Sprint - Nextel 2012 Annual Report Download - page 141

Table of Contents
SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Goodwill
Goodwill represents the excess of consideration paid over the estimated fair value of net tangible and identifiable intangible assets acquired
in business combinations.
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
2012 , we conducted our
annual assessment of goodwill and determined that no adjustment was necessary.
Intangible Assets Subject to Amortization
Sprint's remaining customer relationships are amortized using the sum
- of - the - months' digits method. We reduce the gross carrying value
and associated accumulated amortization when specified intangible assets become fully amortized. During
2012 , we reduced the gross carrying value
and accumulated amortization by approximately $107 million associated with fully amortized intangible assets primarily related to customer
relationships in connection with the 2007 acquisition of Northern PCS. Other intangible assets primarily include certain rights under affiliation
agreements that were reacquired in connection with the acquisitions of Affiliates and Nextel Partners, Inc., which are being amortized over the
remaining terms of those affiliation agreements on a straight
- line basis, and the Nextel, Direct Connect and Virgin Mobile trade names, which are being
amortized on a straight
- line basis. During 2012 , we conducted an assessment of the recoverability of intangible assets subject to amortization and
determined that no adjustment was necessary.
F - 20
December 31, 2012
December 31, 2011
Useful Lives
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
(in millions)
Customer relationships
4 years
$
234
$
(230
)
$
4
$
341
$
(297
)
$
44
Other intangible assets
Trademarks
10 to 37 years
1,168
(681
)
487
1,169
(585
)
584
Reacquired rights
9 to 14 years
1,571
(785
)
786
1,571
(652
)
919
Other
9 to 10 years
138
(80
)
58
126
(57
)
69
Total other intangible assets
2,877
(1,546
)
1,331
2,866
(1,294
)
1,572
Total definite - lived intangible
assets
$
3,111
$
(1,776
)
$
1,335
$
3,207
$
(1,591
)
$
1,616
2013
2014
2015
2016
2017
(in millions)
Estimated amortization expense
$
250
$
237
$
196
$
135
$
134