Sprint - Nextel 2005 Annual Report Download - page 127

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SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
letter of credit in the amount of $2.5 billion to provide assurance that funds will be available to pay the relocation
costs of the incumbent users of the 800 MHz spectrum in connection with the band reconfiguration process. We
obtained the letter of credit using borrowing capacity under Nextel’s then existing revolving credit facility and it
continues to be supported by the new credit facility entered into in December 2005. The letter of credit reflects
fair value as a condition of its underlying purpose and is subject to fees competitively determined in the market
place. We also use letters of credit to provide credit support for various financial obligations.
Concentrations of Risk
Our accounts receivable are not subject to any concentration of credit risk. We are exposed to the risk of loss that
would occur if a counterparty defaults on a derivative transaction used for hedging and risk management
purposes. This exposure is controlled through credit approvals, continual review and monitoring of all
counterparties and legal review of contracts. In the event of nonperformance by the counterparties, our
accounting loss would be limited to the net amount we would be entitled to receive under the terms of the
applicable interest rate swap agreement or foreign currency contract. However, we do not anticipate
nonperformance by any of the counterparties to these contracts.
We rely on Motorola, Inc. to provide us with technology improvements designed to expand our iDEN-based
wireless voice capacity and improve our services. Motorola provides all of the iDEN infrastructure equipment
used in the iDEN network, and substantially all iDEN handset devices. Motorola is and is expected to continue to
be our sole source supplier of iDEN infrastructure and iDEN handsets, except BlackBerry®devices, which are
manufactured by Research in Motion, or RIM. Further, our ability to timely and efficiently implement the
spectrum reconfiguration plan in connection with the FCC’s Report and Order is dependent, in part, on Motorola.
Note 7. Intangible Assets
December 31, 2005 December 31, 2004
Useful Lives
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
(in millions)
Indefinite life intangible
assets
Goodwill ............... Indefinite $ 21,315 $ — $ 21,315 $ 4,401 $ — $ 4,401
FCC licenses ............ Indefinite 18,023 — 18,023 3,376 — 3,376
Trademarks ............. Indefinite 416 — 416 16 — 16
39,754 — 39,754 7,793 — 7,793
Definite life intangible assets
Customer relationships .... 3to5years $ 9,953 $ (1,302) $ 8,651 $ 35 $ (6) $ 29
Trademarks ............. 10years 900 (34) 866 — — —
Other .................. Upto5
years 73 (10) 63 19 (5) 14
10,926 (1,346) 9,580 54 (11) 43
Total intangible assets ..... $ 50,680 $ (1,346) $ 49,334 $ 7,847 $ (11) $ 7,836
Indefinite Life Intangibles
We have identified goodwill, spectrum licenses and our Sprint and Boost Mobile trademarks as indefinite life
intangibles after considering the expected use of the assets, the regulatory and economic environment within
which they are being used, and the effects of obsolescence on their use.
F-32