- Full Year Revenues of $1.26 Billion, Up 1%; Full Year
Retail Revenues Up 5% to $795.6 Million
- Total Ending Subscribers of 9.6 Million, Down 8% Year
Over Year From 10.4 Million
- 2012 Adjusted EBITDA Loss Improved by $157.0 Million
Year Over Year to $(156.9) Million
Clearwire Corporation (Nasdaq:CLWR), 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
2012.
"In fourth quarter 2012, we have once again delivered solid
results resulting in top-line growth and 50% year over year
improvement in full year Adjusted EBITDA loss in 2012," said Erik
Prusch, President and CEO of Clearwire. "Our full year 2012 results
demonstrate our continued focus on reducing costs, managing
revenues and liquidity, and providing exceptional service to our
customers during a transition period as we build an LTE network
equipped to provide wireless consumers the speeds and capacity they
desire."
Total revenue for full year 2012 increased 1% year over year to
$1.26 billion driven by retail revenues which increased 5% to
$795.6 million in 2012 from $758.3 million in 2011. Fourth quarter
2012 total revenue declined 14% year over year to $311.2 million
primarily due to the expected year over year decline in wholesale
revenue. Fourth quarter wholesale revenue of $116.6 million, was
relatively flat compared to third quarter 2012 wholesale revenue of
$116.5 million, and down 29% year over year, reflecting the fixed
wholesale WiMAX revenue terms of the 4G MVNO Agreement with Sprint
which took effect in 2012 and will continue through 2013. Retail
revenue and other revenue decreased 2% year over year to $194.7
million in fourth quarter 2012. Retail average revenue per user
(ARPU) was $44.10 representing a decrease of $2.59 year over year
compared to $46.69 in fourth quarter 2011 primarily due to lower
equipment lease and activation revenue under the no-contract
offering which was fully launched in 2012.
Clearwire ended fourth quarter 2012 with approximately 9.6
million total subscribers, down 8% from 10.4 million subscribers at
the end of fourth quarter 2011. The subscriber base consists of
approximately 1.4 million retail subscribers and 8.2 million
wholesale subscribers, reflecting 9,000 retail net subscriber
additions and 915,000 wholesale net subscriber losses during fourth
quarter 2012. The decline in wholesale subscribers, which consist
primarily of Sprint 3G/4G smartphone customers, is primarily due to
the discontinuation of postpaid WiMAX offerings by Sprint.
Retail cost per gross addition (CPGA) was $155 in fourth quarter
2012 compared to $259 in fourth quarter 2011. The year over year
improvement is primarily due to lower retail selling expenses
associated with our no-contract offering and higher gross adds,
partially offset by increased equipment subsidies. Retail churn was
5.0% in fourth quarter 2012, up from 3.9% in fourth quarter 2011.
The increase in churn is primarily due to an increase in
subscribers on no-contract plans, which were fully launched in
first quarter 2012.
Full year 2012 Adjusted EBITDA improved by $157.0 million year
over year to a loss of $(156.9) million. Adjusted EBITDA in fourth
quarter 2012 was a loss of $(46.0) million, representing a $68.5
million decline compared to fourth quarter 2011 Adjusted EBITDA of
$22.5 million. The decrease is primarily due to lower revenue in
fourth quarter 2012 compared to the prior year period.
Cash, cash equivalents and investments (invested primarily in
U.S. Treasury securities) as of December 31, 2012 was approximately
$868.6 million, a sequential decrease of $315.1 million from
September 30, 2012. The sequential decrease primarily reflects the
fourth quarter payment of our semi-annual interest payment and cash
payments for capital expenditures and operating expenses, which
exceeded the cash inflows during the period (primarily from Sprint
and our retail business). As compared to December 31, 2011, cash,
cash equivalents and investments decreased by $239.0 million.
Fourth quarter 2012 capex of $102 million related primarily to
the deployment of Clearwire's LTE network as well as ongoing
maintenance of our mobile WiMAX network, and increased $68 million
and $79 million, respectively, as compared to $34 million in third
quarter 2012 and $23 million of capex in fourth quarter 2011. Both
the year over year and sequential increases in capex are primarily
related to increased network investments associated with our
ongoing LTE deployment efforts.
