Sprint - Nextel 2010 Annual Report Download - page 105

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period. Diluted net loss per Class A Common Share is computed by dividing net loss attributable to Clearwire
Corporation by the weighted-average number of Class A Common Shares and dilutive Class A Common Share equivalents
outstanding during the period. Class A Common Share equivalents generally consist of the Class A Common Shares issuable
upon the exercise of outstanding stock options, warrants and restricted stock using the treasury stock method. The effects of
potentially dilutive Class A Common Share equivalents are excluded from the calculation of diluted net loss per Class A
Common Share if their effect is antidilutive. We have two classes of common stock, Class A and Class B. The potential
exchange of Clearwire Communications Class B common interests together with Class B common stock for Clearwire Class A
common stock may have a dilutive effect on diluted net loss per share due to certain tax effects. On an “if converted” basis,
shares issuable upon the conversion of the exchangeable notes may have a dilutive effect on diluted net loss per share. See
Note 15, Net Loss Per Share, for further information.
Operating Leases — We have operating leases for spectrum licenses, towers and certain facilities, and equipment for use
in our operations. Certain of our spectrum licenses are leased from third-party holders of Educational Broadband Service,
which we refer to as EBS, spectrum licenses granted by the FCC. EBS licenses authorize the provision of certain
communications services on the EBS channels in certain markets throughout the United States. We account for these spectrum
leases as executory contracts which are similar to operating leases. Signed leases which have unmet conditions required to
become effective are not amortized until such conditions are met and are included in spectrum licenses in the accompanying
consolidated balance sheets, if such leases require upfront payments. For leases containing scheduled rent escalation clauses,
we record minimum rental payments on a straight-line basis over the term of the lease, including the expected renewal periods
as appropriate. For leases containing tenant improvement allowances and rent incentives, we record deferred rent, which is a
liability, and that deferred rent is amortized over the term of the lease, including the expected renewal periods as appropriate, as
a reduction to rent expense.
Foreign Currency — Our international subsidiaries generally use their local currency as their functional currency. Assets
and liabilities are translated at exchange rates in effect at the balance sheet date. Resulting translation adjustments are recorded
within accumulated other comprehensive income (loss). Income and expense accounts are translated at the average monthly
exchange rates. The effects of changes in exchange rates between the designated functional currency and the currency in which
a transaction is denominated are recorded as foreign currency transaction gains (losses) and recorded in the consolidated
statement of operations.
Concentration of Risk — We believe that the geographic diversity of our subscriber base and retail nature of our product
minimizes the risk of incurring material losses due to concentrations of credit risk.
Recent Accounting Pronouncements
In October 2009, the Financial Accounting Standards Board, which we refer to as the FASB, issued new accounting
guidance that amends the revenue recognition for multiple-element arrangements and expands the disclosure requirements
related to such arrangements. The new guidance amends the criteria for separating consideration in multiple-deliverable
arrangements, establishes a selling price hierarchy for determining the selling price of a deliverable, eliminates the residual
method of allocation, and requires the application of relative selling price method in allocating the arrangement consideration
to all deliverables. The new accounting guidance is effective for fiscal years beginning after June 15, 2010. We will adopt the
new accounting guidance beginning January 1, 2011. We do not anticipate the adoption of the new accounting guidance to have
a significant effect on our financial condition or results of operations.
Table of Contents CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
F-48