United States Securities and Exchange Commission Form

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ————————————————————— FORM 10-Q ————————————————————— QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2014 or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File number 1-04721 ————————————————————— SPRINT CORPORATION (Exact name of registrant as specified in its charter) ————————————————————— Delaware 46-1170005 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 6200 Sprint Parkway, Overland Park, Kansas 66251 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (855) 848-3280 ————————————————————— Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer Accelerated filer Non-accelerated filer (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes No COMMON SHARES OUTSTANDING AT AUGUST 1, 2014 : Sprint Corporation Common Stock 3,945,492,794 Table of Contents SPRINT CORPORATION TABLE OF CONTENTS Page Reference Item PART I — FINANCIAL INFORMATION 1. Financial Statements 1 Consolidated Balance Sheets 1 Consolidated Statements of Comprehensive Income (Loss) 2 Consolidated Statements of Cash Flows 3 Consolidated Statement of Stockholders' Equity 4 Notes to the Consolidated Financial Statements 5 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 31 3. Quantitative and Qualitative Disclosures About Market Risk 54 4. Controls and Procedures 54 PART II — OTHER INFORMATION 1. Legal Proceedings 55 1A. Risk Factors 56 2. Unregistered Sales of Equity Securities and Use of Proceeds 56 3. Defaults Upon Senior Securities 56 4. Mine Safety Disclosures 56 5. Other Information 56 6. Exhibits 56 Signature 57 Exhibit Index 58 Table of Contents PART I — FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) SPRINT CORPORATION CONSOLIDATED BALANCE SHEETS Successor June 30, March 31, 2014 2014 (in millions, except share and per share data) ASSETS Current assets: Cash and cash equivalents $ 4,171 $ 4,970 Short-term investments 1,322 1,220 Accounts and notes receivable, net of allowance for doubtful accounts and deferred interest of $254 and $197 3,751 3,607 Device and accessory inventory 1,116 982 Deferred tax assets 78 128 Prepaid expenses and other current assets 936 672 Total current assets 11,374 11,579 Property, plant and equipment, net 16,852 16,299 Intangible assets Goodwill 6,343 6,383 FCC licenses and other 41,764 41,978 Definite-lived intangible assets, net 7,119 7,558 Other assets 967 892 Total assets $ 84,419 $ 84,689 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,492 $ 3,163 Accrued expenses and other current liabilities 5,137 5,544 Current portion of long-term debt, financing and capital lease obligations 807 991 Total current liabilities 9,436 9,698 Long-term debt, financing and capital lease obligations 31,687 31,787 Deferred tax liabilities 14,268 14,207 Other liabilities 3,664 3,685 Total liabilities 59,055 59,377 Commitments and contingencies Stockholders' equity: Common stock, voting, par value $0.01 per share, 9.0 billion authorized, 3.945 billion and 3.941 billion issued at June 30, 2014 and March 31, 2014 39 39 Paid-in capital 27,383 27,354 Accumulated deficit (2,015 ) (2,038 ) Accumulated other comprehensive loss (43 ) (43 ) Total stockholders' equity 25,364 25,312 Total liabilities and stockholders' equity $ 84,419 $ 84,689 See Notes to the Consolidated Financial Statements 1 Table of Contents SPRINT CORPORATION CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) Successor Predecessor Three Months Three Months Ended Ended June 30, June 30, 2014 2013 2013 (in millions, except per share amounts) Net operating revenues $ 8,789 $ — $ 8,877 Net operating expenses: Cost of services and products (exclusive of depreciation and amortization included below) 4,678 — 5,045 Selling, general and administrative 2,284 22 2,442 Severance, exit costs and asset impairments 27 — 632 Depreciation 868 — 1,563 Amortization 413 — 69 8,270 22 9,751 Operating income (loss) 519 (22 ) (874) Other (expense) income: Interest expense (512 ) — (428 ) Equity in losses of unconsolidated investments, net — — (257 ) Other income (expense), net 1 (153) 17 (511 ) (153) (668) Income (loss) before income taxes 8 (175) (1,542) Income tax benefit (expense) 15 61 (55 ) Net income (loss) $ 23 $ (114 ) $ (1,597 ) Basic net income (loss) per common share $ 0.01 $ (0.53 ) Diluted net income (loss) per common share $ 0.01 $ (0.53 ) Basic weighted average common shares outstanding 3,945 3,022 Diluted weighted average common shares outstanding 4,002 3,022 Other comprehensive income, net of tax: Net unrealized holding gains on securities $ — $ 96 $ 36 Net unrecognized net periodic pension and other postretirement benefits — — 15 Other comprehensive income — 96 51 Comprehensive income (loss) $ 23 $ (18 ) $ (1,546 ) See Notes to the Consolidated Financial Statements 2 Table of Contents SPRINT CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS Successor Predecessor Three Months Three Months Ended Ended June 30, June 30, 2014 2013 2013 (in millions) Cash flows from operating activities: Net income (loss) $ 23 $ (114 ) $ (1,597 ) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 1,281 — 1,632 Provision for losses on accounts receivable 225 — 99 Share-based and long-term incentive compensation expense 26 — 16 Deferred income tax (benefit) expense (23 ) (61 ) 52 Equity in losses of unconsolidated investments, net — — 257 Contribution to pension plan (10 ) — — Amortization and accretion of long-term debt premiums and discounts (74 ) — 13 Change in fair value of derivative — 167 — Other changes in assets and liabilities: Accounts and notes receivable (369 ) 7 (143) Inventories and other current assets (97 ) — 93 Accounts payable and other current liabilities (272 ) 1 614 Non-current assets and liabilities, net (66 ) — 189 Other, net 35 8 10 Net cash provided by operating activities 679 8 1,235 Cash flows from investing activities: Capital expenditures (1,246 ) — (1,571 ) Expenditures relating to FCC licenses (41 ) — (68 ) Reimbursements relating to FCC licenses 95 — — Acquisitions, net of cash acquired — — (509 ) Investment in Clearwire (including debt securities) — — (160 ) Proceeds from sales and maturities of short-term investments 900 — 949 Purchases of short-term investments (1,002 ) — (295 ) Other, net 17 — — Net cash used in investing activities (1,277 ) — (1,654 ) Cash flows from financing activities: Repayments of debt, financing and capital lease obligations (210 ) — (303 ) Debt financing costs — — (1 ) Proceeds from issuance of common stock, net 9 — 44 Net cash used in financing activities (201 ) — (260 ) Net (decrease) increase in cash and cash equivalents (799 ) 8 (679) Cash and cash equivalents, beginning of period 4,970 3 6,275 Cash and cash equivalents, end of period $ 4,171 $ 11 $ 5,596 See Notes to the Consolidated Financial Statements 3 Table of Contents SPRINT CORPORATION CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (in millions) Successor Accumulated Common Stock Other Paid-in Accumulated Comprehensive Shares Amount Capital Deficit Loss Total Balance, March 31, 2014 3,941 $ 39 $ 27,354 $ (2,038 ) $ (43 ) $ 25,312 Net income — — — 23 — 23 Issuance of common stock, net 4 — 9 — — 9 Share-based compensation expense — — 20 — — 20 Balance, June 30, 2014 3,945 $ 39 $ 27,383 $ (2,015 ) $ (43 ) $ 25,364 See Notes to the Consolidated Financial Statements 4 Table of Contents SPRINT CORPORATION NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS INDEX Page Reference 1. Basis of Presentation 6 2. New Accounting Pronouncements 7 3. Significant Transactions 8 4. Installment Receivables 10 5. Financial Instruments 12 6. Property, Plant and Equipment 12 7. Intangible Assets 13 8. Accounts Payable 13 9. Long-Term Debt, Financing and Capital Lease Obligations 14 10. Severance, Exit Costs and Asset Impairments 16 11. Income Taxes 17 12. Commitments and Contingencies 18 13. Per Share Data 20 14. Segments 21 15. Related-Party Transactions 23 16. Guarantor Financial Information 24 5 Table of Contents Index for Notes to the Consolidated Financial Statements SPRINT CORPORATION

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