Sprint - Nextel 2005 Annual Report Download - page 79

The above table excludes amounts that may be paid or will be paid in connection with spectrum acquisitions. We
have committed, subject to certain conditions, which may not be met, to pay up to about $393 million for
pending spectrum acquisitions.
In addition, we had about $5 billion of open purchase orders for goods or services as of December 31, 2005 that
are enforceable and legally binding and that specify all significant terms, but were not recorded as liabilities as of
December 31, 2005 or included in the table above. We expect substantially all of these commitments to become
due in the next twelve months. Included in the “Purchase obligations and other” caption are minimum amounts
due under some of our service contracts, including agreements for telecommunications and customer billing
services, advertising services and contracts related to information technology and customer care outsourcing
arrangements. Amounts actually paid under some of these “other” agreements will likely be higher due to
variable components of these agreements. The more significant variable components that determine the ultimate
obligation owed include items such as hours contracted, subscribers, and other factors. In addition, we are party
to various arrangements that are conditional in nature and create an obligation to make payments only upon the
occurrence of certain events, such as the delivery of functioning software or products. Because it is not possible
to predict the timing or amounts that may be due under these conditional arrangements, no such amounts have
been included in the table above.
Expected pension contributions are disclosed in note 18 of the Notes to the Consolidated Financial Statements
appearing at the end of this annual report on Form 10-K and have not been included in unconditional purchase
obligations.
Funding Sources
As of December 31, 2005, our cash, cash equivalents and marketable securities totaled $10.7 billion.
We have two credit agreements, each with a syndicate of banks. The first, a $9.2 billion unsecured credit
agreement entered into in December 2005, is comprised of a 5-year $6.0 billion revolving credit facility and a
364-day $3.2 billion term loan. The full $3.2 billion term loan was borrowed at closing and used to refinance an
existing Nextel credit facility. As of December 31, 2005, about $2.5 billion of letters of credit are outstanding
under the new $6.0 billion revolving credit facility. As a result, approximately $3.5 billion is available under the
new facility. The second credit agreement is a $1.0 billion unsecured facility, structured as a 364-day revolving
credit facility expiring in June 2006, with a subsequent one-year, $1.0 billion term-out option, none of which has
been drawn.
The credit agreements described above provide for interest rates equal to the LIBOR or the prime rate plus a
spread that varies depending on the applicable borrower’s or guarantor’s credit ratings. None of these facilities
includes rating triggers that would allow the lenders involved to terminate the facilities in the event of a credit
rating downgrade.
We had letters of credit of $125 million as of December 31, 2005, in addition to the $2.5 billion letter of credit
related to the Report and Order.
As of December 31, 2005, we were in compliance with all debt covenants, including all financial ratio tests,
associated with our borrowings.
Our ability to fund our capital needs is ultimately impacted by the overall capacity and terms of the bank and
securities markets. Given the volatility in these markets, we continue to monitor them closely and take steps to
maintain financial flexibility and a reasonable capital structure cost.
Off-Balance Sheet Financing
We do not participate in, or secure, financings for any unconsolidated, special purpose entities. We do have
bankruptcy-remote entities that are included in our accompanying consolidated financial statements.
68