Sprint - Nextel 2005 Annual Report Download - page 141

SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Disposal of Long-Lived Assets, we have presented the results of operations of the directory publishing business as
a discontinued operation in the accompanying consolidated financial statements. Summary financial information
is as follows:
Year Ended
December 31,
2003
(in millions)
Net operating revenues ............................................................. $ 5
Income before income taxes ......................................................... 5
In prior years, we reported the cash flows attributable to these discontinued operations on a combined basis as a
single amount. In 2005, these cash flows are no longer reported as a single amount, and have been combined with
the cash flows of our continuing operations.
Note 15. Commitments and Contingencies
Litigation, Claims and Assessments
In 2005, several PCS Affiliates filed lawsuits in various courts, alleging that the merger between Sprint and
Nextel would result in breaches of exclusivity provisions in their management agreements with our subsidiaries.
Suits were brought by UbiquiTel and UbiquiTel Operating Company, iPCS Wireless, Inc., Horizon Personal
Communications Inc. and Bright Personal Communications Services LLC, which are both subsidiaries of iPCS
Wireless and Northern PCS Services, LLC. The lawsuits seek, among other things, to enjoin us from engaging in
certain post-merger business conduct in the respective service areas of the PCS Affiliates, and unspecified
damages caused by the alleged breach. UbiquiTel, Horizon Personal Communications and Bright Personal
Communications Services have all entered into forbearance agreements with us governing certain business
practices addressed by the litigation until a decision is rendered by the trial court in the lawsuits. We and our
subsidiaries intend to defend all of these lawsuits vigorously.
In March 2004, eight purported class action lawsuits relating to the recombination of the tracking stocks were
filed against us and our directors by holders of PCS common stock. Seven of the lawsuits were consolidated in
the District Court of Johnson County, Kansas. The eighth, pending in New York, has been voluntarily stayed.
The consolidated lawsuit alleges breach of fiduciary duty in connection with allocations between the wireline
operations and the wireless operations before the recombination of the tracking stocks and breach of fiduciary
duty in the recombination. The lawsuit seeks to rescind the recombination and monetary damages. In early 2005,
the court denied defendants’ motion to dismiss the complaint and discovery is proceeding. All defendants have
denied plaintiffs’ allegations and intend to defend this matter vigorously.
In 2003, certain participants in the Sprint Nextel Retirement Savings Plan and the Sprint Nextel and Centel
Retirement Savings Plans for Bargaining Unit Employees filed suit in the U.S. District Court for the District of
Kansas against us, the committees that administer the plans, the plan trustee, and various current and former
directors and officers. The consolidated lawsuit alleges that defendants breached their fiduciary duties to the
plans and violated the Employee Retirement Income Security Act of 1974, or ERISA, statutes by making the
company matching contribution in company stock and by including company stock among the thirty investment
options offered to plan participants. The lawsuit seeks to recover any decline in the value of our tracking stocks
during the class period. A settlement agreement has been filed with the court and is subject to final court
approval. The settlement calls for us to make certain changes to the savings plans, to allow for vesting of certain
Sprint Nextel stock in the accounts of certain former employees, and to distribute $4 million in cash to former
employees who no longer have accounts in the savings plans. We have insurance coverage for the cash
component of this settlement.
F-46