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$300
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1Q05 2Q05 3Q05 4Q05 1Q06
1Q05 2Q05 3Q05 4Q05 1Q06
Data ARPU % of Reported ARPU
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31. % 9 . $6
. '5 5
(millions) Long Other &
For the Quarter Ended March 31, 2006 Consolidated Wireless Distance Local Elim inations
$ 863 $ 441 $ 105 $ 423 $ (106)
Operating Income
Special items
Restructuring and asset impairments 67 28 10 29 -
Merger and integration expense 105 - - - 105
1,035 469 115 452 (1)
Adjusted Operating Income
Depreciation and amortization 2,606 2,222 121 263 -
3,641 2,691 236 715 (1)
Adjusted OIBDA
Capital expenditures 1,422 1,071 92 179 80
$ 2,219 $ 1,620 $ 144 $ 536 $ (81)
Adjusted OIBDA less Capex
Long Other &
For the Quarter Ended March 31, 2005 Consolidated Wireless Distance Local Elim inations
$ 1,036 $ 455 $ 146 $ 435 $ -
Operating Income
Special items
Restructuring and asset impairments - 2 (3) 1 -
Merger and integration expense - - - - -
1,036 457 143 436 -
Adjusted Operating Income
Depreciation and amortization 1,036 644 117 276 (1)
2,072 1,101 260 712 (1)
Adjusted OIBDA
Capital expenditures 659 418 65 152 24
$ 1,413 $ 683 $ 195 $ 560 $ (25)
Adjusted OIBDA less Capex
#A
32. % 9 . $6
. '5 5
Pro form a Pro form a Long Other &
For the Quarter Ended March 31, 2005 Consolidated Wireless Distance Local Elim inations
$ 1,009 $ 438 $ 146 $ 435 $ (10)
Operating Income
Special items
Restructuring and asset impairments - 2 (3) 1 -
Merger and integration expense 10 - - - 10
1,019 440 143 436 -
Adjusted Operating Income
Depreciation and amortization 2,292 1,900 117 276 (1)
3,311 2,340 260 712 (1)
Adjusted OIBDA
Capital expenditures 1,433 1,192 65 152 24
$ 1,878 $ 1,148 $ 195 $ 560 $ (25)
Adjusted OIBDA less Capex
Long Other &
For the Quarter Ended December 31, 2005 Consolidated Wireless Distance Local Elim inations
$ 671 $ 512 $ 102 $ 407 $ (350)
Operating income (loss)
Special items 423 3 (15) 87 348
1,094 515 87 494 (2)
Adjusted operating income
Depreciation and amortization 2,438 2,043 136 259 -
$ 3,532 $ 2,558 $ 223 $ 753 $ (2)
Adjusted OIBDA
Capital expenditures 2,150 1,535 166 303 146
$ 1,382 $ 1,023 $ 57 $ 450 $ (148)
Adjusted OIBDA less Capex
#
33. % 9 . $6
. '5 5
Consolidated Free Cash Flow
Quarter Ended
March 31, March 31,
2006 2005
(millions)
$ 3,641 $ 2,072
Adjusted OIBDA
Adjust for special items (172) -
Other operating activities, net (a) (502) (688)
Capital expenditures (1,728) (659)
Dividends paid (76) (187)
Proceeds from sales of assets 123 8
Other investing activities, net (85) (14)
1,201 532
Free Cash Flow
Business acquisitions, net of cash acquired (3,399) -
Payments on debt (868) (1,012)
Retirement of redeemable preferred stock (247) -
Proceeds from maturities and sales of marketable securities 830 (80)
Proceeds from common stock issued 185 58
Other financing activities, net - 13
$ (2,298) $ (489)
Change in cash and cash equivalents - GAAP
March 31,
2006
Total Debt $ 25,950
Less: Cash and cash equivalents (6,604)
Marketable securities (909)
$ 18,437
Net Debt*
Other operating activities, net includes the change in w orking capital, change in deferred income taxes, miscellaneous operating
(a)
activities and non-operating items in net income.
