UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended September 30, 1999
-----------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
333-06609-01
Commission file number 333-06609-02
SPRINT SPECTRUM L.P.
SPRINT SPECTRUM FINANCE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 48-1165245
DELAWARE 43-1746537
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Nos.)
4900 Main Street, Kansas City, Missouri 64112
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (816) 559-1000
-----------------------
Securities registered pursuant to Section 12(b) and 12(g) of the Act: None
The registrants meet the conditions set forth in General Instruction H (1) (a)
and (b) of Form 10-Q and are therefore filing this Form with the reduced
disclosure format.
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______
At November 1, 1999 the Sprint Spectrum Finance Corporation had 100 common
shares outstanding.
Documents Incorporated by Reference: None
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
Number
-------------------
SPRINT SPECTRUM L.P.
Part I - Financial Information
Item 1. Financial Statements
<S> <C>
Consolidated Statements of Operations 1
Consolidated Balance Sheets 2
Consolidated Statements of Cash Flows 3
Consolidated Statements of Changes in Partners' Capital and Accumulated
Deficit 4
Condensed Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures About Market Risk 11
Part II - Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature 12
SPRINT SPECTRUM FINANCE CORPORATION
Part I - Financial Information
Item 1. Financial Statements
Balance Sheets 13
Notes to Financial Statements 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
Part II - Other Information
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signature 15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Part I.
Item 1.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Sprint Spectrum L.P.
(millions)
- --------------------------------------------- ----------------------------------- ----------------------------------
Quarters Ended Year-to-Date
September 30, September 30,
- --------------------------------------------- ----------------------------------- ----------------------------------
1999 1998 1999 1998
- --------------------------------------------- --- ------------- -- -------------- -- ------------- --- -------------
<S> <C> <C> <C> <C>
Net Operating Revenues $ 574 $ 246 $ 1,505 $ 583
- --------------------------------------------- --- ------------- -- -------------- -- ------------- --- -------------
Operating Expenses
Costs of services and products 386 233 1,039 608
Selling, general and administrative 374 252 1,001 699
Depreciation and amortization 201 167 546 432
- --------------------------------------------- --- ------------- -- -------------- -- ------------- --- -------------
Total operating expenses 961 652 2,586 1,739
- --------------------------------------------- --- ------------- -- -------------- -- ------------- --- -------------
Operating Loss (387) (406) (1,081) (1,156)
Interest expense (136) (112) (385) (287)
Other income, net 3 - 8 3
- --------------------------------------------- --- ------------- -- -------------- -- ------------- --- -------------
Loss before Extraordinary Item (520) (518) (1,458) (1,440)
Extraordinary item - - (33) -
- --------------------------------------------- --- ------------- -- -------------- -- ------------- --- -------------
Net Loss $ (520) $ (518) $ (1,491) $ (1,440)
--- ------------- -- -------------- -- ------------- --- -------------
</TABLE>
See accompanying Condensed Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS Sprint Spectrum L.P.
