##### 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: March 31, 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
(State or other jurisdiction of 
incorporation or organization)
    
    56-2408571
(I.R.S. Employer
Identification No.)
 4400 Carillon Point 
Kirkland, Washington
(Address of principal executive office)
    
    98033
(zip code)
 (425) 216-7600
 þ o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



CLEARWIRE CORPORATION AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2008
Table of Contents
 PagePart I. Financial InformationItem 1.
    
    Financial Statements (unaudited)Condensed Consolidated Balance Sheets as of March 31,
2008 and December 31, 2007
    
    
    2Condensed Consolidated Statements of Operations for the
three months ended March 31, 2008 and March 31, 2007
    
    
    3Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2008 and March 31, 2007
    
    
    4Condensed Consolidated Statement of Stockholders
Equity for the three months ended March 31, 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    24Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4.
    
    Controls and Procedures
    
    
    34Part II. Other InformationItem 1.
    
    Legal Proceedings
    
    
    35Item 1A.
    
    Risk Factors
    
    
    35Item 2.
    
    Unregistered sales of equity securities and use of proceeds
    
    
    35Item 4.
    
    Submissions of matters to a vote of security holders
    
    
    35Item 5.
    
    Other information
    
    
    35Item 6.
    
    Exhibits
    
    
    36Signatures
    
    
    
    
    37EXHIBIT 3.1EXHIBIT 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
 March 31,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    614,189
    
    
    $
    876,752Short-term investments
    
    
    110,602
    
    
    
    67,012Restricted cash
    
    
    1,212
    
    
    
    1,077Accounts receivable, net of allowance of $1,720 and $787
    
    
    3,898
    
    
    
    3,677Notes receivable, short-term
    
    
    2,219
    
    
    
    2,134Inventory
    
    
    2,955
    
    
    
    2,312Prepaids and other assets
    
    
    36,509
    
    
    
    36,748Total current assets
    
    
    771,584
    
    
    
    989,712Property, plant and equipment, net
    
    
    601,012
    
    
    
    572,329Restricted cash
    
    
    9,815
    
    
    
    11,603Long-term investments
    
    
    81,029
    
    
    
    88,632Notes receivable, long-term
    
    
    5,115
    
    
    
    4,700Prepaid spectrum license fees
    
    
    483,995
    
    
    
    457,741Spectrum licenses and other intangible assets, net
    
    
    495,940
    
    
    
    480,003Goodwill
    
    
    38,293
    
    
    
    35,666Investments in equity investees
    
    
    14,565
    
    
    
    14,602Other assets
    
    
    29,965
    
    
    
    30,981TOTAL ASSETS
    
    $
    2,531,313
    
    
    $
    2,685,969LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable and
accrued expenses
    
    $
    92,766
    
    
    $
    102,447Deferred rent-current
    
    
    597
    
    
    
    24,805Deferred revenue
    
    
    11,098
    
    
    
    10,010Due to affiliate
    
    
    
    
    
    
    2Current portion of long-term debt
    
    
    22,500
    
    
    
    22,500Total current liabilities
    
    
    126,961
    
    
    
    159,764Long-term debt
    
    
    1,231,250
    
    
    
    1,234,375Deferred tax liabilities
    
    
    44,170
    
    
    
    43,107Other long-term liabilities
    
    
    123,949
    
    
    
    71,385Total liabilities
    
    
    1,526,330
    
    
    
    1,508,631MINORITY INTEREST
    
    
    12,586
    
    
    
    13,506COMMITMENTS AND CONTINGENCIES (NOTE 10)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,
135,609,171 and 135,567,269 shares issued and outstanding
    
    
    2,109,178
    
    
    
    2,098,155Class B, 28,596,685 shares issued and outstanding
    
    
    234,376
    
    
    
    234,376Accumulated other comprehensive income, net
    
    
    11,264
    
    
    
    17,333Accumulated deficit
    
    
    (1,362,421
    )
    
    
    (1,186,032
    )Total stockholders equity
    
    
    992,397
    
    
    
    1,163,832TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,531,313
    
    
    $
    2,685,969
  2




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three months endedMarch 31,2008
    
