Sprint - Nextel 2005 Annual Report Download - page 119

SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Pro Forma Financial Information
The following pro forma consolidated results of operations assume that the merger with Nextel was completed as
of January 1, 2005 and 2004 for the years ended December 31, 2005 and 2004, respectively.
Year Ended December 31,
2005 2004
(in millions except
per share data)
Net operating revenues ................................................... $ 44,069 $ 40,902
Net income (loss) ....................................................... $ 1,593 $ (1,404)
Diluted earnings (loss) per common share .................................... $ 0.54 $ (0.50)
The pro forma amounts represent the historical operating results of Sprint and Nextel with adjustments for
purchase accounting and to conform accounting policies that affect net operating revenues, costs of services and
products, selling, general and administrative expenses, depreciation and amortization, interest expense, other
income (expense), income taxes, and the elimination of intercompany activity.
Affiliate Acquisitions
During 2005, we acquired three PCS Affiliates. We believe that the acquisitions of Nextel Partners and the PCS
Affiliates we have acquired to date will give us control of the distribution of services under our Sprint and Nextel
brands, and provide us with the strategic and financial benefits associated with a larger customer base and
expanded network coverage, which include a number of markets with favorable growth and competitive
characteristics.
US Unwired Inc.
On August 12, 2005, we acquired US Unwired, a PCS Affiliate, for a purchase price of $968 million in cash. As
of December 31, 2005, the majority of the purchase price has been preliminarily allocated to goodwill in the
amount of $872 million and customer relationships in the amount of $276 million. See note 7 for information
regarding amortization expense for customer relationships. We are in the process of completing our valuation of
US Unwired’s assets and liabilities, as well as internal studies of assets, property, plant and equipment, intangible
assets, certain liabilities, and commercial contracts, which when final, may result in additional adjustments to the
purchase price allocation for the acquired assets and assumed liabilities of US Unwired.
Gulf Coast Wireless, Limited Partnership
On October 3, 2005, we acquired Gulf Coast Wireless, a PCS Affiliate, for $211 million in cash, net of the 13.4%
ownership interest held by US Unwired, Inc. As of December 31, 2005, the majority of the purchase price has
been preliminarily allocated to intangible assets including goodwill in the amount of $220 million and customer
relationships of $48 million. See note 7 for information regarding the amortization expense for customer
relationships. We are in the process of completing our valuation of Gulf Coast Wireless’ assets and liabilities, as
well as internal studies of assets, property, plant and equipment, intangible assets, certain liabilities, and
commercial contracts, which when final, may result in additional adjustments to the purchase price allocation for
the acquired assets and assumed liabilities of Gulf Coast Wireless.
IWO Holdings, Inc.
On October 20, 2005, we acquired IWO Holdings, a PCS Affiliate, for $192 million in cash. As of December 31,
2005, the excess purchase price over the fair value of the net assets acquired has been preliminarily allocated to
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