Sprint - Nextel 2014 Annual Report Download - page 56

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$127 million. Net cash provided by financing activities was $142 million during the Predecessor three-month period ended
March 31, 2013, which included net borrowings of approximately $149 million under our secured equipment credit facility.
Net cash provided by financing activities was $24.5 billion during the Successor year ended December 31, 2013,
which included proceeds from the issuance of common stock and warrants of approximately $18.6 billion related to the
SoftBank Merger. In addition, the Company issued $9.0 billion in debt consisting of a September 11, 2013 issuance of $2.25
billion aggregate principal amount of 7.250% notes due 2021 and $4.25 billion aggregate principal amount of 7.875% notes
due 2023, and a December 12, 2013 issuance of $2.5 billion aggregate principal amount of 7.125% notes due 2024, each
guaranteed by Sprint Communications. We also incurred approximately $147 million of debt issuance costs. These increases,
along with net borrowings under our secured equipment credit facility of approximately $444 million, were offset by the
retirement of approximately $3.3 billion principal amount of Clearwire debt.
Net cash provided by financing activities was $4.3 billion during 2012. During 2012, the Company issued senior
notes, guaranteed notes, and a convertible bond, as well as had drawdowns on the secured equipment credit facility totaling, in
the aggregate, approximately $9.2 billion and redeemed the remaining $4.8 billion of Nextel Communications, Inc. senior
notes. In addition, we incurred $134 million of debt financing costs in 2012.
Working Capital
As of March 31, 2015 and 2014, we had negative working capital of $1.2 billion and working capital of $1.9
billion, respectively. Our working capital as of March 31, 2015 and 2014 included accrued capital expenditures for unbilled
services totaling approximately $705 million and $1.2 billion, respectively, related to improving the quality of our network.
The decline in working capital is primarily due to increased accounts payable of approximately $1.2 billion primarily as a
result of extended payment terms with certain network equipment suppliers and timing of purchases and payments associated
with device launches, decreased short-term investments of $1.1 billion, and $500 million under the EDC agreement due
December 2015 being reclassified to current from long-term debt, financing and capital lease obligations. In addition, further
contributing to the decline was decreased cash of $960 million primarily due to cash paid for capital expenditures, which was
partially offset by net cash provided by operating activities and debt issuances. After taking into account the sale of receivables
under our Receivables Facility (see Receivables Facility below), accounts receivable, net increased $381 million primarily due
to increased installment billing receivables. In addition, device and accessory inventory increased $377 million. The remaining
balance was due to changes to other working capital items.
Receivables Facility
On May 16, 2014, certain wholly-owned subsidiaries of Sprint entered into a two-year committed facility (the
Receivables Facility) to sell certain accounts receivable on a revolving basis, subject to a maximum funding limit of $1.3
billion. The available funding varies based on the amount of eligible receivables (as defined in the Receivables Facility). In
connection with the Receivables Facility, Sprint formed wholly-owned subsidiaries that are bankruptcy-remote special
purpose entities (SPEs). Pursuant to the Receivables Facility, certain Sprint subsidiaries (Originators) transfer Receivables to
the SPEs. Receivables contributed by the Originators to the SPEs and available to be sold to the Conduits primarily consisted
of installment receivables and wireless service charges due from subscribers. The SPEs then may sell the Receivables to a
bank agent on behalf of unaffiliated multi-seller asset-backed commercial paper conduits (Conduits) or their sponsoring
banks. A subsidiary of Sprint services the Receivables in exchange for a monthly servicing fee, and Sprint guarantees the
performance of the servicer's and the Originators' obligations under the Receivables Facility. Sales of eligible Receivables by
the SPEs, once initiated, generally occur daily and are settled on a monthly basis. Sprint pays a fee for the drawn and
undrawn portions of the Receivables Facility. The net fees associated with the Receivables Facility are recognized in selling,
general and administrative expenses on the consolidated statements of operations. On April 24, 2015, the Receivables Facility
was amended to include up to $2.0 billion of additional funding as a result of including installment receivables in the
definition of eligible receivables under the Receivables Facility, which had the effect of increasing the maximum funding
limit to $3.3 billion, of which $1.4 billion was available to be drawn for cash as of April 30, 2015. Additionally, the
expiration date was extended to March 31, 2017.
Receivables sold to the Conduits are treated as a sale of financial assets. Upon sale, Sprint derecognizes the
Receivables, as well as the related allowances, and recognizes the net proceeds received in cash provided by operating
activities. The difference between the Receivables sold and the cash received, which represents a financial asset due to Sprint
from the Conduits, is realizable by Sprint contingent upon the collections on the sold Receivables.
On March 31, 2015, of the $3.5 billion of Receivables contributed by the Originators to the SPEs, the SPEs sold
approximately $1.8 billion of service Receivables to the Conduits in exchange for $500 million in cash and a $1.3 billion
receivable from the Conduits. The receivable due to Sprint from the Conduits is classified as a trading security and is