Sprint - Nextel 2005 Annual Report Download - page 77

2004 due primarily to higher spending related to our Wireless segment, partially offset by spending reductions
related to our Local segment. We invested in our Wireless segment primarily to maintain and enhance network
reliability and upgrade capabilities for providing new products and services, including the deployment of EV-DO
technology, as well as to maintain the iDEN network reliability as we fulfill our obligations under the Report and
Order. We invested in our Local segment primarily to accommodate voice grade equivalent growth, convert the
network from circuit to packet switching and continue the build-out of high-speed DSL services, and to meet
regulatory requirements. We invested in our Long Distance segment to maintain network reliability, upgrade
capabilities for providing new products and services and meet capacity demands.
Investing activities also reflect $1.2 billion of net cash acquired in the merger with Nextel, offset by $968 million
of net cash paid to acquire US Unwired, $211 million of net cash paid to acquire Gulf Coast Wireless and $192
million of net cash paid to acquire IWO Holdings. Additionally, investing activities include proceeds from the
sale of assets, including the receipt of $376 million from the sale of shares of NII Holdings common stock in the
third quarter 2005, and the receipt of $200 million from the sale of the Long Distance conferencing business in
the second quarter 2005. The $200 million received from Virgin Mobile in the third quarter 2005 is reflected in
the distribution from affiliates activity.
Financing Activities
Net cash used in financing activities totaled $1.2 billion in 2005 compared to $680 million in 2004. Debt-related
financing activities consisted of the retirement of almost $1.2 billion of senior notes and capital lease obligations
and the retirement of a $2.2 billion term loan and a $1.0 billion revolving credit loan with a new $3.2 billion term
loan. Financing activities for 2005 also include $432 million in proceeds from common stock issuances,
primarily resulting from exercises of employee stock options. Proceeds from common stock issuances of $1.9
billion in 2004 were mainly from the settlement of equity unit forward contracts.
We paid cash dividends of $525 million in 2005 compared with $670 million in 2004. The decrease in cash
dividends paid is due to a decrease in the dividend rate in the third quarter 2005 to 2.5 cents per share from 12.5
cents per share in prior quarters. This was partially offset by an increase in the number of shares of common
stock outstanding in 2005, primarily as a result of the Nextel merger, compared to 2004.
Capital Requirements, Contractual Obligations and Funding Sources
Capital Requirements
We currently anticipate that future funding needs in the near term will principally relate to:
• operating expenses relating to our networks;
• capital expenditures, particularly with respect to the expansion of the coverage and capacity of our
wireless networks and the deployment of new technologies in those networks;
• interest and scheduled principal payments related to our debt and any purchases or redemptions of our
debt or other securities;
• dividend payments as declared by our board of directors, which we plan to continue following the spin-off
of Embarq;
• amounts required to fund pending acquisition transactions, including the purchase of all outstanding
shares of common stock of Nextel Partners that we do not own for about $6.5 billion;
• amounts required to be expended in connection with the FCC’s Report and Order, and other potential
investments in new business opportunities and spectrum purchases;
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