At the end of fourth quarter 2012, Clearwire operated networks
in the U.S. covering areas where approximately 137 million people
reside, including approximately 135 million people in markets where
we provide 4G services, slightly higher than the prior year
period.
Results of Operations Cost of goods and
services and network costs (COGS) in fourth quarter 2012 decreased
29% to $208.3 million compared to $294.0 million in fourth quarter
2011. These amounts include non-cash charges for network equipment
reserves and other write-downs of $2.3 million and $6.4 million in
fourth quarters 2012 and 2011, respectively, and other non-cash
network-related expenses of $22.9 million and $115.4 million in
fourth quarters 2012 and 2011, respectively. The year over year
decrease in other non-cash network related expenses is primarily
due to a higher provision for unused tower-related leases and other
network agreements in fourth quarter 2011. Excluding non-cash
expenses, COGS increased 6% year over year primarily due to higher
tower- and network-related expenses in conjunction with our ongoing
LTE build, as well as an increase in customer premise equipment
sales associated with our no contract retail model, which required
customers to purchase rather than lease devices beginning in
2012.
Selling, general and administrative (SG&A) expense in fourth
quarter 2012 increased 8% to $138.5 million compared to $128.5
million in fourth quarter 2011. The increase is primarily
attributable to professional fees related to the proposed merger
with Sprint and employee-related expenses including stock
compensation.
Fourth quarter 2012 reported net loss from continuing operations
attributable to Clearwire was $(195.0) million, or $(0.28) per
basic share compared to $(236.0) million, or $(0.81) per basic
share, respectively in the prior year period. Including the effects
of discontinued operations, fourth quarter 2012 reported net loss
attributable to Clearwire was $(187.2) million, or $(0.27) per
basic share, compared to $(236.8) million or $(0.81), respectively
in the prior year period.
CLEARWIRE
CORPORATION |
SUMMARY FINANCIAL AND
OPERATING DATA FROM CONTINUING OPERATIONS |
(In
thousands) |
(Unaudited) |
|
|
|
|
|
|
Three months
ended |
|
December 31,
2012 |
September 30,
2012 |
June 30, 2012 |
December 31,
2011 |
|
|
|
|
|
REVENUES: |
|
|
|
|
Retail revenue |
$ 194,451 |
$ 197,215 |
$ 199,156 |
$ 197,640 |
Wholesale revenue |
116,590 |
116,498 |
117,560 |
164,082 |
Other revenue |
200 |
169 |
216 |
148 |
Total revenues |
311,241 |
313,882 |
316,932 |
361,870 |
OPERATING EXPENSES: |
|
|
|
|
Cost of goods and services and network
costs (exclusive of items shown separately below) |
208,322 |
211,540 |
224,426 |
293,999 |
Selling, general and administrative
expense |
138,489 |
139,365 |
137,693 |
128,502 |
Depreciation and amortization |
194,873 |
210,781 |
184,566 |
169,962 |
Spectrum lease expense |
83,387 |
82,513 |
81,190 |
79,556 |
Loss from abandonment of network and
other assets |
(1,099) |
2,588 |
317 |
123,000 |
Total operating expenses |
623,972 |
646,787 |
628,192 |
795,019 |
OPERATING LOSS |
(312,731) |
(332,905) |
(311,260) |
(433,149) |
|
|
|
|
|
LESS NON-CASH ITEMS: |
|
|
|
|
Non-cash expenses |
70,041 |
67,310 |
77,893 |
156,308 |
Non-cash write-downs |
1,805 |
16,551 |
14,369 |
129,358 |
Depreciation and amortization |
194,873 |
210,781 |
184,566 |
169,962 |
Total non-cash items |
266,719 |
294,642 |
276,828 |
455,628 |
Adjusted EBITDA |
$ (46,012) |
$ (38,263) |
$ (34,432) |
$ 22,479 |
Adjusted EBITDA margin |
