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Spectrum Licenses — Spectrum licenses primarily include owned spectrum licenses with indefinite lives, owned
spectrum licenses with definite lives, and favorable spectrum leases. Indefinite lived spectrum licenses acquired are stated at
cost and are not amortized. While owned spectrum licenses in the United States are issued for a fixed time, renewals of these
licenses have occurred routinely and at nominal cost. Moreover, we have determined that there are currently no legal,
regulatory, contractual, competitive, economic or other factors that limit the useful lives of our owned spectrum licenses and
therefore, the licenses are accounted for as intangible assets with indefinite lives. The impairment test for intangible assets with
indefinite useful lives consists of a comparison of the fair value of an intangible asset with its carrying amount. If the carrying
amount of an intangible asset exceeds its fair value, an impairment loss will be recognized in an amount equal to that excess.
The fair value is determined by estimating the discounted future cash flows that are directly associated with, and that are
expected to arise as a direct result of the use and eventual disposition of, the asset. Spectrum licenses with indefinite useful
lives are assessed for impairment annually, or more frequently, if an event indicates that the asset might be impaired.
Internationally, we recorded an impairment charge of $2.6 million during the year ended December 31, 2010 related to our
indefinite-lived spectrum assets in Ireland in conjunction with our sale of those operations. Other than the Ireland impairment,
we had no other impairment of our indefinite lived intangible assets in any of the periods presented.
Spectrum licenses with definite useful lives and favorable spectrum leases are stated at cost, net of accumulated
amortization, and are assessed for impairment whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. The carrying value of the definite lived licenses and spectrum leases are amortized on a
straight-line basis over their estimated useful lives or lease term, including expected renewal periods, as applicable. There were
no impairment losses for spectrum licenses with definite useful lives and favorable spectrum leases in the years ended
December 31, 2010, 2009 and 2008.
Other Intangible Assets — Other intangible assets consist of subscriber relationships, trademarks, patents and other, and
are stated at cost net of accumulated amortization. Amortization is calculated using either the straight-line method or an
accelerated method over the assets’ estimated remaining useful lives. Other intangible assets are assessed for impairment
whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. For the
year ended December 31, 2010, we recorded impairment losses of $1.5 million relating to our definite-lived intangible assets in
Ireland in conjunction with our sale of those operations. There were no impairment losses for our other intangible assets in the
years ended December 31, 2009 and 2008.
Derivative Instruments and Hedging Activities — In the normal course of business, we may be exposed to the effects of
interest rate changes. We have limited our exposure by adopting established risk management policies and procedures,
including the use of derivative instruments. It is our policy that derivative transactions are executed only to manage exposures
arising in the normal course of business and not for the purpose of creating speculative positions or trading. We record all
derivatives on the balance sheet at fair value as either assets or liabilities. The accounting for changes in the fair value of
derivatives depends on the intended use of the derivative and whether it qualifies for hedge accounting.
During December 2010, we issued exchangeable notes that included embedded exchange options which qualified as
embedded derivative instruments that are required to be accounted for separately from the host debt instruments and recorded
as derivative financial instruments at fair value. The embedded exchange options do not qualify for hedge accounting, and as
such, all future changes in the fair value of these derivative instruments will be recognized currently in earnings until such time
as the embedded exchange options are exercised or expire. See Note 10, Derivative Instruments, for further information.
Debt Issuance Costs — Debt issuance costs are initially capitalized as a deferred cost and amortized to interest expense
under the effective interest method over the expected term of the related debt. Unamortized debt issuance costs related to
extinguishment of debt are expensed at the time the debt is extinguished and recorded in other income (expenses), net in the
consolidated statements of operations. Unamortized debt issuance costs are recorded in other assets in the consolidated balance
sheets.
Table of Contents CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
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