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UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
      Form 10-K
      þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 30, 2007ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file number:
    001-33576
    Airvana, Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
      Delaware

04-3507654(State or Other Jurisdiction
    of
    Incorporation or Organization)

(I.R.S. Employer
    Identification Number)  19 Alpha Road
 Chelmsford, Massachusetts 01824
 (Address of Principal Executive
    Offices) (Zip Code)
  (978) 250-3000
  (Registrants telephone number, including area code)
     Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.001 par value

The NASDAQ Global Market   Securities registered pursuant to Section 12(g) of the
    Act:
 None
        o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer o

Non-accelerated
    filer þ
    (Do not check if a smaller reporting company)

Smaller reporting
    company o     Rule 12b-2 o þ
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





ANNUAL
    REPORT ON
    FORM 10-K
    FOR THE FISCAL YEAR ENDED DECEMBER 30, 2007
  Table of
    Contents
   
 PagePART I.Item 1.


Business


4Item 1A.


Risk Factors


19Item 1B.


Unresolved Staff Comments


33Item 2.


Properties


33Item 3.


Legal Proceedings


33Item 4.


Submission of Matters to a Vote of Security
    Holders


33PART II.Item 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


33Item 6.


Selected Financial Data


36Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


39Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


65Item 8.


Financial Statements and Supplementary Data


67Item 9.


Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure


98Item 9A.


Controls and Procedures


98Item 9B.


Other Information


98PART III.Item 10.


Directors, Executive Officers and Corporate
    Governance


98Item 11.


Executive Compensation


98Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


98Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


99Item 14.


Principal Accounting Fees and Services


99PART IV.Item 15.


Exhibits, Financial Statement Schedules


99Signatures


100EX-21.1 Subsidiaries of the RegistrantEX-23.1 Consent of Ernst & Young LLPEX-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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Forward
    Looking Statements
  This Annual Report on
    Form 10-K
    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
    Annual Report on
    Form 10-K
    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
    Annual Report on
    Form 10-K
    and in our other filings with the Securities and Exchange
    Commission or 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.
 3




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Part I  Item 1.
    Business  Overview
  e-mail, IP-TV,
           4




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Industry
    Background
    The
    Desire for Mobile Broadband Services
      IP-TV
  The
    Need for Fixed-Mobile Convergence
       5




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The
    Market Opportunity
    Our
    Solution
  IP-based
  Enable
    New Service Offerings
    
    Mobile Broadband Internet Access.  Our EV-DO
    network products allow operators to offer broadband-quality
    Internet access anywhere in their networks. Users can access
    EV-DO-based networks through their laptop computers and other
    mobile devices. Mobile broadband networks offer increased
    convenience and mobility and wider coverage than wireless local
    area technologies such as Wi-Fi. In addition, in some developing
    markets, EV-DO networks are being used as a wireless alternative
    to DSL or cable to provide
    last-mile
    broadband Internet access. Our products have been used to deploy
    these services in Eastern Europe and Latin America.
    Multimedia Consumer Services.  Our EV-DO
    products enable wireless operators to provide multimedia
    services, such as video, music downloads,
    IP-TV and
    gaming. Broadband speed is important to users seeking to
    download or transmit the large files associated with multimedia
    services. Reflecting the growth of this market, media companies
    and wireless operators are developing content tailored for
    mobile phones. In 2006, Juniper Research estimated that global
    mobile entertainment services revenue, consisting of gambling,
    adult content, mobile games, mobile music, mobile TV and
    infotainment, would increase almost five-fold by 2011.
    Enhanced Voice Services.  Our EV-DO products
    enable the delivery of interactive voice and video services,
    such as
    IP-based
    push-to-talk, video telephony and VoIP. For example, Sprint
    Nextel has announced its intention to deliver push-to-talk over
    its EV-DO network. In the future, our technology will enable
    wireless operators to migrate from separate voice and data
    networks to a single
    IP-based
    mobile broadband network delivering both voice and data.  Provide
    Scalability and Reliability
   6




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Reduce
    Capital and Operating Expenses
  IP-based
  Leverage
    Existing Broadband Infrastructure
    Our
    Strategy
    
    Grow our EV-DO Business.  We plan to grow sales
    of our EV-DO products as operators continue to expand both the
    coverage and capacity of their wireless networks and increase
    their offerings of mobile broadband services. The continued
    growth of broadband service revenues for the operators implies a
    need for capacity expansion. To date, most of our EV-DO revenue
    has been driven by coverage deployments. We believe that a much
    greater opportunity lies in future capacity expansion. We are
    developing new features to facilitate this growth, such as
    technologies that will improve the quality of both VoIP and
    push-to-talk services. In addition, we believe opportunities
    exist to use our EV-DO technologies to address new markets, such
    as air-to-ground, military and public safety communications. We
    are developing an air-to-ground network infrastructure products
    that enable mobile broadband services for airline passengers. We
    are also developing a compact, rugged, easily-transportable base
    station that government agencies can use for military and public
    safety applications.
    Enter the Fixed-Mobile Convergence Market.  We
    are currently conducting trials of our UAG product, which allows
    wireless and wireline operators to deliver mobile voice and data
    services through a combination of wireless and wireline access
    technologies. Our UAG product supports deployment in CDMA, UMTS
    and WiMAX networks and can be used to provide access for Wi-Fi
    and femtocell access points. We are also developing our own
    femtocell access point products for in-building deployment in
    CDMA and UMTS networks. We plan to sell these FMC products
    directly to operators and through OEM customers. We have entered
    into agreements with Nokia Siemens Networks to market an
    end-to-end UMTS femtocell solution and Thomson to supply our
    femtocell product in their residential gateway offerings.
    Develop Products for the GSM/UMTS
    Markets.  While CDMA is the leading mobile
    technology used by North American operators, GSM/UMTS are the
    leading standards used elsewhere in the world. We are currently
    developing and enhancing UAG and femtocell access point products
    to address the GSM/UMTS markets.
    Leverage our Expertise in All-IP Mobile Networks to Develop
    4G Technologies.  Third generation wireless
    standards, known as 3G, enable the delivery of IP data services
    over mobile networks. While EV-DO is considered a 3G standard,
    it is based on an architecture where all multimedia services,
    including voice, are carried over a single all-IP wireless
    network. The fourth generation wireless standards, known as 4G,
    are 7




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expected to offer faster speeds and carry all multimedia
    services over an all-IP wireless network. We believe our
    expertise in EV-DO and all-IP wireless network technology
    positions us well to develop 4G solutions.  
    Expand our OEM Sales Channels.  Our OEM
    relationships have allowed us to reach a broad end-user market
    rapidly. By collaborating with our OEM customers to develop
    specific functionality to be incorporated into products for
    their end-customers, we enable our OEM customers to expand their
    product offering and achieve faster time to market for
    innovative products that enable new operator services. We intend
    to continue to pursue new OEM relationships to leverage their
    extensive operator relationships, industry networks and global
    reach.
    Leverage our Operator Relationships.  We have
    developed direct relationships with leading wireless operators
    to understand their needs and create demand for our products. We
    collaborate directly with these operators to develop new
    products and services for their customers. While our OEM
    customers represent our primary sales channel, we also offer
    some products for sale directly to operators.
    Acquire Selected Complementary Businesses.  We
    intend to pursue acquisitions that we believe will complement
    our strategy and broaden our customer base and technologies. For
    example, on April 30, 2007, we acquired 3Way Networks
    Limited, a United Kingdom-based provider of femtocell access
    points and solutions for UMTS markets.  Products
    Mobile
    Network EV-DO Products
  IP-based
 8




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AIRVANA
    PRODUCTS IN AN EV-DO RADIO ACCESS NETWORK
  
  Base
    Stations and OEM Base Station Channel Cards
    
    OEM Base Station Channel Cards and
    Software.  Mobile base stations send and receive
    signals to mobile phones and other mobile devices connected to
    the network. They generally reside immediately beside a mobile
    tower. OEM base station channel cards and our software are the
    primary elements of an EV-DO base station and serve as its
    intelligence. Nortel Networks, our largest OEM customer,
    manufactures Rev A OEM base station channel cards under license
    from us.
    ipBTS.  Our ipBTS is a compact, rack-mountable
    base station. It will be used to provide both in-building mobile
    coverage for enterprises and for rapid deployment in military
    and public safety applications.
    skyBTS.  Our skyBTS is the base station for our
    air-to-ground radio access network, or ATG RAN, solution. An ATG
    RAN is a ground-based network that will deliver broadband
    Internet connectivity to aircraft using EV-DO technology. Inside
    the aircraft, users will connect to the Internet using
    Wi-Fi-enabled devices such as laptop computers.  Radio
    Network Controllers
   9




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Network
    Management System
    Fixed-Mobile
    Convergence Products
      
    Security.  Our UAG provides security for the
    operators network and security for the users
    traffic. The operators network will be protected by
    authenticating users before granting them access to the
    operators network. In addition, our UAG provides firewall
    functionality, denial of service attack prevention and filtering
    through access control lists. Privacy of user information will
    be ensured by encrypting all traffic flowing between the user
    and the operators network.
    Mobility.  Our UAG maintains a users
    connection as the user moves between networks. When a user
    crosses local IP network boundaries while still connected to an
    operators network through the Internet, our UAG maintains
    the users session. When a user moves between an
    in-building network connected through the Internet and the
    operators wide-area mobile network, our UAG enables a user
    to maintain IP connectivity.
    Scalability.  Our UAG is a high capacity,
    carrier-grade network product that will be scalable easily to
    serve a very large number of users.
    Quality of Service.  Our UAG supports
    differentiation and prioritization of user traffic. The
    capabilities of our UAG to examine different fields in user IP
    packets, such as source and destination addresses, allows
    operators to deliver differentiated services based on the user
    and the user application.
    Service Accounting.  Our UAG collects detailed
    statistics for an operators network billing system. These
    statistics can also be used by operators to determine the
    performance of various subscriber applications.      
    Improved in-building coverage.  Our femtocell
    access points are designed to significantly improve in-building
    mobile network coverage.
    Improved user experience of mobile
    services.  Because our femtocell access points
    will be shared by a small number of users, they will be able to
    provide a higher performance voice and data experience compared
    to existing mobile network services.
    Compatibility with existing mobile phones.  Our
    femtocell access points will allow users to make phone calls and
    access Internet broadband services through their existing CDMA
    or UMTS mobile phones.
    Plug and play installation.  Our femtocell
    access points are being designed for consumer installation with
    minimal user configuration. They will be connected by consumers
    to their existing broadband Internet services, such as those
    provided by DSL, cable or fiber optics. 10




