Clearwire 2007 Annual Report Download - page 88

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The Company’s investments in auction rate securities represent interests in collateralized debt obligations
supported by preferred equity securities of small to medium sized insurance companies and financial institutions
and asset backed capital commitment securities supported by high grade, short term commercial paper and a put
option from a monoline insurance company. These auction rate securities were rated AAA/Aaa or AA/Aa by
Standard & Poors and Moody’s rating services at the time of purchase and their ratings have not changed as of
December 31, 2007. With regards to the asset backed capital commitment securities, both rating agencies have
placed the issuer’s ratings under review for possible downgrade.
As issuers and counterparties to the Company’s investments announce financial results in the coming quarters,
it is possible that the Company may record additional losses and realize losses that are currently unrealized. The
Company will continue to monitor its investments for substantive changes in relevant market conditions,
substantive changes in the financial condition and performance of the investments’ issuers and other substantive
changes in these investments.
The stated maturity of these securities is longer than 10 years; however, because we considered them to be
highly liquid and available for operations, our convention was to use the next auction date, which occurs every 30 to
90 days, as the effective maturity date and these securities were recorded as short-term investments. Current market
conditions do not allow the Company to estimate when the auctions for its auction rate securities will resume. As a
result, during 2007 the Company reclassified its auction rate securities from short-term investments to long-term
investments.
6. Property, Plant and Equipment
Property, plant and equipment as of December 31, 2007 and 2006 consisted of the following (in thousands):
2007 2006
December 31,
Network and base station equipment .............................. $305,635 $161,875
Customer premise equipment ................................... 89,120 47,700
Furniture, fixtures and equipment ................................ 55,548 20,546
Leasehold improvements ...................................... 13,488 8,340
Construction in progress ....................................... 233,120 112,669
696,911 351,130
Less: accumulated depreciation.................................. (124,582) (48,332)
$ 572,329 $302,798
The Company follows the provisions of SFAS No. 34 with respect to its owned FCC licenses and the related
construction of its network infrastructure assets. Capitalization commences with pre-construction period admin-
istrative and technical activities, which includes obtaining leases, zoning approvals and building permits, and ceases
when the construction is substantially complete and available for use generally when a market is launched.
Interest capitalized for the years ended December 31, 2007 and 2006 was $29.0 million and $16.6 million,
respectively. Depreciation expense for the years ended December 31, 2007, 2006 and 2005 was $80.3 million,
$38.5 million and $10.9 million, respectively.
80
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)