Guarantor Financial Information

9 Months Ended

Dec. 31, 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 nine-month periods ended December 31, 2019 and 2018, there were non-cash equity distributions from the non-guarantor subsidiaries to Subsidiary Guarantor of approximately $31 million and $1.1 billion, respectively, as a result of organizational restructuring for tax purposes. As of December 31, 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



	December 31, 2019
	Parent/Issuer		Subsidiary Guarantor		Non-Guarantor Subsidiaries		Eliminations			Consolidated
	(in millions)
ASSETS
Current assets:
Cash and cash equivalents	$	—	$	2,932	$	247	$	—		$	3,179
Short-term investments	—		62		—		—			62
Accounts and notes receivable, net	233		473		3,873		(706		)	3,873
Current portion of notes receivable from consolidated affiliates	—		424		—		(424		)	—
Device and accessory inventory	—		—		1,117		—			1,117
Prepaid expenses and other current assets	—		15		1,209		—			1,224
Total current assets	233		3,906		6,446		(1,130		)	9,455
Investments in subsidiaries	25,471		17,021		—		(42,492		)	—
Property, plant and equipment, net	—		—		20,827		—			20,827
Costs to acquire a customer contract	—		—		1,808		—			1,808
Operating lease right-of-use assets	—		—		6,713		—			6,713
Due from consolidated affiliates	290		6,109		—		(6,399		)	—
Notes receivable from consolidated affiliates	11,902		23,143		—		(35,045		)	—
Intangible assets
Goodwill	—		—		4,598		—			4,598
FCC licenses and other	—		—		41,492		—			41,492
Definite-lived intangible assets, net	—		—		918		—			918
Other assets	—		40		1,051		—			1,091
Total assets	$	37,896	$	50,219	$	83,853	$	(85,066	)	$	86,902

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	—	$	—	$	3,396	$	—		$	3,396
Accrued expenses and other current liabilities	239		346		3,456		(706		)	3,335
Current operating lease liabilities	—		—		1,860		—			1,860
Current portion of long-term debt, financing and finance lease obligations	—		2,569		1,311		—			3,880
Current portion of notes payable to consolidated affiliates	—		—		424		(424		)	—
Total current liabilities	239		2,915		10,447		(1,130		)	12,471
Long-term debt, financing and finance lease obligations	11,902		9,085		12,520		—			33,507
Long-term operating lease liabilities	—		—		5,423		—			5,423
Notes payable to consolidated affiliates	—		11,902		23,143		(35,045		)	—
Deferred tax liabilities	—		—		7,038		—			7,038
Other liabilities	—		846		1,862		—			2,708
Due to consolidated affiliates	—		—		6,399		(6,399		)	—
Total liabilities	12,141		24,748		66,832		(42,574		)	61,147
Commitments and contingencies
Total stockholders' equity	25,755		25,471		17,021		(42,492		)	25,755
Noncontrolling interests	—		—		—		—			—
Total equity	25,755		25,471		17,021		(42,492		)	25,755
Total liabilities and equity	$	37,896	$	50,219	$	83,853	$	(85,066	)	$	86,902

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 December 31, 2019
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	5,416		$	—		$	5,416
Equipment sales	—			—			1,372			—			1,372
Equipment rentals	—			—			1,292			—			1,292
	—			—			8,080			—			8,080
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			1,718			—			1,718
Cost of equipment sales	—			—			1,646			—			1,646
Cost of equipment rentals (exclusive of depreciation below)	—			—			201			—			201
Selling, general and administrative	—			—			2,045			—			2,045
Depreciation - network and other	—			—			1,071			—			1,071
Depreciation - equipment rentals	—			—			1,011			—			1,011
Amortization	—			—			474			—			474
Other, net	—			—			(152		)	—			(152		)
	—			—			8,014			—			8,014
Operating income	—			—			66			—			66
Other income (expense):
Interest income	227			511			113			(834		)	17
Interest expense	(227		)	(513		)	(683		)	834			(589		)
(Losses) earnings of subsidiaries	(120		)	(118		)	—			238			—
Other expense, net	—			—			(23		)	—			(23		)
	(120		)	(120		)	(593		)	238			(595		)
(Loss) income before income taxes	(120		)	(120		)	(527		)	238			(529		)
Income tax benefit	—			—			408			—			408
Net (loss) income	(120		)	(120		)	(119		)	238			(121		)
Less: Net loss attributable to noncontrolling interests	—			—			1			—			1
Net (loss) income attributable to Sprint Corporation	(120		)	(120		)	(118		)	238			(120		)
Other comprehensive (loss) income	(35		)	(35		)	(37		)	72			(35		)
Comprehensive (loss) income	$	(155	)	$	(155	)	$	(156	)	$	310		$	(156	)