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AIRVANA
    FMC PRODUCT PLAN
  
  Technology
  Our IP
    RAN
    
    mechanisms to support subscriber mobility;
    protocols to carry traffic between the various network elements
    of a RAN in a secure manner;
    methods to increase the availability of the network in case of a
    failure in any of its elements;
    designs that increase the scalability of the network;
    procedures to configure, manage and maintain the RAN; and
    quality-of-service algorithms to allocate dynamically the
    resources of the RAN to subscribers and the various applications
    they use.  IP
    Backhaul
    RNC
    Clustering
   11




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Multi-Homing
    IP
    Quality-of-Service
    IP
    Network Management
    IP RAN
    Flat Architecture
     12




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Distance-Based
    Paging
      Universal
    Access Gateway
    Multimedia
    Service Delivery with Integrated Security &
    Mobility
          High-Capacity,
    Carrier-Grade Platform for Fixed-Mobile Convergence
   13




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gigabits-per-second
  Flexible
    Policy Enforcement and Deep Packet Inspection
    IP
    Network Management
  IP-based
  Femtocells
    
    a flat network architecture;
    a flexible hardware architecture based on programmable
    processing elements;
    an extensive software/firmware technology that will implement
    the radio, networking and security functions of a femtocell;
    a suite of proprietary algorithms designed to optimize the
    performance and robustness of the femtocell system; and
    a scalable service manager to facilitate the management of our
    femtocells by the network operator.     14




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
    managing interference between femtocells and between femtocell
    and macro cellular networks;
    providing seamless handoffs as users cross between femtocell and
    macro cellular networks;
    limiting access to a femtocell to authorized users;
    acquiring accurate timing, frequency and location
    information; and
    managing the use of a wireless operators spectrum.    Operators
    Deploying Our Products
    


Alltel (USA)



Sprint Nextel (USA)


Bell Mobility (Canada)



Telefonica (Latin America)


Eurotel (Czech Republic)



Verizon Wireless (USA)


Pelephone (Israel)   OEM
    Customers and Strategic Relationships
    Nortel
    Networks
   15




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Nokia
    Siemens Networks
    Thomson
    Qualcomm
    Sales and
    Marketing
     16




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Service
    and Support
    on-site
      Research
    and Development
      Manufacturing
    and Operations
    Competition
       17




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Intellectual
    Property
            Wi-LAN Wi-LANs Wi-LAN. Wi-LAN. Wi-LAN Wi-LAN, and/or
 18




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Wi-LAN
  Employees
    Facilities
    Legal
    Proceedings
    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 Annual Report on
    Form 10-K
    and in any other public statements we make may turn out to be
    wrong. They may 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.
   19




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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.
    Our
    revenue and billings growth may be constrained by our product
    concentration and lack of revenue diversification.
    A
    majority of 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.
   20




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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.
   21




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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 FMC products does not develop as we expect, or
    our FMC products do not achieve sufficient market acceptance,
    our business will suffer.
    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.
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The
    unpredictability of our future results may adversely affect the
    trading price of our common stock.
    
    the effect of our OEM business model or changes to this 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;
    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.
   23




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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.  Wi-LAN Wi-LANs Wi-LAN Wi-LAN Wi-LANs Wi-LAN Wi-LAN. Wi-LAN Wi-LAN, and/or Wi-LAN
    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.
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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.
        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.
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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.
    Because
    our business depends on the continued strength of the
    communications industry, our operating results will suffer if
    that industry experiences an economic downturn.
   26




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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.
    Future
    interpretations of existing accounting standards could adversely
    affect our operating results.
    97-2, Software Revenue Recognition SOP 97-2.
 27




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SOP 97-2, SOP 97-2,
  The
    loss of key personnel or an inability to attract and retain
    additional personnel may impair our ability to grow our
    business.
      We
    have incurred, and will continue to incur, significant increased
    costs as a result of operating as a public company as
    compared with our history as a private 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
    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.
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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 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
    reduced protection for intellectual property rights in some
    countries.    If
    wireless devices pose safety risks, we may be subject to new
    regulations, and demand for our products and those of our
    licensees and customers may decrease.
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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.
   31




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##### Table of Contents



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.
    lock-up
  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.     32




---



##### Table of Contents



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 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders    Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities      High

LowThird Quarter 2007 (from July 19, 2007)

$
8.35


$
5.03Fourth Quarter 2007

$
7.40


$
5.53       Recent
    Sales of Unregistered Securities
  (a)
    Sales
    of Unregistered Securities   33




---



##### Table of Contents



(b)
    Use of
    Proceeds from Public Offering of Common Stock  Form S-1 No. 333-142210),
    (c)
    Purchases
    of Equity Securities by the Issuer and Affiliated
    Purchasers   34




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##### Table of Contents



Stock
    Performance Graph
  The following performance graph and related information shall
    not be deemed soliciting material or to be
    filed with the Securities and Exchange Commission,
    nor shall such information be incorporated by reference into any
    future filing under the Securities Act of 1933 or Securities
    Exchange Act of 1934, each as amended, except to the extent that
    we specifically incorporate it by reference into such filing.
    COMPARISON
    OF 5 MONTH CUMULATIVE TOTAL RETURN* Among
    Airvana, Inc., The NASDAQ Composite Index
    And The DJ Wilshire Telecommunications Index
  
  7/20/07



7/31/2007



8/31/2007



9/30/2007



10/31/2007



11/30/2007



12/30/2007Airvana, Inc.



100.00




97.63




84.24




84.38




98.05




88.15




77.96NASDAQ Composite Index



100.00




97.96




99.72




104.59




110.62




102.62




102.20DJ Wilshire Telecommunications Index



100.00




98.07




97.76




101.98




100.08




92.33




94.99   *
    
    $100 invested on 7/20/07 in stock or 6/30/2007 in
    index-including reinvestment of dividends. 35




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##### Table of Contents



Item 6.
    Selected
    Financial Data  Form 10-K.
    Fiscal Year2003


2004


2005


2006


2007(In thousands, except per share amounts)Consolidated Statement of Operations Data:Revenue

$
6,978


$
3,617


$
2,347


$
170,270


$
305,785Cost of revenue


5,537



4,453



6,533



45,295



41,904Gross profit (loss)


1,441



(836
)


(4,186
)


124,975



263,881Operating expenses:Research and development


10,089



22,040



42,922



55,073



76,638Sales and marketing


3,582



4,665



5,237



7,729



12,055General and administrative


1,201



2,068



3,253



5,068



7,453In-process research and development


















2,340Total operating expenses


14,872



28,773



51,412



67,870



98,486Operating (loss) income


(13,431
)


(29,609
)


(55,598
)


57,105



165,395Interest (expense) income, net


(93
)


485



3,459



6,602



9,846(Loss) income before tax expense (benefit) and cumulative effect
    of change in accounting principle


(13,524
)


(29,124
)


(52,139
)


63,707



175,241Income tax expense (benefit)


8



5



10,875



(10,742
)


21,898(Loss) income before cumulative effect of change in accounting
    principle


(13,532
)


(29,129
)


(63,014
)


74,449



153,343Cumulative effect of change in accounting principle














(330
)


Net (loss) income

$
(13,532
)

$
(29,129
)

$
(63,014
)

$
74,119


$
153,343Net (loss) income per common share:Basic

$
(2.03
)

$
(3.20
)

$
(5.42
)

$
1.21


$
2.63Diluted

$
(2.03
)

$
(3.20
)

$
(5.42
)

$
1.12


$
2.19Shares used in computing net (loss) income per common share:Basic


9,879



11,409



12,959



13,542



36,238Diluted


9,879



11,409



12,959



18,947



43,496   36




---



##### Table of Contents



Fiscal Year2003


2004


2005


2006


2007(In thousands)Other GAAP and Non-GAAP Financial Data:Product and service billings (Billings)(1)

$
16,660


$
106,149


$
157,420


$
140,564


$
142,174Cost related to Billings(2)


7,303



28,700



45,303



12,543



8,740Gross profit on Billings(3)


9,357



77,449



112,117



128,021



133,434Operating (loss) income on Billings(4)


(5,515
)


48,676



60,705



60,151



34,948Deferred revenue, at end of period


15,519



118,051



273,124



243,418



79,978Deferred product cost, at end of period


3,949



28,196



66,966



34,214



1,050Cash flow from operating activities


(1,687
)


43,028



67,390



25,138



91,771   As ofDecember 28,


January 2,


January 1,


December 31,


December 30,2003


2005


2006


2006


2007Consolidated Balance Sheet Data:Cash, cash equivalents and investments

$
33,745


$
72,321


$
135,470


$
160,123


$
221,963Working capital


26,540



69,689



11,225



3,253



131,886Total assets


41,860



117,436



219,547



264,207



262,740Indebtedness


1,999















Redeemable convertible preferred stock


107,064



114,458



121,714



130,042



Total stockholders (deficit) equity


(84,583
)


(120,796
)


(190,657
)


(122,790
)


145,175     (1)
    
    Billings represents amounts invoiced for products and services
    delivered and services to be delivered to our customers for
    which payment is expected to be made in accordance with normal
    payment terms. For software-only products sold to OEM customers,
    we invoice only upon notification of sale by our OEM customers.
    We use Billings to assess our business performance and as a
    critical metric for our incentive compensation program. We
    believe Billings is a consistent measure of our sales activity
    from period to period. Billings is not a GAAP measure and does
    not purport to be an alternative to revenue or any other
    performance measure derived in accordance with GAAP. The
    following table reconciles revenue to Billings:  Fiscal Year2003

