Clearwire 2008 Annual Report Download - page 72

c
osts assoc
i
ate
d
w
i
t
h
a
d
vert
i
s
i
ng, tra
d
es
h
ows, pu
bli
cre
l
at
i
ons, promot
i
ons an
d
ot
h
er mar
k
et
d
eve
l
opment
p
ro
g
rams and third-part
y
professional service fees
.
(
In thousands, except percentages
)
2008 200
7
D
o
ll
a
r
C
hang
e
P
ercentag
e
C
hange
Y
ear
E
n
d
e
d
December 31
,
Se
lli
ng, genera
l
an
d
a
d
m
i
n
i
strat
i
ve expense ........
$
150
,
940
$
99
,
490
$
51
,
450 51.7%
T
he increase is consistent with the additional resources, headcount and shared services that we have utilized a
s
we continue to build and launch our mobile WiMAX services, especially the higher sales and marketing and
c
ustomer care expenses
i
n support o
f
t
h
e
l
aunc
h
o
f
t
h
eBa
l
t
i
more mar
k
et. T
h
e
i
ncrease
i
n emp
l
oyee compensat
i
o
n
an
d
re
l
ate
d
costs, w
hi
c
hi
nc
l
u
d
es
f
ac
ili
t
i
es costs,
i
spr
i
mar
ily d
ue to t
h
e acqu
i
s
i
t
i
on o
f
O
ld
C
l
earw
i
re an
d
a
ll
o
fi
ts
e
mployees. Employee headcount increased at December 31, 2008 to approximately 1,63
5
employees compared to
approximately 520 employees at December 31, 2007. Our focus in 2009 and 2010 will be on development an
d
e
xpans
i
on o
f
our w
i
re
l
ess 4G networ
k
. We expect t
h
at cost per
g
ross a
ddi
t
i
on, w
hi
c
h
we re
f
er to as CPGA, w
ill
i
ncrease as new markets are launched, consistent with our past operatin
g
experiences
.
D
epreciation and amortizatio
n
(
In thousands, except percenta
g
es
)
2008 200
7
Dollar
C
han
ge
P
ercentag
e
C
han
g
e
Y
ear Ended
December 31,
D
eprec
i
at
i
on an
d
amort
i
zat
i
o
n
...................
$
58
,
146
$
3
,
979
$
54
,
167 1361.3
%
D
epreciation and amortization expense primaril
y
represents the depreciation recorded on network assets tha
t
are
b
e
i
ng p
l
ace
di
nto serv
i
ce as we cont
i
nue to
b
u
ild
an
dd
eve
l
op our networ
k
s. Dur
i
ng t
h
e year en
d
e
d
Decem
b
er 31
,
2
007, su
b
stant
i
a
ll
ya
ll
o
f
t
h
e cap
i
ta
l
expen
di
tures represente
d
construct
i
on wor
ki
n progress an
d
t
h
ere
f
ore very
li
tt
le
depreciation was recorded. In 2008, assets were placed into service as the
y
were available for use and have bee
n
depreciated accordingly. The increase is also due to depreciation and amortization expense recorded on assets
acqu
i
re
df
rom O
ld
C
l
earw
i
re
f
or t
h
e per
i
o
d
a
f
ter t
h
ec
l
os
i
ng o
f
t
h
e Transact
i
ons on Novem
b
er 28, 2008.
D
e
p
rec
i
at
i
on an
d
amort
i
zat
i
on w
ill i
ncrease as a
ddi
t
i
ona
l
mo
bil
eW
i
MAX mar
k
ets are
l
aunc
h
e
d
an
dpl
ace
di
nto
s
ervice during 2009
.
Spectrum lease expens
e
(
In thousands, except percentages
)
2008 200
7
D
o
ll
a
r
C
hang
e
P
ercentag
e
Change
Y
ear Ended
D
ecember
31,
Spectrum
l
ease expens
e
......................
.
$
90
,
032
$
60
,
051
$
29
,
981 49.9%
T
otal spectrum lease expense increased as a direct result of a si
g
nificant increase in the number of spectru
m
leases held b
y
us as well as the acquisition of spectrum leases as part of the Transactions. With the si
g
nifican
t
n
um
b
er o
f
new spectrum
l
eases an
d
t
h
e
i
ncreas
i
ng cost o
f
t
h
ese
l
eases, we expect our spectrum
l
ease expense t
o
i
ncrease. As we rene
g
otiate these leases, the
y
are replaced with new leases, usuall
y
at a hi
g
her lease cost per month
,
b
ut with lon
g
er terms. Man
y
of the leases acquired as part of the Transactions were entered into before 2007 and th
e
p
er
i
o
di
c payments
b
e
f
ore January 1, 2007 were
f
un
d
e
db
y Spr
i
nt. Spectrum expense
f
or t
h
ese contracts was
$21 million and $35 million in 2005 and 2006, respectivel
y
.
T
ransaction re
l
ate
d
ex
p
enses
(
In thousands, except percentages
)
2008 200
7
D
olla
r
C
hang
e
Percenta
ge
Change
Year Ende
d
December
31,
T
ransaction related ex
p
ense
s
.......................
$
82,960 $— $82,960 N/M
T
ransaction related expenses include a one-time
$
80.6 million settlement loss resultin
g
from the termination of
s
pectrum
l
ease a
g
reements
i
nw
hi
c
h
Spr
i
nt
l
ease
d
spectrum to O
ld
C
l
earw
i
re pr
i
or to t
h
e Transact
i
ons. Be
f
ore t
he
Closing, Sprint leased spectrum to Old Clearwire through various spectrum lease agreements. As part of the
60