Sprint - Nextel 2008 Annual Report Download - page 90

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SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
We are currently restricted from paying cash dividends because our ratio of total indebtedness to trailing
four quarters earnings before interest, taxes, depreciation and amortization and certain other non-recurring items,
as defined in the credit facility (adjusted EBITDA), exceeds 2.5 to 1.0. The Company also is obligated to repay
the credit facilities if certain change-of-control events occur.
Future Maturities of Long-Term Debt, Financing Obligation and Capital Lease Obligations
For the years subsequent to December 31, 2009, scheduled annual principal payments of long-term debt,
financing obligation and capital lease obligations outstanding as of December 31, 2009, are as follows:
(in millions)
2010 ............................................................ $ 768
2011 ............................................................ 1,668
2012 ............................................................ 2,770
2013 ............................................................ 1,796
2014 ............................................................ 1,371
2015 and thereafter ................................................ 12,628
21,001
Add: premiums, discounts and adjustments, net .......................... 60
$21,061
Note 9. Severance, Exit Costs and Asset Impairments
Liabilities for severance and exit costs are recognized based upon the nature of the cost to be incurred.
For involuntary separation plans that are completed within the guidelines of our written involuntary separation
plan, a liability is recognized when it is probable and reasonably estimable. For voluntary separation plans (VSP)
a liability is recognized when the VSP is irrevocably accepted by the employee. For one-time termination
benefits, such as additional severance pay or benefit payouts, and other exit costs, such as lease termination costs,
the liability is measured and recognized initially at fair value in the period in which the liability is incurred, with
subsequent changes to the liability recognized as adjustments in the period of change. Severance and exit costs
associated with business combinations were recorded as a component of the purchase price allocation in periods
prior to 2009, generally resulting in additional goodwill. Beginning in 2009, in conjunction with recently adopted
guidance on accounting for business combinations, the Company records severance and exit costs associated with
business combinations in the results of operations when incurred.
Severance and Exit Costs Activity
During 2009, we recognized $400 million of severance and exit costs related primarily to the reduction
in workforce announcements in 2009. Of these amounts, $307 million related to the Wireless segment and $93
million related to the Wireline segment. During 2008, we recognized $355 million of severance and exit costs
related to the separation of employees and continued organizational realignment initiatives. Of these amounts,
$270 million related to our Wireless segment, $62 million related to our Wireline segment and the remaining $23
million related to Corporate and other. In 2007 we recognized $230 million and $47 million of expenses for
severance and exit costs related to our Wireless and Wireline segments, respectively.
F-24