Clearwire Reports Record Fourth Quarter and Full Year 2011 Results
Feb 15, 2012 (GlobeNewswire via COMTEX) --
-- Record Fourth Quarter 2011 Revenue of $361.9 Million, Up 107% Year Over
Year From $175.2 Million
-- Full Year Revenues of $1.25 Billion, Up 134% Year Over Year From $535.1
Million
-- Full Year Wholesale Revenues Up 876% Year Over Year to $493.7 Million
-- 2011 Total Ending Subscribers of 10.4 Million, Up 140% Year Over Year
from 4.3 Million
-- Achieves Positive Quarterly Adjusted EBITDA For the First Time of $22.5
Million
-- Average Smartphone 4G Usage Increased 88% Year Over Year in Fourth
Quarter 2011
-- President and CEO, Erik Prusch, Appointed to Board of Directors
BELLEVUE, Wash., Feb. 15, 2012 (GLOBE NEWSWIRE) -- Clearwire Corporation CLWR -4.66% , a leading provider of 4G wireless broadband services in the U.S., today reported its financial and operating results for fourth quarter and full year 2011.
"Our steadfast efforts to drive strong top line growth and contain costs delivered a successful year both financially and operationally while securing our position as one of the fastest growing U.S. telecommunications companies in 2011," said Erik Prusch, President and CEO of Clearwire. "During the year, we achieved key operational milestones, grew our funding resources, realized operating efficiencies and laid out a long-term vision that we expect will unlock the value of our deep spectrum portfolio through the most capacity-rich LTE deployment in the country."
Total revenue for full year 2011 increased 134% year over year to $1.25 billion, primarily driven by wholesale revenue which increased 876% to $493.7 million in 2011 from $50.6 million in 2010. Fourth quarter 2011 revenue was $361.9 million, a 107% increase over fourth quarter 2010 revenue of $175.2 million. Wholesale revenue in fourth quarter 2011 was a record $164.1 million, a quarter over quarter increase of 20% from $137.2 million in third quarter 2011. Fourth quarter 2011 retail revenue and other revenue was $197.8 million, a year over year increase of 33% from $148.9 million in fourth quarter 2010. Wholesale average revenue per user (ARPU) was $6.34 in fourth quarter 2011, up from $6.20 in third quarter 2011. Fourth quarter 2011 retail ARPU was $46.69, up from $45.52 in fourth quarter 2010.
Clearwire ended fourth quarter 2011 with approximately 10.4 million total subscribers, up 140% from 4.3 million subscribers in fourth quarter 2010. The subscriber base consists of 1.3 million retail subscribers and 9.1 million wholesale subscribers. During fourth quarter 2011, Clearwire added 873,000 total net new subscribers, reflecting 904,000 net new wholesale subscribers and a net loss of 31,000 retail subscribers during the period. Clearwire's wholesale subscribers consist primarily of Sprint 3G/4G smartphone customers.
Fourth quarter 2011 aggregate network usage by wholesale customers increased 22% compared to third quarter 2011, driven primarily by growth in aggregate smartphone usage, which increased 30% over the same period. Average 4G smartphone usage during the quarter increased 88% year over year in fourth quarter 2011. During full year 2011, total 4G network usage by wholesale and retail customers increased 165% as compared to full year 2010. Retail cost per gross addition (CPGA) was $259 in the fourth quarter 2011 compared to $420 in fourth quarter 2010. Retail churn was 3.9% in fourth quarter 2011, down from 4.2% in third quarter 2011.
Adjusted EBITDA in fourth quarter 2011 was $22.5 million, representing a $68.9 million improvement when compared to third quarter 2011 Adjusted EBITDA loss of $46.4 million.
Fourth quarter 2011 reported net loss from continuing operations attributable to Clearwire was $236.0 million, or $0.81 per basic share. Including the effects of discontinued operations, fourth quarter 2011 reported net loss attributable to Clearwire was $236.8 million, or $0.81 per basic share.
At the end of fourth quarter 2011, Clearwire operated networks in the U.S. covering areas where approximately 134 million people reside, including approximately 132 million people in markets where we provide 4G services.
2012 Outlook
For full year 2012 Clearwire expects total revenue of $1.15 billion to $1.25 billion and Adjusted EBITDA loss of approximately $250 million to $350 million. Capital expenditures in 2012 are expected to total approximately $450 million to $550 million, with most of the spend occurring in the second half of the year.
Erik Prusch Appointed to Board of Directors
Clearwire's President and Chief Executive Officer, Erik Prusch, has been appointed to the company's Board of Directors. Prusch was nominated by Eagle River according to their rights under the Equityholders' Agreement and approved by the existing board members on February 10, 2012.
Results of Continuing Operations
Cost of goods and services and network costs (COGS) for fourth quarter 2011 increased 4% to $294.0 million compared to $282.5 million for third quarter 2011. These amounts include non-cash charges for network equipment reserves and other write-downs of $6.4 million and $38.7 million in the fourth and third quarters of 2011, respectively, and other non-cash network charges of $115.4 million and $65.2 million in the fourth and third quarters of 2011, respectively. The increase in other non-cash network charges in the fourth quarter was primarily due to an increased cease-to-use liability for tower-related leases. Excluding non-cash expenses, COGS decreased 4% quarter over quarter primarily due to reductions in software and hardware maintenance costs.