    
    2007REVENUES
    
    $
    51,528
    
    
    $
    29,275OPERATING EXPENSES:Cost of goods and services (exclusive of a portion of depreciation and
amortization shown below)
    
    
    38,174
    
    
    
    16,735Selling, general and administrative expense
    
    
    99,109
    
    
    
    68,657Research and development
    
    
    437
    
    
    
    445Depreciation and amortization
    
    
    28,085
    
    
    
    16,185Spectrum lease expense
    
    
    35,685
    
    
    
    13,442Total operating expenses
    
    
    201,490
    
    
    
    115,464OPERATING LOSS
    
    
    (149,962
    )
    
    
    (86,189
    )OTHER INCOME (EXPENSE):Interest income
    
    
    8,469
    
    
    
    16,590Interest expense
    
    
    (28,594
    )
    
    
    (24,218
    )Foreign currency gains, net
    
    
    525
    
    
    
    33Other-than-temporary impairment loss and realized loss on investments
    
    
    (4,849
    )
    
    
    Other income (expense), net
    
    
    (343
    )
    
    
    2,478Total other expense, net
    
    
    (24,792
    )
    
    
    (5,117
    )LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND LOSSES
FROM EQUITY INVESTEES
    
    
    (174,754
    )
    
    
    (91,306
    )Income tax provision
    
    
    (1,916
    )
    
    
    (603
    )LOSS BEFORE MINORITY INTEREST AND LOSSES FROM EQUITY
INVESTEES
    
    
    (176,670
    )
    
    
    (91,909
    )Minority interest in net loss of consolidated subsidiaries
    
    
    1,237
    
    
    
    892Losses from equity investees
    
    
    (956
    )
    
    
    (1,618
    )NET LOSS
    
    $
    (176,389
    )
    
    $
    (92,635
    )Net loss per common share, basic and diluted
    
    $
    (1.08
    )
    
    $
    (0.64
    )Weighted average common shares outstanding,
basic and diluted
    
    
    164,056
    
    
    
    143,739
  3




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
 For the three months ended March 31,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (176,389
    )
    
    $
    (92,635
    )Adjustments to reconcile net loss to net cash used in operating activities:Provision for uncollectible accounts
    
    
    1,419
    
    
    
    661Depreciation and amortization
    
    
    28,085
    
    
    
    16,185Amortization of prepaid spectrum license fees
    
    
    13,713
    
    
    
    2,774Amortization of deferred financing costs and accretion of debt discount
    
    
    1,518
    
    
    
    7,052Share-based compensation
    
    
    10,712
    
    
    
    7,869Other-than-temporary impairment loss on investments
    
    
    4,849
    
    
    
    Deferred income taxes
    
    
    1,916
    
    
    
    677Non-cash interest on swaps
    
    
    237
    
    
    
    Minority interest
    
    
    (1,237
    )
    
    
    (892
    )Losses from equity investees, net
    
    
    956
    
    
    
    1,618Loss (gain) on other asset disposals
    
    
    1,613
    
    
    
    (5
    )Gain on sale of equity investment
    
    
    
    
    
    
    (2,213
    )Changes in assets and liabilities, net:Prepaid spectrum license fees
    
    
    (39,967
    )
    
    
    (44,327
    )Inventory
    
    
    (748
    )
    
    
    48Accounts receivable
    
    
    (1,578
    )
    
    
    (879
    )Prepaids and other assets
    
    
    (6,485
    )
    
    
    (4,988
    )Accounts payable
    
    
    1,598
    
    
    
    2,855Accrued expenses and other liabilities
    
    
    10,055
    
    
    
    (13,736
    )Due to affiliate
    
    
    (2
    )
    
    
    (392
    )Net cash used in operating activities
    
    
    (149,735
    )
    
    
    (120,328
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, plant and equipment
    
    
    (53,072
    )
    
    
    (74,370
    )Payments for acquisitions of spectrum licenses and other
    
    
    (13,111
    )
    
    
    (10,400
    )Purchases of available-for-sale investments
    
    
    (99,308
    )
    
    
    (461,928
    )Sales or maturities of available-for-sale investments
    
    
    55,200
    
    
    
