Company Quick10K Filing
Quick10K
Sprint
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$5.98 4,079 $24,390
10-Q 2019-06-30 Quarter: 2019-06-30
10-K 2019-03-31 Annual: 2019-03-31
10-Q 2018-12-31 Quarter: 2018-12-31
10-Q 2018-09-30 Quarter: 2018-09-30
10-Q 2018-06-30 Quarter: 2018-06-30
10-K 2018-03-31 Annual: 2018-03-31
10-Q 2017-12-31 Quarter: 2017-12-31
10-Q 2017-09-30 Quarter: 2017-09-30
10-Q 2017-06-30 Quarter: 2017-06-30
10-K 2017-03-31 Annual: 2017-03-31
10-Q 2016-12-31 Quarter: 2016-12-31
10-Q 2016-09-30 Quarter: 2016-09-30
10-Q 2016-06-30 Quarter: 2016-06-30
10-K 2016-03-31 Annual: 2016-03-31
10-Q 2015-12-31 Quarter: 2015-12-31
10-Q 2015-09-30 Quarter: 2015-09-30
10-Q 2015-06-30 Quarter: 2015-06-30
10-K 2015-03-31 Annual: 2015-03-31
10-Q 2014-12-31 Quarter: 2014-12-31
10-Q 2014-09-30 Quarter: 2014-09-30
10-Q 2014-06-30 Quarter: 2014-06-30
10-K 2013-12-31 Annual: 2013-12-31
8-K 2019-08-02 Earnings, Exhibits
8-K 2019-07-26 Enter Agreement, Other Events, Exhibits
8-K 2019-06-07 Enter Agreement, Other Events, Exhibits
8-K 2019-05-20 Regulation FD
8-K 2019-05-16 Officers
8-K 2019-05-07 Earnings, Exhibits
8-K 2019-04-27 Other Events
8-K 2019-01-31 Earnings, Exhibits
8-K 2018-12-17 Other Events, Exhibits
8-K 2018-12-03 Officers
8-K 2018-11-26 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-10-31 Earnings, Exhibits
8-K 2018-10-30 Shareholder Vote
8-K 2018-08-07 Shareholder Vote
8-K 2018-08-01 Earnings, Exhibits
8-K 2018-06-29 Officers, Exhibits
8-K 2018-06-06 Enter Agreement, Exhibits
8-K 2018-05-23 Officers
8-K 2018-05-18 Enter Agreement, Other Events, Exhibits
8-K 2018-04-29 Enter Agreement, Other Events, Exhibits
8-K 2018-03-21 Enter Agreement, Off-BS Arrangement, Exhibits
8-K 2018-02-20 Other Events, Exhibits
8-K 2018-02-09 Enter Agreement, Exhibits
8-K 2018-02-02 Earnings, Exhibits
ACN Accenture 111,280
UHS Universal Health Services 11,080
CRAY Cray 1,180
NP Neenah 1,060
LEVL Level One Bancorp 188
NPHC Nutra Pharma 0
MRMD Marimed 0
STAR Istar 0
CXEE China Xuefeng Environmental Engineering 0
TPCA Tropicana Entertainment 0
S 2019-06-30
Part I - Financial Information
Item 1. Financial Statements (Unaudited)
Note 1. Basis of Presentation and Other Information
Note 2. New Accounting Pronouncements
Note 3. Installment Receivables
Note 4. Financial Instruments
Note 5. Property, Plant and Equipment
Note 6. Intangible Assets
Note 7. Leases
Note 8. Long-Term Debt, Financing and Finance Lease Obligations
Note 9. Revenues From Contracts with Customers
Note 10. Severance and Exit Costs
Note 11. Income Taxes
Note 12. Commitments and Contingencies
Note 13. per Share Data
Note 14. Segments
Note 15. Related-Party Transactions
Note 16. Guarantor Financial Information
Note 17. Additional Financial Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-10.1 sprintcorpjun-2019ex101.htm
EX-10.2 sprintcorpjun-2019ex102.htm
EX-10.3 sprintcorpjun-2019ex103.htm
EX-31.1 sprintcorpjun-2019ex311.htm
EX-31.2 sprintcorpjun-2019ex312.htm
EX-32.1 sprintcorpjun-2019ex321.htm
EX-32.2 sprintcorpjun-2019ex322.htm

Sprint Earnings 2019-06-30

S 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Document
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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, 2019
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: (913794-1091
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbol
 
Name of each exchange on which registered 
Common stock, $0.01 par value
 
S
 
New York Stock Exchange
—————————————————————
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  x    No   o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).    Yes  x    No   o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer

 
Accelerated filer

Non-accelerated filer

 
Smaller reporting company
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.     o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes      No   x
COMMON SHARES OUTSTANDING AT AUGUST 6, 2019:
Sprint Corporation Common Stock
4,092,896,454

 


Table of Contents

SPRINT CORPORATION
TABLE OF CONTENTS
 
 
 
Page
Reference  
Item
PART I — FINANCIAL INFORMATION
 
1.
 