(15)% |
(12)% |
(11)% |
6 % |
|
|
|
|
|
KEY OPERATING METRICS (k for
'000's, MM for '000,000's) |
|
|
|
Total net subscriber additions |
(906)k |
(468)k |
(41)k |
873k |
Wholesale |
(915)k |
(489)k |
(34)k |
904k |
Retail |
9k |
21k |
(8)k |
(31)k |
Total subscribers |
9,581k |
10,488k |
10,957k |
10,414k |
Wholesale (1) |
8,220k |
9,136k |
9,625k |
9,122k |
Retail |
1,361k |
1,353k |
1,333k |
1,292k |
Retail ARPU |
$44.10 |
$45.06 |
$46.12 |
$46.69 |
Churn |
|
|
|
|
Wholesale |
7.3 % |
5.4 % |
3.6 % |
2.9 % |
Retail |
5.0 % |
5.1 % |
4.4 % |
3.9 % |
Retail CPGA |
$155 |
$191 |
$226 |
$259 |
Capital expenditures |
$102MM |
$34MM |
$24MM |
$23MM |
Domestic 4G covered POPS |
135MM |
133MM |
134MM |
132MM |
Cash, cash equivalents and investments |
$869MM |
$1,184MM |
$1,210MM |
$1,108MM |
|
|
|
|
|
(1) Includes non-launched
markets. Based on the terms of the November 2011 Amended MVNO
Agreement between Clearwire and Sprint, which provides for
unlimited WiMAX service to Sprint retail customers in exchange for
fixed payments in 2012 and 2013, fluctuations in the wholesale
subscriber base will not necessarily correlate to wholesale
revenue. |
|
CLEARWIRE
CORPORATION |
SUMMARY FINANCIAL AND
OPERATING DATA FROM CONTINUING OPERATIONS |
(In
thousands) |
(Unaudited) |
|
Year
Ended |
|
December 31,
2012 |
December 31,
2011 |
|
|
|
REVENUES: |
|
|
Retail revenue |
$ 795,632 |
$ 758,254 |
Wholesale revenue |
468,469 |
493,661 |
Other revenue |
593 |
1,551 |
Total revenues |
1,264,694 |
1,253,466 |
OPERATING EXPENSES: |
|
|
Cost of goods and services and network
costs (exclusive of items shown separately below) |
908,078 |
1,249,966 |
Selling, general and administrative
expense |
558,202 |
698,067 |
Depreciation and amortization |
768,193 |
687,636 |
Spectrum lease expense |
326,798 |
308,693 |
Loss from abandonment of network and
other assets |
82,206 |
700,341 |
Total operating expenses |
2,643,477 |
3,644,703 |
OPERATING LOSS |
(1,378,783) |
(2,391,237) |
|
|
|
LESS NON-CASH ITEMS: |
|
|
Non-cash expenses |
281,908 |
423,260 |
Non-cash write-downs |
171,781 |
966,441 |
Depreciation and amortization |
768,193 |
687,636 |
Total non-cash items |
1,221,882 |
2,077,337 |
Adjusted EBITDA |
$ (156,901) |
$ (313,900) |
Adjusted EBITDA margin |
(12)% |
(25)% |
|
|
|
KEY OPERATING METRICS (k for
'000's, MM for '000,000's) |
|
Total net subscriber additions |
(830)k |
6,069k |
Wholesale |
(901)k |
5,876k |
Retail |
71k |
193k |
Total subscribers |
9,581k |
10,414k |
Wholesale (1) |
8,220k |
9,122k |
Retail |
1,361k |
1,292k |
Retail ARPU |
$45.51 |
$47.04 |
Churn |
|
|
Wholesale |
4.8 % |
1.9 % |
Retail |
4.6 % |
3.8 % |
Retail CPGA |
$201 |
$292 |
Capital expenditures |
$182MM |
$226MM |
Domestic 4G covered POPS |
135MM |
132MM |
Cash, cash equivalents and investments |
$869MM |
$1,108MM |
|
|
|
(1) Includes non-launched
markets. Based on the terms of the November 2011 Amended MVNO
Agreement between Clearwire and Sprint, which provides for
unlimited WiMAX service to Sprint retail customers in exchange for
fixed payments in 2012 and 2013, fluctuations in the wholesale
subscriber base will not necessarily correlate to wholesale
revenue. |
Management Webcast Clearwire executives will
host a conference call and simultaneous webcast to discuss the
company's fourth quarter and full year 2012 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 U.S. 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 12, through Thursday, February 19, by calling
1-855-859-2056, or from outside the U.S. by dialing 1-404-537-3406.
