Impairment Losses Related to Sprint (under US GAAP) & Reasons for Not Recognizing an Impairment Loss Related to Sprint in the...
February 05 2015 - 8:08AM
Business Wire
On February 5, 2015 (EST), Sprint Corporation (“Sprint”, a
company that reports in US GAAP), a subsidiary of SoftBank Corp.
(the “Company”) in the U.S., announced that it recorded impairment
losses of USD 2.13 billion (approximately JPY 256.8 billion *1) for
the three-month period ended December 31, 2014 (the “third
quarter”). The Company announces that an impairment loss related to
Sprint was not recognized in the Company’s consolidated financial
statements (under IFRSs) as described below.
1. About Sprint
(1) Name Sprint Corporation (2) Address
6200 Sprint Parkway, Overland Park, Kansas 66251 (3)
Name and title ofrepresentative
Marcelo Claure
President and Chief Executive Officer
(4) Nature of business Holding company. Provision of
telecommunications services through its operating subsidiaries. (5)
Common stock USD 40 million (as of December 31, 2014)
2. Impairment Losses Recorded in Sprint
In the third quarter, Sprint (a company that reports in US GAAP)
recorded USD 1.9 billion and USD 233 million of impairment losses
on the Sprint trade name in its Wireless Segment and property,
plant and equipment in its Wireline Segment, as operating expenses
respectively, due to estimated fair values that were less than the
carrying amounts.
Sprint treats its Wireless Segment and Wireline Segment as
separate cash-generating units*2. Under US GAAP, certain assets,
such as the Sprint trade name, are tested for impairment at the
individual asset level while other assets or asset groups, such as
Wireline’s long-lived assets are tested at the higher level cash
generating unit.
During the third quarter, Sprint determined that certain assets
might be impaired based on several factors including a decrease in
its stock price, downgraded credit rating, and since the Sprint’s
acquisition, actual results and future expectations of the
business, including net postpaid handset subscriber additions, have
been lower than the forecasts used to allocate the purchase price
to the assets acquired and liabilities assumed. Sprint conducted
impairment tests, and as a result, the estimated fair values of the
Sprint trade name and the Wireline property, plant and equipment
were less than the respective carrying amounts and impairment
losses were recognized.
3. Reasons for Not Recognizing an Impairment Loss
Related to Sprint in the Company’s Consolidated Financial
Statements
In the Company’s consolidated financial statements (under
IFRSs), an impairment loss related to Sprint was not recognized in
the third quarter due to the following reasons.
The Company has treated Sprint as a single cash generating unit
since its acquisition in July 2013. Under IFRSs adopted by the
Company, assets in cash-generating units are tested for impairment
together as opposed to at the individual asset level or at a lower
level asset grouping.
The Company determined that the assets of Sprint might be
impaired due to the above facts and conducted an impairment test in
the third quarter. As a result of this impairment test, an
impairment loss was not recognized in the Company’s consolidated
financial statements as the estimated fair value of the Sprint
cash-generating unit exceeded the carrying amount.
[Notes]
*1 Calculated at exchange rate of USD = JPY 120.55 as of
December 31, 2014.
*2 Under US GAAP, the smallest unit that generates independent
cash flows is referred to as an “asset group.” Since an “asset
group” is similar to a “cash-generating unit” in IFRSs, “asset
group” is referred to as “cash-generating unit” in this press
release.
About SoftBank Corp.
SoftBank Corp. (TOKYO:9984), through its subsidiaries and
associates, offers a comprehensive range of advanced mobile
communications, fixed-line communications and Internet services
around the world. With Sprint joining in July 2013, the SoftBank
Group became a leading global carrier that now has over 100 million
subscribers. Maximizing synergies across its Group companies
worldwide, SoftBank aspires to realize lifestyle innovation through
IT. SoftBank is also encouraging the adoption of clean and safe
energy through its business activities. To learn more, please visit
http://www.softbank.jp/en/corp/
SoftBank Corp.:SoftBank Corporate Communications
(Japan)+81.3.6889.2300sbpr@softbank.co.jporJim Barron / Megan
Bouchier (U.S.)+1.212.687.8080
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