Clearwire 2008 Annual Report Download - page 98

We app
l
y Emerg
i
ng Issues Tas
k
Force, w
hi
c
h
we re
f
er to as EITF, Issue No. 00-21
,
R
evenue Arran
g
ement
s
w
it
h
Mu
l
ti
pl
eDe
l
ivera
bl
es
,
w
hi
c
h
we re
f
er as EITF No. 00-21
,
EITF Issue No. 99-19
,
Reporting Revenue
G
ross as
a
Principal versus Net as an A
g
en
t
,
which we refer to as EITF No. 99-19, and EITF Issue No. 01-9,
A
ccounting
f
or
C
onsi
d
eration Given
b
yaVen
d
or to a Customer (Inc
l
u
d
ing a Rese
ll
er of t
h
eVen
d
or’s Pro
d
ucts)
,
w
hi
c
h
we re
f
er to
as EITF No. 01-9. EITF No. 00-21 a
dd
resses
h
ow to account
f
or arrangements t
h
at may
i
nvo
l
ve t
h
e
d
e
li
very or
p
erformance of multiple products, services and/or ri
g
hts to use assets. Revenue arran
g
ements with multiple
deliverables are required to be divided into separate units of accounting based on the deliverables relative fair valu
e
if
t
h
e
d
e
li
vera
bl
es
i
nt
h
e arran
g
ement meet certa
i
ncr
i
ter
i
a. EITF No. 99-19 a
dd
resses
h
ow to
d
eterm
i
ne w
h
et
h
er
i
t
i
s
appropr
i
ate to recor
d
t
h
e
g
ross amount o
f
pro
d
uct sa
l
es an
d
re
l
ate
d
costs or t
h
e net amount earne
d
as comm
i
ss
i
ons.
W
hen we are the primary obligor in a transaction, are subject to inventory risk, have latitude in establishing prices
an
d
se
l
ect
i
n
g
supp
li
ers, or
h
ave severa
lb
ut not a
ll
o
f
t
h
ese
i
n
di
cators, revenue
i
s recor
d
e
dg
ross. I
f
we are not t
h
e
p
r
i
mar
y
o
blig
or an
d
amounts earne
d
are
d
eterm
i
ne
d
us
i
n
g
a
fi
xe
d
percenta
g
e, a
fi
xe
d
-pa
y
ment sc
h
e
d
u
l
e, or a
c
ombination of the two, we record the net amounts as commissions earned. EITF No. 01-9 addresses how to accoun
t
f
or promot
i
ona
ldi
scounts. Promot
i
ona
ldi
scounts treate
d
as cas
h
cons
id
erat
i
on are recor
d
e
d
as a re
d
uct
i
on o
f
reven
u
e.
Advertising Costs
—
Advertisin
g
costs are expensed as incurred. Advertisin
g
expense was $7.5 million and $
0
for the
y
ears ended December 31, 2008 and 2007, respectivel
y.
Research and Develo
p
ment
—
Research and develo
p
ment costs are ex
p
ensed as incurred. Research an
d
d
evelopment expense was
$
350,000 and
$
0 for the years ended December 31, 2008 and 2007, respectively.
Net Loss
p
er S
h
ar
e
—Weca
l
cu
l
ate net
l
oss per s
h
are
i
n accor
d
ance w
i
t
h
SFAS No. 128,
E
arnings Per S
h
ar
e
,
w
hi
c
h
we re
f
er to as SFAS No. 128. Un
d
er t
h
e prov
i
s
i
ons o
f
SFAS No. 128,
b
as
i
c net
l
oss per common s
h
are
is
c
omputed b
y
dividin
g
income or loss available to common stockholders b
y
the wei
g
hted-avera
g
e number of
c
ommon s
h
ares outstan
di
ng
d
ur
i
ng t
h
e per
i
o
d
.D
il
ute
d
net
l
oss per common s
h
are
i
s compute
db
y
di
v
idi
ng
i
ncome
or
l
oss ava
il
a
bl
e to common stoc
kh
o
ld
ers
b
yt
h
ewe
i
g
h
te
d
-average num
b
er o
f
common an
d dil
ut
i
ve common stoc
k
e
quivalents outstandin
g
durin
g
the period. Common stock equivalents t
y
picall
y
consist of the common stock
i
ssuable upon the exercise of outstanding stock options, warrants and restricted stock using the treasury stock
m
et
h
o
d
.T
h
ee
ff
ects o
f
potent
i
a
ll
y
dil
ut
i
ve common stoc
k
equ
i
va
l
ents are exc
l
u
d
e
df
rom t
h
eca
l
cu
l
at
i
on o
f dil
ute
d
l
oss
p
er share if their effect is antidilutive. We have two classes of common stock, Class A and Class B. See Note 1
6,
Net Loss Per Share
.