Selling, general and administrative (SG&A) expense for the fourth quarter 2011 decreased 27% to $128.5 million compared to $176.5 million for the third quarter 2011. The decrease is primarily attributable to reduced marketing activity, lower commission expenses, and a decline in employee-related expenses resulting from workforce reductions.
Total non-cash write-downs of $129.4 million in fourth quarter 2011 includes $123.0 million of loss from abandonment of network and other assets primarily related to write-downs of uncompleted WiMAX network development projects that were abandoned in the quarter as a result of our plans to build and launch service on an LTE network.
Fourth quarter 2011 capital expenditures (capex) were $23 million, up from $17 million in third quarter 2011 primarily due to prior quarter favorable settlements on capex purchases which offset new capex in third quarter 2011. The company ended fourth quarter 2011 with cash and investments of approximately $1.11 billion invested primarily in U.S. Treasury securities, including $716 million total net proceeds from a public equity offering and Sprint equity contribution which were completed in December 2011. In January 2012, Clearwire completed an offering of $300 million First Priority Senior Secured Notes due 2016 and received cash payments from Sprint totaling $172 million, including $150 million related to a promissory note which will be repaid through a reduction in the amounts due to us by Sprint for WiMAX service in two installments in January 2013 and 2014. Due to the repayment terms, this promissory note will be reported as deferred revenue in our financial statements.
CLEARWIRE CORPORATION
SUMMARY OF FINANCIAL DATA FROM CONTINUING OPERATIONS
(In thousands)
(Unaudited)
Three months ended
----------------------------------------------------------------
Pro forma
Actual (1) Actual
----------------------- ------------ -------------------------
December September
31, 30, June 30, June 30, December 31,
2011 2011 2011 2011 2010
---------- ----------- ------------ ----------- ------------
REVENUES:
Retail revenues $ 197,640 $ 194,789 $ 190,583 $ 190,583 $ 148,205
Wholesale revenues 164,082 137,162 102,624 131,522 26,223
Other revenue 148 226 506 506 722
---------- ----------- ------------ ----------- ------------
Total revenues 361,870 332,177 293,713 322,611 175,150
OPERATING EXPENSES:
Cost of goods and
services and network
costs (exclusive of
items shown separately
below) 293,999 282,459 433,363 433,363 271,652
Selling, general and
administrative expense 128,502 176,469 178,232 178,232 223,898
Depreciation and
amortization 169,962 165,560 169,640 169,640 175,161
Spectrum lease expense 79,556 77,696 76,620 76,620 72,389
Loss from abandonment
of network and other
assets 123,000 29,129 376,350 376,350 169,239
---------- ----------- ------------ ----------- ------------
Total operating
expenses 795,019 731,313 1,234,205 1,234,205 912,339
---------- ----------- ------------ ----------- ------------
OPERATING LOSS (433,149) (399,136) (940,492) (911,594) (737,189)
LESS NON-CASH ITEMS:
Non-cash expenses 156,308 119,321 71,388 71,388 71,946
Non-cash write-downs 129,358 67,810 590,948 590,948 224,499
Depreciation and
amortization 169,962 165,560 169,640 169,640 175,161
---------- ----------- ------------ ----------- ------------
Total non-cash items 455,628 352,691 831,976 831,976 471,606
---------- ----------- ------------ ----------- ------------
Adjusted EBITDA $ 22,479 $ (46,445) $ (108,516) $ (79,618) $ (265,583)
Adjusted EBITDA margin 6% -14% -37% -25% -152%
KEY OPERATING METRICS (k for '000's,
MM for '000,000's)
Total net subscriber
additions 873k 1,893k 1,543k 1,543k 1,540k
Wholesale 904k 1,858k 1,504k 1,504k 1,417k
Retail (31)k 35k 39k 39k 123k
Total subscribers 10,414k 9,541k 7,648k 7,648k 4,345k
Wholesale(2) 9,122k 8,219k 6,360k 6,360k 3,246k
Retail 1,292k 1,322k 1,288k 1,288k 1,099k
ARPU
Wholesale $6.34 $6.20 $6.18 $7.92 $3.52
Retail $46.69 $47.05 $47.59 $47.59 $45.52
Churn
Wholesale 2.9% 1.5% 1.3% 1.3% 1.4%
Retail 3.9% 4.2% 3.9% 3.9% 3.8%
Retail CPGA $259 $288 $313 $313 $420
Capital expenditures $23MM $17MM $56MM $56MM $589MM
Domestic 4G covered
POPS 132MM 133MM 132MM 132MM 112MM
Cash, cash equivalents
and investments $1,108MM $711MM $848MM $848MM $1,748MM
(1) Pro Forma revenue includes the impact of approximately $16.1 million of wholesale
revenue related to Q1 2011 that was recorded in Q2 2011 and approximately $12.8 million
of wholesale revenue recorded in Q2 2011 to settle disputes related to prior usage.
(2) Includes non-launched markets.
