Sprint - Nextel 2015 Annual Report Download - page 32

Table of Contents
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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.
Amortization Expense
SuccessorYearEndedMarch31,2016andSuccessorYearEndedMarch31,2015
Amortization expense decreased $258 million , or 17% , in the year ended March 31, 2016 compared to the same period in 2015 , primarily due to
customer relationship intangible assets that are amortized using the sum-of-the-months'-digits method, which results in higher amortization rates in early periods
that will decline over time.
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 recognized as a result of the SoftBank Merger. Customer relationship intangible assets are amortized using the sum-of-the-
months'-digits method, which results in higher amortization rates in early periods that will decline over time.
SuccessorThree-MonthTransitionPeriodEndedMarch31,2014andPredecessorThree-MonthPeriodEndedMarch31,2013
Amortization expense increased $359 million , or 513% , in the Successor three-month transition period ended March 31, 2014 compared to the same
Predecessor period in 2013 , primarily due to the recognition of definite-lived intangible assets related to customer relationships of approximately $6.9 billion as a
result of the SoftBank Merger. Customer relationship intangible assets are amortized using the sum-of-the-months'-digits method, which results in higher
amortization rates in early periods that will decline over time.
Impairments
During the three-month period ended December 31, 2014, we determined that recoverability of the carrying amount of the Sprint trade name should be
evaluated for impairment due to changes in circumstances surrounding our Wireless reporting unit. As a result, we recorded an impairment loss of $1.9 billion,
which is included in "Impairments" in our consolidated statements of operations. During the three-month period ended December 31, 2014, we also tested the
recoverability of the Wireline asset group, which consists primarily of property, plant and equipment, due to continued declines in our Wireline segment earnings
and our forecast that projected continued losses in future periods. As a result, we
30