Sprint - Nextel 2006 Annual Report Download - page 35

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In 2005, we recorded net charges of $723 million ($445 million after tax) primarily related to merger and
integration costs, asset impairments, severance and hurricane-related costs.
In 2004, we recorded net charges of $3.7 billion ($2.3 billion after tax) primarily related to severance and
a Long Distance network impairment, partially offset by recoveries of fully reserved MCI (now Verizon)
receivables.
In 2003, we recorded net charges of $1.9 billion ($1.2 billion after tax) primarily related to severance,
asset impairments and executive separation agreements, partially offset by recoveries of fully reserved MCI
(now Verizon) receivables.
In 2002, we recorded net charges of $318 million ($200 million after tax) primarily related to severance,
asset impairments and expected loss on WorldCom (now Verizon) receivables.
(2) As the effects of including the incremental shares associated with options, restricted stock units and
employees stock purchase plan shares are antidilutive, both basic loss per share and diluted loss per share
from continuing operations reflect the same calculation for the years ended December 31, 2004, 2003 and
2002.
(3) All per share amounts have been restated, for all periods before 2004, to reflect the recombination of our
common stock and PCS common stock as of the earliest period presented at an identical conversion ratio
(0.50 shares of our common stock for each share of PCS common stock). The conversion ratio was also
applied to dilutive PCS securities (mainly stock options, employees stock purchase plan shares, convertible
preferred stock and restricted stock units) to determine diluted weighted average shares on a consolidated
basis.
(4) In 2005, we recorded a charge of $16 million due to the adoption of Financial Accounting Standards
Board Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations, and in 2003, we
recorded a credit of $258 million as a result of the adoption of Statement of Financial Accounting Stan-
dards No. 143, Accounting for Asset Retirement Obligations. Both resulted in a cumulative effect of change
in accounting principle.
(5) In the first and second quarter 2005, a dividend of $0.125 per share was paid. In the third and fourth
quarter 2005 and for each quarter of 2006, the dividend was $0.025 per share. Before the recombination
of our two tracking stocks, shares of PCS common stock did not receive dividends. For each of the three
years ended December 31, 2004, shares of our common stock (before the conversion of shares of PCS
common stock) received dividends of $0.50 per share. In the first quarter 2004, shares of our common
stock received a dividend of $0.125 per share. In the second, third and fourth quarter 2004, shares of our
common stock, which included shares resulting from the conversion of shares of PCS common stock,
received quarterly dividends of $0.125 per share.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
We include certain estimates, projections and other forward-looking statements in our annual, quarterly and
current reports, and in other publicly available material. Statements regarding expectations, including
performance assumptions and estimates relating to capital requirements, as well as other statements that are
not historical facts, are forward-looking statements.
These statements reflect management’s judgments based on currently available information and involve a
number of risks and uncertainties that could cause actual results to differ materially from those in the forward-
looking statements. With respect to these forward-looking statements, management has made assumptions
regarding, among other things, customer and network usage, customer growth and retention, pricing, operating
costs, the timing of various events and the economic environment.
Future performance cannot be assured. Actual results may differ materially from those in the forward-looking
statements. Some factors that could cause actual results to differ include:
• the effects of vigorous competition, including the impact of competition on the price we are able to
charge customers for services we provide and our ability to attract new customers and retain existing
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