 
 
 
 
2.
3.
4.
 
 
 
 
 
 
 
PART II — OTHER INFORMATION
 
1.
1A.
2.
3.
4.
5.
6.
 
 







Table of Contents

PART I — FINANCIAL INFORMATION

Item 1.
Financial Statements (Unaudited)

SPRINT CORPORATION
CONSOLIDATED BALANCE SHEETS  
 
June 30,
 
March 31,
 
2019
 
2019
 
(in millions, except share and
per share data)
ASSETS
Current assets:
 
 
 
Cash and cash equivalents
$
4,869

 
$
6,982

Short-term investments

 
67

Accounts and notes receivable, net of allowance for doubtful accounts and deferred interest of $373 and $363, respectively
3,558

 
3,554

Device and accessory inventory
726

 
999

Prepaid expenses and other current assets
1,436

 
1,289

Total current assets
10,589

 
12,891

Property, plant and equipment, net
20,556

 
21,201

Costs to acquire a customer contract
1,631

 
1,559

Operating lease right-of-use assets
7,054

 

Intangible assets


 
 
Goodwill
4,598

 
4,598

FCC licenses and other
41,474

 
41,465

Definite-lived intangible assets, net
1,525

 
1,769

Other assets
1,119

 
1,118

Total assets
$
88,546

 
$
84,601

LIABILITIES AND EQUITY
Current liabilities:
 
 
 
Accounts payable
$
3,672

 
$
3,961

Accrued expenses and other current liabilities
3,048

 
3,597

Current operating lease liabilities
1,680

 

Current portion of long-term debt, financing and finance lease obligations
2,889

 
4,557

Total current liabilities
11,289

 
12,115

Long-term debt, financing and finance lease obligations
35,073

 
35,366

Long-term operating lease liabilities
5,913

 

Deferred tax liabilities
7,563

 
7,556

Other liabilities
2,540

 
3,437

Total liabilities
62,378

 
58,474

Commitments and contingencies

 

Stockholders' equity:
 
 
 
Common stock, voting, par value $0.01 per share, 9.0 billion authorized, 4.092 billion and 4.081 billion issued, respectively
41

 
41

Paid-in capital
28,323

 
28,306

Treasury shares, at cost
(2
)
 

Accumulated deficit
(1,832
)
 
(1,883
)
Accumulated other comprehensive loss
(414
)
 
(392
)
Total stockholders' equity
26,116

 
26,072

Noncontrolling interests
52

 
55

Total equity
26,168

 
26,127

Total liabilities and equity
$
88,546

 
$
84,601

See Notes to the Consolidated Financial Statements

1

Table of Contents



SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
 
Three Months Ended
 
June 30,
 
2019
 
2018
 
(in millions, except per share amounts)
Net operating revenues:
 
 
 
Service
$
5,563

 
$
5,740

Equipment sales
1,220

 
1,173

Equipment rentals
1,359

 
1,212

 
8,142

 
8,125

Net operating expenses:
 
 
 
Cost of services (exclusive of depreciation and amortization included below)
1,710

 
1,677

Cost of equipment sales
1,341

 
1,270

Cost of equipment rentals (exclusive of depreciation below)
225

 
124

Selling, general and administrative
1,907

 
1,867

Depreciation - network and other
1,120

 
1,023

Depreciation - equipment rentals
1,029

 
1,136

Amortization
118

 
171

Other, net
237

 
42

 
7,687

 
7,310

Operating income
455

 
815

Other (expense) income:
 
 
 
Interest expense
(619
)
 
(637
)
Other income, net
28

 
42

 
(591
)
 
(595
)
(Loss) income before income taxes
(136
)
 
220

Income tax benefit (expense)
22

 
(47
)
Net (loss) income
(114
)
 
173

Less: Net loss attributable to noncontrolling interests
3

 
3

Net (loss) income attributable to Sprint Corporation
$
(111
)
 
$
176

 
 
 
 
Basic net (loss) income per common share attributable to Sprint Corporation
$
(0.03
)
 
$
0.04

Diluted net (loss) income per common share attributable to Sprint Corporation
$
(0.03
)
 
$
0.04

Basic weighted average common shares outstanding
4,087

 
4,010

Diluted weighted average common shares outstanding
4,087

 
4,061

 
 
 
 
Other comprehensive (loss) income, net of tax:
 
 
 
Net unrealized holding losses on securities and other
$
(3
)
 
$
(8
)
Net unrealized holding (losses) gains on derivatives
(21
)
 
10

Net unrecognized net periodic pension and other postretirement benefits
2

 
2

Cumulative effect of accounting change

 
(8
)
Other comprehensive loss
(22
)
 
(4
)
Comprehensive (loss) income
$
(136
)
 
$
169

See Notes to the Consolidated Financial Statements

2

Table of Contents




SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS



 
Three Months Ended
 
June 30,
 
2019
 
2018
 
(in millions)
Cash flows from operating activities:
 
 
 
Net (loss) income
$
(114
)
 
