Exhibits B

 

EXHIBITS

 

Exhibit A

1997

1998

1999

2000

2001

NET SALES(a)

15,238,500

16,762,350

18,438,585

20,282,444

22,310,688

COST OF GOODS

7,626,140

8,388,754

9,227,629

10,150,392

11,165,432

SELL GEN & ADMIN EXP

3,426,213

3,768,834

4,145,718

4,560,290

5,016,318

DEPRECIATION & AMORT

1,726,235

1,898,859

2,088,744

2,297,619

2,527,381

EBIT

2,459,912

2,705,903

2,976,494

3,274,143

3,601,557

INTEREST EXPENSE(b)

201,935

232,225

255,448

280,993

309,092

EBT

2,257,977

2,473,678

2,721,046

2,993,150

3,292,465

TAXES©

858,031

939,998

1,033,997

1,137,397

1,251,137

NET INCOME

1,399,946

1,533,680

1,687,048

1,855,753

2,041,329

PLUS DEPRECIATION & AMORT

1,726,235

1,898,859

2,088,744

2,297,619

2,527,381

CASH FLOW

3,126,181

3,432,539

3,775,793

4,153,372

4,568,709

LESS RETENTIONS(d)

356,093

373,898

400,070

428,075

458,041

PLUS TERMINAL VALUE

35,773,223

NET CASH FLOW TO PURCHASER

2,770,088

3,058,641

3,375,722

3,725,297

40,799,972

(a)Since 8.5% is the average growth over the past 5 years, that was the growth rate used in 1997. All years thereafter, are based on 10% growth.
(b)-To bring Sprint up to its target capital structure, their debt was increased by 15% in 1998, and 10%
thereafter. The present capital structure is 27%. The target is 40%.
©The existing tax rate was maintained at 38%.
(d)Cash flows generated must be retained to finance asset replacement and growth. Thereafter,
retentions will grow at 5% in 1998, and 7% til 2001.

 

Exhibit B

(In billions)

1996

1995

1994

Net cash used by investing activity

-1,856.2

-3,184.2

-2,025.4

Net cash provided (used) by financing activities

479.1

422.6

-456.9

Difference between investing and financing

-1,377.1

-2,761.6

-2,482.3

Retained Earnings

3,211.8

2,763

2,730.9

Balance after RE added in with financing

1,834.7

1.4

248.6

Exhibit C

image3

 

Exhibit D                                                     Exhibit E

VALUES

Times Interest Earned Net Present Value Of Sprint

$22,475,313,000

Risk free rate for industry

14.80%

Risk free rate

6.40%

Leveraged change in beta

0.78

1996

1995

1994

Beta

1.1

Sprint

10.72

6.68

5.62

Tax rate

38%

ATT

27.54

11.99

17.64

New beta with target debt to equity

1.10

MCI

11.15

7.02

9.37

New cost of equity

22.72

Shares Outstanding

430,100,000

Sprint Takeover Share Price
(presently 54 ¼)

60

Value of Sprint

25,806,000,000

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