Sprint - Nextel 2012 Annual Report Download - page 180

Table of Contents
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Charges associated with Property, plant and equipment
We periodically assess assets that have not yet been deployed in our networks, including equipment and cell site development costs, classified
as construction in progress. We evaluate for losses related to (1) shortage, or loss incurred in deploying such equipment, (2) reserve for excessive and
obsolete equipment not yet deployed in the network, and (3) abandonment of network and corporate projects no longer expected to be deployed. In
addition to charges incurred in the normal course of business, this assessment includes evaluating the impact of changes in our business plans and
strategic network plans on those assets.
During the year ended December 31, 2012, we solidified our LTE network architecture, including identifying the sites at which we expect to
overlay LTE technology in the first phase of our deployment. Any projects that are not required to deploy LTE technology at those sites, or that are
no longer viable due to the development of the LTE network architecture, were abandoned and the related costs written down. In addition, any
network equipment not required to support our network deployment plans or sparing requirements were written down to estimated salvage value.
During the year ended December 31, 2011, in connection with our plan to deploy LTE alongside our existing WiMAX network and the shift in
management's strategic network deployment plans to focus on areas with high usage concentration, any projects that no longer fit within the
deployment plans were abandoned and the related costs were written down to salvage value. Additionally, in connection with our savings initiatives,
we continually review our tower leases and evaluate whether such towers fit within management's deployment plans. In connection therewith, certain
tower leases have been terminated, and when early termination was not available under the terms of the lease, we advised our landlords of our
intention not to renew. The costs for projects included in construction in progress related to leases for which we have initiated such terminations were
written down. See Note 3, Charges Resulting from Cost Savings Initiatives, for a discussion of the costs associated with lease terminations.
We incurred the following charges associated with PP&E for the years ended December 31, 2012, 2011 and 2010 (in thousands):
(1) Included in Cost of goods and services and network costs on the consolidated statements of operations.
During the third quarter of 2012, based on the LTE equipment vendor selection process and compatibility of existing network equipment, we
identified a portion of WiMAX network equipment that we are planning to change or upgrade during our deployment of LTE technology. We
concluded that the useful lives of certain WiMAX equipment should be accelerated beginning in the third quarter of 2012. This resulted in the
weighted
- average remaining useful life of WiMAX network assets to decrease from approximately four years to approximately three years based on
the expected date of equipment removal. We will continue to monitor the estimated useful lives of our network assets as our plans evolve.
F - 58
Year Ended December 31,
2012
2011
2010
Abandonment of network projects no longer meeting strategic network plans
$
81,642
$
397,204
$
180,001
Abandonment of network projects associated with terminated leases
—
233,468
—
Abandonment of corporate projects
564
69,669
—
Total loss from abandonment of network and other assets
82,206
700,341
180,001
Charges for disposal and differences between recorded amounts and results of physical counts(1)(2)
30,961
56,188
100,110
Charges for excessive and obsolete equipment(1)
58,613
209,912
65,616
Total losses on property, plant and equipment
$
171,780
$
966,441
$
345,727
(2)
For the year ended December 31, 2012, $14.0 million related to retail operations is included in Selling, general and administrative expense on the consolidated
statements of operations.