FOOL CONFERENCE CALL SYNOPSIS*
By Debra Tidwell (MF Debit)

Sprint Corporation <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: FON)") else Response.Write("(NYSE: FON)") end if %>
2330 Shawnee Mission Parkway
Westwood, KS 66205
(913) 624-3000
http://www.sprint.com/

UNION CITY, CA (February 12, 1997)/FOOLWIRE/ --- Sprint Corporation released results for the fourth quarter and fiscal year 1996 on February 4th. Their fourth quarter earnings per share was $0.57 compared to a loss of $(0.98) per share in the fourth quarter a year ago. In the quarter they took a one-time $60 million or $0.08 per share after-tax litigation charge in their long distance segment. After adjusting for non-recurring items, earnings per share was $0.65 compared to $0.77 a year ago. The year-over-year decline in earnings per share is due to higher losses from their emerging businesses and joint ventures and increased shares outstanding.

FULL YEAR RESULTS. Excluding one-time items, full year earnings per share from continuing operations of $2.87 compares with last year's $2.85 per share on a 22% increase in average shares outstanding. Normalized earnings from Sprint's core businesses in the quarter were $0.85 per share versus $0.83 a year ago. Full-year normalized earnings from their core businesses were $3.38 per share versus $2.95 per share in 1995, an increase of 15%. Normalized core business earnings per share exclude one-time items and the after-tax losses from Sprint Spectrum, Global One, and their emerging market segment.

Q4 OVERVIEW. The fourth quarter progress mirrors Sprint's performance throughout 1996 and once again was extraordinary. Strategically, they positioned themselves for continued success in existing markets and entered new markets that offer substantial opportunities. Operationally, their core long distance and local businesses hit on all cylinders. Financially, they continued to build on their position of strength and flexibility.

1996 OVERVIEW. In 1996 they achieved their key financial objectives of growing revenues, operating income, and operating cash flows at double-digit rates. Full-year revenues were up 10% and increased nearly 12% after adjusting for the transfer of Global One revenues. Their long-distance and local operations both had strong growth, with long distance up 14% and 17% after adjusting for Global One, while local revenues increased 9.5%. Excluding non-recurring items, operating income for the year was up 21%, with long distance improving 39% and local up more than 18%.

EMERGING MARKET INVESTMENTS. For the full year their operating cash flows increased nearly 16%. They are pleased to say that they accomplished these results at the same time they were preparing for their future. In 1996 they made significant investments in new products and services that will help them maintain their growth. In their financial release, they provided separate reporting on these areas of investment under the Emerging Market segment. In this category, they include the results of their consumer Internet access, CLEC (competitive local exchange carrier services), and international development efforts. 1996 reported results for their long-distance and local segments have been restated to exclude costs associated with these initiatives. In future reports, Emerging Markets will also include results from Sprint's recently acquired direct ownership in PCS D and E market licenses.

DIVISION PERFORMANCE OVERVIEW. As they closed out the year their long distance business continued to experience strong broad-based momentum. The fourth quarter year-over-year growth in minutes of use was 21%, matching their third quarter rate. They think it's particularly noteworthy that their 20% full-year growth in minutes is the best performance by a "Big 3" carrier since 1990. Their local exchange operations continued to experience strong growth in the customer base with access line gains of 5.6%. Growth in access minutes of use was also solid at 9.6% for the quarter, which brought the full-year increase to 10.5%.

CORPORATE/DIVISION RESULTS FOR Q4. Sprint's total revenues for the quarter were $3.62 billion, an 8.5% increase from the year ago fourth quarter. Net of an approximate $71 million transfer of retail spreads to Global One, total revenues increased nearly 11%. Long distance recorded a year-over-year revenue gain of $238 million or 12.3%. Adjusting for the Global One transfers, long distance revenue growth was nearly 17%. The growth in long-distance revenues this quarter is primarily a result of strong, broad-based minute growth, and increases in frame relay and Internet platform services. Local division revenues were up $98 million or 7.9%. During the quarter, local service revenues and equipment sales both increased at double-digit rates. This strong growth was partially offset by lower toll revenues and a slowdown in access revenue gains. Sales in their product distribution and publishing operations increased by $23 million or 8.2%.

