Sprint - Nextel 2008 Annual Report Download - page 117

CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
• Accounts payable, which were processed centrally by Sprint and were passed to us through intercompany
accounts that were included in business equity; and
• Certain accrued liabilities, which were passed through to us through intercompany accounts that were
included in business equity.
Our statement of cash flows prior to the Closing presents the activities that were paid by Sprint on our
behalf. Financing activities include funding advances from Sprint, presented as business equity, since Sprint
managed our financing activities on a centralized basis. Further, the net cash used in operating activities and the
net cash used in investing activities for capital expenditures and acquisitions of FCC licenses and patents
represent transfers of expenses or assets paid for by other Sprint subsidiaries. No cash payments were made by us
for income taxes or interest prior to the Closing.
We will be focused on expediting the deployment of the first nationwide 4G mobile broadband network to
provide a true mobile broadband experience for consumers, small businesses, medium and large enterprises,
public safety organizations and educational institutions. We expect to deploy our mobile WiMAX technology,
based on the IEEE 802.16e standard, in our planned markets using 2.5 GHz FCC licenses.
2. Summary of Significant Accounting Policies
The accompanying financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America and pursuant to the rules and regulations of the Securities and
Exchange Commission, which we refer to as the SEC. The following is a summary of our significant accounting
policies:
Principles of Consolidation — The consolidated financial statements include all of the assets, liabilities and
results of operations of our wholly-owned subsidiaries, and subsidiaries we control or in which we have a
controlling financial interest. Investments in entities that we do not control and are not the primary beneficiary,
but for which we have the ability to exercise significant influence over operating and financial policies, are
accounted for under the equity method. All intercompany transactions are eliminated in consolidation.
Non-controlling interests on the consolidated balance sheets include third-party investments in entities that
we consolidate, but do not wholly own. We classify our non-controlling interests as part of equity and include net
income (loss) attributable to our non-controlling interests in net income (loss). We allocate net income (loss),
other comprehensive income (loss) and other equity transactions to our non-controlling interests in accordance
with their applicable ownership percentages. We also continue to attribute our non-controlling interests their
share of losses even if that attribution results in a deficit non-controlling interest balance.
Reclassifications — Certain reclassifications have been made to prior period amounts to conform with the
current period presentation.
Use of Estimates — Our accounting policies require management to make complex and subjective
judgments. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are
based on our historical experience, terms of existing contracts, observance of trends in the industry, information
provided by our customers and information available from other outside sources, as appropriate. Additionally,
changes in accounting estimates are reasonably likely to occur from period to period. These factors could have a
material impact on our financial statements, the presentation of our financial condition, changes in financial
condition or results of operations.
Significant estimates inherent in the preparation of the accompanying financial statements include:
impairment analysis of spectrum licenses with indefinite lives, the recoverability and determination of useful
lives for long-lived assets, which include property, plant and equipment and other intangible assets, tax valuation
allowances, and share-based compensation related to equity-based awards granted.
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