(millions)
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
September 30, December 31, 1998
1999
- --------------------------------------------------------------------------------------------------------------------
(Unaudited)
Assets
Current assets
<S> <C> <C>
Cash and equivalents $ 11 $ 70
Accounts receivable, net of allowance for doubtful
accounts of $34 and $16 356 226
Affiliated receivables 51 248
Inventories 274 92
Prepaids and other current assets 57 26
- --------------------------------------------------------------------------------------------------------------------
Total current assets 749 662
Property, plant and equipment
Network equipment 3,587 2,937
Construction work in progress 891 619
Buildings and leasehold improvements 803 758
Other 355 258
- --------------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 5,636 4,572
Accumulated depreciation (1,261) (772)
- --------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 4,375 3,800
Intangible assets
PCS licenses 2,130 2,130
Microwave relocation costs 332 299
- --------------------------------------------------------------------------------------------------------------------
Total intangible assets 2,462 2,429
Accumulated amortization (156) (110)
- --------------------------------------------------------------------------------------------------------------------
Net intangible assets 2,306 2,319
Other assets 72 45
- --------------------------------------------------------------------------------------------------------------------
Total $ 7,502 $ 6,826
-------------------------------------------
Liabilities and Partners' Capital and Accumulated Deficit
Current liabilities
Current maturities of long-term debt $ 5 $ 5
Accounts payable 460 320
Affiliated payables to Sprint 344 31
Construction obligations 678 593
Accrued interest 163 69
Accrued expenses and other current liabilities 361 386
- --------------------------------------------------------------------------------------------------------------------
Total current liabilities 2,011 1,404
Long-term debt 7,212 5,649
Other noncurrent liabilities 77 81
Partners' capital and accumulated deficit:
Partners' capital 3,691 3,690
Accumulated deficit (5,489) (3,998)
- --------------------------------------------------------------------------------------------------------------------
Total partners' capital and accumulated deficit (1,798) (308)
- --------------------------------------------------------------------------------------------------------------------
Total $ 7,502 $ 6,826
-------------------------------------------
</TABLE>
See accompanying Condensed Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Sprint Spectrum L.P.
(millions)
- ------------------------------------------------------------------ ----------------- ----------------- ----------------
Year-to-Date September 30, 1999 1998
- ------------------------------------------------------------------ ----------------- ----------------- ----------------
Operating Activities
<S> <C> <C>
Net loss $ (1,491) $ (1,440)
Adjustments to reconcile net loss to net cash used by operating
activities:
Depreciation and amortization 546 432
Extraordinary item 33 -
Amortization of debt discount and issuance costs 44 40
Changes in assets and liabilities:
Accounts receivable, net (130) (36)
Affiliated receivables 197 14
Inventories and other current assets (204) (75)
Accounts payable and other current liabilities 590 (35)
Other, net (4) 42
- ------------------------------------------------------------------ --- ------------- --- ------------- -- -------------
Net cash used by operating activities (419) (1,058)
- ------------------------------------------------------------------ --- ------------- --- ------------- -- -------------
Investing Activities
Capital expenditures (1,118) (871)
- ------------------------------------------------------------------ --- ------------- --- ------------- -- -------------
Net cash used by investing activities (1,118) (871)
- ------------------------------------------------------------------ --- ------------- --- ------------- -- -------------
Financing Activities
Proceeds from long-term debt 3,638 1,735
Payments on long-term debt (2,110) (5)
Capital contributions - 252
Other (50) -
- ------------------------------------------------------------------ --- ------------- --- ------------- -- -------------
Net cash provided by financing activities 1,478 1,982
- ------------------------------------------------------------------ --- ------------- --- ------------- -- -------------
Increase (Decrease) in Cash and Equivalents (59) 53
Cash and Equivalents at Beginning of Period 70 67
- ------------------------------------------------------------------ --- ------------- --- ------------- -- -------------
Cash and Equivalents at End of Period $ 11 $ 120
--- ------------- -- -------------
</TABLE>
See accompanying Condensed Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CHANGES IN PARTNERS' CAPITAL AND ACCUMULATED DEFICIT Sprint Spectrum L.P.
(Unaudited)
(millions)
- ---------------------------------------------------------------------------------------------------------------------
Partners' Accumulated
Capital Deficit Total
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Beginning 1999 balance $ 3,690 $ (3,998) $ (308)
Net loss - (1,491) (1,491)
Other, net 1 - 1
- ---------------------------------------------------------------------------------------------------------------------
September 30, 1999 balance $ 3,691 $ (5,489) $ (1,798)
----------------------------------------------------
</TABLE>
See accompanying Condensed Notes to Consolidated Financial Statements.
<PAGE>
CONDENSED NOTES TO CONSOLIDATED FINANCIAL Sprint Spectrum L.P.
