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OVERLAND PARK, Kan. (BUSINESS WIRE), May 01, 2013 - The Environmental Investment Organisation (EIO) released its 2013 Environmental Tracking (ET) Carbon Rankings this week and named Sprint [NYSE:S] the highest ranking of all companies in the United States and No. 13 globally. Sprint was named a leader for North America and the continent's highest ranked telecommunications company.
Sprint also received the Disclosure Leader Award for its Scope 3 emissions reporting. The EIO rankings highlight Scope 3 emissions – indirect emissions from categories such as purchased goods from suppliers, disposal of waste, employee commuting and business travel.
Sprint's commitment to transparent carbon reporting is particularly notable given the EIO's research, which found that less than 40 percent of leading North American companies correctly adopt the basic principles of reporting greenhouse gas (GHG) emissions. The ET Carbon Ranking series is the only public database of its kind and includes companies based on their market size.
"While effective greenhouse gas emissions reporting is certainly not an easy task for any company, it is excellent to see certain companies demonstrating that it can be done and to an ever increasingly higher standard," said Sam Gill, CEO of the EIO. "Any company ranking within the top 10 in their respective region should be viewed as a pioneering leader, constantly raising the bar for others around them."
Sprint is more than halfway to its industry-leading goal of reducing GHG emissions by 20 percent by 2017 and was the first U.S. wireless carrier to publicly announce a goal for reducing absolute emissions (as opposed to the industry standard, emissions intensity, which measures emissions relative to the volume of data traffic carried on a carrier's network).
Sprint's success in reducing overall emissions is the result of forward-looking innovations such as Network Vision, an increase in renewable energy purchases, energy efficiency improvements at data centers, and a shift to SmartWay certified fleet vehicles. Sprint's progress in measuring and reporting Scope 3 emissions illustrates its commitment to addressing all areas of its environmental impact, including its entire supply chain, with guidance from such third-party experts as the World Wildlife Fund (WWF). Sprint is one of only 30 companies accepted in World Wildlife Fund's Climate Savers program based on its aggressive commitments to combat climate change. Sprint recently began creating educational materials to help its outside suppliers understand and reduce their own emissions.
"Sprint has shown an ongoing commitment to cut emissions and deliver solutions that curb climate change," said Matt Banks, Senior Program Officer at WWF. "We applaud Sprint for their success and hope more companies will take Sprint's lead by taking progressive actions to cut carbon emissions throughout their value chain – because collaboration is key to creating a carbon-free world."
Sprint continues to receive recognition for its leadership in environmental practices and transparent reporting. The carrier was named one of 53 top companies – and the top U.S. wireless carrier – on the 2012 Carbon Disclosure Project S&P 500 Climate Change Report 2012. In each of the last two years, the carrier has been named No. 3 in the United States by Newsweek's annual Green Rankingsof the 500 greenest companies. Earlier this year, global consulting and analyst firm Frost and Sullivan recognized Sprint as the 2013 North American Award for Green Excellence. In 2012, the carrier was named No. 4 – and the only wireless provider – on the U.S. Environmental Protection Agency's (EPA) Top 20 Technology & Telecom list of green power users within the sector.
About the Environmental Investment Organisation
The Environmental Investment Organisation (EIO) is an independent not-for-profit research body promoting carbon transparency and investment solutions designed to address climate change. The Environmental Tracking (ET) Carbon Rankings, which are designed to encourage an ever greater standard of transparency and advantage carbon efficient companies, are compiled from publicly available emissions data taken from company sustainability reports, annual reports and websites. The Rankings and the fully transparent methodology behind them can be viewed online at www.eio.org.uk.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 55 million customers at the end of the first quarter of 2013 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. The American Customer Satisfaction Index rated Sprint No. 1 among all national carriers in customer satisfaction and most improved, across all 47 industries, during the last four years. Newsweek ranked Sprint No. 3 in both its 2011 and 2012 Green Rankings, listing it as one of the nation's greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.
