Sprint - Nextel 2006 Annual Report Download - page 132

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obligations, we do not believe that future environmental compliance and remediation expenditures will have a
material adverse effect on our financial condition or results of operations.
We have identified seven former manufactured gas plant sites in Nebraska, not currently owned or operated by
us, that may have been owned or operated by entities acquired by Centel Corporation, formerly a subsidiary of
ours and now a subsidiary of Embarq. We and Embarq have agreed to share the environmental liabilities
arising from these former manufactured gas plant sites. Three of the sites are part of ongoing settlement
negotiations and administrative consent orders with the Environmental Protection Agency, or EPA. Two of the
sites have had initial site assessments conducted by the Nebraska Department of Environmental Quality, or
NDEQ, but no regulatory actions have followed. The two remaining sites have had no regulatory action by the
EPA or the NDEQ. Centel has entered into agreements with other potentially responsible parties to share costs
in connection with five of the seven sites. We are working to assess the scope and nature of these sites and our
potential responsibility, which are not expected to be material.
Note 14. Segments
We operate, and are managed, as two strategic segments: Wireless and Long Distance. These segments are
organized by products and services. Until May 2006, we operated a third segment, our local communications
business, that provided local and long distance voice and data services and is classified as discontinued
operations. See note 2 for more information.
Our executives use segment earnings as the primary measure to evaluate segment performance and make
resource allocation decisions. Segment earnings is defined as operating income before depreciation, amortiza-
tion, severance, lease exit costs, asset impairments and other expenses. We have adjusted the segment
information for 2005 and 2004 to include information related to segment earnings, rather than operating
income (loss), which was the primary measure used to manage our segments in those years. These expenses,
along with all items below operating income (loss) on our consolidated statements of operations, including
interest expense and income tax (expense) benefit, are managed on a total company basis and are reflected
only in our consolidated results.
Our Wireless segment includes revenue from a wide array of wireless mobile telephone and wireless data
transmission services and the sale of wireless equipment. Through our Wireless segment, we, together with the
remaining PCS Affiliates, offer digital wireless service in all 50 states, Puerto Rico and the U.S. Virgin
Islands.
Our Long Distance segment includes revenue from domestic and international wireline voice and data
communication services and services to the cable multiple systems operators, or MSOs, that resell our long
distance service and/or use our back office systems and network assets in support of their telephone services
provided over cable facilities.
F-55
SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)