Sprint - Nextel 2005 Annual Report Download - page 143

SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
related renewal option or options is reasonably assured. Our cell site leases generally provide for an initial
non-cancelable term of 5 to 7 years with up to 5 renewal options for 5 years each.
As of December 31, 2005, our rental commitments for operating leases, including lease renewals that are
reasonably assured, consisted mainly of leases for cell and switch sites, real estate, data processing equipment
and office space were as follows (in millions):
2006 .................................................................... $ 1,475
2007 .................................................................... 1,423
2008 .................................................................... 1,325
2009 .................................................................... 1,237
2010 .................................................................... 1,105
Thereafter ................................................................ 9,814
Total rental expense was $1.4 billion in 2005, $1.1 billion in 2004, and $1.2 billion in 2003.
Leasehold improvements are depreciated over the lesser of the estimated useful life of the asset or the lease term,
including renewal option periods that are reasonably assured.
Commitments
We are a party to service and other contracts in connection with conducting our business. Minimum amounts due
under some of the more significant agreements are $2,427 million in 2006, $1,885 million in 2007, $1,412
million in 2008, $1,180 million in 2009, $603 million in 2010 and $577 million thereafter. Amounts actually paid
under some of these agreements will likely be higher due to variable components of these agreements. The more
significant variable components that determine the ultimate obligation owed include such items as hours
contracted, subscribers and other factors. In addition, we are party to various arrangements that are conditional in
nature and obligate us to make payments only upon the occurrence of certain events, such as the delivery of
functioning software or a product.
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. These outstanding commitments consist primarily of network equipment and maintenance,
access commitments, advertising and marketing, information technology services and customer support provided
by third parties, handset purchases and other expenses related to normal business operations. We expect
substantially all of these commitments to become due in the next twelve months as services are rendered or
goods are received. Certain of these service and other contracts are in the process of being re-negotiated as a
result of our merger with Nextel, and could result in changes to these minimum commitments, which could be
material.
Environmental Compliance
We have identified seven sites, not currently owned or operated by us, that formerly contained manufactured gas
plants that may have been owned or operated by entities acquired by one of our subsidiaries before we acquired
it. We and the current land owner of the site in Columbus, Nebraska are working with the Environmental
Protection Agency, or EPA, pursuant to an administrative consent order. Amounts expended pursuant to the
order are not expected to be material. We are negotiating with the EPA as to whether clean up is required at two
additional sites. In addition, our subsidiary has entered into agreements with another potentially responsible party
to share costs in connection with four of the sites, including two of those where the EPA is involved. We are
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