Guarantor Financial Information

6 Months Ended

Sep. 30, 2019

Condensed Financial Information Disclosure [Abstract]

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 six-month periods ended September 30, 2019 and 2018, there were non-cash equity distributions from the non-guarantor subsidiaries to Subsidiary Guarantor of approximately $31 million and $1.3 billion, respectively, as a result of organizational restructuring for tax purposes. As of September 30, 2019, there were $23.6 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 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 both the Receivables Facility and the spectrum financing transactions, Sprint formed certain wholly-owned bankruptcy-remote subsidiaries that 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 Finance Lease Obligations for additional information.

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, 2019
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	3,876	$	386	$	—		$	4,262
Short-term investments	—		61		—		—			61
Accounts and notes receivable, net	96		220		3,723		(316		)	3,723
Current portion of notes receivable from consolidated affiliates	—		424		—		(424		)	—
Device and accessory inventory	—		—		963		—			963
Prepaid expenses and other current assets	—		9		1,188		—			1,197
Total current assets	96		4,590		6,260		(740		)	10,206
Investments in subsidiaries	25,567		17,144		—		(42,711		)	—
Property, plant and equipment, net	—		—		20,562		—			20,562
Costs to acquire a customer contract	—		—		1,712		—			1,712
Operating lease right-of-use assets	—		—		6,885		—			6,885
Due from consolidated affiliates	290		5,215		—		(5,505		)	—
Notes receivable from consolidated affiliates	11,895		23,143		—		(35,038		)	—
Intangible assets
Goodwill	—		—		4,598		—			4,598
FCC licenses and other	—		—		41,481		—			41,481
Definite-lived intangible assets, net	—		—		1,413		—			1,413
Other assets	—		40		1,031		—			1,071
Total assets	$	37,848	$	50,132	$	83,942	$	(83,994	)	$	87,928

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	3,918	$	—		$	3,918
Accrued expenses and other current liabilities	103		228		3,183		(316		)	3,198
Current operating lease liabilities	—		—		1,835		—			1,835
Current portion of long-term debt, financing and finance lease obligations	—		2,574		1,527		—			4,101
Current portion of notes payable to consolidated affiliates	—		—		424		(424		)	—
Total current liabilities	103		2,802		10,887		(740		)	13,052
Long-term debt, financing and finance lease obligations	11,895		9,105		12,268		—			33,268
Long-term operating lease liabilities	—		—		5,667		—			5,667
Notes payable to consolidated affiliates	—		11,895		23,143		(35,038		)	—
Deferred tax liabilities	—		—		7,489		—			7,489
Other liabilities	—		763		1,792		—			2,555
Due to consolidated affiliates	—		—		5,505		(5,505		)	—
Total liabilities	11,998		24,565		66,751		(41,283		)	62,031
Commitments and contingencies
Total stockholders' equity	25,850		25,567		17,144		(42,711		)	25,850
Noncontrolling interests	—		—		47		—			47
Total equity	25,850		25,567		17,191		(42,711		)	25,897
Total liabilities and equity	$	37,848	$	50,132	$	83,942	$	(83,994	)	$	87,928

CONDENSED CONSOLIDATING BALANCE SHEET



	March 31, 2019
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	6,605	$	377	$	—		$	6,982
Short-term investments	—		67		—		—			67
Accounts and notes receivable, net	96		233		3,554		(329		)	3,554
Current portion of notes receivable from consolidated affiliates	—		424		—		(424		)	—
Device and accessory inventory	—		—		999		—			999
Prepaid expenses and other current assets	—		9		1,280		—			1,289
Total current assets	96		7,338		6,210		(753		)	12,891
Investments in subsidiaries	25,785		17,363		—		(43,148		)	—
Property, plant and equipment, net	—		—		21,201		—			21,201
Costs to acquire a customer contract	—		—		1,559		—			1,559
Due from consolidated affiliates	288		2,418		—		(2,706		)	—
Notes receivable from consolidated affiliates	11,883		23,567		—		(35,450		)	—
Intangible assets
Goodwill	—		—		4,598		—			4,598
FCC licenses and other	—		—		41,465		—			41,465
Definite-lived intangible assets, net	—		—		1,769		—			1,769
Other assets	—		52		1,066		—			1,118
Total assets	$	38,052	$	50,738	$	77,868	$	(82,057	)	$	84,601

