Sprint - Nextel 2015 Annual Report Download - page 30

Table of Contents
information for the 191-day period ended July 10, 2013 and Successor information for the year ended December 31, 2013. The Combined information for the year
ended December 31, 2013 does not comply with U.S. GAAP and is not intended to represent what our consolidated results of operations would have been if the
Successor had actually been formed on January 1, 2013 and acquired the Predecessor as of such date, nor have we made any attempt to either include or exclude
expenses or income that would have resulted had the SoftBank Merger actually occurred on January 1, 2013.
U.S.GAAPDiscussionandAnalysis
The following discussion covers results for the Successor years ended March 31, 2016 compared to March 31, 2015 , the Successor years ended
March 31, 2015 compared to December 31, 2013 and the Successor three-month transition period ended March 31, 2014 compared to the unaudited three-month
Predecessor period ended March 31, 2013.
The results for the Successor three-month period ended March 31, 2013 were considered insignificant and are not comparable to the Successor year
ended December 31, 2013 or three-month transition period ended March 31, 2014 as the Successor entity was established on October 5, 2012 for the sole purpose
of completing the SoftBank Merger. Results for the three-month period ended March 31, 2013 primarily reflected merger expenses that were incurred (recognized
in selling, general and administrative expense) and interest income related to the $3.1 billion Bond issued in connection with the SoftBank Merger. We have
provided information regarding certain of the elements of the acquisition method of accounting affecting the Successor period ended December 31, 2013 and
transition period ended March 31, 2014 results to enable further comparability.
SupplementalDiscussionandAnalysis
Results for the Successor year ended March 31, 2015 as compared to the unaudited Combined year ended December 31, 2013 are also discussed, to the
extent necessary, to provide an analysis of results on comparable periods although the basis of presentation may not be comparable due to the application of the
acquisition method of accounting. Additionally, in certain sections we discuss the activity of the Predecessor 191-day period ended July 10, 2013 to the extent it
provides useful information for the activity during that period.
AcquisitionMethodofAccountingEffectstotheSuccessorPeriodsEndingMarch31,2014(TransitionPeriod)andDecember31,2013
The allocation of the consideration transferred to assets acquired and liabilities assumed were based on estimated fair values as of the date of the
SoftBank Merger, as described further in the Notes to the Consolidated Financial Statements. As a result, the following estimated impacts of purchase price
accounting are included in our results of operations for the Successor three-month transition period ended March 31, 2014 and year ended December 31, 2013:
• Reduced postpaid wireless revenue and wireless cost of service of approximately $29 million and $59 million each for the Successor three-month
transition period ended March 31, 2014 and for the year ended December 31, 2013, respectively, as a result of purchase accounting adjustments to
deferred revenue and deferred costs;
• Reduced prepaid wireless revenue of approximately $96 million for the Successor year ended December 31, 2013 as a result of purchase
accounting adjustments to eliminate deferred revenue;
• Increased rent expense of $29 million and $55 million for the Successor three-month transition period ended March 31, 2014 and year ended
December 31, 2013, respectively, which was included in cost of service, primarily attributable to the write-off of deferred rents associated with our
operating leases, offset by the amortization of our net unfavorable leases recorded in purchase accounting;
• Increased cost of products sold of approximately $31 million for the Successor year ended December 31, 2013 as a result of purchase accounting
adjustments to accessory inventory;
• Reduced depreciation expense of approximately $60 million and $400 million for the Successor three-month transition period ended March 31,
2014 and year ended December 31, 2013, respectively, as a result of purchase accounting adjustments reflecting a net decrease to property, plant
and equipment;
• Incremental amortization expense of approximately $359 million and $772 million for the Successor three-month transition period ended March
31, 2014 and year ended December 31, 2013, respectively, which was primarily attributable to the recognition of customer relationships of
approximately $6.9 billion ; and
• Decrease in pension expense of approximately $22 million and $46 million for the Successor three-month transition period ended March 31, 2014
and year ended December 31, 2013, respectively, which was
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