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 nine-month periods ended December 31, 2018 and 2017, there were non-cash equity distributions from the non-guarantor subsidiaries to Subsidiary Guarantor of approximately $1.1 billion and non-cash equity contributions from Subsidiary Guarantor to the non-guarantor subsidiaries of $4.7 billion, respectively, as a result of organizational restructuring for tax purposes. As of December 31, 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



	December 31, 2018
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	5,800	$	391	$	—		$	6,191
Short-term investments	—		632		—		—			632
Accounts and notes receivable, net	233		477		3,455		(710		)	3,455
Current portion of notes receivable from consolidated affiliates	—		424		—		(424		)	—
Device and accessory inventory	—		—		919		—			919
Prepaid expenses and other current assets	—		15		1,184		—			1,199
Total current assets	233		7,348		5,949		(1,134		)	12,396
Investments in subsidiaries	27,983		19,314		—		(47,297		)	—
Property, plant and equipment, net	—		—		21,422		—			21,422
Costs to acquire a customer contract	—		—		1,497		—			1,497
Due from consolidated affiliates	289		1,849		—		(2,138		)	—
Notes receivable from consolidated affiliates	11,877		23,567		—		(35,444		)	—
Intangible assets
Goodwill	—		—		6,598		—			6,598
FCC licenses and other	—		—		41,448		—			41,448
Definite-lived intangible assets, net	—		—		1,915		—			1,915
Other assets	—		70		1,058		—			1,128
Total assets	$	40,382	$	52,148	$	79,887	$	(86,013	)	$	86,404

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	3,637	$	—		$	3,637
Accrued expenses and other current liabilities	235		349		3,593		(710		)	3,467
Current portion of long-term debt, financing and capital lease obligations	—		351		3,245		—			3,596
Current portion of notes payable to consolidated affiliates	—		—		424		(424		)	—
Total current liabilities	235		700		10,899		(1,134		)	10,700
Long-term debt, financing and capital lease obligations	11,877		10,837		13,574		—			36,288
Notes payable to consolidated affiliates	—		11,877		23,567		(35,444		)	—
Deferred tax liabilities	—		—		7,684		—			7,684
Other liabilities	—		751		2,652		—			3,403
Due to consolidated affiliates	—		—		2,138		(2,138		)	—
Total liabilities	12,112		24,165		60,514		(38,716		)	58,075
Commitments and contingencies
Total stockholders' equity	28,270		27,983		19,314		(47,297		)	28,270
Noncontrolling interests	—		—		59		—			59
Total equity	28,270		27,983		19,373		(47,297		)	28,329
Total liabilities and equity	$	40,382	$	52,148	$	79,887	$	(86,013	)	$	86,404

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 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 (LOSS) INCOME



	Three Months Ended December 31, 2018
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	5,699		$	—		$	5,699
Equipment sales	—			—			1,589			—			1,589
Equipment rentals	—			—			1,313			—			1,313
	—			—			8,601			—			8,601
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			1,648			—			1,648
Cost of equipment sales	—			—			1,734			—			1,734
Cost of equipment rentals (exclusive of depreciation below)	—			—			182			—			182
Selling, general and administrative	—			—			2,003			—			2,003
Depreciation - network and other	—			—			1,088			—			1,088
Depreciation - equipment rentals	—			—			1,137			—			1,137
Amortization	—			—			145			—			145
Other, net	—			—			185			—			185
	—			—			8,122			—			8,122
Operating income	—			—			479			—			479
Other income (expense):
Interest income	227			540			175			(904		)	38
Interest expense	(227		)	(609		)	(732		)	904			(664		)
(Losses) earnings of subsidiaries	(141		)	(69		)	—			210			—
Other expense, net	—			(3		)	(3		)	—			(6		)
	(141		)	(141		)	(560		)	210			(632		)
(Loss) income before income taxes	(141		)	(141		)	(81		)	210			(153		)
Income tax benefit	—			—			8			—			8
Net (loss) income	(141		)	(141		)	(73		)	210			(145		)
Less: Net loss attributable to noncontrolling interests	—			—			4			—			4
Net (loss) income attributable to Sprint Corporation	(141		)	(141		)	(69		)	210			(141		)
Other comprehensive (loss) income	(25		)	(25		)	—			25			(25		)
Comprehensive (loss) income	$	(166	)	$	(166	)	$	(73	)	$	235		$	(170	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended December 31, 2017
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	5,930		$	—		$	5,930
Equipment sales	—			—			1,262			—			1,262
Equipment rentals	—			—			1,047			—			1,047
	—			—			8,239			—			8,239
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			1,733			—			1,733
Cost of equipment sales	—			—			1,673			—			1,673
Cost of equipment rentals (exclusive of depreciation below)	—			—			123			—			123
Selling, general and administrative	—			—			2,108			—			2,108
Depreciation - network and other	—			—			987			—			987
Depreciation - equipment rentals	—			—			990			—			990
Amortization	—			—			196			—			196
Other, net	—			—			(298		)	—			(298		)
	—			—			7,512			—			7,512
Operating income	—			—			727			—			727
Other income (expense):
Interest income	198			458			1			(643		)	14
Interest expense	(198		)	(382		)	(644		)	643			(581		)
Earnings (losses) of subsidiaries	7,162			7,088			—			(14,250		)	—
Other expense, net	—			(2		)	(54		)	—			(56		)
	7,162			7,162			(697		)	(14,250		)	(623		)
Income (loss) before income taxes	7,162			7,162			30			(14,250		)	104
Income tax benefit	—			—			7,052			—			7,052
Net income (loss)	7,162			7,162			7,082			(14,250		)	7,156
Less: Net loss attributable to noncontrolling interests	—			—			6			—			6
Net income (loss) attributable to Sprint Corporation	7,162			7,162			7,088			(14,250		)	7,162
Other comprehensive income (loss)	26			26			6			(32		)	26
Comprehensive income (loss)	$	7,188		$	7,188		$	7,088		$	(14,282	)	$	7,182

