##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended July 1, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission
file number: 001-33576
 
 Airvana, Inc.
 (Exact name of registrant as specified in its charter)
 
 Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    04-3507654
(I.R.S. Employer
Identification Number)
 19 Alpha Road
Chelmsford, Massachusetts 01824
(Address of Principal Executive Offices including Zip Code)
 (978) 250-3000
(Registrants Telephone Number, Including Area Code)
 
 o þ
  o o þ
 o þ




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##### 



AIRVANA, INC.
 QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 1, 2007
Table of Contents
 Page No.PART I. FINANCIAL INFORMATIONItem 1.
    
    Condensed Consolidated Financial StatementsCondensed Consolidated Balance Sheets as of December 31, 2006, July 1, 2007 and July 1, 2007 Pro Forma
    
    
    3Condensed Consolidated Statements of Income for the three and six months Ended July 2, 2006 and July 1, 2007
    
    
    4Condensed Consolidated Statements of Cash Flows for the three and six months Ended July 2, 2006 and July 1, 2007
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4.
    
    Controls and Procedures
    
    
    32PART II. OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    33Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    46Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    47Item 6.
    
    Exhibits
    
    
    47EX-31.1 Section 302 Certification of CEOEX-31.2 Section 302 Certification of CFOEX-32.1 Section 906 Certification of CEOEX-32.2 Section 906 Certification of CFO
  2




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##### Table of Contents



PART I  Financial Information
 
 Item 1  Condensed Consolidated Financial Statements (unaudited)
 AIRVANA, INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 Pro FormaDecember 31,
    
    
    July 1,
    
    
    July 1,2006
    
    
    2007
    
    
    2007(unaudited)AssetsCurrent assets:Cash and cash equivalents
    
    $
    86,815
    
    
    $
    23,217
    
    
    $
    76,519Investments
    
    
    73,308
    
    
    
    116,111
    
    
    
    116,111Accounts receivable
    
    
    46,072
    
    
    
    16,768
    
    
    
    16,768Deferred product cost, current
    
    
    34,214
    
    
    
    701
    
    
    
    701Prepaid taxes
    
    
    14,627
    
    
    
    12,176
    
    
    
    12,176Prepaid expenses and other current assets
    
    
    2,327
    
    
    
    2,251
    
    
    
    2,251Total current assets
    
    
    257,363
    
    
    
    171,224
    
    
    
    224,526Property and equipment
    
    
    14,925
    
    
    
    17,716
    
    
    
    17,716Less: accumulated depreciation and amortization
    
    
    9,122
    
    
    
    10,706
    
    
    
    10,7065,803
    
    
    
    7,010
    
    
    
    7,010Deferred tax assets
    
    
    
    
    
    
    459
    
    
    
    459Restricted investments
    
    
    193
    
    
    
    193
    
    
    
    193Goodwill and intangible assets, net
    
    
    
    
    
    
    12,700
    
    
    
    12,700Other assets
    
    
    848
    
    
    
    2,644
    
    
    
    375Total assets
    
    $
    264,207
    
    
    $
    194,230
    
    
    $
    245,263Liabilities, redeemable convertible
preferred stock and stockholders (deficit) equityCurrent liabilities:Accounts payable
    
    $
    2,988
    
    
    $
    2,609
    
    
    $
    2,609Accrued expenses and other current liabilities
    
    
    7,841
    
    
    
    7,498
    
    
    
    7,498Accrued income taxes
    
    
    
    
    
    
    8,437
    
    
    
    8,437Dividend payable
    
    
    
    
    
    
    48
    
    
    
    48Current portion of long-term debt
    
    
    
    
    
    
    346
    
    
    
    346Deferred revenue, current
    
    
    243,281
    
    
    
    164,989
    
    
    
    164,989Total current liabilities
    
    
    254,110
    
    
    
    183,927
    
    
    
    183,927Deferred revenue, long-term
    
    
    137
    
    
    
    99
    
    
    
    99Other liabilities
    
    
    2,218
    
    
    
    1,958
    
    
    
    1,958Deferred tax liability
    
    
    
    
    
    
    1,419
    
    
    
    1,419Long-term debt
    
    
    
    
    
    
    305
    
    
    
    305Warrants to purchase preferred stock
    
    
    490
    
    
    
    70
    
    
    
    Total long-term liabilities
    
    
    2,845
    
    
    
    3,851
    
    
    
    3,781Commitments (Note 9)
    
    
    
    
    
    
    
    
    
    
    Redeemable
convertible preferred stock (at liquidation value)(Note 14):Series A redeemable convertible preferred stock, $0.01 par value: 10,937,500 shares
authorized, issued and outstanding as of December 31, 2006 and July 1, 2007
(unaudited); no shares pro forma
    
    
    16,749
    
    
    
    17,186
    
    
    
    Series B1 redeemable convertible preferred stock, $0.01 par value: 4,027,663 shares
authorized, 3,994,328 shares issued and outstanding at December 31, 2006 and July 1,
2007 (unaudited); no shares pro forma
    
    
    36,274
    
    
    
    37,257
    
    
    
    Series B2 redeemable convertible preferred stock, $0.01 par value: 900,414 shares
authorized, issued and outstanding as of December 31, 2006 and July 1, 2007
(unaudited); no shares pro forma
    
    
    7,362
    
    
    
    7,561
    
    
    
    Series C redeemable convertible preferred stock, $0.01 par value: 25,093,051 shares
authorized, 25,031,017 shares issued and outstanding as of December 31, 2006 and
25,074,183 shares issued and outstanding at July 1, 2007 (unaudited); no shares pro
forma
    
    
    56,150
    
    
    
    57,830
    
    
    
    Series D redeemable convertible preferred stock, $0.01 par value: 3,288,490 shares
issued and outstanding at December 31, 2006 and July 1, 2007 (unaudited); no shares
pro forma
    
    
    13,507
    
    
    
    13,946
    
    
    
    Total redeemable convertible preferred stock
    
    
    130,042
    
    
    
    133,780
    
    
    
    Stockholders (deficit) equity:Common stock, $0.001 par value: 90,000,000 shares authorized, 13,814,535, 14,567,362 and
63,492,119 issued and outstanding at December 31, 2006, July 1, 2007 (unaudited) and July
1, 2007 pro forma, respectively (Note 14)
    
