Sprint Reports Q2 Earnings

OVERLAND PARK, Kan. -- In its initial financial report since returning to a single common stock structure, Sprint (NYSE: FON - News) today announced strong second quarter results. For the quarter, fully diluted earnings per share on a GAAP basis were 16 cents versus break- even earnings in the second quarter of 2003. Adjusted EPS*, which removes the effects of special items, was 20 cents per share compared to 17 cents per share in the same period a year ago, an 18% improvement.

Consolidated net operating revenues increased 6% compared to a year ago and 2% sequentially. In the quarter, both business and consumer solutions reported sequential growth of revenues, while local consumer solutions reported a small sequential decline. Consolidated Adjusted EBITDA* in the quarter was $2.03 billion, a 1% increase from a year ago and a 2% increase sequentially. Consolidated Adjusted Operating Income* for the quarter increased 5% compared to the year-ago period, and 6% sequentially. Second quarter Free Cash Flow* totaled $692 million and year-to-date Free Cash Flow* was $934 million.

The second quarter performance was driven by very strong results in Wireless and solid contributions from Local, partially offset by lower contributions from Long distance.

"Sprint continues to successfully execute its transformation agenda," said Gary Forsee, Sprint chairman and chief executive officer. "Led by outstanding performance in Wireless which produced its first $1 billion quarterly Adjusted EBITDA*, we generated strong cash flows and improved our balance sheet. We achieved revenue growth in the second quarter that will likely lead other integrated telecom players. Additionally, we continued to implement actions that are enabling us to meet our previously announced goal of reducing annual operating expenses by more than $1 billion by the end of 2006. This consistent progress is the result of our unique nationwide wireless and wireline assets that offer integrated communication solutions to businesses and consumers and a customer-driven team that is producing a diversified and growing roster of satisfied users."

Second quarter net operating revenues were $6.9 billion compared to $6.5 billion last year. Operating income for the second quarter was $707 million compared to $370 million a year ago. Adjusted Operating Income* as a percentage of net operating revenues was consistent year-over-year. Second quarter net income was $233 million compared to $7 million last year. In the second quarter, pension-related costs and stock-based compensation costs totaled $167 million versus $120 million in the year-ago period.

Sprint produced strong cash flows in the second quarter. Debt was reduced by $1.1 billion during the quarter, and Sprint ended the quarter with a cash balance of $2.4 billion. Net Debt* now stands at $15.6 billion.

Sprint Corp.