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Nine Months Ended December 31, 2018
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	17,201		$	—		$	17,201
Equipment sales	—			—			4,180			—			4,180
Equipment rentals	—			—			3,778			—			3,778
	—			—			25,159			—			25,159
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			5,019			—			5,019
Cost of equipment sales	—			—			4,521			—			4,521
Cost of equipment rentals (exclusive of depreciation below)	—			—			457			—			457
Selling, general and administrative	—			—			5,731			—			5,731
Depreciation - network and other	—			—			3,132			—			3,132
Depreciation - equipment rentals	—			—			3,454			—			3,454
Amortization	—			—			475			—			475
Other, net	—			—			298			—			298
	—			—			23,087			—			23,087
Operating income	—			—			2,072			—			2,072
Other income (expense):
Interest income	679			1,632			517			(2,699		)	129
Interest expense	(679		)	(1,755		)	(2,199		)	2,699			(1,934		)
Earnings (losses) of subsidiaries	231			337			—			(568		)	—
Other income, net	—			17			7			—			24
	231			231			(1,675		)	(568		)	(1,781		)
Income (loss) before income taxes	231			231			397			(568		)	291
Income tax expense	—			—			(56		)	—			(56		)
Net income (loss)	231			231			341			(568		)	235
Less: Net income attributable to noncontrolling interests	—			—			(4		)	—			(4		)
Net income (loss) attributable to Sprint Corporation	231			231			337			(568		)	231
Other comprehensive (loss) income	(20		)	(20		)	(10		)	30			(20		)
Comprehensive income (loss)	$	211		$	211		$	331		$	(538	)	$	215

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Nine Months Ended December 31, 2017
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	17,968		$	—		$	17,968
Equipment sales	—			—			3,443			—			3,443
Equipment rentals	—			—			2,912			—			2,912
	—			—			24,323			—			24,323
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			5,140			—			5,140
Cost of equipment sales	—			—			4,622			—			4,622
Cost of equipment rentals (exclusive of depreciation below)	—			—			347			—			347
Selling, general and administrative	—			—			6,059			—			6,059
Depreciation - network and other	—			—			2,961			—			2,961
Depreciation - equipment rentals	—			—			2,732			—			2,732
Amortization	—			—			628			—			628
Other, net	—			(55		)	(602		)	—			(657		)
	—			(55		)	21,887			—			21,832
Operating income	—			55			2,436			—			2,491
Other income (expense):
Interest income	593			783			10			(1,320		)	66
Interest expense	(593		)	(1,171		)	(1,345		)	1,320			(1,789		)
Earnings (losses) of subsidiaries	7,320			7,722			—			(15,042		)	—
Other expense, net	—			(69		)	(47		)	—			(116		)
	7,320			7,265			(1,382		)	(15,042		)	(1,839		)
Income (loss) before income taxes	7,320			7,320			1,054			(15,042		)	652
Income tax benefit	—			—			6,662			—			6,662
Net income (loss)	7,320			7,320			7,716			(15,042		)	7,314
Less: Net loss attributable to noncontrolling interests	—			—			6			—			6
Net income (loss) attributable to Sprint Corporation	7,320			7,320			7,722			(15,042		)	7,320
Other comprehensive income (loss)	38			38			18			(56		)	38
Comprehensive income (loss)	$	7,358		$	7,358		$	7,734		$	(15,098	)	$	7,352

