Sprint - Nextel 2007 Annual Report Download - page 106

SPRINT NEXTEL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
were made as part of our overall strategy to enhance network coverage and expand the distribution of our
services. We paid a premium of $10.7 billion over the fair value of the assets acquired and liabilities assumed for
the PCS Affiliates, Velocita Wireless and Nextel Partners because we believed that these acquisitions would
result in better control of the distribution services under Sprint and Nextel brands, and would provide us with
strategic and financial benefits associated with a larger customer base and expanded network coverage.
On August 1, 2007, we acquired Northern PCS Services, LLC, a PCS Affiliate, for a net purchase price of
$287 million. As of December 31, 2007, the preliminary allocation of the purchase price included the following:
$113 million to goodwill, $107 million to customer relationships and $56 million to reacquired rights. The results
of Northern PCS’s operations have been included in the consolidated financial statements since the acquisition
date. Pro forma information has not been provided, as the impact to prior periods is immaterial.
The purchase price allocation for the transactions from 2005 to 2007 is summarized in the table below along
with the respective total fair value of assets acquired and liabilities assumed.
Purchase Price Allocation
2005 2006
PCS Affiliate
and
Nextel Partners
Acquisitions
2007
Acquisition(1)Total
Nextel
Merger
PCS
Affiliate
Acquisitions
(in millions)
Current assets, including cash and cash
equivalents ............................ $ 5,527 — — — $ 5,527
Property, plant and equipment ............... 8,337 383 1,494 33 10,247
Goodwill ............................... 15,593 1,122 9,461 113 26,289(2)
FCC licenses ............................ 14,240 — 1,313 — 15,553
Other indefinite lived intangibles ............ 400 — — — 400
Reacquired rights ......................... — 354 858 56 1,268
Customer relationships and other definite lived
intangible assets ........................ 10,448 338 2,298 107 13,191
Investments ............................. 2,678 — — — 2,678
Other assets ............................. 111 198 1,178 10 1,497
Current liabilities ......................... (3,013) — — — (3,013)
Long-term debt ........................... (8,984) (703) (2,818) (25) (12,530)
Deferred income taxes, net ................. (7,754) 5 143 — (7,606)
Other liabilities ........................... (159) (168) (696) (7) (1,030)
Deferred compensation included in shareholders’
equity ................................ 392 — — — 392
Net assets acquired .................... $37,816 $1,529 $13,231 $287 $ 52,863(3)
(1) Represents preliminary purchase price allocation of Northern PCS. We are in the process of completing our
valuation of certain assets and liabilities, as well as internal studies of certain assets, property, plant and
equipment, intangible assets, certain liabilities and commercial contracts, which when finalized, may result
in additional adjustments to the purchase price allocation.
(2) During the fourth quarter 2007, we performed our annual goodwill and other indefinite lived intangible
asset impairment analyses. As a result, we recorded a non-cash impairment charge to goodwill of
$29.7 billion.
(3) Includes $2.4 billion related to our 28% ownership interest in the common stock of Nextel Partners prior to
June 2006 at which time we acquired the remaining 72%.
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