Sprint - Nextel 2015 Annual Report Download - page 108

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
operations. Changes in the fair value of the DPP did not have a material impact on our consolidated statements of operations for the year ended March 31, 2016 .
Changes to the unobservable inputs used to determine the fair value did not and are not expected to result in a material change in the fair value of the DPP.
WirelessServiceReceivableSales
On March 31, 2015, we sold approximately $1.8 billion of wireless service receivables in exchange for $500 million in cash (reflected within the
change in accounts and notes receivable on the consolidated statement of cash flows) and a DPP of $1.3 billion , with an estimated fair value of $1.2 billion . In
accordance with our rights under the Receivables Facility, in April 2015 Sprint elected to temporarily suspend sales of receivables by the SPEs and remitted
payments received to the Purchasers to reduce the funded amount of $500 million to zero.
In September 2015, we sold wireless service receivables of approximately $1.9 billion in exchange for $400 million in cash and $1.5 billion of DPP,
with an estimated fair value of $1.4 billion . In October 2015 and January 2016, we elected to receive $300 million and $125 million , respectively, of cash, which
reduced the total amount of the DPP due to Sprint. During the period from our initial sale in September to March 31, 2016 , cash collections on previously sold
wireless service receivables exceeded sales of new receivables such that the DPP decreased by approximately $207 million . As of March 31, 2016 , the total
amount available under the Receivables Facility associated with wireless service receivables was $43 million and the total fair value of the associated DPP was
$760 million .
InstallmentReceivableSales
In October 2015, we sold installment receivables of approximately $1.2 billion under the Receivables Facility in exchange for $100 million in cash and
$1.1 billion of DPP, with an estimated fair value of $1.0 billion . In November 2015, we elected to receive $400 million of cash, which reduced the total amount of
the DPP due to Sprint. During the period from our initial sale in October to March 31, 2016 , cash collections on previously sold installment receivables exceeded
sales of new receivables such that the DPP decreased by approximately $227 million . As of March 31, 2016 , there is no remaining availability under the
Receivables Facility associated with installment receivables and the total fair value of the associated DPP was $395 million .
FutureLeaseReceivableSales
In February and March 2016, we sold approximately $1.2 billion in total of future lease receivables in exchange for cash proceeds of $600 million . The
difference between the amount sold and the cash received represents additional collateral to the lender. The sale was accounted for as a financing and the $600
million cash proceeds were, accordingly, reflected as debt in our consolidated balance sheets. As of March 31, 2016 , the amount available under the Receivables
Facility associated with future lease receivables was $51 million .
Continuing Involvement
Sprint has continuing involvement in the receivables sold by the SPEs to the Purchasers because a subsidiary of Sprint services the receivables.
Additionally, in accordance with the Receivables Facility, Sprint is required to repurchase aged receivables, or those that will be written off in accordance with
Sprint's credit and collection policies, both of which result from subscriber non-payment. Sprint recognizes assets and liabilities, as applicable, with respect to its
continuing involvement at fair value. Sprint's continuing involvement did not have a material impact on its financial statements as of March 31, 2016 .
Variable Interest Entity
Sprint determined that certain of the Purchasers, which are multi-seller asset-backed commercial paper conduits (Conduits) are considered variable
interest entities because they lack sufficient equity to finance their activities. Sprint's interest in the service and installment receivables purchased by the Conduits,
which is comprised of the DPP due to Sprint, is not considered a variable interest because it is in assets that represent less than 50% of the total activity of the
Conduits.
Handset Sale-Leaseback Tranche 1
In November 2015, Sprint entered into agreements (Handset Sale-Leaseback Tranche 1) to sell and lease-back certain leased devices excluded from our
Receivables Facility, which allowed us to monetize the devices including the device residual values. Under the agreements with Mobile Leasing Solutions, LLC
(MLS), a company formed by a group of equity investors, including SoftBank, Sprint maintains the customer lease, will continue to collect and record lease
revenue from the
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