The passcode for the replay is 90062075.
About Clearwire Clearwire Corporation
(Nasdaq:CLWR), through its operating subsidiaries, is a leading
provider of 4G wireless broadband services offering services in
areas of the U.S. where more than 130 million people live. The
company holds the deepest portfolio of wireless spectrum available
for data services in the U.S. Clearwire serves retail
customers through its own CLEAR® brand as well as through wholesale
relationships with some of the leading companies in the retail,
technology and telecommunications industries, including Sprint and
NetZero. The company is constructing a next-generation 4G LTE
Advanced-ready network to address the capacity needs of the
market, and is also working closely with the Global TDD-LTE
Initiative to further the TDD-LTE ecosystem. Clearwire is
headquartered in Bellevue, Wash. Additional information is
available at http://www.clearwire.com.
The Clearwire Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=8493
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:
- Our proposed merger with Sprint is subject to certain
regulatory conditions that may not be satisfied on a timely basis,
or at all, and is also conditioned on the consummation of the
Sprint-Softbank transaction. If the merger with Sprint fails
because it is not adopted by our shareholders, then under certain
circumstances Sprint may gain significant control over us by
increasing its majority stake in us pursuant to the terms of an
agreement with other shareholders. Additionally, failure to
complete the proposed merger could negatively impact our business
and the market price of our Class A Common Stock, and substantial
doubt may arise regarding our ability to continue as a going
concern.
- We have a history of operating losses and we expect to continue
to realize significant net losses for the foreseeable future.
- Our business has become increasingly dependent on our wholesale
partners, and Sprint in particular. Additionally, our current
business plans depend on our ability to attract new wholesale
partners with substantial requirements for additional data
capacity, which is subject to a number of risks and uncertainties.
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 in a timely manner, our business prospects, results of
operations and financial condition could be adversely affected, or
we could be forced to consider all available alternatives,
including financial restructuring.
- Sprint owns a majority of our common shares, is our largest
shareholder, and may have, or may develop in the future, interests
that may diverge from other stockholders.
- If the proposed merger with Sprint fails to close for any
reason, we believe that we will require substantial additional
capital to fund our business beyond the next twelve months and to
further develop our network; such capital may not be available on
acceptable terms or at all. If the merger fails to close and
the funding under our Note Purchase Agreement with Sprint was no
longer available, we would have to significantly curtail our LTE
network build plan to conserve cash and meet our obligations during
2013. Additionally, if the proposed merger with Sprint fails to
close and we are unable to obtain sufficient additional capital, or
we fail to generate sufficient revenue from our businesses to meet
our ongoing obligations beyond the next twelve months, 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, including financial
restructuring.
- We are in the early stages of deploying LTE on our wireless
broadband network, alongside mobile WiMAX, to remain competitive
and to generate sufficient revenues for our business; 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
are 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. Further, unless we are able
to secure the required shareholder approvals to increase the number
of authorized shares under our Certificate of Incorporation, we may
not have enough authorized, but unissued shares available to raise
sufficient additional capital through an equity financing.
- 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 16, 2012, and subsequent SEC filings. Clearwire assumes
no obligation to update or supplement such forward-looking
statements.
