##### 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: September 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 SEPTEMBER 30, 2008
Table of Contents
 PagePart I. Financial Information
    
    
    2Item 1. Financial Statements (unaudited)
    
    
    2Condensed Consolidated Balance Sheets as of September
30, 2008 and December 31, 2007
    
    
    2Condensed Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 2008 and
September 30, 2007
    
    
    3Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2008 and September 30,
2007
    
    
    4Condensed Consolidated Statement of Stockholders
Equity for the Nine Months Ended September 30, 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
    
    
    38Item 4. Controls and Procedures
    
    
    40Part II. Other Information
    
    
    41Item 1. Legal Proceedings
    
    
    41Item 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
    
    
    44Item 6. Exhibits
    
    
    45Signatures
    
    
    46EX-31.1EX-31.2EX-32.1EX-32.2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 September 30,
    
    
    December 31,2008
    
    
    2007(unaudited)ASSETSCURRENT ASSETS:Cash and cash equivalents
    
    $
    242,910
    
    
    $
    876,752Short-term investments
    
    
    124,959
    
    
    
    67,012Restricted cash
    
    
    1,205
    
    
    
    1,077Accounts receivable, net of allowance of $994 and $787
    
    
    5,202
    
    
    
    3,677Notes receivable, short-term
    
    
    
    
    
    
    2,134Inventory
    
    
    2,786
    
    
    
    2,312Prepaids and other assets
    
    
    28,301
    
    
    
    36,748Total current assets
    
    
    405,363
    
    
    
    989,712Property, plant and equipment, net
    
    
    650,339
    
    
    
    572,329Restricted cash
    
    
    8,636
    
    
    
    11,603Long-term investments
    
    
    55,278
    
    
    
    88,632Notes receivable, long-term
    
    
    4,862
    
    
    
    4,700Prepaid spectrum license fees
    
    
    516,773
    
    
    
    457,741Spectrum licenses and other intangible assets, net
    
    
    486,895
    
    
    
    480,003Goodwill
    
    
    35,451
    
    
    
    35,666Investments in equity investees
    
    
    12,135
    
    
    
    14,602Other assets
    
    
    38,312
    
    
    
    30,981TOTAL ASSETS
    
    $
    2,214,044
    
    
    $
    2,685,969LIABILITIES AND STOCKHOLDERS EQUITYCURRENT LIABILITIES:Accounts payable and accrued expenses
    
    $
    99,708
    
    
    $
    102,449Deferred rent-current
    
    
    697
    
    
    
    24,805Deferred revenue
    
    
    11,818
    
    
    
    10,010Current portion of long-term debt
    
    
    12,500
    
    
    
    22,500Total current liabilities
    
    
    124,723
    
    
    
    159,764Long-term debt
    
    
    1,225,000
    
    
    
    1,234,375Deferred tax liabilities
    
    
    47,338
    
    
    
    43,107Other long-term liabilities
    
    
    148,226
    
    
    
    71,385Total liabilities
    
    
    1,545,287
    
    
    
    1,508,631MINORITY INTEREST
    
    
    10,181
    
    
    
    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,
135,806,518 and 135,567,269 shares issued and outstanding
    
    
    2,133,037
    
    
    
    2,098,155Class B, 28,596,685 shares issued and outstanding
    
    
    234,376
    
    
    
    234,376Accumulated other comprehensive income, net
    
    
    19,213
    
    
    
    17,333Accumulated deficit
    
    
    (1,728,050
    )
    
    
    (1,186,032
    )Total stockholders equity
    
    
    658,576
    
    
    
    1,163,832TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    2,214,044
    
    
    $
    2,685,969
  2




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007REVENUES
    
    $
    60,839
    
    
    $
    41,297
    
    
    $
    170,930
    
    
    $
    106,056OPERATING EXPENSES:Cost of goods and services (exclusive of a portion of
depreciation and amortization shown below)
    
    
    44,399
    
    
    
    29,268
    
    
    
    124,766
    
    
    
    69,316Selling, general and administrative expense
    
    
    84,305
    
    
    
    103,424
    
    
    
    278,183
    
    
    
    259,456Transaction related expenses
    
    
    4,932
    
    
    
    
    
    
    
    15,156
    
    
    
    Research and development
    
    
    537
    
    
    
    194
    
    
    
    1,567
    
    
    
    1,217Depreciation and amortization
    
    
    28,604
    
    
    
    22,659
    
    
    
    85,590
    
    
    
    58,558Spectrum lease expense
    
    
    32,194
    
    
    
    28,278
    
    
    
    96,401
    
    
    
    56,543Total operating expenses
    
    
    194,971
    
    
    
    183,823
    
    
    
    601,663
    
    
    
    445,090OPERATING LOSS
    
    
    (134,132
    )
    
    
    (142,526
    )
    
    
    (430,733
    )
    
    
    (339,034
    )OTHER INCOME (EXPENSE):Interest income
    
    
    3,468
    
    
    