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OVERLAND PARK, Kan. (BUSINESS WIRE), May 01, 2013 - Sprint (NYSE: S) today announced that its plans to shut down the iDEN Nextel National Network remain on schedule for the end of June, as originally announced in May of last year.
The last full day of iDEN service will be June 29; shutdown begins first thing Sunday, June 30, and will continue throughout the day. iDEN devices will then no longer receive voice service – including 911 calls – or data service. Sprint will shut down switch locations in rapid succession on June 30, followed by powering down equipment and eliminating backhaul at each cell site.
Sprint announced plans on May 29, 2012 to cease service on the iDEN Nextel National Network as early as June 30, 2013, as part of its Network Vision plan – a series of network updates designed to offer next-generation network capabilities to customers.
Since then, Sprint has been aggressively notifying customers to migrate from the iDEN Nextel National Network to avoid service disruptions. The notifications have included customer letters, legal notifications, and email reminders. Sprint added iDEN shutdown reminder text messages and will use other communications tactics during the network's final days of operation.
"Our shutdown communications are meant to give customers more than enough lead time to plan their migration," said Bob Azzi, senior vice president-Network. "This has been especially important for public safety, first responders, health care users and others who rely on the service to protect and preserve people's lives. We strongly urge customers to migrate now, rather than wait until the last minute."
Customers who migrate to Sprint Direct Connect experience three times the push-to-talk coverage compared to iDEN, international direct connect reach to Latin American countries, and 3G broadband data capabilities.
"SprintDirect Connect is a gold standard in push-to-talk," Azzi said. "It comes with the broadband capabilities that businesses and public safety pros need for business applications, social media, and future push-to-X capabilities on Sprint's broadband CDMA network."
The transition of Sprint's push-to-talk service from iDEN to CDMA is part of the company's Network Vision plans. Network Vision is expected to add net economic value for Sprint from reduced roaming costs, cell site reduction, backhaul efficiencies, more efficient use of capital, and energy cost savings.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 55 million customers at the end of the first quarter of 2013 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. The American Customer Satisfaction Index rated Sprint No. 1 among all national carriers in customer satisfaction and most improved, across all 47 industries, during the last four years. Newsweek ranked Sprint No. 3 in both its 2011 and 2012 Green Rankings, listing it as one of the nation's greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.
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OVERLAND PARK, Kan. (BUSINESS WIRE), April 29, 2013 - Swiss-based u-blox, a leading provider of cellular modem modules, Sprint, a major U.S. telecommunications provider, and Taoglas, a global antenna solutions provider, announce a series of nationwide seminars covering all aspects of migrating M2M applications from GSM/GPRS to CDMA technology.
The seminars are part of a recently announced u-blox and Sprint collaboration to allow customers designing products for telematics, telemetry, automotive and security applications to extend the product lifetime of their existing 2G M2M devices by seamlessly migrating to the CDMA network with minimal effort. Those customers concerned about the continued availability of 2G GSM networks in the United States can now select from a variety of affordable u-blox modems tested for compatibility on Sprint's CDMA 1xRTT network.
The seminars will be held at or near the following locations:
The seminars include an overview of the following u-blox CDMA modules:
FW75-C200: connectorized 1xRTT module, in the most widely used M2M GSM form factor
LISA-C200: surface-mount 1xRTT module in the most popular M2M form factor
FW2763: 1xRTT PCIe card
FW2770: EV-DO PCIe card
The four-hour, hands-on training includes design recommendations and real-life case studies. The nominal participation fee includes the seminar, refreshments, development kit with integrated GPS, CDMA module, antennas, and 60 days of service from Sprint (a total estimated value of $199).
For more information about GSM to CDMA modules, antennas and 2G CDMA network support, please contact:
Swiss-based u-blox (SIX:UBXN) is the global leader in positioning and wireless semiconductors for the consumer, industrial and automotive markets. Our solutions enable people, vehicles and machines to locate their exact position and wirelessly communicate via voice, text or video. With a broad portfolio of chips, modules and software solutions, u-blox is uniquely positioned to enable OEMs to develop innovative personal, professional and M2M solutions quickly and cost-effectively. With headquarters in Thalwil, Switzerland, u-blox is globally present with offices in Europe, Asia and the USA (www.u-blox.com).