2004

2005

2006

2007(In thousands)Revenue

$
6,978


$
3,617


$
2,347


$
170,270


$
305,785Deferred revenue, at end of period


15,519



118,051



273,124



243,418



79,978Less: Deferred revenue acquired


















(171
)Less: Deferred revenue, at beginning of period


(5,837
)


(15,519
)


(118,051
)


(273,124
)


(243,418
)Billings

$
16,660


$
106,149


$
157,420


$
140,564


$
142,174   (2)
    
    Cost related to Billings represents the cost directly
    attributable to products and services delivered and invoiced to
    our customers in the period. We record product cost related to
    Billings as deferred product cost until such time as the related
    deferred revenue is recognized upon the delivery of specified
    software upgrades. When we recognize revenue, the related
    deferred product cost is expensed as cost of revenue. We believe
    that cost related to Billings is an important measure of our
    operating performance. Cost related to Billings is not a GAAP
    measure and does not purport to be an alternative to cost of
    revenue or any other performance measure derived in accordance
    with GAAP. The following table reconciles cost of revenue to
    cost related to Billings:  37




---



##### Table of Contents



Fiscal Year2003

2004

2005

2006

2007(In thousands)Cost of revenue

$
5,537


$
4,453


$
6,533


$
45,295


$
41,904Deferred product cost, at end of period


3,949



28,196



66,966



34,214



1,050Less: Deferred product cost, at beginning of period


(2,183
)


(3,949
)


(28,196
)


(66,966
)


(34,214
)Cost related to Billings

$
7,303


$
28,700


$
45,303


$
12,543


$
8,740   (3)
    
    Gross profit on Billings represents Billings less cost related
    to Billings. We believe that gross profit on Billings is an
    important measure of our operating performance. Gross profit on
    Billings is not a GAAP measure and does not purport to be an
    alternative to gross profit or any other performance measure
    derived in accordance with GAAP. The following table reconciles
    gross profit to gross profit on Billings.  Fiscal Year2003

2004

2005

2006

2007(In thousands)Gross (loss) profit

$
1,441


$
(836
)

$
(4,186
)

$
124,975


$
263,881Deferred revenue, at end of period


15,519



118,051



273,124



243,418



79,978Less: Deferred revenue acquired


















(171
)Less: Deferred revenue, at beginning of period


(5,837
)


(15,519
)


(118,051
)


(273,124
)


(243,418
)Deferred product cost, at beginning of period


2,183



3,949



28,196



66,966



34,214Less: Deferred product cost, at end of period


(3,949
)


(28,196
)


(66,966
)


(34,214
)


(1,050
)Gross profit on Billings

$
9,357


$
77,449


$
112,117


$
128,021


$
133,434   (4)
    
    Operating (loss) income on Billings represents gross profit on
    Billings less operating expenses. We believe that operating
    (loss) income on Billings is an important measure of our
    operating performance. Operating (loss) income on Billings is
    not a GAAP measure and does not purport to be an alternative to
    operating (loss) income or any other performance measure derived
    in accordance with GAAP. The following table reconciles
    operating (loss) profit to operating (loss) profit on billings.  Fiscal Year2003

2004

2005

2006

2007(In thousands)Operating (loss) profit

$
(13,431
)

$
(29,609
)

$
(55,598
)

$
57,105


$
165,395Deferred revenue, at end of period


15,519



118,051



273,124



243,418



79,978Less: Deferred revenue acquired


















(171
)Less: Deferred revenue, at beginning of period


(5,837
)


(15,519
)


(118,051
)


(273,124
)


(243,418
)Deferred product cost, at beginning of period


2,183



3,949



28,196



66,966



34,214Less: Deferred product cost, at end of period


(3,949
)


(28,196
)


(66,966
)


(34,214
)


(1,050
)Operating (loss) profit on billings

$
(5,515
)

$
48,676


$
60,705


$
60,151


$
34,948  38




---



##### Table of Contents



Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  This Annual Report on
    Form 10-K
    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
    Annual Report on
    Form 10-K
    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
    Annual Report on
    Form 10-K
    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
  e-mail, IP-TV, push-to-talk voice-over-IP.
  push-to-talk, voice-over-IP
     39




---



##### Table of Contents



Our
    OEM Business Model
       40




---



##### Table of Contents



No. 97-2, Software Revenue Recognition.
  Impact of
    SOP No. 97-2,
    Software Revenue Recognition
       41




---



##### Table of Contents



Software release A is delivered and related product and service
    billings are recognized as revenue because there are no
    outstanding commitments for upgrades.Software upgrade B is committed in Period 1 and, therefore,
    product and service billings for shipments of software release A
    after that point cannot be recognized as revenue before software
    upgrade B is delivered.Before software upgrade B is delivered, software upgrade C is
    committed in Period 2 and, therefore, product and service
    billings for shipments of software release A after that point
    cannot be recognized before software upgrade C is delivered.When software upgrade B is delivered in Period 3, all deferred
    revenue, which consists of deferred revenue from billings of
    software release A, from the time of the commitment of software
    upgrade B until the time of the commitment of software upgrade C
    is recognized.(5)
    
    When software upgrade C is delivered in Period 4, all remaining
    deferred revenue from the time of the commitment of software
    upgrade C, which consists of deferred revenue from billings of
    software release A and software upgrade B, is recognized because
    no commitments are outstanding. 42




---



##### Table of Contents



Key
    Elements of Financial Performance
  Revenue
    Product Revenue.
       43




---



##### Table of Contents



Service Revenue. around-the-clock
        Product
    and Service Billings
     44




---



##### Table of Contents



Fiscal Year2005


2006


2007Revenue

$
2,347


$
170,270


$
305,785Deferred revenue, at end of period


273,124



243,418



79,978Less: Deferred revenue acquired










(171
)Less: Deferred revenue, at beginning of period


(118,051
)


(273,124
)


(243,418
)Product and service billings

$
157,420


$
140,564


$
142,174   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
   45




---



##### Table of Contents



Gross
    Profit
    Gross
    Profit on Billings
    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. 46




---



##### Table of Contents



Stock-Based
    Compensation Expense
      Operating
    Income on Billings
    Interest
    Income, Net
    Cash Flow
    from Operating Activities
    Cash
    and Investments
   47




---



##### Table of Contents



Fiscal
    Year
    Critical
    Accounting Policies and Estimates
      Revenue
    Recognition
  No. 97-2, Software Revenue Recognition.
         48




---



##### Table of Contents



around-the-clock
     49




---



##### Table of Contents



Stock-Based
    Compensation
  Accounting for Stock Issued to
    Employees Accounting for Stock-Based
    Compensation Accounting for
    Stock-Based Compensation Transition and
    Disclosure an Amendment of FASB Statement
    No. 123. No. 96-18, Accounting for Equity Instruments that are Issued to Other
    than Employees for Acquiring, or in Conjunction with Selling,
    Goods and Services,
  Share-Based Payment
  Share-Based Payments and SFAS 123(R). 7-year
 50




---



##### Table of Contents



Number ofShares Subjectto Options


Exercise


Fair Value ofGranted


Price


Common StockDecember 13, 2005


633,898


$
2.67


$
4.91
(a)January 23, 2006


87,767



2.67



5.29
(a)April 18, 2006


256,177



3.00



5.05
(a)July 19, 2006


167,275



3.00



3.67
(a)August 21, 2006


1,311,383



3.00



4.08
(a)October 17, 2006


254,259



3.67



6.10
(a)November 28, 2006


303,625



7.62



7.62
(b)February 28, 2007


360,068



7.04



7.04
(b)March 22, 2007


135,028



7.07



7.07
(b)April 30, 2007


262,566



0.01



6.03
(b)May 22, 2007


418,943



6.72



6.72
(b)June 21, 2007


104,268



7.44



7.44
(b)Total:


4,295,257     (a)
    
    Fair value as determined in a retrospective valuation(b)
    
    Fair value as determined in a contemporaneous valuation    Valuation of Privately-Held-Company Equity
    Securities Issued as Compensation,
   51




---



##### Table of Contents



52




---



##### Table of Contents



Income
    Taxes
  Accounting for
    Income Taxes
  Accounting for Uncertainty in Income Taxes
 53




---



##### Table of Contents



Results
    of Operations
    AIRVANA,
    INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years EndedJanuary 1,


December 31,


December 30,2006


2006


2007(In thousands, except per share amounts)Revenue:Product

$
1,358


$
145,835


$
279,133Service


989



24,435



26,652Total revenue


2,347



170,270



305,785Cost of revenue:Product


1,792



39,241



34,794Service


4,741



6,054



7,110Total cost of revenue


6,533



45,295



41,904Gross (loss) profit


(4,186
)


124,975



263,881Operating expenses:Research and development


42,922



55,073



76,638Selling and marketing


5,237



7,729



12,055General and administrative


3,253



5,068



7,453In-process research and development










2,340Total operating expenses


51,412



67,870



98,486Operating (loss) income


(55,598
)


57,105



165,395Interest income (expense)Interest income


3,459



6,642



9,881Interest expense






(40
)


(35
)Total interest income (expense)


3,459



6,602



9,846(Loss) income before income tax expense (benefit) and cumulative
    effect of change in accounting principle


(52,139
)


63,707



175,241Income tax expense (benefit)


10,875



(10,742
)


21,898(Loss) income before cumulative effect of change in
    accounting principle


(63,014
)


74,449



153,343Cumulative effect of change in accounting principle






(330
)


Net (loss) income

$
(63,014
)

$
74,119


$
153,343Other GAAP and Non-GAAP Financial
    Data(1):Product and service billings

$
157,420


$
140,564


$
142,174Cost related to product and service billings


45,303



12,543



8,740Gross profit on Billings


112,117



128,021



133,434Operating income on Billings


60,705



60,151



34,948Deferred revenue, at end of period


273,124



243,418



79,978Deferred product cost, at end of period


66,966



34,214



1,050Cash flow from operating activities


67,390



25,138



91,771     (1)
    