    512,415Investments in equity investees
    
    
    (760
    )
    
    
    Restricted cash
    
    
    1,653
    
    
    
    (926
    )Restricted investments
    
    
    
    
    
    
    34,294Proceeds from sale of equity investment and other assets
    
    
    
    
    
    
    2,250Net cash (used in) provided by investing activities
    
    
    (109,398
    )
    
    
    1,335CASH FLOWS FROM FINANCING ACTIVITIES:Proceeds from issuance of common stock for IPO and other, net
    
    
    
    
    
    
    557,572Proceeds from issuance of common stock for option and warrant exercises
    
    
    335
    
    
    
    1,546Principal payments on long-term debt
    
    
    (3,125
    )
    
    
    (625
    )Contributions from minority interests
    
    
    
    
    
    
    15,000Net cash (used in) provided by financing activities
    
    
    (2,790
    )
    
    
    573,493Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    (640
    )
    
    
    (90
    )Net (decrease) increase in cash and cash equivalents
    
    
    (262,563
    )
    
    
    454,410CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    876,752
    
    
    
    438,030End of period
    
    $
    614,189
    
    
    $
    892,440SUPPLEMENTAL CASH FLOW DISCLOSURES:Common stock and warrants issued for spectrum licenses
    
    $
    
    
    
    $
    21,379Common stock and warrants issued for business acquisitions
    
    
    
    
    
    
    15Cash paid for taxes
    
    
    
    
    
    
    32Cash paid for interest
    
    
    32,218
    
    
    
    39,170Cashless option exercises
    
    
    
    
    
    
    346Fixed asset purchases in accounts payable
    
    
    2,277
    
    
    
    1,518Non-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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (176,389
    )
    
    
    (176,389
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,492
    
    
    
    
    
    
    
    12,492Unrealized loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,881
    )
    
    
    
    
    
    
    (8,881
    )Reclassification adjustment for other-than-temporary impairment loss on investments
    
    
     
    
    
    
   
    
    
    
     
    
    
    
     
    
    
    
    4,849
    
    
    
    
    
    
    
    4,849Unrealized loss on hedge activity
    
    
    
    
    
    
     
    
    
    
     
    
    
    
     
    
    
    
    (14,529
    )
    
    
    
    
    
    
    (14,529
    )Options and warrants exercised
    
    
    42
    
    
    
    335
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    335Share-based compensation
    
    
    
    
    
    
    10,688
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,688Balances at March 31, 2008
    
    
    135,609
    
    
    $
    2,109,178
    
    
    
    28,597
    
    
    $
    234,376
    
    
    $
    11,264
    
    
    $
    (1,362,421
    )
    
    $
    992,397
  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
 Accounting for Derivative Instruments and Hedging Activities
     Financial Instruments
 Fair Value Measurements
 7




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 Effective
Date of FASB Statement No. 157
  
  The Fair Value Option for Financial Assets and
Financial Liabilities
 Recent Accounting Pronouncements
 SFAS No.141(R) Business Combinations .
 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. Investments
  March 31, 2008
    
    
    December 31, 2007Gross Unrealized
    
    
    Gross UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-termCommercial paper
    
    $
    6,000
    
    
    $
    
    
    
    $
    
    
    
    $
    6,000
    
    
    $
    7,500
    
    
    $
    
    
    
    $
    
    
    
    $
    7,500Corporate bonds
    
    
    4,994
    
    
    
    9
    
    
    
    
    
    
    
    5,003
    
    
    
    7,970
    
    
    
    15
    
    
    
    
    
    
    
    7,985US Government and Agency Issues
    
    
    99,369
    
    
    
    230
    
    
    
    
    
    
    
    99,599
    
    
    
    51,544
    
    
    
    3
    
    
    
    (20
    )
    
    
    51,527Total
    
    $
    110,363
    
    
    $
    239
    
    
    $
    
    
    
    $
    110,602
    
    
    $
    67,014
    
    
    $
    18
    
    
    $
    (20
    )
    
    $
    67,012Long-termAuction rate securities
    
    $
    92,591
    
    
    $
    
    
    
    $
    (11,562
    )
    