    16,596
    
    
    
    15,766
    
    
    
    52,006Interest expense
    
    
    (24,726
    )
    
    
    (28,813
    )
    
    
    (79,031
    )
    
    
    (76,542
    )Foreign currency gains (losses), net
    
    
    (517
    )
    
    
    292
    
    
    
    174
    
    
    
    224Loss on extinguishment of debt
    
    
    
    
    
    
    (159,193
    )
    
    
    
    
    
    
    (159,193
    )Other-than-temporary impairment loss and realized loss on investments, net
    
    
    (9,353
    )
    
    
    (14,208
    )
    
    
    (42,120
    )
    
    
    (14,208
    )Other income (expense), net
    
    
    (517
    )
    
    
    453
    
    
    
    (1,726
    )
    
    
    2,197Total other expense, net
    
    
    (31,645
    )
    
    
    (184,873
    )
    
    
    (106,937
    )
    
    
    (195,516
    )LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND LOSSES FROM
EQUITY INVESTEES
    
    
    (165,777
    )
    
    
    (327,399
    )
    
    
    (537,670
    )
    
    
    (534,550
    )Income tax provision
    
    
    (1,781
    )
    
    
    (1,198
    )
    
    
    (5,365
    )
    
    
    (3,927
    )LOSS BEFORE MINORITY INTEREST AND LOSSES FROM EQUITY
INVESTEES
    
    
    (167,558
    )
    
    
    (328,597
    )
    
    
    (543,035
    )
    
    
    (538,477
    )Minority interest in net loss of consolidated subsidiaries
    
    
    1,061
    
    
    
    994
    
    
    
    3,406
    
    
    
    2,961Losses from equity investees
    
    
    (78
    )
    
    
    (1,034
    )
    
    
    (2,389
    )
    
    
    (3,841
    )NET LOSS
    
    $
    (166,575
    )
    
    $
    (328,637
    )
    
    $
    (542,018
    )
    
    $
    (539,357
    )Net loss per common share, basic and diluted
    
    $
    (1.01
    )
    
    $
    (2.01
    )
    
    $
    (3.30
    )
    
    $
    (3.44
    )Weighted average common shares outstanding,
basic and diluted
    
    
    164,232
    
    
    
    163,586
    
    
    
    164,145
    
    
    
    156,940
  3




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 For the Nine Months Ended September30,2008
    
    
    2007CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (542,018
    )
    
    $
    (539,357
    )Adjustments to reconcile net loss to net cash used in operating activities:Provision for uncollectible accounts
    
    
    5,244
    
    
    
    3,631Depreciation and amortization
    
    
    85,590
    
    
    
    58,558Amortization of prepaid spectrum license fees
    
    
    29,695
    
    
    
    16,962Amortization of deferred financing costs and accretion of debt discount
    
    
    4,748
    
    
    
    19,234Share-based compensation
    
    
    33,739
    
    
    
    28,600Other-than-temporary impairment loss and realized loss on investments
    
    
    42,120
    
    
    
    14,208Deferred income taxes
    
    
    5,365
    
    
    
    3,901Non-cash interest on swaps
    
    
    2,512
    
    
    
    Minority interest
    
    
    (3,406
    )
    
    
    (2,961
    )Losses from equity investees, net
    
    
    1,796
    
    
    
    3,841Loss on extinguishment of debt
    
    
    
    
    
    
    159,193Loss on other asset disposals
    
    
    13,949
    
    
    
    531Impairment of equity investment
    
    
    1,397
    
    
    
    Gain on sale of equity investment
    
    
    
    
    
    
    (2,213
    )Changes in assets and liabilities, net:Prepaid spectrum license fees
    
    
    (87,224
    )
    
    
    (183,776
    )Inventory
    
    
    (951
    )
    
    
    (2,331
    )Accounts receivable
    
    
    (6,829
    )
    
    
    (3,954
    )Prepaids and other assets
    
    
    (3,984
    )
    
    
    (15,716
    )Accounts payable
    
    
    8,011
    
    
    
    26,544Accrued expenses and other liabilities
    
    
    39,668
    
    
    
    16,617Net cash used in operating activities
    
    
    (370,578
    )
    
    
    (398,488
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of property, plant and equipment
    
    
    (178,367
    )
    
    
    (279,198
    )Payments for acquisitions of spectrum licenses and other
    
    
    (13,719
    )
    
    
    (212,353
    )Purchases of available-for-sale investments
    
    
    (323,225
    )
    
    
    (1,144,293
    )Sales or maturities of available-for-sale investments
    
    
    266,532
    
    
    
    1,478,252Purchase of minority interest
    
    
    
    
    
    
    (1,173
    )Investments in equity investees
    
    
    (760
    )
    
    
    (5,293
    )Receipt (issuance) of notes receivable, related party
    
    
    1,500
    
    
    
