Sprint - Nextel 2008 Annual Report Download - page 55

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exposure to optimize consolidated cash flow. We use foreign currency derivatives to hedge our foreign currency
exposure related to settlement of international telecommunications access charges and the operation of our
international subsidiaries. The dollar equivalent of our net foreign currency payables from international
settlements was $4 million and the net foreign currency receivables from international operations was $5 million
as of December 31, 2009. The potential immediate pre-tax loss to us that would result from a hypothetical 10%
change in foreign currency exchange rates based on these positions would be insignificant.
Equity Risk
We are exposed to market risk as it relates to changes in the market value of our investments. We invest
in equity instruments of public and private companies for operational and strategic business purposes. These
securities are subject to significant fluctuations in fair market value due to volatility of the stock market and
industries in which the companies operate. These securities, which are classified in investments and short-term
investments on the consolidated balance sheets, include equity method investments, such as our investment in
Clearwire, investments in private securities, and available-for-sale securities.
In certain business transactions, we are granted warrants to purchase the securities of other companies at
fixed rates. These warrants are supplemental to the terms of the business transaction and are not designated as
hedging instruments.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements required by this item begin on page F-1 of this annual report on
Form 10-K and are incorporated herein by reference. The financial statements of Clearwire, as required under
Regulation S-X, are filed pursuant to Item 15 of this annual report on Form 10-K and incorporated herein by
reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Not applicable.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Disclosure controls are procedures that are designed with the objective of ensuring that information
required to be disclosed in our reports under the Securities Exchange Act of 1934, such as this Form 10-K, is
reported in accordance with the SEC’s rules. Disclosure controls are also designed with the objective of ensuring
that such information is accumulated and communicated to management, including the Chief Executive Officer
and Chief Financial Officer, to allow timely decisions regarding required disclosure.
In connection with the preparation of this Form 10-K as of December 31, 2009, under the supervision
and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer,
we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and
procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
design and operation of the disclosure controls and procedures were effective as of December 31, 2009 in
providing reasonable assurance that information required to be disclosed in reports we file or submit under the
Securities Exchange Act of 1934 is accumulated and communicated to management, including the Chief
Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure and in
providing reasonable assurance that the information is recorded, processed, summarized and reported within the
time periods specified in the SEC’s rules and forms.
Internal controls over our financial reporting continue to be updated as necessary to accommodate
modifications to our business processes and accounting procedures. There have been no changes in our internal
control over financial reporting that occurred during the fourth quarter 2009 that have materially affected, or are
reasonably likely to materially affect, our internal control over financial reporting.
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