Sprint - Nextel 2010 Annual Report Download - page 65

Note 1. Description of Operations
Sprint Nextel Corporation, including its consolidated subsidiaries, (“Sprint,” “we,” “us,” “our” or the “Company”) is
a communications company offering a comprehensive range of wireless and wireline communications products and services
that are designed to meet the needs of individual consumers, businesses, government subscribers and resellers. We have
organized our operations to meet the needs of our targeted subscriber groups through focused communications solutions that
incorporate the capabilities of our wireless and wireline services. As a result of the acquisition of Virgin Mobile USA, Inc.
(Virgin Mobile) on November 24, 2009 and iPCS, Inc. (iPCS) on December 4, 2009, the operations of Virgin Mobile and iPCS
are consolidated prospectively from their respective acquisition dates.
The Wireless segment includes retail and wholesale service revenue from a wide array of wireless mobile telephone
and wireless data transmission services and equipment revenue from the sale of wireless devices and accessories in the U.S.,
Puerto Rico and the U.S. Virgin Islands.
The Wireline segment includes revenue from domestic and international wireline voice and data communication
services, including services to the cable multiple systems operators that resell our local and long distance service and use our
back office systems and network assets in support of their telephone services provided over cable facilities.
Sprint's fourth generation (4G) technology capabilities exist through our mobile virtual network operator (MVNO)
relationship with Clearwire Corporation and its consolidated subsidiary, Clearwire Communications LLC (together,
"Clearwire") in which we own a 54% economic interest. Clearwire is deploying Worldwide Interoperability for Microwave
Access (WiMAX) technology as a new network in markets that we serve. The services supported by this technology give
subscribers with compatible devices high-speed access to the Internet and a variety of increasingly sophisticated data services
(See note 3).
Note 2. Summary of Significant Accounting Policies and Other Information
Consolidation Policies and Estimates
The consolidated financial statements include our accounts, those of our wholly owned subsidiaries, and subsidiaries
we control or in which we have a controlling financial interest. All significant intercompany transactions and balances have
been eliminated in consolidation. Investments where Sprint maintains majority ownership, but lacks full decision making
ability over all major issues, are accounted for using the equity method. Sprint's most significant equity investment is in
Clearwire for which Sprint does not have a controlling vote or the ability to control operating and financial policies.
The consolidated financial statements are prepared in conformity with accounting principles generally accepted in
the United States (GAAP). This requires management of the Company to make estimates and assumptions that affect the
reported amounts of assets and liabilities, revenues and expenses and the disclosure of contingent assets and liabilities as of the
date of the consolidated financial statements. These estimates are inherently subject to judgment and actual results could differ.
Certain prior period amounts have been reclassified to conform to the current period presentation. Subsequent events
were evaluated for disclosure through the date on which the financial statements were filed with the Securities and Exchange
Commission (SEC).
Summary of Significant Accounting Policies
Cash and Cash Equivalents
Cash equivalents generally include highly liquid investments with maturities at the time of purchase of three months
or less. These investments may include money market funds, certificates of deposit, U.S. government and government-
sponsored debt securities, corporate debt securities, municipal securities, bank-related securities, and credit and debit card
transactions in process.
Allowance for Doubtful Accounts
An allowance for doubtful accounts is established sufficient to cover probable and reasonably estimable losses.
Because of the number of subscriber accounts, it is not practical to review the collectibility of each of those accounts
individually to determine the amount of allowance for doubtful accounts each period, although some account level analysis is
performed with respect to large wireless and wireline subscribers. The estimate of allowance for doubtful accounts considers a
number of factors, including collection experience, aging of the accounts receivable portfolios, credit quality of the subscriber
base and other qualitative considerations, including macro-economic factors. Amounts written off against the allowance for
doubtful accounts, net of recoveries and other adjustments, were $437 million, $487 million, and $826 million in 2010, 2009
and 2008, respectively.
Table of Contents SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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