Clearwire 2008 Annual Report Download - page 92

CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
N
OTE
S
TO CON
S
OLIDATED FINANCIAL
S
TATEMENT
S
1. Descr
ip
t
i
on o
f
Bus
i
nes
s
We starte
d
operat
i
ons on January 1, 2007 as a
d
eve
l
opmenta
l
stage company represent
i
ng a co
ll
ect
i
on o
f
assets, related liabilities and activities accounted for in various le
g
al entities that were wholl
y
-owned subsidiaries o
f
S
print Nextel Corporation, which we refer to as Sprint or the Parent. The nature of the assets held b
y
the Sprint le
g
a
l
e
ntities was primarily 2.5 GHz Federal Communications Commission, which we refer to as FCC, licenses an
d
c
erta
i
n propert
y
,p
l
ant an
d
equ
i
pment re
l
ate
d
to t
h
eWor
ld
w
id
e Interopera
bili
t
y
o
f
M
i
crowave Access, w
hi
c
h
we
r
efer to as WiMAX, network. The acquisition of the assets was funded b
y
the Parent. As Sprint had acquired
s
ignificant amounts of FCC licenses on our behalf in the past, these purchases have been presented as part of the
open
i
n
gb
us
i
ness equ
i
t
y
as pr
i
nc
i
pa
l
operat
i
ons
did
not commence unt
il
Januar
y
1, 2007, at w
hi
c
h
t
i
me t
he
operat
i
ons qua
lifi
e
d
as a
b
us
i
ness pursuant to Ru
l
e 11-01(
d
)o
f
Re
g
u
l
at
i
on S-X. From Januar
y
1, 2007 t
h
rou
gh
November 28, 2008, we conducted our business as the WiMAX O
p
erations of S
p
rint, which we refer to as the S
p
rin
t
Wi
MAX Bus
i
ness, w
i
t
h
t
h
eo
bj
ect
i
ve o
fd
eve
l
op
i
n
g
anext
g
enerat
i
on w
i
re
l
ess
b
roa
db
an
d
networ
k.
On Ma
y
7, 2008, Spr
i
nt announce
d
t
h
at
i
t
h
a
d
entere
di
nto a
d
e
fi
n
i
t
i
ve a
g
reement w
i
t
h
t
h
e
l
e
g
ac
y
C
l
earw
i
re
Corporation, which we refer to as Old Clearwire, to combine both of their next
g
eneration wireless broadban
d
businesses to form a new independent compan
y
to be called Clearwire Corporation, which we refer to as Clearwire
.
In a
ddi
t
i
on,
fi
ve
i
n
d
epen
d
ent partners,
i
nc
l
u
di
ng Inte
l
Corporat
i
on t
h
roug
h
Inte
l
Cap
i
ta
l
, Goog
l
e Inc., Comcast
Corporation, Time Warner Cable Inc. and Bri
g
ht House Networks LLC, collectivel
y
, whom we refer to as the
Investors, a
g
reed to invest $3.2 billion in Clearwire and its subsidiar
y
Clearwire Communications LLC, which we
r
e
f
er to as C
l
earw
i
re Commun
i
cat
i
ons. On Novem
b
er 28, 2008, w
hi
c
h
we re
f
er to as t
h
eC
l
os
i
ng, O
ld
C
l
earw
i
re an
d
t
he S
p
rint WiMAX Business com
p
leted the combination to form Clearwire and the Investors contributed a total o
f
$3.2 billion of new equit
y
to Clearwire and Clearwire Communications. Prior to closin
g
, the activities and certai
n
assets o
f
t
h
e Spr
i
nt W
i
MAX Bus
i
ness were trans
f
erre
d
to a s
i
ng
l
e
l
ega
l
ent
i
ty t
h
at was contr
ib
ute
d
to C
l
earw
i
re a
t
cl
ose
i
nexc
h
an
g
e
f
or an equ
i
t
yi
nterest
i
nC
l
earw
i
re. T
h
e transact
i
ons
d
escr
ib
e
d
a
b
ove are co
ll
ect
i
ve
ly
re
f
erre
d
to as
t
he Transactions. After the Transactions we owned 100% of the votin
g
interests and 27% of the economic interests
i
n Clearwire Communications, which we consolidate as a controlled subsidiary. Clearwire holds no assets othe
r
th
an
i
ts
i
nterests
i
n
Cl
ear
wi
re
C
ommun
i
cat
i
ons
.
Th
e conso
lid
ate
dfi
nanc
i
a
l
statements o
f
C
l
earw
i
re an
d
su
b
s
idi
ar
i
es
i
nc
l
u
d
et
h
e resu
l
ts o
f
t
h
e Spr
i
nt W
i
MAX
Business from Januar
y
1, 2007 throu
g
h November 28, 2008 and the results of the combined entities thereafter fo
r
t
he period from November 29, 2008 through December 31, 2008. For financial reporting purposes, the Sprin
t
Wi
MAX Bus
i
ness was
d
eterm
i
ne
d
to
b
et
h
e account
i
n
g
acqu
i
rer an
d
account
i
n
g
pre
d
ecessor. T
h
e assets acqu
i
re
d
and liabilities assumed of Old Clearwire have been accounted for at fair value in accordance with the
p
urchas
e
m
ethod of accountin
g
, and its results of operations have been included in our consolidated financial results
b
eg
i
nn
i
ng on Novem
b
er 29, 2008
.
Th
e accounts an
dfi
nanc
i
a
l
statements o
f
C
l
earw
i
re
f
or t
h
e per
i
o
df
rom January 1, 2007 t
h
roug
h
Novem
b
er 28,
2008 have been prepared from the separate records maintained b
y
Sprint. Further, such accounts and financial
s
tatements
i
nc
l
u
d
ea
ll
ocat
i
ons o
f
expenses
f
rom Spr
i
nt an
d
t
h
ere
f
ore may not necessar
il
y
b
e
i
n
di
cat
i
ve o
f
t
he
fi
nanc
i
a
l
pos
i
t
i
on, resu
l
ts o
f
operat
i
ons an
d
cas
hfl
ows t
h
at wou
ld h
ave resu
l
te
dh
a
d
we
f
unct
i
one
d
as a stan
d
-a
l
one
operation. Sprint directl
y
assi
g
ned, where possible, certain costs to us based on our actual use of the shared services.
These costs include network related expenses, office facilities, treasury services, human resources, supply chai
n
m
anagement an
d
ot
h
er s
h
are
d
serv
i
ces. W
h
ere
di
rect ass
i
gnment o
f
costs was not poss
ibl
e or pract
i
ca
l
, Spr
i
nt use
d
i
n
di
rect met
h
o
d
s,
i
nc
l
u
di
n
g
t
i
me stu
di
es, to est
i
mate t
h
e ass
ig
nment o
fi
ts costs to us, w
hi
c
h
were a
ll
ocate
d
to us
t
hrough a management fee. Cash management was performed on a consolidated basis, and Sprint processe
d
p
ayables, payroll and other transactions on our behalf. Assets and liabilities which were not specifically identifiabl
e
t
ous
i
nc
l
u
d
e
d:
• Cas
h
, cas
h
equ
i
va
l
ents an
di
nvestments, w
i
t
h
act
i
v
i
t
yi
n our cas
hb
a
l
ances
b
e
i
n
g
recor
d
e
d
t
h
rou
gh b
us
i
nes
s
e
quit
y;
80