Sprint - Nextel 2011 Annual Report Download - page 46

Table of Contents
addition, during the fourth quarter 2011, Sprint invested an additional $331 million in Clearwire as a result of an amendment to our agreements and Clearwire's successful
offering of additional Class A shares to the market.
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 operation 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.
Financing Activities
Net cash provided by financing activities was $26 million during 2011. During 2011, the Company repaid certain debt obligations, including $1.65 billion of
Sprint Capital Corporation 7.625% senior notes, the early redemption of $2.0 billion of Sprint Capital Corporation 8.375% senior notes and repayment of $250 million of
the $750 million Export Development Canada (EDC) Facility. The reductions in debt obligations were offset by proceeds from issuance of $1.0 billion of 11.5% senior
notes due 2021 and $3.0 billion of 9% guaranteed notes due 2018 in a private placement in November 2011. We also paid $86 million for debt financing costs associated
with our November 2011 debt issuances and fourth quarter credit facility amendments.
Net cash used in financing activities was $905 million during 2010. Activities in 2010 included a $750 million debt payment in June 2010 and a $51 million
payment for debt financing costs associated with our new revolving credit facility. In addition, in the fourth quarter 2010, we exercised an option to terminate our
relationship with a variable interest entity, which resulted in the repayment of financing, capital lease and other obligations of $105 million.
Net cash used in financing activities was $919 million during 2009. Activities in 2009 include debt repayments of $600 million of senior notes in May 2009,
the early redemption of $607 million of our convertible senior notes in September 2009, and a $1.0 billion payment on our revolving bank credit facility in November
2009 offset by the issuance of $1.3 billion of senior notes in August 2009.
We received $18 million, $8 million and $4 million in 2011, 2010 and 2009, respectively, in proceeds from common share issuances, primarily resulting from
exercises of employee options.
Liquidity
As of December 31, 2011, our liquidity, including cash, cash equivalents, short-term investments, and available borrowing capacity under our revolving credit
facility was $6.7 billion. Our cash, cash equivalents and short-term investments totaled $5.6 billion as of December 31, 2011 compared to $5.5 billion as of December 31,
2010. As of December 31, 2011, $1.1 billion in letters of credit were outstanding under our $2.2 billion revolving bank credit facility, including the letter of credit
required by the Report and Order to reconfigure the 800 MHz band. As a result of the outstanding letters of credit, which directly reduce the availability of the revolving
bank credit facility, we had $1.1 billion of borrowing capacity available under our revolving bank credit facility as of December 31, 2011. On January 31, 2011, $1.65
billion of Sprint Capital Corporation 7.625% senior notes were repaid upon maturity. Also in January 2011, we amended $500 million of our $750 million EDC loan to
extend the maturity date from 2012 to 2015. In October 2011, we amended the terms of our revolving credit facility to modify certain financial covenants and increase in
the capacity by $150 million to $2.2 billion. On November 23, 2011, we paid $250 million plus accrued and unpaid interest of the EDC loan due 2012. In addition, the
EDC loan agreement was amended in December 2011 to provide for similar covenant terms to those of the amended revolving bank credit facility. On December 29,
2011, we redeemed all of our outstanding $2.0 billion Sprint Capital Corporation 8.375% senior notes due March 2012 for principal plus accrued and unpaid interest in
addition to a $33 million loss recognized as a result of the early retirement. In January 2012, we received a $150 million note receivable with a stated interest rate of
11.5% from Clearwire as a result of the additional investment provided to Clearwire through our amended agreement in the fourth quarter 2011 that matures in two
installments of $75 million plus accrued interest in January 2013 and in January 2014.
In September 2011, we entered into a four year commitment with Apple, Inc. to purchase a minimum number of smartphones, which on average, are expected
to carry a higher subsidy per unit than other smartphones we sell. Our minimum commitment under this arrangement is approximately $15.5 billion; however, we expect
our actual purchases will exceed this amount. This will result in an expected increase in cash outflow and reduction in
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