    $
    81,029
    
    
    $
    95,922
    
    
    $
    
    
    
    $
    (7,290
    )
    
    $
    88,632Total
    
    $
    92,591
    
    
    $
    
    
    
    $
    (11,562
    )
    
    $
    81,029
    
    
    $
    95,922
    
    
    $
    
    
    
    $
    (7,290
    )
    
    $
    88,632Total Investments
    
    $
    202,954
    
    
    $
    239
    
    
    $
    (11,562
    )
    
    $
    191,631
    
    
    $
    162,936
    
    
    $
    18
    
    
    $
    (7,310
    )
    
    $
    155,644
    9




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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
       10




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 4. Property, Plant and Equipment
  March 31,
    
    
    December 31,2008
    
    
    2007Network and base station equipment
    
    $
    327,826
    
    
    $
    305,635Customer premise equipment
    
    
    99,709
    
    
    
    89,120Furniture, fixtures and equipment
    
    
    62,865
    
    
    
    55,548Leasehold improvements
    
    
    14,221
    
    
    
    13,488Construction in progress
    
    
    247,937
    
    
    
    233,120752,558
    
    
    
    696,911Less: accumulated depreciation and amortization
    
    
    (151,546
    )
    
    
    (124,582
    )$
    601,012
    
    
    $
    572,329
 Capitalization of Interest Cost,
  5. Spectrum Licenses, Goodwill, and Other Intangible Assets
 Purchased Spectrum Rights and other intangibles
   Prepaid Spectrum License Fees
   11




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 6. Accounts Payable and Accrued Expenses
  March 31,
    
    
    December 31,2008
    
    
    2007Accounts payable
    
    $
    49,472
    
    
    $
    47,865Accrued interest
    
    
    11,993
    
    
    
    11,643Salaries and benefits
    
    
    13,371
    
    
    
    17,697Business and income taxes payable
    
    
    6,193
    
    
    
    9,299Other
    
    
    11,737
    
    
    
    15,943$
    92,766
    
    
    $
    102,447
 7. Income Taxes
  8. Derivative Instruments and Hedging Activities
   Notional
    
    
    
    Receive
    
    Pay
    
    Fair MarketType of Hedge
    
    Amount
    
    Maturity Date
    
    Index Rate
    
    Fixed Rate
    
    ValueSwap
    
    $
    300,000
    
    
    
    3/5/2010
    
    
    3-month LIBOR
    
    
    3.50
    %
    
    $
    (6,622
    )Swap
    
    $
    300,000
    
    
    
    3/5/2011
    
    
    3-month LIBOR
    
    
    3.62
    %
    
    $
    (8,144
    )
   12




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
   9. Fair Value Measurements
  
   Investment Securities
  13




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 
    
    Fair values of auction rate securities collateralized by preferred debt and equity of
financial institutions and insurance companies are determined by discounting forecasted
cash flows at the LIBOR curve, adjusted for credit risk and liquidity. Forecasted cash
flow assumptions include managements estimate of the dividends paid to investors of the
security, the probability of deferral of dividend payments as well as default and loss of
the underlying financial institutions and insurance companies, and the probability of
exercise of call options and final maturity of the bonds.
    
    For the fair values of auction rate securities containing a put option from a monoline
insurance company, management assumes the put option is exercised and the value of the
auction rate security is comparable to the value of the preferred debt of the monoline
insurance company. The inputs include prices of exchange traded preferred debt of the
monoline insurance company or other companies with comparable credit risk. Management
assumptions include an estimate of dividends, probability of default and loss, and
probability of exercise of call options and final maturity of the bonds.
    