$
173

Adjustments to reconcile net (loss) income to net cash provided by operating activities:
 
 
 
Impairments
210

 

Depreciation and amortization
2,267

 
2,330

Provision for losses on accounts receivable
117

 
57

Share-based and long-term incentive compensation expense
35

 
40

Deferred income tax (benefit) expense
(33
)
 
39

Amortization of long-term debt premiums, net
(16
)
 
(33
)
Loss on disposal of property, plant and equipment
225

 
124

Deferred purchase price from sale of receivables

 
(170
)
Other changes in assets and liabilities:
 
 
 
Accounts and notes receivable
(121
)
 
273

Inventories and other current assets
456

 
421

Operating lease right-of-use assets
414

 

Accounts payable and other current liabilities
(660
)
 
(766
)
Current and long-term operating lease liabilities
(460
)
 

Non-current assets and liabilities, net
(136
)
 
(197
)
Other, net
60

 
139

Net cash provided by operating activities
2,244

 
2,430

Cash flows from investing activities:
 
 
 
Capital expenditures - network and other
(1,189
)
 
(1,132
)
Capital expenditures - leased devices
(1,516
)
 
(1,817
)
Expenditures relating to FCC licenses
(9
)
 
(59
)
Proceeds from sales and maturities of short-term investments

 
810

Purchases of short-term investments
67

 
(2,464
)
Proceeds from sales of assets and FCC licenses
182

 
133

Proceeds from deferred purchase price from sale of receivables

 
170

Other, net
(3
)
 
(10
)
Net cash used in investing activities
(2,468
)
 
(4,369
)
Cash flows from financing activities:
 
 
 
Proceeds from debt and financings
1,061

 
1,370

Repayments of debt, financing and finance lease obligations
(2,919
)
 
(1,415
)
Debt financing costs
(12
)
 
(248
)
Proceeds from issuance of common stock, net
(17
)
 

Other, net

 
(2
)
Net cash used in financing activities
(1,887
)
 
(295
)
Net decrease in cash, cash equivalents and restricted cash
(2,111
)
 
(2,234
)
Cash, cash equivalents and restricted cash, beginning of period
7,063

 
6,659

Cash, cash equivalents and restricted cash, end of period
$
4,952

 
$
4,425

See Notes to the Consolidated Financial Statements

3

Table of Contents



SPRINT CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(in millions)
 
 
Three Months Ended June 30, 2019
 
Common Stock
 
Paid-in
Capital
 
Treasury Shares
 
(Accumulated
Deficit) Retained Earnings
 
Accumulated
Other
Comprehensive
Loss
 
Noncontrolling
Interests
 
Total Equity
 
Shares
 
Amount
Shares
 
Amount
Balance, March 31, 2019
4,081

 
$
41

 
$
28,306

 

 
$

 
$
(1,883
)
 
$
(392
)
 
$
55

 
$
26,127

Net loss
 
 
 
 
 
 
 
 
 
 
(111
)
 
 
 
(3
)
 
(114
)
Other comprehensive loss, net of tax
 
 
 
 
 
 
 
 
 
 
 
 
(22
)
 
 
 
(22
)
Issuance of common stock, net
11

 

 
(15
)
 

 
(2
)
 
 
 
 
 
 
 
(17
)
Share-based compensation expense
 
 
 
 
35

 
 
 
 
 
 
 
 
 
 
 
35

Other, net
 
 
 
 
(3
)
 
 
 
 
 
 
 
 
 
 
 
(3
)
Cumulative effect of accounting change
 
 
 
 

 
 
 
 
 
162

 
 
 

 
162

Balance, June 30, 2019
4,092

 
$
41

 
$
28,323

 

 
$
(2
)
 
$
(1,832
)
 
$
(414
)
 
$
52

 
$
26,168


 
Three Months Ended June 30, 2018
 
Common Stock
 
Paid-in
Capital
 
Treasury Shares
 
(Accumulated
Deficit) Retained Earnings
 
Accumulated
Other
Comprehensive
(Loss) Income
 
Noncontrolling
Interests
 
Total Equity
 
Shares
 
Amount
Shares
 
Amount
Balance, March 31, 2018
4,005

 
$
40

 
$
27,884

 

 
$

 
$
(1,255
)
 
$
(313
)
 
$
63

 
$
26,419

Net income (loss)
 
 
 
 
 
 
 
 
 
 
176

 
 
 
(3
)
 
173

Other comprehensive income, net of tax
 
 
 
 
 
 
 
 
 
 
 
 
4

 
 
 
4

Issuance of common stock, net
8

 
 
 
2

 
1

 
(4
)
 
 
 
 
 
 
 
(2
)
Share-based compensation expense
 
 
 
 
40

 
 
 
 
 
 
 
 
 
 
 
40

Capital contribution by SoftBank
 
 
 
 
1

 
 
 
 
 
 
 
 
 
 
 
1

Cumulative effect of accounting changes
 
 
 
 
 
 
 
 
 
 
1,315

 
(8
)
 
 
 
1,307

Other, net
 
 
 
 
3

 
 
 
 
 
 
 
 
 
 
 
3

Increase (decrease) attributable to noncontrolling interests
 
 
 
 
8

 
 
 
 
 
 
 
 
 
(8
)
 

Balance, June 30, 2018
4,013

 
$
40

 
$
27,938

 
1

 
$
(4
)
 
$
236

 
$
(317
)
 
$
52

 
$
27,945

See Notes to the Consolidated Financial Statements

4

Table of Contents



SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
INDEX
 
 
 
Page
Reference
1.
 
