##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended: June 30, 2008
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                    to
 Commission file number 001-33349
 CLEARWIRE CORPORATION
  Delaware
    
    56-2408571(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)4400 Carillon PointKirkland, Washington
    
    98033(Address of principal executive office)
    
    (zip code)
 (425) 216-7600
 þ o
   Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



CLEARWIRE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2008
Table of Contents
 PagePart I. Financial InformationItem 1.
    
    Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of June 30,
2008 and December 31, 2007
    
    
    2Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2008 and June 30,
 2007
    
    
    3Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2008 and June 30, 2007
    
    
    4Condensed Consolidated Statement of Stockholders
Equity for the Six Months Ended June 30, 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    

Managements
Discussion and Analysis of Financial Condition and Results of
Operations
    
    
    26Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    39Item 4.
    
    Controls and Procedures
    
    
    41Part II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    42Item 1A.
    

Risk
Factors
    
    
    42Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 4.
    
    Submissions of Matters to a Vote of Security Holders
    
    
    44Item 5.
    
    Other Information
    
    
    45Item 6.
    
    Exhibits
    
    
    46Signatures
    
    
    47EXHIBIT 10.1EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  1




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    349,350
    
    
    $
    876,752Short-term investments
    
    
    178,737
    
    
    
    67,012Restricted cash
    
    
    1,183
    
    
    
    1,077Accounts receivable, net of allowance of $1,234 and $787
    
    
    4,818
    
    
    
    3,677Notes receivable, short-term
    
    
    1,500
    
    
    
    2,134Inventory
    
    
    3,258
    
    
    
    2,312Prepaids and other assets
    
    
    32,117
    
    
    
    36,748Total current assets
    
    
    570,963
    
    
    
    989,712Property, plant and equipment,net
    
    
    632,766
    
    
    
    572,329Restricted cash
    
    
    9,595
    
    
    
    11,603Long-term investments
    
    
    64,766
    
    
    
    88,632Notes receivable, long-term
    
    
    5,214
    
    
    
    4,700Prepaid spectrum license fees
    
    
    519,201
    
    
    
    457,741Spectrum licenses and other intangible assets, net
    
    
    495,894
    
    
    
    480,003Goodwill
    
    
    38,763
    
    
    
    35,666Investments in equity investees
    
    
    12,288
    
    
    
    14,602Other assets
    
    
    29,239
    
    
    
    30,981TOTAL ASSETS
    
    $
    2,378,689
    
    
    $
    2,685,969LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable and accrued expenses
    
    $
    101,359
    
    
    $
    102,449Deferred rent-current
    
    
    606
    
    
    
    24,805Deferred revenue
    
    
    11,985
    
    
    
    10,010Current portion of long-term debt
    
    
    22,500
    
    
    
    22,500Total current liabilities
    
    
    136,450
    
    
    
    159,764Long-term debt
    
    
    1,228,125
    
    
    
    1,234,375Deferred tax liabilities
    
    
    45,986
    
    
    
    43,107Other long-term liabilities
    
    
    124,511
    
    
    
    71,385Total liabilities
    
    
    1,535,072
    
    
    
    1,508,631MINORITY INTEREST
    
    
    11,499
    
    
    
    13,506COMMITMENTS AND CONTINGENCIES (NOTE 11)STOCKHOLDERS EQUITYPreferred stock, par value $0.0001, 5,000,000 shares
authorized; no shares issued or outstandingCommon stock, par value $0.0001, and additional paid-in
capital, 350,000,000 shares authorized; Class A,
135,676,636 and 135,567,269 shares issued and outstanding
    
    
    2,122,660
    
    
    
    2,098,155Class B, 28,596,685 shares issued and outstanding
    
    
    234,376
    
    
    
    234,376Accumulated other comprehensive income, net
    
    
    36,557
    
    
    
    17,333Accumulated deficit
    
    
    (1,561,475
    )
    
    
    (1,186,032
    )Total stockholders equity
    
    
    832,118
    
    
    
    1,163,832TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,378,689
    
    
    $
    2,685,969
  2




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUES
    
    $
    58,563
    
    
    $
    35,484
    
    
    $
    110,091
    
    
    $
    64,759OPERATING EXPENSES:Cost of goods and services (exclusive of a portion of depreciation and
amortization shown below)
    
    
    42,193
    
    
    
    23,313
    
    
    
    80,367
    
    
    
    40,048Selling, general and administrative expense
    
    
    94,769
    
    
    
    87,375
    
    
    
    193,878
    
    
    
    156,032Transaction related expenses
    
    
    10,224
    
    
    
    
    
    
    
    10,224
    
    
    
    Research and development
    
    
    593
    
    
    
    578
    
    
    
    1,030
    
    
    
    1,023Depreciation and amortization
    
    
    28,901
    
    
    
    19,714
    
    
    
    56,986
    
    
    
    35,899Spectrum lease expense
    
    
    28,522
    
    
    
    14,823
    
    
    
    64,207
    
    
    
    28,265Total operating expenses
    
    
    205,202
    
    
    
    145,803
    
    
    
    406,692
    
    
    
    261,267OPERATING LOSS
    
    
    (146,639
    )
    
    
    (110,319
    )
    
    
    (296,601
    )
    
    
    (196,508
    )OTHER INCOME (EXPENSE):Interest income
    
    
    3,829
    
    
    
    18,820
    
    
    
    12,298
    
    
    
    35,410Interest expense
    
    
    (25,711
    )
    
    
    (23,511
    )
    
    
    (54,305
    )
    
    
    (47,729
    )Foreign currency gains (losses), net
    
    
    166
    
    
    
    (101
    )
    
    
    691
    
    
    
    (68
    )Other-than-temporary impairment loss and realized loss on investments
    
    
    (27,918
    )
    
