Clearwire 2009 Annual Report Download - page 65

C
ost of goods and services and network costs increased
$
290.6 million in the year ended December 31, 2009 a
s
c
ompared to the
y
ear ended December 31, 2008, primaril
y
due to an increase in tower lease and backhaul expenses
r
esulting from the launch of new 4G markets. We incurred twelve months of tower lease and backhaul expens
e
d
ur
i
ng 2009, compare
d
to one mont
hf
or 2008
f
o
ll
ow
i
ng t
h
eC
l
os
i
ng on Novem
b
er 28, 2008, w
h
en we acqu
i
re
d
a
ll
of the Old Clearwire tower leases and backhaul a
g
reements. Durin
g
2009, we incurred approximatel
y
$41.0 million
r
e
l
ate
d
to wr
i
te-o
ff
so
f
CPE an
d
networ
k
an
db
ase stat
i
on equ
i
pment an
d
an
i
ncrease
i
n our o
b
so
l
escence an
d
s
hrinkage allowance. Also, we incurred approximately
$
10.1 million for cost abandonments associated with marke
t
r
e
d
es
ig
ns
.
C
ost of
g
oods and services and network costs increased $82.6 million in the
y
ear ended December 31, 2008 a
s
c
ompare
d
to t
h
e year en
d
e
d
Decem
b
er 31, 2007, pr
i
mar
il
y
d
ue to an
i
ncrease
i
n tower
l
ease an
db
ac
kh
au
l
expenses
due to our ac
q
uisition of Old Clearwire on November 28, 2008.
We expect costs of
g
oods and services and network costs to continue to increase in 2010 as we expand our
n
etwork.
Se
ll
ing, Genera
l
an
d
A
d
ministrative Ex
p
ens
e
Se
lli
n
g
,
g
enera
l
an
d
a
d
m
i
n
i
strat
i
ve expenses
i
nc
l
u
d
ea
ll
o
f
t
h
e
f
o
ll
ow
i
n
g
: costs assoc
i
ate
d
w
i
t
h
a
d
vert
i
s
i
n
g,
t
rade shows, public relations, promotions and other market development programs; third-party professional service
fees; salaries and benefits, sales commissions, travel expenses and related facilities costs for sales, marketing,
n
etwor
kd
eve
l
opment, execut
i
ve,
fi
nance an
d
account
i
n
g
, IT, customer care,
h
uman resource an
dl
e
g
a
l
personne
l;
n
etwork deplo
y
ment expenses representin
g
non-capitalizable costs on network builds in markets prior to launch,
r
ather than costs related to our markets after launch, which are included in cost of
g
oods and services and network
c
osts; an
dh
uman resources, treasury serv
i
ces an
d
ot
h
er s
h
are
d
serv
i
ces
.
(
In thousands, except percentages
)
2009 2008 2007
P
ercenta
g
e
Chan
g
e 2009
Versus
2008
P
ercenta
ge
C
han
g
e 2008
Versus
200
7
Y
ear Ended
D
ecember
31,
Selling, general and administrativ
e
ex
p
ens
e
...................
$
568
,
063
$
150
,
940
$
99
,
490 276.4% 51.7
%
Th
e
i
ncrease
i
n 2009 compare
d
to 2008
i
s cons
i
stent w
i
t
h
t
h
ea
ddi
t
i
ona
l
resources,
h
ea
d
count an
d
s
h
are
d
s
ervices that we have utilized as we continue to build and launch our 4G mobile broadband services in additiona
l
m
arkets, especiall
y
the hi
g
her sales and marketin
g
and customer care expenses in support of the launch of new
m
ar
k
ets. Emp
l
oyee
h
ea
d
count
i
ncrease
d
at Decem
b
er 31, 2009 to approx
i
mate
l
y 3,440 emp
l
oyees compare
d
t
o
approximatel
y
1,635 emplo
y
ees at December 31, 2008
.
T
he increase in 2008 compared to 2007 is due to hi
g
her emplo
y
ee compensation and related costs, which
i
ncludes facilities costs, resultin
g
from the acquisition of Old Clearwire and all of its emplo
y
ees and hi
g
her sales
an
d
mar
k
et
i
ng an
d
customer 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.
O
ur
f
ocus
i
n 2010 w
ill b
eon
d
eve
l
o
p
ment an
d
ex
p
ans
i
on o
f
our w
i
re
l
ess 4G networ
k
.Weex
p
ect t
h
at cost
p
e
r
gross addition will remain stable in 2010 compared to 2009 as new markets are launched, consistent with our pas
t
operat
i
n
g
exper
i
ences.
Depreciation and Amortizatio
n
(
In thousands, except percentages
)
2009 2008 2007
P
ercenta
g
e
C
han
g
e 2009
V
ersus
2008
P
ercenta
ge
C
han
g
e 2008
V
ersus
200
7
Yea
rEn
ded
December
31,
D
e
p
reciation and amortizatio
n
......
$
208,263 $58,146 $3,979 258.2% 1361.3
%
D
eprec
i
at
i
on an
d
amort
i
zat
i
on expense pr
i
mar
il
y represents t
h
e
d
eprec
i
at
i
on recor
d
e
d
on PP&E an
d
amor
-
ti
zat
i
on o
fi
ntan
gibl
e assets an
dd
e
fi
n
i
te-
li
ve
d
owne
d
spectrum. T
h
e
i
ncrease
i
n 2009
i
spr
i
mar
ily
a resu
l
to
f
ne
w
n
etwor
k
assets
pl
ace
di
nto serv
i
ce to su
pp
ort our
l
aunc
h
es an
d
cont
i
nue
d
networ
k
ex
p
ans
i
on. T
h
e
i
ncrease
i
sa
l
so
due to 12 months de
p
reciation and amortization ex
p
ense recorded on assets ac
q
uired in connection with our
55