 
 
2.
 
 
 
3.
 
 
 
4.
 
 
 
5.
 
 
 
6.
 
 
 
7.
 
 
 
8.
 
 
 
9.
 
 
 
10.
 
 
 
11.
 
 
 
12.
 
 
 
13.
 
 
 
14.
 
 
 
15.
 
 
 
16.
 
 
 
17.
 
 
 



5

Table of Contents

Index for Notes to the Consolidated Financial Statements


SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1.
Basis of Presentation and Other Information
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X for interim financial information. All normal recurring adjustments considered necessary for a fair presentation have been included. Certain disclosures normally included in annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States (U.S. GAAP) have been omitted. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes contained in our Annual Report on Form 10-K for the year ended March 31, 2019. Unless the context otherwise requires, references to "Sprint," "we," "us," "our" and the "Company" mean Sprint Corporation and its consolidated subsidiaries for all periods presented, and references to "Sprint Communications" are to Sprint Communications, Inc. and its consolidated subsidiaries.
The preparation of the unaudited interim consolidated financial statements requires management of the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements. These estimates are inherently subject to judgment and actual results could differ.
The consolidated financial statements include our accounts, those of our 100% owned subsidiaries, and subsidiaries we control or in which we have a controlling financial interest. For controlled subsidiaries that are not wholly-owned, the noncontrolling interests are included in "Net (loss) income" and "Total equity." All intercompany transactions and balances have been eliminated in consolidation.
Business Combination Agreement
On April 29, 2018, we announced that we entered into a Business Combination Agreement with T-Mobile US, Inc. (T-Mobile) to merge in an all-stock transaction for a fixed exchange ratio of 0.10256 of T-Mobile shares for each Sprint share, or the equivalent of 9.75 Sprint shares for each T-Mobile share (Merger Transaction). Immediately following the Merger Transaction, Deutsche Telekom AG and SoftBank Group Corp. are expected to hold approximately 42% and 27% of fully-diluted shares of the combined company, respectively, with the remaining 31% of the fully-diluted shares of the combined company held by public stockholders. The board of directors will consist of 14 directors, of which nine will be nominated by Deutsche Telekom AG, four will be nominated by SoftBank Group Corp., and the final director will be the CEO of the combined company. The combined company will be named T-Mobile. The Merger Transaction is subject to customary closing conditions, including certain state and federal regulatory approvals. Sprint and T-Mobile completed the Hart-Scott-Rodino filing with the Department of Justice (DOJ) on May 24, 2018. On June 18, 2018, the parties filed with the Federal Communications Commission (FCC) the merger applications, including the Public Interest Statement. On July 18, 2018, the FCC accepted the applications for filing and established a public comment period for the Merger Transaction. The formal comment period concluded on October 31, 2018. On May 20, 2019, to facilitate the FCC’s review and approval of the FCC license transfers associated with the proposed Merger Transaction, we and T-Mobile filed with the FCC a written ex parte presentation (the Presentation) relating to the proposed Merger Transaction. The Presentation included proposed commitments from us and T-Mobile. Following the Presentation, we received statements of support for the Merger Transaction by the FCC Chairman Ajit Pai and Commissioners Carr and O’Rielly. Formal action on the Merger Transaction by the FCC remains pending. The Merger Transaction received clearance from the Committee on Foreign Investment in the United States on December 17, 2018.
On July 26, 2019, the DOJ and five State Attorneys General filed an action in the United States District Court for the District of Columbia that would resolve their objections to the Merger Transaction. The Merger Transaction has received approval from 18 of the 19 state public utility commissions. The parties are awaiting further regulatory approvals, and resolution of litigation filed by the Attorneys General of 14 states and the District of Columbia seeking to block the Merger Transaction. Sprint and T-Mobile also announced agreements with DISH Network Corporation (DISH) in which new T-Mobile will divest Sprint’s prepaid businesses (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Telecommunications Company and Swiftel Communications, Inc.) and Sprint’s 800 MHz spectrum assets to DISH for a total of approximately $5.0 billion. Additionally, upon the closing of the divestiture transaction, new T-Mobile will provide DISH wireless customers access to its network for up to seven years and offer standard transition

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SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

services arrangements to DISH during a transition period of up to three years. DISH will also have an option to take on leases for certain cell sites and retail locations that are decommissioned by the new T-Mobile, subject to any assignment restrictions. The transactions with DISH are contingent on the successful closing of T-Mobile’s merger with Sprint, among other closing conditions. Additionally, the parties to the Business Combination Agreement extended the Outside Date (as defined in the Business Combination Agreement) to November 1, 2019, or, if the Marketing Period (as defined in the Business Combination Agreement) is in effect at such time, then the Outside Date will be January 2, 2020.