    
    
    
    
    
    (32,767
    )
    
    
    Other income (expense), net
    
    
    (866
    )
    
    
    (734
    )
    
    
    (1,209
    )
    
    
    1,744Total other expense, net
    
    
    (50,500
    )
    
    
    (5,526
    )
    
    
    (75,292
    )
    
    
    (10,643
    )LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND LOSSES FROM
EQUITY INVESTEES
    
    
    (197,139
    )
    
    
    (115,845
    )
    
    
    (371,893
    )
    
    
    (207,151
    )Income tax provision
    
    
    (1,668
    )
    
    
    (2,126
    )
    
    
    (3,584
    )
    
    
    (2,729
    )LOSS BEFORE MINORITY INTEREST AND LOSSES FROM EQUITY
INVESTEES
    
    
    (198,807
    )
    
    
    (117,971
    )
    
    
    (375,477
    )
    
    
    (209,880
    )Minority interest in net loss of consolidated subsidiaries
    
    
    1,108
    
    
    
    1,075
    
    
    
    2,345
    
    
    
    1,967Losses from equity investees
    
    
    (1,355
    )
    
    
    (1,189
    )
    
    
    (2,311
    )
    
    
    (2,807
    )NET LOSS
    
    $
    (199,054
    )
    
    $
    (118,085
    )
    
    $
    (375,443
    )
    
    $
    (210,720
    )Net loss per common share, basic and diluted
    
    $
    (1.21
    )
    
    $
    (0.72
    )
    
    $
    (2.29
    )
    
    $
    (1.37
    )Weighted average common shares outstanding,
basic and diluted
    
    
    164,129
    
    
    
    163,276
    
    
    
    164,096
    
    
    
    153,561
  3




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
   For the Six Months Ended June 30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (375,443
    )
    
    $
    (210,720
    )Adjustments to reconcile net loss to net cash used in operating activities:Provision for uncollectible accounts
    
    
    2,968
    
    
    
    2,120Depreciation and amortization
    
    
    56,985
    
    
    
    35,899Amortization of prepaid spectrum license fees
    
    
    21,117
    
    
    
    5,347Amortization of deferred financing costs and accretion of debt discount
    
    
    3,186
    
    
    
    14,409Share-based compensation
    
    
    23,744
    
    
    
    18,202Other-than-temporary impairment loss on investments
    
    
    32,767
    
    
    
    Deferred income taxes
    
    
    3,582
    
    
    
    2,702Non-cash interest on swaps
    
    
    1,208
    
    
    
    Minority interest
    
    
    (2,345
    )
    
    
    (1,967
    )Losses from equity investees, net
    
    
    1,719
    
    
    
    2,807Loss (gain) on other asset disposals
    
    
    5,556
    
    
    
    (5
    )Impairment of equity investment
    
    
    1,397
    
    
    
    Gain on sale of equity investment
    
    
    
    
    
    
    (2,213
    )Changes in assets and liabilities, net:Prepaid spectrum license fees
    
    
    (79,819
    )
    
    
    (172,272
    )Inventory
    
    
    (1,144
    )
    
    
    (273
    )Accounts receivable
    
    
    (3,945
    )
    
    
    (2,609
    )Prepaids and other assets
    
    
    (5,956
    )
    
    
    (12,262
    )Accounts payable
    
    
    (1,111
    )
    
    
    20,864Accrued expenses and other liabilities
    
    
    34,289
    
    
    
    19,332Net cash used in operating activities
    
    
    (281,245
    )
    
    
    (280,639
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, plant and equipment
    
    
    (115,390
    )
    
    
    (164,604
    )Payments for acquisitions of spectrum licenses and other
    
    
    (13,719
    )
    
    
    (194,830
    )Purchases of available-for-sale investments
    
    
    (248,792
    )
    
    
    (1,064,121
    )Sales or maturities of available-for-sale investments
    
    
    137,007
    
    
    
    1,051,358Investments in equity investees
    
    
    (760
    )
    
    
    (5,293
    )Restricted cash
    
    
    1,902
    
    
    
    (975
    )Restricted investments
    
    
    
    
    
    
    33,729Business acquisitions, net of cash acquired
    
    
    
    
    
    
    (7,067
    )Proceeds from sale of equity investment and other assets
    
    
    
    
    
    
    2,250Net cash used in investing activities
    
    
    (239,752
    )
    
    
    (349,553
    )CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of common stock for IPO and other, net
    
    
    
    
    
    
    556,005Proceeds from issuance of common stock for option and warrant exercises
    
    
    785
    
    
    
    2,182Principal payments on long-term debt
    
    
    (6,250
    )
    
    
    (937
    )Contributions from minority interests
    
    
    
    
    
    
    15,000Net cash (used in) provided by financing activities
    
    
    (5,465
    )
    
    
    572,250Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    (940
    )
    
    
    (50
    )Net decrease in cash and cash equivalents
    
    
    (527,402
    )
    
    
    (57,992
    )CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    876,752
    
    
    
    438,030End of period
    
    $
    349,350
    
    
    $
    380,038SUPPLEMENTAL CASH FLOW DISCLOSURES:Cash paid for income taxes
    
    $
    
    
    
    $
    26Cash paid for interest
    
    
    61,082
    
    
    
    42,961NON-CASH INVESTING AND FINANCING ACTIVITIESCommon stock and warrants issued for spectrum licenses
    
    $
    
    
    
    $
    21,379Common stock and warrants issued for business acquisitions
    
    
    
    
    
    
    15Cashless option exercises
    
    
    
    
    
    
    503Fixed asset purchases in accounts payable
    
    
    1,376
    
    
    
    6,930Non-cash dividends to related party
    
    
    
    
    
