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 three-month periods ended June 30, 2018 and 2017, there were non-cash equity distributions from the non-guarantor subsidiaries to Subsidiary Guarantor of approximately $1.5 billion and non-cash equity contributions from Subsidiary Guarantor to the non-guarantor subsidiaries of $42 million, respectively, as a result of organizational restructuring for tax purposes. As of June 30, 2018, there were $24.0 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 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 7. 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



	June 30, 2018
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	3,962	$	416	$	—		$	4,378
Short-term investments	—		4,008		—		—			4,008
Accounts and notes receivable, net	236		481		3,492		(717		)	3,492
Current portion of notes receivable from consolidated affiliates	—		424		—		(424		)	—
Device and accessory inventory	—		—		622		—			622
Prepaid expenses and other current assets	3		12		880		—			895
Total current assets	239		8,887		5,410		(1,141		)	13,395
Investments in subsidiaries	27,885		18,777		—		(46,662		)	—
Property, plant and equipment, net	—		—		20,538		—			20,538
Costs to acquire a customer contract	—		—		1,294		—			1,294
Due from consolidated affiliates	6		1,711		—		(1,717		)	—
Notes receivable from consolidated affiliates	11,864		23,567		—		(35,431		)	—
Intangible assets
Goodwill	—		—		6,586		—			6,586
FCC licenses and other	—		—		41,368		—			41,368
Definite-lived intangible assets, net	—		—		2,245		—			2,245
Other assets	—		198		825		—			1,023
Total assets	$	39,994	$	53,140	$	78,266	$	(84,951	)	$	86,449

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	3,143	$	—		$	3,143
Accrued expenses and other current liabilities	237		414		3,724		(717		)	3,658
Current portion of long-term debt, financing and capital lease obligations	—		1,817		3,029		—			4,846
Current portion of notes payable to consolidated affiliates	—		—		424		(424		)	—
Total current liabilities	237		2,231		10,320		(1,141		)	11,647
Long-term debt, financing and capital lease obligations	11,864		10,348		13,559		—			35,771
Notes payable to consolidated affiliates	—		11,864		23,567		(35,431		)	—
Deferred tax liabilities	—		—		7,704		—			7,704
Other liabilities	—		812		2,570		—			3,382
Due to consolidated affiliates	—		—		1,717		(1,717		)	—
Total liabilities	12,101		25,255		59,437		(38,289		)	58,504
Commitments and contingencies
Total stockholders' equity	27,893		27,885		18,777		(46,662		)	27,893
Noncontrolling interests	—		—		52		—			52
Total equity	27,893		27,885		18,829		(46,662		)	27,945
Total liabilities and equity	$	39,994	$	53,140	$	78,266	$	(84,951	)	$	86,449

CONDENSED CONSOLIDATING BALANCE SHEET



	March 31, 2018
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	6,222	$	388	$	—		$	6,610
Short-term investments	—		2,354		—		—			2,354
Accounts and notes receivable, net	99		248		3,711		(347		)	3,711
Current portion of notes receivable from consolidated affiliates	—		424		—		(424		)	—
Device and accessory inventory	—		—		1,003		—			1,003
Prepaid expenses and other current assets	5		9		561		—			575
Total current assets	104		9,257		5,663		(771		)	14,253
Investments in subsidiaries	26,351		18,785		—		(45,136		)	—
Property, plant and equipment, net	—		—		19,925		—			19,925
Due from consolidated affiliates	1		—		594		(595		)	—
Notes receivable from consolidated affiliates	11,887		23,991		—		(35,878		)	—
Intangible assets
Goodwill	—		—		6,586		—			6,586
FCC licenses and other	—		—		41,309		—			41,309
Definite-lived intangible assets, net	—		—		2,465		—			2,465
Other assets	—		185		736		—			921
Total assets	$	38,343	$	52,218	$	77,278	$	(82,380	)	$	85,459