CLEARWIRE CORPORATION
SUMMARY OF FINANCIAL DATA FROM CONTINUING OPERATIONS
(In thousands)
(Unaudited)
Year ended
----------------------------
December 31, December 31,
2011 2010
------------ --------------
REVENUES:
Retail revenues $ 758,254 $ 480,761
Wholesale revenues 493,661 50,593
Other revenues 1,551 3,749
------------ --------------
Total revenues 1,253,466 535,103
OPERATING EXPENSES:
Cost of goods and
services and network
costs (exclusive of
items shown
separately below) 1,249,966 912,776
Selling, general and
administrative
expense 698,067 870,980
Depreciation and
amortization 687,636 454,003
Spectrum lease expense 308,693 279,993
Loss from abandonment
of network and other
assets 700,341 180,001
------------ --------------
Total operating
expenses 3,644,703 2,697,753
------------ --------------
OPERATING LOSS (2,391,237) (2,162,650)
LESS NON-CASH ITEMS:
Non-cash expenses 423,260 305,869
Non-cash write-downs 966,441 345,727
Depreciation and
amortization 687,636 454,003
------------ --------------
Total non-cash items 2,077,337 1,105,599
------------ --------------
Adjusted EBITDA $ (313,900) $ (1,057,051)
Adjusted EBITDA margin -25% -198%
KEY OPERATING METRICS (k for '000's,
MM for '000,000's)
Total net subscriber
additions 6,069k 3,769k
Wholesale 5,876k 3,200k
Retail 193k 569k
Total subscribers 10,414k 4,345k
Wholesale(1) 9,122k 3,246k
Retail 1,292k 1,099k
ARPU
Wholesale $6.44 $4.10
Retail $47.04 $43.65
Churn
Wholesale 1.9% 1.5%
Retail 3.8% 3.4%
Retail CPGA $292 $452
Capital expenditures $226MM $2,655MM
Domestic 4G covered
POPS 132MM 112MM
Cash, cash equivalents
and investments $1,108MM $1,748MM
(1) Includes
non-launched markets.
Management Webcast
Clearwire executives will host a conference call and simultaneous webcast to discuss the company's fourth quarter and full year 2011 financial results at 4:30 p.m. Eastern Time today. A live broadcast of the conference call will be available online on the company's investor relations website located at http://investors.clearwire.com .
Interested parties can access the conference call by dialing 1-877-392-9886, or from outside the United States by dialing 1-707-287-9329, at least five minutes prior to the start time. A replay of the call will be available beginning at approximately 7:30 p.m. Eastern Time on February 15, through Wednesday, February 22, by calling 1-855-859-2056, or from outside the United States by dialing 1-404-537-3406. The passcode for the replay is 46495945.
About Clearwire
Clearwire Corporation CLWR -4.66% , through its operating subsidiaries, is a leading provider of 4G wireless broadband services. The company holds the deepest portfolio of wireless spectrum available for data services in the U.S. and provides coverage in areas of where more than 130 million people live. Clearwire serves retail customers through its own CLEAR(R) brand as well as through wholesale relationships with some of the leading companies in the communications, technology and retail industries. Strategic investors include Intel Capital, Comcast, Sprint, Google, Time Warner Cable, and Bright House Networks. The company plans to add to its current 4G offering by launching a next-generation 4G LTE Advanced-ready network to address the capacity needs of the market while also working closely with the Global TDD-LTE Initiative and China Mobile to advance the development of the TDD-LTE ecosystem. Clearwire is headquartered in Bellevue, Wash. Additional information is available at http://www.clearwire.com .
Forward-Looking Statements
This release, and other written and oral statements made by Clearwire from time to time, contain forward-looking statements which are based on management's current expectations and beliefs, as well as on a number of assumptions concerning future events made with information that is currently available. Forward-looking statements may include, without limitation, management's expectations regarding future financial and operating performance and financial condition; proposed transactions; network development and market launch plans; strategic plans and objectives; industry conditions; the strength of the balance sheet; and liquidity and financing needs. The words "will," "would," "may," "should," "estimate," "project," "forecast," "intend," "expect," "believe," "target," "designed," "plan" and similar expressions are intended to identify forward-looking statements. Readers are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside of Clearwire's control, which could cause actual results to differ materially and adversely from such statements. Some factors that could cause actual results to differ are:
-- We have a history of operating losses and we expect to continue to
realize significant net losses for the foreseeable future.
-- If our business fails to perform as we expect or if we incur unforeseen
expenses in the near term, we may require additional capital to fund our
current business. Also, we will need substantial additional capital over
the long-term. Such additional capital may not be available on
acceptable terms or at all. If we fail to obtain additional capital, our
business prospects, financial condition and results of operations will
likely be materially and adversely affected, and we will be forced to
consider all available alternatives.
-- Our current plans and projections are based on a number of assumptions
about our future performance, which may prove to be inaccurate, such as
our ability to substantially expand our wholesale business and the
expected timing and costs of deploying LTE on our wireless broadband
network.
-- Our business has become increasingly dependent on our wholesale
partners, and Sprint in particular. If we do not receive the amount of
revenues we expect from existing wholesale partners or if we are unable
to enter into new agreements with additional wholesale partners for
significant new wholesale commitments, our business prospects, results
of operations and financial condition could be adversely affected, or we
could be forced to consider all available alternatives.