    
    1,063
  4




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
 Class A
    
    
    Class B
    
    
    AccumulatedCommon Stock, Warrants and
    
    
    Common Stock and
    
    
    Other
    
    
    
    
    
    
    TotalAdditional Paid In Capital
    
    
    Additional Paid In Capital
    
    
    Comprehensive
    
    
    Accumulated
    
    
    StockholdersShares
    
    
    Amounts
    
    
    Shares
    
    
    Amounts
    
    
    Income
    
    
    Deficit
    
    
    EquityBalances at January 1, 2008
    
    
    135,567
    
    
    $
    2,098,155
    
    
    
    28,597
    
    
    $
    234,376
    
    
    $
    17,333
    
    
    $
    (1,186,032
    )
    
    $
    1,163,832Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (375,443
    )
    
    
    (375,443
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,559
    
    
    
    
    
    
    
    12,559Unrealized loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,431
    )
    
    
    
    
    
    
    (25,431
    )Reclassification adjustment for other-than-
temporary impairment loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,767
    
    
    
    
    
    
    
    32,767Unrealized loss on hedge activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (671
    )
    
    
    
    
    
    
    (671
    )Options and warrants exercised
    
    
    110
    
    
    
    785
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    785Share-based compensation
    
    
    
    
    
    
    23,720
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,720Balances at June 30, 2008
    
    
    135,677
    
    
    $
    2,122,660
    
    
    
    28,597
    
    
    $
    234,376
    
    
    $
    36,557
    
    
    $
    (1,561,475
    )
    
    $
    832,118
  5




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
 1. Description of Business and Basis of Presentation
 The Business
  Business Segments
 Disclosures about Segments of an Enterprise and Related Information
 Basis of Presentation
  Principles of Consolidation
 Use of Estimates
 6




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  2. Significant Accounting Policies
 Significant Accounting Policies Accounting for
Derivative Instruments and Hedging Activities Fair Value
Measurements
 Derivative Instruments
      Financial Instruments
 Effective Date of FASB Statement No. 157
 7




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
   
  Recent Accounting Pronouncements
 SFAS No.141(R) Business
Combinations .
 SFAS No. 159 The Fair Value Option for Financial Assets and Financial Liabilities
 SFAS No. 160 Noncontrolling Interests in
Consolidated Financial Statements . Consolidated Financial Statements,
 8




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 SFAS No. 161 Disclosures about Derivative
Instruments and Hedging Activities
 FSP No. 142-3 Determination of the Useful Life
of Intangible Assets Goodwill and Other Intangible Assets ). Business Combinations ,
 3. Strategic Transaction
      9




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
    4. Investments
  June 30, 2008
    
    
    December 31, 2007Gross Unrealized
    
    
    Gross UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-termCommercial paper in structured
investment vehicles
    
    $
    4,100
    
    
    $
    
    
    
    $
    
    
    
    $
    4,100
    
    
    $
    7,500
    
    
    $
    
    
    
    $
    
    
    
    $
    7,500Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,970
    
    
    
    15
    
    
    
    
    
    
    
    7,985US Government and Agency Issues
    
    
    174,593
    
    
    
    45
    
    
    
    (1
    )
    
    
    174,637
    
    
    
    51,544
    
    
    
    3
    
    
    
    (20
    )
    
    
    51,527Total
    
    $
    178,693
    
    
    $
    45
    
    
    $
    (1
    )
    
    $
    178,737
    
    
    $
    67,014
    
    
    $
    18
    
    
    $
    (20
    )
    
    $
    67,012Long-termAuction rate securities
    
    $
    64,766
    
    
    $
    
    
    
    $
    
    
    
    $
    64,766
    
    
    $
    95,922
    
    
    $
    
    
    
    $
    (7,290
    )
    
    $
    88,632Total
    
    $
    64,766
    
    
    $
    
    
    
    $
    
    
    
    $
    64,766
    
    
    $
    95,922
    
    
    $
    
    
    
    $
    (7,290
    )
    
    $
    88,632Total Investments
    
    $
    243,459
    
    
    $
    45
    
    
    $
    (1
    )
    
    $
    243,503
    
    
    $
    162,936
    
    
    $
    18
    
    
    $
    (7,310
    )
    
    $
    155,644
    10




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
       11




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 5. Property, Plant and Equipment
  June 30,
    
    
    December 31,2008
    
    
    2007Network and base station equipment
    
    $
    342,680
    
    
    $
    305,635Customer premise equipment
    
    
    104,015
    
    
    
    89,120Furniture, fixtures and equipment
    
    
    61,720
    
    
    
    55,548Leasehold improvements
    
    
    14,506
    
    
    
    13,488Construction in progress
    
    
    286,603
    
    
    
    233,120809,524
    
    
    
    696,911Less: accumulated depreciation and amortization
    
    
    (176,758
    )
    
    
    (124,582
    )$
    632,766
    
    
    $
    572,329
 Capitalization of Interest Cost
 Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007$
    5,606
    
    
    $
    7,586
    
    
    $
    11,354
    
    
    $
    12,590
  Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007$
    27,545
    
    
    $
    18,971
    
    
    $
    53,686
    
    
    $
    33,920
 6. Spectrum Licenses, Goodwill, and Other Intangible Assets
 Purchased Spectrum Rights and other intangibles
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cash
    
    $
    608
    
    
    $
    184,311
    
    
    $
    13,719
    
    
    $
    194,661Stock/Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200Total
    
    $
    608
    
    
    $
    184,311
    
    
    $
    13,719
    
    
    $
    198,861
 12




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007$
    1,275
    
    
    $
    742
    
    
    $
    3,141
    
    
    $
    1,979
 Prepaid Spectrum License Fees
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cash
    
