
Capital expenditures - leased devices	—		—			(1,105		)	—			(1,105		)
Expenditures relating to FCC licenses	—		—			(19		)	—			(19		)
Proceeds from sales and maturities of short-term investments	—		5,582			—			—			5,582
Purchases of short-term investments	—		(1,748		)	—			—			(1,748		)
Change in amounts due from/due to consolidated affiliates	—		1,628			—			(1,628		)	—
Proceeds from sales of assets and FCC licenses	—		—			218			—			218
Other, net	—		—			(1		)	—			(1		)
Net cash provided by (used in) investing activities	—		5,462			(2,710		)	(1,628		)	1,124
Cash flows from financing activities:
Proceeds from debt and financings	—		—			1,860			—			1,860
Repayments of debt, financing and capital lease obligations	—		(2,520		)	(1,741		)	—			(4,261		)
Debt financing costs	—		(9		)	—			—			(9		)
Change in amounts due from/due to consolidated affiliates	—		—			(1,628		)	1,628			—
Other, net	—		1			(22		)	—			(21		)
Net cash (used in) provided by financing activities	—		(2,528		)	(1,531		)	1,628			(2,431		)
Net increase in cash and cash equivalents	—		1,858			74			—			1,932
Cash and cash equivalents, beginning of period	—		2,461			409			—			2,870
Cash and cash equivalents, end of period	$	—	$	4,319		$	483		$	—		$	4,802

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Six Months Ended September 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	$	—	$	(780	)	$	3,148		$	(118	)	$	2,250
Cash flows from investing activities:
Capital expenditures - network and other	—		—			(943		)	—			(943		)
Capital expenditures - leased devices	—		—			(763		)	—			(763		)
Expenditures relating to FCC licenses	—		—			(32		)	—			(32		)
Proceeds from sales and maturities of short-term investments	—		1,087			35			—			1,122
Purchases of short-term investments	—		(2,737		)	(35		)	—			(2,772		)
Change in amounts due from/due to consolidated affiliates	—		3,883			—			(3,883		)	—
Proceeds from sales of assets and FCC licenses	—		—			66			—			66
Intercompany note advance to consolidated affiliate	—		(70		)	—			70			—
Proceeds from intercompany note advance to consolidated affiliate	—		62			—			(62		)	—
Other, net	—		—			(36		)	—			(36		)
Net cash provided by (used in) investing activities	—		2,225			(1,708		)	(3,875		)	(3,358		)
Cash flows from financing activities:
Proceeds from debt and financings	—		—			3,278			—			3,278
Repayments of debt, financing and capital lease obligations	—		—			(667		)	—			(667		)
Debt financing costs	—		(110		)	(65		)	—			(175		)
Intercompany dividends paid to consolidated affiliate	—		—			(118		)	118			—
Change in amounts due from/due to consolidated affiliates	—		—			(3,883		)	3,883			—
Intercompany note advance from consolidated affiliate	—		—			70			(70		)	—
Repayments of intercompany note advance from consolidated affiliate	—		—			(62		)	62			—
Other, net	—		20			17			—			37
Net cash (used in) provided by financing activities	—		(90		)	(1,430		)	3,993			2,473
Net increase in cash and cash equivalents	—		1,355			10			—			1,365
Cash and cash equivalents, beginning of period	—		2,154			487			—			2,641
Cash and cash equivalents, end of period	$	—	$	3,509		$	497		$	—		$	4,006