STATEMENTS (Unaudited)
The information in this Form 10-Q has been prepared according to Securities and
Exchange Commission rules and regulations. In our opinion, the consolidated
interim financial statements reflect all adjustments, consisting only of normal
recurring accruals, needed to fairly present Sprint Spectrum L.P.'s consolidated
financial position, results of operations and cash flows.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared according to generally accepted accounting
principles have been condensed or omitted. As a result, you should read these
financial statements along with Sprint Spectrum's 1998 Form 10-K. Operating
results for the 1999 year-to-date period do not necessarily represent the
results that may be expected for the year ending December 31, 1999.
- --------------------------------------------------------------------------------
1. PCS Restructuring
- --------------------------------------------------------------------------------
In November 1998, Sprint Corporation purchased the remaining ownership interests
in Sprint Spectrum Holding Company, L.P.--Sprint Spectrum's general partner--and
MinorCo, L.P.--Sprint Spectrum's limited partner--from Tele-Communications,
Inc., Comcast Corporation and Cox Communications, Inc. At that time, Sprint
created the Sprint PCS Group, which consists of Sprint's domestic wireless
personal communication services (PCS) operations, including Sprint Spectrum.
- --------------------------------------------------------------------------------
2. Basis of Consolidation and Presentation
- --------------------------------------------------------------------------------
The consolidated financial statements include the accounts of Sprint Spectrum
and its subsidiaries. Sprint Spectrum is, indirectly, a wholly owned Sprint
subsidiary.
The consolidated financial statements are prepared using generally accepted
accounting principles. These principles require management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.
Certain prior-year amounts have been reclassified to conform to the current-year
presentation. These reclassifications had no effect on the results of operations
or partners' capital as previously reported.
- --------------------------------------------------------------------------------
3. Long-term Debt
- --------------------------------------------------------------------------------
In the 1999 year-to-date period, Sprint allocated $2.4 billion of senior notes
with 5-year and 20-year maturities to Sprint Spectrum. These notes have interest
rates ranging from 7.6% to 8.8%.
In the 1999 first quarter, Sprint Spectrum issued notes payable totaling $844
million to affiliates. The notes mature in 2006 and have interest rates based on
the London Inter-Bank Offered Rate plus 269 basis points.
In the 1999 first quarter, Sprint Spectrum terminated its revolving credit
facilities and repaid, prior to scheduled maturities, the related outstanding
balance of $1.7 billion. These facilities had interest rates ranging from 5.6%
to 6.3%. These repayments resulted in a $33 million extraordinary loss. These
short-term borrowings were repaid with the long-term financing provided by
Sprint.
- --------------------------------------------------------------------------------
4. Litigation, Claims and Assessments
- --------------------------------------------------------------------------------
Various suits arising in the ordinary course of business are pending against
Sprint Spectrum. Management cannot predict the final outcome of these actions
but believes they will not be material to the consolidated financial statements.
- --------------------------------------------------------------------------------
5. Supplemental Cash Flows Information
- --------------------------------------------------------------------------------
Sprint Spectrum's cash paid for interest, net of capitalized interest, totaled
$216 million in the first nine months of 1999 and $116 million in the same 1998
period.
Sprint Spectrum's noncash activities included the following:
Year-to-Date
September 30,
-------------------------
1999 1998
- -------------------------------------------------------
(millions)
Accrued interest converted
to long-term debt $ - $ 139
-------------------------
Noncash activity in
partners' capital $ 1 $ -
-------------------------
- --------------------------------------------------------------------------------
<PAGE>
6. Subsequent Event
- --------------------------------------------------------------------------------
In October 1999, Sprint announced a definitive merger agreement with
MCI/WorldCom. The merger is subject to the approvals of Sprint and MCI/WorldCom
stockholders as well as approvals from the Federal Communications Commission,
the Justice Department, various state government bodies and foreign antitrust
authorities. The companies anticipate that the merger will close in the second
half of 2000.
<PAGE>
Part I.
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF Sprint Spectrum L.P.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
General
- --------------------------------------------------------------------------------
In November 1998, Sprint Corporation purchased the remaining ownership interests
in Sprint Spectrum Holding Company, L.P.--Sprint
Spectrum's general partner--and MinorCo, L.P.--Sprint Spectrum's limited
partner--from Tele-Communications, Inc., Comcast Corporation
and Cox Communications, Inc. At that time, Sprint created the Sprint PCS Group,
which consists of Sprint's domestic wireless personal communication services
(PCS) operations, including Sprint Spectrum.