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	3,409	$	—		$	3,409
Accrued expenses and other current liabilities	100		341		3,868		(347		)	3,962
Current portion of long-term debt, financing and capital lease obligations	—		1,832		1,597		—			3,429
Current portion of notes payable to consolidated affiliates	—		—		424		(424		)	—
Total current liabilities	100		2,173		9,298		(771		)	10,800
Long-term debt, financing and capital lease obligations	11,887		10,381		15,195		—			37,463
Notes payable to consolidated affiliates	—		11,887		23,991		(35,878		)	—
Deferred tax liabilities	—		—		7,294		—			7,294
Other liabilities	—		831		2,652		—			3,483
Due to consolidated affiliates	—		595		—		(595		)	—
Total liabilities	11,987		25,867		58,430		(37,244		)	59,040
Commitments and contingencies
Total stockholders' equity	26,356		26,351		18,785		(45,136		)	26,356
Noncontrolling interests	—		—		63		—			63
Total equity	26,356		26,351		18,848		(45,136		)	26,419
Total liabilities and equity	$	38,343	$	52,218	$	77,278	$	(82,380	)	$	85,459

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended June 30, 2018
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service revenue	$	—		$	—		$	5,740		$	—		$	5,740
Equipment sales	—			—			1,173			—			1,173
Equipment rentals	—			—			1,212			—			1,212
	—			—			8,125			—			8,125
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			1,677			—			1,677
Cost of equipment sales	—			—			1,270			—			1,270
Cost of equipment rentals (exclusive of depreciation below)	—			—			124			—			124
Selling, general and administrative	—			—			1,867			—			1,867
Depreciation - network and other	—			—			1,023			—			1,023
Depreciation - equipment rentals	—			—			1,136			—			1,136
Amortization	—			—			171			—			171
Other, net	—			—			42			—			42
	—			—			7,310			—			7,310
Operating income	—			—			815			—			815
Other income (expense):
Interest income	226			547			2			(733		)	42
Interest expense	(226		)	(571		)	(573		)	733			(637		)
Earnings (losses) of subsidiaries	176			202			—			(378		)	—
Other (expense) income, net	—			(2		)	2			—			—
	176			176			(569		)	(378		)	(595		)
Income (loss) before income taxes	176			176			246			(378		)	220
Income tax expense	—			—			(47		)	—			(47		)
Net income (loss)	176			176			199			(378		)	173
Less: Net loss attributable to noncontrolling interests	—			—			3			—			3
Net income (loss) attributable to Sprint Corporation	176			176			202			(378		)	176
Other comprehensive (loss) income	(4		)	(4		)	(13		)	17			(4		)
Comprehensive income (loss)	$	172		$	172		$	186		$	(361	)	$	169

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended June 30, 2017
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service revenue	$	—		$	—		$	6,071		$	—		$	6,071
Equipment sales	—			—			1,187			—			1,187
Equipment rentals	—			—			899			—			899
	—			—			8,157			—			8,157
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			1,709			—			1,709
Cost of equipment sales	—			—			1,545			—			1,545
Cost of equipment rentals (exclusive of depreciation below)	—			—			112			—			112
Selling, general and administrative	—			—			1,938			—			1,938
Depreciation - network and other	—			—			977			—			977
Depreciation - equipment rentals	—			—			854			—			854
Amortization	—			—			223			—			223
Other, net	—			(55		)	(309		)	—			(364		)
	—			(55		)	7,049			—			6,994
Operating income	—			55			1,108			—			1,163
Other income (expense):
Interest income	198			45			4			(228		)	19
Interest expense	(198		)	(351		)	(292		)	228			(613		)
Earnings (losses) of subsidiaries	206			524			—			(730		)	—
Other expense, net	—			(67		)	(4		)	—			(71		)
	206			151			(292		)	(730		)	(665		)
Income (loss) before income taxes	206			206			816			(730		)	498
Income tax expense	—			—			(292		)	—			(292		)
Net income (loss)	206			206			524			(730		)	206
Other comprehensive (loss) income	(4		)	(4		)	5			(1		)	(4		)
Comprehensive income (loss)	$	202		$	202		$	529		$	(731	)	$	202

