Sprint - Nextel 2005 Annual Report Download - page 118

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SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Property, Plant and Equipment Acquired
The fair values preliminarily allocated to property, plant and equipment acquired in the merger are as follows:
Preliminary
Fair Value
(in millions)
Network equipment and software ...................................................... $ 7,370
Buildings and improvements ......................................................... 239
Non-network internal use software, office equipment and other .............................. 765
Total .......................................................................... $ 8,374
The weighted average remaining useful lives are 6 years for network assets, 3 years for building and
improvements and 2 years for non-network internal use software, office equipment and other assets.
Goodwill and Intangibles Acquired
Goodwill resulting from the merger with Nextel is allocated to the Wireless segment. Goodwill includes a
portion of value for assembled workforce, which is not separately classified from goodwill in accordance with
SFAS No. 141. Goodwill, spectrum licenses and the Boost Mobile trademark are considered to have indefinite
lives. They are not amortized, but rather are reviewed annually for impairment, or more frequently if indicators
of impairment exist.
Definite life intangibles include $9.5 billion associated with Nextel’s customer relationships, which will be
amortized over five years using the sum of the years’ digits method, which we believe approximately reflects the
estimated pattern in which the economic benefits will be consumed. Other definite life intangibles primarily
include the Nextel and Direct ConnectSM trademarks, which will be amortized over 10 years on a straight-line
basis. See note 7 for information regarding the amortization expense of these assets.
In accordance with SFAS No. 109, Accounting for Income Taxes, a deferred income tax liability was not recorded
on the goodwill since it is not tax deductible. Deferred income tax liabilities were recorded on the net assets
acquired and will reverse as a tax benefit in the accompanying consolidated statements of operations in proportion
to and over the amortization period of the related intangibles or upon their write-off or disposition, if any.
Long-term Debt Assumed
The fair value of long-term debt assumed as of the merger date is as follows:
Preliminary
Fair Value
(in millions)
5.25% convertible senior notes due 2010, principal amount of $607 including a deferred
premium of $3 ................................................................... $ 610
9.5% senior serial redeemable notes due 2011, principal amount of $85 including a deferred
premium of $5 ................................................................... 90
6.875% senior serial redeemable notes due 2013, principal amount of $1,473 including a deferred
premium of $96 .................................................................. 1,569
5.95% senior serial redeemable notes due 2014, principal amount of $1,170 including a deferred
premium of $38 .................................................................. 1,208
7.375% senior serial redeemable notes due 2015, principal amount of $2,137 including a deferred
premium of $158 ................................................................. 2,295
Bank credit facility, including a deferred premium of $6 ................................... 3,206
Other ............................................................................ 6
Total ........................................................................ $ 8,984
F-23