- --------------------------------------------------------------------------------
Recent Developments
- --------------------------------------------------------------------------------
In October 1999, Sprint announced a definitive merger agreement with
MCI/WorldCom. The merger is subject to the approvals of Sprint and MCI/WorldCom
stockholders as well as approvals from the Federal Communications Commission
(FCC), the Justice Department, various state government bodies and foreign
antitrust authorities. The companies anticipate that the merger will close in
the second half of 2000.
- --------------------------------------------------------------------------------
Results of Operations
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Selected Operating Results
---------------------------------------------------------------------
Quarters Ended
September 30, Variance
---------------------------------- -------------------------------
1999 1998 $ %
- ---------------------------------------------- ---------------- ----------------- -- ------------- -----------------
(millions)
<S> <C> <C> <C> <C>
Net operating revenues $ 574 $ 246 $ 328 133.3%
- ---------------------------------------------- -- ------------- -- -------------- -- -------------
Operating expenses
Costs of services and products 386 233 153 65.7%
Selling, general and administrative 374 252 122 48.4%
Depreciation and amortization 201 167 34 20.4%
- ---------------------------------------------- -- ------------- -- -------------- -- -------------
Total operating expenses 961 652 309 47.4%
- ---------------------------------------------- -- ------------- -- -------------- -- -------------
Operating loss $ (387) $ (406) $ 19 4.7%
-- ------------- -- -------------- -- -------------
Operating loss before depreciation and
amortization $ (186) $ (239) $ 53 22.2%
-- ------------- -- -------------- -- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Selected Operating Results
---------------------------------------------------------------------
Year-to-Date
September 30, Variance
---------------------------------- -------------------------------
1999 1998 $ %
- ---------------------------------------------- ---------------- ----------------- -- ------------- -----------------
(millions)
<S> <C> <C> <C> <C>
Net operating revenues $ 1,505 $ 583 $ 922 158.1%
- ---------------------------------------------- -- ------------- -- -------------- -- -------------
Operating expenses
Costs of services and products 1,039 608 431 70.9%
Selling, general and administrative 1,001 699 302 43.2%
Depreciation and amortization 546 432 114 26.4%
- ---------------------------------------------- -- ------------- -- -------------- -- -------------
Total operating expenses 2,586 1,739 847 48.7%
- ---------------------------------------------- -- ------------- -- -------------- -- -------------
Operating loss $ (1,081) $ (1,156) $ 75 6.5%
-- ------------- -- -------------- -- -------------
Operating loss before depreciation and
amortization $ (535) $ (724) $ 189 26.1%
-- ------------- -- -------------- -- -------------
</TABLE>
The wireless industry typically generates a significantly higher number of
subscriber additions and handset sales in the fourth quarter of each year
compared to the remaining quarters. This is due to the use of retail
distribution, which is dependent on the holiday shopping season; the timing of
new products and service introductions; and aggressive marketing and sales
promotions.
Sprint Spectrum markets its products through multiple distribution channels,
including its own retail stores as well as other retail outlets. Equipment sales
to one retailer, and the related service revenues generated by such sales,
accounted for nearly 30% of net operating revenues in the 1999 third quarter and
year-to-date periods.
Net Operating Revenues
Net operating revenues include subscriber revenues and sales of handsets and
accessory equipment. Subscriber revenues consist of monthly recurring charges
and usage charges. Net operating revenues increased 133% in the 1999 third
quarter and 158% in the 1999 year-to-date period from the same 1998 periods
reflecting an increased customer base over the past 12 months.
Approximately one-sixth of the 1999 third quarter and year-to-date net operating
revenues and one-fifth of the 1998 third quarter and year-to-date net operating
revenues were from sales of handsets and accessories. As part of Sprint
Spectrum's marketing plans, handsets are normally sold at prices below Sprint
Spectrum's cost.
