Sprint - Nextel 2010 Annual Report Download - page 75

As of December 31, 2010, Sprint Nextel Corporation, the parent corporation, had $4.3 billion in principal of debt
outstanding, including the credit facilities. In addition, $15.1 billion in principal of our long-term debt issued by wholly-owned
subsidiaries is guaranteed by the parent, of which approximately $10.3 billion is fully and unconditionally guaranteed. The
indentures and financing arrangements of certain subsidiaries' debt contain provisions that limit cash dividend payments on
subsidiary common stock. The transfer of cash in the form of advances from the subsidiaries to the parent corporation generally
is not restricted.
As of December 31, 2010, about $1.3 billion of our outstanding debt, comprised of certain notes, financing and
capital lease obligations and mortgages, is secured by $1.1 billion of gross property, plant and equipment and other assets. Cash
interest payments totaled $1.5 billion during the year ended December 31, 2010 and $1.4 billion during each of the years ended
December 31, 2009 and 2008.
Notes
Notes consist of senior and serial redeemable senior notes that are unsecured, and Secured Notes of iPCS which are
secured solely with the underlying assets of iPCS. The Company may elect to pay interest on a portion of the iPCS Secured
Notes entirely in cash or by increasing the principal amount. Cash interest on the remaining notes is generally payable
semiannually in arrears. Approximately $18.4 billion of the notes are redeemable at the Company's discretion at the then
applicable redemption price plus accrued interest. On June 28, 2010, the Company paid $750 million in principal plus accrued
and unpaid interest on its outstanding floating rate senior notes as scheduled. Our weighted average effective interest rate
related to our senior notes was 6.9% in 2010 and 6.5% in 2009.
On August 11, 2009, the Company issued $1.3 billion in principal of senior notes due 2017. Interest is payable semi-
annually on February 15 and August 15 at a fixed rate of 8.375%. The Company may redeem some or all of these notes at any
time prior to maturity. The notes are unsecured senior obligations and rank equally with the existing unsecured senior
indebtedness. If a change of control event (as defined in the related indenture) occurs, Sprint will be required to make an offer
to repurchase the notes in cash at a price equal to 101% of their principal amount. In May 2009, all outstanding 6.38% senior
notes due 2009 were repaid totaling $600 million plus accrued and unpaid interest. On September 16, 2009, all outstanding
5.25% convertible senior notes due 2010 were redeemed at 100% of the principal amount totaling $607 million plus accrued
and unpaid interest.
Credit Facilities
On May 21, 2010, the Company entered into a new $2.1 billion unsecured revolving bank credit facility that expires
in October 2013, which replaced the $4.5 billion credit facility that was due to expire in December 2010. As of December 31,
2010, $1.4 billion in letters of credit, which includes a $1.3 billion letter of credit required by the FCC's Report and Order to
reconfigure the 800 MHz band, were outstanding under our $2.1 billion revolving bank credit facility. As a result, the Company
had $700 million of borrowing capacity available under this revolving bank credit facility as of December 31, 2010. The terms
of this credit facility provide for an interest rate equal to the London Interbank Offered Rate (LIBOR) plus a spread that varies
depending on the Company's credit ratings. As of December 31, 2010, the unsecured loan agreement with Export Development
Canada (EDC) is fully drawn and has terms similar to those of the revolving bank credit facility. Under terms of the EDC loan,
repayments of outstanding amounts cannot be re-drawn. During 2009, we repaid $1.0 billion of the remaining outstanding
balance under the $4.5 billion credit facility.
Financing, Capital Lease and Other Obligations
We have approximately 3,000 cell sites, which we sold and subsequently leased back space. Terms extend over a
period of 10 years, beginning in 2008, with renewal options for an additional 20 years. The cell sites continue to be reported as
part of our property, plant and equipment due to our continued involvement with the property sold and the transaction is
accounted for as a financing. Our capital lease and other obligations are primarily for the use of communication switches.
In the fourth quarter 2010, we exercised an option to terminate our relationship with a variable interest entity, which
resulted in the repayment of financing, capital lease and other obligations of $105 million.
Table of Contents SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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