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Three Months Ended June 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	$	—		$	(231	)	$	2,661		$	—		$	2,430
Cash flows from investing activities:
Capital expenditures - network and other	—			—			(1,132		)	—			(1,132		)
Capital expenditures - leased devices	—			—			(1,817		)	—			(1,817		)
Expenditures relating to FCC licenses	—			—			(59		)	—			(59		)
Proceeds from sales and maturities of short-term investments	—			810			—			—			810
Purchases of short-term investments	—			(2,464		)	—			—			(2,464		)
Change in amounts due from/due to consolidated affiliates	28			(778		)	—			750			—
Proceeds from sales of assets and FCC licenses	—			—			133			—			133
Proceeds from deferred purchase price from sale of receivables	—			—			170			—			170
Proceeds from intercompany note advance to consolidated affiliate	—			424			—			(424		)	—
Other, net	—			—			(10		)	—			(10		)
Net cash provided by (used in) investing activities	28			(2,008		)	(2,715		)	326			(4,369		)
Cash flows from financing activities:
Proceeds from debt and financings	—			—			1,370			—			1,370
Repayments of debt, financing and capital lease obligations	—			(10		)	(1,405		)	—			(1,415		)
Debt financing costs	(28		)	(9		)	(211		)	—			(248		)
Change in amounts due from/due to consolidated affiliates	—			—			750			(750		)	—
Repayments of intercompany note advance from parent	—			—			(424		)	424			—
Other, net	—			(2		)	—			—			(2		)
Net cash (used in) provided by financing activities	(28		)	(21		)	80			(326		)	(295		)
Net (decrease) increase in cash, cash equivalents and restricted cash	—			(2,260		)	26			—			(2,234		)
Cash, cash equivalents and restricted cash, beginning of period	—			6,222			437			—			6,659
Cash, cash equivalents and restricted cash, end of period	$	—		$	3,962		$	463		$	—		$	4,425

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Three Months Ended June 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	$	—	$	(394	)	$	2,318		$	—		$	1,924
Cash flows from investing activities:
Capital expenditures - network and other	—		—			(1,151		)	—			(1,151		)
Capital expenditures - leased devices	—		—			(1,359		)	—			(1,359		)
Expenditures relating to FCC licenses	—		—			(13		)	—			(13		)
Proceeds from sales and maturities of short-term investments	—		2,594			—			—			2,594
Purchases of short-term investments	—		(1,499		)	—			—			(1,499		)
Change in amounts due from/due to consolidated affiliates	—		588			—			(588		)	—
Proceeds from sales of assets and FCC licenses	—		—			101			—			101
Proceeds from deferred purchase price from sale of receivables	—		—			375			—			375
Other, net	—		2			(3		)	—			(1		)
Net cash provided by (used in) investing activities	—		1,685			(2,050		)	(588		)	(953		)
Cash flows from financing activities:
Proceeds from debt and financings	—		—			902			—			902
Repayments of debt, financing and capital lease obligations	—		(1,598		)	(523		)	—			(2,121		)
Call premiums paid on debt redemptions	—		(129		)	—			—			(129		)
Change in amounts due from/due to consolidated affiliates	—		—			(588		)	588			—
Other, net	—		9			(24		)	—			(15		)
Net cash (used in) provided by financing activities	—		(1,718		)	(233		)	588			(1,363		)
Net (decrease) increase in cash, cash equivalents and restricted cash	—		(427		)	35			—			(392		)
Cash, cash equivalents and restricted cash, beginning of period	—		2,461			481			—			2,942
Cash, cash equivalents and restricted cash, end of period	$	—	$	2,034		$	516		$	—		$	2,550