    Fair value of Commercial Paper in default is determined by valuing the underlying assets
of the structured investment vehicle. Underlying assets are grouped by investment type,
credit rating, and estimated maturity or duration. The value of these groups of assets are
estimated by comparing prices and spreads of recently traded securities of the same
investment type, adjusted for credit and interest rate risk and liquidity.
 Derivatives
  Debt Instruments
   14




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  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
    
    $
    614,189
    
    
    $
    614,189
    
    
    $
    614,189
    
    
    $
    
    
    
    $
    Short-term investments
    
    
    110,602
    
    
    
    110,602
    
    
    
    104,602
    
    
    
    
    
    
    
    6,000Long-term investments
    
    
    81,029
    
    
    
    81,029
    
    
    
    
    
    
    
    
    
    
    
    81,029Financial liabilities:Interest rate swaps
    
    $
    14,766
    
    
    $
    14,766
    
    
    $
    
    
    
    $
    14,766
    
    
    $
    Debt
    
    
    1,253,750
    
    
    
    1,085,582
    
    
    
    1,075,844
    
    
    
    9,738
    
    
    
    
  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
    
    $
    87,029
 10. Commitments and Contingencies
    15




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 Motorola Agreements
  11. Share-Based Payments
   ), Share-Based Payment
  Three months ended March 31,2008
    
    
    2007Cost of service
    
    $
    17
    
    
    $
    15Selling, general and administrative
    
    
    10,695
    
    
    
    7,854Total
    
    $
    10,712
    
    
    $
    7,869
 Stock Options
   16




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
    Three months ended March 31,2008
    
    2007Expected volatility
    
    
    58.81%  66.20
    %
    
    
    64.68
    %Expected dividend yield
    
    
    
    
    
    
    Expected life (in years)
    
    
    3.00 - 6.25
    
    
    
    6.25Risk-free interest rate
    
    
    2.46%  3.58
    %
    
    
    4.46%  4.78
    %Weighted average fair value per option at grant date
    
    
    $8.55
    
    
    
    $15.96
  Restricted Stock Awards
  Restricted Stock Units
  Warrants
   Three months ended March 31,2008
    
    2007Expected volatility
    
    
    N/A
    
    
    
    64.68%  88.54
    %Expected dividend yield
    
    
    N/A
    
    
    
    Contractual life (in years)
    
    
    N/A
    
    
    
    5-10Risk-free interest rate
    
    
    N/A
    
    
    
    3.05%  4.81
    %Weighted average fair value per warrant at issuance date
    
    
    N/A
    
    
    $
    12.07
 17




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 12. Net Loss Per Share
 Earnings
Per Share,
  Three months ended March 31,2008
    
    
    2007Stock options
    
    
    17,697
    
    
    
    13,943Nonvested restricted stock
    
    
    56
    
    
    
    75Restricted Stock Units
    
    
    577
    
    
    
    Warrants
    
    
    17,806
    
    
    
    18,90536,136
    
    
    
    32,923
 13. Comprehensive Loss
    For the three monthsended March 31,2008
    
    
    2007Net loss
    
    $
    (176,389
    )
    
    $
    (92,635
    )Other comprehensive income (loss):Net unrealized loss on available-for-sale investments
    
    
    (8,881
    )
    
    
    (37
    )Reclassification adjustment for other-than-temporary
impairment loss on investments
    
    
    4,849Net unrealized loss on available-for-sale investments
    
    
    (4,032
    )
    
    
    (37
    )Derivatives designated as cash flow hedges
    
    
    (14,766
    )
    
    
    Reclassification adjustment to expense
    
    
    237
    
    
    
    Net unrealized loss on derivative instruments
    
    
    (14,529
    )
    
    
    Foreign currency translation adjustment
    
    
    12,492
    
    
    
    1,320Total Other comprehensive (loss) income
    
    
    (6,069
    )
    
    
    1,283Total comprehensive loss
    
    $
    (182,458
    )
    
    $
    (91,352
    )
 18




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 14. Business Segments
   Three months ended March 31,2008
    
    
    2007United StatesRevenues
    
    $
    42,302
    
    
    $
    23,104Cost of goods and services
(exclusive of items shown separately below)
    
    
    34,694
    
    
    
    14,070Operating expenses
    
    
    112,865
    
    
    
    71,611Depreciation and amortization
    
    
    22,079
    
    
    
    12,854Total operating expenses
    
    
    169,638
    
    
    
    98,535Operating loss
    
    
    (127,336
    )
    
    
    (75,431
    )InternationalRevenues
    
    
    9,226
    
    
    
    6,171Cost of goods and services
(exclusive of items shown separately below)
    
