SB Conf (FINAL 1-10-05) - library.corporate-ir.netlibrary.corporate-ir.net/library/12/127/127149/items/214891/January...Smith Barney Citigroup 15th Annual Global Entertainment, Media

Smith Barney Citigroup15th Annual Global Entertainment, Media &

Telecommunications Conference

Len LauerPresident and Chief Operating Officer

© 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.

Smith Barney Citigroup 15th Annual Global Entertainment, Media & Telecom Conf 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 <<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 Oct 19, 2004, Third Quarter Investor Update located at <http://www.sprint.com/sprint/ir/>.


Safe Harbor"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995.A number of the matters discussed in this presentation that 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 companies annual report on Form 10-K for the year ended December 31, 2003 and quarterly report on Form 10-Q for the quarterly period ended September 30, 2004 as such reports may have been amended. This presentation 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 ItIn connection with the proposed transaction, a registration statement on Form S-4 will be filed with the SEC. 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 WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL 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, 913-794 -1126, or from Nextel Investor Relations at, 703-433-4300.Participants In SolicitationSprint, Nextel and their respective directors and executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies in respect of the combination. Information concerning Sprint's participants is set forth in the proxy statement, dated, March 16, 2004, for Sprint's 2004 annual meeting of shareholders as filed with the SEC on Schedule 14A. Information concerning Nextel's participants is set forth in the proxy statement, dated April 2, 2004, for Nextel's 2004 annual meeting of shareholders as filed with the SEC on Schedule 14A. Additional information regarding the interests of participants of Sprint and Nextel in the solicitation of proxies in respect ofthe combination will be included in the registration statement and joint proxy statement/prospectus to be filed with the SEC.


2004 - Leading the Industry• Created substantial

shareholder value• Executing transformation

initiatives• Recombined tracking

stocks• Leveraging strategic

alliances• Announced Sprint-Nextel

merger

2004 Equity Returns

0%

20%

40%

60%

80%

Sprint DJ TelecomIndex

S&P 500 NASDAQ DJIA


America’s PremierCommunications Company

• Creating powerhouse communications provider

• High-value customer base

• Unmatched product and service capabilities

• Clear vision for technology evolution

• $12 billion NPV of achievable synergies expected

• Substantial financial strength

• Local operations spin-off offers attractive investment vehicle


Sprint - Executing on Our Priorities

� Positioning for growth

� Leveraging strategic alliances

� Reducing operational costs

� Increasing financial strength

� Optimizing merger integration


Industry Revenue ($B) by Product Sector

Source: Sprint

$-

$50

$100

$150

$200

$250

$300

$350

$400

2003 2010

Rev

enue

($B

)

LDLD

Local

Local

Mobile

Mobile

InternetInternet

Video Video

Sprint’s Mix Weighted Towards Growth Sectors

3Q04 Adjusted EBITDA Contribution

Wireless52%

LD15%

Local33%

3Q04 Revenue Contribution*

Wireless53%

LD26%

Local21%

(Product)

* 3Q04 results before eliminations


Wireless

• Focus on profitable growth

• Growing data contribution

• Increasing scale through wholesale

• Expanding distribution

• Differentiation through Sprint PCS Fair & Flexible PlanSM

• Integrated solution selling to businesses

Wireless Data Growth

0.0

2.0

4.0

6.0

8.0

3Q03 4Q03 1Q04 2Q04 3Q04

Subs

crib

ers

(M)

$-

$2.50

$5.00

$7.50

Data Subscribers (000s) Data ARPU


Leveraging Strategic Alliances

• MVNOs extend wireless reach

• Solution selling with system integrators

• Video completes the local bundle

• Cable agreements capitalize on telco expertise


Long Distance

• Presence in nearly all Fortune 500 companies

• National wireline and wireless network

• Focus on multi-product bundles, IP and wireless solutions

• Executing with cable companies

• Aligning resources with revenue opportunities

3Q04 Revenue Mix

Voice

Internet

Data/Other(Product)

3Q04 Revenue Mix

Consumer

Whsl / Aff / IntlBusiness

(Segment)


Local

• Accelerating DSL additions

• Penetrating with bundles

-

10

20

30

40

50

60

3Q03 4Q03 1Q04 2Q04 3Q04-

50

100

150

200

250

300

350

400

450

500

DSL net additions Lines in Service

34% 33% 32% 31%

34% 33% 32% 32%

25% 26% 27% 27%

7% 8% 9% 10%

0%

25%

50%

75%

100%

3Q03 1Q04 2Q04 3Q04

Basic Service One Strategic Product Two Strategic Products Three+ Strategic Products

DSL - Building Long Term Value Success Bundling Strategic Products

• Wireless and video emphasis

• Superior financial results

(000’s)


Increasing Financial Strength

3%Adjusted EBITDA

35%Adjusted EPS

10%Adjusted Operating Income

5%Revenue

Growing Profitably (YTD 3Q04) Decreasing Leverage

5.2

2.0

$17.1

3Q03

1.7Net Debt / Adj EBITDA

6.1Interest Coverage

$13.4Net Debt (B)

3Q04

• Growth well ahead of industry

• Progress on achieving Net Debt target

• Credit outlook raised to “positive”


Why Sprint?