    (2,000
    )Restricted cash decrease (increase), net
    
    
    2,839
    
    
    
    (3,323
    )Restricted investments
    
    
    
    
    
    
    85,670Business acquisitions, net of cash acquired
    
    
    
    
    
    
    (7,067
    )Proceeds from sale of business, net of cash
    
    
    
    
    
    
    2,250Proceeds from sale of equity investment and other assets
    
    
    
    
    
    
    1,000Net cash used in investing activities
    
    
    (245,200
    )
    
    
    (87,528
    )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
    
    
    1,167
    
    
    
    4,610Proceeds from issuance of debt
    
    
    
    
    
    
    1,000,000Financing fees
    
    
    
    
    
    
    (66,954
    )Principal payments on long-term debt
    
    
    (19,375
    )
    
    
    (745,696
    )Contributions from minority interests
    
    
    
    
    
    
    15,000Net cash (used in) provided by financing activities
    
    
    (18,208
    )
    
    
    762,965Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    144
    
    
    
    (696
    )Net (decrease) increase in cash and cash equivalents
    
    
    (633,842
    )
    
    
    276,253CASH AND CASH EQUIVALENTS:Beginning of period
    
    
    876,752
    
    
    
    438,030End of period
    
    $
    242,910
    
    
    $
    714,283SUPPLEMENTAL CASH FLOW DISCLOSURES:Cash paid for income taxes
    
    $
    
    
    
    $
    24Cash paid for interest
    
    
    92,335
    
    
    
    91,229NON-CASH INVESTING AND FINANCING ACTIVITIESCommon stock and warrants issued for spectrum licenses
    
    $
    
    
    
    $
    21,379Common stock and warrants issued for business acquisitions
    
    
    
    
    
    
    15Fixed asset purchases in accounts payable
    
    
    4,744
    
    
    
    10,672Non-cash dividends to related party
    
    
    
    
    
    
    1,465
  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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (542,018
    )
    
    
    (542,018
    )Foreign currency translation adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,967
    )
    
    
    
    
    
    
    (2,967
    )Unrealized loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (25,190
    )
    
    
    
    
    
    
    (25,190
    )Reclassification adjustment for other-than-
temporary impairment loss on investments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,767
    
    
    
    
    
    
    
    32,767Unrealized loss on hedge activity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,730
    )
    
    
    
    
    
    
    (2,730
    )Options and warrants exercised
    
    
    226
    
    
    
    1,167
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,167Restricted stock issued
    
    
    14
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Share-based compensation
    
    
    
    
    
    
    33,715
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,715Balances at September 30, 2008
    
    
    135,807
    
    
    $
    2,133,037
    
    
    
    28,597
    
    
    $
    234,376
    
    
    $
    19,213
    
    
    $
    (1,728,050
    )
    
    $
    658,576
  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
 Accounting for Derivative Instruments and Hedging
Activities Fair Value Measurements
 Derivative Instruments
      Financial Instruments
  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
  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,
 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 ,
 8




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  FSP No. SFAS No. 133-1 and FIN 45-4 , Disclosures about Credit Derivatives and Certain Guarantees Accounting for Derivative Instruments and
Hedging Activities Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others Disclosures
about Derivative Instruments and hedging Activities
 FSP No. SFAS No. 157-3 , Determining
the Fair Value of a Financial Asset When the Market for that Asset is Not Active
 3. Pending Strategic Transaction
    9




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
      4. Investments
  September 30, 2008
    
    
    
    
    
    
    
    
    
    
    December 31, 2007Gross Unrealized
    
    
    
    
    
    
    
    
    
    
    Gross UnrealizedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair Value
    
    
    Cost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueShort-termCommercial paper in structured
investment vehicles
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    7,500
    
    
    $
    
    
    
    $
    
    
    
    $
    7,500Corporate bonds
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,970
    
    
    
    15
    
    
    
    
    
    
    
    7,985US Government and Agency Issues
    
    
    124,673
    
    
    
    286
    
    
    
    
    
    
    
    124,959
    
    
    
    51,544
    
    
    
    3
    
    
    
    (20
    )
    
    
    51,527Total
    
    $
    124,673
    
    
    $
    286
    
    
    $
    
    
    
    $
    124,959
    
    
    $
    67,014
    
    
    $
    18
    
    
    $
    (20
    )
    
    $
    67,012Long-termAuction rate securities
    
    $
    55,278
    
    
    $
    
    
    
    $
    
    
    
    $
    55,278
    
    
    $
    95,922
    
    
    $
    
    
    
    $
    (7,290
    )
    
    $
    88,632Total
    
    $
    55,278
    
    
    $
    
    
    
    $
    
    
    
    $
    55,278
    
    
    $
    95,922
    
    
    $
    
    
    
    $
    (7,290
    )
    
    $
    88,632Total Investments
    
    $
    179,951
    
    
    $
    286
    
    
    $
    
    
    
