Sanford C. Bernstein & Co. 21 st Annual Strategic Decisions Conference Gary Forsee Chairman & CEO 2005 Sprint. All Rights Reserved. Sprint and the diamond logo design are trademarks of Sprint Communications Company L.P. All other trademarks are the property of their respective owners.
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 April 20, 2005, which is posted on Sprint s website at <<http://www.sprint.com/sprint/ir/fn/>>, 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 1934. 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 April 20, 2005, First Quarter 2005 Investor Update located at <http://www.sprint.com/sprint/ir/>. 2
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995 A number of the matters discussed in this document are not historical or current facts deal with potential future circumstances and developments, in particular, information regarding the new company, including expected synergies resulting from the merger of Sprint and Nextel, combined operating and financial data, future technology plans, and whether and when the transactions contemplated by the merger agreement will be consummated. The discussion of such matters is qualified by the inherent risks and uncertainties surrounding future expectations generally, and also may materially differ from actual future experience involving any one or more of such matters. Such risks and uncertainties include: the failure to realize capital and operating expense synergies; the result of the review of the proposed merger by various regulatory agencies, and any conditions imposed on the new company in connection with consummation of the merger; approval of the merger by the stockholders of Sprint and Nextel and satisfaction of various other conditions to the closing of the merger contemplated by the merger agreement; and the risks that are described from time to time in Sprint s and Nextel s respective reports filed with the SEC, including each company s annual report on Form 10-K for the year ended December 31, 2004. This document speaks only as of its date, and Sprint and Nextel each disclaims any duty to update the information herein. Additional Information and Where to Find It Sprint Corporation has filed a Registration Statement on Form S-4 with the SEC (Reg. No. 333-123333) containing a preliminary joint proxy statement/prospectus regarding the proposed transaction. SHAREHOLDERS OF SPRINT AND SHAREHOLDERS OF NEXTEL ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/ PROSPECTUS THAT IS PART OF THE REGISTRATION STATEMENT, BECAUSE THEY CONTAIN IMPORTANT INFORMATION ABOUT THE COMBINATION. The final joint proxy statement/prospectus will be mailed to shareholders of Sprint and shareholders of Nextel. Investors and security holders will be able to obtain the documents free of charge at the SEC s web site, www.sec.gov, from Sprint Investor Relations at Sprint Corporation, 6200 Sprint Parkway, Overland Park, Kansas 66251, 800-259-3755, Option 1 or from Nextel Investor Relations at 2001 Edmund Halley Drive, Reston, Virginia 20191, 703-433-4300. Participants in Solicitation Sprint, Nextel and their respective directors and executive officers, other members of management and employees and the proposed directors and executive officers of Sprint Nextel, may be deemed to be participants in the solicitation of proxies in respect of the combination. Information concerning the proposed directors and executive officers of Sprint Nextel, Sprint s and Nextel s respective directors and executive officers and other participants in the proxy solicitation, including a description of their interests, is included in the joint proxy statement/prospectus contained in the above-referenced Registration Statement on Form S-4. 3
Reconciliation of non-gaap Liquidity Measures Quarter ended March 31, 2005 Long Other & Consolidated Wireless Local Distance Eliminations Quarter ended March 31, 2004 Long Other & Consolidated Wireless Local Distance Eliminations Operating income (loss) $ 1,036 $ 455 $ 445 $ 146 $ (10) Special items (1) - 2 1 (3) - Adjusted operating income (loss)* 1,036 457 446 143 (10) Depreciation and amortization 1,036 644 277 117 (2) Adjusted EBITDA* 2,072 $ 1,101 $ 723 $ 260 $ (12) Adjust for special items - Other operating activities, net (2) (688) Cash provided by operating activities-gaap 1,384 Capital expenditures (659) Dividends paid (187) Investments in and loans to affiliates, net (14) Other investing activities, net 8 Free Cash