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	3,961	$	—		$	3,961
Accrued expenses and other current liabilities	97		230		3,599		(329		)	3,597
Current portion of long-term debt, financing and finance lease obligations	—		1,373		3,184		—			4,557
Current portion of notes payable to consolidated affiliates	—		—		424		(424		)	—
Total current liabilities	97		1,603		11,168		(753		)	12,115
Long-term debt, financing and finance lease obligations	11,883		10,660		12,823		—			35,366
Notes payable to consolidated affiliates	—		11,883		23,567		(35,450		)	—
Deferred tax liabilities	—		—		7,556		—			7,556
Other liabilities	—		807		2,630		—			3,437
Due to consolidated affiliates	—		—		2,706		(2,706		)	—
Total liabilities	11,980		24,953		60,450		(38,909		)	58,474
Commitments and contingencies
Total stockholders' equity	26,072		25,785		17,363		(43,148		)	26,072
Noncontrolling interests	—		—		55		—			55
Total equity	26,072		25,785		17,418		(43,148		)	26,127
Total liabilities and equity	$	38,052	$	50,738	$	77,868	$	(82,057	)	$	84,601

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME



	Three Months Ended September 30, 2019
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	5,273		$	—		$	5,273
Equipment sales	—			—			1,192			—			1,192
Equipment rentals	—			—			1,330			—			1,330
	—			—			7,795			—			7,795
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			1,775			—			1,775
Cost of equipment sales	—			—			1,359			—			1,359
Cost of equipment rentals (exclusive of depreciation below)	—			—			240			—			240
Selling, general and administrative	—			—			1,936			—			1,936
Depreciation - network and other	—			—			1,065			—			1,065
Depreciation - equipment rentals	—			—			1,056			—			1,056
Amortization	—			—			106			—			106
Other, net	—			—			21			—			21
	—			—			7,558			—			7,558
Operating income	—			—			237			—			237
Other income (expense):
Interest income	226			509			118			(837		)	16
Interest expense	(226		)	(522		)	(683		)	837			(594		)
(Losses) earnings of subsidiaries	(274		)	(260		)	—			534			—
Other expense, net	—			(1		)	(1		)	—			(2		)
	(274		)	(274		)	(566		)	534			(580		)
(Loss) income before income taxes	(274		)	(274		)	(329		)	534			(343		)
Income tax benefit	—			—			64			—			64
Net (loss) income	(274		)	(274		)	(265		)	534			(279		)
Less: Net loss attributable to noncontrolling interests	—			—			5			—			5
Net (loss) income attributable to Sprint Corporation	(274		)	(274		)	(260		)	534			(274		)
Other comprehensive (loss) income	(4		)	(4		)	1			3			(4		)
Comprehensive (loss) income	$	(278	)	$	(278	)	$	(264	)	$	537		$	(283	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Three Months Ended September 30, 2018
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	5,762		$	—		$	5,762
Equipment sales	—			—			1,418			—			1,418
Equipment rentals	—			—			1,253			—			1,253
	—			—			8,433			—			8,433
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			1,694			—			1,694
Cost of equipment sales	—			—			1,517			—			1,517
Cost of equipment rentals (exclusive of depreciation below)	—			—			151			—			151
Selling, general and administrative	—			—			1,861			—			1,861
Depreciation - network and other	—			—			1,021			—			1,021
Depreciation - equipment rentals	—			—			1,181			—			1,181
Amortization	—			—			159			—			159
Other, net	—			—			71			—			71
	—			—			7,655			—			7,655
Operating income	—			—			778			—			778
Other income (expense):
Interest income	226			545			340			(1,062		)	49
Interest expense	(226		)	(638		)	(831		)	1,062			(633		)
Earnings (losses) of subsidiaries	196			267			—			(463		)	—
Other income, net	—			22			8			—			30
	196			196			(483		)	(463		)	(554		)
Income (loss) before income taxes	196			196			295			(463		)	224
Income tax expense	—			—			(17		)	—			(17		)
Net income (loss)	196			196			278			(463		)	207
Less: Net income attributable to noncontrolling interests	—			—			(11		)	—			(11		)
Net income (loss) attributable to Sprint Corporation	196			196			267			(463		)	196
Other comprehensive income (loss)	9			9			3			(12		)	9
Comprehensive income (loss)	$	205		$	205		$	281		$	(475	)	$	216