CLEARWIRE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED BALANCE
SHEETS |
(In thousands, except
par value) |
(Unaudited) |
|
|
|
|
December 31,
2012 |
December 31,
2011 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 193,445 |
$ 891,929 |
Short-term investments |
675,112 |
215,655 |
Restricted cash |
1,653 |
1,000 |
Accounts receivable, net of allowance of
$3,145 and $5,542 |
22,769 |
83,660 |
Inventory |
10,940 |
23,832 |
Prepaids and other assets |
83,769 |
71,083 |
Total current assets |
987,688 |
1,287,159 |
Property, plant and equipment, net |
2,259,004 |
3,014,277 |
Restricted cash |
3,709 |
7,619 |
Spectrum licenses, net |
4,249,621 |
4,298,254 |
Other intangible assets, net |
24,660 |
40,850 |
Other assets |
141,107 |
157,797 |
Assets of discontinued operations |
— |
36,696 |
Total assets |
$ 7,665,789 |
$ 8,842,652 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable and accrued
expenses |
$ 177,855 |
$ 157,172 |
Other current liabilities |
227,610 |
122,756 |
Total current liabilities |
405,465 |
279,928 |
Long-term debt, net |
4,271,357 |
4,019,605 |
Deferred tax liabilities, net |
143,992 |
152,182 |
Other long-term liabilities |
963,353 |
719,703 |
Liabilities of discontinued operations |
— |
25,196 |
Total liabilities |
5,784,167 |
5,196,614 |
Commitments and contingencies |
|
|
Stockholders' equity: |
|
|
Class A common stock, par value
$0.0001, 2,000,000 shares authorized; 691,315 and
452,215 shares outstanding |
69 |
45 |
Class B common stock, par value
$0.0001, 1,400,000 shares authorized; 773,733 and
839,703 shares outstanding |
77 |
83 |
Additional paid-in capital |
3,158,244 |
2,714,634 |
Accumulated other comprehensive (loss)
income |
(6) |
2,793 |
Accumulated deficit |
(2,346,393) |
(1,617,826) |
Total Clearwire Corporation stockholders'
equity |
811,991 |
1,099,729 |
Non-controlling interests |
1,069,631 |
2,546,309 |
Total stockholders' equity |
1,881,622 |
3,646,038 |
Total liabilities and stockholders'
equity |
$ 7,665,789 |
$ 8,842,652 |
|
|
CLEARWIRE CORPORATION
AND SUBSIDIARIES |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(In thousands, except
per share data) |
(Unaudited) |
|
|
Three Months
Ended December 31, |
|
2012 |
2011 |
|
|
|
Revenues |
$ 311,241 |
$ 361,870 |
Operating expenses: |
|
|
Cost of goods and services and network
costs (exclusive of items shown separately below) |
208,322 |
293,999 |
Selling, general and administrative
expense |
138,489 |
128,502 |
Depreciation and amortization |
194,873 |
169,962 |
Spectrum lease expense |
83,387 |
79,556 |
Loss from abandonment of network and
other assets |
(1,099) |
123,000 |
Total operating expenses |
623,972 |
795,019 |
Operating loss |
(312,731) |
(433,149) |
Other income (expense): |
|
|
Interest income |
543 |
272 |
Interest expense |
(139,077) |
(128,859) |
Loss on derivative instruments |
(3,539) |
(2,919) |
Other income (expense), net |
1,261 |
(285) |
Total other expense, net |
(140,812) |
(131,791) |
Loss from continuing operations before income
taxes |
(453,543) |
(564,940) |
Income tax benefit (provision) |
22,261 |
(78,406) |
Net loss from continuing operations |
(431,282) |
(643,346) |
Less: non-controlling interests in net loss
from continuing operations of consolidated subsidiaries |
236,297 |
407,348 |
Net loss from continuing operations
attributable to Clearwire Corporation |
(194,985) |
(235,998) |
Net loss from discontinued operations
attributable to Clearwire Corporation, net of tax |
7,831 |
(851) |
Net loss attributable to Clearwire
Corporation |
$ (187,154) |
$ (236,849) |
|
|
|
Net loss from continuing
operations attributable to Clearwire Corporation per Class A common
share: |
Basic |
$ (0.28) |
$ (0.81) |
Diluted |
$ (0.30) |
$ (0.81) |
|
|
|
Net loss attributable to
Clearwire Corporation per Class A common share: |
|
Basic |
$ (0.27) |
$ (0.81) |
Diluted |
$ (0.29) |
$ (0.81) |
|
|
|