Note 2.
New Accounting Pronouncements
Accounting Pronouncements Adopted During the Current Year
In February 2016, the Financial Accounting Standards Board (FASB) issued new authoritative literature, Leases (Topic 842), and has subsequently modified several areas of the standard in order to provide additional clarity and improvements. The new standard supersedes much of the existing lease guidance (Topic 840) to enhance the transparency and comparability of financial reporting related to leasing arrangements. This guidance requires lessees, among other things, to recognize right-of-use (ROU) assets and lease liabilities on their balance sheet for all leases. The criteria for distinguishing leases between finance and operating are substantially similar to criteria for distinguishing between capital leases and operating leases in previous lease guidance. In July 2018, the FASB made targeted improvements to the standard, including providing an additional and optional transition method. Under this method, an entity initially applies the standard at the adoption date, including the election of certain transition reliefs, and recognizes a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption.
The Company adopted this standard beginning on April 1, 2019 using the modified retrospective transition method such that the comparative period financial statements and disclosures were not adjusted. Results for reporting periods beginning after April 1, 2019 are presented under Topic 842, while amounts reported under prior periods have not been adjusted and continue to be reported under accounting standards in effect for those periods. See Note 7. Leases for additional
information related to operating and financing leases, including qualitative and quantitative disclosures required under Topic
842.
The new standard provides for a number of optional practical expedients in transition. We elected the package of practical expedients as defined by the standard that allows an entity not to reassess:
whether expired or existing contracts contain leases under the new definition of a lease;
lease classification for expired or existing leases; and
whether previously capitalized initial direct costs would qualify for capitalization under Topic 842.
Additionally, the Company elected the permitted practical expedient to use hindsight in determining the lease term under the new standard and the practical expedient related to land easements, allowing us to carry forward our accounting treatment for land easements under existing agreements.
The most significant change from adopting the new standard involved recognizing ROU assets and lease liabilities for operating leases which resulted in a material impact to our consolidated balance sheet. As of the adoption date, we recognized ROU assets in the amount of $7.4 billion and related liabilities in current liabilities of $1.8 billion and a long-term lease liability in the amount of $6.3 billion. This impact is inclusive of the following:
the recognition of the lease liability and ROU assets for operating leases that were not previously recorded. The ROU asset was adjusted for recognized balances associated with operating leases, including prepaid and deferred rent, cease-use liabilities and favorable or unfavorable intangible assets; and
the impact of our election to apply hindsight in determining the lease term, such that our lease liability generally only includes payments for the initial non-cancelable lease term.
As the Company has elected the modified retrospective transition method, any assets and liabilities that were recognized solely as a result of a transaction where the Company was the deemed owner during construction were derecognized at transition for completed construction sites. The Company funded certain construction costs which were concluded to be prepaid lease payments; consequently, such amounts were carried over at their depreciated balance of

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SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

approximately $0.6 billion and included in the associated finance lease ROU assets, which is included within "Property, Plant and Equipment, net" in the consolidated balance sheets.
Additionally, the Company is party to several leaseback arrangements. Under the transition provision of Topic 842, we were required to reassess the previously failed sale-leasebacks of certain Sprint-owned wireless communication tower sites and determine whether the transfer of the assets to the tower operator under the arrangement met the transfer of control criteria in the revenue standard and the new leasing standard and whether a sale should be recognized. We concluded that a sale should be recognized for the approximately 1,750 remaining tower sites transferred to a third-party under an agreement that closed in 2008. Upon adoption on April 1, 2019, we derecognized our existing long-term financial obligation and the tower-related property and equipment associated with these previously failed sale-leaseback tower sites and recognized a lease liability and ROU asset for the leaseback of the tower sites. The impacts from the change in accounting conclusion are a decrease to accumulated deficit of $104 million, a decrease in liabilities of $108 million and a decrease in property, plant and equipment, net of $4 million upon transition to Topic 842.
For lease arrangements where we are the lessor, the adoption of the standard did not have a material impact. While the standard modifies the classification and accounting for sales-type and direct finance leases, substantially all of the Company's current handset leases are classified as operating leases. If terms remain consistent with the Company’s current leasing program, we do not expect material sales-type or direct financing leases in future periods.
The cumulative after-tax effect of the changes made to our consolidated balance sheet for the adoption of Topic 842 effective for the Company on April 1, 2019 were as follows:
 
March 31, 2019
 
Effects of the adoption of Topic 842
 
April 1, 2019
 
(in millions)
ASSETS
 
 
 
 
 
Current assets:
 
 
 
 
 
Prepaid expenses and other current assets
$
1,289

 
$
(111
)
 
$
1,178

Property, plant and equipment
41,740

 
(31
)
 
