Sprint - Nextel 2007 Annual Report Download - page 45

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On May 17, 2006, we spun-off to our shareholders our local communications business, which is now known
as Embarq Corporation and is comprised primarily of what was our local wireline communications segment prior
to the spin-off. As a result of the spin-off, we no longer own any interest in Embarq. The results of Embarq for
periods prior to the spin-off are presented as discontinued operations. The following table summarizes our
consolidated results of operations.
Year Ended December 31,
2007 2006 2005
(in millions)
Net operating revenues .............................................. $40,146 $41,003 $28,771
Goodwill impairment ............................................... 29,729 — —
Income (loss) from continuing operations ............................... (29,580) 995 821
Discontinued operations, net .......................................... — 334 980
Net income (loss) .................................................. (29,580) 1,329 1,785
Net operating revenues decreased about 2% in 2007 as compared to 2006, reflecting the decrease in
revenues from our Wireless segment, principally due to the decrease in wireless equipment revenue, and
increased 43% in 2006 as compared to 2005, primarily as a result of the business combinations, partially offset
by declining revenues of our Wireline segment. For additional information, see “—Segment Results of
Operations” below.
Income from continuing operations decreased to a loss of $29.6 billion in 2007, compared to income of
$995 million in 2006, primarily due to the goodwill impairment charge of $29.7 billion. Income from continuing
operations increased to $995 million in 2006, as compared to income of $821 million in 2005, primarily due to
revenue growth as a result of the business combinations described above, partially offset by increases to cost of
service primarily due to higher volume in roaming and interconnection expenses. For additional information, see
“—Segment Results of Operations” and “—Consolidated Information” below.
In 2007, we incurred a net loss of $29.6 billion as compared to net income of $1.3 billion in 2006, due to the
reasons stated above and the absence of income from discontinued operations in 2007. Net income decreased to
$1.3 billion in 2006 as compared to net income of $1.8 billion in 2005 primarily as a result of the Embarq spin-
off. For additional information, see “—Segment Results of Operations” and “—Consolidated Information”
below.
Presented below are results of operations for our Wireless and Wireline segments, followed by a discussion
of consolidated information.
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