Weighted average Class A common shares
outstanding: |
|
|
Basic |
689,688 |
291,634 |
Diluted |
1,464,987 |
291,634 |
|
CLEARWIRE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF OPERATIONS |
(In thousands, except
per share data) |
(Unaudited) |
|
|
|
|
Year Ended
December 31, |
|
2012 |
2011 |
|
|
|
Revenues |
$ 1,264,694 |
$ 1,253,466 |
Operating expenses: |
|
|
Cost of goods and services and network
costs (exclusive of items shown separately below) |
908,078 |
1,249,966 |
Selling, general and administrative
expense |
558,202 |
698,067 |
Depreciation and amortization |
768,193 |
687,636 |
Spectrum lease expense |
326,798 |
308,693 |
Loss from abandonment of network and
other assets |
82,206 |
700,341 |
Total operating expenses |
2,643,477 |
3,644,703 |
Operating loss |
(1,378,783) |
(2,391,237) |
Other income (expense): |
|
|
Interest income |
1,895 |
2,335 |
Interest expense |
(553,459) |
(505,992) |
Gain on derivative instruments |
1,356 |
145,308 |
Other income (expense), net |
(12,153) |
681 |
Total other expense, net |
(562,361) |
(357,668) |
Loss from continuing operations before income
taxes |
(1,941,144) |
(2,748,905) |
Income tax benefit (provision) |
197,399 |
(106,828) |
Net loss from continuing operations |
(1,743,745) |
(2,855,733) |
Less: non-controlling interests in net loss
from continuing operations of consolidated subsidiaries |
1,182,183 |
2,158,831 |
Net loss from continuing operations
attributable to Clearwire Corporation |
(561,562) |
(696,902) |
Net loss from discontinued operations
attributable to Clearwire Corporation, net of tax |
(167,005) |
(20,431) |
Net loss attributable to Clearwire
Corporation |
$ (728,567) |
$ (717,333) |
|
|
|
Net loss from continuing
operations attributable to Clearwire Corporation per Class A common
share: |
Basic |
$ (1.01) |
$ (2.70) |
Diluted |
$ (1.27) |
$ (2.99) |
|
|
|
Net loss attributable to
Clearwire Corporation per Class A common share: |
|
Basic |
$ (1.31) |
$ (2.78) |
Diluted |
$ (1.39) |
$ (3.07) |
|
|
|
Weighted average Class A common shares
outstanding: |
|
|
Basic |
554,015 |
257,967 |
Diluted |
1,398,603 |
965,099 |
|
|
CLEARWIRE CORPORATION
AND SUBSIDIARIES |
CONSOLIDATED STATEMENTS
OF CASH FLOWS |
(In
thousands) |
(Unaudited) |
|
Year Ended
December 31, |
|
2012 |
2011 |
Cash flows from operating activities: |
|
|
Net loss from continuing operations |
$ (1,743,745) |
$ (2,855,733) |
Adjustments to reconcile net loss to net cash
used in operating activities: |
|
|
Deferred income taxes |
(199,199) |
105,308 |
Non-cash gain on derivative
instruments |
(1,356) |
(145,308) |
Accretion of discount on debt |
41,386 |
40,216 |
Depreciation and amortization |
768,193 |
687,636 |
Amortization of spectrum leases |
54,328 |
53,674 |
Non-cash rent expense |
197,169 |
342,962 |
Loss on property, plant and
equipment |
171,780 |
966,441 |
Other operating activities |
42,740 |
27,745 |
Changes in assets and liabilities: |
|
|
Inventory |
11,200 |
15,697 |
Accounts receivable |
50,401 |
(54,212) |
Prepaids and other assets |
326 |
22,447 |
Prepaid spectrum licenses |
1,904 |
(4,360) |
Deferred revenue |
170,455 |
16,497 |
Accounts payable and other
liabilities |
(17,090) |
(152,180) |
Net cash used in operating activities of
continuing operations |
(451,508) |
(933,170) |
Net cash provided by (used in) operating
activities of discontinued operations |
(3,000) |
2,381 |
Net cash used in operating activities |
(454,508) |
(930,789) |
Cash flows from investing activities: |
|
|
Capital expenditures |
(112,997) |
(405,655) |
Purchases of available-for-sale
investments |
(1,797,787) |
(957,883) |
Disposition of available-for-sale
investments |
1,339,078 |
1,255,176 |
Other investing activities |
(655) |
20,229 |
Net cash used in investing activities of
continuing operations |
(572,361) |
(88,133) |
Net cash provided by (used in) investing
activities of discontinued operations |
1,185 |
(3,886) |
