Sprint - Nextel 2006 Annual Report Download - page 116

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Capital Lease Obligations and Other
As of December 31, 2006, we had $106 million in capital lease obligations, primarily for the use of
communication switches.
In December 2005, we terminated two accounts receivable asset securitization facilities that provided us with
up to $1.2 billion of liquidity. Neither facility had an outstanding balance when it was terminated, and both
were scheduled to expire during 2006.
We are currently in compliance with all restrictive and financial covenants associated with the borrowings
discussed above. There is no provision under any of our indebtedness that requires repayment in the event of a
downgrade by any ratings service.
Future Maturities of Long-Term Debt and Capital Lease Obligations
For the years subsequent to December 31, 2006, scheduled annual principal payments of long-term debt,
including our bank credit facility and capital lease obligations outstanding as of December 31, 2006, are as
follows:
(in millions)
2007 ...................................................................... $ 1,105
2008 ...................................................................... 1,280
2009 ...................................................................... 617
2010 ...................................................................... 873
2011 ...................................................................... 2,142
Thereafter .................................................................. 15,814
21,831
Add deferred premiums/discounts and fair value hedge adjustments ....................... 323
$22,154
Seventh Series Redeemable Preferred Shares
On March 31, 2006, we redeemed for cash all of our outstanding Seventh series preferred shares at the stated
value of $1,000 per share for an aggregate face amount of $247 million, which approximated the carrying
value at the time of redemption. Dividends of $6.73 per share were paid quarterly through March 31, 2006.
Note 10. Derivative Instruments and Hedging Activities
Risk Management Policies
Our derivative instruments typically include interest rate swaps, stock warrants, option contracts, and foreign
currency forward and option contracts. We primarily use derivative instruments to hedge our exposure to the
market risks associated with unfavorable movements in interest rates, equity prices, and foreign currencies.
Our board of directors has authorized us to enter into derivative transactions, and all transactions comply with
our risk management policies.
Interest rate risk is the risk that changes in interest rates could adversely affect earnings or cash flows. Specific
interest rate risks include the risk of increasing interest rates on short-term debt, the risk of increasing interest
rates for planned new fixed rate long-term financing and the risk of increasing interest rates for planned
refinancings using long-term fixed rate debt.
Exposure to strategic investments in other companies includes the risk that unfavorable changes in market
prices could adversely affect earnings and cash flows. We may also obtain equity rights in other companies,
usually in the form of warrants to purchase common stock of the companies. These equity rights are typically
obtained in connection with commercial agreements or strategic investments.
F-39
SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)