Sprint - Nextel 2007 Annual Report Download - page 104

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SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
awards and charged to retained earnings (accumulated deficit) according to SFAS No. 123R, Share-Based
Payment. This issue is effective for our quarterly reporting period ending March 31, 2008. We do not expect this
consensus to have a material impact on our consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141R, Business Combinations, which revises SFAS
No. 141, Business Combinations, originally issued in June 2001. SFAS No. 141R will apply to business
combinations for which the acquisition date is on or after January 1, 2009, and this Statement could have a
material impact on us with respect to business combinations completed after the effective date. Such significant
changes include, but are not limited to the “acquirer” recording 100% of all assets and liabilities, including
goodwill, of the acquired business, generally at their fair values, and acquisition-related transaction and
restructuring costs will be expensed rather than treated as part of the cost of the acquisition and included in the
amount recorded for assets acquired. In addition, after the effective date, reversals of valuation allowances
related to acquired deferred tax assets and changes to acquired income tax uncertainties related to any business
combinations, even those completed prior to the Statement’s effective date, will be recognized in earnings,
except for qualified measurement period adjustments.
In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements. This statement amends Accounting Research Bulletin No. 51, Consolidated Financial Statements, to
establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the
deconsolidation of a subsidiary. SFAS No. 160 is effective for our quarterly reporting period ending March 31,
2009. This statement could have a material impact on us to the extent we enter into an arrangement after the
effective date of the standard where we are required to consolidate a non-controlling interest. If such an event
occurred, we will report the non-controlling interest’s equity as a component of our equity in our consolidated
balance sheet, we would report the component of net income or loss and comprehensive income or loss
attributable to the non-controlling interest separately and changes in ownership interests will be treated as equity
transactions. Upon a loss of control, any gain or loss on the interest sold will be recognized in earnings.
Concentrations of Risk
Our accounts and notes 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 maintain and expand
our iDEN®-based wireless services. Motorola provides substantially all of the iDEN infrastructure equipment
used in our iDEN network, and substantially all iDEN handsets. We have agreements with Motorola that set the
prices we must pay to purchase and license this equipment, as well as a structure to develop new features and
make long-term improvements to our network. Motorola also provides integration services in connection with the
deployment of iDEN network elements. We have also agreed to warranty and maintenance programs and
specified indemnity arrangements with Motorola. Motorola is expected to continue to be our sole source supplier
of iDEN infrastructure and iDEN handsets, except primarily for BlackBerry®devices, which are manufactured
by Research in Motion. Further, our ability to timely and efficiently implement the spectrum reconfiguration plan
in connection with the Report and Order, described in note 13 is dependent, in part, on Motorola.
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