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Nine Months Ended December 31, 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	$	—		$	(408	)	$	7,990		$	—		$	7,582
Cash flows from investing activities:
Capital expenditures - network and other	—			—			(3,814		)	—			(3,814		)
Capital expenditures - leased devices	—			—			(5,739		)	—			(5,739		)
Expenditures relating to FCC licenses	—			—			(145		)	—			(145		)
Proceeds from sales and maturities of short-term investments	—			6,619			—			—			6,619
Purchases of short-term investments	—			(5,152		)	—			—			(5,152		)
Change in amounts due from/due to consolidated affiliates	(253		)	(1,285		)	—			1,538			—
Proceeds from sales of assets and FCC licenses	—			—			416			—			416
Proceeds from deferred purchase price from sale of receivables	—			—			223			—			223
Proceeds from corporate owned life insurance policies	—			110			—			—			110
Proceeds from intercompany note advance to consolidated affiliate	—			424			—			(424		)	—
Other, net	—			—			52			—			52
Net cash (used in) provided by investing activities	(253		)	716			(9,007		)	1,114			(7,430		)
Cash flows from financing activities:
Proceeds from debt and financings	—			1,100			5,316			—			6,416
Repayments of debt, financing and capital lease obligations	—			(1,783		)	(5,154		)	—			(6,937		)
Debt financing costs	(28		)	(47		)	(211		)	—			(286		)
Proceeds from issuance of common stock, net	281			—			—			—			281
Change in amounts due from/due to consolidated affiliates	—			—			1,538			(1,538		)	—
Repayments of intercompany note advance from parent	—			—			(424		)	424			—
Net cash provided by (used in) financing activities	253			(730		)	1,065			(1,114		)	(526		)
Net (decrease) increase in cash, cash equivalents and restricted cash	—			(422		)	48			—			(374		)
Cash, cash equivalents and restricted cash, beginning of period	—			6,222			437			—			6,659
Cash, cash equivalents and restricted cash, end of period	$	—		$	5,800		$	485		$	—		$	6,285

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Nine Months Ended December 31, 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	$	—	$	(1,016	)	$	8,425		$	—		$	7,409
Cash flows from investing activities:
Capital expenditures - network and other	—		—			(2,539		)	—			(2,539		)
Capital expenditures - leased devices	—		—			(5,533		)	—			(5,533		)
Expenditures relating to FCC licenses	—		—			(92		)	—			(92		)
Proceeds from sales and maturities of short-term investments	—		7,113			—			—			7,113
Purchases of short-term investments	—		(1,842		)	—			—			(1,842		)
Change in amounts due from/due to consolidated affiliates	—		—			689			(689		)	—
Proceeds from sales of assets and FCC licenses	—		—			367			—			367
Proceeds from deferred purchase price from sale of receivables	—		—			909			—			909
Proceeds from corporate owned life insurance policies	—		2			—			—			2
Proceeds from intercompany note advance to consolidated affiliate	—		575			—			(575		)	—
Other, net	—		—			(1		)	—			(1		)
Net cash provided by (used in) investing activities	—		5,848			(6,200		)	(1,264		)	(1,616		)
Cash flows from financing activities:
Proceeds from debt and financings	—		—			3,073			—			3,073
Repayments of debt, financing and capital lease obligations	—		(2,530		)	(4,629		)	—			(7,159		)
Debt financing costs	—		(9		)	(10		)	—			(19		)
Call premiums paid on debt redemptions	—		(129		)	—			—			(129		)
Proceeds from issuance of common stock, net	—		12			—			—			12
Change in amounts due from/due to consolidated affiliates	—		(689		)	—			689			—
Repayments of intercompany note advance from consolidated affiliate	—		—			(575		)	575			—
Other, net	—		—			(18		)	—			(18		)
Net cash (used in) provided by financing activities	—		(3,345		)	(2,159		)	1,264			(4,240		)
Net increase in cash, cash equivalents and restricted cash	—		1,487			66			—			1,553
Cash, cash equivalents and restricted cash, beginning of period	—		2,461			481			—			2,942
Cash, cash equivalents and restricted cash, end of period	$	—	$	3,948		$	547		$	—		$	4,495