Sprint - Nextel 2015 Annual Report Download - page 113

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 8. Intangible Assets
Indefinite-Lived Intangible Assets
Our indefinite-lived intangible assets consists of FCC licenses, which were acquired primarily through FCC auctions and business combinations, certain
of our trademarks, and goodwill. At March 31, 2016 , we held 1.9 GHz, 800 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. Our Sprint and Boost
Mobile trademarks have also been identified as indefinite-lived intangible assets. Goodwill represents the excess of consideration paid over the estimated fair value
of net tangible and identifiable intangible assets acquired in business combinations ( seeNote3.SignificantTransactions).
The following provides the activity of Indefinite-lived intangible assets within the consolidated balance sheets:
March 31,
2015
Net
Additions
March 31,
2016
(in millions)
FCC licenses $ 35,952
$ 86
$ 36,038
Trademarks 4,035
—
4,035
Goodwill 6,575
—
6,575
$ 46,562
$ 86
$ 46,648
March 31,
2014
Net
Reductions
March 31,
2015
(in millions)
FCC licenses $ 36,043
$ (91)
$ 35,952
Trademarks 5,935
(1,900)
(1 )
4,035
Goodwill 6,383
192
(2 )
6,575
$ 48,361
$ (1,799)
$ 46,562
_________________
(1) NetreductiontotrademarksfortheyearendedMarch31,2015ofapproximately$1.9billionwasrelatedtotheimpairmentoftheSprinttradename.Seediscussionbelow.
(2) NetadditionstogoodwillfortheSuccessoryearendedMarch31,2015ofapproximately$192millionweretheresultofpurchasepriceallocationadjustments,whichconsistedofa$232
millionincreaserecordedduringthethree-monthperiodendedMarch31,2015tocorrecttheamountofnetdeferredtaxliabilitiesrecognizedinconnectionwiththeSoftBankMergerand
ClearwireAcquisitionandanet$40milliondecreaserecordedduringthethree-monthsendedJune30,2014,whichisalsoassociatedwiththeSoftBankMergerandClearwire
Acquisition.
Assessment of Impairment
Our annual impairment testing date for goodwill and indefinite-lived intangible assets is January 1 of each year; however, we test for impairment
between our annual tests if an event occurs or circumstances change that indicate that the asset may be impaired, or in the case of goodwill, that the fair value of
the reporting unit is below its carrying amount. We did not record any impairment during the year ended March 31, 2016. Since the SoftBank Merger Date, actual
results and expectations of net postpaid handset subscriber additions were lower than the forecasts used to allocate the purchase price to the assets acquired and
liabilities assumed. During the quarter ended December 31, 2014, we determined that recoverability of the carrying amount of goodwill and the Sprint trade name
should be evaluated for impairment and it was determined that the carrying value of the Sprint trade name exceeded its estimated fair value of $3.3 billion .
Accordingly, during the quarter ended December 31, 2014 we recorded an impairment loss of $1.9 billion , which is included in "Impairments" in our consolidated
statements of operations.
The stock price at March 31, 2016 of $3.48 was below the net book value per share price of $4.98 . Subsequent to the balance sheet date, the stock price
has decreased further to $3.44 at May 13, 2016 . The quoted market price of our stock is not the sole consideration of fair value. Other considerations include, but
are not limited to, expectations of future results and an estimated control premium.
F-29