Sprint - Nextel 2013 Annual Report Download - page 144

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Indefinite - Lived Intangible Assets
At
December 31, 2013 , we hold 1.9 GHz, 800 MHz, 900 MHz and 2.5 GHz FCC licenses authorizing the use of radio frequency spectrum to deploy our
wireless services. 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. Accordingly, we have concluded that FCC licenses are indefinite
- lived intangible assets.
_________________
During the Predecessor period from January 1, 2013 through July 10, 2013 Sprint acquired approximately
$605 million of 1.9 GHz spectrum and $11.9
billion of 2.5 GHz spectrum from U.S. Cellular and Clearwire, respectively (see Note 3. Significant Transactions). The net additions during this Predecessor
period also included approximately
$91 million of costs related to our 2004 FCC Report and Order to reconfigure the 800 MHz band (Report and Order) (see Note
12. Commitments and Contingencies)
.
The amounts reflected in the July 11, 2013 column represents the preliminary estimated fair value of each class of indefinite
- lived intangible assets
resulting from the SoftBank Merger (see Note 3. Significant Transactions). Trademarks, which include our Sprint and Boost Mobile tradenames, have also been
identified as indefinite
- lived intangible assets. The net additions for FCC licenses during the period from July 11, 2013 through December 31, 2013 were primarily
as a result of work related to our Report and Order (see Note 12. Commitments and Contingencies) .
Goodwill
Goodwill represents the excess of consideration paid over the estimated fair value of net tangible and identifiable intangible assets acquired in
business combinations. We recognized $6.4 billion of goodwill associated with the SoftBank Merger in the Successor period (see Note 3. Significant
Transactions)
.
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. As a result of the preliminary remeasurement of assets acquired and
liabilities assumed in connection with the SoftBank
F - 26
Note 7.
Intangible Assets
Predecessor
December 31,
2012
Net
Additions
July 10,
2013
(in millions)
FCC licenses
$
20,268
$
12,580
$
32,848
Trademarks
409
—
409
Goodwill
359
715
1,074
$
21,036
$
13,295
$
34,331
Successor
July 11,
2013
Net
Additions
December 31,
2013
(in millions)
FCC licenses
$
35,723
$
166
(1
)
$
35,889
Trademarks
5,935
—
5,935
Goodwill
6,434
—
6,434
$
48,092
$
166
$
48,258
(1)
Net additions for the Successor period ended December 31, 2013 consist of approximately $62 million in deposits made to acquire additional FCC licenses that is pending FCC
approval.