Sprint - Nextel 2013 Annual Report Download - page 145

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Merger, Sprint recognized goodwill at its estimate of fair value as of the SoftBank Merger Date. Since goodwill is reflected at its estimate of fair value, there is no
cushion, or fair value in excess of carrying value as of the SoftBank Merger Date, and the risk associated with potential goodwill impairment in future reporting
periods is heightened. The Company has not finalized the valuation associated with the SoftBank Merger. Any additional changes to the valuation and
associated impact to our purchase price allocation could result in a change in the amount of goodwill reflected in these financial statements in future reporting
periods.
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,
earnings before interest, taxes, depreciation and amortization (EBITDA) 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.
Intangible Assets Subject to Amortization
Customer relationships are amortized using the sum
- of - the - months' digits method, while all other definite - lived intangible assets are amortized using the
straight line method over the estimated useful lives of the respective assets. We reduce the gross carrying value and associated accumulated amortization when
specified intangible assets become fully amortized. Amortization expense related to favorable spectrum and tower leases are recognized in cost of services.
During the third quarter 2013, we recorded
$6.9 billion of customer relationships, $884 million of favorable spectrum leases, $589 million of favorable tower leases,
$520 million for trademarks and $52 million of other intangible assets as a result of the preliminary allocation of the SoftBank Merger and Clearwire Acquisition
(see Note 3. Significant Transactions)
.
F - 27
Successor
Predecessor
December 31, 2013
December 31, 2012
Useful Lives
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
Gross
Carrying
Value
Accumulated
Amortization
Net
Carrying
Value
(in millions)
Customer relationships
4 to 8 years
$
6,923
$
(875
)
$
6,048
$
234
$
(230
)
$
4
Other intangible assets
Favorable spectrum leases
23 years
884
(20
)
864
—
—
—
Favorable tower leases
3 to 7 years
589
(52
)
537
—
—
—
Trademarks
34 years
520
(8
)
512
1,168
(681
)
487
Reacquired rights
9 to 14 years
—
—
—
1,571
(785
)
786
Other
4 to 10 years
58
(5
)
53
138
(80
)
58
Total other intangible assets
2,051
(85
)
1,966
2,877
(1,546
)
1,331
Total definite-lived intangible assets
$
8,974
$
(960
)
$
8,014
$
3,111
$
(1,776
)
$
1,335
2014
2015
2016
2017
2018
(in millions)
Estimated amortization expense
$
1,737
$
1,488
$
1,231
$
946
$
715