Sprint - Nextel 2014 Annual Report Download - page 33

Table of Contents
31
Depreciation Expense
Successor Year Ended March 31, 2015 and Successor Year Ended December 31, 2013
Depreciation expense increased $1.8 billion, or 87% in the year ended March 31, 2015 compared to the year
ended December 31, 2013 primarily due to comparing a full twelve-month period to a shortened Post-merger period.
Successor Three-Month Transition Period Ended March 31, 2014 and Predecessor Three-Month Period Ended
March 31, 2013
Depreciation expense decreased $554 million, or 39%, in the Successor three-month transition period ended
March 31, 2014 compared to the same Predecessor period in 2013 primarily due to the absence of accelerated depreciation
associated with equipment related to our legacy Nextel and Sprint platforms. This reduction was partially offset by increased
depreciation on asset additions primarily associated with improving the quality of our network and assets acquired as a result
of the Clearwire Acquisition. The deployment of our network modernization program resulted in incremental charges during
earlier stages of implementation including, but not limited to, an increase in depreciation associated with existing assets
related to both the Nextel and Sprint platforms, due to changes in our estimates of the remaining useful lives of long-lived
assets, and the expected timing and amount of asset retirement obligations, which continued to have an impact on our results
of operations through 2013. The incremental effect of accelerated depreciation due to the implementation of our network
modernization program was approximately $360 million during the Predecessor three-month period ended March 31, 2013,
of which the majority related to the Nextel platform, compared to no such accelerated depreciation in the three-month
transition period ended March 31, 2014.
Successor Year Ended December 31, 2013 and Predecessor Year Ended December 31, 2012
Depreciation expense decreased $4.2 billion, or 68%, for the Successor year ended December 31, 2013 compared
to the Predecessor year ended December 31, 2012 primarily due to comparing results for the shortened Post-merger period to
a period consisting of a full calendar year. In addition, the decrease in depreciation expense was driven by accelerated
depreciation expense recognized in 2012 from the modernization of our network, with no such accelerated depreciation in the
Successor year ended December 31, 2013 and asset revaluations as a result of the SoftBank Merger. These decreases were
partially offset by increased depreciation expense on assets acquired as a result of the Clearwire Acquisition and asset
additions primarily related to network initiatives.
Successor Year Ended March 31, 2015 and Combined Year Ended December 31, 2013
Specific efforts to improve the quality of our network, which began in 2011, as well as the shut down of the
Nextel platform on June 30, 2013, resulted in incremental charges during earlier stages of these efforts including, but not
limited to, an increase in depreciation associated with existing assets related to both the Nextel and Sprint platforms, due to
changes in our estimates of the remaining useful lives of long-lived assets, and the expected timing and amount of asset
retirement obligations, which continued to have an impact on our results of operations in 2013. The incremental effect of
accelerated depreciation was approximately $800 million during the Predecessor 191-day period ended July 10, 2013, of
which the majority related to the Nextel platform, which was shut down on June 30, 2013, compared to no such accelerated
depreciation in the Successor year ended March 31, 2015. In addition to the explanations above and the effect of accelerated
depreciation in the Predecessor period, the depreciation expense also decreased by approximately $160 million for the
Successor year ended March 31, 2015 due to asset revaluations as a result of the SoftBank Merger in 2013.
Combined Year Ended December 31, 2013 and Predecessor Year Ended December 31, 2012
In addition to the explanations above, the decrease in depreciation expense for the combined year ended
December 31, 2013 compared to the Predecessor year ended December 31, 2012 was primarily due to the reduction of
accelerated depreciation partially offset by increased depreciation expense primarily due to network asset additions in the
Predecessor 191-day period. The incremental effect of accelerated depreciation expense totaled approximately $2.1 billion for
the Predecessor year ended December 31, 2012, which was primarily related to the shut-down of the Nextel platform on June
30, 2013.
Amortization Expense
Successor Year Ended March 31, 2015 and Successor Year Ended December 31, 2013
Amortization expense increased $644 million, or 71%, in the year ended March 31, 2015 compared to the year
ended December 31, 2013, primarily due to comparing results for a full twelve-month period to a shortened Post-merger
period which primarily consisted of amortization of customer relationships of approximately $6.9 billion that were