OPERATING MARGINS. Sprint's normalized operating margin this quarter was 15.8% versus 16.9% in the third quarter and 15.6% a year ago. The sequential decline is primarily due to higher expenses in their emerging market segment and lower margins in local. Total normalized operating income of $573 million is a 10% improvement over the year-ago period. Long distance operating income of $257 million this quarter is up 27% from a year ago. The local division reported operating income of $334 million. Excluding the 1995 restructuring charge, this is better than a 12% improvement. Product distribution and publishing increased its operating income by 21% this quarter.

EMERGING MARKET EXPENSES - INTERNET ACCESS SERVICE. Their emerging markets expenses this quarter were approximately $36 million which compares to $15 million in the third quarter. The largest area of spending was for their consumer Internet access service which they made generally available in the latter part of the quarter. They have substantially completed the buildout of their Internet access platform which now contains more than 230 points of presence (POPs) and can be reached by 85% of the nation's population through a local call. Early acceptance to a measured rollout has been encouraging with about 60,000 subscribers currently using the service.

EMERGING MARKET EXPENSES - OTHER. The balance of the expenses in the emerging markets reflect their efforts to enter newly competitive domestic and international markets. In the US, they have applied to compete for local exchange services in 47 states and the District of Columbia and they have received approval in 25 of these states. They launched their initial competitive local service offering in San Diego last week. Internationally, their primary thrust has been in China where they are participating in an alternative infrastructure project.

OPERATING CASH FLOW. Operating cash flows were $979 million this quarter excluding non-recurring items. This is an increase of $80 million from the same period in 1995. Normalized operating cash flows in long distance improved nearly 20% from a year ago while cash flows in the local division grew by 10%. The overall cash flow margin of 27% is ten basis points above last year's level. Full year operating cash flows of $3.92 billion equates to $9.20 per share. Over the last 3 years, Sprint has generated a double-digit compounded growth rate in operating cash flows. They continue to believe they can grow cash flows at double-digit rates. Despite this superior performance and despite their better than 45% return to shareholders in 1995 and a better than 25% return in 1996, their stock continues to trade at a discounted level of 4.5 times operating cash flows. For the 12 months ended in December, economic value added which measures the spread between after tax operating returns on capital and the cost of capital deployed, was ahead of year-ago levels by approximately $175 million. Improvement in EVA continues to be driven by increased operating margins and higher asset turns.

GLOBAL ONE JOINT VENTURE. Global One finished its first 11 months in business with slightly more than $800 million in revenues. Fourth quarter revenues were at $1 billion annualized run rate. In the fourth quarter, Global One secured major contracts from several large multinational accounts including data communications agreements with Samsung and Volvo and a 5-year $550 million agreement with Credit Lyonnaise. In the fourth quarter, Global one results were unfavorably impacted by year-end true-ups which resulted in higher reported losses. Sprint's portion of operating losses from Global One was $31 million this quarter which, on an after-tax basis, diluted earnings by $0.05 per share.

SPRINT SPECTRUM JOINT VENTURE. Sprint Spectrum launched PCS service under the Sprint PCS brand name in 8 markets in the month of December. Sprint Spectrum delayed the launch of several Nortel markets from the fourth quarter due to a software issue. The venture expects to begin providing service in these markets during the first quarter. Sprint Spectrum has set mid-1997 as its target for having all its markets open. In the fourth quarter, Sprint's share of Sprint Spectrum operating losses amounted to $71 million, which had an after-tax impact of $0.10 per share. The increased expenditures in the fourth quarter included higher costs for marketing and customer service and depreciation and amortization expenses in the markets where service was initiated. The venture also had higher expenses for advertising in those markets expected to be launched in the first quarter. Capital expenditures for the quarter were $864 million. Fourth quarter capital expenditures by division were $256 million in local and $517 million in long distance. Total capital expenditures for local and long distance were approximately $2.3 billion in 1996 and they currently expect these expenditures will be about $2.5 billion in 1997. 1996 equity contributions to Sprint Spectrum were approximately $365 million. They currently expect equity contributions to Sprint Spectrum will be approximately $500 million in 1997.

PCS LICENSE AUCTIONS. In the recently completed 10MHz PCS license auctions, Sprint won licenses covering about 70 million people. Their total cost for these licenses was $544 million. The balance due on these licenses, approximately $460 million, will be paid in the first quarter. In addition, they expect to spend approximately $1.5 billion for construction of networks in these market areas over the next three years. Total capital spending on emerging markets was approximately $50 million in 1996. They currently expect 1997 capital spending for the CLEC business will be around $200 million.

LOCAL DIVISION RESULTS. They are pleased to report that their performance in 1996 far exceeded their expectations. Their full-year financial highlights include 9.5% revenue growth, an 18.5% improvement in recurring operating income, and a 14.4% increase in operating cash flows. A major contributor to their strong financial results was the addition of a record number of new access lines resulting in 5.6% growth over the 12-month period.

NEW PROGRAMS. In addition to strong financial results in 1996, the year was also notable for the groundwork they put in place to succeed in a newly competitive environment. They adopted the Sprint brand in all their territories. They realigned their field operations to gain efficiency. They made preparations to begin offering wholesale network services, and most importantly they developed a competitive mindset throughout the organization.

GROWTH. The division's 5.6% access line growth for the year is an increase from the 5.4% they reported through the third quarter. In the fourth quarter they installed nearly 100,000 access lines to end the year with more than 7.1 million. Approximately 1/3 of their growth stems from demand for second lines which are becoming more necessary for Internet and work-at-home needs. Within their territories, more than 9% of their customers have more than one line. Their Nevada and Florida properties continue to see particularly strong growth, with year-over-year access line growth rates reaching 10.9% and 5.9% respectively. At quarter end, the division had more than 5.1 million residential access lines, a 4% increase over the fourth quarter 1995. Business lines continued to grow at double-digit rates in the fourth quarter and approached 2 million at the end of the period.

LOCAL SERVICE REVENUE. In the fourth quarter their revenues of $1.33 billion were 7.9% ahead of the $1.23 billion they reported in the fourth quarter of 1995. During the quarter they continued to experience strong growth in local services revenue which increased more than 12% over the fourth quarter of 1995. This growth is a product of their strong primary and secondary access line gains and high acceptance of vertical network services.

REVENUES - VERTICAL NETWORK SERVICES. For the quarter, revenue from vertical network services was up over 40% from the same quarter a year ago led by strong gains in class services such as Caller-ID and Return Call. This local services revenue growth was also a result of the expansion of extended area calling plans.

REVENUES - EQUIPMENT SALES. Increased equipment sales also contributed to their revenue growth. Fourth quarter revenues were up 48% over the same quarter in 1995. Equipment sales have been strong in both the consumer and business markets. Over 30% of the year-over-year growth in equipment sales came from consumer telephone instrument products introduced in 1996. During the fourth quarter, access revenues were up 4.9% over the same period last year. This growth rate is slower than they have been reporting in prior quarters and is partially due to implementation of selected intrastate rate reductions. Their access minutes of use were up 9.6% in the quarter compared to the fourth quarter last year.

TOTAL REVENUE. Total revenues declined 17% in the fourth quarter due to lower volumes caused by competition in their intra-LATA toll markets and the shifting of some toll to extended-area local calling plans. Operating income for the quarter totalled $334 million. This is a $37 million increase or a 12.4% improvement from the fourth quarter of 1995, excluding the 1995 non-recurring charge.

LOCAL DIVISION OPERATING MARGIN & CASH FLOW. The local division operating margin for the quarter was 25.1% compared to a normalized 24.1% during the fourth quarter of 1995. Their operating margin for all of 1996 was 25.9%, a 200 basis point improvement over normalized 1995 levels. Operating cash flows amounted to $561 million during the quarter which is $52 million or 10% above the normalized fourth quarter of 1995. Full year operating cash flows were $2.25 billion compared to the $1.96 billion reported in 1995.

EXPENSES. In the fourth quarter, operating expenses were $995 million, up 6.5% over the fourth quarter last year, excluding the 1995 non-recurring charge. The increase is driven by an increase in marketing costs, customer service costs, and a one-time charge for the close of United Telephone Long Distance, the local division's reseller of long distance services. Capital expenditures in the local division for the fourth quarter were $256 million, a 15% increase over the same period in 1995. Year-to-date capital expenditures were $1.1 billion compared to $1 billion in 1995.

TELECOM ACT OF 1996. With the passage of the Telecommunications Act of 1996, the telecom industry will be faced with several major regulatory issues including access reform and rules for competition. They are pleased that the FCC is taking on the long-overdue task of establishing a closer alignment between access pricing and relevant access costs. While there is always uncertainty when a task of this magnitude is undertaken, Sprint has put forth a plan that fully addresses access and universal service reform which, if adopted, would provide a framework in which all of their internal divisions can prosper in a competitive marketplace. They are hopeful that the FCC will, as it has in the past, arrive at decisions close to the balanced proposal set forth by Sprint. The Telecom Act requires Sprint to provide nondiscriminatory unbundled access and resale of services at wholesale rates to new local exchange competitors. During the quarter they made substantial progress on interconnection negotiations with these new competitors. At the same time, they began putting into place operating processes to provide quality service to these soon-to-be new customers.

PRODUCT DISTRIBUTION & DIRECTORY PUBLISHING. Their product distribution and directory publishing businesses also enjoyed a successful year in 1996. Operating income for the year increased 17% to $102 million from $87 million a year ago. Revenues increased 6.8% to $1.23 billion from $1.15 billion in 1995. Operating cash flows showed a 15.6% increase, up from $94.1 million in 1995. For the fourth quarter, operating income increased to 21% to $26.1 million up from $21.6 million in 1995. Total revenues increased 8.2% to $300 million, driven primarily by increased sales to customers not affiliated with Sprint. Quarterly operating cash flows from these businesses climbed more than 18% from the same period last year.

SUMMARY OF LOCAL DIVISION RESULTS AND OUTLOOK. They are very pleased with the strong performance of the local division in 1996. Their challenge in the new year will be to put into place a redefined approach to their business to take advantage of the changing telecommunications environment and to continue to build on their momentum. They will develop new service offerings and new distribution channels to support strong revenue growth. They will continue to modernize their networks to expand both the reach and variety of their services. They will position themselves to be the wholesaler of choice for the competitive local exchange carriers. They will continue to implement process improvement initiatives and focus on reducing costs. Finally, they will ensure that Sprint's voice is heard in the regulatory debates affecting their industry. They think they are entering 1997 with continued strong growth in the basic drivers of their business and they all look forward to a challenging and exciting new year.

LONG DISTANCE DIVISION. They were very pleased to report that the long distance division continued its outstanding momentum in the fourth quarter with year-over-year revenue and minute growth rates reaching double-digits for the fifth consecutive quarter. They are obviously pleased with this continuing performance track record. Their volume and revenue growth was broad-based as their business, consumer, and wholesale groups each achieved double-digit year-over-year growth. The division-wide 21% year-over-year volume growth matched their 3rd quarter results and brought full-year volume growth to 20%, a level they had not achieved since 1990.

