Clearwire 2009 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 Januar
y
1, 2007 as a
d
eve
l
opmenta
l
sta
g
e compan
y
represent
i
n
g
aco
ll
ect
i
on o
f
assets, re
l
ate
dli
a
bili
t
i
es an
d
act
i
v
i
t
i
es accounte
df
or
i
nvar
i
ous
l
e
g
a
l
ent
i
t
i
es t
h
at were w
h
o
lly
-owne
d
su
b
s
idi
ar
i
es o
f
S
print Nextel Corporation, which we refer to as Sprint or the Parent. The nature of the assets held by the Sprint lega
l
e
ntities was primaril
y
2.5 GHz Federal Communications Commission, which we refer to as FCC, licenses an
d
c
ertain propert
y
, plant and equipment related to the Worldwide Interoperabilit
y
of Microwave Access, which we
r
efer to as WiMAX, network. The acquisition of the assets was funded by the Parent. As Sprint had acquired
sig
n
ifi
cant amounts o
f
FCC
li
censes on our
b
e
h
a
lf i
nt
h
e past, t
h
ese purc
h
ases
h
ave
b
een presente
d
as part o
f
t
h
e
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
operations qualified as a business pursuant to Rule 11-01(d) of Re
g
ulation S-X. From Januar
y
1, 2007 throu
g
h
Novem
b
er 28, 2008, we con
d
ucte
d
our
b
us
i
ness as t
h
eW
i
MAX Operat
i
ons o
f
Spr
i
nt, w
hi
c
h
we re
f
er to as t
h
e Spr
i
n
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, Sprint announced that it had entered into a definitive a
g
reement with the le
g
ac
y
Clearwire
Corporat
i
on, w
hi
c
h
we re
f
er to as O
ld
C
l
earw
i
re, to com
bi
ne
b
ot
h
o
f
t
h
e
i
r next generat
i
on w
i
re
l
ess
b
roa
db
an
d
b
us
i
nesses to
f
orm a new
i
n
d
epen
d
ent company to
b
eca
ll
e
d
C
l
earw
i
re Corporat
i
on, w
hi
c
h
we re
f
er to as C
l
earw
i
re
.
In a
ddi
t
i
on,
fi
ve
i
n
d
epen
d
ent partners,
i
nc
l
u
di
n
g
Inte
l
Corporat
i
on, Goo
gl
e Inc., Comcast Corporat
i
on, T
i
me
W
arner Cable Inc. and Bright House Networks LLC, collectively, whom we refer to as the Investors, agreed to inves
t
$
3.2 billion in Clearwire and its subsidiary Clearwire Communications LLC, which we refer to as Clearwir
e
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
n
g
,O
ld
C
l
earw
i
re an
d
t
h
e Spr
i
nt W
i
MA
X
Business com
p
leted the combination to form Clearwire and the Investors contributed a total of $3.2 billion of ne
w
e
quity to Clearwire and Clearwire Communications. Prior to the Closing, the activities and certain assets of the
S
pr
i
nt W
i
MAX Bus
i
ness were trans
f
erre
d
to a s
i
n
gl
e
l
e
g
a
l
ent
i
t
y
t
h
at was contr
ib
ute
d
to C
l
earw
i
re at c
l
ose
i
n
e
xchan
g
e for an equit
y
interest in Clearwire. The transactions described above are collectivel
y
referred to as the
Transactions. Immediatel
y
after the Transactions, we owned 100% of the votin
g
interests and 27% of the economic
i
nterests
i
nC
l
earw
i
re Commun
i
cat
i
ons, w
hi
c
h
we conso
lid
ate as a contro
ll
e
d
su
b
s
idi
ary. C
l
earw
i
re
h
o
ld
s no assets
other than its interests in Clearwire Communications
.
On the Closin
g
, Old Clearwire, and the Sprint WiMAX Business, combined to form a new independent
c
ompany, C
l
earw
i
re. T
h
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 are t
h
e resu
l
ts o
f
t
h
e
S
pr
i
nt W
i
MAX Bus
i
ness,
f
rom Januar
y
1, 2007 t
h
rou
gh
Novem
b
er 28, 2008 an
di
nc
l
u
d
et
h
e resu
l
ts o
f
t
h
e com
bi
ne
d
e
ntities thereafter for the period from November 29, 2008 throu
g
h December 31, 2009. For financial reportin
g
p
urposes, the Sprint WiMAX Business was determined to be the accounting acquirer and accounting predecessor
.
T
h
e assets acqu
i
re
d
an
dli
a
bili
t
i
es assume
d
o
f
O
ld
C
l
earw
i
re
h
ave
b
een accounte
df
or at
f
a
i
rva
l
ue
i
n accor
d
anc
e
w
i
t
h
t
h
e purc
h
ase met
h
o
d
o
f
account
i
n
g
,an
di
ts resu
l
ts o
f
operat
i
ons
h
ave
b
een
i
nc
l
u
d
e
di
n our conso
lid
ate
d
financial results beginning on November 29, 2008
.
T
he accounts and financial statements of Clearwire for the period from January 1, 2007 through November 28,
2008
h
ave
b
een prepare
df
rom t
h
e separate recor
d
sma
i
nta
i
ne
dby
Spr
i
nt. Furt
h
er, suc
h
accounts an
dfi
nanc
i
a
l
s
tatements include allocations of expenses from Sprint and therefore ma
y
not necessaril
y
be indicative of th
e
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
operat
i
on. Spr
i
nt
di
rect
l
y ass
i
gne
d
,w
h
ere poss
ibl
e, certa
i
n costs to us
b
ase
d
on our actua
l
use o
f
t
h
es
h
are
d
serv
i
ces.
These costs include network related expenses, office facilities, treasur
y
services, human resources, suppl
y
chai
n
m
anagement an
d
ot
h
er s
h
are
d
serv
i
ces. Cas
h
management was per
f
orme
d
on a conso
lid
ate
db
as
i
s, an
d
Spr
i
n
t
p
rocesse
d
paya
bl
es, payro
ll
an
d
ot
h
er transact
i
ons on our
b
e
h
a
lf
. Assets an
dli
a
bili
t
i
es w
hi
c
h
were not spec
ifi
ca
lly
i
dentifiable to us included
:
• Cash, cash equivalents and investments, with activit
y
in our cash balances bein
g
recorded throu
g
h busines
s
e
qu
i
ty
;
82