    $
    180,237
    
    
    $
    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
  September 30,
    
    
    December 31,2008
    
    
    2007Network and base station equipment
    
    $
    346,083
    
    
    $
    305,635Customer premise equipment
    
    
    106,015
    
    
    
    89,120Furniture, fixtures and equipment
    
    
    61,261
    
    
    
    55,548Leasehold improvements
    
    
    14,726
    
    
    
    13,488Construction in progress
    
    
    321,369
    
    
    
    233,120849,454
    
    
    
    696,911Less: accumulated depreciation and amortization
    
    
    (199,115
    )
    
    
    (124,582
    )$
    650,339
    
    
    $
    572,329
 Capitalization of Interest Cost
 Three Months Ended September 30,
    
    Nine Months Ended September 30,2008
    
    2007
    
    2008
    
    2007$6,109
    
    $8,095
    
    $17,463
    
    $20,685
  Three Months Ended September 30,
    
    Nine Months Ended September 30,2008
    
    2007
    
    2008
    
    2007$27,202
    
    $21,458
    
    $80,888
    
    $55,378
 6. Spectrum Licenses, Goodwill, and Other Intangible Assets
 Purchased Spectrum Rights and Other Intangibles
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cash
    
    $
    
    
    
    $
    17,444
    
    
    $
    13,719
    
    
    $
    212,105Stock/Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,200Total
    
    $
    
    
    
    $
    17,444
    
    
    $
    13,719
    
    
    $
    216,305
 12




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Three Months Ended September 30,
    
    Nine Months Ended September 30,2008
    
    2007
    
    2008
    
    2007$1,322
    
    $1,201
    
    $4,463
    
    $3,180
 Prepaid Spectrum License Fees Accounting for leases
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cash
    
    $
    7,405
    
    
    $
    18,449
    
    
    $
    87,224
    
    
    $
    189,584Stock/Warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,063Total
    
    $
    7,405
    
    
    $
    18,449
    
    
    $
    87,224
    
    
    $
    206,647
  Three Months Ended September 30,
    
    Nine Months Ended September 30,2008
    
    2007
    
    2008
    
    2007$8,578
    
    $11,633
    
    $29,695
    
    $16,962
  7. Accounts Payable and Accrued Expenses
  September 30,
    
    
    December 31,2008
    
    
    2007Accounts payable
    
    $
    49,499
    
    
    $
    47,865Accrued interest
    
    
    8,426
    
    
    
    11,643Salaries and benefits
    
    
    17,429
    
    
    
    17,697Business and income taxes payable
    
    
    7,056
    
    
    
    9,299Other
    
    
    17,298
    
    
    
    15,945$
    99,708
    
    
    $
    102,449
 8. Income Taxes
  13




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##### Table of Contents



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%
    
    ($1,456)Swap
    
    $300,000
    
    3/5/2011
    
    3-month LIBOR
    
    3.62%
    
    ($1,586)
      10. Fair Value Measurements
  14




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
      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: Auction Rate Securities
    
    Level 3
    
    Discount of forecasted cash flows adjusted for default/loss
probabilities and estimate of final maturity
  Derivatives
  15




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 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
    
    $
    242,910
    
    
    $
    242,910
    
    
    $
    242,910
    
    
    $
    
    
    
    $
    Short-term investments
    
    
    124,959
    
    
    
    124,959
    
    
    
    124,959
    
    
    
    
    
    
    
    Long-term investments
    
    
    55,278
    
    
    
    55,278
    
    
    
    
    
    
    
    
    
    
    
    55,278Financial liabilities:Interest rate swaps
    
    $
    3,042
    
    
    $
    3,042
    
    
    $
    
    
    
    $
    3,042
    
    
    $
    Debt
    
    
    1,237,500
    
    
    
    1,138,538
    
    
    
    1,138,538
    
    
    
    
    
    
    
    
  Fair ValueMeasurementsUsing SignificantUnobservable Inputs(Level 3)Balance at January 1, 2008
    
    $
    96,132Total losses included in:Net loss
    
    
    (4,849
    )Other comprehensive loss
    
    
    (4,272
    )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
    
    $
    64,766Total losses included in:Net loss
    
    
    (9,488
    )Balance at September 30, 2008
    
    $
    55,278
 11. Commitments and Contingencies
  16




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
    Motorola Agreements
  12. Share-Based Payments
   ), Share-Based Payment
 17




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Cost of service
    
    $
    59
    
    
    $
    21
    
    
    $
    156
    
    
    $
    53Selling, general and administrative
    
    
    9,936
    
    
    
    10,378
    
    
    
    33,583
    
    
    
    28,547Total
    
    $
    9,995
    
    
    $
    10,399
    
    
    $
    33,739
    
    
    $
    28,600
 Stock Options
    Three Months Ended September 30,
    
    Nine Months Ended September 30,2008
    
    2007
    
    2008
    
    2007Expected volatility
    
    
    57.02
    %
    
    
    58.28
    %
    
    
    57.02%-61.05
    %
    
    
    57.07% - 64.68
    %Expected dividend yield
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Expected life (in years)
    