About Taoglas
Taoglas provides a comprehensive range of external, embedded and base-station antenna solutions for M2M applications, such as telematics/automotive, smart-grid, metering/telemetry, home automation, remote monitoring and telemedical applications. The company's device RF optimization OTA anechoic test chambers and labs in the United States and Ireland enable M2M manufacturers to design and test antenna solutions for M2M devices with a single company, while also performing pre-certification OTA (efficiency/radiation patterns/TRP/TIS) testing for PTCRB and USA network requirements. Taoglas continually innovates and creates new antenna solutions to meet the evolving needs of the machine-to-machine world. Taoglas' products operate consistently at optimum proficiency levels, delivering world-class performance time after time. With Taoglas, customers experience high performance, unrivaled delivery, plus exceptional backup and support services. (www.taoglas.com)
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 55 million customers at the end of the first quarter of 2013 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. The American Customer Satisfaction Index rated Sprint No. 1 among all national carriers in customer satisfaction and most improved, across all 47 industries, during the last four years. Newsweek ranked Sprint No. 3 in both its 2011 and 2012 Green Rankings, listing it as one of the nation's greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.
OVERLAND PARK, Kan. (BUSINESS WIRE), April 29, 2013 - Sprint Nextel (NYSE: S) today announced that it had received from SoftBank Corp. a waiver of various provisions of the merger agreement between Sprint and SoftBank. The waiver will permit Sprint and its representatives, including the Special Committee of the Sprint board, to enter into a non-disclosure agreement and discussions with DISH for the purpose of clarifying and obtaining further information from DISH regarding its proposal made on April 15, 2013. The SoftBank waiver does not permit Sprint to provide non-public information to DISH nor does it enable Sprint to enter into negotiations with DISH. Such actions may be taken by Sprint only in accordance with the Sprint-SoftBank merger agreement.
Sprint does not intend to make any further comment on the work of the Special Committee until it completes an assessment with respect to whether the DISH proposal is, or is reasonably likely to lead to a Superior Offer (as defined in the Sprint-SoftBank merger agreement) and the Sprint board has considered such assessment.
About Sprint Nextel
Sprint Nextel offers a comprehensive range of wireless and wireline communications services bringing the freedom of mobility to consumers, businesses and government users. Sprint Nextel served more than 55 million customers at the end of the first quarter of 2013 and is widely recognized for developing, engineering and deploying innovative technologies, including the first wireless 4G service from a national carrier in the United States; offering industry-leading mobile data services, leading prepaid brands including Virgin Mobile USA, Boost Mobile, and Assurance Wireless; instant national and international push-to-talk capabilities; and a global Tier 1 Internet backbone. The American Customer Satisfaction Index rated Sprint No. 1 among all national carriers in customer satisfaction and most improved, across all 47 industries, during the last four years. Newsweek ranked Sprint No. 3 in both its 2011 and 2012 Green Rankings, listing it as one of the nation's greenest companies, the highest of any telecommunications company. You can learn more and visit Sprint at www.sprint.com or www.facebook.com/sprint and www.twitter.com/sprint.
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Q1 Total Revenues of $318.0 Million Increased 2% Sequentially, Down 1% Year Over Year
Retail Subscribers Up 8% Sequentially and 10% Year Over Year on Record Gross Additions
Approximately 1,300 TDD-LTE Sites Commissioned at Quarter-End; On Track to Meet 2,000 Site Milestone by End of June 2013
BELLEVUE, Wash., April 25, 2013 (GLOBE NEWSWIRE) -- Clearwire Corporation (Nasdaq:CLWR), a leading provider of 4G wireless broadband services in the U.S., today reported its financial and operating results for first quarter 2013.