    
    14
    
    
    
    14
    
    
    
    63Additional paid-in capital
    
    
    3,251
    
    
    
    3,619
    
    
    
    188,453Accumulated deficit
    
    
    (126,055
    )
    
    
    (130,961
    )
    
    
    (130,961
    )Total stockholders (deficit) equity
    
    
    (122,790
    )
    
    
    (127,328
    )
    
    
    57,555Total liabilities, redeemable convertible preferred stock and stockholders (deficit) equity
    
    $
    264,207
    
    
    $
    194,230
    
    
    $
    245,263
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##### Table of Contents



AIRVANA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
 Three Months Ended
    
    
    Six Months EndedJuly 2,
    
    
    July 1,
    
    
    July 2,
    
    
    July 1,2006
    
    
    2007
    
    
    2006
    
    
    2007Revenue:Product
    
    $
    145,835
    
    
    $
    141,641
    
    
    $
    145,835
    
    
    $
    141,641Service
    
    
    21,464
    
    
    
    14,615
    
    
    
    21,626
    
    
    
    14,884Total revenue
    
    
    167,299
    
    
    
    156,256
    
    
    
    167,461
    
    
    
    156,525Cost of revenue:Product
    
    
    39,016
    
    
    
    33,918
    
    
    
    39,196
    
    
    
    33,931Service
    
    
    1,414
    
    
    
    1,852
    
    
    
    2,809
    
    
    
    3,522Total cost of revenue
    
    
    40,430
    
    
    
    35,770
    
    
    
    42,005
    
    
    
    37,453Gross profit
    
    
    126,869
    
    
    
    120,486
    
    
    
    125,456
    
    
    
    119,072Operating expenses:Research and development
    
    
    13,464
    
    
    
    18,598
    
    
    
    25,861
    
    
    
    34,581Selling and marketing
    
    
    1,744
    
    
    
    3,182
    
    
    
    2,946
    
    
    
    5,762General and administrative
    
    
    1,104
    
    
    
    1,721
    
    
    
    2,096
    
    
    
    3,237In-process research and
development
    
    
    
    
    
    
    2,340
    
    
    
    
    
    
    
    2,340Total operating expenses
    
    
    16,312
    
    
    
    25,841
    
    
    
    30,903
    
    
    
    45,920Operating income
    
    
    110,557
    
    
    
    94,645
    
    
    
    94,553
    
    
    
    73,152Interest income, net
    
    
    1,662
    
    
    
    1,879
    
    
    
    3,065
    
    
    
    4,587Income before income tax expense
(benefit) and cumulative effect
of change in accounting
principle
    
    
    112,219
    
    
    
    96,524
    
    
    
    97,618
    
    
    
    77,739Income tax (benefit) expense
    
    
    (8,280
    )
    
    
    10,422
    
    
    
    (10,742
    )
    
    
    10,422Income before cumulative effect
of change in accounting
principle
    
    
    120,499
    
    
    
    86,102
    
    
    
    108,360
    
    
    
    67,317Cumulative effect of change in
accounting principle
    
    
    
    
    
    
    
    
    
    
    (330
    )
    
    
    Net income
    
    $
    120,499
    
    
    $
    86,102
    
    
    $
    108,030
    
    
    $
    67,317Net income per common share
applicable to to common
stockholders:Basic
    
    $
    2.20
    
    
    $
    1.56
    
    
    $
    1.92
    
    
    $
    1.14Diluted
    
    $
    2.01
    
    
    $
    1.37
    
    
    $
    1.75
    
    
    $
    1.04Weighted average common shares
outstanding:Basic
    
    
    13,505
    
    
    
    14,017
    
    
    
    13,468
    
    
    
    13,938Diluted
    
    
    18,894
    
    
    
    21,526
    
    
    
    18,926
    
    
    
    20,793
  4




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AIRVANA, INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Three Months Ended
    
    
    Six Months EndedJuly 2,
    
    
    July 1,
    
    
    July 2,
    
    
    July 1,2006
    
    
    2007
    
    
    2006
    
    
    2007Operating activitiesNet income
    
    $
    120,499
    
    
    $
    86,102
    
    
    $
    108,030
    
    
    $
    67,317Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation
    
    
    546
    
    
    
    782
    
    
    
    1,096
    
    
    
    1,504Amortization of intangible assets
    
    
    
    
    
    
    178
    
    
    
    
    
    
    
    178In-process research and development
    
    
    
    
    
    
    2,340
    
    
    
    
    
    
    
    2,340Stock-based compensation
    
    
    65
    
    
    
    739
    
    
    
    199
    
    
    
    1,253Deferred tax benefit
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    330
    
    
    
    Amortization of investments
    
    
    132
    
    
    
    (1,338
    )
    
    
    438
    
    
    
    (2,587
    )Amortization of leasehold incentive
    
    
    (142
    )
    
    
    (130
    )
    
    
    (281
    )
    
    
    (260
    )Non-cash interest income
    
    
    (94
    )
    
    
    (15
    )
    
    
    (85
    )
    
    
    (103
    )Changes in operating assets and liabilities:Accounts receivable
    
    
    6,732
    
    
    
    (13,506
    )
    
    
    7,590
    
    
    
    29,304Deferred cost
    
    
    37,730
    
    
    
    33,672
    
    
    
    33,444
    
    
    
    33,513Prepaid taxes
    
    
    (40
    )
    
    
    2,451
    
    
    
    (11,439
    )
    
    
    2,451Prepaid expenses and other current assets
    
    
    441
    
    
    
    287
    
    
    
    305
    
    
    
    271Accounts payable
    
    
    (2,420
    )
    
    
    (156
    )
    
    
    (3,217
    )
    
    
    (685
    )Accrued expenses and other current liabilities
    
    
    (7,276
    )
    
    
    2,528
    
    
    
    (4,495
    )
    
    
    (556
    )Accrued income taxes
    
    
    
    
    
    
    8,437
    
    
    
    
    
    
    
    8,437Deferred revenue
    
    
    (148,183
    )
    
    
    (119,706
    )
    
    
    (129,522
    )
    
