Sprint - Nextel 2006 Annual Report Download - page 138

or group announces a tender or exchange offer for 15% or more of the voting power. These rights expire on
June 25, 2007 unless extended or earlier redeemed.
Accumulated Other Comprehensive Loss
The components of accumulated other comprehensive loss are as follows:
2006 2005
As of December 31,
(in millions)
Unrecognized net periodic pension and postretirement benefit cost............ $(173) $ —
Additional minimum pension liability ................................. — (818)
Unrealized net gains related to investments ............................. 4 89
Unrealized net losses related to derivatives ............................. — (9)
Foreign currency translation adjustments ............................... 21 12
Accumulated other comprehensive loss ................................ $(148) $(726)
Note 17. Adoption of Staff Accounting Bulletin No. 108
Effective January 1, 2006, we adopted SAB No. 108, Considering the Effects of Prior Year Misstatements
when Quantifying Misstatements in Current Year Financial Statements. SAB No. 108 requires a dual approach
for quantifying misstatements using both a method that quantifies a misstatement based on the amount of
misstatement originating in the current year statement of operations, as well as a method that quantifies a
misstatement based on the effects of correcting the misstatement existing in the balance sheet. Prior to the
adoption of SAB No. 108, we quantified any misstatements in our consolidated financial statements using the
statement of operations method in addition to evaluating qualitative characteristics. As this method focuses
solely on the statement of operations, this can lead to the accumulation of misstatements in the balance sheet
that may become material if recorded in a particular period.
In the fourth quarter 2006, we discovered lease accounting misstatements during the process of migrating more
than 30,000 leases into a single lease accounting system. During this process, we identified that we previously
were not accurately calculating the straight-line impact of operating lease expense nor were we accurately
following the definition of a lease term for a minor number of leases.Specifically, certain rent escalation
clauses were not included in the minimum lease payment streams for certain leases and the lease term for
certain leases did not include all reasonably assured renewal periods.
These misstatements accumulated over several years and were immaterial when quantifying the misstatements
using the statement of operations method. Upon adoption of SAB No. 108 on January 1, 2006, we recorded an
$81 million increase to the deferred rent liability for the cumulative misstatements as of December 31, 2005.
Accordingly, we reduced retained earnings by $50 million and recorded $31 million as a deferred tax asset.
The related 2006 misstatement of $17 million, or $10 million net of tax, was recorded in the fourth quarter
2006.
Note 18. Subsequent Events
Dividend Declaration
On February 27, 2007, our board of directors declared a dividend of $0.025 per share on our common shares,
payable on March 30, 2007 to shareholders of record at the close of business on March 9, 2007.
Debt Retirement
In January 2007, we completed the redemption of our IWO Senior Secured Floating Rate Notes due 2012, of
which $150 million in aggregate principal amount was outstanding as of December 31, 2006, for $153 million
in cash. We are committed to redeem on March 1, 2007, $420 million of our 9.875% notes due 2011 for
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SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)