Sprint - Nextel 2012 Annual Report Download - page 67

Table of Contents
About 96% of our debt as of December 31, 2012 was fixed - rate debt. While changes in interest rates impact the fair value of this debt, there
is no impact to earnings and cash flows because we intend to hold these obligations to maturity unless market and other conditions are favorable.
We perform interest rate sensitivity analyses on our variable rate debt. These analyses indicate that a one percentage point change in
interest rates would have an annual pre
- tax impact of $10 million on our consolidated statements of operations and cash flows for the year ended
December 31, 2012 . We also perform a sensitivity analysis on the fair market value of our outstanding debt. A 10% decline in market interest rates
would cause an
$844 million increase in the fair market value of our debt to $29.3 billion .
Foreign Currency Risk
We may enter into forward contracts and options in foreign currencies to reduce the impact of changes in foreign exchange rates. Our
foreign exchange risk management program focuses on reducing transaction 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 receivables from international settlements was $26 million and the net
foreign currency receivables from international operations was less than
$1 million as of December 31, 2012 . 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 less than
$3 million .
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
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 on the consolidated balance
sheets, primarily include equity method investments, such as our investment in Clearwire 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.
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 included in Item 15 of this annual report on Form 10 - K
and incorporated herein by reference.
None.
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 Annual Report on 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 Annual Report on Form 10 - K, 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, 2012 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.
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Item 8.
Financial Statements and Supplementary Data
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Item 9A.
Controls and Procedures