    $
    40,005
    
    
    $
    127,873
    
    
    $
    79,819
    
    
    $
    171,135Stock/Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,063Total
    
    $
    40,005
    
    
    $
    127,873
    
    
    $
    79,819
    
    
    $
    188,198
  Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007$
    7,404
    
    
    $
    2,555
    
    
    $
    21,117
    
    
    $
    5,329
 7. Accounts Payable and Accrued Expenses
  June 30,
    
    
    December 31,2008
    
    
    2007Accounts payable
    
    $
    44,673
    
    
    $
    47,865Accrued interest
    
    
    11,760
    
    
    
    11,643Salaries and benefits
    
    
    17,041
    
    
    
    17,697Business and income taxes payable
    
    
    7,191
    
    
    
    9,299Other
    
    
    20,694
    
    
    
    15,945$
    101,359
    
    
    $
    102,449
 8. Income Taxes
  13




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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 9. Derivative Instruments and Hedging Activities
   Type of
    
    Notional
    
    
    
    
    
    Receive
    
    Pay
    
    Fair marketHedge
    
    Amount
    
    Maturity Date
    
    Index Rate
    
    Fixed rate
    
    ValueSwap
    
    $
    300,000
    
    
    
    3/5/2010
    
    
    3-month LIBOR
    
    
    3.50
    %
    
    $
    (1,788
    )Swap
    
    $
    300,000
    
    
    
    3/5/2011
    
    
    3-month LIBOR
    
    
    3.62
    %
    
    $
    747
     14




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 10. Fair Value Measurements
  
  Investment Securities
  Financial Instrument
    
    Hierarchy
    
    Pricing AssumptionsInvestment: U.S. Treasuries
    
    Level 1
    
    Market QuotesInvestment: Money Market Mutual Funds
    
    Level 1
    
    Market QuotesDebt Instrument: Credit Agreement
    
    Level 1
    
    Market QuotesDerivative: Interest Rate Swap
    
    Level 2
    
    Discount of forecasted cash flowsDebt Instrument: Bell Canada Loan
    
    Level 2
    
    Discount of forecasted cash flowsInvestment: Commercial Paper Security
    
    Level 2
    
    Discount of forecasted cash flows adjusted for default/loss probabilities and estimate of final maturityInvestment: Auction Rate Securities
    
    Level 3
    
    Discount of forecasted cash flows adjusted for default/loss probabilities and estimate of final maturity
  15




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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Derivatives
  Debt Instruments
    Quoted
    
    SignificantPrices in
    
    Other
    
    SignificantActive
    
    Observable
    
    UnobservableCarrying
    
    Total Fair
    
    Markets
    
    Inputs
    
    InputsAmount
    
    Value
    
    (Level 1)
    
    (Level 2)
    
    (Level 3)Financial assets:Cash and cash equivalents
    
    $
    349,350
    
    
    $
    349,350
    
    
    $
    349,350
    
    
    $
    
    
    
    $
    Short-term investments
    
    
    178,693
    
    
    
    178,737
    
    
    
    174,637
    
    
    
    4,100
    
    
    
    Long-term investments
    
    
    64,766
    
    
    
    64,766
    
    
    
    
    
    
    
    
    
    
    
    64,766Interest rate swaps
    
    
    747
    
    
    
    747
    
    
    
    
    
    
    
    747
    
    
    
    Financial liabilities:Interest rate swaps
    
    $
    1,788
    
    
    $
    1,788
    
    
    $
    
    
    
    $
    1,788
    
    
    $
    Debt
    
    
    1,250,625
    
    
    
    1,198,622
    
    
    
    1,188,643
    
    
    
    9,979
    
    
    
    
 16




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Fair ValueMeasurements atUsing SignificantUnobservable Inputs(Level 3)Balance at January 1, 2008
    
    $
    96,132Total losses included in:Net loss
    
    
    (4,849
    )Other comprehensive income
    
    
    (4,272
    )Purchases, sales, issuances and
settlements, net
    
    
    Other
    
    
    18Balance at March 31, 2008
    
    $
    87,029Total losses included in:Net loss
    
    
    (27,918
    )Other comprehensive income
    
    
    11,562Transfer to level 2
    
    
    (4,100
    )Purchases, sales, issuances and
settlements, net
    
    
    (1,807
    )Balance at June 30, 2008
    
    $
    64,766
 11. Commitments and Contingencies
    Motorola Agreements
 17




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
   12. Share-Based Payments
   ), Share-Based Payment
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cost of service
    
    $
    80
    
    
    $
    17
    
    
    $
    97
    
    
    $
    32Selling, general and administrative
    
    
    12,952
    
    
    
    10,316
    
    
    
    23,647
    
    
    
    18,170Total
    
    $
    13,032
    
    
    $
    10,333
    
    
    $
    23,744
    
    
    $
    18,202
 Stock Options
    18




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
   Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007Expected volatility
    
    
    59.47%-62.67
    %
    
    
    57.07
    %
    
    
    58.81%-66.20
    %
    
    
    57.07% - 64.68
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected life (in years)
    
    
    4.75-6.75
    
    
    
    6.25
    
    
    
    3.00-6.75
    
    
    
    6.25Risk-free interest rate
    
    
    2.68%-3.61
    %
    
    
    5.00
    %
    
    
    2.46%-3.61
    %
    
    
    4.46% - 5.00
    %Weighted average fair value per option at grant date
    
    $
    7.00
    
    
    $
    14.92
    
    
    
    8.48
    
    
    $
    15.85
 Issues
Related to the Accounting for Stock Compensation Under APB No. 25, Accounting for Stock Issued to
Employees, and FASB Interpretation No. 44, Accounting for Certain Transactions Involving Stock
Compensation
 13. Net Loss Per Share
 Earnings
Per Share,
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Stock options
    
