Sprint - Nextel 2013 Annual Report Download - page 23

Table of Contents
We may be required to recognize an impairment of our goodwill or indefinite
- lived intangible assets, which could have a material adverse effect on our
financial position and results of operations.
As a result of the SoftBank Merger and the remeasurement of assets acquired and liabilities assumed in connection with the transaction, Sprint
recognized goodwill at its estimate of fair value of approximately
$6.4 billion , which has been entirely allocated to the wireless segment. Since goodwill is
reflected at its estimate of fair value, there is no excess fair value over book value as of the date of the close of the SoftBank Merger. Additionally, we recorded
$41.7 billion of indefinite - lived intangible assets as of the close of the Merger. We are required to perform goodwill impairment tests for goodwill and indefinite -
lived intangible assets at least annually and whenever events or circumstances indicate that the carrying value exceed fair value. If any circumstances were to
occur, such as a decline in stock price, a reduction in consumer demand, or for any other reason we were to experience a significant decrease in sales or an
increase in costs, which had a negative impact on our estimated cash flows associated with our Wireless segment, our analysis of goodwill and indefinite
- lived
intangible assets may conclude that the carrying value exceeds the estimated fair value of the assets. If this were to occur, we would be required to recognize an
impairment which could adversely affect our financial position and results of operations.
Controlled Company Risks
As long as SoftBank controls us, other holders of our common stock will have limited ability to influence matters requiring stockholder approval and
SoftBank ’ s interest may conflict with ours and other stockholders.
SoftBank beneficially owns approximately 80% of the outstanding common stock of Sprint. As a result, until such time as SoftBank and its controlled
affiliates hold shares representing less than a majority of the votes entitled to be cast by the holders of our outstanding common stock at a stockholder meeting,
SoftBank generally will have the ability to control the outcome of any matter submitted for the vote of our stockholders, except in certain circumstances set forth
in our certificate of incorporation or bylaws.
In addition, pursuant to our bylaws, we are subject to certain requirements and limitations regarding the composition of our board of directors. Many
of those requirements and limitations expire on or prior to July 10, 2016. Thereafter, for so long as SoftBank and its controlled affiliates hold shares of our
common stock representing at least a majority of the votes entitled to be cast by the holders of our common stock at a stockholder meeting, SoftBank will be
able to freely nominate and elect all the members of our board of directors, subject only to a requirement that a certain number of directors qualify as
"Independent Directors," as such term is defined in the NYSE listing rules, and applicable laws. The directors elected by SoftBank will have the authority to
make decisions affecting the capital structure of the Company, including the issuance of additional capital stock or options, the incurrence of additional
indebtedness, the implementation of stock repurchase programs and the declaration of dividends.
The interests of SoftBank may not coincide with the interests of our other stockholders or with holders of our indebtedness. SoftBank
’ s ability,
subject to the limitations in our certificate of incorporation and bylaws, to control all matters submitted to our stockholders for approval limits the ability of other
stockholders to influence corporate matters and, as a result, we may take actions that our stockholders or holders of our indebtedness do not view as beneficial.
As a result, the market price of our common stock or terms upon which we issue indebtedness could be adversely affected. In addition, the existence of a
controlling stockholder of Sprint may have the effect of making it more difficult for a third
- party to acquire, or discouraging a third - party from seeking to acquire,
the Company. A third
- party would be required to negotiate any such transaction with SoftBank, and the interests of SoftBank with respect to such transaction
may be different from the interests of our other stockholders or with holders of our indebtedness. In addition, the performance of SoftBank and SoftBank
’ s
ordinary shares or speculation about the possibility of future actions SoftBank may take in connection with us may adversely affect our share price or the
trading price of our debt securities.
Subject to limitations in our certificate of incorporation that limit SoftBank
’ s ability to engage in certain competing businesses in the U.S. or take
advantage of certain corporate opportunities, SoftBank is not restricted from competing with us or otherwise taking for itself or its other affiliates certain
corporate opportunities that may be attractive to the Company.
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