    
    3,480
    
    
    
    2,665Operating expenses
    
    
    22,366
    
    
    
    10,933Depreciation and amortization
    
    
    6,006
    
    
    
    3,331Total operating expenses
    
    
    31,852
    
    
    
    16,929Operating loss
    
    
    (22,626
    )
    
    
    (10,758
    )Total operating loss
    
    
    (149,962
    )
    
    
    (86,189
    )Other income (expense)
    
    
    (24,792
    )
    
    
    (5,117
    )Income tax provision
    
    
    (1,916
    )
    
    
    (603
    )Minority interest in net loss of consolidated subsidiaries
    
    
    1,237
    
    
    
    892Losses from equity investees
    
    
    (956
    )
    
    
    (1,618
    )Net loss
    
    $
    (176,389
    )
    
    $
    (92,635
    )Capital expendituresUnited States
    
    $
    45,617
    
    
    $
    66,146International
    
    
    7,455
    
    
    
    8,224$
    53,072
    
    
    $
    74,370
 March 31,
    
    
    December 31,2008
    
    
    2007Total assetsUnited States
    
    $
    2,283,143
    
    
    $
    2,444,341International
    
    
    248,170
    
    
    
    241,628$
    2,531,313
    
    
    $
    2,685,969
 19




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 15. Related Party Transactions
  March 31,
    
    December 31,2008
    
    2007Prepaids
    
    $
    1,751
    
    
    $
    14Notes receivable, short-term
    
    
    2,219
    
    
    
    2,134Notes receivable, long-term
    
    
    5,115
    
    
    
    4,700Accounts payable and accrued expenses
    
    
    7,107
    
    
    
    4,521
 Three months ended March 31,2008
    
    2007Cost of service
    
    $
    856
    
    
    $
    728
  Relationships among Certain Stockholders, Directors, and Officers of Clearwire
    Advisory Services Agreement and Other Reimbursements
   20




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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
   21




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Agreements with Bell Canada
  Davis Wright Tremaine LLP
 22




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 16. Subsequent Events
       23




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##### Table of Contents



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 months ended March 31, 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. 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
    Recent Developments and Overview
       24




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
         25




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
  Business Segments
 Disclosures about Segments of an Enterprise and Related Information
 Critical Accounting Policies
    Fair Value Measurements
   
 26




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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
  Three months endedMarch 31,
    
    
    Percentage2008
    
    
    2007
    
    
    ChangeREVENUES
    
    $
    51,528
    
    
    $
    29,275
    
    
    
    76.0
    %OPERATING EXPENSES:Cost of goods and services (exclusive of a portion of depreciation and
amortization shown below)
    
    
    38,174
    
    
    
    16,735
    
    
    
    128.1
    %Selling, general and administrative expense
    
    
    99,109
    
    
    
    68,657
    
    
    
    44.4
    %Research and development
    
    
    437
    
    
    
    445
    
    
    
    (1.8
    %)Depreciation and amortization
    
    
    28,085
    
    
    
    16,185
    
    
    
    73.5
    %Spectrum lease expense
    
    
    35,685
    
    
    
    13,442
    
    
    
    165.5
    %Total operating expenses
    
    
    201,490
    
    
    
    115,464
    
    
    
    74.5
    %OPERATING LOSS
    
    
    (149,962
    )
    
    
    (86,189
    )
    
    
    74.0
    %OTHER INCOME (EXPENSE):Interest income
    
    
    8,469
    
    
    
    16,590
    
    
    
    (49.0
    %)Interest expense
    
    
    (28,594
    )
    
    
    (24,218
    )
    
    
    18.1
    %Foreign currency gains, net
    
    
    525
    
    
    
    33
    
    
    
    1490.9
    %Other-than-temporary impairment loss and realized loss on investments
    
    
    (4,849
    )
    
    
    
    
    
    
    N/MOther income (expense), net
    
    
    (343
    )
    
    
    2,478
    
    
    
    N/MTotal other expense, net
    
    
    (24,792
    )
    
    
    (5,117
    )
    
    
    384.5
    %LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND LOSSES
FROM EQUITY INVESTEES
    
    
    (174,754
    )
    