Operating Expenses
Costs of services and products mainly includes handset and accessory costs,
interconnection costs, and switch and cell site expenses. These costs increased
66% in the 1999 third quarter and 71% in the 1999 year-to-date period from the
same 1998 periods reflecting the significant growth in customers and expanded
market coverage, partly offset by a reduction in handset unit costs.
Selling, general and administrative (SG&A) expense mainly includes salary and
benefit costs as well as marketing costs to promote products and services. SG&A
expense increased 48% in the 1999 third quarter and 43% in the 1999 year-to-date
period from the same 1998 periods reflecting an expanded workforce to support
subscriber growth and increased marketing and selling costs. SG&A also includes
costs related to Sprint Spectrum's efforts to achieve Year 2000 compliance.
Depreciation and amortization expense consists of depreciation of network assets
and amortization of intangible assets. The intangible assets include PCS
licenses, which are amortized over 40 years, and microwave relocation costs,
which are amortized over the remaining life of the related PCS licenses.
Depreciation and amortization expense increased 20% in the 1999 third quarter
and 26% in the 1999 year-to-date period from the same 1998 periods reflecting
depreciation of the network assets placed in service during 1999 and 1998.
- --------------------------------------------------------------------------------
<PAGE>
Interest Expense
- --------------------------------------------------------------------------------
Interest expense increased 21% in the 1999 third quarter and 34% in the 1999
year-to-date periods from the same 1998 periods reflecting increased borrowings.
- --------------------------------------------------------------------------------
Extraordinary Item
- --------------------------------------------------------------------------------
In the 1999 first quarter, Sprint Spectrum terminated its revolving credit
facilities and repaid, prior to scheduled maturities, the related outstanding
balance of $1.7 billion. These facilities had interest rates ranging from 5.6%
to 6.3%. These repayments resulted in a $33 million extraordinary loss. These
short-term borrowings were repaid with long-term financing provided by Sprint.
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
- --------------------------------------------------------------------------------
Sprint Spectrum's liquidity and capital resources are managed by Sprint. Sprint
funds the Sprint PCS Group's, including Sprint Spectrum's, operating losses,
working capital and debt service requirements.
- --------------------------------------------------------------------------------
Year 2000 Issue
- --------------------------------------------------------------------------------
The "Year 2000" issue affects Sprint Spectrum's installed computer systems,
network elements, software applications, and other business systems that have
time-sensitive programs that may not properly reflect or recognize the year
2000. Because many computers and computer applications define dates by the last
two digits of the year, "00" may not be properly identified as the year 2000.
This error could result in miscalculations or system failures. The Year 2000
issue may also affect the systems and applications of Sprint Spectrum's
customers, vendors, resellers or affiliates.
Sprint Spectrum has completed an inventory, assessment, renovation and testing
of its computer systems, network elements, software applications, products and
other business systems. Additional testing will continue for the remainder of
the year to maintain Year 2000 readiness for all systems and networks.
Substantially all of Sprint Spectrum's software applications and network
elements have met its Year 2000 Program requirements and have been
deployed. Sprint Spectrum is using both internal and external resources to
identify, correct or reprogram, and test its systems for Year 2000 readiness. It
expects Year 2000 compliance for all systems to be achieved in 1999.
Sprint Spectrum has also contacted others with whom it conducts business to
receive the proper warranties and assurances that those third parties, including
affiliates, are or will be Year 2000 compliant. Sprint Spectrum relies on
third-party vendors for a significant portion of its important operating and
computer system functions and is highly dependent on those third-party vendors
to remediate and test network elements, computer systems, software applications
and other business systems. However, Sprint Spectrum has reviewed test results
provided by its vendors to help ensure Year 2000 compliance. In addition, Sprint
Spectrum uses publicly available services that are acquired without contract,
such as global positioning system timing signal, that may be affected by the
Year 2000 issue. While Sprint Spectrum believes these publicly available systems
will be Year 2000 compliant, it has no contractual or other right to force
compliance.
