Sprint - Nextel 2005 Annual Report Download - page 50

• inability of third parties to perform to our requirements under agreements related to business operations;
• one or more of the markets in which we compete being impacted by changes in political or other factors
such as monetary policy, legal and regulatory changes or other external factors over which we have no
control; and
• other risks referenced in this annual report on Form 10-K and from time to time in other filings of ours
with the SEC including in Part I, Item 1A, “Risk Factors.”
The words “estimate,” “project,” “forecast,” “intend,” “expect,” “believe,” “target,” “providing guidance” and
similar expressions are intended to identify forward-looking statements. Forward-looking statements are found
throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and
elsewhere in this report. The reader should not place undue reliance on forward-looking statements, which speak
only as of the date of this report. We are not obligated to publicly release any revisions to forward-looking
statements to reflect events after the date of this report, including unforeseen events.
Overview
We are a global communications company offering a comprehensive suite of wireless and wireline
communications products and services that are designed to meet the needs of our targeted customer groups:
individuals and business and government customers. Although our operations are divided into three lines of
business, wireless, long distance and local, we have organized our sales and distribution efforts to focus on the
needs of two distinct customer types – individuals, and businesses and government agencies, which enable us to
create customer-focused communications solutions that can incorporate any of our wireless and wireline services.
We are one of the three largest wireless companies in the United States based on the number of wireless
subscribers. We own extensive wireless networks and a global long distance, Tier 1 Internet backbone. We also
provide regulated local exchange telephone services to approximately 7.4 million access lines in our local service
territories in 18 states.
Nextel Merger and Contemplated Local Spin-off
On August 12, 2005, a subsidiary of our company merged with Nextel. In connection with the Nextel merger, we
changed our name to Sprint Nextel Corporation. The aggregate consideration paid for the merger was
approximately $37.8 billion. At the time that we announced the merger with Nextel, we also announced that we
intend to spin-off our local communications business to our shareholders on a tax-free basis. The business being
spun-off, which is the business reported as the Local segment in our financial statements, will be known as
Embarq Corporation, and we refer to this business as Embarq. To mitigate the risk that the stock we issued in the
Sprint-Nextel merger would preclude the tax-free treatment of the spin-off of Embarq, and to ensure that Sprint
was treated as the acquiring entity for accounting purposes, the merger agreement provided for an allocation of
cash and shares of our common stock, determined as of the date of the merger, that would result in the original
Sprint shareholders maintaining at least 50.1% of the outstanding voting power upon closing of the merger.
Pursuant to this allocation, Nextel common shareholders received $969 million in cash and 1.452 billion shares
of our voting and non-voting common stock in the aggregate, or $0.84629198 and 1.26750218 shares of our
stock in exchange for each then outstanding share of Nextel stock. It is anticipated that the common stock of
Embarq will trade on the NYSE and that the spin-off will be completed in the second quarter 2006.
We merged with Nextel to secure a number of potential strategic and financial benefits including, but not limited
to, the following:
• the combination of extensive network and spectrum assets, which enables us to offer consumers,
businesses and government agencies a wide array of broadband wireless and integrated communications
services;
39