Sprint Reports Q1

Sprint's net operating revenues were up 6% from $6.3B to $6.7B, boasts solid gains in wireless and DSL customers

April 20, 2004

3 Min Read

OVERLAND PARK, Kan. -- The Sprint FON Group (NYSE: FON) is comprised of Sprint's global markets division, local division and other businesses consisting primarily of wholesale distribution of telecommunications products.

The Sprint PCS Group (NYSE: PCS) consists of Sprint's mobile wireless operations.

On April 23, 2004, Sprint will recombine its two tracking stocks, and each share of PCS stock will automatically convert into 0.5 shares of FON stock. As of April 23, 2004, the FON Group and the PCS Group will no longer exist, and FON stock will represent all of the operations and net assets of Sprint, including the global markets division, the local division and the PCS wireless division.

Sprint today announced first quarter 2004 financial results. The results include strong revenue and operating income performance, strong cash flow production, excellent operational performance including solid gains in wireless and DSL customers, and significant growth in wireless data customers and revenues.

Under Sprint's tracking stock structure, fully diluted Earnings per share from continuing operations for the FON Group in the first quarter was 34 cents compared to 31 cents in the first quarter of 2003. Before special items, FON Group's Adjusted EPS* was 36 cents versus 34 cents in the year-ago period, a 6% increase. The PCS Group reported a loss from continuing operations of 9 cents per share for the first quarter, compared to a loss of 18 cents per share in the first quarter of 2003. Before special items, the PCS Group reported an 8 cent Adjusted loss per share* versus a 16 cent loss in the year- ago period, a 50% improvement.

Assuming the recombination of the tracking stocks occurred at the beginning of 2003 at the same conversion ratio, Sprint's pro forma consolidated Earnings per share from continuing operations in the first quarter of 2004 was 15 cents compared to 7 cents per share in the first quarter of 2003. Before special items, Sprint's pro forma Adjusted EPS* was 17 cents versus 10 cents in the year-ago period, a 70% increase.

In the quarter, Sprint's total net operating revenues increased 6% compared to the first quarter of 2003; total Adjusted Operating Income* was up 21%; total Adjusted EBITDA* increased 7%; and first quarter Free Cash Flow* totaled $242 million. Free Cash Flow* in the quarter is net of a $300 million contribution to Sprint's employee pension fund.

In the quarter, each of Sprint's business units contributed to the solid overall performance. The PCS wireless division reported strong financial results and added 972,000 customers, consisting of 414,000 net direct customer additions combined with 558,000 from wholesale and affiliate partners. PCS also built on its data leadership adding one million new Sprint PCS Vision(SM) subscribers. Annualized data revenues were $713 million, a 32 percent improvement from the fourth quarter. The local division delivered steady financial performance including solid cash production, and added a record 45,000 DSL subscribers, driving a 13% year-over-year improvement in data revenues. Despite a challenging operating environment, the global markets division reported revenue performance that is expected to exceed top-line results for major backbone competitors, a year-over-year gain in operating income, and Adjusted EBITDA* that exceeded capital expenditures by nearly $290 million.

"In the first quarter, Sprint demonstrated the strength of our transformed business," said Gary Forsee, Sprint chairman and chief executive officer. "We have widened our industry lead in wireless data, we have aggressively added customers in DSL, and we added game-changing alliances that will help grow the scale of our operations and improve our customer experience.

"I am very encouraged that our associates have been able to jump start our new organization and a new year," Forsee added. "We clearly have a solid footing for strong performance throughout 2004."

Sprint Corp.

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