Sprint - Nextel 2008 Annual Report Download - page 44

Other Revenues
Other revenues, which primarily consist of sales of customer premises equipment, decreased $35
million, or 24%, in 2009 as compared to 2008 and decreased $23 million, or 14%, in 2008 as compared to 2007
as a result of fewer projects in 2009 and 2008.
Costs of Services and Products
Costs of services and products include access costs paid to local phone companies, other domestic
service providers and foreign phone companies to complete calls made by our domestic subscribers, costs to
operate and maintain our networks and costs of equipment. Costs of services and products decreased $529
million, or 13%, in 2009 from 2008 and decreased $254 million, or 6%, in 2008 from 2007. The decrease in 2009
is primarily due to declining voice volumes and a shift in mix to lower cost products as a result of the migration
from data to IP-based technologies. The decrease in 2008 is mainly due to improved access cost rates and
declining volumes. Service gross margin percentage increased from 31% in 2007 to 34% in 2008 and to 35% in
2009, primarily as a result of revenue growth in our cable VoIP business and a decrease in costs of services offset
by a decrease in voice revenue.
Selling, General and Administrative Expense
Selling, general and administrative expense decreased $220 million, or 23%, as compared to 2008 and
increased $22 million, or 2% in 2008 as compared 2007. The 2009 decrease was primarily due to a reduction in
employee headcount and a decline in the use of outside services and maintenance as part of our cost cutting
initiatives. The 2008 increase was primarily driven by the absence of a favorable settlement with Vonage
recognized in 2007 related to the use of certain patents within our patent portfolio. Total selling, general and
administrative expense as a percentage of net services revenue was 13% in 2009 and 15% in both 2008 and 2007.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Year Ended December 31,
2009 2008 2007
(in millions)
Net cash provided by operating activities ......... $4,891 $ 6,179 $ 9,245
Net cash used in investing activities ............. (3,844) (4,250) (6,377)
Net cash used in financing activities ............. (919) (484) (2,668)
Operating Activities
Net cash provided by operating activities of $4.9 billion in 2009 decreased by $1.3 billion from 2008,
primarily due to a $3.6 billion decrease in cash received from our subscribers as a result of declining service
revenues from our loss of post-paid subscribers and a $200 million contribution to the Company pension plan
during 2009. These declines were offset by a decrease of $2.1 billion in cash paid to our suppliers and employees
primarily due to reductions in variable cost of services and products and selling, general and administrative
expenses due to the various cost cutting initiatives implemented over the past year.
Net cash provided by operating activities of $6.2 billion in 2008 decreased $3.1 billion from 2007,
primarily due to a $3.8 billion decrease in cash received from our subscribers as a result of declining service
revenues from our loss of post-paid subscribers. This was offset by a decrease of $1.2 billion in cash paid to our
suppliers and employees.
Net cash provided by operating activities for both 2008 and 2007 is net of cash used for operating
activities of approximately $300 million that related to our operations that were contributed to Clearwire in
November 2008.
42