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE (LOSS) INCOME



	Six Months Ended September 30, 2019
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	10,836		$	—		$	10,836
Equipment sales	—			—			2,412			—			2,412
Equipment rentals	—			—			2,689			—			2,689
	—			—			15,937			—			15,937
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			3,485			—			3,485
Cost of equipment sales	—			—			2,700			—			2,700
Cost of equipment rentals (exclusive of depreciation below)	—			—			465			—			465
Selling, general and administrative	—			—			3,843			—			3,843
Depreciation - network and other	—			—			2,185			—			2,185
Depreciation - equipment rentals	—			—			2,085			—			2,085
Amortization	—			—			224			—			224
Other, net	—			—			258			—			258
	—			—			15,245			—			15,245
Operating income	—			—			692			—			692
Other income (expense):
Interest income	452			1,035			259			(1,700		)	46
Interest expense	(452		)	(1,072		)	(1,389		)	1,700			(1,213		)
(Losses) earnings of subsidiaries	(385		)	(346		)	—			731			—
Other expense, net	—			(2		)	(2		)	—			(4		)
	(385		)	(385		)	(1,132		)	731			(1,171		)
(Loss) income before income taxes	(385		)	(385		)	(440		)	731			(479		)
Income tax benefit	—			—			86			—			86
Net (loss) income	(385		)	(385		)	(354		)	731			(393		)
Less: Net loss attributable to noncontrolling interests	—			—			8			—			8
Net (loss) income attributable to Sprint Corporation	(385		)	(385		)	(346		)	731			(385		)
Other comprehensive (loss) income	(26		)	(26		)	1			25			(26		)
Comprehensive (loss) income	$	(411	)	$	(411	)	$	(353	)	$	756		$	(419	)

CONDENSED CONSOLIDATING STATEMENT OF COMPREHENSIVE INCOME (LOSS)



	Six Months Ended September 30, 2018
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	11,502		$	—		$	11,502
Equipment sales	—			—			2,591			—			2,591
Equipment rentals	—			—			2,465			—			2,465
	—			—			16,558			—			16,558
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			3,371			—			3,371
Cost of equipment sales	—			—			2,787			—			2,787
Cost of equipment rentals (exclusive of depreciation below)	—			—			275			—			275
Selling, general and administrative	—			—			3,728			—			3,728
Depreciation - network and other	—			—			2,044			—			2,044
Depreciation - equipment rentals	—			—			2,317			—			2,317
Amortization	—			—			330			—			330
Other, net	—			—			113			—			113
	—			—			14,965			—			14,965
Operating income	—			—			1,593			—			1,593
Other income (expense):
Interest income	452			1,092			342			(1,795		)	91
Interest expense	(452		)	(1,209		)	(1,404		)	1,795			(1,270		)
Earnings (losses) of subsidiaries	372			469			—			(841		)	—
Other income, net	—			20			10			—			30
	372			372			(1,052		)	(841		)	(1,149		)
Income (loss) before income taxes	372			372			541			(841		)	444
Income tax expense	—			—			(64		)	—			(64		)
Net income (loss)	372			372			477			(841		)	380
Less: Net income attributable to noncontrolling interests	—			—			(8		)	—			(8		)
Net income (loss) attributable to Sprint Corporation	$	372		$	372		$	469		$	(841	)	$	372
Other comprehensive income (loss)	5			5			(10		)	5			5
Comprehensive income (loss)	$	377		$	377		$	467		$	(836	)	$	385