    
    18,727
    
    
    
    13,369
    
    
    
    18,213
    
    
    
    12,521Nonvested restricted stock
    
    
    25
    
    
    
    75
    
    
    
    41
    
    
    
    64Restricted Stock Units
    
    
    766
    
    
    
    
    
    
    
    699
    
    
    
    Warrants
    
    
    17,806
    
    
    
    18,446
    
    
    
    18,517
    
    
    
    18,11437,324
    
    
    
    31,890
    
    
    
    37,470
    
    
    
    30,699
 14.  Comprehensive Loss
  19




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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  For the Three Months
    
    
    For the Six MonthsEnded June 30,
    
    
    Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (199,054
    )
    
    $
    (118,085
    )
    
    $
    (375,443
)


    $
    (210,720
    )Other comprehensive income (loss):Net unrealized loss on available-for-sale investments
    
    
    (16,550
    )
    
    
    (104
    )
    
    
    (25,431
    )
    
    
    (141
    )Reclassification adjustment for other-than-temporary
impairment loss on investments
    
    
    27,918
    
    
    
    
    
    
    
    32,767
    
    
    
    Net unrealized gain (loss) on available-for-sale investments
    
    
    11,368
    
    
    
    (104
    )
    
    
    7,336
    
    
    
    (141
    )Derivatives designated as cash flow hedges
    

    
    12,887
    
    
    
    
    
    
    (1,879
    )
    
    

Reclassification adjustment to expense
    
    
    971
    
    
    
    
    
    
    
    1,208
    
    
    
    Net unrealized gain (loss) on derivative instruments
    
    
    13,858
    
    
    
    
    
    
    (671
    )

    
    
    Foreign currency translation adjustment
    
    
    67
    
    
    
    2,274
    
    
    
    12,559
    
    
    
    3,594Total other comprehensive income
    
    
    25,293
    
    
    
    2,170
    
    
    
    19,224
    
    
    
    3,453Total comprehensive loss
    
    $
    (173,761
    )
    
    $
    (115,915
    )
    
    $
    (356,219
    )
    
    $
    (207,267
    )
 15.  Business Segments
  20




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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007United StatesRevenues
    
    $
    48,083
    
    
    $
    29,070
    
    
    $
    90,385
    
    
    $
    52,174Cost of goods and services
(exclusive of items shown separately below)
    
    
    37,226
    
    
    
    20,534
    
    
    
    71,921
    
    
    
    34,604Operating expenses
    
    
    111,158
    
    
    
    86,017
    
    
    
    224,021
    
    
    
    157,628Depreciation and amortization
    
    
    22,937
    
    
    
    16,476
    
    
    
    45,017
    
    
    
    29,330Total operating expenses
    
    
    171,321
    
    
    
    123,027
    
    
    
    340,959
    
    
    
    221,562Operating loss
    
    
    (123,238
    )
    
    
    (93,957
    )
    
    
    (250,574
    )
    
    
    (169,388
    )InternationalRevenues
    
    
    10,480
    
    
    
    6,414
    
    
    
    19,706
    
    
    
    12,585Cost of goods and services
(exclusive of items shown separately below)
    
    
    4,967
    
    
    
    2,779
    
    
    
    8,446
    
    
    
    5,444Operating expenses
    
    
    22,950
    
    
    
    16,759
    
    
    
    45,318
    
    
    
    27,692Depreciation and amortization
    
    
    5,964
    
    
    
    3,238
    
    
    
    11,969
    
    
    
    6,569Total operating expenses
    
    
    33,881
    
    
    
    22,776
    
    
    
    65,733
    
    
    
    39,705Operating loss
    
    
    (23,401
    )
    
    
    (16,362
    )
    
    
    (46,027
    )
    
    
    (27,120
    )Total operating loss
    
    
    (146,639
    )
    
    
    (110,319
    )
    
    
    (296,601
    )
    
    
    (196,508
    )Other expense, net
    
    
    (50,500
    )
    
    
    (5,526
    )
    
    
    (75,292
    )
    
    
    (10,643
    )Income tax provision
    
    
    (1,668
    )
    
    
    (2,126
    )
    
    
    (3,584
    )
    
    
    (2,729
    )Minority interest in net loss of consolidated subsidiaries
    
    
    1,108
    
    
    
    1,075
    
    
    
    2,345
    
    
    
    1,967Losses from equity investees
    
    
    (1,355
    )
    
    
    (1,189
    )
    
    
    (2,311
    )
    
    
    (2,807
    )Net loss
    
    $
    (199,054
    )
    
    $
    (118,085
    )
    
    $
    (375,443
    )
    
    $
    (210,720
    )Capital expendituresUnited States
    
    $
    59,653
    
    
    $
    80,376
    
    
    $
    105,270
    
    
    $
    146,522International
    
    
    2,665
    
    
    
    9,858
    
    
    
    10,120
    
    
    
    18,082$
    62,318
    
    
    $
    90,234
    
    
    $
    115,390
    
    
    $
    164,604
 June 30,
    
    
    December 31,2008
    
    
    2007Total assetsUnited States
    
    $
    2,137,754
    
    
    $
    2,444,341International
    
    
    240,935
    
    
    
    241,628$
    2,378,689
    
    
    $
    2,685,969
 21




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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 16.  Related Party Transactions
  June 30,
    
    December 31,2008
    
    2007Prepaids
    
    $
    1,812
    
    
    $
    14Notes receivable, short-term
    
    
    1,500
    
    
    
    2,134Notes receivable, long-term
    
    
    5,214
    
    
    
    4,700Accounts payable and accrued expenses
    
    
    8,251
    
    
    
