Sprint - Nextel 2010 Annual Report Download - page 69

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New Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (FASB) issued authoritative literature regarding
Amendments to FASB Interpretation No. 46(R), which changes various aspects of accounting for and disclosures of interests in
variable interest entities, and Accounting for Transfers of Financial Assets, which was issued in order to improve the relevance,
representational faithfulness, and comparability of the information that a reporting entity provides in its financial statements
about a transfer of financial assets; the effects of a transfer on its financial position, financial performance, and cash flows; and
a transferor's continuing involvement, if any, in transferred financial assets. This guidance was effective beginning in January
2010 and did not have a material effect on our consolidated financial statements.
In September 2009, the FASB modified the accounting for Multiple-Deliverable Revenue Arrangements and Certain
Revenue Arrangements that Include Software Elements. These modifications alter the methods previously required for
allocating consideration received in multiple-element arrangements to require revenue allocation based on a relative selling
price method, including arrangements containing software components and non-software components that function together to
deliver the product's essential functionality. These modifications will be effective prospectively for the fiscal year ending
December 31, 2011 and are not expected to have a material effect on our consolidated financial statements.
In January 2010, the FASB issued authoritative guidance regarding Improving Disclosures about Fair Value
Measurements, which requires new and amended disclosure requirements for classes of assets and liabilities, inputs and
valuation techniques and transfers between levels of fair value measurements and Accounting for Distributions to Shareholders
with Components of Stock and Cash, which clarifies the accounting for distributions to shareholders that offer them the ability
to elect to receive their entire distribution in cash or shares of equivalent value. This guidance was effective beginning in
January 2010 and did not have a material effect on our consolidated financial statements.
In July 2010, the FASB amended the requirements for Disclosures about the Credit Quality of Financing Receivables
and the Allowance for Credit Losses. As a result of these amendments, an entity is required to disaggregate by portfolio
segment or class certain existing disclosures and provide certain new disclosures about its financing receivables and related
allowance for credit losses. The new disclosures as of the end of the reporting period are effective for the fiscal year ending
December 31, 2010, while the disclosures about activity that occurs during a reporting period are effective for the first fiscal
quarter of 2011. The disclosure requirements effective for the fiscal year ending December 31, 2010 did not have a material
effect on our consolidated financial statements. The requirements effective for the first fiscal quarter of 2011 are not expected
to have a material effect on our consolidated financial statements.
Concentrations of Risk
Motorola Mobility, Inc. and Motorola Solutions, Inc. (collectively, "Motorola") is our sole source for all of the
devices we offer under the Nextel brand, except BlackBerry® devices. Although our handset supply agreement with Motorola is
structured to provide competitively-priced devices, the cost of iDEN devices is generally higher than devices that do not
incorporate a similar multi-function capability. This difference may make it more difficult or costly for us to offer devices at
prices that are attractive to potential subscribers. In addition, the higher cost of iDEN devices requires us to absorb a larger part
of the cost of offering devices to new and existing subscribers, which may reduce our growth and profitability. Also, we must
rely on Motorola to develop devices capable of supporting the features and services we offer to subscribers of services on our
iDEN network and to provide maintenance and support for our iDEN-based infrastructure. A decision by Motorola to
discontinue, or the inability of either company to continue, manufacturing, maintaining or supporting our iDEN-based
infrastructure and devices could have a material adverse effect on us. Further our ability to complete the spectrum
reconfiguration plan in connection with the FCC's Report and Order, described in note 11, is dependent, in part, on Motorola.
Table of Contents SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-12