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Six Months Ended September 30, 2019
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Cash flows from operating activities:
Net cash (used in) provided by operating activities	$	—		$	(88	)	$	4,898		$	—		$	4,810
Cash flows from investing activities:
Capital expenditures - network and other	—			—			(2,298		)	—			(2,298		)
Capital expenditures - leased devices	—			—			(3,302		)	—			(3,302		)
Expenditures relating to FCC licenses	—			—			(16		)	—			(16		)
Proceeds from sales and maturities of short-term investments	—			67			—			—			67
Purchases of short-term investments	—			(61		)	—			—			(61		)
Change in amounts due from/due to consolidated affiliates	33			(2,743		)	—			2,710			—
Proceeds from sales of assets and FCC licenses	—			—			599			—			599
Proceeds from intercompany note advance to consolidated affiliate	—			424			—			(424		)	—
Other, net	—			3			(12		)	—			(9		)
Net cash provided by (used in) investing activities	33			(2,310		)	(5,029		)	2,286			(5,020		)
Cash flows from financing activities:
Proceeds from debt and financings	—			—			3,364			—			3,364
Repayments of debt, financing and finance lease obligations	—			(330		)	(5,496		)	—			(5,826		)
Debt financing costs	—			(2		)	(10		)	—			(12		)
Proceeds from issuance of common stock, net	(33		)	—			—			—			(33		)
Change in amounts due from/due to consolidated affiliates	—			—			2,710			(2,710		)	—
Repayments of intercompany note advance from parent	—			—			(424		)	424			—
Net cash (used in) provided by financing activities	(33		)	(332		)	144			(2,286		)	(2,507		)
Net (decrease) increase in cash, cash equivalents and restricted cash	—			(2,730		)	13			—			(2,717		)
Cash, cash equivalents and restricted cash, beginning of period	—			6,606			457			—			7,063
Cash, cash equivalents and restricted cash, end of period	$	—		$	3,876		$	470		$	—		$	4,346

CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS



	Six Months Ended September 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	$	—		$	(209	)	$	5,566		$	—		$	5,357
Cash flows from investing activities:
Capital expenditures - network and other	—			—			(2,398		)	—			(2,398		)
Capital expenditures - leased devices	—			—			(3,524		)	—			(3,524		)
Expenditures relating to FCC licenses	—			—			(70		)	—			(70		)
Proceeds from sales and maturities of short-term investments	—			4,002			—			—			4,002
Purchases of short-term investments	—			(4,834		)	—			—			(4,834		)
Change in amounts due from/due to consolidated affiliates	(248		)	(320		)	—			568			—
Proceeds from sales of assets and FCC licenses	—			—			272			—			272
Proceeds from deferred purchase price from sale of receivables	—			—			223			—			223
Proceeds from intercompany note advance to consolidated affiliate	—			424			—			(424		)	—
Other, net	—			—			42			—			42
Net cash (used in) provided by investing activities	(248		)	(728		)	(5,455		)	144			(6,287		)
Cash flows from financing activities:
Proceeds from debt and financings	—			—			2,944			—			2,944
Repayments of debt, financing and finance lease obligations	—			(20		)	(2,908		)	—			(2,928		)
Debt financing costs	(28		)	(9		)	(211		)	—			(248		)
Proceeds from issuance of common stock, net	276			—			—			—			276
Change in amounts due from/due to consolidated affiliates	—			—			568			(568		)	—
Repayments of intercompany note advance from parent	—			—			(424		)	424			—
Net cash provided by (used in) financing activities	248			(29		)	(31		)	(144		)	44
Net (decrease) increase in cash, cash equivalents and restricted cash	—			(966		)	80			—			(886		)
Cash, cash equivalents and restricted cash, beginning of period	—			6,222			437			—			6,659
Cash, cash equivalents and restricted cash, end of period	$	—		$	5,256		$	517		$	—		$	5,773