Sprint - Nextel 2005 Annual Report Download - page 41

Properties utilized by our Long Distance segment generally consist of land, buildings, switching equipment,
digital fiber-optic network and other transport facilities. We have been granted easements, rights-of-way and
rights-of-occupancy by railroads and other private landowners for our fiber-optic network. MCI (now owned by
Verizon) provides network facilities to us that comprise approximately 11% of our Long Distance fiber network
under various long-term lease and service agreements. Portions of the MCI-provided network facilities are also
shared or utilized by MCI.
Properties utilized by our Local segment mainly consist of land, buildings, metallic cable and wire facilities,
fiber-optic cable facilities, switching equipment and other electronics. We have been granted easements,
rights-of-way and rights-of-occupancy, mainly by municipalities and private landowners. Most cable facilities
are buried, but some metallic and fiber cable is above-ground on telephone poles. We own some of our own
telephone poles, but we also contract with other utilities, mainly electric companies, for the right to connect cable
and wire to their poles.
As of December 31, 2005, $628 million of our outstanding debt represented first mortgage debt and other capital
lease obligations and is secured by $14.0 billion of gross property, plant and equipment.
Additional information regarding our commitments related to operating leases can be found in note 15 of the
Notes to the Consolidated Financial Statements appearing at the end of this annual report on Form 10-K.
Item 3. Legal Proceedings
In 2005, several PCS Affiliates filed lawsuits in various courts, alleging that our merger with 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, Enterprise
Digital PCS LLC, Enterprise Wireless LLC and Enterprise Communications Partnership, Airgate PCS, Inc. 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. UbiquiTel, Horizon Personal Communications, Inc. 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
intend to defend all of these lawsuits vigorously.
The lawsuit filed by Enterprise Digital PCS LLC, Enterprise Wireless LLC and Enterprise Communications
Partnership was withdrawn following our acquisition of those companies, and the lawsuit filed by Airgate, Inc.
was withdrawn following our acquisition of its parent corporation, Alamosa Holdings.
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, was 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 of our 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, by making the
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