Clearwire 2008 Annual Report Download - page 63

Common Stoc
k
. Spr
i
nt an
d
t
h
e Investors, ot
h
er t
h
an Goo
gl
e,
h
o
ld
t
h
e
i
r econom
i
cr
igh
ts t
h
rou
gh
owners
hi
po
f
Clearwire Communications Class B Common Interests. In exchan
g
e for its investment, Goo
g
le initiall
y
received
2
5
million shares of
C
lear
w
ire
C
lass A
C
ommon
S
tock
.
I
n addition, at the Closing, we entered into several commercial agreements with Sprint and certain of the
Investors relating to, among other things, access rights to towers that Sprint owns or leases, resales by us and certain
Investors o
fb
un
dl
e
d
secon
dg
enerat
i
on w
i
re
l
ess commun
i
cat
i
ons, w
hi
c
h
we re
f
er to as 2G, an
d
t
hi
r
dg
enerat
i
on
wireless communications, which we refer to as 3G services, from Sprint, resales b
y
Sprint and certain Investors o
f
our fourth generation wireless broadband, which we refer to as 4G, services, most favored reseller status wit
h
r
espect to econom
i
can
d
non-econom
i
c terms o
f
certa
i
n serv
i
ce a
g
reements, co
ll
ect
i
ve
d
eve
l
opment o
f
new 4
G
s
ervices, creation of desktop and mobile applications on the Clearwire network, the embeddin
g
of WiMAX chip
s
i
nto various Clearwire network devices and the develo
p
ment of Internet services and
p
rotocols. As a result of ou
r
e
nter
i
ng
i
nto certa
i
no
f
t
h
e commerc
i
a
l
agreements w
i
t
h
Spr
i
nt an
d
t
h
e Investors
i
n connect
i
on w
i
t
h
t
h
e Trans-
actions, we expect to increase our distribution opportunities, thereb
y
permittin
g
us to expand our subscriber base
and increase revenues
.
B
usiness
S
e
g
ments
We compl
y
with the requirements of Statement of Financial Accountin
g
Standards, which we refer to as SFAS,
No. 131
,
D
isc
l
osures a
b
out Segments of an Enterprise an
d
Re
l
ate
d
Information
,
w
hi
c
h
esta
bli
s
h
es annua
l
an
d
i
nterim reportin
g
standards for an enterprise’s operatin
g
se
g
ments and related disclosures about its products
,
s
ervices,
g
eo
g
raphic areas and ma
j
or customers. Operatin
g
se
g
ments are defined as components of an enterprise fo
r
w
hi
c
h
separate
fi
nanc
i
a
li
n
f
ormat
i
on
i
sava
il
a
bl
et
h
at
i
seva
l
uate
d
regu
l
ar
l
y
b
yt
h
ec
hi
e
f
operat
i
ng
d
ec
i
s
i
on ma
k
er,
which we refer to as the CODM, in decidin
g
how to allocate resources and in assessin
g
performance. Operatin
g
s
e
g
ments can be a
gg
re
g
ated for se
g
ment reportin
g
purposes so lon
g
as certain a
gg
re
g
ation criteria are met. W
e
d
e
fi
ne t
h
e CODM as our C
hi
e
f
Execut
i
ve O
ffi
cer. As our
b
us
i
ness cont
i
nues to mature
,
we assess
h
ow we v
i
ew an
d
operate our
b
us
i
ness. Base
d
on t
h
e nature o
f
our operat
i
ons, we mar
k
et a pro
d
uct t
h
at
i
s
b
as
i
ca
lly
t
h
e same pro
d
uc
t
across our Un
i
te
d
States an
di
nternat
i
ona
l
mar
k
ets. Our CODM assesses an
d
rev
i
ews t
h
e Compan
y
’s per
f
ormanc
e
and makes resource allocation decisions at the domestic and international levels. In 2008
,
we have identified two
r
eporta
bl
ese
g
ments: t
h
eUn
i
te
d
States an
d
t
h
e Internat
i
ona
lb
us
i
ness. In 2007, we on
ly h
a
d
one reporta
bl
e
b
us
i
nes
s
s
e
g
ment: t
h
eUn
i
te
d
States, as we
h
a
d
no
i
nternat
i
ona
l
operat
i
ons.
Critical Accountin
g
Policie
s
Our
di
scuss
i
on an
d
ana
ly
s
i
so
f
our
fi
nanc
i
a
l
con
di
t
i
on an
d
resu
l
ts o
f
operat
i
ons are
b
ase
d
upon our
fi
nanc
i
a
l
s
tatements, which have been prepared in accordance with accounting principles generally accepted in the United
S
tates. T
h
e preparat
i
on o
f
t
h
ese conso
lid
ate
dfi
nanc
i
a
l
statements requ
i
res us to ma
k
e est
i
mates an
dj
u
dg
ments t
h
a
t
a
ff
ect t
h
e reporte
d
amounts o
f
assets,
li
a
bili
t
i
es, revenues an
d
expenses, an
d
re
l
ate
ddi
sc
l
osure o
f
cont
i
n
g
ent assets
and liabilities. On an on
g
oin
g
basis, we evaluate our estimates used, includin
g
those related to investments, lon
g-
li
ve
d
assets, goo
d
w
ill
an
di
ntang
ibl
e assets,
i
nc
l
u
di
ng spectrum, s
h
are-
b
ase
d
compensat
i
on, an
dd
e
f
erre
d
tax asset
v
a
l
uat
i
on a
ll
o
w
ance
.
Our account
i
ng po
li
c
i
es requ
i
re management to ma
k
e comp
l
ex an
d
su
bj
ect
i
ve
j
u
d
gments. By t
h
e
i
r nature,
t
h
ese
j
u
dg
ments are su
bj
ect to an
i
n
h
erent
d
e
g
ree o
f
uncerta
i
nt
y
.T
h
ese
j
u
dg
ments are
b
ase
d
on our
hi
stor
i
ca
l
e
xperience, terms of existing contracts, observance of trends in the industry, information provided by our customers
and information available from other outside sources, as appropriate. Additionally, changes in accounting estimates
are reasona
bly lik
e
ly
to occur
f
rom per
i
o
d
to per
i
o
d
.T
h
ese
f
actors cou
ld h
ave a mater
i
a
li
mpact on our
fi
nanc
i
a
l
s
tatements, the presentation of our financial condition, chan
g
es in financial condition or results of operations
.
I
n consu
l
tat
i
on w
i
t
h
our
b
oar
d
o
fdi
rectors, we
h
ave
id
ent
ifi
e
d
t
h
e
f
o
ll
ow
i
n
g
account
i
n
g
po
li
c
i
es t
h
at we
believe are ke
y
to an understandin
g
of our financial statements: revenue reco
g
nition; impairments of lon
g
-lived
51
CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
MANAGEMENT’
S
DI
S
CU
SS
ION AND ANALY
S
I
S
OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS —
(
Continued
)