Sprint - Nextel 2015 Annual Report Download - page 136

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Brightstar
We have arrangements with Brightstar, whereby Brightstar provides supply chain and inventory management services to us in our indirect channels and
whereby Sprint may sell new and used devices and new accessories to Brightstar for its own purposes. We have provided a $1.0 billion credit line to Brightstar to
facilitate certain of these arrangements. As a result, we shifted our concentration of credit risk away from our indirect channel partners to Brightstar. As Brightstar
is a subsidiary of SoftBank, we expect SoftBank will provide the necessary support to ensure that Brightstar will fulfill its obligations to us under these agreements.
However, we have no assurance that SoftBank will provide such support.
The supply chain and inventory management arrangement included, among other things, that Brightstar would purchase inventory from the OEMs to
sell directly to our indirect dealers. As compensation for these services, we remit per unit fees to Brightstar for each device sold to dealers or retailers in our
indirect channels. During the years ended March 31, 2016 and 2015 , we incurred fees under these arrangements totaling $102 million and $66 million ,
respectively. We may also purchase new and used devices and accessories from Brightstar to be sold in our direct channels or to be used to fulfill service and repair
needs.
Amounts included in our consolidated financial statements associated with these arrangements with Brightstar were as follows:
March 31,
Consolidated balance sheets: 2016
2015
(in millions)
Accounts receivable $ 197
$ 430
Accounts payable $ 96
$ 96
March 31,
Consolidated statements of operations: 2016
2015
(in millions)
Equipment revenues (1) $ 1,731
$ 1,818
Cost of products (1) $ 1,743
$ 1,887
_________________
(1) Amountsforallotherreportedperiodswereimmaterial.
Handset Sale-Leaseback Tranche 1
In November, 2015, Sprint entered into a Handset Sale-Leaseback Tranche 1 transaction with MLS, a company formed by a group of equity investors,
including SoftBank to sell and lease-back certain devices, which are currently being leased by our customers, for total proceeds of $1.1 billion ( seeNote4.
FundingSourcesandNote13.CommitmentsandContingencies).
All other transactions under agreements with SoftBank Parties, in the aggregate, were immaterial through the period ended March 31, 2016 .
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