41,709

Accumulated depreciation
(20,539
)
 
27

 
(20,512
)
Property, plant and equipment, net
21,201

 
(4
)
 
21,197

Operating lease right-of-use assets

 
7,358

 
7,358

Definite-lived intangible assets, net
1,769

 
(119
)
 
1,650

Other assets
1,118

 
(1
)
 
1,117

LIABILITIES AND EQUITY
 
 
 
 
 
Current liabilities:
 
 
 
 
 
Accrued expenses and other current liabilities
$
3,597

 
$
(178
)
 
$
3,419

Current operating lease liabilities

 
1,813

 
1,813

Current portion of long-term debt, financing and finance lease obligations
4,557

 
(43
)
 
4,514

Long-term debt, financing and finance lease obligations
35,366

 
(67
)
 
35,299

Long-term operating lease liabilities

 
6,263

 
6,263

Deferred tax liabilities
7,556

 
46

 
7,602

Other liabilities
3,437

 
(873
)
 
2,564

Stockholders' equity:
 
 
 
 
 
(Accumulated deficit) retained earnings
(1,883
)
 
162

 
(1,721
)

In June 2018, the FASB issued authoritative guidance regarding Compensation - Stock Compensation, which expands the scope of ASC Topic 718 to include share-based payment transactions for acquiring goods and services from non-employees. The Company adopted this standard on April 1, 2019 with no impact to our consolidated financial statements at the date of adoption.

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SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Accounting Pronouncements Not Yet Adopted
In June 2016, the FASB issued authoritative guidance regarding Financial Instruments - Credit Losses and has subsequently modified several areas of the standard in order to provide additional clarity and improvements. The new standard requires entities to use a Current Expected Credit Loss impairment model based on expected losses rather than incurred losses. Under this model, an entity would recognize an impairment allowance equal to its current estimate of all contractual cash flows that the entity does not expect to collect from financial assets measured at amortized cost within the scope of the standard. The entity's estimate would consider relevant information about past events, current conditions and reasonable and supportable forecasts, which will result in recognition of lifetime expected credit losses. The standard will be effective for the Company's fiscal year beginning April 1, 2020, including interim reporting periods within that fiscal year, although early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In August 2018, the FASB issued authoritative guidance regarding Fair Value Measurement: Disclosure Framework, which eliminates, adds and modifies certain disclosure requirements for fair value measurements. The standard will be effective for the Company for its fiscal year beginning April 1, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the guidance and assessing its overall impact. However, we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.
In August 2018, the FASB issued authoritative guidance regarding Intangibles - Goodwill and Other - Internal-Use Software, which aligns the requirements for a customer to capitalize implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard will be effective for the Company for its fiscal year beginning April 1, 2020, including interim periods within that fiscal year, with early adoption permitted. The Company is currently evaluating the guidance and assessing its overall impact.

Note 3.
Installment Receivables
Certain subscribers have the option to pay for their devices in installments, generally up to a 24-month period. Short-term installment receivables are recorded in "Accounts and notes receivable, net" and long-term installment receivables are recorded in "Other assets" in the consolidated balance sheets.
The following table summarizes the installment receivables:
 
June 30,
2019
 
March 31,
2019
 
(in millions)
Installment receivables, gross
$
1,332

 
$
1,212

Deferred interest
(74
)
 
(71
)
Installment receivables, net of deferred interest
1,258

 
1,141

Allowance for credit losses
(234
)
 
(215
)
Installment receivables, net
$
1,024

 
$
926

 
 
 
 
Classified in the consolidated balance sheets as:
 
 
 
Accounts and notes receivable, net
$
758

 
$
679

Other assets
266

 
247

Installment receivables, net
$
1,024

 
$
926



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SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The balance and aging of installment receivables on a gross basis by credit category were as follows:
 
June 30, 2019
 
March 31, 2019
 
Prime
 
Subprime
 
Total
 
Prime
 
Subprime
 
Total
 
(in millions)
 
(in millions)
Unbilled
$
722

 
$
521

 
$
1,243

 
$
667

 
$
459

 
$
1,126

Billed - current
43

 
24

 
67

 
43

 
22

 
65

Billed - past due
10

 
12

 
22

 
10

 
11

 
21

Installment receivables, gross
$
775

 
$
557

 
$
1,332

 
$
720

 
$
492

 
$
1,212


Activity in the deferred interest and allowance for credit losses for the installment receivables was as follows:
 
Three Months Ended
 
Twelve Months Ended
 
June 30, 2019
 
March 31, 2019
 
(in millions)
Deferred interest and allowance for credit losses, beginning of period
$
286

 
$
323

Adjustment to deferred interest on short- and long-term installment receivables due to adoption of revenue recognition standard on April 1, 2018

 
(50
)
Bad debt expense
50

 
116

Write-offs, net of recoveries
(32
)
 
(118
)
Change in deferred interest on short- and long-term installment receivables
4