    For a reconciliation of non-GAAP financial data to GAAP data,
    please see the tables on the following pages of
    Managements Discussion and Analysis of Financial
    Condition and Results of Operations. 54




---



##### Table of Contents



Comparison
    of Fiscal 2006 and Fiscal 2007
  Revenue
    and Product and Service Billings
  Fiscal Year


Period-to-Period2006


2007


Change(In thousands)Revenue

$
170,270


$
305,785


$
135,515Deferred revenue, at end of period


243,418



79,978Less: Deferred revenue acquired






(171
)Less: Deferred revenue, at beginning of period


(273,124
)


(243,418
)Product and service billings

$
140,564


$
142,174


$
1,610       Cost of
    Revenue and Cost Related to Product and Service
    Billings
  Fiscal Year


Period-to-Period2006


2007


Change(In thousands)Cost of revenue

$
45,295


$
41,904


$
(3,391
)Deferred product cost, at end of period


34,214



1,050Less: Deferred product cost, at beginning of period


(66,966
)


(34,214
)Cost related to product and service billings

$
12,543


$
8,740


$
(3,803
)       Gross
    Profit (Loss) and Gross Profit (Loss) on Billings
  Fiscal Year


Period-to-Period2006


2007


Change(In thousands)Gross profit

$
124,975


$
263,881


$
138,906Deferred revenue, at end of period


243,418



79,978Less: Deferred revenue acquired






(171
)Less: Deferred revenue, at beginning of period


(273,124
)


(243,418
)Deferred product cost, at beginning of period


66,966



34,214Less: Deferred product cost, at end of period


(34,214
)


(1,050
)Gross profit on Billings

$
128,021


$
133,434


$
5,413  55




---



##### Table of Contents



Operating
    Expenses
  Fiscal Year


Period-to-Period Change2006


2007


Amount


Percentage(Dollars in thousands)Research and development

$
55,073


$
76,638


$
21,565



39.2
%Sales and marketing


7,729



12,055



4,326



56.0
%General and administrative


5,068



7,453



2,385



47.1
%In-process research and development






2,340



2,340Total operating expenses

$
67,870


$
98,486


$
30,616



45.1
%   Research and Development.
  Sales and Marketing.
  General and Administrative.
  In-process Research and Development. Business
 56




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##### Table of Contents



Operating
    Profit (Loss) and Operating Profit (Loss) on Billings
  Fiscal Year

Period-to-Period2006

2007

Change(In thousands)Operating profit

$
57,105


$
165,395


$
108,290Deferred revenue, at end of period


243,418



79,978Less: Deferred revenue acquired






(171
)Less: Deferred revenue, at beginning of period


(273,124
)


(243,418
)Deferred product cost, at beginning of period


66,966



34,214Less: Deferred product cost, at end of period


(34,214
)


(1,050
)Operating profit on billings

$
60,151


$
34,948


$
(25,203
)       Interest Income, Net.
  Comparison
    of Fiscal 2005 and Fiscal 2006
  Revenue
    and Product and Service Billings
  Fiscal Year


Period-to-Period2005


2006


Change(In thousands)Revenue

$
2,347


$
170,270


$
167,923Deferred revenue, at end of period


273,124



243,418Less: Deferred revenue, at beginning of period


(118,051
)


(273,124
)Product and service billings

$
157,420


$
140,564


$
(16,856
)    57




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##### Table of Contents



Cost of
    Revenue and Cost Related to Product and Service
    Billings
  Fiscal Year


Period-to-Period2005


2006


Change(In thousands)Cost of revenue

$
6,533


$
45,295


$
38,762Deferred product cost, at end of period


66,966



34,214Less: Deferred product cost, at beginning of period


(28,196
)


(66,966
)Cost related to product and service billings

$
45,303


$
12,543


$
(32,760
)       Gross
    Profit (Loss) and Gross Profit (Loss) on Billings
  Fiscal YearPeriod-to-Period2005

2006

Change(In thousands)Gross (loss) profit

$
(4,186
)

$
124,975


$
129,161Deferred revenue, at end of period


273,124



243,418Less: Deferred revenue acquired






Less: Deferred revenue, at beginning of period


(118,051
)


(273,124
)Deferred product cost, at beginning of period


28,196



66,966Less: Deferred product cost, at end of period


(66,966
)


(34,214
)Gross profit on Billings

$
112,117


$
128,021


$
15,904      58




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##### Table of Contents



Operating
    Expenses
  Fiscal Year


Period-to-Period Change2005


2006


Amount


Percentage(Dollars in thousands)Research and development

$
42,922


$
55,073


$
12,151



28.3
%Sales and marketing


5,237



7,729



2,492



47.6
%General and administrative


3,253



5,068



1,815



55.8
%Total operating expenses

$
51,412


$
67,870


$
16,458



32.0
%   Research and Development.
  Sales and Marketing.
  General and Administrative.
  Operating
    Profit (Loss) and Operating Profit (Loss) on Billings
  Fiscal YearPeriod-to-Period2005

2006

Change(In thousands)Operating (loss) profit

$
(55,598
)

$
57,105


$
112,703Deferred revenue, at end of period


273,124



243,418Less: Deferred revenue acquired






Less: Deferred revenue, at beginning of period


(118,051
)


(273,124
)Deferred product cost, at beginning of period


28,196



66,966Less: Deferred product cost, at end of period


(66,966
)


(34,214
)Operating profit on billings

$
60,705


$
60,151


$
(554
)  59




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##### Table of Contents



Interest Income, Net.
  Quarterly
    Results of Operations
    Fiscal Quarter EndedApril 2,


July 2,


October 1,


December 31,


April 1,


July 1,


September 30,


December 30,2006


2006


2006


2006


2007


2007


2007


2007(In thousands)RevenueProduct revenue

$



$
145,835


$



$



$



$
141,641


$



$
137,493Service revenue


162



21,464



1,513



1,296



269



14,615



3,645



8,123Total revenue


162



167,299



1,513



1,296



269



156,256



3,645



145,616Cost of revenueProduct revenue


180



39,016



37



8



13



33,918



13



850Service revenue


1,395



1,414



1,523



1,722



1,670



1,852



1,676



1,912Total cost of revenue


1,575



40,430



1,560



1,730



1,683



35,770



1,689



2,762Gross (loss) profit


(1,413
)


126,869



(47
)


(434
)


(1,414
)


120,486



1,956



142,854Operating expensesResearch and development


12,397



13,464



13,323



15,889



15,983



18,598



20,395



21,662Sales and marketing


1,202



1,744



1,842



2,941



2,580



3,182



3,029



3,264General and administrative


992



1,104



1,151



1,821



1,516



1,721



1,743



2,473In-process research and development






















2,340







Total operating expenses


14,591



16,312



16,316



20,651



20,079



25,841



25,167



27,399Operating (loss) income


(16,004
)


110,557



(16,363
)


(21,085
)


(21,493
)


94,645



(23,211
)


115,455Interest income, net


1,403



1,662



1,573



1,964



2,708



1,879



2,514



2,744(Loss) income before tax expense (benefit) and cumulative effect
    of change in accounting principle


(14,601
)


112,219



(14,790
)


(19,121
)


(18,785
)


96,524



(20,697
)


118,199Income tax expense (benefit)


(2,462
)


(8,280
)














10,422



(2,478
)


13,954Net (loss) income before cumulative effect of change in
    accounting principle


(12,139
)


120,499



(14,790
)


(19,121
)


(18,785
)


86,102



(18,219
)


104,245 60




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##### Table of Contents



Fiscal Quarter EndedApril 2,


July 2,


October 1,


December 31,


April 1,


July 1,


September 30,


December 30,2006


2006


2006


2006


2007


2007


2007


2007(In thousands)Cumulative effect of change in accounting principle


(330
)


























Net (loss) income

$
(12,469
)

$
120,499


$
(14,790
)

$
(19,121
)

$
(18,785
)

$
86,102


$
(18,219
)

$
104,245Other GAAP and Non-GAAP Financial Data:Product and service billings(1)

$
18,823


$
19,116


$
29,773


$
72,852


$
41,475


$
36,549


$
30,816


$
33,335Cost related to product and service billings(2)


5,861



2,700



1,931



2,051



1,842



2,098



2,311



2,489Gross profit on billings(3)


12,962



16,416



27,842



70,801



39,633



34,451



28,505



30,846Operating (loss) income on billings(4)


(1,629
)


104



11,526



50,150



19,554



8,610



3,338



3,447Deferred revenue, at end of period


291,785



143,602



171,862



243,418



284,624



165,088



192,259



79,978Deferred product cost, at end of period


71,252



33,522



33,893



34,214



34,373



701



1,323



1,050Cash flow from operating activities


(5,597
)


7,990



1,600



21,145



61,212



2,670



17,493



10,396     (1)
    
    Product and service billings represents amounts invoiced for
    products and services delivered and services to be delivered to
    our customers for which payment is expected to be made in
    accordance with normal payment terms. For software-only products
    sold to OEM customers, we invoice only upon notification of
    sales by our OEM customers. We use product and service billings
    to assess our business performance and as a critical metric for
    our incentive compensation program. We believe product and
    service billings is a consistent measure of our sales activity
    from period to period. Product and service billings is not a
    GAAP measure and does not purport to be an alternative to
    revenue or any other performance measure derived in accordance
    with GAAP. The following table reconciles revenue to product and
    service billings:  Fiscal Quarter EndedApril 2,

July 2,

October 1,

December 31,

April 1,

July 1,

September 30,

December 30,2006

2006

2006

2006

2007

2007

2007

2007(In thousands)Revenue

$
162


$
167,299


$
1,513


$
1,296


$
269


$
156,256


$
3,645


$
145,616Deferred revenue, at end of period


291,785



143,602



171,862



243,418



284,624



165,088



192,259



79,978Less: Deferred revenue acquired






















(171
)






