Sprint - Nextel 2012 Annual Report Download - page 55

Table of Contents
Communications, Inc. senior notes of approximately $4.8 billion (see "Liquidity and Capital Resources - Liquidity"). In addition, we incurred $134 million
of debt financing costs in
2012.
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 issuances 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 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.
We received
$29 million , $18 million and $8 million in 2012, 2011 and 2010 , respectively, in proceeds from common share issuances, primarily
resulting from exercises of employee options.
Working Capital
As of
December 31, 2012 , we had working capital of $4.9 billion compared to $3.8 billion as of December 31, 2011 . The increase in working
capital is primarily due to net debt proceeds of $4.4 billion consisting of approximately $9.2 billion in debt issuances offset by debt repayments of
approximately $4.8 billion. This increase was partially offset by increases in accounts payable, increases in accrued expenses and other current
liabilities, and increases to the current portion of long
- term debt. The remaining change is primarily related to other activity in current assets during
2012.
Available Liquidity
As of
December 31, 2012 , our liquidity, including cash, cash equivalents, short - term investments, and available borrowing capacity under
our revolving credit facility was $9.5 billion . Our cash, cash equivalents and short - term investments totaled $8.2 billion as of December 31, 2012
compared to
$5.6 billion as of December 31, 2011 . As of December 31, 2012 , approximately $925 million 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
$1.3 billion of borrowing capacity
available under our revolving bank credit facility as of December 31, 2012 . In addition, as of December 31, 2012 , up to $204 million was available
through May 31, 2013 under the first tranche of our secured equipment credit facility described below, although the use of such funds is limited to
equipment
- related purchases from Ericsson. On February 28, 2013 we entered into a new $2.8 billion unsecured revolving credit facility that expires in
February 2018. This new credit facility replaced the $2.2 billion revolving credit facility that was due to expire in October 2013. The new facility includes
approximately
$925 million of letters of credit outstanding, resulting in approximately $1.9 billion of available borrowing capacity under this facility.
Strategic Initiatives
Apple Contract
Our commitment with Apple to purchase a minimum number of smartphones, which on average, carry a higher subsidy per unit than other
smartphones we sell, has had, and will continue to have, an expected increase in cash outflow and reduction in operating income in the earlier years of
the contract until such time as we may recover the acquisition costs through subscriber revenue consistent with our initial forecast when we launched
the iPhone. We continue to believe the effect of the iPhone, given the significance of its expected positive effect on gross additions and upgrades, will
reduce contribution margin in the near term. These estimates are subject to significant judgment and include assumptions such as product mix,
expected improvements in customer churn, and smartphone sales volume, which are difficult to predict and actual results may differ significantly
compared to our estimates.
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