"Our ongoing focus on driving our retail business cash contribution, controlling costs and maintaining liquidity continues to yield results," said Erik Prusch, President and CEO of Clearwire. "Our day-to-day focus on delivering for our customers and the substantial progress on the TDD-LTE network build demonstrate the company's commitment to execution during this transition period."
First quarter 2013 total revenue increased 2% over fourth quarter 2012 primarily due to sequential retail revenue growth. On a year over year basis, total revenue declined 1% to $318.0 million, reflecting slight declines in both wholesale and retail revenue over the prior year period. First quarter wholesale revenue of $114.9 million declined 1% sequentially on lower revenue related to the amortization of the second quarter 2011 Sprint wholesale settlement (the "Sprint Settlement"). On a year over year basis, wholesale revenue declined 2% primarily due to a decrease in the non-Sprint wholesale customer base as well as lower Sprint Settlement revenue. Wholesale revenue in first quarter 2013, fourth quarter 2012 and first quarter 2012 reflect the fixed wholesale WiMAX revenue terms of the November 2011 4G MVNO Agreement with Sprint which will continue through 2013. Retail revenue and other revenue increased 4% sequentially and decreased 1% year over year to $203.1 million in first quarter 2013. Retail average revenue per user (ARPU) was $43.49 representing sequential and year over year decreases of $(0.61) and $(3.34), respectively, primarily due to lower equipment lease revenue under the no-contract offering that was fully launched in first quarter 2012.
Clearwire ended first quarter 2013 with approximately 9.4 million total subscribers. First quarter 2013 retail subscribers increased 10% year over year and 8% sequentially to approximately 1.5 million retail subscribers. Retail net subscriber additions during the period were 108,000 reflecting 4.2% churn and record gross additions of approximately 287,000. During the period, wholesale subscribers declined 18% year over year and 3% sequentially on 270,000 wholesale net subscriber losses to approximately 7.9 million wholesale subscribers at the end of first quarter 2013. 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 a company record low $143 in first quarter 2013 compared to $155 in fourth quarter 2012 and $242 in first quarter 2012. Both the sequential and year over year improvements are primarily due to improved efficiencies in retail selling expenses associated with our no-contract offering and higher gross adds, partially offset by increased equipment subsidies.
Excluding $9.3 million of merger-related expenses, first quarter 2013 Adjusted EBITDA loss was $(42.2) million. Inclusive of merger-related expenses, Adjusted EBITDA loss in first quarter 2013 was $(51.5) million, representing a $(13.3) million increase compared to first quarter 2012 Adjusted EBITDA loss of $(38.2) million. The increase is primarily due to merger-related expenses, as well as lower revenue and higher COGS (excluding non-cash expenses) on a year over year basis.
Cash, cash equivalents and investments (invested primarily in U.S. Treasury securities) as of March 31, 2013 was approximately $797.4 million, a sequential decrease of $71.2 million from December 31, 2012. The sequential decrease primarily reflects cash payments for capital expenditures and operating expenses, which was partially offset by $80 million drawn against the interim financing facility provided by Sprint in conjunction with our merger agreement, as well as payments from Sprint for wholesale WiMAX services and cash inflows from our retail business. As compared to March 31, 2012, cash, cash equivalents and investments decreased by $635.1 million.
First quarter 2013 capex of $50 million increased $27 million over prior year period capex of $23 million primarily due to increased expenditures for Clearwire's TDD-LTE network deployment. Compared to fourth quarter 2012 capex of $102 million, first quarter 2013 capex decreased $52 million primarily due to a decline in network equipment received as compared to the prior quarter.
At the end of first quarter 2013, Clearwire operated networks in the U.S. covering areas where approximately 136 million people reside, including approximately 134 million people in markets where we provide 4G services. At the end of the period our TDD-LTE network consisted of approximately 1,300 commissioned sites.
