Sprint - Nextel 2010 Annual Report Download - page 37

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Other Revenues
Other revenues, which primarily consist of sales of customer premises equipment (CPE), decreased $14 million, or
13% in 2010 as compared to 2009 and $35 million, or 24%, in 2009 as compared to 2008 as a result of fewer projects in 2010
and 2009.
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 $344 million, or 9%, in 2010 from 2009 and $529 million, or
13%, in 2009 from 2008. The decrease in 2010 and 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. Service gross margin percentage increased from
34% in 2008 to 35% in 2009 and decreased back to 34% in 2010. The increase from 2008 to 2009 was primarily due to revenue
growth in our cable VoIP business and a decrease in costs of services and products offset by a decrease in voice revenue. The
decrease from 2009 to 2010 was as a result of a decrease in net service revenue offset by a decrease in costs of services and
products.
Selling, General and Administrative Expense
Selling, general and administrative expense decreased $114 million, or 15%, in 2010 as compared to 2009 and $220
million, or 23% in 2009 as compared 2008. The decreases were 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. Total selling, general and
administrative expense as a percentage of net services revenue was 13% in 2010 and 2009 and 15% in 2008.
LIQUIDITY AND CAPITAL RESOURCES
Cash Flow
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Year Ended December 31,
2010
(in millions)
$ 4,815
(2,556)
(905)
2009
$ 4,891
(3,844)
(919)
2008
$ 6,179
(4,250)
(484)
Operating Activities
Net cash provided by operating activities of $4.8 billion in 2010 decreased $76 million from the same period in 2009
primarily due to a $196 million decrease in cash received from our subscribers resulting from a decline in our postpaid
subscriber customer base, an increase of $217 million in cash paid to our suppliers and employees, and an increase of $36
million in cash paid for interest. These were partially offset by an increase of $170 million in cash received for income tax
refunds. Net cash provided by operating activities for 2009 also includes a cash payment of $200 million resulting from a
contribution to the Company pension plan.
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 for 2008 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.
Investing Activities
Net cash used in investing activities for 2010 decreased by $1.3 billion from 2009, due to a decrease of $300 million
in purchases of short-term investments and a decrease of $132 million in expenditures related to FCC licenses as determined by
specific operations requirements of the Report and Order. These decreases were partially offset by reduced proceeds from sales
and maturities of short-term investments of $418 million and increased capital expenditures of $332 million to add coverage
and capacity to our wireless networks. Sprint also increased its investment in Clearwire by $1.1 billion and acquired iPCS and
Virgin Mobile for $560 million in 2009, which resulted in the remaining decline in 2010 as compared to 2009.
Net cash used in investing activities for 2009 decreased by $406 million from 2008, primarily due to an increase of
$369 million in proceeds from short-term investments and a decrease in capital expenditures of $2.3 billion in 2009 as
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