    4,523
 Three Months Ended June 30,
    
    Six Months Ended June 30,2008
    
    2007
    
    2008
    
    2007Cost of service
    
    $
    1,018
    
    
    $
    662
    
    
    $
    1,874
    
    
    $
    1,390
  Relationships among Certain Stockholders, Directors, and Officers of Clearwire
    Advisory Services Agreement and Other Reimbursements
   22




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 Nextel Undertaking 
 Intel Collaboration Agreement
  Motorola Agreements
 HITN and its Affiliates
    Agreements with Bell Canada
 23




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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
   Davis Wright Tremaine LLP
 24




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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 17. Subsequent Events
 Bell Canada Loan Repayment
  25




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 The following discussion and analysis summarizes the significant factors affecting our
condensed consolidated results of operations, financial condition and liquidity position for the
three and six months ended June 30, 2008 and 2007 and should be read in conjunction with our
condensed consolidated financial statements and related notes included elsewhere in this filing.
The following discussion and analysis contains forward-looking statements that reflect our plans,
estimates and beliefs, including statement relating to the current Clearwire Corporation as a
standalone entity that do not consider the impact of the pending combination with Sprint Nextel
Corporations WiMAX business and the pending investment by strategic investors. Our actual results
could differ materially from those discussed in the forward-looking statements. Factors that could
cause or contribute to these differences include those discussed below and elsewhere in this
quarterly report on Form 10-Q , particularly in the section entitled Risk Factors.
 Forward-Looking Statements
    Pending Strategic Transaction
    26




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Company Overview
         27




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
     Critical Accounting Policies
    28




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Fair Value Measurements
       Derivative Instruments
    29




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
   Results of Operations for the Three Months Ended June 30, 2008 and 2007
  Three Months EndedJune 30,
    
    
    Percentage2008
    
    
    2007
    
    
    ChangeREVENUES
    
    $
    58,563
    
    
    $
    35,484
    
    
    
    65.0
    %OPERATING EXPENSES:Cost of goods and services (exclusive of a portion of depreciation and
amortization shown below)
    
    
    42,193
    
    
    
    23,313
    
    
    
    81.0
    %Selling, general and administrative expense
    
    
    94,769
    
    
    
    87,375
    
    
    
    8.5
    %Transaction related expenses
    
    
    10,224
    
    
    
    
    
    
    
    N/MResearch and development
    
    
    593
    
    
    
    578
    
    
    
    2.6
    %Depreciation and amortization
    
    
    28,901
    
    
    
    19,714
    
    
    
    46.6
    %Spectrum lease expense
    
    
    28,522
    
    
    
    14,823
    
    
    
    92.4
    %Total operating expenses
    
    
    205,202
    
    
    
    145,803
    
    
    
    40.7
    %OPERATING LOSS
    
    
    (146,639
    )
    
    
    (110,319
    )
    
    
    32.9
    %OTHER INCOME (EXPENSE):Interest income
    
    
    3,829
    
    
    
    18,820
    
    
    
    (79.7
    %)Interest expense
    
    
    (25,711
    )
    
    
    (23,511
    )
    
    
    9.4
    %Foreign currency gains (losses), net
    
    
    166
    
    
    
    (101
    )
    
    
    (264.4
    %)Other-than-temporary impairment loss and realized loss on investments
    
    
    (27,918
    )
    
    
    
    
    
    
    N/MOther expense, net
    
    
    (866
    )
    
    
    (734
    )
    
    
    18.0
    %Total other expense, net
    
    
    (50,500
    )
    
    
    (5,526
    )
    
    
    813.9
    %LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND LOSSES
FROM EQUITY INVESTEES
    
    
    (197,139
    )
    
    
    (115,845
    )
    
    
    70.2
    %Income tax provision
    
    
    (1,668
    )
    
    
    (2,126
    )
    
    
    (21.5
    %)LOSS BEFORE MINORITY INTEREST AND LOSSES FROM EQUITY
INVESTEES
    
    
    (198,807
    )
    
    
    (117,971
    )
    
    
    68.5
    %Minority interest in net loss of consolidated subsidiaries
    
    
    1,108
    
    
    
    1,075
    
    
    
    3.1
    %Losses from equity investees
    
    
    (1,355
    )
    
    
    (1,189
    )
    
    
    14.0
    %NET LOSS
    
    $
    (199,054
    )
    
    $
    (118,085
    )
    
    
    68.6
    %
 30




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Revenue .
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeRevenue
    
    $
    58,563
    
    
    $
    35,484
    
    
    $
    23,079
    
    
    
    65.0
    %
  Cost of goods and services .
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeCost of goods and services
    
    $
    42,193
    
    
    $
    23,313
    
    
    $
    18,880
    
    
    
    81.0
    %As a percent of revenue
    
    
    72.0
    %
    
    
    65.7
    %
  Selling, general and administrative expense .
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeSelling, general and administrative expense
    
    $
    94,769
    
    
    $
    87,375
    
    
    $
    7,394
    
    
    
    8.5
    %As a percent of revenue
    
    
    161.8
    %
    
    
    246.2
    %
  31




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Transaction related expense.
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeTransaction related expenses
    
    $
    10,224
    
    
    $
    
    
    
    $
    10,224
    
    
    
    N/M
  Depreciation and amortization .
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeDepreciation and amortization
    
    $
    28,901
    
    
    $
    19,714
    
    
    $
    9,187
    
    
    
    46.6
    %
  Spectrum lease expense.
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeSpectrum lease expense
    
    $
    28,522
    
    
    $
    14,823
    
    
    $
    13,699
    
    
    
    92.4
    %
  Interest income.
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeInterest income
    
    $
    3,829
    
    
    $
    18,820
    
    
    $
    (14,991
    )
    
    
    (79.7
    %)
  32




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Interest expense.
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeInterest expense
    