-- We regularly evaluate our plans, and we may elect to pursue new or
alternative strategies which we believe would be beneficial to our
business, including among other things, expanding our network coverage
to new markets, augmenting our network coverage in existing markets,
changing our sales and marketing strategy and/or acquiring additional
spectrum. Such modifications to our plans could significantly change our
capital requirements.
-- We plan to deploy LTE on our wireless broadband network, alongside
mobile WiMAX and we will incur significant costs to deploy such
technology. Additionally, LTE technology, or other alternative
technologies that we may consider, may not perform as we expect on our
network and deploying such technologies would result in additional risks
to the company, including uncertainty regarding our ability to
successfully add a new technology to our current network and to operate
dual technology networks without disruptions to customer service, as
well as our ability to generate new wholesale customers for the new
network.
-- We currently depend on our commercial partners to develop and deliver
the equipment for our legacy and mobile WiMAX networks, and will be
dependent on commercial partners to deliver equipment and devices for
our planned LTE network as well.
-- Many of our competitors for our retail business are better established
and have significantly greater resources, and may subsidize their
competitive offerings with other products and services.
-- Our substantial indebtedness and restrictive debt covenants could limit
our financing options and liquidity position and may limit our ability
to grow our business.
-- Sprint owns just less than a majority of our common shares, is our
largest shareholder, and has the contractual ability to obtain enough
shares to hold the majority voting interest in the company, and Sprint
may have, or may develop in the future, interests that may diverge from
other stockholders.
-- Future sales of large blocks of our common stock may adversely impact
our stock price.
For a more detailed description of the factors that could cause such a difference, please refer to Clearwire's filings with the Securities and Exchange Commission, including the information under the heading "Risk Factors" in our Annual Report on Form 10-K filed on February 22, 2011 and subsequent Form 10-Q filings. Clearwire assumes no obligation to update or supplement such forward-looking statements.
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
December 31, December 31,
2011 2010
------------ -------------
ASSETS
Current assets:
Cash and cash equivalents $ 891,929 $ 1,230,242
Short-term investments 215,655 502,316
Restricted cash 1,000 1,000
Accounts receivable, net of
allowance of $5,542 and
$3,792 83,660 24,653
Inventory 23,832 17,432
Prepaids and other assets 71,083 82,580
------------ -------------
Total current assets 1,287,159 1,858,223
Property, plant and equipment,
net 3,014,277 4,447,374
Restricted cash 7,619 29,355
Spectrum licenses, net 4,298,254 4,348,882
Other intangible assets, net 40,850 60,884
Other assets 157,797 199,003
Assets of discontinued
operations 36,696 96,765
------------ -------------
Total assets $ 8,842,652 $ 11,040,486
============ =============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
expenses $ 157,172 $ 448,789
Other current liabilities 122,756 226,997
------------ -------------
Total current liabilities 279,928 675,786
Long-term debt, net 4,019,605 4,017,019
Deferred tax liabilities, net 152,182 838
Other long-term liabilities 719,703 444,774
Liabilities of discontinued
operations 25,196 32,071
------------ -------------
Total liabilities 5,196,614 5,170,488
Commitments and contingencies
Stockholders' equity:
Class A common stock, par
value $0.0001, 2,000,000 and
1,500,000 shares authorized;
452,215 and 243,544 shares
outstanding 45 24
Class B common stock, par
value $0.0001, 1,400,000 and
1,000,000 shares authorized;
839,703 and 743,481 shares
outstanding 83 74
Additional paid-in capital 2,714,634 2,221,110
Accumulated other
comprehensive income 2,793 2,495
Accumulated deficit (1,617,826) (900,493)
------------ -------------
Total Clearwire Corporation
stockholders' equity 1,099,729 1,323,210
Non-controlling interests 2,546,309 4,546,788
------------ -------------
Total stockholders' equity 3,646,038 5,869,998
------------ -------------
Total liabilities and
stockholders' equity $ 8,842,652 $ 11,040,486
============ =============
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
December 31,
2011 2010
------------ ------------
Revenues $ 361,870 $ 175,150
Operating expenses:
Cost of goods and services and
network costs (exclusive of items
shown separately below) 293,999 271,652
Selling, general and
administrative expense 128,502 223,898
Depreciation and amortization 169,962 175,161
Spectrum lease expense 79,556 72,389
Loss from abandonment of network
and other assets 123,000 169,239
------------ ------------
Total operating expenses 795,019 912,339
------------ ------------
Operating loss (433,149) (737,189)
Other income (expense):
Interest income 272 870
Interest expense (128,859) (67,999)
Gain on derivative instruments (2,919) 63,255
Other income (expense), net (285) 2,714
------------ ------------
Total other expense, net (131,791) (1,160)
------------ ------------
Loss from continuing operations
before income taxes (564,940) (738,349)
Income tax provision (78,406) (221)
------------ ------------
Net loss from continuing operations (643,346) (738,570)
Less: non-controlling interests in
net loss from continuing
operations of consolidated
subsidiaries 407,348 613,766
------------ ------------
Net loss from continuing operations
attributable to Clearwire
Corporation (235,998) (124,804)
Net loss from discontinued
operations attributable to
Clearwire Corporation (851) (3,208)
------------ ------------
Net loss attributable to Clearwire
Corporation $ (236,849) $ (128,012)
============ ============
Net loss from continuing operations
attributable to Clearwire
Corporation per Class A common
share:
Basic $ (0.81) $ (0.51)
============ ============
Diluted $ (0.81) $ (0.79)
============ ============