    
    (78,500
    )Net cash provided by operating activities
    
    
    7,990
    
    
    
    2,670
    
    
    
    2,393
    
    
    
    63,882Investing activitiesPurchases of property and equipment
    
    
    (422
    )
    
    
    (673
    )
    
    
    (1,439
    )
    
    
    (2,259
    )Restricted investments
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    Purchase of 3-Way Networks, net of cash acquired
    
    
    
    
    
    
    (10,907
    )
    
    
    
    
    
    
    (10,907
    )Purchases of investments
    
    
    (28,007
    )
    
    
    (56,262
    )
    
    
    (50,221
    )
    
    
    (163,810
    )Maturities of investments
    
    
    45,118
    
    
    
    66,951
    
    
    
    66,930
    
    
    
    123,594Other assets
    
    
    4
    
    
    
    (91
    )
    
    
    2
    
    
    
    (87
    )Net cash provided by (used in) investing activities
    
    
    16,693
    
    
    
    (982
    )
    
    
    15,372
    
    
    
    (53,469
    )Financing activitiesPayments on long-term debt
    
    
    
    
    
    
    (53
    )
    
    
    
    
    
    
    (53
    )Costs associated with proposed initial public offering
    
    
    
    
    
    
    (841
    )
    
    
    
    
    
    
    (1,709
    )Proceeds from leasehold incentive
    
    
    175
    
    
    
    
    
    
    
    789
    
    
    
    Proceeds from sale of Series D redeemable convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    1,000
    
    
    
    Payments of cash dividend
    
    
    
    
    
    
    (72,707
    )
    
    
    
    
    
    
    (72,707
    )Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (96
    )Proceeds from exercise of stock options
    
    
    119
    
    
    
    266
    
    
    
    168
    
    
    
    502Net cash provided by (used in) financing activities
    
    
    294
    
    
    
    (73,335
    )
    
    
    1,957
    
    
    
    (74,063
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    17
    
    
    
    56
    
    
    
    16
    
    
    
    52Net increase (decrease) in cash and cash equivalents
    
    
    24,994
    
    
    
    (71,591
    )
    
    
    19,738
    
    
    
    (63,598
    )Cash and cash equivalents at beginning of period
    
    
    14,617
    
    
    
    94,808
    
    
    
    19,873
    
    
    
    86,815Cash and cash equivalents at end of period
    
    $
    39,611
    
    
    $
    23,217
    
    
    $
    39,611
    
    
    $
    23,217Supplemental Disclosure of Cash Flow InformationCash paid for income taxes
    
    $
    60
    
    
    $
    55
    
    
    $
    3,978
    
    
    $
    55Supplemental Disclosure of Noncash ActivitiesAccretion of dividends on redeemable convertible preferred stock
    
    $
    1,834
    
    
    $
    1,835
    
    
    $
    3,662
    
    
    $
    3,669Retirement of property and equipment
    
    $
    
    
    
    $
    
    
    
    $
    113
    
    
    $
    
  5




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##### Table of Contents



AIRVANA, INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
 1. Operations
 Business Description
  2. Summary of Significant Accounting Policies
 Basis of Presentation and Principles of Consolidation
  Unaudited Interim Financial Statements
  Unaudited Pro Forma Presentation
  Use of Estimates
  6




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Fiscal Year
  Cash and Cash Equivalents
  Investments
  Revenue Recognition
 Software
Revenue Recognition.
    7




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8




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##### Table of Contents



Segment and Geographic Information
 Disclosures About Segments of an
Enterprise and Related Information
 Stock-Based Compensation
 Share-Based Payment
 Comprehensive Income
 Reporting Comprehensive Income
 Income Taxes
 Accounting for Income
Taxes
 3. Investments
 Accounting for Certain Investments in Debt and Equity
Securities
  9




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##### Table of Contents



December 31, 2006
    
    
    July 1, 2007Amortized
    
    
    Fair Market
    
    
    Amortized
    
    
    Fair MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueCorporate debt securities
    
    $
    61,007
    
    
    $
    61,018
    
    
    $
    103,094
    
    
    $
    103,178Asset-backed securities
    
    
    12,301
    
    
    
    12,302
    
    
    
    13,017
    
    
    
    13,028$
    73,308
    
    
    $
    73,320
    
    
    $
    116,111
    
    
    $
    116,206
  4. Income Taxes
      5. Property and Equipment
  10




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##### Table of Contents



December 31,
    
    July 1,Estimated Useful Life
    
    2006
    
    2007Computer equipment and
purchased software
    
    1.5 - 3 years
    
    
    4,972
    
    
    
    5,596Test and lab equipment
    
    3 years
    
    
    3,883
    
    
    
    4,831Leasehold improvements
    
    Shorter of life of lease or 5 years
    
    
    5,600
    
    
    
    6,372Office furniture and equipment
    
    3 - 5 years
    
    
    470
    
    
    
    917Total property and equipment
    
    
    
    
    
    
    14,925
    
    
    
    17,716Less: Accumulated
depreciation and amortization
    
    
    
    
    
    
    (9,122
    )
    
    
    (10,706
    )5,803
    
    
    
    7,010
  6. Concentrations of Credit Risk and Significant Customers
   7. Common Stock
 Stock Option Plans
   11




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##### Table of Contents



Share-Based Payment.
  Weighted
    
    
    Average
    
    
    
    
    
    
    AverageAverage
    
    
    Remaining
    
    
    
    
    
    
    FairNumber of
    
    
    Exercise Price
    
    
    Contractual
    
    
    Aggregate
    
    
    ValueShares
    
    
    per Share
    
    
    Term in Years
    
    
    Intrinsic Value
    
    
    Per ShareOutstanding at December 31, 2006
    
    
    10,007,812
    
    
    $
    2.05
    
    
    
    7.67
    
    
    $
    55,641Granted
    
    
    3,677,086
    
    
    
    3.14
    
    
    
    
    
    
    
    
    
    
    $
    5.83Exercised
    
    
    (355,992
    )
    
    
    1.41
    
    
    
    
    
    
    $
    1,850Cancelled
    
    
    (290,228
    )
    
    
    2.67Outstanding at July 1, 2007
    
    
    13,038,678
    
    
    
