Clearwire 2010 Annual Report Download - page 66

response to changes in our strategy, funding availability, technology and industry trends additional projects could be
identified for abandonment, for which the associated write-downs could be material.
Additionally, during the year ended December 31, 2010, we recorded an impairment charge of $2.6 million
related to our indefinite-lived spectrum assets in Ireland in conjunction with our sale of those operations, as well as
impairment losses of $7.8 million related to network and other intangible assets in our international operations.
There were no impairment losses recorded in the years ended December 31, 2009 and 2008.
Transaction Related Expenses
(In thousands, except percentages) 2010 2009 2008
Year Ended
December 31,
Transaction related expenses ................................... $— $— $82,960
Transaction related expenses in 2008 include a one-time $80.6 million settlement loss resulting from the
termination of spectrum lease agreements under which Sprint leased spectrum to Old Clearwire prior to the Closing.
As part of the Closing, Sprint contributed both the spectrum lease agreements and the spectrum assets underlying
those agreements to our business. As a result of the Closing, the spectrum lease agreements were effectively
terminated, and the settlement of those agreements was accounted for as a separate element apart from the business
combination. The settlement loss recognized from the termination was valued based on the amount by which the
agreements were favorable or unfavorable to our business as compared to current market rates. We had no
comparable expenses in 2010 or 2009.
Interest Expense
(In thousands, except percentages) 2010 2009 2008
Year Ended
December 31,
Interest expense .................................... $(152,868) $(69,468) $(16,545)
We incurred $361.5 million and $209.6 million in gross interest costs during the years ended December 31,
2010 and 2009, respectively. Interest costs were partially offset by capitalized interest of $208.6 million and
$140.2 million for the years ended December 31, 2010 and 2009, respectively. Interest expense also includes
adjustments to accrete our debt to par value. The increase in interest expense for the year ended December 31, 2010
as compared to the same period in 2009 is due primarily to the issuance of the Senior Secured Notes in November
2009, which increased the outstanding principal balances by approximately $1.36 billion during 2010 as compared
to 2009.
For the year ended December 31, 2009, we incurred twelve months of interest costs totaling $209.6 million,
which were partially offset by capitalized interest of $140.2 million. Interest expense for 2008 included $7.9 million
of interest expense recorded on the note payable to Sprint for the repayment of an obligation to reimburse Sprint for
financing the Sprint WiMAX Business between April 1, 2008 and the Closing, which we refer to as the Sprint Pre-
Closing Financing Amount, and one month of interest expense totaling $8.6 million on the long-term debt acquired
from Old Clearwire.
We expect interest expense to increase next year compared to 2010 as we will incur a full year of interest costs
for the additional $1.40 billion of debt issued during December 2010 and a full year of accretion of the significant
discount on the Exchangeable Notes resulting from separation of the Exchange Options. In addition, capitalized
interest is expected to be reduced as network expansion activities subside.
Gain (Loss) on Derivative Instruments
(In thousands, except percentages) 2010 2009 2008
Year Ended
December 31,
Gain (loss) on derivative instruments ........................ $63,255 $(6,976) $(6,072)
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