 
15

Deferred interest and allowance for credit losses, end of period
$
308

 
$
286



Note 4.
Financial Instruments
The Company carries certain assets and liabilities at fair value. Fair value is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs based on the observability as of the measurement date, is as follows: quoted prices in active markets for identical assets or liabilities; observable inputs other than the quoted prices in active markets for identical assets and liabilities; and unobservable inputs for which there is little or no market data, which require the Company to develop assumptions of what market participants would use in pricing the asset or liability.
The carrying amount of cash equivalents, accounts and notes receivable, and accounts payable approximates fair value. Short-term investments are recorded at amortized cost and the respective carrying amounts approximate the fair value that would be determined primarily using quoted prices in active markets. Sprint did not hold any short-term investments as of June 30, 2019. As of March 31, 2019, short-term investments consisted of $67 million of commercial paper. The fair value of marketable equity securities, totaling $1 million for both periods ended June 30, 2019 and March 31, 2019, are measured on a recurring basis using quoted prices in active markets. Current and long-term debt inclusive of our other financings are carried at amortized cost.
Debt for which estimated fair value is determined based on unobservable inputs primarily represents borrowings under our secured equipment credit facilities, and sales of receivables under our Accounts Receivable Facility (Receivables Facility). See Note 8. Long-Term Debt, Financing and Finance Lease Obligations for additional information. The carrying amounts associated with these borrowings approximate fair value.
The estimated fair value of the majority of our current and long-term debt, excluding our secured equipment credit facilities, and sold wireless service, installment billing and future receivables is determined based on quoted prices in active markets or by using other observable inputs that are derived principally from, or corroborated by, observable market data.

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SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table presents carrying amounts and estimated fair values of current and long-term debt and financing obligations:
 
Carrying amount at June 30, 2019
 
Estimated Fair Value Using Input Type
 
 
Quoted prices in active markets
 
Observable
 
Unobservable
 
Total estimated fair value
 
(in millions)
Current and long-term debt and financing obligations
$
38,335

 
$
35,601

 
$
198

 
$
4,076

 
$
39,875

 
Carrying amount at March 31, 2019
 
Estimated Fair Value Using Input Type
 
 
Quoted prices in active markets
 
Observable
 
Unobservable
 
Total estimated fair value
 
(in millions)
Current and long-term debt and financing obligations
$
40,193

 
$
36,642

 
$
197

 
$
3,970

 
$
40,809



Note 5.
Property, Plant and Equipment
Property, plant and equipment consists primarily of network equipment, leased devices and other long-lived assets used to provide service to our subscribers. Non-cash accruals included in property, plant and equipment (excluding leased devices) totaled $1.1 billion and $987 million as of June 30, 2019 and 2018, respectively.
The following table presents the components of property, plant and equipment and the related accumulated depreciation:
 
June 30,
2019
 
March 31,
2019
 
(in millions)
Land
$
107

 
$
246

Network equipment, site costs and related software
25,110

 
24,967

Buildings and improvements
392

 
856

Leased devices, non-network internal use software, office equipment and other
12,448

 
12,627

Construction in progress
2,919

 
3,044

Less: accumulated depreciation
(20,420
)
 
(20,539
)
Property, plant and equipment, net
$
20,556

 
$
21,201


Network equipment, site costs and related software includes switching equipment, cell site towers, site development costs, radio frequency equipment, network software, digital fiber optic cable, transport facilities and transmission-related equipment. Also included within this component are finance lease ROU assets, which primarily consist of prepayments of site rental costs for leases with an immaterial remaining lease obligation. Buildings and improvements principally consist of owned general office facilities, retail stores and leasehold improvements. Non-network internal use software, office equipment, leased devices and other primarily consists of furniture, information technology systems, equipment and vehicles, and leased devices. Construction in progress, which is not depreciated until placed in service, primarily includes materials, transmission and related equipment, labor, engineering, site development costs, interest and other costs relating to the construction and development of our network.
Sprint offers a leasing program to its customers whereby qualified subscribers can lease a device for a contractual period of time. At the end of the lease term, the subscriber has the option to return the device, continue leasing the device, or purchase the device. As of June 30, 2019, substantially all of our device leases were classified as operating leases. Purchases of leased devices are reported as cash outflows for "Capital expenditures - leased devices" in the consolidated statements of cash flows. The devices are then depreciated using the straight-line method to their estimated residual value generally over the term of the lease.