Flow* 532 Decrease in debt, net (1,012) Investments in debt securities, net 19 Proceeds from common stock issued 58 Other financing activities, net 13 Change in cash and equivalents - GAAP $ (390) Operating income (loss) $ 724 $ 277 $ 446 $ 11 $ (10) Special items (1) 30 4 14 12 - Adjusted operating income (loss)* 754 281 460 23 (10) Depreciation and amortization 1,233 644 268 320 1 Adjusted EBITDA* 1,987 $ 925 $ 728 $ 343 $ (9) Adjust for special items (30) Other operating activities, net (2) (919) Cash provided by operating activities-gaap 1,038 Capital expenditures (683) Dividends paid (115) Other investing activities, net 3 Free Cash Flow* 243 Decrease in debt, net (22) Proceeds from common stock issued 33 Investments in debt securities, net 34 Other financing activities, net 16 Change in cash and equivalents - GAAP $ 304 (1) In the 2005 first quarter, Sprint's restructuring activities were related to its ongoing organizational realignment initiatives as well as the Web Hosting wind-down. This activity had no impact on consolidated results. In the 2004 first quarter, Sprint recorded a $30 million pre-tax restructuring charge related to its ongoing organizational realignment initiatives as well as the Web Hosting wind-down. These charges reduced net income by $19 million. (2) 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. 4
Sprint Well Positioned in Changing Industry Convergence changing the industry Integrated bundled products growing Industry players striving to look like Sprint Enviable business mix Compelling investment profile Sprint Nextel merger milestones update 5
Convergence is Redefining the Industry Device Convergence Lifestyle Convergence Work Home Customer Choices Elsewhere Corporate Office Wireless Inter-working Gateway IP Suppliers Continuity & Security Connectivity Intelligent Applications & Services Branch Offices Mobile Employees Network Convergence Application Convergence 6
Industry Moving Towards Integrated Products Telecom Industry Revenue by Source 2003 2010 Integrated Bundled Services Ala Carte Products Source: Sprint Estimates Convergence drives growth of integrated and bundled services By 2010, 80% of households expected to bundle at least two services from a single provider 7
Industry Players Trying to Look Like Sprint Sprint Global Wireline Voice & Data Wireless Voice & Data Wireline/ Wireless Integrated Solutions Video Established national/global provider Wireline / wireless solutions Positioned for cable partnerships LD Lack wireless/wireline capability Resells local RBOC service Cable (MSOs) Lack wireline/wireless capability RBOCs No nationwide Internet network No national/global enterprise capabilities Wireless via joint ownership Sprint is well positioned to offer a unified user experience 8
Sprint Structured to Focus on the Customer s Needs Customer Centric Allows Sprint to sell integrated products Business Consumer One point-of-contact for the customer Network & IT focused on facilitating solution selling Network and IT Corporate Staff 100% ownership in primary growth drivers in industry: wireless & IP 9
Sprint s Mix Weighted Towards Growth Sectors Revenue Contribution Adjusted EBITDA Contribution 100% 100% 75% 22% 21% 75% 36% 35% 50% 28% 24% 50% 17% 12% 25% 50% 55% 25% 47% 53% 0% 1Q04 1Q05 Wireless LD Local Results exclude North Supply & before eliminations 0% 1Q04 1Q05 Wireless LD Local Strong year-over-year growth in wireless, DSL and IP 10
Sprint Nextel Investment Profile Compelling Combined Sprint Nextel Wireless Subscribers on Network 45 15% 1Q05 Combined Wireless Revenue Y-o-Y Growth Rate 8% 1Q05 Total Combined Revenue Y-o-Y Growth Rate 40 35 +22% 14% 6% 4% 30 13% 2% 25 0% 20 1Q04 1Q05 Subscribers include Sprint direct, affiliate & wholesale and Nextel 12% Sprint Nextel Competitor Avg Competitors include Verizon, T-Mobile USA, Cingular & Alltel (including Western Wireless) -2% Total Sprint Nextel Integrated Carriers Integrated carriers includes Verizon, SBC, Bellsouth, Alltel, Qwest and normalizes for ownership positions and merger activity Fortune 40 company with superior growth profile 11
Merger Milestones Accomplishments Creation of merger governance structure Accomplishments State approvals DOJ: Hart-Scott-Rodino Act FCC application SEC Joint proxy/s-4 filing SEC proxy approval DOJ antitrust review FCC review Expected merger close Expected Local spin-off Next level of executive management 1Q 2005 2Q 2005 2H 2005 2006 12
Q&A Gary Forsee Chairman & CEO 13