Less: Deferred revenue, at beginning of period


(273,124
)


(291,785
)


(143,602
)


(171,862
)


(243,418
)


(284,624
)


(165,088
)


(192,259
)Product and service billings

$
18,823


$
19,116


$
29,773


$
72,852


$
41,475


$
36,549


$
30,816


$
33,335   (2)
    
    Cost related to product and service billings represents the cost
    directly attributable to products and services delivered and
    invoiced to our customers in the period. We record cost related
    to product billings as deferred product cost until such time as
    the related deferred revenue is recognized as revenue upon the
    delivery of specified software upgrades. When we recognize
    revenue, the related deferred product cost is expensed as cost
    of revenue. We believe that cost related to product and service
    billings is an important measure of our operating performance.
    Cost related to product and service billings is not a GAAP
    measure and does not purport to be an alternative to cost of
    revenue or any other performance measure derived in accordance
    with GAAP. The following table reconciles cost of revenue to
    cost related to product and service billings:  61




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##### Table of Contents



Fiscal Quarter EndedApril 2,

July 2,

October 1,

December 31,

April 1,

July 1,

September 30,

December 30,2006

2006

2006

2006

2007

2007

2007

2007(In thousands)Cost of revenue

$
1,575


$
40,430


$
1,560


$
1,730


$
1,683


$
35,770


$
1,689


$
2,762Deferred product cost, at end of period


71,252



33,522



33,893



34,214



34,373



701



1,323



1,050Less: Deferred product cost, at beginning of period


(66,966
)


(71,252
)


(33,522
)


(33,893
)


(34,214
)


(34,373
)


(701
)


(1,323
)Cost related to product and service billings

$
5,861


$
2,700


$
1,931


$
2,051


$
1,842


$
2,098


$
2,311


$
2,489   (3)
    
    Gross (loss) profit on Billings represents Billings less cost
    related to Billings. We believe that gross profit on Billings is
    an important measure of our operating performance. Gross profit
    on Billings is not a GAAP measure and does not purport to be an
    alternative to gross profit or any other performance measure
    derived in accordance with GAAP. The following table reconciles
    gross (loss) profit to gross (loss) profit on Billings.  Fiscal Quarter EndedApril 2,

July 2,

October 1,

December 31,

April 1,

July 1,

September 30,

December 30,2006

2006

2006

2006

2007

2007

2007

2007(In thousands)Gross (loss) profit

$
(1,413
)

$
126,869


$
(47
)

$
(434
)

$
(1,414
)

$
120,486


$
1,956


$
142,854Deferred revenue, at end of period


291,785



143,602



171,862



243,418



284,624



165,088



192,259



79,978Less: Deferred revenue acquired






















(171
)






Less: Deferred revenue, at beginning of period


(273,124
)


(291,785
)


(143,602
)


(171,862
)


(243,418
)


(284,624
)


(165,088
)


(192,259
)Deferred product cost, at beginning of period


66,966



71,252



33,522



33,893



34,214



34,373



701



1,323Less: Deferred product cost, at end of period


(71,252
)


(33,522
)


(33,893
)


(34,214
)


(34,373
)


(701
)


(1,323
)


(1,050
)Gross profit on Billings

$
12,962


$
16,416


$
27,842


$
70,801


$
39,633


$
34,451


$
28,505


$
30,846   (4)
    
    Operating (loss) income on Billings represents gross profit on
    Billings less operating expenses. We believe that operating
    (loss) income on Billings is an important measure of our
    operating performance. Operating (loss) income on Billings is
    not a GAAP measure and does not purport to be an alternative to
    operating (loss) income or any other performance measure derived
    in accordance with GAAP. The following table reconciles
    operating (loss) income to operating (loss) income on Billings.  Fiscal Quarter EndedApril 2,

July 2,

October 1,

December 31,

April 1,

July 1,

September 30,

December 30,2006

2006

2006

2006

2007

2007

2007

2007(In thousands)Operating (loss) income

$
(16,004
)

$
110,557


$
(16,363
)

$
(21,085
)

$
(21,493
)

$
94,645


$
(23,211
)

$
115,455Deferred revenue, at end of period


291,785



143,602



171,862



243,418



284,624



165,088



192,259



79,978Less: Deferred revenue acquired






















(171
)






Less: Deferred revenue, at beginning of period


(273,124
)


(291,785
)


(143,602
)


(171,862
)


(243,418
)


(284,624
)


(165,088
)


(192,259
)Deferred product cost, at beginning of period


66,966



71,252



33,522



33,893



34,214



34,373



701



1,323Less: Deferred product cost, at end of period


(71,252
)


(33,522
)


(33,893
)


(34,214
)


(34,373
)


(701
)


(1,323
)


(1,050
)Operating (loss) income on Billings

$
(1,629
)

$
104


$
11,526


$
50,150


$
19,554


$
8,610


$
3,338


$
3,447  62




---



##### Table of Contents



63




---



##### Table of Contents



Liquidity
    and Capital Resources
      Fiscal Year2005


2006


2007Cash and cash equivalents

$
19,873


$
86,815


$
43,547Investments, short-term


115,597



73,308



178,416Accounts receivable


7,590



46,072



14,171Working capital


111,225



3,253



131,886Cash flow from operating activities


67,390



25,138



91,771Cash flow from investing activities


(60,932
)


40,180



(113,670
)Cash flow from financing activities


3,202



1,624



(21,391
)        64




---



##### Table of Contents



Contractual
    Obligations and Commitments
    Payments Due by PeriodLess Than


1-3


3-5


More ThanTotal


1 Year


Years


Years


5 Years(In thousands)Operating leases(1)

$
5,870


$
1,435


$
2,753


$
1,682


$
Purchase commitments(2)


414



414











Capital leases(3)

$
133



72



61







Total

$
6,417


$
1,921


$
2,814


$
1,682


$
     (1)
    
    Consists of contractual obligations for non-cancelable office
    space under operating leases.(2)
    
    Represents amounts associated with agreements that are
    enforceable, legally binding and specify terms, including: fixed
    or minimum quantities to be purchased; fixed, minimum or
    variable price provisions; and the approximate timing of
    payment. Obligations under contracts that we can cancel without
    a significant penalty are not included in the table above.(3)
    
    Consists of principal and interest payment obligations under
    capital leases.   65




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Item 7A.
    Quantitative
    and Qualitative Disclosures about Market Risk  Foreign
    Currency Exchange Risk
    Interest
    Rate Sensitivity
     66




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
     
 PageReport of Independent Registered Public
    Accounting Firm


68Consolidated Balance Sheets as of
    December 31, 2006, and December 30, 2007


69Consolidated Statements of Operations for the
    years ended January 1, 2006, December 31, 2006 and
    December 30, 2007


70Consolidated Statements of Cash Flows for the
    years ended January 1, 2006, December 31, 2006 and
    December 30, 2007


71Consolidated Statements of Redeemable Convertible
    Preferred Stock and Stockholders Deficit for the years
    ended January 1, 2006, December 31, 2006 and
    December 30, 2007


72Notes to Consolidated Financial Statements


73   67




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM          Accounting for Uncertainty in Income Taxes No. 150-5
      68




---



##### Table of Contents



AIRVANA,
    INC.



CONSOLIDATED
    BALANCE SHEETS  December 31,


December 30,2006


2007(In thousands, except share and per share amounts)ASSETSCurrent assets:Cash and cash equivalents

$
86,815


$
43,547Investments


73,308



178,416Accounts receivable


46,072



14,171Deferred product cost, current


34,214



1,050Deferred tax assets, current






1,422Prepaid taxes


14,627



115Prepaid expenses and other current assets


2,327



3,064Total current assets


257,363



241,785Property and equipment


14,925



17,831Less: accumulated depreciation and amortization


9,122



11,4345,803



6,397Restricted investments


193



193Deferred tax assets






1,786Goodwill and intangible assets, net






12,165Other assets


848



414Total assets

$
264,207


$
262,740LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITYCurrent liabilities:Accounts payable

$
2,988


$
3,806Accrued expenses and other current liabilities


7,841



11,162Accrued income taxes






15,016Deferred revenue, current


243,281



79,915Total current liabilities


254,110



109,899Deferred revenue, long-term


137



63Accrued income taxes






4,675Deferred tax liabilities






1,174Other liabilities


2,218



1,754Warrants to purchase preferred stock


490



Total long-term liabilities


2,845



7,666Commitments (Note 8)






Redeemable convertible preferred stock (at liquidation value):Series A redeemable convertible preferred stock,
    $0.01 par value: 10,937,500 shares authorized,
    10,937,500 shares issued and outstanding as of
    December 31, 2006 and no shares authorized, issued or
    outstanding at December 30, 2007


16,749



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 no shares authorized, issued or
    outstanding at December 30, 2007


36,274



Series B2 redeemable convertible preferred stock,
    $0.01 par value: 900,414 shares authorized,
    900,414 shares issued and outstanding as of
    December 31, 2006 and no shares authorized, issued or
    outstanding at December 30, 2007


7,362



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 no shares authorized, issued or
    outstanding at December 30, 2007


56,150



Series D redeemable convertible preferred stock,
    $0.01 par value: 4,485,305 shares authorized,
    3,288,490 shares issued and outstanding at
    December 31, 2006 and no shares authorized, issued or
    outstanding at December 30, 2007


13,507



Total redeemable convertible preferred stock


130,042



Stockholders (deficit) equity:Preferred stock, $0.001 par value: no shares authorized,
    issued or outstanding as of December 31, 2006;
    10,000,000 shares authorized, no shares issued or
    outstanding at December 30, 2007






Common stock, $0.001 par value: 90,000,000 shares
    authorized, 13,814,535 shares issued and outstanding at
    December 31, 2006; 350,000,000 shares authorized,
    63,559,983 shares issued and outstanding at
    December 30, 2007 (Note 9)


14



64Additional paid-in capital


3,251



190,409Accumulated deficit


(126,055
)


(45,298
)Total stockholders (deficit) equity


(122,790
)


