
Note 7.	Long-Term Debt, Financing and Capital Lease Obligations



	Interest Rates			Maturities			December 31, 2011			December 31, 2010
							(in millions)
Notes
Senior notes
Sprint Nextel Corporation	6.00	-	11.50%	2016	-	2022	$	4,500		$	3,500
Sprint Capital Corporation	6.88	-	8.75%	2019	-	2032	6,204			9,854
Serial redeemable senior notes
Nextel Communications, Inc.	5.95	-	7.38%	2013	-	2015	4,780			4,780
Guaranteed notes
Sprint Nextel Corporation	9.00%			2018			3,000			—
Secured notes
iPCS, Inc.	2.55	-	3.68%	2013	-	2014	481			481
Credit facilities - Sprint Nextel Corporation
Bank credit facility	4.63%			2013			—			—
Export Development Canada	5.30%			2015			500			750
Financing obligation	9.50%			2030			698			698
Capital lease obligations and other	4.11	-	15.49%	2014	-	2022	71			76
Net premiums							40			52
							20,274			20,191
Less current portion							(8		)	(1,656		)
Long-term debt, financing and capital lease obligations							$	20,266		$	18,535

As of December 31, 2011, Sprint Nextel Corporation, the parent corporation, had $8.0 billion in principal of debt outstanding, including amounts drawn under the credit facilities. In addition, $11.5 billion in principal of our long-term debt issued by wholly-owned subsidiaries is guaranteed by the parent, of which approximately $6.7 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, 2011, about $1.2 billion of our outstanding debt, comprised of certain notes, financing and capital lease obligations and mortgages, is secured by $793 million of property, plant and equipment and other assets, net (gross book value of $1.2 billion). Cash interest payments, net of amounts capitalized of $413 million, $13 million, and $12 million, totaled $1.0 billion, $1.5 billion, and $1.4 billion during each of the years ended December 31, 2011, 2010 and 2009, respectively.

Notes

Notes consist of senior notes, serial redeemable senior notes, and guaranteed notes, all of which are unsecured, as well as 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 $18.8 billion of the notes are redeemable at the Company's discretion at the then applicable redemption price plus accrued interest.

On November 9, 2011, the Company issued $1.0 billion in principal of 11.50% senior notes due 2021 and $3.0 billion in principal of 9.00% guaranteed notes due 2018. Interest is payable semi-annually on May 15 and November 15. The Company, at its option, may redeem some or all of either issue of the notes at any time prior to maturity. If a change of control event (as defined in the Supplemental Indentures) occurs prior to the Company being rated “investment grade” by the applicable rating agencies, the holders will have the right, subject to certain conditions, to require the Company to repurchase their notes at a purchase price equal to 101% of the aggregate principal amount of notes repurchased plus accrued and unpaid interest, as of the date of repurchase. As with other of our indentures, the Supplemental Indentures also contain covenants that limit the Company's ability to sell all or substantially all of its assets or to merge or consolidate with or into other companies and certain of its subsidiaries have restrictions on granting liens to other creditors. The 2018 Guaranteed Notes are guaranteed by the company's wholly-owned subsidiaries that guarantee its existing credit agreements.

On January 31, 2011, the Company paid $1.65 billion in principal plus accrued and unpaid interest on its outstanding Sprint Capital Corporation 7.625% senior notes as scheduled. In addition, on December 29, 2011, we redeemed all of our outstanding $2.0 billion Sprint Capital Corporation 8.375% senior notes due March 2012 for principal plus accrued and unpaid interest in addition to a $33 million loss recognized as a result of the early retirement. 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 notes and credit facilities was 7.0% in 2011 and 6.9% in 2010.

Credit Facilities

In October 2011, our credit facility was amended to prospectively redefine earnings before interest, taxes, depreciation and amortization and certain other non-recurring items (adjusted EBITDA) within the ratio of total indebtedness to trailing four quarters adjusted EBITDA to exclude costs comprising equipment net subsidy, as defined by the amended agreement, to the extent such costs exceed $1.1 billion in any of the six consecutive fiscal quarters ending March 31, 2013. The amount added back related to this exclusion cannot exceed $1.75 billion in any four consecutive fiscal quarters and is limited to $2.7 billion in the aggregate for the six consecutive fiscal quarters ending March 31, 2013. The borrowing capacity under the facility was also increased by $150 million to $2.2 billion. As of December 31, 2011, $1.1 billion in letters of credit, which includes a $1.0 billion letter of credit required by the FCC's Report and Order to reconfigure the 800 MHz band, were outstanding under our $2.2 billion revolving bank credit facility. As a result, the Company had $1.1 billion of borrowing capacity available under this revolving bank credit facility as of December 31, 2011. 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.

On November 23, 2011, the Company paid $250 million, plus accrued and unpaid interest, of the amounts outstanding under the Export Development Canada (EDC) loan due 2012. As of December 31, 2011, the unsecured loan agreement with EDC is fully drawn as repayments of outstanding amounts cannot be re-drawn. In addition, the EDC loan agreement was amended in December 2011 to provide for terms similar to those of the amended revolving bank 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 through 2021, 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.

Covenants

As of December 31, 2011, the Company is in compliance with all restrictive and financial covenants associated with its borrowings. A default under any of our borrowings could trigger defaults under our other debt obligations, which in turn could result in the maturities being accelerated. Certain indentures that govern our outstanding notes also require compliance with various covenants, including limitations on the incurrence of indebtedness and liens by the Company and its subsidiaries, as defined by the terms of the indentures.

We are currently restricted from paying cash dividends because our ratio of total indebtedness to trailing four quarters adjusted EBITDA, as defined in the amended credit facility discussed above, exceeds 2.5 to 1.0. The Company is also obligated to repay the credit facilities if certain change-of-control events occur.

Future Maturities of Long-Term Debt, Financing Obligation and Capital Lease Obligations

Scheduled principal payments of long-term debt, financing obligation and capital lease obligations outstanding as of December 31, 2011, are as follows:



	(in millions)
2012	$	8
2013	1,783
2014	1,364
2015	2,652
2016	2,019
2017 and thereafter	12,408
	20,234
Net premiums	40
	$	20,274