    2.02
    
    
    
    7.44
    
    
    $
    70,670Exercisable at July 1, 2007
    
    
    5,680,025
    
    
    
    1.14
    
    
    
    6.16
    
    
    $
    35,777Options outstanding at
July 1, 2007 expected to vest
    
    
    12,647,518
    
    
    
    2.02
    
    
    
    7.44
    
    
    $
    68,559
   12




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedJuly 2,
    
    
    July 1,
    
    
    July 2,
    
    
    July 1,2006
    
    
    2007
    
    
    2006
    
    
    2007Cost of service revenue
    
    $
    6
    
    
    $
    44
    
    
    $
    7
    
    
    $
    77Research and development
    
    
    46
    
    
    
    451
    
    
    
    59
    
    
    
    744Selling and marketing
    
    
    11
    
    
    
    172
    
    
    
    11
    
    
    
    316General and administrative
    
    
    2
    
    
    
    72
    
    
    
    122
    
    
    
    116Total stock-based compensation
    
    $
    65
    
    
    $
    739
    
    
    $
    199
    
    
    $
    1,253
 8. Net Income Per Share
 Earnings Per
Share
  13




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##### Table of Contents



Three Months
    
    
    Six MonthsEnded
    
    
    EndedJuly 2,
    
    
    July 1,
    
    
    July 2,
    
    
    July 1,2006
    
    
    2007
    
    
    2006
    
    
    2007Numerator:Income before cumulative effect of change in accounting
principle
    
    $
    120,499
    
    
    $
    86,102
    
    
    $
    108,360
    
    
    $
    67,317Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (330
    )
    
    
    Net income
    
    $
    120,499
    
    
    $
    86,102
    
    
    $
    108,030
    
    
    $
    67,317Allocation of net income:Basic:Accretion of redeemable preferred stock
    
    $
    1,834
    
    
    $
    1,835
    
    
    $
    3,662
    
    
    $
    3,669Dividend
allocated to preferred stockholders
    
    
    
    
    
    
    53,803
    
    
    
    
    
    
    
    47,736Undistributed net income allocated to preferred
stockholders
    
    
    88,999
    
    
    
    8,554
    
    
    
    78,524
    
    
    
    Net income applicable to preferred stockholders
    
    
    90,833
    
    
    
    64,192
    
    
    
    82,186
    
    
    
    51,405Net income applicable to common stockholders
before cumulative effect of change in accounting
principle
    
    
    29,666
    
    
    
    21,910
    
    
    
    26,174
    
    
    
    15,912Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (330
    )
    
    
    Net income applicable to common stockholders
    
    
    29,666
    
    
    
    21,910
    
    
    
    25,844
    
    
    
    15,912Net income
    
    $
    120,499
    
    
    $
    86,102
    
    
    $
    108,030
    
    
    $
    67,317Diluted:Accretion of redeemable preferred stock
    
    $
    1,834
    
    
    $
    1,835
    
    
    $
    3,662
    
    
    $
    3,669Dividend
allocated to preferred stockholders
    
    
    
    
    
    $
    47,260
    
    
    
    
    
    
    $
    42,008Undistributed net income allocated to preferred
stockholders
    
    
    80,692
    
    
    
    7,514
    
    
    
    71,195
    
    
    
    Net income applicable to preferred stockholders
    
    
    82,526
    
    
    
    56,609
    
    
    
    74,857
    
    
    
    45,677Net income applicable to common stockholders
before cumulative effect of change in accounting
principle
    
    
    37,973
    
    
    
    29,493
    
    
    
    33,503
    
    
    
    21,640Cumulative effect of change in accounting principle
    
    
    
    
    
    
    
    
    
    
    (330
    )
    
    
    Net income applicable to common stockholders
    
    
    37,973
    
    
    
    29,493
    
    
    
    33,173
    
    
    
    21,640Net income
    
    $
    120,499
    
    
    $
    86,102
    
    
    $
    108,030
    
    
    $
    67,317Denominator:Basic weighted average shares
    
    
    13,505
    
    
    
    14,017
    
    
    
    13,468
    
    
    
    13,938Dilutive effect of common stock equivalents
    
    
    5,389
    
    
    
    7,509
    
    
    
    5,458
    
    
    
    6,855Diluted weighted average shares
    
    
    18,894
    
    
    
    21,526
    
    
    
    18,926
    
    
    
    20,793Calculation of net income per share:Basic:Net income applicable to common stockholders
    
    $
    29,666
    
    
    $
    21,910
    
    
    $
    25,844
    
    
    $
    15,912Weighted average shares of common stock outstanding
    
    
    13,505
    
    
    
    14,017
    
    
    
    13,468
    
    
    
    13,938Net income per share
    
    $
    2.20
    
    
    $
    1.56
    
    
    $
    1.92
    
    
    $
    1.14Diluted:Net income applicable to common stockholders
    
    $
    37,973
    
    
    $
    29,493
    
    
    $
    33,173
    
    
    $
    21,640Weighted average shares of common stock outstanding
    
    
    18,894
    
    
    
    21,526
    
    
    
    18,926
    
    
    
    20,793Net income per share
    
    $
    2.01
    
    
    $
    1.37
    
    
    $
    1.75
    
    
    $
    1.04Cumulative effect of change in accounting principleBasic
    
    $
    
    
    
    $
    
    
    
    $
    0.02
    
    
    $
    Diluted
    
    $
    
    
    
    $
    
    
    
    $
    0.02
    
    
    $
    
 14




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##### Table of Contents



9. Lease Commitments
     Fiscal year:Remainder of 2007
    
    $
    6652008
    
    
    1,2952009
    
    
    1,2992010
    
    
    1,3512011
    
    
    1,359Thereafter
    
    
    279$
    6,248
 10. Deferred Revenue and Deferred Product Cost
   15




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##### Table of Contents



Current
    
    
    Long-Term
    
    
    TotalDeferred revenue related to
April 2005 specified upgrade
    
    $
    885
    
    
    $
    
    
    
    $
    885Deferred revenue related to
September 2006 specified upgrade
    
    
    146,887
    
    
    
    
    
    
    
    146,887Deferred revenue related to June
2007 specified upgrade
    
    
    16,619
    
    
    
