Sprint - Nextel 2006 Annual Report Download - page 61

interest rates. Future events, including additional purchases of our securities and refinancing of those securities,
could cause actual payments to differ significantly from these amounts. See “— Forward-Looking Statements.”
Future Contractual Obligations Total 2007 2008 2009 2010 2011
2012 and
Thereafter
(in millions)
Senior notes, bank credit facilities,
debentures and commercial
paper
(1)
................... $38,244 $ 2,646 $2,758 $2,009 $2,233 $3,388 $25,210
Capital leases
(2)
............... 170 21 27 14 10 10 88
Operating leases
(3)
............. 17,905 1,816 1,700 1,595 1,432 1,244 10,118
Purchase orders and other
commitments
(4)
.............. 12,659 6,340 2,177 1,626 918 615 983
Total ....................... $68,978 $10,823 $6,662 $5,244 $4,593 $5,257 $36,399
(1) Includes principal and estimated interest payments. Interest payments are based on management’s expecta-
tions for future interest rates.
(2) Represents capital lease payments including interest.
(3) Includes future lease costs related to sites, switches, offices, retail stores, circuits, towers and spectrum.
(4) Excludes $3.6 billion of blanket purchase orders. See below for further discussion.
The table above does not include remaining costs to be paid in connection with the fulfillment of our
obligation under the Report and Order. The total minimum cash obligation for the Report and Order is
$2.8 billion. Costs incurred under the Report and Order associated with the reconfiguration of the 800 MHz
band may be applied against the $2.8 billion obligation, subject to approval by the Transition Administrator
under the Report and Order. In addition, costs associated with the reconfiguration of the 1.9 GHz spectrum are
not fully approved for credit until the completion of the entire reconfiguration process. Because the final
reconciliation and audit of the entire reconfiguration obligation outlined in the Report and Order will not take
place until after the completion of all aspects of the reconfiguration process, there can be no assurance that we
will be given full credit for the expenditures that we have incurred under the Report and Order. Additionally,
since we, the Transition Administrator and the FCC have not yet reached an agreement on the methodology
for calculating certain amounts of property, plant and equipment to be submitted for credit associated with
reconfiguration activity with our own network, we cannot provide assurance that we will be granted full credit
for certain of these network costs. As a result of the uncertainty with regard to the calculation of the credit for
our internal network costs, as well as the significant number of variables outside of our control, particularly
with regard to the 800 MHz reconfiguration licensee costs, we do not believe that we can reasonably estimate
what amount, if any, will be paid to the U.S. Treasury. Since the inception of the program through
December 31, 2006, we estimate that we have incurred $721 million of costs directly attributable to the
reconfiguration program. This amount does not include any indirect network costs that we have preliminarily
allocated to the reconfiguration program.
“Purchase orders and other commitments” include minimum purchases we commit to purchase from suppliers
over time and/or the unconditional purchase obligations where we guarantee to make a minimum payment to
suppliers for goods and services regardless of whether suppliers fully deliver them. They include agreements
for communications and customer billing services, advertising services and contracts related to information
technology and customer care outsourcing arrangements. Amounts actually paid under some of these “other”
agreements will likely be higher due to variable components of these agreements. The more significant
variable components that determine the ultimate obligation owed include hours contracted, subscribers and
other factors. In addition, we are party to various arrangements that are conditional in nature and create an
obligation to make payments only upon the occurrence of certain events, such as the delivery of functioning
software or products. Because it is not possible to predict the timing or amounts that may be due under these
conditional arrangements, no such amounts have been included in the table above. The table above also
excludes about $3.6 billion of blanket purchase order amounts since their agreement terms are not specified.
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