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 (LOSS) INCOME



	Nine Months Ended December 31, 2019
	Parent/Issuer			Subsidiary Guarantor			Non-Guarantor Subsidiaries			Eliminations			Consolidated
	(in millions)
Net operating revenues:
Service	$	—		$	—		$	16,252		$	—		$	16,252
Equipment sales	—			—			3,784			—			3,784
Equipment rentals	—			—			3,981			—			3,981
	—			—			24,017			—			24,017
Net operating expenses:
Cost of services (exclusive of depreciation and amortization included below)	—			—			5,203			—			5,203
Cost of equipment sales	—			—			4,346			—			4,346
Cost of equipment rentals (exclusive of depreciation below)	—			—			666			—			666
Selling, general and administrative	—			—			5,888			—			5,888
Depreciation - network and other	—			—			3,256			—			3,256
Depreciation - equipment rentals	—			—			3,096			—			3,096
Amortization	—			—			698			—			698
Other, net	—			—			106			—			106
	—			—			23,259			—			23,259
Operating income	—			—			758			—			758
Other income (expense):
Interest income	679			1,546			372			(2,534		)	63
Interest expense	(679		)	(1,585		)	(2,072		)	2,534			(1,802		)
(Losses) earnings of subsidiaries	(505		)	(464		)	—			969			—
Other expense, net	—			(2		)	(25		)	—			(27		)
	(505		)	(505		)	(1,725		)	969			(1,766		)
(Loss) income before income taxes	(505		)	(505		)	(967		)	969			(1,008		)
Income tax benefit	—			—			494			—			494
Net (loss) income	(505		)	(505		)	(473		)	969			(514		)
Less: Net loss attributable to noncontrolling interests	—			—			9			—			9
Net (loss) income attributable to Sprint Corporation	(505		)	(505		)	(464		)	969			(505		)
Other comprehensive (loss) income	(61		)	(61		)	(36		)	97			(61		)
Comprehensive (loss) income	$	(566	)	$	(566	)	$	(509	)	$	1,066		$	(575	)

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 CASH FLOWS



	Nine Months Ended December 31, 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	$	—		$	(197	)	$	6,962		$	—		$	6,765
Cash flows from investing activities:
Capital expenditures - network and other	—			—			(3,360		)	—			(3,360		)
Capital expenditures - leased devices	—			—			(5,449		)	—			(5,449		)
Expenditures relating to FCC licenses	—			—			(24		)	—			(24		)
Proceeds from sales and maturities of short-term investments	—			79			—			—			79
Purchases of short-term investments	—			(74		)	—			—			(74		)
Change in amounts due from/due to consolidated affiliates	29			(3,560		)	—			3,531			—
Proceeds from sales of assets and FCC licenses	—			—			819			—			819
Proceeds from corporate owned life insurance policies	—			5			—			—			5
Proceeds from intercompany note advance to consolidated affiliate	—			424			—			(424		)	—
Other, net	—			—			(27		)	—			(27		)
Net cash provided by (used in) investing activities	29			(3,126		)	(8,041		)	3,107			(8,031		)
Cash flows from financing activities:
Proceeds from debt and financings	—			—			4,731			—			4,731
Repayments of debt, financing and finance lease obligations	—			(345		)	(6,843		)	—			(7,188		)
Debt financing costs	—			(3		)	(9		)	—			(12		)
Proceeds from issuance of common stock, net	(29		)	—			—			—			(29		)
Acquisition of noncontrolling interest	—			(3		)	(30		)	—			(33		)
Change in amounts due from/due to consolidated affiliates	—			—			3,531			(3,531		)	—
Repayments of intercompany note advance from parent	—			—			(424		)	424			—
Other, net	—			—			1			—			1
Net cash (used in) provided by financing activities	(29		)	(351		)	957			(3,107		)	(2,530		)
Net decrease in cash, cash equivalents and restricted cash	—			(3,674		)	(122		)	—			(3,796		)
Cash, cash equivalents and restricted cash, beginning of period	—			6,606			457			—			7,063
Cash, cash equivalents and restricted cash, end of period	$	—		$	2,932		$	335		$	—		$	3,267

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 finance 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