    
    4.75
    
    
    
    6.25
    
    
    
    4.75-6.25
    
    
    
    6.25Risk-free interest rate
    
    
    3.10
    %
    
    
    4.80
    %
    
    
    2.50%-3.58
    %
    
    
    4.46% - 5.00
    %Weighted average fair
    
    $
    5.49
    
    
    $
    13.91
    
    
    $
    7.62
    
    
    $
    15.06value per option at
grant date
 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,
 18




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Stock options
    
    
    18,362
    
    
    
    14,395
    
    
    
    18,263
    
    
    
    13,535Nonvested restricted stock
    
    
    25
    
    
    
    75
    
    
    
    35
    
    
    
    77Restricted Stock Units
    
    
    1,042
    
    
    
    73
    
    
    
    787
    
    
    
    25Warrants
    
    
    17,806
    
    
    
    18,154
    
    
    
    17,806
    
    
    
    18,15137,235
    
    
    
    32,697
    
    
    
    36,891
    
    
    
    31,788
 14. Comprehensive Loss
   For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net loss
    
    $
    (166,575
    )
    
    $
    (328,637
    )
    
    $
    (542,018
    )
    
    $
    (539,357
    )Other comprehensive income (loss):Net unrealized gain (loss) on available-for-sale investments
    
    
    241
    
    
    
    (26,510
    )
    
    
    (25,190
    )
    
    
    (26,651
    )Reclassification adjustment for other-than-temporary
impairment loss on investments
    
    
    
    
    
    
    14,208
    
    
    
    32,767
    
    
    
    14,208Net unrealized gain (loss) on available-for-sale investments
    
    
    241
    
    
    
    (12,302
    )
    
    
    7,577
    
    
    
    (12,443
    )Derivatives designated as cash flow hedges
    
    
    (3,362
    )
    
    
    
    
    
    
    (5,241
    )
    
    
    Reclassification adjustment to expense
    
    
    1,303
    
    
    
    
    
    
    
    2,511
    
    
    
    Net unrealized gain (loss) on derivative instruments
    
    
    (2,059
    )
    
    
    
    
    
    
    (2,730
    )
    
    
    Foreign currency translation adjustment
    
    
    (15,526
    )
    
    
    6,301
    
    
    
    (2,967
    )
    
    
    9,895Total other comprehensive income (loss)
    
    
    (17,344
    )
    
    
    (6,001
    )
    
    
    1,880
    
    
    
    (2,548
    )Total comprehensive loss
    
    $
    (183,919
    )
    
    $
    (334,638
    )
    
    $
    (540,138
    )
    
    $
    (541,905
    )
 15. Business Segments
  19




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2008
    
    
    2007
    
    
    2008
    
    
    2007United StatesRevenues
    
    $
    51,560
    
    
    $
    33,425
    
    
    $
    141,945
    
    
    $
    85,599Cost of goods and services
(exclusive of items shown separately below)
    
    
    40,417
    
    
    
    26,401
    
    
    
    112,338
    
    
    
    61,006Operating expenses
    
    
    103,904
    
    
    
    107,713
    
    
    
    327,926
    
    
    
    265,341Depreciation and amortization
    
    
    22,352
    
    
    
    18,114
    
    
    
    66,565
    
    
    
    47,444Total operating expenses
    
    
    166,673
    
    
    
    152,228
    
    
    
    506,829
    
    
    
    373,791Operating loss
    
    
    (115,113
    )
    
    
    (118,803
    )
    
    
    (364,884
    )
    
    
    (288,192
    )InternationalRevenues
    
    
    9,279
    
    
    
    7,872
    
    
    
    28,985
    
    
    
    20,457Cost of goods and services
(exclusive of items shown separately below)
    
    
    3,982
    
    
    
    2,867
    
    
    
    12,428
    
    
    
    8,310Operating expenses
    
    
    18,064
    
    
    
    24,183
    
    
    
    63,381
    
    
    
    51,875Depreciation and amortization
    
    
    6,252
    
    
    
    4,545
    
    
    
    19,025
    
    
    
    11,114Total operating expenses
    
    
    28,298
    
    
    
    31,595
    
    
    
    94,834
    
    
    
    71,299Operating loss
    
    
    (19,019
    )
    
    
    (23,723
    )
    
    
    (65,849
    )
    
    
    (50,842
    )Total operating loss
    
    
    (134,132
    )
    
    
    (142,526
    )
    
    
    (430,733
    )
    
    
    (339,034
    )Other expense, net
    
    
    (31,645
    )
    
    
    (184,873
    )
    
    
    (106,937
    )
    
    
    (195,516
    )Income tax provision
    
    
    (1,781
    )
    