Net loss attributable to Clearwire
Corporation per Class A common
share:
Basic $ (0.81) $ (0.53)
============ ============
Diluted $ (0.81) $ (0.81)
============ ============
Weighted average Class A common
shares outstanding:
Basic 291,634 243,544
============ ============
Diluted 291,634 1,011,395
============ ============
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Year Ended
December 31,
2011 2010
------------ ------------
Revenues $ 1,253,466 $ 535,103
Operating expenses:
Cost of goods and services and
network costs (exclusive of items
shown separately below) 1,249,966 912,776
Selling, general and
administrative expense 698,067 870,980
Depreciation and amortization 687,636 454,003
Spectrum lease expense 308,693 279,993
Loss from abandonment of network
and other assets 700,341 180,001
------------ ------------
Total operating expenses 3,644,703 2,697,753
------------ ------------
Operating loss (2,391,237) (2,162,650)
Other income (expense):
Interest income 2,335 4,950
Interest expense (505,992) (152,868)
Gain on derivative instruments 145,308 63,255
Other income (expense), net 681 (2,671)
------------ ------------
Total other expense, net (357,668) (87,334)
------------ ------------
Loss from continuing operations
before income taxes (2,748,905) (2,249,984)
Income tax provision (106,828) (1,218)
------------ ------------
Net loss from continuing operations (2,855,733) (2,251,202)
Less: non-controlling interests in
net loss from continuing
operations of consolidated
subsidiaries 2,158,831 1,775,840
------------ ------------
Net loss from continuing operations
attributable to Clearwire
Corporation (696,902) (475,362)
Net loss from discontinued
operations attributable to
Clearwire Corporation (20,431) (12,075)
------------ ------------
Net loss attributable to Clearwire
Corporation $ (717,333) $ (487,437)
============ ============
Net loss from continuing operations
attributable to Clearwire
Corporation per Class A common
share:
Basic $ (2.70) $ (2.14)
============ ============
Diluted $ (2.99) $ (2.41)
============ ============
Net loss attributable to Clearwire
Corporation per Class A common
share:
Basic $ (2.78) $ (2.19)
============ ============
Diluted $ (3.07) $ (2.46)
============ ============
Weighted average Class A common
shares outstanding:
Basic 257,967 222,527
============ ============
Diluted 965,099 970,765
============ ============
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended
December 31,
------------------------------
2011 2010
-------------- --------------
Cash flows from operating activities:
Net loss from continuing operations $ (2,855,733) $ (2,251,202)
Adjustments to reconcile net loss to net
cash used in operating activities:
Deferred income taxes 105,308 --
Non-cash gain on derivative instruments (145,308) (63,255)
Accretion of discount on debt 40,216 6,113
Depreciation and amortization 687,636 454,003
Amortization of spectrum leases 53,674 57,433
Non-cash rent expense 342,962 200,901
Loss on property, plant and equipment 966,441 345,727
Other operating activities 27,745 49,506
Changes in assets and liabilities:
Inventory 15,697 (11,697)
Accounts receivable (54,212) (20,550)
Prepaids and other assets 22,447 (73,767)
Prepaid spectrum licenses (4,360) (3,294)
Accounts payable and other liabilities (135,683) 144,680
-------------- --------------
Net cash used in operating activities of
continuing operations (933,170) (1,165,402)
Net cash provided (used in) by operating
activities of discontinued operations 2,381 (3,311)
-------------- --------------
Net cash used in operating activities (930,789) (1,168,713)
-------------- --------------
Cash flows from investing activities:
Capital expenditures (405,655) (2,646,365)
Purchases of available-for-sale
investments (957,883) (2,098,705)
Disposition of available-for-sale
investments 1,255,176 3,776,805
Other investing 20,229 (44,119)
-------------- --------------
Net cash used in investing activities of
continuing operations (88,133) (1,012,384)
Net cash used in investing activities of
discontinued operations (3,886) (834)
-------------- --------------
Net cash used in investing activities (92,019) (1,013,218)
-------------- --------------
Cash flows from financing activities:
Principal payments on long-term debt (29,957) (876)
Proceeds from issuance of long-term debt 1,413,319
Debt financing fees (1,159) (53,285)
Equity investment by strategic investors 331,400 54,828
Proceeds from issuance of common stock 387,279 304,015
-------------- --------------
Net cash provided by financing activities
of continuing operations 687,563 1,718,001
Net cash provided by financing activities
of discontinued operations -- --
-------------- --------------
Net cash provided by financing activities 687,563 1,718,001
-------------- --------------
Effect of foreign currency exchange rates
on cash and cash equivalents (4,573) (525)
-------------- --------------
Net decrease in cash and cash equivalents (339,818) (464,455)
Cash and cash equivalents:
Beginning of period 1,233,562 1,698,017
-------------- --------------
End of period 893,744 1,233,562
Less: cash and cash equivalents of
discontinued operations at end of period 1,815 3,320
-------------- --------------
Cash and cash equivalents of continuing
operations at end of period $ 891,929 $ 1,230,242
============== ==============
Supplemental cash flow disclosures:
Cash paid for interest including
capitalized interest paid $ 474,849 $ 336,314
Non-cash investing activities:
Fixed asset purchases in accounts payable
and accrued expenses $ 14,144 $ 120,025
Fixed asset purchases financed by
long-term debt $ 11,514 $ 133,288
Non-cash financing activities:
Vendor financing obligations $ (3,332) $ (60,251)
Capital lease obligations $ (8,182) $ (73,037)
Definitions of Terms and Reconciliations of Non-GAAP Financial Measures
to Unaudited Condensed Consolidated Statements of Operations
The company utilizes certain non-GAAP financial measures which are widely used in the telecommunications industry and are not calculated based on accounting principles generally accepted in the United States of America (GAAP). Other companies may calculate these measures differently.