Sprint Spectrum incurred approximately $40 million from inception through
September 1999 for its Year 2000 remediation program and expects to incur
approximately $10 million through the remainder of 1999. This program is
designed to assure the proper functioning of critical and secondary elements for
Year 2000 compliance. When this program is fulfilled, Sprint Spectrum has a high
degree of confidence that elements within its control will function through the
upcoming date changes. However, there is a remaining risk stemming from elements
vulnerable to the Year 2000 problem which are beyond Sprint Spectrum's control.
For example, Sprint Spectrum interconnects with numerous third party carriers
and utilities. Sprint Spectrum has taken measures to assure that these third
parties will continue to function through any date related difficulties, but
ultimately Sprint Spectrum does not have control over their success. Sprint
Spectrum is continuing to focus on identifying and addressing all aspects of its
operations that may be affected by the Year 2000 issue.
Sprint Spectrum is evaluating events beyond its control that could occur before
and after the arrival of the year 2000. Sprint Spectrum has reviewed its
existing disaster recovery plans and developed additional contingency and
business continuity plans to prepare for the year 2000. All of these plans were
complete at the end of the third quarter. Sprint Spectrum will implement, if
necessary, appropriate contingency and business continuity plans to mitigate to
the extent possible the effects of any Year 2000 noncompliance.
<PAGE>
Sprint Spectrum has reviewed the risks related to a worst case scenario
that could result from a Year 2000 related failure. This scenario could result
in a temporary disruption to normal business operations and could impact Sprint
Spectrum's financial performance. Based upon the work completed to date, Sprint
Spectrum believes that such an occurrence is unlikely. Nevertheless, certain
elements related to the Year 2000 readiness of suppliers, utilities,
interconnecting carriers and customers are beyond Sprint Spectrum's control and
could fail. At this point, Sprint Spectrum does not believe that the failure of
such elements could cause a major breakdown within its normal operations.
- --------------------------------------------------------------------------------
Forward-Looking Information
- --------------------------------------------------------------------------------
Sprint Spectrum includes certain estimates, projections and other
forward-looking statements in its reports, in presentations to analysts and
others, and in other publicly available material. Future performance cannot be
ensured. Actual results may differ materially from those in the forward-looking
statements. Some factors that could cause actual results to differ include:
- the effects of vigorous competition in the markets in which Sprint
Spectrum operates;
- the costs and business risks related to entering and expanding new
markets necessary to provide nationwide service and new services;
- the ability of Sprint Spectrum to grow its market presence;
- the impact of any unusual items resulting from ongoing evaluations of
Sprint Spectrum's business strategies;
- unexpected results of litigation filed against Sprint Spectrum;
- the impact of the Year 2000 issue and any related noncompliance;
- the possibility of one or more of the markets in which Sprint Spectrum
competes being impacted by changes in economic or other factors such as
legal and regulatory changes or other external factors over which
Sprint Spectrum has no control; and
- the possibility that relationships with customers, governments,
partners and employees may be affected because of uncertainty
surrounding Sprint as a result of its entering into a merger agreement
with MCI/WorldCom.
The words "estimate," "project," "intend," "expect," "believe" and similar
expressions are intended to identify forward-looking statements. Forward-looking
statements are found throughout "Management's Discussion and Analysis of
Financial Condition and Results of Operations". The reader should not place
undue reliance on forward-looking statements, which speak only as of the date of
this report. Sprint Spectrum is not obligated to publicly release any revisions
to forward-looking statements to reflect events after the date of this report or
unforeseen events.
<PAGE>
Part I.
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES Sprint Spectrum L.P.
ABOUT MARKET RISK
Omitted under the provisions of General Instruction H.
Part II.
Other Information
Item 1. Legal Proceedings
There were no reportable events during the quarter ended September 30, 1999.
Item 2. Changes in Securities
Omitted under the provisions of General Instruction H.
Item 3. Defaults Upon Senior Securities
Omitted under the provisions of General Instruction H.
Item 4. Submission of Matters to a Vote of Security Holders
Omitted under the provisions of General Instruction H.