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SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The following table presents leased devices and the related accumulated depreciation:
 
June 30,
2019
 
March 31,
2019
 
(in millions)
Leased devices
$
10,770

 
$
10,972

Less: accumulated depreciation
(4,346
)
 
(4,360
)
Leased devices, net
$
6,424

 
$
6,612


During the three-month periods ended June 30, 2019 and 2018, we had non-cash transfers of returned leased devices from property, plant and equipment to device and accessory inventory at the lower of net book value or their estimated fair value of $236 million and $163 million, respectively. Non-cash accruals included in leased devices totaled $156 million and $221 million as of June 30, 2019 and 2018, respectively.
During the three-month periods ended June 30, 2019 and 2018, we recorded $225 million and $124 million, respectively, of loss on disposal of property, plant and equipment, net of recoveries. Net losses that resulted from the write-off of leased devices were primarily associated with lease cancellations prior to the scheduled customer lease terms where customers did not return the devices to us. Such losses are included in "Cost of equipment rentals" in our consolidated statements of comprehensive (loss) income.
On June 27, 2019, the Company entered into a sale and leaseback agreement for our Overland Park, Kansas campus. The sale closed and the leaseback began on July 9, 2019. As of June 30, 2019, the Company determined that the asset should be classified as held-for-sale and measured at the lower of its carrying amount or fair value less cost to sell resulting in the recognition of a non-cash impairment of approximately $207 million included in "Other, net" within the consolidated statements of comprehensive (loss) income.

Note 6.
Intangible Assets
Indefinite-Lived Intangible Assets
Our indefinite-lived intangible assets consist of FCC licenses, which were acquired primarily through FCC auctions and business combinations, certain of our trademarks, and goodwill. At June 30, 2019, we held 800 MHz, 1.9 GHz and 2.5 GHz FCC licenses authorizing the use of radio frequency spectrum to deploy our wireless services. As long as the Company acts within the requirements and constraints of the regulatory authorities, the renewal and extension of these licenses is reasonably certain at minimal cost. Accordingly, we have concluded that FCC licenses are indefinite-lived intangible assets. Our Sprint and Boost Mobile trademarks have also been identified as indefinite-lived intangible assets. Goodwill represents the excess of consideration paid over the estimated fair value of net tangible and identifiable intangible assets acquired in business combinations.
The following provides the activity of indefinite-lived intangible assets within the consolidated balance sheets:
 
March 31,
2019
 
Net
Additions
 
June 30,
2019
 
(in millions)
FCC licenses
$
37,430

 
$
9

 
$
37,439

Trademarks
4,035

 

 
4,035

Goodwill(1)
4,598

 

 
4,598

 
$
46,063

 
$
9

 
$
46,072


_________________
(1)
Through March 31, 2019 accumulated impairment losses for goodwill were $2.0 billion. There were no additional accumulated impairment losses for the quarter ended June 30, 2019.
Assessment of Impairment
Our annual impairment testing date for goodwill and indefinite-lived intangible assets is January 1 of each year; however, we test for impairment between our annual tests if an event occurs or circumstances change that indicate that the asset may be impaired, or in the case of goodwill, that the fair value of the reporting unit is below its carrying amount. Our most recent test for impairment of goodwill was completed at January 1, 2019 and we concluded that the carrying value of

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SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

the Wireless reporting unit exceeded its estimated fair value by $2.0 billion. As a result, a goodwill impairment charge was recorded in our consolidated statements of operations for the year ended March 31, 2019. During the three-month period ended June 30, 2019, we did not record any further impairment to goodwill, nor did we record any impairment to other indefinite-lived intangible assets.
The determination of fair value requires considerable judgment and is highly sensitive to changes in underlying assumptions. Consequently, there can be no assurance that the estimates and assumptions made for the purposes of the goodwill, spectrum licenses, and Sprint and Boost Mobile trade names impairment tests will prove to be an accurate prediction of the future. Sustained declines in the Company’s operating results, number of wireless subscribers, future forecasted cash flows, growth rates and other assumptions, as well as significant, persistent declines in the Company’s stock price and related market capitalization could impact the underlying key assumptions and our estimated fair values, potentially leading to a future material impairment of goodwill or other indefinite-lived intangible assets.
Intangible Assets Subject to Amortization
Customer relationships are amortized using the sum-of-the-months' digits method, while all other definite-lived intangible assets are amortized using the straight-line method over the estimated useful lives of the respective assets. We reduce the gross carrying value and associated accumulated amortization when specified intangible assets become fully amortized. Amortization expense related to favorable spectrum is recognized in "Cost of services" in our consolidated statements of comprehensive (loss) income.
 
 
 
June 30, 2019
 
March 31, 2019
 
Useful Lives
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
 
Gross
Carrying
Value
 
Accumulated
Amortization
 
Net
Carrying
Value
 
 
 
(in millions)
Customer relationships
5 to 8 years
 
$
6,563

 
$
(6,139
)
 
$
424

 
$
6,563

 
$
(6,029
)
 
$
534

Other intangible assets:
 
 
 
 
 
 
 
 
 
 
 
 
Favorable spectrum leases
23 years
 
807

 
(202
)
 
605

 
763

 
(150
)
 
613

Favorable tower leases(1)
 

 

 

 
335

 
(215
)
 
120

Trademarks
2 to 34 years
 
520

 
(93
)
 
427

 
520

 
(89
)
 
431

Other
5 to 10 years
 
139

 
(70
)
 
69

 
137

 
(66
)
 
71

Total other intangible assets
 
1,466


(365
)

1,101


1,755


(520
)

1,235

Total definite-lived intangible assets
 
$
8,029


$
(6,504
)

$
1,525