Sprint - Nextel 2014 Annual Report Download - page 111

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F-28
based valuation models. The determination of the fair value of the reporting unit requires significant estimates and
assumptions, including significant unobservable inputs. The key inputs include, but are not limited to, a discount rate of 8%,
a terminal growth rate of 1.5%, a control premium, market multiple data from selected guideline public companies,
management’s internal forecasts which include numerous assumptions such as share of industry gross additions, churn, mix
of plans, rate changes, expenses, EBITDA margins, and capital expenditures, among others. We compared the estimated fair
value to the carrying amount of the Wireless reporting unit and concluded that the second step of a goodwill impairment test
was not required because the estimated fair value exceeded the carrying amount.
The determination of fair value requires considerable judgment and is highly sensitive to changes in underlying
assumptions. Consequently, there can be no assurance that the estimates and assumptions made for the purposes of the
goodwill and Sprint trade name impairment tests will prove to be an accurate prediction of the future. Continued, sustained
declines in the Company’s operating results, future forecasted cash flows, growth rates and other assumptions, as well as
significant, sustained declines in the Company’s stock price and related market capitalization could impact the underlying
key assumptions and our estimated fair values, potentially leading to a future material impairment of goodwill or other
indefinite-lived intangible assets.
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 is recognized in cost of services.
March 31, 2015 March 31, 2014
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 $ (2,791) $ 4,132 $ 6,923 $ (1,289) $ 5,634
Other intangible assets:
Favorable spectrum leases 23 years 884 (71) 813 884 (30) 854
Favorable tower leases 3 to 7 years 589 (189) 400 589 (80) 509
Trademarks 34 years 520 (27) 493 520 (12) 508
Other 4 to 10 years 72 (17) 55 60 (7) 53
Total other intangible assets 2,065 (304) 1,761 2,053 (129) 1,924
Total definite-lived intangible assets $ 8,988 $ (3,095) $ 5,893 $ 8,976 $ (1,418) $ 7,558
Fiscal Year
2015 Fiscal Year 2016 Fiscal Year 2017 Fiscal Year 2018 Fiscal Year 2019
(in millions)
Estimated amortization expense $ 1,427 $ 1,162 $ 882 $ 665 $ 461