Sprint - Nextel 2008 Annual Report Download - page 118

Download and view the complete annual report

Please find page 118 of the 2008 Sprint - Nextel annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 158

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158

CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Subsequent Events — We evaluated subsequent events occurring through the date the financial statements
were issued.
Cash and Cash Equivalents — Cash equivalents consist of money market mutual funds and highly liquid
short-term investments with original maturities of three months or less. Cash equivalents are stated at cost, which
approximates market value. Cash and cash equivalents exclude cash that is contractually restricted for
operational purposes. We maintain cash and cash equivalent balances with financial institutions that exceed
federally insured limits. We have not experienced any losses related to these balances, and management believes
the credit risk related to these balances to be minimal.
Restricted Cash — Restricted cash consists primarily of amounts we have set aside to satisfy certain
contractual obligations and is classified as a current or noncurrent asset based on its designated purpose. The
majority of this restricted cash relates to outstanding letters of credit.
Investments — We have an investment portfolio comprised of U.S. Treasuries and other debt securities. The
value of these securities is subject to market and credit volatility during the period the investments are held and
until their sale or maturity. We classify marketable debt securities as available-for-sale investments and these
securities are stated at their estimated fair value. Our investments that are available for current operations are
recorded as short-term investments when the original maturities are greater than three months but remaining
maturities are less than one year. Our investments with maturities of more than one year are recorded as long-
term investments. Unrealized gains and losses are recorded within accumulated other comprehensive income
(loss). Realized gains and losses are measured and reclassified from accumulated other comprehensive income
(loss) on the basis of the specific identification method.
We recognize realized losses when declines in the fair value of our investments below their cost basis are
judged to be other-than-temporary. In determining whether a decline in fair value is other-than-temporary, we
consider various factors including market price (when available), investment ratings, the financial condition and
near-term prospects of the issuer, the length of time and the extent to which the fair value has been less than the
cost basis, and our intent and ability to hold the investment until maturity or for a period of time sufficient to
allow for any anticipated recovery in market value. We make significant judgments in considering these factors.
If it is judged that a decline in fair value is other-than-temporary, a realized loss equal to the decline is reflected
in the consolidated statement of operations, and a new cost basis in the investment is established.
We account for certain of our investments using the equity method based on our ownership interest and our
ability to exercise significant influence. Accordingly, we record our investment initially at cost and we adjust the
carrying amount of the investment to recognize our share of the earnings or losses of the investee each reporting
period. We cease to recognize investee losses when our investment basis is zero.
Fair Value Measurements — Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. In determining fair
value, we use various methods including market, cost and income approaches. Based on these approaches, we
utilize certain assumptions that market participants would use in pricing the asset or liability, including
assumptions about risk. Based on the observability of the inputs used in the valuation techniques, we are required
to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the
quality and reliability of the information used to determine fair values. Financial assets and financial liabilities
carried at fair value will be classified and disclosed in one of the following three categories:
Level 1: Quoted market prices in active markets for identical assets or liabilities
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data
Level 3: Unobservable inputs that are not corroborated by market data
F-52