Share-Based Com
p
ensation
—
We appl
y
SFAS No. 123(R), Share-Based Pa
y
ment
,
which we refer to a
s
SFAS No. 123(R), to new awar
d
san
d
to awar
d
smo
difi
e
d
, repurc
h
ase
d
, or cance
ll
e
d
,us
i
ng t
h
eB
l
ac
k
-Sc
h
o
l
es
o
pt
i
on pr
i
c
i
n
g
mo
d
e
l
.T
h
e est
i
mate o
f
compensat
i
on expense requ
i
res comp
l
ex an
d
su
bj
ect
i
ve assumpt
i
ons
,
i
ncludin
g
the stock price volatilit
y
, emplo
y
ee exercise patterns (expected life of the options), future forfeitures, and
re
l
ate
d
tax e
ff
ects. S
h
are-
b
ase
d
compensat
i
on expense
i
s
b
ase
d
on t
h
e est
i
mate
d
grant-
d
ate
f
a
i
rva
l
ue an
dis
recogn
i
ze
d
, net o
f
a
f
or
f
e
i
ture rate on t
h
ose s
h
ares expecte
d
to vest over a gra
d
e
d
vest
i
ng sc
h
e
d
u
l
e on a stra
i
g
h
t-
li
ne
basis over the requisite service period for each separatel
y
vestin
g
portion of the award as if the award was, in
su
b
stance, mu
l
t
i
p
l
e awar
d
s
.
O
peratin
g
Lease
s
—
We account for our leases in accordance with SFAS No. 13
,
A
ccounting
f
or Lease
s
,
an
d
F
ASB Technical Bulletin 85-3
,
A
ccounting for Operating Leases wit
h
Sc
h
e
d
u
l
e
d
Rent Increases. We
h
ave operat
i
n
g
l
eases
f
or s
p
ectrum
li
censes, towers an
d
certa
i
n
f
ac
ili
t
i
es, an
d
e
q
u
ip
ment
f
or use
i
n our o
p
erat
i
ons. Certa
i
no
f
our
spectrum licenses are leased from third-part
y
holders of Educational Broadband Service, which we refer to as EBS
,
spectrum
li
censes grante
db
yt
h
e FCC. EBS
li
censes aut
h
or
i
ze t
h
e prov
i
s
i
on o
f
certa
i
n commun
i
cat
i
ons serv
i
ces o
n
t
h
e EBS c
h
anne
l
s
i
n certa
i
n mar
k
ets t
h
rou
gh
out t
h
eUn
i
te
d
States. We account
f
or t
h
ese spectrum
l
eases as
executor
y
contracts which are similar to operatin
g
leases. Si
g
ned leases which have unmet conditions required to
b
ecome e
ff
ect
i
ve are not amort
i
ze
d
unt
il
suc
h
con
di
t
i
ons are met an
d
are
i
nc
l
u
d
e
di
n spectrum
li
censes
i
nt
h
e
a
ccompany
i
ng conso
lid
ate
db
a
l
ance s
h
eets,
if
suc
hl
eases requ
i
re up
f
ront payments. For
l
eases conta
i
n
i
ng
scheduled rent escalation clauses, we record minimum rental pa
y
ments on a strai
g
ht-line basis over the term
86
C
LEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)