    
    (1,198
    )
    
    
    (5,365
    )
    
    
    (3,927
    )Minority interest in net loss of consolidated subsidiaries
    
    
    1,061
    
    
    
    994
    
    
    
    3,406
    
    
    
    2,961Losses from equity investees
    
    
    (78
    )
    
    
    (1,034
    )
    
    
    (2,389
    )
    
    
    (3,841
    )Net loss
    
    $
    (166,575
    )
    
    $
    (328,637
    )
    
    $
    (542,018
    )
    
    $
    (539,357
    )Capital expendituresUnited States
    
    $
    60,819
    
    
    $
    104,552
    
    
    $
    166,089
    
    
    $
    251,074International
    
    
    2,158
    
    
    
    10,042
    
    
    
    12,278
    
    
    
    28,124$
    62,977
    
    
    $
    114,594
    
    
    $
    178,367
    
    
    $
    279,198
 September 30,
    
    
    December 31,2008
    
    
    2007Total assetsUnited States
    
    $
    2,000,562
    
    
    $
    2,444,341International
    
    
    213,482
    
    
    
    241,628$
    2,214,044
    
    
    $
    2,685,969
 20




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
 16. Related Party Transactions
  September 30,
    
    December 31,2008
    
    2007Prepaids
    
    $
    31
    
    
    $
    14Notes receivable, short-term
    
    
    
    
    
    
    2,134Notes receivable, long-term
    
    
    4,862
    
    
    
    4,700Accounts payable and accrued expenses
    
    
    22,347
    
    
    
    4,523
 Three Months Ended September 30,
    
    Nine Months Ended September 30,2008
    
    2007
    
    2008
    
    2007Cost of service
    
    $
    1,263
    
    
    $
    815
    
    
    $
    3,137
    
    
    $
    2,205
  Relationships among Certain Stockholders, Directors, and Officers of Clearwire
    Advisory Services Agreement and Other Reimbursements
   21




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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
 22




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
(continued)
   Davis Wright Tremaine LLP
 23




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
 
 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 nine months ended September 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
    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)
  Company Overview
          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)
  Critical Accounting Policies
    Fair Value Measurements
       26




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




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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 Three Months Ended September 30, 2008 and 2007
  Three Months EndedSeptember 30,
    
    
    Percentage2008
    
    
    2007
    
    
    ChangeREVENUES
    
    $
    60,839
    
    
    $
    41,297
    
    
    
    47.3
    %OPERATING EXPENSES:Cost of goods and services (exclusive of a portion of
depreciation and amortization shown below)
    
    
    44,399
    
    
    
    29,268
    
    
    
    51.7
    %Selling, general and administrative expense
    
    
    84,305
    
    
    
    103,424
    
    
    
    (18.5
    %)Transaction related expenses
    
    
    4,932
    
    
    
    
    
    
    
    N/MResearch and development
    
    
    537
    
    
    
    194
    
    
    
    176.8
    %Depreciation and amortization
    
    
    28,604
    
    
    
    22,659
    
    
    
    26.2
    %Spectrum lease expense
    
    
    32,194
    
    
    
    28,278
    
    
    
    13.8
    %Total operating expenses
    
    
    194,971
    
    
    
    183,823
    
    
    
    6.1
    %OPERATING LOSS
    
    
    (134,132
    )
    
    
    (142,526
    )
    
    
    (5.9
    %)OTHER INCOME (EXPENSE):Interest income
    
    
    3,468
    
    
    
    16,596
    
    
    
    (79.1
    %)Interest expense
    
    
    (24,726
    )
    
    
    (28,813
    )
    
    
    (14.2
    %)Foreign currency gains (losses), net
    
    
    (517
    )
    
    
    292
    
    
    
    (277.1
    %)Loss on extinguishment of debt
    
    
    
    
    
    
    (159,193
    )
    
    
    N/MOther-than-temporary impairment loss and realized loss on investments, net
    
    
    (9,353
    )
    
    
    (14,208
    )
    
    
    (34.2
    %)Other expense, net
    
    
    (517
    )
    
    
    453
    
    
    
    (214.1
    %)Total other expense, net
    
    
    (31,645
    )
    
    
    (184,873
    )
    
    
    (82.9
    %)LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND LOSSES
FROM EQUITY INVESTEES
    
    
    (165,777
    )
    
    
    (327,399
    )
    
    
    (49.4
    %)Income tax provision
    
    
    (1,781
    )
    
    
    (1,198
    )
    
    
    48.7
    %LOSS BEFORE MINORITY INTEREST AND LOSSES FROM EQUITY
INVESTEES
    
    
    (167,558
    )
    
    
    (328,597
    )
    
    
    (49.0
    %)Minority interest in net loss of consolidated subsidiaries
    
    
    1,061
    
    
    
    994
    
    
    
    6.7
    %Losses from equity investees
    
    
    (78
    )
    
