Sprint - Nextel 2012 Annual Report Download - page 194

Table of Contents
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Expense recorded related to spectrum and operating leases was as follows (in thousands):
Operating lease obligations —
Our commitments for non - cancelable operating leases consist mainly of leased sites, including towers and rooftop
locations, and office space. Certain of the leases provide for minimum lease payments, additional charges and escalation clauses. Operating leases
generally have initial terms of five to seven years with multiple renewal options for additional five
- year terms totaling between 20 and 25 years.
Operating lease obligations in the table above include all lease payments for the contractual lease term including any remaining future lease payments
for leases where notice of intent not to renew has been sent as a result of the lease termination initiatives describe in Note 3, Charges Resulting from
Cost Savings Initiatives. Operating lease payments for assumed renewal periods include the expected renewal periods for those leases where renewal
is likely. The effect of this change in estimate will be reflected in Cost of goods and services and network costs prospectively over the remaining
expected term of the commitment.
Certain of the tower leases specify a minimum number of new leases to commence under a master agreement. Charges are incurred for the
minimum commitment and are included in the table above.
Spectrum lease obligations
- Certain of the leases provide for minimum lease payments, additional charges and escalation clauses. Leased spectrum
agreements have terms of up to
30 years and the weighted average remaining lease term at December 31, 2012 was approximately 23 years, including
renewal terms. We expect that all renewal periods in our spectrum leases will be renewed by us.
Spectrum service credits
- We have commitments to provide Clearwire services to certain lessors in launched markets, and to reimburse lessors for
certain capital equipment and third
- party service expenditures, over the term of the lease. We accrue a monthly obligation for the services and
equipment based on the total estimated available service credits divided by the term of the lease. The obligation is reduced as actual invoices are
presented and paid to the lessors. During the years ended December 31, 2012, 2011 and 2010 we satisfied $3.3 million, $4.5 million and $1.0 million,
respectively, related to these commitments. The maximum remaining commitment at December 31, 2012 is $101.8 million and is expected to be incurred
over the term of the related lease agreements, which generally range from
15 - 30 years .
Purchase agreements
- Included in the table above are purchase commitments with take - or - pay obligations and/or volume commitments for
equipment that are non
- cancelable. The table above also includes other obligations we have that include minimum purchase commitments with certain
suppliers over time for goods and services regardless of whether suppliers fully deliver them. They include, among other things, agreements for
backhaul, subscriber devices and IT related and other services.
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 actual delivery and acceptance of products or services. 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 blanket purchase order amounts where the orders are subject to cancellation or termination at our discretion or where the quantity of goods
or services to be purchased or the payment terms are unknown because such purchase orders are not firm commitments.
F - 72
(1)
Principal and interest payments beyond 2017 represent potential principal and interest payments on the Exchangeable Notes beyond the expected repayment in
2017.
(2)
Includes executory costs of $51.5 million.
(3)
Payments include $44.2 million representing interest.
Year ended December 31,
2012
2011
2010
Spectrum lease payments
$
181,949
$
169,353
$
179,741
Non - cash spectrum lease expense
90,521
85,666
42,819
Amortization of spectrum leases
54,328
53,674
57,433
Total spectrum lease expense
$
326,798
$
308,693
$
279,993
Operating lease expense
$
502,701
$
637,688
$
473,410