(1) Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as consolidated operating loss less depreciation and amortization expenses, non-cash expenses related to operating leases (towers, spectrum leases and buildings), stock-based compensation expense, loss from abandonment of network and other assets, charges for differences between recorded amounts and the results of physical counts, and charges for excessive and obsolete network equipment and CPE inventory. A reconciliation of operating loss to Adjusted EBITDA is as follows:
Three months ended
(Unaudited)
--------------------------------------------------------------------
Actual Pro forma Actual
-------------------------- ------------ --------------------------
September
December 31, 30, June 30, June 30, December 31,
2011 2011 2011 2011 2010
------------ ------------ ------------ ------------ ------------
(in thousands)
Operating loss $ (433,149) $ (399,136) $ (940,492) $ (911,594) $ (737,189)
Non-cash expenses:
Spectrum lease expense 37,228 38,845 28,519 28,519 32,156
Building and network
related rents* 113,612 70,584 37,965 37,965 32,625
Stock compensation* 5,468 9,892 4,904 4,904 7,165
------------ ------------ ------------ ------------ ------------
Non-cash expenses 156,308 119,321 71,388 71,388 71,946
Non-cash write-downs:
Loss from abandonment of
network and other assets 123,000 29,129 376,350 376,350 169,239
Network equipment
reserves and other
write-downs 6,358 38,681 214,598 214,598 55,260
------------ ------------ ------------ ------------ ------------
Non-cash write-downs 129,358 67,810 590,948 590,948 224,499
Depreciation and
amortization 169,962 165,560 169,640 169,640 175,161
------------ ------------ ------------ ------------ ------------
Adjusted EBITDA $ 22,479 $ (46,445) $ (108,516) $ (79,618) $ (265,583)
============ ============ ============ ============ ============
*Amounts included in COGS
and SG&A.
Year ended
(Unaudited)
------------------------------
December 31, December 31,
2011 2010
-------------- --------------
(in thousands)
Operating loss $ (2,391,237) $ (2,162,650)
Non-cash expenses:
Spectrum lease expense 139,340 100,251
Building and network
related rents* 257,296 158,083
Stock compensation* 26,624 47,535
-------------- --------------
Non-cash expenses 423,260 305,869
Non-cash write-downs:
Loss from abandonment of
network and other assets 700,341 180,001
Network equipment
reserves and other
write-downs 266,100 165,726
-------------- --------------
Non-cash write-downs 966,441 345,727
Depreciation and
amortization 687,636 454,003
-------------- --------------
Adjusted EBITDA $ (313,900) $ (1,057,051)
============== ==============
*Amounts included in COGS
and SG&A.
In a capital-intensive industry, management believes Adjusted EBITDA to be a meaningful measure of the company's operating performance. The company provides this non-GAAP measure as a supplemental performance measure because management believes it facilitates comparisons of the company's operating performance from period to period and comparisons of the company's operating performance to that of other companies by backing out potential differences caused by non-cash expenses related to long-term leases, share-based compensation and non-cash write-downs. Because this non-GAAP measure facilitates internal comparisons of the company's historical operating performance, management also uses this non-GAAP measure for business planning purposes and in measuring the company's performance relative to that of its competitors. In addition, Clearwire believes that Adjusted EBITDA and similar measures are widely used by investors, financial analysts and credit rating agencies as a measure of the company's financial performance over time and to compare the company's financial performance with that of other companies in the industry.
(2) ARPU (Average Revenue Per User) is revenue, less acquired businesses revenue (revenue from entities that were acquired by Clearwire's predecessor entity), the revenue generated from the sales of devices, and shipping revenue, divided by the weighted average number of subscribers in the period, divided by the number of months in the period. Wholesale ARPU is wholesale revenue divided by the average number of wholesale subscribers in the period, divided by the number of months in the period. Retail ARPU is retail revenue less acquired businesses revenue (revenue from entities that were acquired by Clearwire's predecessor entity), the revenue generated from the sales of devices, and shipping revenue; divided by the weighted average number of retail subscribers in the period, divided by the number of months in the period.