Item 5. Other Information
There were no reportable events during the quarter ended September 30, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
(3.1) Certificate of Limited Partnership of Sprint Spectrum L.P.
(incorporated by reference to Exhibit 3.2 to Sprint Spectrum's
Form S-1 Registration Statement, Registration No. 333-06609,
filed on June 21, 1996).
(3.2) Agreement of Limited Partnership of MajorCo Sub, L.P. (renamed
Sprint Spectrum L.P.), dated as of March 28, 1995, among
MajorCo, L.P. (renamed Sprint Spectrum Holding Company, L.P.)
and MinorCo, L.P. (incorporated by reference to Exhibit 3.6 to
Sprint Spectrum's Form S-1 Registration Statement,
Registration No. 333-06609, filed on June 21, 1996).
(27) Financial Data Schedule
(a) September 30, 1999
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPRINT SPECTRUM L.P.
----------------------------------------------------------
(Registrant)
/s/ William J. Gunter
----------------------------------------------------------
William J. Gunter
Chief Financial Officer
Principal Financial Officer
Date: November 12, 1999
<PAGE>
<TABLE>
<CAPTION>
Part I.
Item 1.
Sprint Spectrum Finance Corporation
- --------------------------------------------------------------------------------------------------------------------
BALANCE SHEETS (Unaudited)
September 30, December 31,
1999 1998
- --------------------------------------------------------------------------------------------------------------------
Liabilities and Shareholder's Equity
<S> <C> <C>
Payable to Sprint Spectrum, L.P. $ 1,497 $ 1,497
-------------------------------
Shareholder's equity
Common stock, $1.00 par value; 1,000 shares authorized;
100 shares issued and outstanding 100 100
Accumulated deficit (1,597) (1,597)
-------------------------------
Total shareholder's equity (1,497) (1,497)
-------------------------------
Total $ - $ -
-------------------------------
</TABLE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
Sprint Spectrum Finance Corporation, a wholly owned subsidiary of Sprint
Spectrum L.P., was formed to be a co-obligor of certain securities issued by
Sprint Spectrum. Sprint Spectrum Finance Corporation has nominal assets and did
not conduct any operations during 1999 and 1998. As a result, the Statements of
Operations and Statements of Cash Flows have been omitted.
Part I.
Item 2.
- --------------------------------------------------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Sprint Spectrum Finance Corporation had no operations during 1999 and 1998.
Part I.
Item 3.
- --------------------------------------------------------------------------------
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Omitted under the provisions of General Instruction H.
<PAGE>
Part II.
Other Information
Item 1. Legal Proceedings
There were no reportable events during the quarter ended September 30, 1999.
Item 2. Changes in Securities
Omitted under the provisions of General Instruction H.
Item 3. Defaults Upon Senior Securities
Omitted under the provisions of General Instruction H.
Item 4. Submission of Matters to a Vote of Security Holders
Omitted under the provisions of General Instruction H.
Item 5. Other Information
There were no reportable events during the quarter ended September 30, 1999.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed as part of this report:
(3.1) Certificate of Incorporation of Sprint Spectrum Finance
Corporation (incorporated by reference to Exhibit 3.3 to
Sprint Spectrum's Form S-1 Registration Statement,
Registration No. 333-06609, filed on June 21, 1996).
(3.2) Bylaws of Sprint Spectrum Finance Corporation (incorporated
by reference to Exhibit 3.4 to Sprint Spectrum's Form S-1
Registration Statement, Registration No. 333-06609, filed on
June 21, 1996).
(27) Financial Data Schedule
(a) September 30, 1999
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 1999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SPRINT SPECTRUM FINANCE CORPORATION
----------------------------------------------------------
(Registrant)
/s/ William J. Gunter
----------------------------------------------------------
William J. Gunter
Vice President, Treasurer and Director
Principal Financial Officer
Date: November 12, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001015551
<NAME> Sprint Spectrum L.P.
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1999
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<NAME> Sprint Spectrum Finance Corporation
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