Sprint - Nextel 2007 Annual Report Download - page 95

SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Supplemental Cash Flow Information from Continuing Operations
Year Ended December 31,
2007 2006 2005
(in millions)
Interest paid, net of capitalized interest ..................................... $1,474 $1,589 $1,232
Interest received ....................................................... 152 303 229
Income taxes paid ...................................................... 51 247 97
Our non-cash activities included the following:
Year Ended December 31,
2007 2006 2005
(in millions)
Common stock issued
Acquisition of Nextel .................................................. $— — $35,645
Vested stock option awards exchanged in acquisition of Nextel ................ — — 639
Conversion of non-voting common shares to voting common shares ............. — 623 —
Employee stock purchase plans .......................................... 15 44 90
2.5 gigahertz, or GHz, spectrum acquisition ................................ 100 — —
Earthlink common stock used to extinguish debt ................................ — — 90
Investments
We record our investments in marketable equity securities at fair value as we consider them
available-for-sale securities. Accordingly, we record unrealized holding gains and losses on these securities in
accumulated other comprehensive income (loss), net of related income tax. Realized gains or losses are measured
and reclassified from accumulated other comprehensive income (loss) into earnings based on identifying the
specific investments sold. During 2007, 2006 and 2005, we recorded gross unrealized holding gains of
$8 million, $6 million and $143 million, and gross unrealized holding losses of $1 million in 2007 and $8 million
in 2006, on equity securities. See note 9 for information regarding our sale of NII Holdings, Inc.
available-for-sale securities in 2006. Certain other equity securities are accounted for at cost.
We record our investments in debt securities at amortized cost and classify these securities as current assets
on the consolidated balance sheets when the original maturities at purchase are greater than 90 days but less than
one year. Interest on investments in debt securities is reinvested and included in interest income in the
consolidated statements of operations. During 2007, 2006 and 2005, we recognized $31 million, $122 million
and $96 million of interest income, respectively, on these securities.
We assess any declines in the value of individual investments to determine whether the decline is other-
than-temporary and thus the investment is impaired. We make this assessment by considering available evidence,
including changes in general market conditions, specific industry and individual company data, the length of time
and the extent to which the market value has been less than cost, the financial condition and near-term prospects
of the individual company and our intent and ability to hold the investment.
We account for our investment in Virgin Mobile USA, LLC, or VMU, using the equity method. At
December 31, 2007, we held an approximate 18.5% ownership interest and continued to have the ability to
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