Net cash used in investing activities |
(571,176) |
(92,019) |
Cash flows from financing activities: |
|
|
Principal payments on long-term debt |
(26,985) |
(29,957) |
Proceeds from issuance of long-term
debt |
300,000 |
— |
Debt financing fees |
(6,205) |
(1,159) |
Equity investment by strategic
investors |
8 |
331,400 |
Proceeds from issuance of common
stock |
58,460 |
387,279 |
Net cash provided by financing activities of
continuing operations |
325,278 |
687,563 |
Net cash provided by financing activities of
discontinued operations |
— |
— |
Net cash provided by financing
activities |
325,278 |
687,563 |
Effect of foreign currency exchange rates on
cash and cash equivalents |
107 |
(4,573) |
Net decrease in cash and cash
equivalents |
(700,299) |
(339,818) |
Cash and cash equivalents: |
|
|
Beginning of period |
893,744 |
1,233,562 |
End of period |
193,445 |
893,744 |
Less: cash and cash equivalents of
discontinued operations at end of period |
— |
1,815 |
Cash and cash equivalents of continuing
operations at end of period |
$ 193,445 |
$ 891,929 |
|
|
|
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
excluding depreciation and amortization expenses, non-cash expenses
related to operating leases (primarily 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) |
(in thousands) |
December 31,
2012 |
September 30,
2012 |
June 30, 2012 |
December 31,
2011 |
Operating loss |
$ (312,731) |
$ (332,905) |
$ (311,260) |
$ (433,149) |
|
|
|
|
|
Non-cash expenses: |
|
|
|
|
Spectrum lease expense |
36,260 |
39,833 |
32,341 |
37,228 |
Building and network related expenses* |
25,256 |
18,741 |
38,468 |
113,612 |
Stock compensation and other* |
8,525 |
8,736 |
7,084 |
5,468 |
Non-cash expenses |
70,041 |
67,310 |
77,893 |
156,308 |
|
|
|
|
|
Non-cash write-downs: |
|
|
|
|
Loss from abandonment of network and other
assets |
(1,099) |
2,588 |
317 |
123,000 |
Network equipment reserves and other
write-downs* |
2,904 |
13,963 |
14,052 |
6,358 |
Non-cash write-downs |
1,805 |
16,551 |
14,369 |
129,358 |
|
|
|
|
|
Depreciation and amortization |
194,873 |
210,781 |
184,566 |
169,962 |
|
|
|
|
|
Adjusted EBITDA |
$ (46,012) |
$ (38,263) |
$ (34,432) |
$ 22,479 |
|
|
|
|
|
*Amounts included in COGS and
SG&A. |
|
|
|
|
|
|
Year
ended |
|
(Unaudited) |
(in thousands) |
December 31,
2012 |
December 31,
2011 |
Operating loss |
$ (1,378,783) |
$ (2,391,237) |
|
|
|
Non-cash expenses: |
|
|
Spectrum lease expense |
144,849 |
139,340 |
Building and network related expenses* |
106,648 |
257,296 |
Stock compensation and other* |
30,411 |
26,624 |
Non-cash expenses |
281,908 |
423,260 |
|
|
|
Non-cash write-downs: |
|
|
Loss from abandonment of network and other
assets |
82,206 |
700,341 |
Network equipment reserves and other
write-downs* |
89,575 |
266,100 |
Non-cash write-downs |
171,781 |
966,441 |
|
|
|
Depreciation and amortization |
768,193 |
687,636 |
|
|
|
Adjusted EBITDA |
$ (156,901) |
$ (313,900) |
|
|
|
*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, non-cash write-downs and
depreciation and amortization. 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) Retail ARPU (Average Revenue Per User) is
total revenue less wholesale revenue, the revenue generated from
the sales of devices, shipping revenue, and other revenue; divided
by the weighted average number of retail subscribers in the period,
divided by the number of months in the period.
Management uses retail ARPU to identify average revenue per
customer, to track changes in average retail customer revenues over
time, to help evaluate how changes in the business, including
changes in the company's service offerings and fees, affect average
retail revenue per customer, and to assist in forecasting future
service retail revenue. In addition, retail ARPU provides
management with a useful measure to compare the company's customer
retail revenue to that of other wireless communications providers.