Results of Operations
Cost of goods and services and network costs (COGS) in first quarter 2013 decreased 19% to $213.2 million compared to $263.8 million in first quarter 2012. These amounts include non-cash charges for network equipment reserves and other write-downs of $4.7 million and $56.4 million in first quarters 2013 and 2012, respectively, and other non-cash network-related expenses of $17.7 million and $26.6 million in first quarters 2013 and 2012, respectively. The year over year decrease in network equipment reserves and other write-downs is primarily due to a decrease in charges for network equipment not required to support our network deployment plans or sparing requirements. 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 first quarter 2012. Excluding non-cash expenses, COGS increased 6% year over year primarily due to an increase in customer premise equipment sales associated with our no contract retail model, as well as higher tower- and network-related expenses in conjunction with our ongoing LTE build.
Selling, general and administrative (SG&A) expense in first quarter 2013 decreased slightly to $141.1 million from $142.7 million in first quarter 2012. The decrease is primarily attributable to lower sales and marketing, call center and facilities expenses, mostly offset by higher commissions, employee-related costs and general and administrative expenses related to the proposed merger with Sprint.
First quarter 2013 reported net loss from continuing operations attributable to Clearwire was $(227.0) million, or $(0.33) per basic share compared to $(182.1) million, or $(0.40) per basic share, respectively in the prior year period. Including the effects of discontinued operations, first quarter 2013 reported net loss attributable to Clearwire was $(227.0) million, or $(0.33) per basic share, compared to $(181.8) million or $(0.40), respectively in the prior year period.
CLEARWIRE CORPORATION
SUMMARY FINANCIAL AND OPERATING DATA FROM CONTINUING OPERATIONS
(In thousands)
(Unaudited)
Three months ended
March 31, 2013
December 31, 2012
September 30, 2012
March 31, 2012
REVENUES:
Retail revenue
$ 202,997
$ 194,451
$ 197,215
$ 204,810
Wholesale revenue
114,917
116,590
116,498
117,821
Other revenue
128
200
169
8
Total revenues
318,042
311,241
313,882
322,639
OPERATING EXPENSES:
Cost of goods and services and network costs (exclusive of items shown separately below)
213,181
208,322
211,540
263,790
Selling, general and administrative expense
141,101
138,489
139,365
142,655
Depreciation and amortization
183,633
194,873
210,781
177,973
Spectrum lease expense
83,399
83,387
82,513
79,708
Loss from abandonment of network and other assets
414
(1,099)
2,588
80,400
Total operating expenses
621,728
623,972
646,787
744,526
OPERATING LOSS
(303,686)
(312,731)
(332,905)
(421,887)
LESS NON-CASH ITEMS:
Non-cash expenses
63,413
70,041
67,310
66,664
Non-cash write-downs
5,116
1,805
16,551
139,056
Depreciation and amortization
183,633
194,873
210,781
177,973
Total non-cash items
252,162
266,719
294,642
383,693
Adjusted EBITDA
$ (51,524)
$ (46,012)
$ (38,263)
$ (38,194)
Adjusted EBITDA margin
(16)%
(15)%
(12)%
(12)%
KEY OPERATING METRICS (k for '000's, MM for '000,000's)
Total net subscriber additions
(162)k
(906)k
(468)k
586k
Wholesale
(270)k
(915)k
(489)k
537k
Retail
108k
9k
21k
49k
Total subscribers
9,413k
9,581k
10,488k
11,000k
Wholesale (1)
7,944k
8,220k
9,136k
9,659k
Retail
1,469k
1,361k
1,353k
1,341k
Retail ARPU
$43.49
$44.10
$45.06
$46.83
Churn
Wholesale
5.3 %
7.3 %
5.4 %
3.0 %
Retail
4.2 %
5.0 %
5.1 %
3.7 %
Retail CPGA
$143
$155
$191
$242
Capital expenditures
$50MM
$102MM
$34MM
$23MM
Domestic 4G covered POPS
134MM
135MM
133MM
132MM
Cash, cash equivalents and investments
$797MM
$869MM
$1,184MM
$1,433MM
(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 first quarter 2013 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 April 25, through Thursday, May 2, by calling 1-855-859-2056, or from outside the U.S. by dialing 1-404-537-3406. The passcode for the replay is 36445633.
