Sprint - Nextel 2007 Annual Report Download - page 63

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Other New Accounting Pronouncements
In September 2006, the EITF reached a consensus on Issue No. 06-1, Accounting for Consideration Given
by a Service Provider to a Manufacturer or Reseller of Equipment Necessary for an End-Customer to Receive
Service from the Service Provider. EITF Issue No. 06-1 provides guidance regarding whether the consideration
given by a service provider to a manufacturer or reseller of specialized equipment should be characterized as a
reduction of revenue or as an expense. This issue is effective for our quarterly reporting period ending March 31,
2008. Entities are required to recognize the effects of applying this issue as a change in accounting principle
through retrospective application to all prior periods unless it is impracticable to do so. We do not expect this
consensus to have a material impact on our consolidated financial statements.
In June 2007, the EITF reached a consensus on Issue No. 06-11, Accounting for Income Tax Benefits of
Dividends on Share-Based Payment Awards. EITF Issue No. 06-11 provides guidance regarding how an entity
should recognize the tax benefit received as a result of dividends paid to holders of share-based compensation
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 will 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.
Financial Condition
Our consolidated assets were $64.1 billion as of December 31, 2007, which included $28.1 billion of
intangible assets, and $97.2 billion as of December 31, 2006, which included $60.1 billion of intangible assets.
The decrease in our consolidated assets was primarily a result of the $29.7 billion goodwill impairment charge,
recorded in 2007, the amortization of $3.3 billion related to our definite lived intangible assets, cash used in our
stock repurchase program and the settlement of our securities loan agreement. See “—Liquidity and Capital
Resources” for additional information on the change in cash and cash equivalents.
Liquidity and Capital Resources
Management exercises discretion regarding the liquidity and capital resource needs of our business
segments. This responsibility includes the ability to prioritize the use of capital and debt capacity, to determine
cash management policies and to make decisions regarding the timing and amount of capital expenditures.
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