    
    (1,034
    )
    
    
    (92.5
    %)NET LOSS
    
    $
    (166,575
    )
    
    $
    (328,637
    )
    
    
    (49.3
    %)
 Revenue .
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeRevenue
    
    $
    60,839
    
    
    $
    41,297
    
    
    $
    19,542
    
    
    
    47.3
    %
  28




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Cost of goods and services .
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeCost of goods and services
    
    $
    44,399
    
    
    $
    29,268
    
    
    $
    15,131
    
    
    
    51.7
    %As a percent of revenue
    
    
    73.0
    %
    
    
    70.9
    %
  Selling, general and administrative expense .
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeSelling, general and administrative expense
    
    $
    84,305
    
    
    $
    103,424
    
    
    $
    (19,119
    )
    
    
    (18.5
    %)As a percent of revenue
    
    
    138.6
    %
    
    
    250.4
    %
  Transaction related expense.
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeTransaction related expenses
    
    $
    4,932
    
    
    $
    
    
    
    $
    4,932
    
    
    
    N/M
  Depreciation and amortization .
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeDepreciation and amortization
    
    $
    28,604
    
    
    $
    22,659
    
    
    $
    5,945
    
    
    
    26.2
    %
  29




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Spectrum lease expense.
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeSpectrum lease expense
    
    $
    32,194
    
    
    $
    28,278
    
    
    $
    3,916
    
    
    
    13.8
    %
  Interest income.
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeInterest income
    
    $
    3,468
    
    
    $
    16,596
    
    
    $
    (13,128
    )
    
    
    (79.1
    %)
  Interest expense.
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeInterest expense
    
    $
    (24,726
    )
    
    $
    (28,813
    )
    
    $
    4,087
    
    
    
    (14.2
    %)
  Loss on extinguishment of debt.
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeLoss on extinguishment of debt
    
    $
    
    
    
    $
    (159,193
    )
    
    $
    159,193
    
    
    
    N/M
  30




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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.
 Three Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeOther-than-temporary impairment loss and realized loss on
investments, net
    
    $
    (9,353
    )
    
    $
    (14,208
    )
    
    $
    4,855
    
    
    
    (34.2
    %)
  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)
 Results of Operations for the Nine Months Ended September 30, 2008 and 2007
  Nine Months EndedSeptember 30,
    
    
    Percentage2008
    
    
    2007
    
    
    ChangeREVENUES
    
    $
    170,930
    
    
    $
    106,056
    
    
    
    61.2
    %OPERATING EXPENSES:Cost of goods and services (exclusive of a portion of
depreciation and amortization shown below)
    
    
    124,766
    
    
    
    69,316
    
    
    
    80.0
    %Selling, general and administrative expense
    
    
    278,183
    
    
    
    259,456
    
    
    
    7.2
    %Transaction related expenses
    
    
    15,156
    
    
    
    
    
    
    
    N/MResearch and development
    
    
    1,567
    
    
    
    1,217
    
    
    
    28.8
    %Depreciation and amortization
    
    
    85,590
    
    
    
    58,558
    
    
    
    46.2
    %Spectrum lease expense
    
    
    96,401
    
    
    
    56,543
    
    
    
    70.5
    %Total operating expenses
    
    
    601,663
    
    
    
    445,090
    
    
    
    35.2
    %OPERATING LOSS
    
    
    (430,733
    )
    
    
    (339,034
    )
    
    
    27.0
    %OTHER INCOME (EXPENSE):Interest income
    
    
    15,766
    
    
    
    52,006
    
    
    
    (69.7
    %)Interest expense
    
    
    (79,031
    )
    
    
    (76,542
    )
    
    
    3.3
    %Foreign currency gains (losses), net
    
    
    174
    
    
    
    224
    
    
    
    (22.3
    %)Loss on extinguishment of debt
    
    
    
    
    
    
    (159,193
    )
    
    
    N/MOther-than-temporary impairment loss and realized loss on investments, net
    
    
    (42,120
    )
    
    
    (14,208
    )
    
    
    196.5
    %Other (expense) income, net
    
    
    (1,726
    )
    
    
    2,197
    
    
    
    (178.6
    %)Total other expense, net
    
    
    (106,937
    )
    
    
    (195,516
    )
    
    
    (45.3
    %)LOSS BEFORE INCOME TAXES, MINORITY INTEREST AND LOSSES
FROM EQUITY INVESTEES
    
    
    (537,670
    )
    
    
    (534,550
    )
    
    
    0.6
    %Income tax provision
    
    
    (5,365
    )
    
    
    (3,927
    )
    
    
    36.6
    %LOSS BEFORE MINORITY INTEREST AND LOSSES FROM EQUITY
INVESTEES
    
    
    (543,035
    )
    
    
    (538,477
    )
    
    
    0.8
    %Minority interest in net loss of consolidated subsidiaries
    
    
    3,406
    
    
    
