Sprint - Nextel 2006 Annual Report Download - page 131

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As of December 31, 2006, 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. These commitments in future years are as follows (in millions):
2007 ................................................................ $ 1,816
2008 ................................................................ 1,700
2009 ................................................................ 1,595
2010 ................................................................ 1,432
2011 ................................................................ 1,244
Thereafter ............................................................ 10,118
Total rental expense was $1.8 billion in 2006, $1.4 billion in 2005 and $1.0 billion in 2004.
Communication Towers Lease Transaction
In May 2005, we closed a transaction with Global Signal, Inc. under which Global Signal acquired exclusive
rights to lease or operate about 6,500 communications towers owned by us for a negotiated lease term, which
is the greater of the remaining terms of the underlying ground leases, about 16 years at present, or up to
32 years, assuming successful renegotiation of the underlying ground leases at the end of their current lease
terms.
We have subleased space on about 6,400 of the towers from Global Signal. This sublease arrangement is
accounted for as an operating lease. Since we maintain ownership of the towers, we continue to reflect the
towers on our consolidated balance sheet.
At closing, we received proceeds of about $1.2 billion, which we recorded in other liabilities on our
consolidated balance sheet. The deferred rental income is being recognized as a reduction of lease expense
related to our subleasing arrangement on a straight-line basis over the remaining terms of the underlying
ground leases.
Commitments
We are a party to service and other contracts in connection with conducting our business. As of December 31,
2006, the minimum amounts due under these agreements were as follows (in millions):
2007 ................................................................. $6,340
2008 ................................................................. 2,177
2009 ................................................................. 1,626
2010 ................................................................. 918
2011 ................................................................. 615
Thereafter ............................................................. 983
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 a 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.
Environmental Compliance
Environmental compliance and remediation expenditures result mainly from the operation of standby power
generators for our telecommunications equipment. These expenditures arise in connection with standards
compliance, permits or occasional remediation, which are usually related to generators, batteries or fuel
storage. Although we cannot assess with certainty the impact of any future compliance and remediation
F-54
SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)