Sprint - Nextel 2013 Annual Report Download - page 142

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash and cash equivalents, accounts and notes receivable, and accounts payable are carried at cost, which approximates fair value. Short
- term
investments (consisting primarily of time deposits, commercial paper, and Treasury securities), totaling approximately $1.1 billion and $1.8 billion as of the
Successor year ended
December 31, 2013 and Predecessor year ended December 31, 2012 , respectively, are recorded at amortized cost, and the respective
carrying amounts approximate fair value using quoted prices in active markets. The fair value of marketable equity securities totaling
$49 million as of the
Successor year ended
December 31, 2013 and $45 million as of the Predecessor year ended December 31, 2012 , respectively, are measured on a recurring basis
using quoted prices in active markets.
The estimated fair value of the majority of our current and long
- term debt, excluding the Bond and our credit facilities, is determined based on quoted
prices in active markets or by using other observable inputs that are derived principally from or corroborated by observable market data. At March 31, 2013, the
outstanding carrying value under our credit facilities, which totaled
$945 million (Predecessor) and approximated fair value at the time of transfer, was transferred
out of estimated fair value using observable inputs and into estimated fair value using unobservable inputs due to the lack of an available pricing source. To
estimate the fair value of Bond issued by Sprint Communications, Inc. to Starburst II (see Note 3. Significant Transactions) and its related bond derivative, a
convertible bond pricing model was used based on the relevant interest rates, conversion feature and other significant inputs not observable in the market. The
significant unobservable inputs used in the fair value measurement of the Bond and its related bond derivative are the credit condition of the companies,
probability and timing of conversion, and discount for lack of marketability. Significant increases or decreases in any of those inputs, in isolation, would result
or could have resulted in a significantly lower or higher fair value measurement. Immediately preceding the close of the SoftBank Merger on July 10, 2013, the
Bond was converted into shares of Sprint Communications. As a result, there is no balance for the Bond or its related bond derivative as of
December 31, 2013 .
The following table presents carrying amounts and estimated fair values of current and long
- term debt, and the available - for - sale bond investment
and its related bond derivative:
F - 24
Note 5.
Financial Instruments
Predecessor
Carrying amount at December
31, 2012
Estimated Fair Value Using Input Type
Quoted prices in active
markets
Observable
Unobservable
Total estimated fair
value
(in millions)
Current and long - term debt
$
23,569
$
17,506
$
6,118
$
3,104
$
26,728
Successor
Carrying amount at December
31, 2013
Estimated Fair Value Using Input Type
Quoted prices in active
markets
Observable
Unobservable
Total estimated fair
value
(in millions)
Current and long - term debt
$
32,485
$
27,000
$
5,356
$
1,389
$
33,745
Carrying amount at December
31, 2012
Estimated Fair Value Using Input Type
Quoted prices in active
markets
Observable
Unobservable
Total estimated fair
value
(in millions)
Bond investment
$
2,929
$
—
$
—
$
2,929
$
2,929
Bond derivative
$
175
$
—
$
—
$
175
$
175