The company believes investors use retail ARPU primarily as a tool
to track changes in the company's average retail revenue per
customer and to compare Clearwire's per retail customer service
revenues to those of other wireless communications providers.
|
Three months
ended |
|
(Unaudited) |
(in thousands) |
December 31,
2012 |
September 30,
2012 |
June 30, 2012 |
December 31,
2011 |
Total revenues |
$ 311,241 |
$ 313,882 |
$ 316,932 |
$ 361,870 |
|
|
|
|
|
Wholesale revenue |
(116,590) |
(116,498) |
(117,560) |
(164,082) |
|
|
|
|
|
Device and other revenue |
(15,763) |
(15,956) |
(14,694) |
(14,540) |
Retail ARPU revenue |
$ 178,888 |
$ 181,428 |
$ 184,678 |
$ 183,248 |
|
|
|
|
|
Average retail customers |
1,352 |
1,342 |
1,335 |
1,308 |
Months in period |
3 |
3 |
3 |
3 |
Retail ARPU |
$ 44.10 |
$ 45.06 |
$ 46.12 |
$ 46.69 |
|
|
|
|
|
Year
ended |
|
(Unaudited) |
(in thousands) |
December 31,
2012 |
December 31,
2011 |
Total revenues |
$ 1,264,694 |
$ 1,253,466 |
|
|
|
Wholesale revenue |
(468,469) |
(493,661) |
|
|
|
Device and other revenue |
(67,131) |
(45,675) |
Retail ARPU revenue |
$ 729,094 |
$ 714,130 |
|
|
|
Average retail customers |
1,335 |
1,265 |
Months in period |
12 |
12 |
Retail ARPU |
$ 45.51 |
$ 47.04 |
(3) Churn, which measures customer turnover, is
calculated as the number of subscribers that terminate service in a
given period, divided by the weighted average number of subscribers
in that period, divided by the number of months in that period.
Retail customers are deactivated approximately 30 days after
failing to pay their monthly bill or when they ask to terminate
their service. Retail 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.
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.
(4) 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
device equipment subsidies, divided by gross retail customer
additions in the period.
|
Three months
ended |
|
(Unaudited) |
(in thousands) |
December 31,
2012 |
September 30,
2012 |
June 30, 2012 |
December 31,
2011 |
|
|
|
|
|
Selling, general and administrative |
$ 138,489 |
$ 139,365 |
$ 137,693 |
$ 128,502 |
Less: G&A and other |
(113,103) |
(104,720) |
(100,409) |
(97,227) |
Selling expense |
25,386 |
34,645 |
37,284 |
31,275 |
Plus: Equipment COGS |
16,300 |
17,707 |
8,959 |
9,875 |
Less: Equipment revenue |
(9,042) |
(9,396) |
(8,269) |
(9,111) |
|
|
|
|
|
Total retail CPGA Expense |
$ 32,644 |
$ 42,956 |
$ 37,974 |
$ 32,039 |
|
|
|
|
|
Total gross adds |
211 |
225 |
168 |
124 |
Total retail CPGA |
$ 155 |
$ 191 |
$ 226 |
$ 259 |
|
|
|
Year
ended |
|
(Unaudited) |
(in thousands) |
December 31,
2012 |
December 31,
2011 |
|
|
|
Selling, general and administrative |
$ 558,202 |
$ 698,067 |
Less: G&A and other |
(413,640) |
(473,696) |
Selling expense |
144,562 |
224,371 |
Plus: Equipment COGS |
57,586 |
24,113 |
Less: Equipment revenue |
(41,062) |
(21,952) |
|
|
|
Total retail CPGA Expense |
$ 161,086 |
$ 226,532 |
|
|
|
Total gross adds |
800 |
776 |
Total retail CPGA |
$ 201 |
$ 292 |
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.
CONTACT: Investor Relations:
Alice Ryder, 425-505-6494
alice.ryder@clearwire.com
Media Relations:
Susan Johnston, 425-505-6178
susan.johnston@clearwire.com
JLM Partners for Clearwire:
Mike DiGioia or Jeremy Pemble, 206-381-3600
mike@jlmpartners.com or jeremy@jlmpartners.com
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