Sprint - Nextel 2010 Annual Report Download - page 99

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On the Closing, Old Clearwire, and the Sprint WiMAX Business, combined to form a new independent company,
Clearwire. The consolidated financial statements of Clearwire and subsidiaries are the results of the Sprint WiMAX Business,
from January 1, 2008 through November 28, 2008 and include the results of the combined entities thereafter for the period
from November 29, 2008 through December 31, 2010. For financial reporting purposes, the Sprint WiMAX Business was
determined to be the accounting acquirer and accounting predecessor. The assets acquired and liabilities assumed of Old
Clearwire have been accounted for at fair value in accordance with the purchase method of accounting, and its results of
operations have been included in our consolidated financial results beginning on November 29, 2008.
The accounts and financial statements of Clearwire for the period from January 1, 2008 through November 28, 2008 have
been prepared from the separate records maintained by Sprint. Further, such accounts and financial statements include
allocations of expenses from Sprint and therefore may not necessarily be indicative of the financial position, results of
operations and cash flows that would have resulted had we functioned as a stand-alone operation. Sprint directly assigned,
where possible, certain costs to us based on our actual use of the shared services. These costs include network related expenses,
office facilities, treasury services, human resources, supply chain management and other shared services. Cash management
was performed on a consolidated basis, and Sprint processed payables, payroll and other transactions on our behalf. Assets and
liabilities which were not specifically identifiable to us included:
• Cash, cash equivalents and investments, with activity in our cash balances being recorded through business equity;
• 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.
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
Table of Contents CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —(CONTINUED)
F-42