    
    (91,306
    )
    
    
    91.4
    %Income tax provision
    
    
    (1,916
    )
    
    
    (603
    )
    
    
    217.7
    %LOSS BEFORE MINORITY INTEREST AND LOSSES FROM EQUITY
INVESTEES
    
    
    (176,670
    )
    
    
    (91,909
    )
    
    
    92.2
    %Minority interest in net loss of consolidated subsidiaries
    
    
    1,237
    
    
    
    892
    
    
    
    38.7
    %Losses from equity investees
    
    
    (956
    )
    
    
    (1,618
    )
    
    
    (40.9
    %)NET LOSS
    
    $
    (176,389
    )
    
    $
    (92,635
    )
    
    
    90.4
    %Net loss per common share, basic and diluted
    
    $
    (1.08
    )
    
    $
    (0.64
    )
    
    
    68.8
    %Weighted average common shares outstanding,
basic and diluted
    
    
    164,056
    
    
    
    143,739
    
    
    
    14.1
    %
 Revenue .
 27




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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 .
   Selling, general and administrative expense .
  Research and development.
 Depreciation and amortization .
 28




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
  Spectrum lease expense.
 Interest income.
 Interest expense .
 Other-than-temporary impairment loss on investments.
    29




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   Other income (expense), net.
 Losses from equity investees.
 Minority interest in net loss of consolidated subsidiaries.
 Cash Flow Analysis
  Three months ended March 31,2008
    
    
    2007Cash used in operating activities
    
    $
    (149,735
    )
    
    $
    (120,328
    )Cash provided by (used in) investing activities
    
    
    (109,398
    )
    
    
    1,335Cash provided by (used in) financing activities
    
    
    (2,790
    )
    
    
    573,493Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    (640
    )
    
    
    (90
    )Total cash flows
    
    $
    (262,563
    )
    
$
    454,410
 Operating Activities
  Investing Activities
  30




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
  Financing Activities
  Liquidity and Capital Resource Requirements
  Derivative Instruments and Hedging Activities
 .
   Receive
    
    Pay
    
    Fair MarketType of Hedge
    
    Notional Amount
    
    Maturity Date
    
    Index Rate
    
    Fixed Rate
    
    ValueSwap
    
    $
    300,000
    
    
    
    3/5/2010
    
    
    3-month LIBOR
    
    
    3.50
    %
    
    $
    (6,622
    )Swap
    
    $
    300,000
    
    
    
    3/5/2011
    
    
    3-month LIBOR
    
    
    3.62
    %
    
    $
    (8,144
    )
  31




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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. 160 Noncontrolling Interests in
Consolidated Financial Statements . Consolidated Financial Statements,
 SFAS 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
  32




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
   Foreign Currency Exchange Rates
  Investment Risk
     33




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)
 
 Item 4. Controls and Procedures
    34




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
    Our
    recently announced transactions with Sprint and several
    strategic investors are subject to several closing conditions
    that, if not satisfied, could result in the transactions not
    being completed.
    The
    Transaction Agreement includes covenants that limit our ability
    to take certain actions prior to the completion of the
    Transactions and that may cause our business and prospects to
    suffer if the Transactions are not completed.
    The
    Transactions may present significant challenges to our
    management that could divert managements attention from
    day-to-day operations and have a negative impact on our
    business.
    We may
    fail to realize all of the anticipated benefits of the
    Transactions.
   
 Item 2. Unregistered sales of Equity Securities and use of proceeds
 (None)
 
 Item 4. Submission of matters to a vote of security holders
 (None)
 
 Item 5. Other information
 (None)
 35




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 Item 6. Exhibits
 EXHIBIT INDEX
 3.1
    
    Amended and Restated Bylaws10.1
    
    Clearwire Corporation Change in Control Severance Plan10.2
    
    Form of Non-Qualified Stock Option Agreement*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.
 
 *
    
    Incorporated by Reference to Clearwires Form 8-K filed on February 20, 2008 36




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 SIGNATURES
  CLEARWIRE CORPORATIONDate: May 12, 2008
    /s/ JOHN A. BUTLERJohn A. ButlerChief Financial Officer 37