Sprint - Nextel 2010 Annual Report Download - page 73

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Note 6. Intangible Assets
Indefinite-Lived Intangibles
FCC licenses
Trademarks
Goodwill(1)
December 31,
2008
(in millions)
$ 18,911
409
—
$ 19,320
Net
Additions/
(Reductions)
$ 591
—
373
$ 964
December 31,
2009
$ 19,502
409
373
$ 20,284
Net
Additions/
(Reductions)
$ 425
—
(14)
$ 411
December 31,
2010
$ 19,927
409
359
$ 20,695
______________
(1) The net reduction to goodwill of $14 million was a result of purchase price allocation adjustments recognized in the
first quarter of 2010 associated with the 2009 acquisitions of Virgin Mobile and iPCS primarily related to deferred tax
assets and liabilities.
We hold FCC licenses authorizing the use of radio frequency spectrum to deploy our wireless services: 1.9 gigahertz
(GHz) licenses utilized in the CDMA network, and 800 megahertz (MHz) and 900 MHz licenses utilized in the iDEN network.
We also hold FCC licenses that are not yet placed in service but that we intend to use in accordance with FCC requirements. As
long as the Company acts within the requirements and constraints of the regulatory authorities, the renewal and extension of
these licenses is reasonably certain at minimal cost. We are not aware of any technology being developed that would render this
spectrum obsolete and have concluded that these licenses are indefinite-lived intangible assets. Our Sprint and Boost Mobile
trademarks have been identified as indefinite-lived intangible assets. During 2010, we conducted our annual assessment of the
estimated fair value of indefinite-lived intangible assets other than goodwill and determined that no adjustment was necessary.
Goodwill
Goodwill represents the excess of consideration paid over the estimated fair value of net tangible and identifiable
intangible assets acquired in business combinations. During the fourth quarter 2009, we acquired Virgin Mobile and iPCS,
which resulted in the recognition of $373 million of goodwill. During 2010, Sprint finalized purchase price allocations
associated with these acquisitions.
Goodwill Recoverability Assessment
The carrying value of Sprint's goodwill is included in the Wireless segment which represents our wireless reporting
unit. We estimate the fair value of the wireless reporting unit using both discounted cash flow and market-based valuation
models. If the fair value of the wireless reporting unit exceeds its net book value, goodwill is not impaired, and no further
testing is necessary. If the net book value of our wireless reporting unit exceeds its estimated fair value, we estimate the fair
value of goodwill to determine the amount of impairment loss, if any.
The determination of the estimated fair value of the wireless reporting unit requires significant estimates and
assumptions. These estimates and assumptions primarily include, but are not limited to, transactions within the wireless
industry and related control premiums, discount rate, terminal growth rate, operating income before depreciation and
amortization (OIBDA) and capital expenditure forecasts. Due to the inherent uncertainty involved in making those estimates,
actual results could differ from those estimates. We evaluate the merits of each significant assumption, both individually and in
the aggregate, used to determine the fair value of the wireless reporting unit for reasonableness. During 2010, we conducted our
annual assessment of goodwill and determined that no adjustment was necessary.
Table of Contents SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-16