Clearwire 2009 Annual Report Download - page 97

p
er
i
o
d
a
d
m
i
n
i
strat
i
ve an
d
tec
h
n
i
ca
l
act
i
v
i
t
i
es, w
hi
c
hi
nc
l
u
d
es o
b
ta
i
n
i
ng
l
eases, zon
i
ng approva
l
san
db
u
ildi
ng
p
erm
i
ts, an
d
ceases w
h
en t
h
e construct
i
on
i
ssu
b
stant
i
a
ll
y comp
l
ete an
d
ava
il
a
bl
e
f
or use (genera
ll
yw
h
en a mar
k
et
i
s launched). Interest is capitalized on construction in pro
g
ress and spectrum licenses accounted for as intan
g
ibl
e
assets w
i
t
hi
n
d
e
fi
n
i
te use
f
u
lli
ves. Interest cap
i
ta
li
zat
i
on
i
s
b
ase
d
on rates app
li
ca
bl
eto
b
orrow
i
ngs outstan
di
ng
d
ur
i
ng t
h
e per
i
o
d
an
d
t
h
e
b
a
l
ance o
f
qua
lifi
e
d
assets un
d
er construct
i
on
d
ur
i
ng t
h
e per
i
o
d
. Cap
i
ta
li
ze
di
nterest
i
s
r
e
p
orted as a cost of the network assets and de
p
reciated over the useful life of those assets.
I
ncome Taxe
s
— We recor
dd
e
f
erre
di
ncome taxes
b
ase
d
on t
h
e est
i
mate
df
uture tax e
ff
ects o
f diff
erences
between the financial statement and tax basis of assets and liabilities usin
g
the tax rates expected to be in effec
t
when the temporar
y
differences reverse. Deferred tax assets are also recorded for net operatin
g
loss, capital loss, an
d
t
ax cre
di
t carry
f
orwar
d
s. Va
l
uat
i
on a
ll
owances,
if
any, are recor
d
e
d
to re
d
uce
d
e
f
erre
d
tax assets to t
h
e amount
c
onsidered more likel
y
than not to be realized. We also appl
y
a reco
g
nition threshold that a tax position is required
t
o meet before bein
g
reco
g
nized in the financial statements
.
Revenue Recognitio
n
—Wepr
i
mar
ily
earn revenue
by
prov
idi
n
g
access to our
high
-spee
d
w
i
re
l
ess networ
k.
A
lso included in revenue are leases of CPE and additional add-on services, includin
g
personal and business email
and static Internet Protocol. Revenue from customers is billed one month in advance and recognized ratably over the
c
ontracte
d
serv
i
ce per
i
o
d
. Revenues assoc
i
ate
d
w
i
t
h
t
h
esa
l
eo
f
CPE an
d
ot
h
er equ
i
pment to customers
i
s
r
eco
g
nized when title and risk of loss is transferred to the customer. Shippin
g
and handlin
g
costs billed t
o
c
ustomers are classified as revenue. Activation fees char
g
ed to the customer are deferred and reco
g
nized as
r
evenues on a stra
i
g
h
t-
li
ne
b
as
i
s over t
h
e average est
i
mate
d lif
eo
f
t
h
e customer re
l
at
i
ons
hi
po
f
3 years
.
R
evenue arrangements with multiple deliverables are divided into separate units of accounting based on the
d
e
li
vera
bl
es’ re
l
at
i
ve
f
a
i
rva
l
ues
if
t
h
et
h
ere
i
so
bj
ect
i
ve an
d
re
li
a
bl
eev
id
ence o
ff
a
i
rva
l
ue
f
or a
ll d
e
li
vera
bl
es
i
nt
he
arran
g
ement. W
h
en we are t
h
epr
i
mar
y
o
blig
or
i
n a transact
i
on, are su
bj
ect to
i
nventor
y
r
i
s
k
,
h
ave
l
at
i
tu
d
e
i
n
e
stablishin
g
prices and selectin
g
suppliers, or have several but not all of these indicators,
g
ross revenue is recorded.
I
f
we are not t
h
epr
i
mary o
bli
gor an
d
amounts earne
d
are
d
eterm
i
ne
d
us
i
ng a
fi
xe
d
percentage, a
fi
xe
d
-payment
s
c
h
e
d
u
l
e
,
or a com
bi
nat
i
on o
f
t
h
e two
,
we recor
d
t
h
e net amounts as comm
i
ss
i
ons earne
d
. Promot
i
ona
ldi
scount
s
t
reated as cash consideration are recorded as a reduction of revenue.
A
d
vertising Costs —A
d
vert
i
s
i
n
g
costs are expense
d
as
i
ncurre
d
or t
h
e
fi
rst t
i
me t
h
ea
d
vert
i
s
i
n
g
occurs
.
A
dvertisin
g
expense was $99.1 million, $7.5 million and $0 for the
y
ears ended December 31, 2009, 2008 and 2007
,
r
espectively.
Research and Developmen
t
—
Research and develo
p
ment costs are ex
p
ensed as incurred. Research an
d
d
evelopment expense was $6.4 million, $350,000 and $0 for the
y
ears ended December 31, 2009, 2008 and 2007
,
respect
i
ve
l
y.
Net Loss
p
er Shar
e
—
Basic net loss per common share is computed b
y
dividin
g
loss attributable to common
s
toc
kh
o
ld
ers
b
yt
h
ewe
i
g
h
te
d
-average num
b
er o
f
common 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
c
ommon s
h
are
i
s compute
db
y
di
v
idi
ng
l
oss attr
ib
uta
bl
e to common stoc
kh
o
ld
ers
b
yt
h
ewe
i
g
h
te
d
-average num
b
e
r
of common shares and dilutive common stock equivalents outstandin
g
durin
g
the period. Common stock equiv
-
a
l
ents typ
i
ca
ll
y cons
i
st o
f
t
h
e common stoc
ki
ssua
bl
e upon t
h
e exerc
i
se o
f
outstan
di
ng stoc
k
opt
i
ons, warrants an
d
restr
i
cte
d
stoc
k
us
i
ng t
h
e treasury stoc
k
met
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 ar
e
e
xcluded from the calculation of diluted loss
p
er share if their effect is antidilutive. We have two classes of commo
n
s
tock
,
Class A and Class B. See Note 16
,
Net Loss Per Share
,
for further information
.
S
h
are-Base
d
Compensation
—
T
h
e est
i
mate o
f
s
h
are-
b
ase
d
compensat
i
on expense requ
i
res comp
l
ex an
d
s
ub
j
ective assumptions, includin
g
the stock price volatilit
y
, emplo
y
ee exercise patterns (expected life of the
opt
i
ons),
f
uture
f
or
f
e
i
tures, an
d
re
l
ate
d
tax e
ff
ects. S
h
are-
b
ase
d
compensat
i
on expense on new awar
d
san
df
o
r
awar
d
smo
difi
e
d
, repurc
h
ase
d
, or cance
ll
e
di
s
b
ase
d
on t
h
e est
i
mate
d
grant-
d
ate
f
a
i
rva
l
ue, us
i
ng t
h
eB
l
ac
k
-Sc
h
o
l
e
s
option pricin
g
model, and is reco
g
nized, net of a forfeiture rate on those shares expected to vest over a
g
rade
d
87
CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)