Sprint - Nextel 2015 Annual Report Download - page 126

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
index. Any rent abatements, along with rent escalations, are included in the computation of rent expense calculated on a straight-line basis over the lease term. Our
lease term for most leases includes the initial non-cancelable term plus at least one renewal period, if the non-cancelable term is less than ten years, as the exercise
of the related renewal option or options is reasonably assured. Our cell site leases generally provide for an initial non-cancelable term of five to twelve years with
up to 5 renewal options for five years each.
Our rental commitments for operating leases, including lease renewals that are reasonably assured, consisted mainly of leases for cell and switch sites,
real estate, information technology and network equipment and office space. Total rental expense was $2.9 billion , $2.6 billion , $653 million and $1.3 billion for
the Successor years ended March 31, 2016 and 2015 , the three-month transition period ended March 31, 2014 and year ended December 31, 2013 , respectively,
and $1.0 billion and $483 million for the Predecessor 191-day period ended July 10, 2013 and unaudited three-month period ended March 31, 2013, respectively.
Spectrum Leases and Service Credits
Certain of the spectrum leases provide for minimum lease payments, additional charges, renewal options and escalation clauses. Leased spectrum
agreements generally have terms of up to 30 years. We expect that all renewal periods in our spectrum leases will be renewed by us.
We also have commitments to provide services to certain lessors, 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 by services provided and as actual invoices are presented and paid to the lessors. During the period
ended March 31, 2016 , we satisfied $4 million related to these commitments. The maximum remaining commitment at March 31, 2016 was $86 million and is
expected to be incurred over the term of the related lease agreements, which generally range from 15 to 30 years.
Purchase Orders and Other Commitments
We are a party to other commitments, which includes, among other things, service, spectrum, network equipment, devices, asset retirement obligations
and other executory contracts in connection with conducting our business. Amounts actually paid under some of these agreements will likely be higher due to
variable components of these agreements. The more significant variable components that determine the ultimate obligation owed include such items as hours
contracted, subscribers and other factors. In addition, we are a party to various arrangements that are conditional in nature and obligate us to make payments only
upon the occurrence of certain events, such as the delivery of functioning software or a product. 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.
Note 14. Stockholders' Equity and Per Share Data
Our certificate of incorporation authorizes 10,020,000,000 shares of capital stock as follows:
• 9,000,000,000 shares of common stock, par value $0.01 per share;
• 1,000,000,000 shares of non-voting common stock, par value $0.01 per share; and
• 20,000,000 shares of preferred stock, par value $0.0001 per share.
Classes of Common Stock
Voting Common Stock
The holders of our common stock are entitled to one vote per share on all matters submitted for action by the stockholders. There were approximately
4.0 billion shares of common stock outstanding as of March 31, 2016 .
Treasury Shares
Shares of common stock repurchased by us are recorded at cost as treasury shares and result in a reduction of stockholders' equity. We reissue treasury
shares as part of our stockholder approved stock-based compensation programs, as well as upon conversion of outstanding securities that are convertible into
common stock. When shares are reissued, we determine the cost using the FIFO method.
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