    
    
    
    
    16,619Other deferred revenue
    
    
    598
    
    
    
    99
    
    
    
    697Total deferred revenue
    
    $
    164,989
    
    
    $
    99
    
    
    $
    165,088Deferred product cost related to
September 2006 specified upgrade
    
    $
    681
    
    
    $
    
    
    
    $
    681Deferred product cost related to
June 2007 specified upgrade
    
    
    20
    
    
    
    
    
    
    
    20Total deferred product cost
    
    $
    701
    
    
    $
    
    
    
    $
    701
  Current
    
    
    Long-Term
    
    
    TotalDeferred revenue related to
April 2005 specified upgrade
    
    $
    156,899
    
    
    $
    
    
    
    $
    156,899Deferred revenue related to
September 2006 specified upgrade
    
    
    85,820
    
    
    
    
    
    
    
    85,820Other deferred revenue
    
    
    562
    
    
    
    137
    
    
    
    699Total deferred revenue
    
    $
    243,281
    
    
    $
    137
    
    
    $
    243,418Deferred product cost related to
April 2005 specified upgrade
    
    $
    33,849
    
    
    $
    
    
    
    $
    33,849Deferred product cost related to
September 2006 specified upgrade
    
    
    365
    
    
    
    
    
    
    
    365Total deferred product cost
    
    $
    34,214
    
    
    $
    
    
    
    $
    34,214
 11. Accrued Expenses and Other Current Liabilities
  December 31,
    
    
    July 1,2006
    
    
    2007Payroll and related accruals
    
    $
    5,301
    
    
    $
    4,287Accrued rent expense
    
    
    569
    
    
    
    585Accrued legal fees
    
    
    591
    
    
    
    240Other accruals
    
    
    1,380
    
    
    
    2,386$
    7,841
    
    
    $
    7,498
 12. Acquisition
   16




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##### Table of Contents



EstimatedUseful Life
    
    
    Fair ValueDeveloped Technology
    
    60 months
    
    $
    3,340Customer Relationships
    
    48 months
    
    
    1,350Non-Compete Agreements
    
    36 months
    
    
    190Total Intangible Assets
    
    
    
    
    
    $
    4,880
   Pro Forma Results of Operations
  Three Months
    
    Six MonthsEnded
    
    EndedJuly 2,
    
    July 1,
    
    July 2,
    
    July 1,2006
    
    2007
    
    2006
    
    2007Pro forma revenues
    
    $
    167,555
    
    
    $
    156,256
    
    
    $
    168,150
    
    
    $
    156,980Pro forma net income
    
    $
    120,515
    
    
    $
    85,832
    
    
    $
    108,150
    
    
    $
    66,791Pro forma EPS
    
    $
    2.20
    
    
    $
    1.56
    
    
    $
    1.92
    
    
    $
    1.13
 13. Special Cash Dividend
  17




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14. Reverse Stock Split
  15. Related Party Transactions
  16. Subsequent Events
  18




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 This quarterly report on Form 10-Q contains forward-looking statements that involve risks and
uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could
cause our results to differ materially from those expressed or implied by such forward-looking
statements. The statements contained in this Quarterly Report on Form 10-Q that are not purely
historical are forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements include any expectation of earnings, revenues, billings or other
financial items; any statements of the plans, strategies and objectives of management for future
operations; factors that may affect our operating results; statements concerning new products or
services; statements related to future capital expenditures; statements related to future economic
conditions or performance; statements as to industry trends and other matters that do not relate
strictly to historical facts or statements of assumptions underlying any of the foregoing. These
statements are often identified by the use of words such as, but not limited to, anticipate,
believe, continue, could,
estimate, expect, intend, may, will, plan, target,
continue, and similar expressions or variations intended to identify forward-looking statements.
These statements are based on the beliefs and assumptions of our management based on information
currently available to management. Such forward-looking statements are subject to risks,
uncertainties and other important factors that could cause actual results and the timing of certain
events to differ materially from future results expressed or implied by such forward-looking
statements. Factors that could cause or contribute to such differences include, but are not limited
to, those identified below, and those discussed in the section titled Risk Factors included
elsewhere in this Form 10-Q and in our other filings with the SEC. Furthermore, such
forward-looking statements speak only as of the date of this report. We undertake no obligation to
update any forward-looking statements to reflect events or circumstances after the date of such
statements.
 Overview
     19




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Our OEM Business Model
    Software Revenue Recognition.
 Impact of SOP No. 97-2, Software Revenue Recognition
   20




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##### Table of Contents




 
 
 
 
 21




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##### Table of Contents



Key Elements of Financial Performance
 Revenue
  Product Revenue.
    22




---



##### Table of Contents



Service Revenue.
   Product and Service Billings
     23




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJuly 2, 2006
    
    
    July 1, 2007
    
    
    July 2, 2006
    
    
    July 1, 2007Revenue
    
    $
    167,299
    
    
    $
    156,256
    
    
    $
    167,461
    
    
    $
    156,525Less: deferred revenue acquired
    
    
    
    
    
    
    (171
    )
    
    
    
    
    
    
    (171
    )Deferred revenue, at end of period
    
    
    143,602
    
    
    
    165,088
    
    
    
    143,602
    
    
    
    165,088Less: deferred revenue, at beginning of period
    
    
    (291,785
    )
    
    
    (284,624
    )
    
    
    (273,124
    )
    
    
    (243,418
    )Product and service billings
    
    $
    19,116
    
    
    $
    36,549
    
    
    $
    37,939
    
    
    $
    78,024
 Deferred Revenue
  Cost of Revenue
  
    
    cost for channel card hardware provided by contract manufacturers;
    
    cost of hardware for our radio network controllers and network management systems;
    
    license fees for third-party software and other intellectual property used in our products; and
    
    other related overhead costs.
  Cost Related to Product and Service Billings
  Deferred Product Cost
  Gross Margin
  24




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##### Table of Contents



Operating Expenses
 Research and Development.
 
    
    salaries, benefits and stock-based compensation related to our engineers;
    
    cost of prototypes and test equipment relating to the development of new products and the enhancement of existing products;
    
    payments to suppliers for design and consulting services; and
    
    other related overhead costs.
  Sales and Marketing.
 
