Clearwire 2008 Annual Report Download - page 66

f
or
i
mpa
i
rment annua
lly
, or more
f
requent
ly
,
if
an event
i
n
di
cates t
h
at t
h
e asset m
igh
t
b
e
i
mpa
i
re
d
.We
h
a
d
n
o
i
mpairment of our indefinite lived intan
g
ible assets in an
y
of the periods presented.
Business Com
b
ination
s
We account for acquisitions occurrin
g
before Januar
y
1, 2009 usin
g
the purchase method in accordance with
S
FAS No. 141
,
B
usiness Com
b
inations
,
w
hi
c
h
we re
f
er to as SFAS No. 141. SFAS No. 141 requ
i
res t
h
at t
h
e tota
l
p
urchase
p
rice be allocated to the fair value of assets ac
q
uired and liabilities assumed based on their fair values a
t
t
he acquisition date, with amounts exceedin
g
the fair value bein
g
recorded as
g
oodwill. If the cost of the acquisitio
n
i
s
l
ess t
h
an t
h
e
f
a
i
rva
l
ue o
f
t
h
e net assets acqu
i
re
d
,t
h
e
diff
erence
i
sa
ll
ocate
d
to t
h
ee
li
g
ibl
e assets un
d
e
r
S
FAS No. 141. T
h
ea
ll
ocat
i
on process requ
i
res an ana
ly
s
i
so
f
acqu
i
re
dfi
xe
d
assets, contracts, an
d
cont
i
n
g
enc
i
es t
o
i
dentif
y
and allocate the excess of fair value over cost to the eli
g
ible assets acquired. Si
g
nificant mana
g
ement
judgment is required in estimating the fair value of assets acquired. The fair value estimates are based on futur
e
e
xpectat
i
ons an
d
assumpt
i
ons
d
eeme
d
reasona
bl
e
by
mana
g
ement,
b
ut are
i
n
h
erent
ly
uncerta
i
n. Our a
ll
ocat
i
on o
f
th
e purc
h
ase pr
i
ce to spec
ifi
c assets an
dli
a
bili
t
i
es
i
s
b
ase
d
upon customar
y
va
l
uat
i
on proce
d
ures an
d
tec
h
n
i
ques
.
P
urchase transactions are subject to purchase price allocation adjustments due to contingency resolution for up t
o
one year a
f
ter c
l
ose.
Share-Based Compensatio
n
We account
f
or our s
h
are-
b
ase
d
compensat
i
on
i
n accor
d
ance w
i
t
h
SFAS No. 123(R),
Sh
are-Base
d
Payment
,
which we refer to as SFAS No. 123(R), which requires the measurement and reco
g
nition of compensation expens
e
for all share-based awards made to emplo
y
ees and directors based on estimated fair values. We reco
g
niz
e
c
ompensat
i
on costs, net o
f
a
f
or
f
e
i
ture rate,
f
or t
h
ose s
h
ares expecte
d
to vest on a gra
d
e
d
vest
i
ng sc
h
e
d
u
l
eover
t
he requisite service period of the award, which is
g
enerall
y
the option vestin
g
term of four
y
ears. Goin
g
forward
,
s
tock-based compensation expenses ma
y
increase as we issue additional equit
y
-based awards to continue to attrac
t
an
d
reta
i
n
k
ey emp
l
oyees.
We issue incentive awards to our employees through stock-based compensation consisting of stock options an
d
r
estr
i
cte
d
stoc
k
un
i
ts, w
hi
c
h
we re
f
er to as RSUs. T
h
eva
l
ue o
f
RSUs
i
s
d
eterm
i
ne
d
us
i
ng t
h
e
f
a
i
rva
l
ue met
h
o
d,
w
hi
c
hi
nt
hi
s case,
i
s
b
ase
d
on t
h
e num
b
er o
f
s
h
ares
g
rante
d
an
d
t
h
e quote
d
pr
i
ce o
f
C
l
earw
i
re C
l
ass A Common
S
tock on the date of grant. In determining the fair value of stock options, we use the Black-Scholes valuation model,
which we refer to as BSM, to estimate the fair value of stock options which requires complex and judgmental
assumpt
i
ons
i
nc
l
u
di
n
g
est
i
mate
d
stoc
k
pr
i
ce vo
l
at
ili
t
y
an
d
emp
l
o
y
ee exerc
i
se patterns (expecte
d lif
eo
f
t
h
e opt
i
on)
.
The computation of expected volatilit
y
is based on an avera
g
e historical volatilit
y
from common shares of a
g
rou
p
o
f
our peers as we
ll
as our own vo
l
at
ili
ty. T
h
e expecte
d lif
eo
f
opt
i
ons grante
di
s
b
ase
d
on t
h
es
i
mp
lifi
e
d
ca
l
cu
l
at
i
o
n
o
f
expecte
d lif
e,
d
escr
ib
e
di
n SAB No. 107
,
S
h
are-Base
d
Payment,
d
ue to
l
ac
k
o
f
opt
i
on exerc
i
se
hi
story. I
f
any o
f
t
he assumptions used in the BSM chan
g
esi
g
nificantl
y
, share-based compensation expense ma
y
differ materiall
y
fo
r
f
uture grants as compare
d
to t
h
e current per
i
o
d
.
SFAS No. 123(R) also requires that we reco
g
nize compensation expense for onl
y
the portion of stock option
s
or RSUs t
h
at are expecte
d
to vest. T
h
ere
f
ore, we app
l
y est
i
mate
df
or
f
e
i
ture rates t
h
at are
d
er
i
ve
df
rom
hi
stor
i
ca
l
e
mplo
y
ee termination behavior. If the actual number of forfeitures differs from those estimated b
y
mana
g
ement,
additional ad
j
ustments to stock-based compensation expense ma
y
be required in future periods.
A
ccounting
f
or S
p
ectrum Licenses an
d
Leases
We have three t
y
pes of arran
g
ements for spectrum licenses in the United States: owned spectrum licenses with
i
n
d
e
fi
n
i
te
li
ves, owne
d
spectrum
li
censes w
i
t
hd
e
fi
n
i
t
i
ve
li
ves an
d
spectrum
l
eases.
54
CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
MANA
G
EMENT’
S
DI
SCUSS
I
O
N AND ANALY
S
I
SO
F FINAN
C
IAL
CO
NDITI
O
N
A
ND RESULTS OF OPERATIONS —
(
Continued
)