Three months ended
(Unaudited)
-----------------------------------------------------------
Actual Pro forma Actual
----------------------- ---------- ----------------------
December September December
31, 30, June 30, June 30, 31,
2011 2011 2011 2011 2010
----------- ---------- ---------- ---------- ----------
(in thousands)
Total revenues $ 361,870 $ 332,177 $ 293,713 $ 322,611 $ 175,150
Acquired companies &
other revenues (14,564) (10,850) (9,509) (9,509) (7,350)
----------- ---------- ---------- ---------- ----------
Total ARPU revenues $ 347,306 $ 321,327 $ 284,204 $ 313,102 $ 167,800
=========== ========== ========== ========== ==========
Wholesale ARPU
revenues $ 164,058 $ 137,109 $ 102,624 $ 131,522 $ 26,223
Retail ARPU revenues 183,248 184,218 181,580 181,580 141,577
----------- ---------- ---------- ---------- ----------
Total ARPU revenues $ 347,306 $ 321,327 $ 284,204 $ 313,102 $ 167,800
=========== ========== ========== ========== ==========
Three months ended
(Unaudited)
-----------------------------------------------------------
Actual Pro forma Actual
----------------------- ---------- ----------------------
December September December
31, 30, June 30, June 30, 31,
2011 2011 2011 2011 2010
----------- ---------- ---------- ---------- ----------
(in thousands)
Wholesale ARPU revenues $ 164,058 $ 137,109 $ 102,624 $ 131,522 $ 26,223
Average wholesale
customers 8,630 7,371 5,533 5,533 2,485
Months in period 3 3 3 3 3
Wholesale ARPU $ 6.34 $ 6.20 $ 6.18 $ 7.92 $ 3.52
=========== ========== ========== ========== ==========
Three months ended
(Unaudited)
-----------------------------------------------------------
Actual Pro forma Actual
----------------------- ---------- ----------------------
December September December
31, 30, June 30, June 30, 31,
2011 2011 2011 2011 2010
----------- ---------- ---------- ---------- ----------
(in thousands)
Retail ARPU revenues $ 183,248 $ 184,218 $ 181,580 $ 181,580 $ 141,577
Average retail customers 1,308 1,305 1,272 1,272 1,037
Months in period 3 3 3 3 3
Retail ARPU $ 46.69 $ 47.05 $ 47.59 $ 47.59 $ 45.52
=========== ========== ========== ========== ==========
Year ended
(Unaudited)
------------------------
December
December 31, 31,
2011 2010
------------ ----------
(in thousands)
Total revenues $ 1,253,466 $ 535,103
Acquired companies &
other revenues (45,753) (29,828)
------------ ----------
Total ARPU revenues $ 1,207,713 $ 505,275
============ ==========
Wholesale ARPU
revenues $ 493,583 $ 50,593
Retail ARPU revenues 714,130 454,682
------------ ----------
Total ARPU revenues $ 1,207,713 $ 505,275
============ ==========
Year ended
(Unaudited)
------------------------
December
December 31, 31,
2011 2010
------------ ----------
(in thousands)
Wholesale ARPU revenues $ 493,583 $ 50,593
Average wholesale
customers 6,390 1,029
Months in period 12 12
Wholesale ARPU $ 6.44 $ 4.10
============ ==========
Year ended
(Unaudited)
------------------------
December
December 31, 31,
2011 2010
------------ ----------
(in thousands)
Retail ARPU revenues $ 714,130 $ 454,682
Average retail customers 1,265 868
Months in period 12 12
Retail ARPU $ 47.04 $ 43.65
============ ==========
Management uses ARPU to identify average revenue per customer, to track changes in average customer revenues over time, to help evaluate how changes in the business, including changes in the company's service offerings and fees, affect average revenue per customer, and to assist in forecasting future service revenue. In addition, ARPU provides management with a useful measure to compare the company's customer revenue to that of other wireless communications providers. The company believes investors use ARPU primarily as a tool to track changes in the company's average revenue per customer and to compare Clearwire's per customer service revenues to those of other wireless communications providers.
(3) Pro Forma Reconciliation
The unaudited pro forma condensed consolidated statements of operations that follow are presented for informational purposes only and should not be taken as representative of the future consolidated results of operations of the company. Management believes the unaudited pro forma condensed consolidated statements of operations are useful because they more accurately reflect the revenue-generating activities during the relevant periods and facilitate period to period comparisons of the company's operating performance.
The following unaudited pro forma condensed consolidated statements of operations for the three months ended June 30, 2011 were prepared using the unaudited condensed consolidated statement of operations of Clearwire for the three months ended June 30, 2011. The unaudited pro forma condensed consolidated statement of operations should be read in conjunction with the separate historical financial statements and accompanying notes thereto.
The pricing provisions agreed to in the 4G Amendment and the other new Sprint wholesale agreements signed on April 18, 2011 were applicable as of January 1, 2011. However, in accordance with GAAP applicable to revenue recognition, Clearwire's first quarter 2011 results did not reflect additional revenues due to the company as a result of the amendments contained in the Sprint wholesale amendments being signed subsequent to the end of the period. As such, during second quarter 2011, Clearwire recognized revenue of approximately $16.1 million attributable to services provided in first quarter 2011. In addition, Clearwire received a $28.2 million settlement in second quarter 2011, of which $12.8 million related to services provided in periods prior to December 31, 2010.
Had the Sprint wholesale amendments been in effect as of March 31, 2011, and the portion of the settlement related to prior periods been recorded in the attributable service periods, Clearwire's pro forma revenues for second quarter 2011 would have decreased by $28.9 million and the pro forma net loss from continuing operations attributable to Clearwire Corporation would have increased by $6.5 million or $0.03 per basic share.
