Credit Suisse First Boston Media & Telecom Conference Bob Dellinger CFO

Transcription

1 Credit Suisse First Boston Media & Telecom Conference Bob Dellinger CFO

2 Cautionary statement regarding forward-looking information The information highlighted in this presentation includes selected financial information and should be read in conjunction with our consolidated financial statements and notes and the Cautionary Statements Regarding Forward-Looking Information included in our press release dated Oct 19, 2004, which is posted on Sprint s website at << as well as our financial statements and notes, the trends and risk factors affecting us and other information provided in our annual, quarterly and current reports, proxy statement, and other filings made with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of This presentation includes "forward-looking statements" within the meaning of securities laws. The statements in this presentation regarding the business outlook and expected performance as well as other statements that are not historical facts are forward-looking statements. The words "estimate," "project," "forecast," "intend," "expect," "believe," "target," "providing guidance" and similar expressions identify forward-looking statements, which are estimates and projections reflecting management's judgments based on currently available information and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. Forward-looking statements speak only as of the date indicated. Sprint is not obligated to publicly release any revisions to forward-looking statements to reflect events after the date of any news release or unforeseen events. With respect to these forward-looking statements, Sprint has made assumptions regarding, among other things, customer and network usage, customer growth and retention, pricing, costs to acquire customers and to provide services, the timing of various events and the economic environment. This presentation contains certain non-gaap financial measures as well as reconciliations to the most directly comparable GAAP financial measures. Because Sprint does not predict special items that might occur in the future, and our forecasts are developed at a level of detail different than that used to prepare GAAP-based financial measures, Sprint does not provide reconciliations to its forward-looking measures. Definitions of these non-gaap financial measures are available in the Oct 19, 2004, Third Quarter Investor Update located at < 2

3 Executing on Our Priorities Transforming the organization Positioning for growth Leveraging strategic alliances Reducing operational costs Increasing financial strength Sprint is delivering on its commitments 3

4 Transforming the Organization Processes and resources aligned with customer needs Single sales force streamlines customer interactions Able to fully leverage portfolio of assets Sprint Corporation SCS SBS LCS 50% of revenue 40% of revenue 10% of revenue Data contribution growing Expanding distribution Improving customer experience Focus on integrated solutions Enabling VOIP through cable Strong wireless growth Accelerating DSL additions Penetrating with bundles Wireless and video emphasis 4

5 Positioning for Growth 3Q04 Revenue Wireless Voice Data Wireline Voice High exposure to wireless and data: ~65% of revenue More than 50% of Adjusted EBITDA from wireless Continuing innovation - EV-DO - Fair & Flexible - Wireless multi-media - Circuit to packet conversion 5

6 Leveraging Strategic Alliances MVNOs extend wireless reach Video completes the local bundle Cable agreements capitalize on telco expertise Wireless Wholesale Growth Subscribers 3,000 2,500 2,000 1,500 1, Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 $120 $100 $80 $60 $40 $20 $0 Net Operating Revenue Subscriber Base (000s) Revenue ($M) 6

7 Reducing Operational Costs Ahead of plan on cost reduction initiatives Will exceed target of $1B by 2006 Relative Cost Improvement 80% of reductions to date IT IT Access Access Network Billing & Receivables Network Billing & Receivables 7

8 Increasing Financial Strength Growing Profitably (2004 YTD) Decreasing Leverage Revenue 5% 3Q03 3Q04 Adjusted Operating Income 10% Net Debt (B) $17.1 $13.4 Adjusted EBITDA 3% Net Debt / Adj EBITDA Adjusted EPS 35% Interest Coverage Growth well ahead of industry Achieving long-held Net Debt target Credit outlook raised to positive 8

9 Why Sprint? Differentiated Go-to-Market strategy Exposure to growth segments Consistent financial & operational execution Superior value opportunity 9

10 Questions & Answers 10

11 Reconciliation of non-gaap Liquidity Measures Quarter-to-date June 30, 2004 Long Other & Consolidated Wireless Local Distance Eliminations Operating income (loss) $ 707 $ 407 $ 445 $ (139) $ (6) Special items Adjusted Operating Income (Loss)* (66) (6) Depreciation and amortization 1, Adjusted EBITDA* 2,032 $ 1,065 $ 718 $ 255 $ (6) Adjust for special items (82) Other operating activities, net (1) (48) Cash provided by operating activities-gaap 1,902 Capital expenditures (999) Dividends paid (179) Investments in affilates, net (3) Other investing activities, net (29) Free Cash Flow* 692 Increase (decrease) in debt, net (1,090) Investments in debt securities, net 45 Other financing activities, net 3 Change in cash and equivalents - GAAP $ (350) Year-to-date June 30, 2004 Long Other & Consolidated Wireless Local Distance Eliminations Operating income (loss) $ 1,421 $ 674 $ 891 $ (128) $ (16) Special items Adjusted Operating Income (Loss)* 1, (43) (16) Depreciation and amortization 2,486 1, Adjusted EBITDA* 4,019 $ 1,990 $ 1,446 $ 598 $ (15) Adjust for special items (112) Other operating activities, net (1) (961) Cash provided by operating activities-gaap 2,946 Capital expenditures (1,688) Dividends paid (295) Investments in affilates, net (5) Other investing activities, net (24) Free Cash Flow* 934 Increase (decrease) in debt, net (1,112) Investments in debt securities, net 79 Other financing activities, net 53 Change in cash and equivalents - GAAP $ (46) Quarter-to-date June 30, 2003 Long Other & Consolidated Wireless Local Distance Eliminations Operating income (loss) $ 370 $ 261 $ 453 $ (333) $ (11) Special items Adjusted Operating Income (Loss)* (11) Depreciation and amortization 1, Adjusted EBITDA* 2,006 $ 897 $ 732 $ 387 $ (10) Adjust for special items (384) Other operating activities, net (1) 288 Cash provided by operating activities-gaap 1,910 Capital expenditures (945) Dividends paid (114) Other investing activities, net 74 Free Cash Flow* 925 Discontinued operation 16 Decrease in debt, net (304) Other financing activities, net 7 Change in cash and equivalents - GAAP $ 644 Year-to-date June 30, 2003 Long Other & Consolidated Wireless Local Distance Eliminations Operating income (loss) $ 974 $ 411 $ 915 $ (329) $ (23) Special items Adjusted Operating Income (Loss)* 1, (23) Depreciation and amortization 2,488 1, Adjusted EBITDA* 3,856 $ 1,665 $ 1,459 $ 752 $ (20) Adjust for special items (394) Other operating activities, net (1) (494) Cash provided by operating activities-gaap 2,968 Capital expenditures (1,492) Dividends paid (228) Investments in affilates, net (12) Other investing activities, net 77 Free Cash Flow* 1,313 Discontinued operation 2,231 Decrease in debt, net (1,859) Other financing activities, net 19 Change in cash and equivalents - GAAP $ 1,704 (1) Other operating activities, net includes the change in working capital, change in deferred income taxes, miscellaneous operating activities and non-operating items in income (loss) from continuing operations. 11