    
    salaries, benefits and stock-based compensation related to our sales, marketing and customer support personnel;
    
    commissions payable to our sales personnel;
    
    travel, lodging and other out-of-pocket expenses;
    
    marketing program expenses; and
    
    other related overhead costs.
  General and Administrative.
 
    
    salaries, benefits and stock-based compensation related to our executive, finance, legal,
human resource and administrative personnel;
    
    professional services costs; and
    
    other related overhead costs.
  Stock-Based Compensation Expense
  25




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##### Table of Contents



Interest Income, Net
  Cash Flow from Operating Activities
   Fiscal Year
  Critical Accounting Policies and Estimates
    26




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Results of Operations
 Comparison of Three Months Ended July 2, 2006 and July 1, 2007
 Revenue and Product and Service Billings
 Three Months Ended
    
    
    Period-to-PeriodJuly 2, 2006
    
    
    July 1, 2007
    
    
    Change(dollars in thousands)Revenue
    
    $
    167,299
    
    
    $
    156,256
    
    
    $
    (11,043
    )Less: deferred revenue acquired
    
    
    
    
    
    
    (171
    )Deferred revenue, end of period
    
    
    143,602
    
    
    
    165,088Less: deferred revenue,
beginning of period
    
    
    (291,785
    )
    
    
    (284,624
    )Product and service billings
    
    $
    19,116
    
    
    $
    36,549
    
    
    $
    17,433
   Cost of Revenue and Cost Related to Product and Service Billings
 Three Months Ended
    
    
    Period-to-PeriodJuly 2, 2006
    
    
    July 1, 2007
    
    
    Change(dollars in thousands)Cost of revenue
    
    $
    40,430
    
    
    $
    35,770
    
    
    $
    (4,660
    )Deferred product cost, end of period
    
    
    33,522
    
    
    
    701Less: deferred product cost, beginning of period
    
    
    (71,252
    )
    
    
    (34,373
    )Cost related to product billings
    
    $
    2,700
    
    
    $
    2,098
    
    
    $
    (602
    )
   27




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##### Table of Contents



Gross Profit
  Operating Expenses
 Period-to-PeriodThree Months Ended
    
    
    ChangeJuly 2, 2006
    
    
    July 1, 2007
    
    
    Amount
    
    
    Percentage(dollars in thousands)Research and development
    
    $
    13,464
    
    
    $
    18,598
    
    
    $
    5,134
    
    
    
    38.1
    %Sales and marketing
    
    
    1,744
    
    
    
    3,182
    
    
    
    1,438
    
    
    
    82.5
    %General and administrative
    
    
    1,104
    
    
    
    1,721
    
    
    
    617
    
    
    
    55.9
    %In-process research and development
    
    
    
    
    
    
    2,340
    
    
    
    2,340Total operating expenses
    
    $
    16,312
    
    
    $
    25,841
    
    
    $
    9,529
    
    
    
    58.4
    %
 Research and Development
 Sales and Marketing
 General and Administrative
 In-Process Research and Development
 Comparison of Six Months Ended July 2, 2006 and July 1, 2007
 Revenue and Product and Service Billings
 28




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##### Table of Contents



Six Months Ended
    
    
    Period-to-PeriodJuly 2, 2006
    
    
    July 1, 2007
    
    
    Change(dollars in thousands)Revenue
    
    $
    167,461
    
    
    $
    156,525
    
    
    $
    (10,936
    )Less: deferred revenue acquired
    
    
    
    
    
    
    (171
    )Deferred revenue, end of period
    
    
    143,602
    
    
    
    165,088Less: deferred revenue,
beginning of period
    
    
    (273,124
    )
    
    
    (243,418
    )Product and service billings
    
    $
    37,939
    
    
    $
    78,024
    
    
    $
    40,085
   Cost of Revenue and Cost Related to Product and Service Billings
 Six Months Ended
    
    
    Period-to-PeriodJuly 2, 2006
    
    
    July 1, 2007
    
    
    Change(dollars in thousands)Cost of revenue
    
    $
    42,005
    
    
    $
    37,453
    
    
    $
    (4,552
    )Deferred product cost, end of period
    
    
    33,522
    
    
    
    701Less: deferred product cost,
beginning of period
    
    
    (66,966
    )
    
    
    (34,214
    )Cost related to product billings
    
    $
    8,561
    
    
    $
    3,940
    
    
    $
    (4,621
    )
    Gross Profit
  29




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Operating Expenses
 Period-to-PeriodSix Months Ended
    
    
    ChangeJuly 2, 2006
    
    
    July 1, 2007
    
    
    Amount
    
    Percentage(dollars in thousands)Research and development
    
    $
    25,861
    
    
    $
    34,581
    
    
    $
    8,720
    
    
    
    33.7
    %Sales and marketing
    
    
    2,946
    
    
    
    5,762
    
    
    
    2,816
    
    
    
    95.6
    %General and administrative
    
    
    2,096
    
    
    
    3,237
    
    
    
    1,141
    
    
    
    54.4
    %In-process research and development
    
    
    
    
    
    
    2,340
    
    
    
    2,340Total operating expenses
    
    $
    30,903
    
    
    $
    45,920
    
    
    $
    15,017
    
    
    
    48.6
    %
 Research and Development
 Sales and Marketing
 General and Administrative
 In-Process Research and Development
 30




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##### Table of Contents



Liquidity and Capital Resources
 As of
    
    As ofDecember 31,
    
    July 1,2006
    
    2007Cash and cash equivalents
    
    $
    86,815
    
    
    $
    23,217Investments, short-term
    
    
    73,308
    
    
    
    116,111Accounts receivable, net
    
    
    46,072
    
    
    
    16,768Working capital
    
    
    3,254
    
    
    
    (12,703
    )
   Six Months
    
    Six MonthsEnded
    
    EndedJuly 2,
    
    July 1,2006
    
    2007Cash flow from operating activities
    
    $
    2,393
    
    
    $
    63,882Cash flow from investing activities
    
    
    15,372
    
    
    
    (53,406
    )Cash flow from financing activities
    
    
    1,957
    
    
    