    $
    (25,711
    )
    
    $
    (23,511
    )
    
    $
    (2,200
    )
    
    
    9.4
    %
  Other-than-temporary impairment loss on investments.
 Three Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeOther-than-temporary impariment
loss on investments
    
    $
    (27,918
    )
    
    $
    
    
    
    $
    (27,918
    )
    
    
    N/M
  33




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Results of Operations for the Six Months Ended June 30, 2008 and 2007
  Six Months EndedJune 30,
    
    
    Percentage2008
    
    
    2007
    
    
    ChangeREVENUES
    
    $
    110,091
    
    
    $
    64,759
    
    
    
    70.0
    %OPERATING EXPENSES:Cost of goods and services (exclusive of a portion of depreciation and
amortization shown below)
    
    
    80,367
    
    
    
    40,048
    
    
    
    100.7
    %Selling, general and administrative expense
    
    
    193,878
    
    
    
    156,032
    
    
    
    24.3
    %Transaction related expenses
    
    
    10,224
    
    
    
    
    
    
    
    N/MResearch and development
    
    
    1,030
    
    
    
    1,023
    
    
    
    0.7
    %Depreciation and amortization
    
    
    56,986
    
    
    
    35,899
    
    
    
    58.7
    %Spectrum lease expense
    
    
    64,207
    
    
    
    28,265
    
    
    
    127.2
    %Total operating expenses
    
    
    406,692
    
    
    
    261,267
    
    
    
    55.7
    %OPERATING LOSS
    
    
    (296,601
    )
    
    
    (196,508
    )
    
    
    50.9
    %OTHER INCOME (EXPENSE):Interest income
    
    
    12,298
    
    
    
    35,410
    
    
    
    (65.3
    %)Interest expense
    
    
    (54,305
    )
    
    
    (47,729
    )
    
    
    13.8
    %Foreign currency gains (losses), net
    
    
    691
    
    
    
    (68
    )
    
    
    (1116.2
    %)Other-than-temporary impairment loss and realized loss on investments
    
    
    (32,767
    )
    
    
    
    
    
    
    N/MOther (expense) income, net
    
    
    (1,209
    )
    
    
    1,744
    
    
    
    (169.3
    %)Total other expense, net
    
    
    (75,292
    )
    
    
    (10,643
    )
    
    
    607.4
    %LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND LOSSES
FROM EQUITY INVESTEES
    
    
    (371,893
    )
    
    
    (207,151
    )
    
    
    79.5
    %Income tax provision
    
    
    (3,584
    )
    
    
    (2,729
    )
    
    
    31.3
    %LOSS BEFORE MINORITY INTEREST AND LOSSES FROM EQUITY
INVESTEES
    
    
    (375,477
    )
    
    
    (209,880
    )
    
    
    78.9
    %Minority interest in net loss of consolidated subsidiaries
    
    
    2,345
    
    
    
    1,967
    
    
    
    19.2
    %Losses from equity investees
    
    
    (2,311
    )
    
    
    (2,807
    )
    
    
    (17.7
    %)NET LOSS
    
    $
    (375,443
    )
    
    $
    (210,720
    )
    
    
    78.2
    %
 Revenue .
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeRevenue
    
    $
    110,091
    
    
    $
    64,759
    
    
    $
    45,332
    
    
    
    70.0
    %
  34




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
  Cost of goods and services .
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeCost of goods and services
    
    $
    80,367
    
    
    $
    40,048
    
    
    $
    40,319
    
    
    
    100.7
    %As a percent of revenue
    
    
    73.0
    %
    
    
    61.8
    %
  Selling, general and administrative expense .
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeSelling, general and administrative expense
    
    $
    193,878
    
    
    $
    156,032
    
    
    $
    37,846
    
    
    
    24.3
    %As a percent of revenue
    
    
    176.1
    %
    
    
    240.9
    %
  Transaction related expense.
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeTransaction related expenses
    
    $
    10,224
    
    
    $
    
    
    
    $
    10,224
    
    
    
    N/M
  35




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Depreciation and amortization .
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeDepreciation and amortization
    
    $
    56,986
    
    
    $
    35,899
    
    
    $
    21,087
    
    
    
    58.7
    %
  Spectrum lease expense.
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeSpectrum lease expense
    
    $
    64,207
    
    
    $
    28,265
    
    
    $
    35,942
    
    
    
    127.2
    %
  Interest income.
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeInterest income
    
    $
    12,298
    
    
    $
    35,410
    
    
    $
    (23,112
    )
    
    
    (65.3
    %)
  Interest expense .
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeInterest expense
    
    $
    (54,305
    )
    
    $
    (47,729
    )
    
    $
    (6,576
    )
    
    
    13.8
    %
  36




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Other-than-temporary impairment loss on investments.
 Six Months EndedJune 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeOther-than-temporary impariment
loss on investments
    
    $
    (32,767
    )
    
    
    
    
    
    $
    (32,767
    )
    
    
    N/M
  Cash Flow Analysis
  Six Months Ended June 30,2008
    
    
    2007Cash used in operating activities
    
    $
    (281,245
    )
    
    $
    (280,639
    )Cash used in investing activities
    
    
    (239,752
    )
    
    
    (349,553
    )Cash provided by (used in) financing activities
    
    
    (5,465
    )
    
    
    572,250Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    (940
    )
    
    
    (50
    )Total cash flows
    
    $
    (527,402
    )
    
    $
    (57,992
    )
 Operating Activities
  Investing Activities
  Financing Activities
  Liquidity and Capital Resource Requirements
  37




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
    Recent Accounting Pronouncements
 SFAS No.141(R) Business Combinations .
 SFAS No. 159 The Fair Value Option for Financial Assets and Financial Liabilities
 SFAS No. 160 Noncontrolling Interests in
Consolidated Financial Statements . Consolidated Financial Statements,
 38