145,175Total liabilities, redeemable convertible preferred stock and
    stockholders (deficit) equity

$
264,207


$
262,740    69




---



##### Table of Contents



AIRVANA,
    INC.
  CONSOLIDATED
    STATEMENTS OF OPERATIONS
  Years EndedJanuary 1,


December 31,


December 30,2006


2006


2007(In thousands, except per share amounts)Revenue:Product

$
1,358


$
145,835


$
279,133Service


989



24,435



26,652Total revenue


2,347



170,270



305,785Cost of revenue:Product


1,792



39,241



34,794Service


4,741



6,054



7,110Total cost of revenue


6,533



45,295



41,904Gross (loss) profit


(4,186
)


124,975



263,881Operating expenses:Research and development


42,922



55,073



76,638Selling and marketing


5,237



7,729



12,055General and administrative


3,253



5,068



7,453In-process research and development










2,340Total operating expenses


51,412



67,870



98,486Operating (loss) income


(55,598
)


57,105



165,395Interest income (expense)Interest income


3,459



6,642



9,881Interest expense






(40
)


(35
)Total interest income (expense)


3,459



6,602



9,846(Loss) income before income tax expense (benefit) and cumulative
    effect of change in accounting principle


(52,139
)


63,707



175,241Income tax expense (benefit)


10,875



(10,742
)


21,898(Loss) income before cumulative effect of change in accounting
    principle


(63,014
)


74,449



153,343Cumulative effect of change in accounting principle






(330
)


Net (loss) income

$
(63,014
)

$
74,119


$
153,343Net (loss) income per common share applicable to common
    stockholders:Basic

$
(5.42
)

$
1.21


$
2.63Diluted

$
(5.42
)

$
1.12


$
2.19Weighted average common shares outstanding:Basic


12,959



13,542



36,238Diluted


12,959



18,947



43,496    70




---



##### Table of Contents



AIRVANA,
    INC.
  CONSOLIDATED
    STATEMENTS OF CASH FLOWS
  Years EndedJanuary 1,


December 31,


December 30,2006


2006


2007(In thousands)Operating activitiesNet (loss) income

$
(63,014
)

$
74,119


$
153,343Adjustments to reconcile net income to net cash provided by
    operating activities:Depreciation


1,758



2,408



3,078Amortization of intangible assets










713In-process research and development










2,340Stock-based compensation






800



2,996Loss on disposal of property and equipment


99



36



Deferred tax benefit










(2,989
)Cumulative effect of change in accounting principle






330



Amortization of investments


1,426



(581
)


(5,661
)Amortization of leasehold incentive


(300
)


(542
)


(522
)Non-cash interest income






40



(103
)Changes in operating assets and liabilities:Accounts receivable


1,654



(38,482
)


31,901Deferred product cost


(38,770
)


32,752



33,164Prepaid taxes


(105
)


(13,619
)


14,512Prepaid expenses and other current assets


2,417



149



(542
)Accounts payable


512



(1,707
)


512Accrued expenses and other current liabilities


6,640



(859
)


2,948Accrued income taxes










19,691Deferred revenue


155,073



(29,706
)


(163,610
)Net cash provided by operating activities


67,390



25,138



91,771Investing activitiesPurchases of property and equipment


(6,119
)


(2,614
)


(3,190
)Restricted investments


49



100



Purchase of 3-Way Networks, net of cash acquired










(10,907
)Purchases of investments


(159,837
)


(136,930
)


(367,851
)Maturities of investments


104,939



179,800



268,404Other assets


36



(176
)


(126
)Net cash (used in) provided by investing activities


(60,932
)


40,180



(113,670
)Financing activitiesPayments on long-term debt










(583
)Proceeds from initial public offering, net of offering costs






(560
)


51,353Proceeds from leasehold incentive


2,793



789



Proceeds from sale of Series D redeemable convertible
    preferred stock






1,000



Proceeds from sale of restricted common stock


160







Payments of cash dividend










(72,674
)Purchase of treasury stock










(96
)Proceeds from exercise of stock options


249



395



609Net cash provided by (used in) financing activities


3,202



1,624



(21,391
)Effect of exchange rate changes on cash and cash equivalents


15







22Net (decrease) increase in cash and cash equivalents


9,675



66,942



(43,268
)Cash and cash equivalents at beginning of period


10,198



19,873



86,815Cash and cash equivalents at end of period

$
19,873


$
86,815


$
43,547Supplemental Disclosure of Cash Flow InformationCash paid for income taxes

$
7,649


$
6,204


$
100Supplemental Disclosure of Noncash ActivitiesAccretion of dividends on redeemable convertible preferred stock

$
7,256


$
7,328


$
4,032Retirement of property and equipment

$
1,554


$
244


$
867    71




---



##### Table of Contents





AIRVANA,
    INC.
  CONSOLIDATED
    STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
    STOCKHOLDERS (DEFICIT) EQUITY
  Redeemable ConvertiblePreferred StockSeries A


Series B1


Series B2


Series C


Series D



Common Stock


AdditionalLiquidation





Liquidation





Liquidation





Liquidation





Liquidation






Par


Paid-in


Accumulated


StockholdersShares


Value


Shares


Value


Shares


Value


Shares


Value


Shares


Value



Shares


Value


Capital


Deficit


(Deficit) Equity(In thousands, except share amounts)Balance at January 2, 2005


10,937,500



15,004



3,994,328



32,341



900,414



6,564



25,031,017



49,712



2,989,537



10,837




13,217,513



13



1,767



(122,576
)


(120,796
)Issuance of restricted common stock











































75,018







160







160Exercise of stock options











































228,012







249







249Cumulative dividends on redeemable convertible preferred stock






873







1,967







399







3,219







798
















(7,256
)


(7,256
)Net loss























































(63,014
)


(63,014
)Balance at January 1, 2006


10,937,500



15,877



3,994,328



34,308



900,414



6,963



25,031,017



52,931



2,989,537



11,635




13,520,543



13



2,176



(192,846
)


(190,657
)Sale of Series D redeemable convertible preferred stock


































298,953



1,000




















Exercise of stock options











































293,992



1



394







395Stock based compensation



















































800







800Cumulative dividends on redeemable convertible preferred stock






872







1,966







399







3,219







872
















(7,328
)


(7,328
)Reclassification of preferred stock warrants to liability



















































(119
)






(119
)Net income























































74,119



74,119Balance at December 31, 2006


10,937,500



16,749



3,994,328



36,274



900,414



7,362



25,031,017



56,150



3,288,490



13,507




13,814,535



14



3,251



(126,055
)


(122,790
)Exercise of stock options











































416,328







609







609Repurchase and retirement of treasury stock











































(45,010
)






(96
)






(96
)Stock based compensation



















































2,996







2,996Conversion of convertible preferred stock warrants into common
    stock warrants



















































70







70Exercise of common stock warrants











































7,528















Cumulative dividends on redeemable convertible preferred stock






480







1,080







219







1,771







482
















(4,032
)


(4,032
)Exercise of convertible preferred stock warrants


























43,166



69




















248







248Issuance of common stock in connection with the Companys
    acquisition of 3Way Networks Limited











































441,845



1



2,661







2,662Conversion of redeemable convertible preferred stock in
    connection with the Companys initial public offering


(10,937,500
)


(17,229
)


(3,994,328
)


(37,354
)


(900,414
)


(7,581
)


(25,074,183
)


(57,990
)


(3,288,490
)


(13,989
)



40,624,757



41



134,102







134,143Issuance of common stock in connection with the Companys
    initial public offering, net of offering costs of $7,267











































8,300,000



8



50,785







50,793Cash dividend



















































(4,217
)


(68,554
)


(72,771
)Net income























































153,343



153,343Balance at December 30, 2007











































63,559,983



64



190,409



(45,298
)


145,175    72




---



##### Table of Contents





AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts)
  1.
    Operations  Business
    Description
  e-mail, IP-TV,
  2.
    Summary
    of Significant Accounting Policies  Basis
    of Presentation and Principles of Consolidation
    Use of
    Estimates
        Fiscal
    Year
   73




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
  Cash
    and Cash Equivalents
    Investments
    Prepaid
    and Other Current Assets
  first-in,
  Deferred
    Product Cost
  No. 97-2, Software Revenue Recognition (SOP 97-2), Restatement and Revision of
    Accounting Research Bulletins Inventory Cost
  Property
    and Equipment
    As ofDecember 31,


December 30,Estimated Useful Life


2006


2007Computer equipment and purchased software


1.5 - 3 years


$
4,972


$
5,343Test and lab equipment


3 years



3,883



5,100Leasehold improvements


Shorter of life of lease or 5 years



5,600



6,497Office furniture and equipment


3 - 5 years



470



891Total property and equipment






14,925



17,831Less: Accumulated depreciation and amortization






(9,122
)


(11,434
)$
5,803


$
6,397    74




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    Capitalized
    Internal-Use Software
  SOP NO. 98-1, Accounting for the Costs of Computer Software Developed or
    Obtained for Internal Use
    (SOP 98-1). SOP 98-1
  Software
    Development Costs
  Accounting for the Costs of Computer
    Software to Be Sold, Leased or Otherwise Marketed,
  Revenue
    Recognition
  SOP No. 97-2.
   75




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
               76




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
            Concentrations
    of Credit Risk and Significant Customers
      Segment
    and Geographic Information
  Disclosures About Segments of an
    Enterprise and Related Information,
 77




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    Stock-Based
    Compensation
    Accounting for Stock
    Issued to Employees, Accounting for
    Stock-Based Compensation Accounting for Stock-Based
    Compensation Transition and Disclosure an Amendment of FASB Statement No. 123 No. 96-18, Accounting for Equity Instruments that are Issued to Other
    than Employees for Acquiring, or in Conjunction with Selling,
    Goods and Services,
  Share-Based
    Payment,
  Comprehensive
    Income
  Reporting Comprehensive Income,
  Net
    (Loss) Income Per Share
  Earnings Per Share, No. 03-6, Participating Securities and the
    Two-Class Method
    Under FASB Statemement No. 128 Earnings Per Share No. 03-06), No. 03-6 No. 03-6
 78




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##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
      Years EndedJanuary 1,


December 31,


December 30,2006


2006


2007Numerator:(Loss) income before cumulative effect of change in accounting
    principle

$
(63,014
)

$
74,449


$
153,343Cumulative effect of change in accounting principle






(330
)


Net (loss) income

$
(63,014
)

$
74,119


$
153,343Allocation of net (loss) income:Basic:Accretion of redeemable preferred stock

$
7,256


$
7,328


$
4,032Dividend allocated to preferred stockholders










54,153Undistributed net income allocated to preferred stockholders






50,354



Net income applicable to preferred stockholders


7,256



57,682



58,185Net (loss) income applicable to common stockholders
    before cumulative effect of change in accounting principle


(70,270
)


16,767



95,158Cumulative effect of change in accounting principle






(330
)


Net (loss) income applicable to common stockholders


(70,270
)


16,437



95,158Net (loss) income

$
(63,014
)

$
74,119


$
153,343Diluted:Accretion of redeemable preferred stock

$
7,256


$
7,328


$
4,032Dividend allocated to preferred stockholders










54,153Undistributed net income allocated to preferred stockholders






45,642



Net income applicable to preferred stockholders


7,256



52,970



58,185Net (loss) income applicable to common stockholders
    before cumulative effect of change in accounting principle


(70,270
)


21,479



95,158Cumulative effect of change in accounting principle






(330
)


Net (loss) income applicable to common stockholders


(70,270
)


21,149



95,158Net (loss) income

$
(63,014
)

$
74,119


$
153,343Denominator:Basic weighted average shares


12,959



13,542



36,238Dilutive effect of common stock equivalents






5,405



7,258Diluted weighted average shares


12,959



18,947



43,496Calculation of net (loss) income per share:Basic:Net (loss) income applicable to common stockholders

$
(70,270
)

$
16,437


$
95,158Weighted average shares of common stock outstanding


12,959



13,542



36,238Net (loss) income per share

$
(5.42
)

$
1.21


$
2.63Diluted:Net (loss) income applicable to common stockholders

$
(70,270
)

$
21,149


$
95,158Weighted average shares of common stock outstanding


12,959



18,947



43,496Net (loss) income per share

$
(5.42
)

$
1.12


$
2.19Cumulative effect of change in accounting principleBasic





$
(0.02
)Diluted





$
(0.02
)  79




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
  Impairment
    of Long-Lived Assets
  Accounting for the Impairment or
    Disposal of Long-Lived Assets
  Goodwill
    and Other Intangibles
  Goodwill and Other Intangible
    Assets
  Foreign
    Currency Translation
  Foreign Currency Translation
  Income
    Taxes
  Accounting for Income Taxes Accounting for Uncertainty in Income Taxes
  Fair
    Value of Financial Instruments
   80




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
  Single
    or Limited Source Suppliers and Contract
    Manufacturers
    New
    Pronouncements
  Business Combinations Noncontrolling Interests in Consolidated Financial
    Statements  an amendment of Accounting Research
    Bulletin No. 51
  The
    Fair Value Option for Financial Assets and Liabilities,
    Including an amendment of FASB Statement No. 115
  Fair Value Measurements 157-2
   81




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
  3.
    Change in
    Accounting Principle  Warrants  150-5, Issuers Accounting under FASB Statement No. 150
    for Freestanding Warrants and Other Similar Instruments on
    Shares that are Redeemable (FSP 150-5). FSP 150-5 Accounting for
    Certain Financial Instruments with Characteristics of Both
    Liabilities and Equity,
  FSP 150-5
    FSP 150-5 FSP 150-5
  4.
    Investments  Accounting for
    Certain Investments in Debt and Equity Securities,
    December 31, 2006


December 30, 2007Amortized


Fair Market


Amortized


Fair MarketCost


Value


Cost


ValueCorporate debt securities

$
61,007


$
61,018


$
124,385


$
124,856Asset-backed securities


12,301



12,302



54,031



54,092$
73,308


$
73,320


$
178,416


$
178,948    82




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
  5.
    Goodwill
    and Intangible Assets    December 30, 2007Gross


Accumulated


NetIntangible


Amortization


IntangibleDeveloped technology

$
3,340


$
446


$
2,894Customer relationships


1,350



225



1,125Non-compete agreements


190



42



148Total intangible assets

$
4,880


$
713


$
4,167     Fiscal year:2008

$
1,0692009


1,0692010


1,0262011


7802012


223$
4,167   6.
    Income
    Taxes    January 1,


December 31,


December 30,2006


2006


2007Domestic

$
(52,371
)

$
63,284


$
183,068Foreign


232



423



(7,827
)Total

$
(52,139
)

$
63,707


$
175,241  83




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    January 1,


December 31,


December 30,2006


2006


2007Current:Federal

$
10,833


$
(10,832
)

$
24,618State


42



86



117Foreign






4



11910,875



(10,742
)


24,854Deferred:Federal


(33,503
)


30,861



40,879State


(923
)


(1,266
)


(1,216
)Foreign










(2,213
)(34,426
)


29,595



37,450Change in valuation allowanceFederal


33,503



(30,861
)


(42,646
)State


923



1,266



1,197Foreign










1,04334,426



(29,595
)


(40,406
)Total tax expense (benefit)

$
10,875


$
(10,742
)

$
21,898     January 1,


December 31,


December 30,2006


2006


2007Expected provision at federal statutory rate, 35%

$
(18,249
)

$
22,297


$
61,345State taxes, net of federal benefit


27



56



76Foreign taxes






4



141Extraterritorial income exclusion, net


(2,018
)






Federal research and development credit


(1,837
)


(2,436
)


(2,524
)State research and development credit


(914
)


(1,233
)


(1,216
)Domestic manufacturing deduction


(498
)






(1,930
)Change in valuation allowance


34,423



(29,597
)


(40,406
)Change in unrecognized tax benefits










4,675In process research and development










702Stock compensation






239



890Other items


(59
)


(71
)


145Provision for (benefit from) income taxes

$
10,875


$
(10,742
)

$
21,898  84




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    December 31,


December 30,2006


2007Federal net operating loss carryforwards

$
6,300


$
Foreign net operating loss carryforwards






2,216Deferred revenue


27,257



Federal research and development credit carryforwards


7,707



State research and development credit carryforwards


3,859



5,056Depreciation and amortization


411



(408
)Stock compensation


28



168Accrued expenses and other temporary differences


943



1,10146,505



8,133Less valuation allowance


(46,505
)


(6,099
)Net deferred tax assets

$



$
2,034       Balance at January 1, 2007

$
Increases for prior years


3,977Increases for the current year


698Reductions related to settlements with tax authorities


Reductions related to expiration of statute of limitations


Balance at December 30, 2007

$
4,675        85




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
        7.
    Equipment
    Line of Credit  36-month
    36-month
    8.
    Commitments
    and Contingencies   86




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
        Fiscal year:2008

$
1,4352009


1,3582010


1,3952011


1,4032012


279$
5,870   9.
    Common
    Stock    December 31,


December 30,2006


2007Series A Preferred Stock


12,307,744



Series B1 Preferred Stock


5,765,749



Series B2 Preferred Stock


1,273,943



Series C Preferred Stock


18,810,329



Series D Preferred Stock


3,364,069



2000 Stock Plan


12,113,373



12,786,3532007 Stock Plan






12,609,800Series B1 Warrants


48,118



24,059Series C Warrant


32,282



Total number of common shares reserved


53,715,607



25,420,212    87




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
  Founders
    Shares
    10.
    Stock
    Incentive Plans  Restricted
    Common Stock
        Stock
    Options
       88




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
  Share-Based Payments and SFAS 123(R). 7-year
    Number ofShares Subject





Fair Valueto Options


Exercise


ofGranted


Price


Common StockDecember 13, 2005


633,898


$
2.67


$
4.91
(a)January 23, 2006


87,767



2.67



5.29
(a)April 18, 2006


256,177



3.00



5.05
(a)July 19, 2006


167,275



3.00



3.67
(a)August 21, 2006


1,311,383



3.00



4.08
(a)October 17, 2006


254,259



3.67



6.10
(a)November 28, 2006


303,625



7.62



7.62
(b)February 28, 2007


360,068



7.04



7.04
(b)March 22, 2007


135,028



7.07



7.07
(b)April 30, 2007


262,566



0.01



6.03
(b)May 22, 2007


418,943



6.72



6.72
(b)June 21, 2007


104,268



7.44



7.44
(b)Total:


4,295,257     (a)
    
    Fair value as determined in a retrospective valuation(b)
    
    Fair value as determined in a contemporaneous valuation   89




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    Valuation of Privately-Held-Company Equity Securities Issued
    as Compensation
               90




---



##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
             91




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##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    Weighted





WeightedWeighted


Average





AverageAverage


Remaining





FairNumber of


Exercise Price


Contractual


Aggregate


ValueShares


per Share


Term in Years


Intrinsic Value


Per ShareOutstanding at January 2, 2005


6,564,363


$
1.28



8.55


$
4,711Granted


2,073,426



2.41










$
0.44Exercised


(303,030
)


1.09






$
266Cancelled


(172,908
)


1.53Outstanding at January 1, 2006


8,161,851


$
1.56



8.06


$
27,309Granted


2,380,486



3.65










$
3.96Exercised


(293,992
)


1.35






$
671Cancelled


(240,533
)


2.00Outstanding at December 31, 2006


10,007,812


$
2.05



7.67


$
55,641Granted


4,307,829



6.23










$
3.71Exercised


(416,328
)


1.47






$
2,160Cancelled


(563,860
)


2.88Outstanding at December 30, 2007


13,335,453



2.24



7.05


$
44,728Exercisable at January 1, 2006


2,828,168



1.15



8.06


$
10,618Exercisable at December 31, 2006


4,169,331



1.34



6.47


$
26,163Exercisable at December 30, 2007


6,985,359



1.33



6.01


$
29,784Options vested or expected to vest at December 31, 2006


9,707,578



2.05



7.67


$
53,972Options vested or expected to vest at December 30, 2007


12,935,389



2.24



7.05


$
43,386    92




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##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    Years EndedDecember 31,