    (74,063
    )
    31




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Item 3. Quantitative and Qualitative Disclosures about Market Risk
 Foreign Currency Exchange Risk
  Interest Rate Sensitivity
   
 Item 4. Changes in Internal Controls over Financial Reporting and Procedures
  32




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PART II. OTHER INFORMATION
 
 Item 1A. Risk Factors
 Our business is subject to numerous risks. We caution you that the following important factors,
among others, could cause our actual results to differ materially from those expressed in
forward-looking statements made by us or on our behalf in filings with the SEC, press releases,
communications with investors and oral statements. Any or all of our forward-looking statements in
this Quarterly Report on Form 10-Q and in any other public statements we make may turn out to be
wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks
and uncertainties. Many factors mentioned in the discussion below will be important in determining
future results. Consequently, no forward-looking statement can be guaranteed. Actual future
results may vary materially from those anticipated in forward-looking statements. We undertake no
obligation to update any forward-looking statements, whether as a result of new information, future
events or otherwise. You are advised, however, to consult any further disclosure we make in our
reports filed with the SEC.
 Risks Relating to Our Business
 We depend on a single
OEM customer, Nortel Networks, for almost all of our revenue and billings,
and a significant shortfall in sales to Nortel Networks would significantly harm our business and
operating results.
  Because our OEM business model requires us to defer the recognition of most of our revenue from
product sales until we deliver specified upgrades, our revenue in any period is not likely to be
indicative of the level of our sales activity in that period.
  33




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##### Table of Contents



Our revenue and billings growth may be constrained by our product concentration and lack of revenue
diversification.
  Our current products are based exclusively on the CDMA2000 air interface standard for wireless
communications, and therefore any movement by existing or prospective operator customers to a
different standard could impair our business and operating results.
   The introduction of fourth generation wireless technology could reduce spending on our EV-DO
products and therefore harm our operating results.
   34




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##### Table of Contents



The variable sales and deployment cycles for our EV-DO products are likely to cause our quarterly
billings to fluctuate materially
   If demand for mobile broadband services does not develop as quickly as we anticipate, or develops
in a manner that we do not anticipate, our revenue and billings may decline or fail to grow, which
would adversely affect our operating results
  Deployments of our EV-DO products by two large wireless operators account for a substantial
majority of our revenue and billings, and a decision by these operators to reduce their use of our
products would harm our business and operating results.
  If the market for our fixed-mobile convergence products does not develop as we expect, or our
fixed-mobile convergence products do not achieve sufficient market acceptance, our business would
suffer.
  35




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##### Table of Contents



Our future sales will depend on our success in generating sales to a limited number of OEM
customers, and any failure to do so would have a significant detrimental effect on our business.
  The unpredictability of our future results may adversely affect the trading price of our common
stock.
  
    
    the effect of our OEM business model on our revenue recognition;
    
    the timing of agreements or commitments with our OEM customers for new products or software upgrades;
    
    the timing of our delivery of software upgrades;
    
    the unpredictable deployment and purchasing patterns of operators;
    
    fluctuations in demand for products of our OEM customers that are sold together with our products, and the timing and size
of orders for such products of our OEM customers;
    
    new product introductions and enhancements by our competitors and us;
    
    the timing and acceptance of software upgrades sold by our OEM customers to their installed base of operators;
    
    changes in our pricing policies or the pricing policies of our competitors;
    
    our ability to develop, introduce and deploy new products and product upgrades that meet customer requirements in a timely
manner;
    
    adjustments in the reporting of royalties and product sales by our OEM customers resulting from reviews and audits of such
reports;
 36




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##### Table of Contents




    
    our and our OEM customers ability to obtain sufficient supplies of limited source components or materials;
    
    our and our OEM customers ability to attain and maintain production volumes and quality levels for our products; and
    
    general economic conditions, as well as those specific to the communications, networking, wireless and related
industries.
   We may not be able to achieve profitability for any period in the future or sustain cash flow from
operating activities.
  Claims by other parties that we infringe their proprietary technology could force us to redesign
our products or to incur significant costs.
  
    
    stop selling, incorporating or using our products that use the challenged intellectual property;
    
    obtain from the owner of the infringed intellectual property right a license to sell or use the relevant technology, which
license may not be available on reasonable terms, or at all;
    
    redesign those products that use any allegedly infringing technology, which may be costly and time-consuming; or
    
    refund deposits and other amounts received for allegedly infringing technology or products.
 37




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If we are not successful in obtaining from third parties licenses to intellectual property that is
required for GSM/UMTS products that we are developing, we may not be able to expand our business as
expected and our business may suffer.
  If we do not timely deliver new and enhanced products that respond to customer requirements and
technological changes, operators may not buy our products and our revenue and product and service
billings may decline significantly.
    38




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Our revenue and product and service billings growth will be limited if our OEM customers are unable
to continue to sell our products to large wireless operators or if we have to discount our products
to support the selling efforts of our OEM customers.
  We depend on sole sources for certain components of our products and our business would be harmed
if the supply from our sole sources were disrupted.
  The market for network infrastructure products is highly competitive and continually evolving, and
if we are not able to compete effectively, we may not be able to continue to expand our business as
expected and our business may suffer.
   Our agreement with our largest OEM customer, Nortel Networks, provides Nortel Networks with an
option to license some of our intellectual property to develop internally products competitive with
the products it currently purchases from us.
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Because our business depends on the continued strength of the communications industry, our
operating results will suffer if that industry experiences an economic downturn.
  Our ability to compete and the success of our business could be jeopardized if we are unable to
protect our intellectual property adequately.
  We may engage in future acquisitions that could disrupt our business, cause dilution to our
stockholders and harm our financial condition and operating results.
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Future interpretations of existing accounting standards could adversely affect our operating
results.
   The loss of key personnel or an inability to attract and retain additional personnel may impair our
ability to grow our business.
   We will incur significant increased costs as a result of operating as a public company, and our
management will be required to devote substantial time to public company compliance initiatives. If
we are unable to absorb these increased costs or maintain management focus on development and sales
of our product offerings and services, we may not be able to achieve our business plan.
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If we are unable to manage our growth and expand our operations successfully, our business and
operating results will be harmed and our reputation may be damaged.
   We may need additional capital in the future, which may not be available to us, and if it is
available, may dilute our existing stockholders ownership of our common stock.
  