##
34. % 9 . $6
. '5 5
Quarter Ended
(millions)
March 31, December 31, March 31,
2006 2005 2005
Wireless Pro Forma
Adjusted OIBDA $ 2,691 $ 2,558 $ 2,340
Service, wholesale, affiliate and other net operating revenues 7,685 7,388 6,841
Adjusted OIBDA margin 35.0% 34.6% 34.2%
Operating income $ 441 $ 512 $ 438
Operating income margin 5.7% 6.9% 6.4%
Long Distance
Adjusted OIBDA $ 236 $ 223 $ 260
Total net operating revenues 1,669 1,662 1,715
Adjusted OIBDA margin 14.1% 13.4% 15.2%
Operating income $ 105 $ 102 $ 146
Operating income margin 6.3% 6.1% 8.5%
Local
Adjusted OIBDA $ 715 $ 753 $ 712
Total net operating revenues 1,620 1,667 1,597
Adjusted OIBDA margin 44.1% 45.2% 44.6%
Operating income $ 423 $ 407 $ 435
Operating income margin 26.1% 24.4% 27.2%
Consolidated
Adjusted OIBDA $ 3,641
Total net operating revenues 11,548
Adjusted OIBDA margin 31.5%
Operating income $ 863
Operating income margin 7.5%
< . ?F
!8 * 1 7 *
#P
35. % 9 . $6
. '5 5
Pro Forma (c)
As Reported
Quarter Ended Quarter Ended
March 31, March 31, March 31,
2006 2005 2005
(millions, except per share data)
$ 417 $ 470 $ 378
Earnings Available to Common Shareholders
Preferred stock dividends paid 2 2 2
419 472 380
Net Income
Special items (net of taxes) (a)
Restructuring and asset impairments 41 - -
Merger integration expense 64 - 6
Net gains on investment activities (55) - -
Premium on early retirement of debt - - 22
$ 469 $ 472 $ 408
Adjusted Net Income
Amortization (net of taxes) 564 2 494
$ 1,033 $ 474 $ 902
Adjusted Net Income before Amortization
$ 0.14 $ 0.31 $ 0.13
Diluted Earnings Per Share
$ 0.14 $ 0.31 0.13
Earnings Per Share from Continuing Operations
Special items 0.02 - 0.01
(b)
Adjusted Earnings Per Share $ 0.16 $ 0.31 $ 0.14
Amortization (net of taxes) 0.19 - 0.17
(b)
Adjusted Earnings Per Share before Amortization $ 0.35 $ 0.31 $ 0.31
See accompanying Notes to Financial Data for more information on special items.
(a)
Earnings per share data may not add due to rounding.
(b)
Pro forma consolidated information has been presented as if the Sprint Nextel merger occurred at the beginning of 2005. The 2006 first quarter reflects actual results.
(c)
#C
36. % 9 . $6
. '5 5
Quarter Ended
March 31, March 31,
2006 2005
(millions, except per share data)
$ 11,548 $ 10,586
Net Operating Revenues
Operating Expenses
Costs of services and products 4,541 4,094
Selling, general and administrative
3,471 3,191
(includes $105 & $10 of merger and integration)
Restructuring and asset impairments 67 -
Depreciation 1,668 1,470
Amortization 938 822
Total operating expenses 10,685 9,577
863 1,009
Operating Income
Interest expense (408) (427)
Interest income 84 36
Equity in earnings of unconsolidated subsidiaries 20 8
Other, net 108 (25)
Income before income taxes 667 601
Income tax expense (248) (221)
419 380
Net Income
Preferred stock dividends paid (2) (2)
$ 417 $ 378
Earnings Available to Common Shareholders
(a)
Diluted Earnings Per Common Share
Diluted earnings per share $ 0.14 $ 0.13
Special items 0.02 0.01
(a)
Adjusted EPS $ 0.16 $ 0.14
Diluted weighted average common shares 2,992.8 2,944.8
(a) Earnings per share data may not add due to rounding.
Pro forma consolidated statements of operations have been presented as if the Sprint Nextel merger occurred at the beginning of 2005.
Because the merger occurred in the third quarter of 2005, the first quarter of 2006 reflects actual results. The pro forma results do not include
any Affiliate results prior to the dates of their respective acquisitions because they do not significantly affect reported results.
#
37. % 9 . $6
. '5 5
(millions)
Local Telephone North Intercompany * Local
Quarter Ended 3/31/2006 Operations Supply Eliminations Division
$ 1,467 $ 243 $ (90) $ 1,620
Net Operating Revenues
Operating Expenses
Costs of services and products 460 229 (90) 599
Selling, general and administrative 287 19 - 306
Depreciation and amortization 265 5 (7) 263
Restructuring and asset impairments 26 3 - 29
Total operating expenses 1,038 256 (97) 1,197
$ 429 $ (13) $ 7$ 423
Operating Income (Loss)
$ 720 $ (5) $ - $ 715
Adjusted OIBDA
$ 179 $ - $ - $ 179
Capex
$ 429 $ (13)
Operating Income (Loss)
Special Items 26 3
$ 455 $ (10)
Adjusted Operating Income (Loss)
Depreciation and amortization 265 5
$ 720 $ (5)
Adjusted OIBDA
49% -2%
Adjusted OIBDA Margin
Operating Income Margin 29% -5%
#N
38. % 9 . $6
. '5 5
Local Telephone North Intercompany * Local
Quarter Ended 3/31/2005 Operations Supply Eliminations Division
$ 1,498 $ 186 $ (87) $ 1,597
Net Operating Revenues
Operating Expenses
Costs of services and products 482 165 (83) 564
Selling, general and administrative 293 27 1 321
Depreciation and amortization 277 5 (6) 276
Restructuring and asset impairments 1 - - 1
Total operating expenses 1,053 197 (88) 1,162
$ 445 $ (11) $ 1$ 435
Operating Income (Loss)
$ 723 $ (6) $ (5) $ 712
Adjusted OIBDA*
$ 156 $ 1$ (5) $ 152
Capex
$ 445 $ (11)
Operating Income (Loss)
Special Items 1 -
$ 446 $ (11)
Adjusted Operating Income (Loss)*
Depreciation and amortization 277 5
$ 723 $ (6)
Adjusted OIBDA*
48% -3%
Adjusted OIBDA Margin*
Operating Income Margin 30% -6%
* Intercompany eliminations also include certain immaterial rounding differences
#: