Sprint - Nextel 2005 Annual Report Download - page 76

This facility replaced the existing Nextel credit agreement, which included a $4.0 billion revolving credit facility,
$1.0 billion of which was drawn, and a $2.2 billion term loan, all of which was outstanding. The new $3.2 billion
term loan was used to refinance the outstanding revolving credit and term loans under the existing Nextel credit
agreement. The $2.5 billion letter of credit required by the FCC Report and Order that was outstanding under the
Nextel credit agreement remains outstanding under the new $6.0 billion revolving credit facility and reduces the
available revolving loan commitments by an equivalent amount, leaving $3.5 billion of borrowing capacity
available under the new credit facility at December 31, 2005. The full revolving loan commitment under our
existing $1.0 billion bank credit facility was also available as of December 31, 2005.
The credit agreements described above provide for interest rates equal to the London Interbank Offered Rate, or
LIBOR, or Prime Rate plus a spread that varies depending on the applicable borrower’s or guarantor’s credit
ratings. None of these facilities includes rating triggers that would allow the lenders involved to terminate the
facilities in the event of a credit rating downgrade.
We had letters of credit of $125 million as of December 31, 2005, in addition to the $2.5 billion letter of credit
related to the Report and Order.
As of December 31, 2005, we were in compliance with all debt covenants, including all financial ratio tests,
associated with our borrowings.
Our ability to fund our capital needs is ultimately impacted by the overall capacity and terms of the bank and
securities markets. Given the volatility in these markets, we continue to monitor them closely and to take steps to
maintain financial flexibility and a reasonable capital structure cost.
As of December 31, 2005, we had working capital of $5.0 billion compared to $3.1 billion as of December 31,
2004. In addition to cash, cash equivalents and current marketable securities, a significant portion of our working
capital consists of accounts receivable, handset inventory, prepaid expenses, deferred tax assets and other current
assets, net of accounts payable, accrued expenses and the current portion of long-term debt and capital lease
obligations. The increase in working capital is primarily due to the approximately $2.6 billion of working capital
acquired as a result of the Nextel merger.
Cash Flows
Year Ended
December 31,
Change from
Previous Year
2005 2004 Dollars Percent
(dollars in millions)
Cash provided by operating activities ........................ $ 10,678 $ 6,625 $ 4,053 61%
Cash used in investing activities ............................ (4,724) (4,056) (668) 16%
Cash used in financing activities ............................ (1,228) (680) (548) 81%
Operating Activities
Net cash provided by operating activities of $10.7 billion increased $4.1 billion in 2005 from 2004. Cash
received from customers increased by approximately $7.4 billion, which was partially offset by a $4.6 billion
increase in cash paid to suppliers and employees. These increases were primarily the result of the operations of
Nextel being included with our operations beginning on August 12, 2005, as well as continued growth in the
Wireless customer base, partially offset by merger-related costs. Additionally, cash flows provided by operating
activities for 2005 include the receipt of $1.2 billion in prepaid tower rentals from Global Signal in exchange for
granting Global Signal the exclusive rights to lease or operate more than 6,600 communications towers owned by
us.
Investing Activities
Net cash used in investing activities totaled $4.7 billion in 2005 compared to $4.1 billion in 2004. Capital
expenditures, which accounted for $5.1 billion of our investing activities in 2005, increased from $4.0 billion in
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