Sprint - Nextel 2014 Annual Report Download - page 180

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Table of Contents
Index to Consolidated Financial Statements
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
F-97
The following table presents the change in Level 3 financial assets and liabilities measured on a recurring basis
for the year ended December 31, 2012 (in thousands):
January 1,
2012
Acquisitions,
Issuances
and
Settlements
Net
Unrealized
Gains
(Losses)
Included in
Earnings
Net Unrealized
Gains (Losses)
Included in
Accumulated
Other
Comprehensive
Income December
31, 2012
Net Unrealized
Gains (Losses)
Included in
2011 Earnings
Relating to
Instruments
Held at
December 31,
2012
Other assets:
Derivatives $ 209 $ — $ 2 (1) $ — $ 211 $ 2
Other current liabilities:
Derivatives $ (8,240) $ 1,553 $ 1,354 (1) $ — $ (5,333) $ 1,778
______________________________________
(1) Included in Gain on derivative instruments in the consolidated statements of operations.
The following is the description of the fair value for financial instruments we hold that are not subject to fair
value recognition.
Debt Instruments
To estimate the fair value of the 2015 Senior Secured Notes, the 2016 Senior Secured Notes, the Second-
Priority Secured Notes and the Exchangeable Notes, we used the average indicative price from several market
makers.
A level of subjectivity is applied to estimate the fair value of the Sprint Notes. We use a market approach,
benchmarking the price of the Sprint Notes to our Exchangeable Notes, adjusting for differences in critical terms
such as tenor and strike price of the options as well as liquidity.
To estimate the fair value of the Vendor Financing Notes, we used an income approach based on the
contractual terms of the notes and market-based parameters such as interest rates. A level of subjectivity is applied to
estimate the discount rate used to calculate the present value of the estimated cash flows.
The following table presents the carrying value and the approximate fair value of our outstanding debt
instruments at July 9, 2013 and 2012 (in thousands):
July 9, 2013 December 31, 2012
Carrying
Value Fair Value Carrying
Value Fair Value
Notes:
2015 Senior Secured Notes $ 2,923,872 $ 3,167,127 $ 2,919,594 $ 3,180,238
2016 Senior Secured Notes $ 300,000 $ 412,500 $ 300,000 $ 414,375
Second-Priority Secured Notes $ 500,000 $ 583,125 $ 500,000 $ 591,565
Exchangeable Notes(1) $ 476,241 $ 696,164 $ 464,200 $ 689,598
Sprint Notes(2) $ 12,735 $ 176,713 $ — $ —
Vendor Financing Notes $ 31,982 $ 32,458 $ 32,005 $ 31,802
_______________________________________
(1) Carrying value as of July 9, 2013 and December 31, 2012 is net of $153.0 million and $165.1 million discount, respectively,
arising from the separation of the Exchange Options from the debt host instrument. The fair value of the Exchangeable