The following table reconciles as reported results to the pro forma results for the three months ended June 30, 2011 (in thousands):
Three Months Ended June 30, 2011
(Unaudited)
---------------------------------------
Amounts as Adjustments Pro forma
reported (1) amounts
------------ ----------- ------------
Revenues:
Retail revenue $ 190,583 $ -- $ 190,583
Wholesale revenue 131,522 (28,898) 102,624
Other revenue 506 506
------------ ----------- ------------
Total revenues 322,611 (28,898) 293,713
Total expenses (1,262,381) (1,262,381)
------------ ----------- ------------
Net loss from
continuing
operations (939,770) (28,898) (968,668)
Less:
non-controlling
interests in net
loss from
continuing
operations of
consolidated
subsidiaries 779,245 22,382 801,627
------------ ----------- ------------
Net loss from
continuing
operations
attributable to
Clearwire
Corporation (160,525) (6,516) (167,041)
Net loss from
discontinued
operations
attributable to
Clearwire
Corporation (8,213) -- (8,213)
------------ ----------- ------------
Net loss attributable
to Clearwire
Corporation $ (168,738) $ (6,516) $ (175,254)
============ =========== ============
Net loss from
continuing
operations
attributable to
Clearwire
Corporation per
Class A Common
Share:
Basic $ (0.65) $ (0.68)
============ ============
Diluted $ (0.98) $ (1.00)
============ ============
Net loss attributable
to Clearwire
Corporation per
Class A Common
Share:
Basic $ (0.68) $ (0.71)
============ ============
Diluted $ (1.01) $ (1.03)
============ ============
Wholesale ARPU $ 7.92 $ 6.18
============ ============
(1) Pro Forma revenue includes the impact of approximately
$16.1 million of wholesale revenue related to Q1 2011 that
was recorded in Q2 2011 and approximately $12.8 million of
wholesale revenue recorded in Q2 2011 to settle disputes
related to prior usage.
(4) Churn, which measures customer turnover, is calculated as the number of subscribers that terminate service in a given month divided by the average number of subscribers in that month using the actual number of subscribers. Subscribers that discontinue service in the first 30 days of service for any reason, or in the first 90 days of service under certain circumstances, are deducted from the company's gross customer additions and therefore not included in any of the churn calculations. Wholesale churn is calculated as the wholesale subscriber deactivations during the reporting period divided by the weighted average wholesale subscriber base for the period divided by the number of months in the period. Retail churn is calculated as the retail subscriber deactivations during the reporting period divided by the weighted average retail subscriber base for the period divided by the number of months in the period. Management uses churn to measure retention of the company's subscribers, to measure changes in customer retention over time, and to help evaluate how changes in the business affect customer retention. The company believes investors use churn primarily as a tool to track changes in the company's customer retention. Other companies may calculate this measure differently.
(5) Retail CPGA (Cost per Gross Addition) is selling, general and administrative costs, less general and administrative costs and acquired businesses costs (costs from entities that were acquired by Clearwire's predecessor entity) plus devices equipment subsidy, divided by gross retail customer additions in the period.
Three months ended
(Unaudited)
-----------------------------------------------
December September December
31, 30, June 30, 31,
2011 2011 2011 2010
----------- ---------- ---------- ----------
(in thousands)
Retail CPGA
Selling,
general and
administrativ
e $ 128,502 $ 176,469 $ 178,232 $ 223,894
G&A and other (96,469) (118,923) (120,033) (122,210)
----------- ---------- ---------- ----------
Total selling
expense 32,033 57,546 58,199 101,684
Total gross
adds 124 200 186 242
Total retail
CPGA $ 259 $ 288 $ 313 $ 420
=========== ========== ========== ==========
Year ended
(Unaudited)
-----------------------
December December
31, 31,
2011 2010
----------- ----------
(in thousands)
Retail CPGA
Selling,
general and
administrativ
e $ 698,067 $ 870,980
G&A and other (471,529) (455,084)
----------- ----------
Total selling
expense 226,538 415,896
Total gross
adds 776 920
Total retail
CPGA $ 292 $ 452
=========== ==========
Management uses retail CPGA to measure the efficiency of the company's customer acquisition efforts, to track changes in Clearwire's average cost of acquiring new subscribers over time, and to help evaluate how changes in the company's sales and distribution strategies affect the cost-efficiency of the company's customer acquisition efforts. Clearwire believes investors use retail CPGA primarily as a tool to track changes in the company's average cost of acquiring new subscribers.
(6) Market EBITDA is the equivalent of Adjusted EBITDA (see definition (1) Adjusted EBITDA) at the market level. This calculation does not include an allocation of corporate general and administrative expenses or spectrum lease expense.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Clearwire Corporation
CONTACT: Investor Relations:
Alice Ryder, 425-636-5828
alice.ryder@clearwire.com
Media Relations:
Susan Johnston, 425-216-7913
susan.johnston@clearwire.com
JLM Partners for Clearwire:
Mike DiGioia or Jeremy Pemble, 206-381-3600
mike@jlmpartners.com or jeremy@jlmpartners.com