    
    fund ongoing operations;
    
    take advantage of opportunities, including more rapid expansion of our
business or the acquisition of complementary products, technologies or
businesses;
    
    develop new products; or
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
    
    respond to competitive pressures.
  Our ability to sell our products depends in part on the quality of our support and services
offerings, and our failure to offer high quality support and services would have a material adverse
effect on our sales and operating results.
  Our products are highly technical and may contain undetected software or hardware errors, which
could cause harm to our reputation and adversely affect our business.
  Our international sales and operations subject us to additional risks that can adversely affect our
operating results.
  
    
    the difficulty of managing and staffing foreign offices and the increased travel, infrastructure and legal compliance costs
associated with multiple international locations;
    
    difficulties in enforcing contracts, collecting accounts receivable and longer payment cycles, especially in emerging
markets;
    
    the need to localize our products and licensing programs for international customers;
    
    tariffs and trade barriers and other regulatory or contractual limitations on our ability to sell or develop our products
in certain foreign markets;
    
    increased exposure to foreign currency exchange rate risk; and
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
    
    reduced protection for intellectual property rights in some countries.
  Risks Relating to Ownership of Our Common Stock
 The market price of our common stock may be volatile.
  
    
    fluctuations in our quarterly financial results or the quarterly financial results of
companies perceived to be similar to us;
    
    fluctuations in our revenue as a result of our revenue recognition policy, even during
periods of significant sales activity;
    
    changes in estimates of our financial results or recommendations by securities analysts;
    
    failure of any of our products to achieve or maintain market acceptance;
    
    any adverse change in our relationship with Nortel Networks;
    
    changes in market valuations of similar companies;
    
    success of competitive products;
    
    changes in our capital structure, such as future issuances of securities or the incurrence of debt;
    
    announcements by us or our competitors of significant products, contracts, acquisitions
or strategic alliances;
    
    regulatory developments in the United States, foreign countries or both;
    
    litigation involving our company, our general industry or both;
    
    additions or departures of key personnel;
    
    general perception of the future of CDMA technology;
    
    investors general perception of us; and
    
    changes in general economic, industry and market conditions.
  If equity research analysts do not publish research or reports about our business or if they issue
unfavorable commentary or downgrade our common stock, the price of our common stock could decline.
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A significant portion of our total outstanding shares may be sold into the public market in the
near future, which could cause the market price of our common stock to drop significantly, even if
our business is doing well.
   Our directors and management will exercise significant control over our company.
  Provisions in our certificate of incorporation, our by-laws or Delaware law might discourage,
delay or prevent a change in control of our company or changes in our management and, therefore,
depress the trading price of our common stock.
  
    
    limitations on the removal of directors;
    
    a classified board of directors so that not all members of our board are elected at one time;
    
    advance notice requirements for stockholder proposals and nominations;
    
    the inability of stockholders to act by written consent or to call special meetings;
    
    the ability of our board of directors to make, alter or repeal our by-laws; and
    
    the ability of our board of directors to designate the terms of and issue new series of
preferred stock without stockholder approval, which could be used to institute a rights
plan, or a poison pill, that would work to dilute the stock ownership of a potential hostile
acquirer, likely preventing acquisitions that have not been approved by our board of
directors.
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We do not currently intend to pay dividends on our common stock and, consequently, the ability to
achieve a return on an investment in our common stock will depend on appreciation in the price of
our common stock.
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 (a) Sales of Unregistered Securities
  (b) Use of Proceeds from IPO
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Item 4. Submission of Matters to a Vote of Security Holders.
  
    
    The amendment and restatement of the Companys Certificate of Incorporation, as
amended, which, among other things, provides: (a) that the authorized capitalization of
the Company shall consist of 350,000,000 shares of common stock and 10,000,000 shares of
undesignated preferred stock; (b) that, upon the closing of the IPO, the Companys board
of directors shall be divided into three separate classes; (c) that, upon the closing of
the IPO, stockholders may not take action by written consent and may not call a special
meeting of stockholders; and (d) for an amendment of the provisions relating to the
indemnification, and limitation on liability, of the officers and directors of the
Company.
    
    The approval of the Companys 2007 Stock Incentive Plan, pursuant to which the Company
may grant equity awards to its employees, officers, directors, consultants and advisors of
up to 20,130,557 shares of common stock in the form of stock options, stock appreciation
rights, restricted stock, restricted stock units and other stock-based awards.
    
    The removal and election of the following directors, constituting the entire board of directors:
 Hassan Ahmed
    
    Vedat M. EyubogluRobert Badavas
    
    Paul J. FerriRandall S. Battat
    
    Steven HaleyGururaj Deshpande
    
    Sanjeev Verma
  Class I directors:
    
    Vedat M. Eyuboglu(term expiring at the
    
    Steven Haley2008 Annual Meeting)
    
    Sanjeev VermaClass II directors:
    
    Hassan Ahmed(term expiring at the
    
    Gururaj Deshpande2009 Annual Meeting)Class III directors:
    
    Robert Badavas(term expiring at the
    
    Randall S. Battat2010 Annual Meeting)
    
    Paul J. Ferri
 
    
    The adoption and ratification of all actions taken and things done by the
incorporators, stockholders, directors and officers of the Company, including without
limitation all elections of officers and directors.
 
 Item 6. Exhibits.
 3.1
    
    Certificate of Incorporation of the Registrant (filed as Exhibit 3.1
to the Registrants current report on form 8-K filed July 25, 2007
and incorporated by reference herein).31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, Rule 13a-14(a)/15d-
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14(a), by Chief Executive Officer.31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of
2002, Rule 13a-14(a)/15d-14(a), by Chief Financial Officer.32.1
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive
Officer.32.2
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial
Officer.
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SIGNATURES
  AIRVANA, INC.By: /s/ Randall S. BattatDate: August 31, 2007
    
    President and Chief Executive Officer(Principal Executive Officer)By: /s/ Jeffrey D. GliddenJeffrey D. GliddenDate: August 31, 2007
    
    Vice President, Chief Financial Officer(Principal Financial Officer)
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