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 SFAS No. 161 Disclosures about Derivative
Instruments and Hedging Activities
 FSP No. 142-3 Determination of the Useful Life of Intangible Assets Goodwill and Other Intangible Assets ). Business Combinations ,
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
  Interest Rate Hedge Contracts
   Foreign Currency Exchange Rates
  39




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
  Investment Risk
     Derivative Instruments and Hedging Activities
 .
  40




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
  Type of
    
    Notional
    
    
    
    
    
    Receive
    
    Pay
    
    Fair marketHedge
    
    Amount
    
    Maturity Date
    
    Index Rate
    
    Fixed rate
    
    ValueSwap
    
    $
    300,000
    
    
    
    3/5/2010
    
    
    3-month LIBOR
    
    
    3.50
    %
    
    $
    (1,788
    )Swap
    
    $
    300,000
    
    
    
    3/5/2011
    
    
    3-month LIBOR
    
    
    3.62
    %
    
    $
    747
  
 Item 4. Controls and Procedures
    41




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  Failure to complete our recently announced transactions with Sprint and several strategic investors
may result in material adverse consequences to our business and operations.
    
    
    Clearwire would not realize the anticipated benefits of the proposed Transactions,
including any anticipated synergies from combining Clearwire and the Sprint WiMAX
Business;
 42




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
    
    Clearwire will be required to pay certain costs relating to the Transactions, such
as legal, accounting, financial advisor and printing fees, whether or not the
Transactions are completed;
    
    Clearwire may be required to pay a termination fee of $60 million if the Transaction
Agreement is terminated due to an adverse change in our Boards recommendation to our
stockholders to approve the Transactions in order to allow us to proceed with an
alternative acquisition, as a result of our failure to close the Transactions within 12
months of the date of the Transaction Agreement if an alternative acquisition proposal
is made prior to our stockholders meeting to vote on the Transactions and we enter
into an alternative acquisition within 12 months following the termination or solely
due to our material breach of a covenant in the Transaction Agreement;
    
    the trading price of Clearwire Common Stock may decline to the extent that the
current market prices reflect a market assumption that the Transactions will be
completed;
    
    Clearwire would continue to be exposed to the general competitive pressures and
risks discussed in our previous Annual Report on Form 10-K , which pressures and risks
may be increased if the Transactions are not completed;
    
    matters relating to the Transactions (including integration planning) may require
substantial commitments of time and resources by our management, which could otherwise
have been devoted to other opportunities that may have been beneficial to us; and
    
    Clearwire may not be able to obtain necessary funding on acceptable terms or at all,
which could significantly impact our ability to build out our network or launch new
markets and may jeopardize our ability to continue to operate.
  Our business will be subject to uncertainties and contractual restrictions while the
Transactions are pending that could adversely affect its business.
     43




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CLEARWIRE CORPORATION AND SUBSIDIARIES
  The Transaction Agreement contains provisions that may discourage other companies from
trying to acquire Clearwire.
  
 Item 2. Unregistered sales of Equity Securities and use of proceeds
 None.
 
 Item 4. Submission of matters to a vote of security holders
 (a)
    
    The Companys Annual Meeting of Stockholders was held on June 20, 2008.(b)
    
    The following directors were elected at such meeting:
 
 (c)
    
    The following matters were voted upon at such meeting:
 Election of Directors
    
    Votes For
    
    Votes WithheldCraig O. McCaw
    
    
    371,561,917
    
    
    
    9,701,594Benjamin G. Wolff
    
    
    371,293,674
    
    
    
    9,969,837Peter L. S. Currie
    
    
    379,732,592
    
    
    
    1,530,919Richard P. Emerson
    
    
    379,748,353
    
    
    
    1,515,158Nicholas Kauser
    
    
    371,592,772
    
    
    
    9,670,739David Perlmutter
    
    
    371,350,658
    
    
    
    9,912,853Michael J. Sabia
    
    
    371,470,189
    
    
    
    9,793,322R. Gerard Salemme
    
    
    371,699,115
    
    
    
    9,564,396Stuart M. Sloan
    
    
    378,301,146
    
    
    
    2,962,365Michelangelo A. Volpi
    
    
    379,781,501
    
    
    
    1,482,010
 Item
    
    Votes For
    
    Votes Against
    
    AbstainRatification of the appointment of Deloitte & Touche LLP
as the Companys independent registered accountants
for fiscal year 2008
    
    
    381,175,148
    
    
    
    56,491
    
    
    
    31,872
 44




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 Item 5. Other information
 None.
 45




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 Item 6. Exhibits
 EXHIBIT INDEX
 10.1
    
    Amendment No. 1 to the Clearwire Corporation Change in Control Severance Plan.31.1
    
    Certification of Chief Executive Officer required by Rule
13a-14(b) or Rule 15d-14(a) and Section 302 of the Sarbanes
Oxley Act of 2002.31.2
    
    Certification of Chief Financial Officer required by Rule
13a-14(b) or Rule 15d-14(a) and Section 302 of the Sarbanes
Oxley Act of 2002.32.1
    
    Certification of Chief Executive Officer required by Rule
13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes
Oxley Act of 2002, 18 U.S.C. Section 1350.32.2
    
    Certification of Chief Financial Officer required by Rule
13a-14(b) or Rule 15d-14(b) and Section 906 of the Sarbanes
Oxley Act of 2002, 18 U.S.C. Section 1350.
 46




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 SIGNATURES
  CLEARWIRE CORPORATIONDate: August 8, 2008
    /s/ JOHN A. BUTLERJohn A. ButlerChief Financial Officer 47