LONG DISTANCE FINANCIAL RESULTS. In the fourth quarter, the division reported record revenues of $2.16 billion compared to $1.93 billion one year ago, a 12.3% increase. Adjusting for Global One, revenue growth would have been nearly 17%. Net of this adjustment the gap between minute growth and revenue growth this quarter was approximately 4%. This gap is due to a shift in segment mix and the competitive conditions in the marketplace. Sequentially, their volumes were up 3% and revenues were up almost 4%. Revenues and volumes exited 1996 on a very strong note and they have seen that strength continue into the new year. They took a $60 million non-recurring charge related to litigation. Additionally, earlier quarters have been restated to reflect their new emerging market segment including Internet related financials. In the fourth quarter they reported record operating income of $257 million. This is a 27% increase from the year-ago period. The operating margin at 11.9% fell just short of last quarter's record 12.1% and compares to the 10.5% margin that they reported in the fourth quarter last year. The long distance division made substantial margin progress throughout 1996. For the full year, operating income was up substantially to $984 million resulting in a 220 basis point operating margin increase.

BUSINESS MARKET GROWTH DRIVERS. Some key drivers of their growth were domestic WATs and toll-free volumes which each grew in excess of 30% and international traffic which grew nearly 30%. They achieved nearly 20% revenue growth in the small-medium business segment and saw churn drop to record lows resulting in a 33% improvement in customer loyalty versus 1995 levels. These impressive statistics are the result of a simple and compelling marketing proposition, the loyalty-focused reward program Callers Plus, and a proactive service and selling focus in their business solutions center in Louisville Kentucky. Friday's Free continues to be a major driver of their success in the small business segment. In 1996, total non-Friday minute usage for small business increased by nearly 26%. For qualifying businesses that signed up during the first quarter of 1997, they are extending the Friday's Free offer until the year 2000.

HIGH-END BUSINESS MARKET. In national and major accounts, high-end business volumes exceeded 17% for the quarter and they closed new business agreements with BMW North America, Control Data, and Circus Circus Enterprises. They also extended an existing contract with Occidental Petroleum and British Trading. Their contract with Circus Circus is another example of success in the hospitality market. They now supply service to a substantial portion of the major hotel and casino operators in Las Vegas. They earned the exclusive endorsement of the American Hotel and Motel Association during the quarter, the result of Sprint's substantial capabilities to provide customized services for the hospitality industry.

DATA SERVICES. Sprint continues to maintain a dominant position across the spectrum of data services. In November, International Data Corporation announced that it has found that Sprint leads the market for packet and cell-based services. This IDC report indicates that Sprint's 39% revenue share leads the market for these data services. Sprint holds a commanding lead in two key market segments, ATM and X.25, and is neck-and-neck for the lead in frame relay services. Frame relay revenues more than doubled this quarter compared to the year-ago period and ATM revenues showed a large sequential improvement. Excluding the transfer of business to Global One, fourth quarter data revenue growth would have been nearly 33% compared to the prior year period. Their consumer services group had an outstanding fourth quarter and full year. Domestic residential revenues were substantial contributors to the quarter's strength, increasing nearly 15% from last year's fourth quarter, three times this industry segment's rate of growth.

CONSUMER MARKET. For the full year, domestic residential revenues and volumes increased 16%. In its initial season of Sprint NFL sponsorship program was used for key customer loyalty programs and in support of key complementary communication products such as paging, phone cards, and prepaid cards. They recently celebrated the second anniversary of Sprint Sense, their most successful consumer marketing program ever. In 1996 they extended the product set with international, day, state, and card line offers resulting in record sales and profitability. In November, Blockbuster music and video stores nationwide began to distribute the software for Sprint Internet Passport. They anticipate that their competitive flat-rated Internet access offering will introduce new customers to the Sprint family of services as well as enhancing existing customer loyalty.

ADVERTISING/CUSTOMER SERVICE METRICS. Sprint advertising effectiveness continues to increase and, for the second year in a row, Video Storyboard ranked Candace Bergen the top celebrity endorser. For the third year in a row the Yankee Group found that Sprint gave its customers the highest level of service in all 8 categories measured. The Yankee Group study reinforced a similar finding by JD Powers in the third quarter. Simple pricing, higher value to the consumer, a broadening portfolio of services, and excellent customer service continue to be the keys to their success in the consumer market.