December 30,2006


2007Cost of service revenue

$
40


$
174Research and development


435



1,827Selling and marketing


141



669General and administrative


184



326Total stock-based compensation

$
800


$
2,996   11.
    Deferred
    Revenue and Deferred Product Cost     93




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##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    Current


Long-Term


TotalDeferred revenue related to April 2005 specified upgrade

$
44


$



$
44Deferred revenue related to September 2006 specified upgrade


6,191







6,191Deferred revenue related to June 2007 specified upgrade


61,316







61,316Deferred revenue related to December 2007 specified upgrade


11,273







11,273Other deferred revenue


1,091



63



1,154Total deferred revenue

$
79,915


$
63


$
79,978Deferred product cost related to September 2006 specified upgrade

$
73


$



$
73Deferred product cost related to June 2007 specified upgrade


853







853Deferred product cost related to December 2007 specified upgrade


124







124Total deferred product cost

$
1,050


$



$
1,050     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   12.
    Accrued
    Expenses and Other Current Liabilities    December 31,


December 30,2006


2007Payroll and related accruals

$
5,301


$
7,668Accrued rent expense


569



601Accrued legal fees


591



173Accrued audit and tax


167



504Accrued royalties


315



771Other accruals


898



1,445$
7,841


$
11,162   13.
    Acquisition   94




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##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    Business
    Combinations
  EstimatedUseful Life


Fair ValueDeveloped Technology


60 months


$
3,340Customer Relationships


48 months



1,350Non-Compete Agreements


36 months



190Total Intangible Assets





$
4,880      95




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##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
    Fair ValueApril 30, 2007Assets Acquired:Current assets

$
462Fixed assets


504Deferred tax asset


509In-process research and development


2,340Intangible assets


4,880Goodwill


7,99816,693Liabilities Assumed:Current liabilities


689Deferred tax liability


1,464Non-current liabilities


7042,857Net assets acquired

$
13,836     Pro
    Forma Results of Operations
    Years EndedDecember 31,


December 30,2006


2007Pro forma revenues

$
171,807


$
306,247Pro forma net (loss) income

$
72,081


$
152,809Pro forma (loss) earnings per share

$
1.22


$
2.61   14.
    Employee
    Benefit Plan   96




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##### Table of Contents



AIRVANA,
    INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
 (dollars
    in thousands, except per share amounts) 
    (Continued)
  15.
    Related
    Party Transactions    16.
    Special
    Cash Dividend    17.
    Reverse
    Stock Split  1-for-1.333
  18.
    Quarterly
    Financial Data (unaudited)    April 2,


July 2,


October 1,


December 31,


April 1,


July 1,


September 30,


December 30,2006


2006


2006


2006


2007


2007


2007


2007Revenue

$
162


$
167,299


$
1,513


$
1,296


$
269


$
156,256


$
3,645


$
145,616Cost of revenue


1,575



40,430



1,560



1,730



1,683



35,770



1,689



2,762Gross (loss) profit


(1,413
)


126,869



(47
)


(434
)


(1,414
)


120,486



1,956



142,854Total operating expenses


14,591



16,312



16,316



20,651



20,079



25,841



25,167



27,399(Loss) income from operations


(16,004
)


110,557



(16,363
)


(21,085
)


(21,493
)


94,645



(23,211
)


115,455Net (loss) income


(12,469
)


120,499



(14,790
)


(19,121
)


(18,785
)


86,102



(18,219
)


104,245Basic net (loss) income per share

$
(1.07
)

$
2.20


$
(1.22
)

$
(1.53
)

$
(1.49
)

$
1.56


$
(0.35
)

$
1.64Diluted net (loss) income per share

$
(1.07
)

$
2.01


$
(1.22
)

$
(1.53
)

$
(1.49
)

$
1.37


$
(10.35
)

$
1.46  97




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##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rules 13a-15(e) 15d-15(e)
      Item 9B.
    Other
    Information   PART III  Item 10.
    Directors
    and Executive Officers of the Registrant    Item 11.
    Executive
    Compensation    Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters   98




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##### Table of Contents



Item 13.
    Certain
    Relationships and Related Transactions and Director
    Independence    Item 14.
    Principal
    Accounting Fees and Services   PART IV  Item 15.
    Exhibits,
    Financial Statement Schedules      PageReport of Independent Registered Public Accounting Firm


68Consolidated Balance Sheets as of December 31, 2006 and
    December 30, 2007


69Consolidated Statements of Operations for the years ended
    January 1, 2006, December 31, 2006 and
    December 30, 2007


70Consolidated Statements of Cash Flows for the years ended
    January 1, 2006, December 31, 2006 and
    December 30, 2007


71Consolidated Statements of Redeemable Convertible Preferred
    Stock and Stockholders Deficit for the for the years ended
    January 1, 2006, December 31, 2006 and
    December 30, 2007


72Notes to Consolidated Financial Statements


73          99




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##### Table of Contents



SIGNATURES      By:
    /s/  Randall
    S. Battat       Name

Title/s/  Randall
    S. BattatRandall
    S. Battat

President, Chief Executive Officer and Director
    (Principal Executive Officer)/s/  Jeffrey
    D. GliddenJeffrey
    D. Glidden

Vice President, Chief Financial Officer
    (Principal Financial and Accounting Officer)/s/  Hassan
    AhmedHassan
    Ahmed

Director/s/  Robert
    P. BadavasRobert
    P. Badavas

Director/s/  Gururaj
    DeshpandeGururaj
    Deshpande

Director/s/  Vedat
    M. EyubogluVedat
    M. Eyuboglu

Director/s/  Paul
    J. FerriPaul
    J. Ferri

Director/s/  Steven
    HaleySteven
    Haley

Director/s/  Anthony
    S. ThornleyAnthony
    S. Thornley

Director/s/  Sanjeev
    VermaSanjeev
    Verma

Director  100




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##### Table of Contents



EXHIBIT INDEX
  Exhibit No.

Exhibit3
.1

Restated Certificate of Incorporation of the Registrant (filed
    as Exhibit 3.1 to the Registrants Report on
    Form 8-K
    filed on July 25, 2007 (File
    No. 001-33576)
    and incorporated herein by reference)3
.2

Amended and Restated Bylaws of the Registrant (filed as
    Exhibit 3.4 to the Registrants Registration Statement
    on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)4
.1

Specimen certificate evidencing shares of common stock (filed as
    Exhibit 4.1 to the Registrants Registration Statement
    on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)4
.2

Third Amended and Restated Investor Rights Agreement dated as of
    June 6, 2007 between the Registrant and the Preferred
    Investors, Other Investors, Founders and Warrant Holders (filed
    as Exhibit 10.5 to the Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.1*

2000 Stock Incentive Plan, as amended (filed as
    Exhibit 10.1 to the Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.2*

2007 Stock Incentive Plan (filed as Exhibit 10.2 to the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.3*

Forms of Incentive Stock Option Agreements under 2007 Stock
    Incentive Plan (filed as Exhibit 10.3 to the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.4*

Forms of Nonstatutory Stock Option Agreements under 2007 Stock
    Incentive Plan (filed as Exhibit 10.4 to the
    Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.5

Development and Purchase and Sale Agreement for CDMA High Data
    Rate (1xEV-DO) Products dated October 1, 2001 between the
    Registrant and Nortel Networks, Inc., as amended (filed as
    Exhibit 10.6 to the Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.6

HDR Infrastructure Equipment License Agreement, entered into on
    September 18, 2000, by and between Qualcomm Incorporated
    and the Registrant, as amended (filed as Exhibit 10.7 to
    the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.7

CSM 6800 Software Agreement, entered into as of April 28,
    2004, by and between Qualcomm Incorporated and the Registrant
    (filed as Exhibit 10.8 to the Registrants
    Registration Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.8

Lease Agreement, dated as of October 4, 2004, between the
    Registrant and W9/TIB Realty, L.L.C. (filed as Exhibit 10.9
    to the Registrants Registration Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.9

Lease Agreement, dated as of August 4, 2005, between the
    Registrant and W9/TIB III Realty, L.L.C. (filed as
    Exhibit 10.10 to the Registrants Registration
    Statement on
    Form S-1
    (File
    No. 333-142210)
    and incorporated herein by reference)10
.10

Amendment No. 10 to Development and Purchase And Sale
    Agreement For CDMA High Data Rate (1xEV-DO) Products, entered
    into as of September 28, 2007 (filed as Exhibit 10.1
    to the Registrants Quarterly Report on
    Form 10-Q
    filed on November 8, 2007 (File
    No. 001-33576)
    for the quarterly period ended September 30, 2007 and
    incorporated herein by reference)21
.1#

Subsidiaries of the Registrant23
.1#

Consent of Ernst & Young LLP, Independent Registered
    Public Accounting Firm31
.1#

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002,
    Rule 13(a)-
    14(a)/15d-14(a), by President and Chief Executive Officer31
.2#

Certification pursuant to Section 302 of the Sarbanes-Oxley
    Act of 2002,
    Rule 13(a)-
    14(a)/15d-14(a), by Vice President, Chief Financial Officer




---



##### Table of Contents



Exhibit No.

Exhibit32
.1#

Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, by President and Chief Executive Officer32
.2#

Certification pursuant to 18 U.S.C. Section 1350, as
    adopted pursuant to Section 906 of the Sarbanes-Oxley Act
    of 2002, by Vice President, Chief Financial Officer     *
    
    Management contracts or compensatory plans or arrangements
    required to be filed as an exhibit hereto pursuant to
    Item 15(a) of
    Form 10-K.
    
    Indicates confidential treatment requested as to certain
    portions, which portions were omitted and filed separately with
    the Securities and Exchange Commission pursuant to a
    Confidential Treatment Request.#
    
    Filed herewith.