• Differentiated Go-to-Market strategy

• Exposure to growth segments

• Consistent financial & operational execution

• Merger creates telecommunications powerhouse

• Local operations positioned to deliver shareholder value


Questions &

Answers


Reconciliation of non-GAAP Liquidity MeasuresQuarter-to-date September 30, 2004

Long Other &Consolidated Wireless Local Distance Eliminations

Operating income (loss) (2,715)$ 451$ 411$ (3,570)$ (7)$ Special items 3,559 3 3 3,553 - Adjusted operating income (loss)* 844 454 414 (17) (7) Depreciation and amortization 1,222 630 272 319 1 Adjusted EBITDA* 2,066 1,084$ 686$ 302$ (6)$ Adjust for special items (3,559) Other operating activities, net (1) 3,085 Cash provided by operating activities-GAAP 1,592 Capital expenditures (966) Dividends paid (190) Investments in affiliates, net (5) Other investing activities, net 8 Free Cash Flow* 439 Decrease in debt, net (573) Investments in debt securities, net 37 Proceeds from common stock issued 1,757 Other financing activities, net (22) Change in cash and equivalents - GAAP 1,638$

Quarter-to-date September 30, 2003(Restated) (2) Long Other &

Consolidated Wireless Local Distance Eliminations

Operating income (loss) (430)$ 303$ 463$ (1,185)$ (11)$ Special items 1,223 - - 1,223 - Adjusted operating income (loss)* 793 303 463 38 (11) Depreciation and amortization 1,243 620 269 352 2 Adjusted EBITDA* 2,036 923$ 732$ 390$ (9)$ Adjust for special items (1,223) Other operating activities, net (1) 592 Cash provided by operating activities-GAAP 1,405 Capital expenditures (854) Dividends paid (115) Other investing activities, net - Free Cash Flow* 436 Discontinued operation (1) Decrease in debt, net (483) Investments in debt securities (91) Other financing activities, net 1 Change in cash and equivalents - GAAP (138)$

Year-to-date September 30, 2004Long Other &


Operating income (loss) (1,273)$ 1,146$ 1,302$ (3,698)$ (23)$ Special items 3,671 14 19 3,638 - Adjusted operating income (loss)* 2,398 1,160 1,321 (60) (23) Depreciation and amortization 3,687 1,914 811 960 2 Adjusted EBITDA* 6,085 3,074$ 2,132$ 900$ (21)$ Adjust for special items (3,671) Other operating activities, net (1) 2,112 Cash provided by operating activities-GAAP 4,526 Capital expenditures (2,642) Dividends paid (485) Investments in affiliates, net (10) Other investing activities, net (16) Free Cash Flow* 1,373 Decrease in debt, net (1,685) Investments in debt securities, net 116 Proceeds from common stock issued 1,802 Other financing activities, net (14) Change in cash and equivalents - GAAP 1,592$

Year-to-date September 30, 2003(Restated) (2) Long Other &


Operating income (loss) 560$ 730$ 1,378$ (1,514)$ (34)$ Special items 1,617 29 8 1,580 - Adjusted operating income (loss)* 2,177 759 1,386 66 (34) Depreciation and amortization 3,715 1,829 805 1,076 5 Adjusted EBITDA* 5,892 2,588$ 2,191$ 1,142$ (29)$ Adjust for special items (1,617) Other operating activities, net (1) 85 Cash provided by operating activities-GAAP 4,360 Capital expenditures (2,333) Dividends paid (343) Other investing activities, net 65 Free Cash Flow* 1,749 Discontinued operation 2,230 Decrease in debt, net (2,342) Investments in debt securities (91) Other financing activities, net 20 Change in cash and equivalents - GAAP 1,566$

Documents

SB Conf (FINAL 1-10-05) - library.corporate-ir.netlibrary.corporate-ir.net/library/12/127/127149/items/214891/January...Smith Barney Citigroup 15th Annual Global Entertainment, Media