WHOLESALE BUSINESS. Their wholesale group had a terrific quarter with year-over-year revenue growth and volumes each up more than 50%. They are competing very successfully with traditional reseller business winning several new accounts and gaining increased commitments from existing customers. Going forward, the opportunity to carry in-region RBOC wireless and out-of-region traffic, which is underway for NYNEX and Bell Atlantic, and their continuing attention to this important market, will drive their growth in the wholesale segment.

INTERCONNECTION. Interconnection costs as a percent of revenue were 45.6% this quarter versus 41.9% a year ago and 44.9% in the third quarter. This increase in interconnection expense was due primarily to increases in international traffic. Operations costs grew moderately and, as a percentage of revenue, declined again this quarter to 12.3% of revenues compared to 15.5% in last year's fourth quarter and 12.4% in the previous quarter. For the year, their people were dramatically more productive. Revenue per employee increased nearly 16% and cash flow generated per employee increased over 27%. Excluding the charge related to litigation, SG&A as a percentage of revenue declined both sequentially and year-over-year to 22.5% of revenues compared to the 24.2% reported a year ago and 22.9% in the third quarter. Some of the improvements in operations and SG&A expenses has been influenced by the contribution of business to Global One.

LONG DISTANCE DIVISION SUMMARY AND OUTLOOK. They are obviously very pleased with their performance in the fourth quarter and for all of last year. The long distance division profitably increased the scale and scope of its operations during 1996. They are executing their plans and growing operating profits at twice the rate of their main competitors. In 1997 they will further integrate packages of communication products and expand their distribution with partners such as Sprint Spectrum and Radio Shack, where several thousand stores nationwide will sell the full array of Sprint brand products and services. They are confident this will result in continued profitable market share growth and an even stronger Sprint brand.

CORPORATE OUTLOOK FOR 1997. First of all, in their long distance business, they continue to experience very strong momentum. They currently see no impediments to this momentum and they are targeting double-digit volume and revenue growth for the full year 1997. Their first quarter year-over-year volume comparisons in long distance will likely trend down from the fourth quarter, due primarily to lower FTS 2000 traffic. Unlike past years, they are no longer carrying minutes for IRS 800 lines, which historically have had a strong seasonal impact in the first part of the year. This traffic has traditionally had a lower average yield, so the reported gap between minutes and revenues should narrow.

GLOBAL ONE WILL CONTINUE TO IMPACT RESULTS. Their reported year-over-year comparisons next period will continue to be affected by Global One related transfers. This amount will be approximately $23 million in the first quarter which, compared to the fourth quarter, will also contribute to a smaller reported gap. They currently expect long distance to generate double-digit operating income growth in the first quarter and for all of 1997.

LOCAL DIVISION GROWTH OUTLOOK. In their local business they expect recent trends to continue throughout 1997. The areas they serve continue to maintain healthy economies. More and more homes are installing fax capabilities and the demand for Internet access is exploding. As a result, they expect to continue adding access lines at a very strong clip. In 1997 their local division is targeting significant unit cost reductions through consolidation and business process improvements. They currently expect that their local operations will also achieve double-digit profit growth in the first quarter and they are targeting similar growth for all of 1997.

INTERCONNECT OUTLOOK. The pace of their CLEC business rollout will be largely dependent upon successful completion of interconnect agreements and the implementation of workable interfaces with the incumbent local exchange carriers. They are currently targeting to provide service in 2-3 dozen cities before year end. Based upon the current status of interconnection issues, this may be an aggressive target.

CONSUMER INTERNET ACCESS OUTLOOK. Their consumer Internet access business will continue to be marketed at a level that insures they maintain a quality service with uninterrupted access and acceptable response times. They expect that this service will exit 1997 with an annualized revenue stream in the neighborhood of $100 million.

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