Sprint - Nextel 2014 Annual Report Download - page 36

Table of Contents
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Interest Expense
Successor Year Ended March 31, 2015 and Successor Year Ended December 31, 2013
Interest expense increased $1.1 billion, or 123%, in the year ended March 31, 2015 compared to the year ended
December 31, 2013 primarily due to interest associated with debt of $9.0 billion issued in September and December 2013 as
well as comparing a full calendar year to a shortened Post-merger period. The effective interest rate, which includes
capitalized interest, on the weighted average long-term debt balance of $32.7 billion was 6.4% in the year ended March 31,
2015 compared to 7.7% for the Combined year ended December 31, 2013. The decrease in the effective interest rate is
primarily due to interest expense of $247 million recognized in the Combined year ended December 31, 2013 related to the
beneficial conversion feature on the $3.1 billion Bond. See “Liquidity and Capital Resources” for more information on the
Company's financing activities.
Successor Three-Month Transition Period Ended March 31, 2014 and Predecessor Three-Month Period Ended
March 31, 2013
Interest expense increased $84 million, or 19%, in the Successor three-month transition period ended March 31,
2014 compared to the same Predecessor period in 2013, primarily due to interest associated with debt of $9.0 billion issued in
September and December 2013 and the debt assumed as a result of the Clearwire acquisition. This was partially offset by
premium amortization which was the result of our debt being revalued in connection with the SoftBank merger. The effective
interest rate, which includes capitalized interest, on the weighted average long-term debt balance of $32.9 billion and $24.5
billion was 6.4% and 7.3% for the Successor three-month transition period ended March 31, 2014 and the Predecessor three-
month period ended March 31, 2013, respectively. See “Liquidity and Capital Resources” for more information on the
Company's financing activities.
Successor Year Ended December 31, 2013 and Predecessor Year Ended December 31, 2012
Interest expense decreased $510 million, or 36%, for the Successor year ended December 31, 2013 compared to
the Predecessor year ended December 31, 2012. The decrease was primarily due to comparing a shortened Post-merger
period to a Predecessor period representing a full calendar year. This decrease was partially offset by interest expense
increases as a result of the debt assumed in the Clearwire Acquisition and new debt issuances of $9.0 billion in September
and December 2013. See "Liquidity and Capital Resources" for more information on the Company's financing activities.
Taking into account the Clearwire and SoftBank transactions, the Company's consolidated debt balance was
approximately $33.0 billion as of December 31, 2013. The effective interest rate, which includes capitalized interest, for the
Combined year ended December 31, 2013 was 7.7% based on a weighted average long-term debt balance of $27.5 billion.
The effective interest rate, which includes capitalized interest, on the weighted average long-term debt balances of $22.0
billion was 7.8% for the Predecessor year ended December 31, 2012. See "Liquidity and Capital Resources" for more
information on the Company's financing activities.
Combined Year Ended December 31, 2013 and Predecessor Year Ended December 31, 2012
In addition to the explanations above, the interest expense increase for the Combined year ended December 31,
2013 compared to the Predecessor year ended December 31, 2012 was partially due to reductions in the amount of interest
capitalized related to spectrum licenses.
Equity in Losses of Unconsolidated Investments, net
As a result of the Clearwire Acquisition on July 9, 2013 and the resulting consolidation of Clearwire results of
operations into the accounts of the Company, the Successor period results of operations do not reflect any equity in losses of
unconsolidated investments. Equity in losses from Clearwire were $482 million, $202 million, and $1.1 billion for the
Predecessor 190-day period ended July 9, 2013, Predecessor unaudited three-month period ended March 31, 2013, and the
Predecessor year ended December 31, 2012, respectively. The equity in losses from our investment in Clearwire consisted of
our share of Clearwire's net loss and other adjustments, if any, such as non-cash impairment of our investment, gains or losses
associated with the dilution of our ownership interest resulting from Clearwire's equity issuances, derivative losses associated
with the change in fair value of the embedded derivative included in exchangeable notes between Clearwire and Sprint, and
other items recognized by Clearwire Corporation that did not affect our economic interest. Sprint's equity in losses for the
Predecessor 190-day period ended July 9, 2013, include a $65 million derivative loss associated with the change in fair value
of the embedded derivative. Equity in losses from Clearwire for the year ended December 31, 2012 included $204 million in
pre-tax impairment reflecting Sprint's reduction in the carrying value of its investment in Clearwire to an estimated fair value
as well as charges of approximately $41 million, which were associated with Clearwire's write-off of certain network and
other assets that no longer met its strategic plans.