AT&T Wireless 2015 Annual Report Download - page 64

Notes to Consolidated Financial Statements (continued)
Dollars in millions except per share amounts
62 | AT&T INC.
NOTE 10. FAIR VALUE MEASUREMENTS AND DISCLOSURE
The Fair Value Measurement and Disclosure framework provides a three-tiered fair value hierarchy that gives highest priority
to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority
to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:
Level 1 Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active
markets that we have the ability to access.
Level 2 Inputs to the valuation methodology include:
• Quoted prices for similar assets and liabilities in active markets.
• Quoted prices for identical or similar assets or liabilities in inactive markets.
• Inputs other than quoted market prices that are observable for the asset or liability.
• Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
• Fair value is often based on developed models in which there are few, if any, external observations.
The fair value measurements level of an asset or liability within
the fair value hierarchy is based on the lowest level of any
input that is significant to the fair value measurement.
Valuation techniques used should maximize the use of
observable inputs and minimize the use of unobservable inputs.
The valuation methodologies described above may
produce a fair value calculation that may not be indicative
of future net realizable value or reflective of future fair
values. We believe our valuation methods are appropriate
and consistent with other market participants. The use of
different methodologies or assumptions to determine the
fair value of certain financial instruments could result in
a different fair value measurement at the reporting date.
There have been no changes in the methodologies used
since December 31, 2014.
Long-Term Debt and Other Financial Instruments
The carrying amounts and estimated fair values of our long-term debt, including current maturities and other financial
instruments, are summarized as follows:
December 31, 2015 December 31, 2014
Carrying Fair Carrying Fair
Amount Value Amount Value
Notes and debentures1 $124,847 $128,993 $81,399 $90,367
Bank borrowings 4 4 5 5
Investment securities 2,704 2,704 2,735 2,735
1 Includes credit agreement borrowings.
The carrying value of debt with an original maturity of less than one year approximates fair value. The fair value measurements
used for notes and debentures are considered Level 2 and are determined using various methods, including quoted prices for
identical or similar securities in both active and inactive markets.
Following is the fair value leveling for available-for-sale securities and derivatives as of December 31, 2015, and December
31, 2014:
December 31, 2015
Level 1 Level 2 Level 3 Total
Available-for-Sale Securities
Domestic equities $1,132 $ — $ — $ 1,132
International equities 569 — — 569
Fixed income bonds — 680 — 680
Asset Derivatives1
Interest rate swaps — 136 — 136
Cross-currency swaps — 556 — 556
Foreign exchange contracts — 3 — 3
Liability Derivatives1
Cross-currency swaps — (3,466) — (3,466)
1 Derivatives designated as hedging instruments are reflected as “Other assets,” “Other noncurrent liabilities” and, for a portion of interest rate swaps, “Other current assets”
in our consolidated balance sheets.