    2,961
    
    
    
    15.0
    %Losses from equity investees
    
    
    (2,389
    )
    
    
    (3,841
    )
    
    
    (37.8
    %)NET LOSS
    
    $
    (542,018
    )
    
    $
    (539,357
    )
    
    
    0.5
    %
 Revenue .
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeRevenue
    
    $
    170,930
    
    
    $
    106,056
    
    
    $
    64,874
    
    
    
    61.2
    %
  32




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Cost of goods and services .
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeCost of goods and services
    
    $
    124,766
    
    
    $
    69,316
    
    
    $
    55,450
    
    
    
    80.0
    %As a percent of revenue
    
    
    73.0
    %
    
    
    65.4
    %
  Selling, general and administrative expense .
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeSelling, general and administrative expense
    
    $
    278,183
    
    
    $
    259,456
    
    
    $
    18,727
    
    
    
    7.2
    %As a percent of revenue
    
    
    162.7
    %
    
    
    244.6
    %
  Transaction related expense.
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeTransaction related expenses
    
    $
    15,156
    
    
    $
    
    
    
    $
    15,156
    
    
    
    N/M
  Depreciation and amortization .
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeDepreciation and amortization
    
    $
    85,590
    
    
    $
    58,558
    
    
    $
    27,032
    
    
    
    46.2
    %
  33




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CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
  Spectrum lease expense.
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeSpectrum lease expense
    
    $
    96,401
    
    
    $
    56,543
    
    
    $
    39,858
    
    
    
    70.5
    %
  Interest income.
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeInterest income
    
    $
    15,766
    
    
    $
    52,006
    
    
    $
    (36,240
    )
    
    
    (69.7
    %)
  Interest expense .
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeInterest expense
    
    $
    (79,031
    )
    
    $
    (76,542
    )
    
    $
    (2,489
    )
    
    
    3.3
    %
  Loss on extinguishment of debt.
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeLoss on extinguishment of debt
    
    $
    
    
    
    $
    (159,193
    )
    
    $
    159,193
    
    
    
    N/M
  34




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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.
 Nine Months EndedSeptember 30,
    
    Dollar
    
    Percentage(In thousands, except percentages)
    
    2008
    
    2007
    
    Change
    
    ChangeOther-than-temporary impairment loss and realized loss on
investments, net
    
    $
    (42,120
    )
    
    $
    (14,208
    )
    
    $
    (27,912
    )
    
    
    196.5
    %
  Cash Flow Analysis
  Nine Months Ended September 30,2008
    
    
    2007Cash used in operating activities
    
    $
    (370,578
    )
    
    $
    (398,488
    )Cash used in investing activities
    
    
    (245,200
    )
    
    
    (87,528
    )Cash provided by (used in) financing activities
    
    
    (18,208
    )
    
    
    762,965Effect of foreign currency exchange rates on cash and cash equivalents
    
    
    144
    
    
    
    (696
    )Total cash flows
    
    $
    (633,842
    )
    
    $
    276,253
 Operating Activities
   Investing Activities
   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)
 Financing Activities
   Liquidity and Capital Resource Requirements
     Recent Accounting Pronouncements
 SFAS No.141(R) Business Combinations .
 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)
  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,
 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 ,
 FSP No. SFAS No. 133-1 and FIN 45-4 , Disclosures about Credit Derivatives and Certain Guarantees Accounting for Derivative Instruments and
Hedging Activities Guarantors Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others Disclosures
about Derivative Instruments and hedging Activities
 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)
  FSP No. SFAS No. 157-3 , Determining
the Fair Value of a Financial Asset When the Market for that Asset is Not Active
 
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  Interest Rate Risk
  Interest Rate Hedge Contracts
    Foreign Currency Exchange Rates
  38




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##### Table of Contents



CLEARWIRE CORPORATION AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS (continued)
 Investment Risk
     Derivative Instruments and Hedging Activities
 .
  39




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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
    %
    
    
    ($1,456
    )Swap
    
    $
    300,000
    
    
    
    3/5/2011
    
    
    3-month LIBOR
    
    
    3.62
    %
    
    
    ($1,586
    )
  
 Item 4. Controls and Procedures
    40




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
        41




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 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.
  42




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CLEARWIRE CORPORATION AND SUBSIDIARIES
  
    
    Clearwire would not realize the anticipated benefits of the proposed Transactions,
including any anticipated synergies from combining Clearwire and the Sprint WiMAX
Business;
    
    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 or require us to
significantly curtail our operations.
  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
 None.
 
 Item 5. Other information
 None.
 44




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 Item 6. Exhibits
 
 EXHIBIT INDEX
 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.
 45




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CLEARWIRE CORPORATION AND SUBSIDIARIES
 
 SIGNATURES
  CLEARWIRE CORPORATIONDate: November 10, 2008
    /s/ JOHN A. BUTLERJohn A. ButlerChief Financial Officer 46