Sprint - Nextel 2006 Annual Report Download - page 96

The discontinued operations’ assets and liabilities reported as of December 31, 2005 were as follows:
December 31,
2005
(in millions)
Current assets . . . ........................................................... $ 916
Investments ................................................................ $ 6
Property, plant and equipment, net ............................................... 7,804
Intangible assets, net ......................................................... 27
Other assets ............................................................... 20
Total non-current assets ....................................................... $7,857
Current liabilities ........................................................... $ 822
Long-term debt and capital lease obligations ....................................... $ 663
Deferred income taxes ........................................................ 1,282
Other liabilities . . ........................................................... 68
Total non-current liabilities .................................................... $2,013
Note 3. Business Combinations
We have made various acquisitions of companies and have accounted for these acquisitions in our Wireless
segment under the purchase method as required by SFAS No. 141, Business Combinations. SFAS No. 141
requires that the total purchase price of each of the acquired entities be allocated to the assets acquired and
liabilities assumed based on their fair values at the respective acquisition dates. The allocation process requires
an analysis of intangible assets, such as FCC licenses, customer relationships, trade names, and rights under
affiliation agreements that we reacquired in connection with acquisitions of the PCS Affiliates and Nextel
Partners, acquired contractual rights and assumed contractual commitments and legal contingencies to identify
and record all assets acquired and liabilities assumed at their fair value. In valuing acquired assets and
assumed liabilities, fair values are based on, but are not limited to: quoted market prices, where available; our
intent with respect to whether the assets purchased are to be held, sold or abandoned; expected future cash
flows; current replacement cost for similar capacity for certain property, plant and equipment; market rate
assumptions for contractual obligations; and appropriate discount rates and growth rates. The results of
operations for all acquired companies are included in our consolidated financial statements either from the
date of acquisition or from the start of the month closest to the acquisition date.
During 2006, we acquired several PCS Affiliates, as well as Nextel Partners. We paid a premium (i.e.,
goodwill) over the fair value of the net tangible and identified intangible assets of these entities because we
believed the acquisition of the PCS Affiliates and Nextel Partners would give us more control of the
distribution of services under our Sprint and Nextel brands, and would provide us with the strategic and
financial benefits associated with a larger customer base and expanded network coverage. During the same
period, we also acquired Velocita Wireless Holdings Corporation, primarily to increase our licenses to use
spectrum in the 900 megahertz, or MHz, spectrum band.
2006 Acquisitions
Enterprise Communications Partnership
On January 31, 2006, we acquired Enterprise Communications for a purchase price of $77 million in cash. As
of December 31, 2006, the preliminary allocation of the purchase price included the following: $48 million to
F-19
SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)