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Additional information regarding our fi nancial commitments at
September 25, 2005 is provided in the Notes to our Consolidated
Financial Statements. See “Notes to Consolidated Financial
Statements, Note 4—Investments in Other Entities and Note 9—
Commitments and Contingencies.”
Future Accounting Requirements
In December 2004, the FASB revised Statement No. 123 (FAS 123R),
“Share-Based Payment,” which requires companies to expense the
estimated fair value of employee stock options and similar awards.
On April 14, 2005, the U.S. Securities and Exchange Commission
adopted a new rule amending the compliance dates for FAS 123R. In
accordance with the new rule, the accounting provisions of FAS 123R
will be effective for us beginning in the fi rst quarter of fi scal 2006.
We tentatively expect to adopt the provisions of FAS 123R using a
modifi ed prospective application. FAS 123R, which provides certain
changes to the method for valuing share-based compensation
among other changes, will apply to new awards and to awards that
are outstanding on the effective date and are subsequently modifi ed
or cancelled. Compensation expense for outstanding awards for
which the requisite service had not been rendered as of the effective
date will be recognized over the remaining service period using the
compensation cost calculated for pro forma disclosure purposes
under FAS 123. At September 25, 2005, unamortized compensation
expense related to outstanding unvested options, as determined
in accordance with FAS 123, that we expect to record during fi scal
2006 was approximately $394 million before income taxes. We will
incur additional expense during fi scal 2006 related to new awards
granted during fi scal 2006 that cannot yet be quantifi ed. We are
in the process of determining how the guidance regarding valuing
share-based compensation as prescribed in FAS 123R will be
applied to valuing share-based awards granted after the effective
date and the impact that the recognition of compensation expense
related to such awards will have on our fi nancial statements.
At September 25, 2005, our outstanding contractual obligations included (in millions):
Beyond No
Total Fiscal Fiscal Fiscal Fiscal Expiration
2006 2007-2008 2009-2010 2010 Date
Long-term fi nancing under Ericsson arrangement(1) $ 118 $ — $ — $ — $ — $118
Purchase obligations 1,042 750 286 6 — —
Operating leases 193 67 75 29 22 —
Equity investments(1) 13 — — — — 13
Inquam guarantee 27 — — — 27 —
Other commitments 1 1 — — — —
Total commitments 1,394 818 361 35 49 131
Capital leases(2) 2 — — — 2 —
Other long-term liabilities(3) 40 — 40 — — —
Total recorded liabilities 42 — 40 — 2 —
Total $1,436 $818 $401 $35 $51 $131
(1) These commitments do not have fi xed funding dates. Amounts are presented based on the expiration of the commitment, but actual funding may occur earlier or not
at all as funding is subject to certain conditions. Commitments represent the maximum amounts to be fi nanced or funded under these arrangements; actual fi nancing
or funding may be in lesser amounts.
(2) Amounts represent future minimum lease payments not including interest payments.
(3) Certain long-term liabilities refl ected on our balance sheet, such as unearned revenue, are not presented in this table because they do not require cash settlement
in the future.