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.
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 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.
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 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 substantially all of our LTE network build plan to conserve cash and there would likely be substantial doubt about our ability to continue as a going concern for the next twelve months. 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, 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 have a history of operating losses and we expect to continue to realize significant net losses for the foreseeable future.
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.
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.
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 (or a similar merger) transaction. If the merger with Sprint fails because it is not adopted by our shareholders, then under certain circumstances Sprint may gain significant additional control over us by acquiring the Clearwire shares held by other parties to our Equityholders' Agreement, pursuant to the terms of an agreement with those 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 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.
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 14, 2013, and subsequent SEC 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)
March 31, 2013
December 31, 2012
ASSETS
Current assets:
Cash and cash equivalents
$ 172,108
$ 193,445
Short-term investments
625,297
675,112
Restricted cash
1,641
1,653
Accounts receivable, net of allowance of $2,400 and $3,145
19,769
22,769
Inventory
16,098
10,940
Prepaids and other assets
83,672
83,769
Total current assets
918,585
987,688
Property, plant and equipment, net
2,120,081
2,259,004
Restricted cash
2,114
3,709
Spectrum licenses, net
4,237,640
4,249,621
Other intangible assets, net
21,576
24,660
Other assets
137,601
141,107
Total assets
$ 7,437,597
$ 7,665,789
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses
$ 285,723
$ 177,855
Other current liabilities
279,001
227,610
Total current liabilities
564,724
405,465
Long-term debt, net
4,287,671
4,271,357
Deferred tax liabilities, net
191,136
143,992
Other long-term liabilities
913,772
963,353
Total liabilities
5,957,303
5,784,167
Commitments and contingencies
Stockholders' equity:
Class A common stock, par value $0.0001, 2,000,000 shares authorized; 699,172 and 691,315 shares outstanding
70
69
Class B common stock, par value $0.0001, 1,400,000 shares authorized; 773,733 shares outstanding
77
77
Additional paid-in capital
3,217,732
3,158,244
Accumulated other comprehensive income (loss)
15
(6)
Accumulated deficit
(2,573,346)
(2,346,393)
Total Clearwire Corporation stockholders' equity
644,548
811,991
Non-controlling interests
835,746
1,069,631
Total stockholders' equity
1,480,294
1,881,622
Total liabilities and stockholders' equity
$ 7,437,597
$ 7,665,789
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended March 31,
2013
2012
Revenues
$ 318,042
$ 322,639
Operating expenses:
Cost of goods and services and network costs (exclusive of items shown separately below)
213,181
263,790
Selling, general and administrative expense
141,101
142,655
Depreciation and amortization
183,633
177,973
Spectrum lease expense
83,399
79,708
Loss from abandonment of network and other assets
414
80,400
Total operating expenses
621,728
744,526
Operating loss
(303,686)
(421,887)
Other income (expense):
Interest income
378
264
Interest expense
(140,517)
(136,686)
Loss on derivative instruments
(1,774)
(4,862)
Other income (expense), net
336
(13,268)
Total other expense, net
(141,577)
(154,552)
Loss from continuing operations before income taxes
(445,263)
(576,439)
Income tax (provision) benefit
(16,625)
15,413
Net loss from continuing operations
(461,888)
(561,026)
Less: non-controlling interests in net loss from continuing operations of consolidated subsidiaries
234,935
378,972
Net loss from continuing operations attributable to Clearwire Corporation
(226,953)
(182,054)
Net loss from discontinued operations attributable to Clearwire Corporation, net of tax
—
231
Net loss attributable to Clearwire Corporation
$ (226,953)
$ (181,823)
Net loss from continuing operations attributable to Clearwire Corporation per Class A common share:
Basic
$ (0.33)
$ (0.40)
Diluted
$ (0.33)
$ (0.44)
Net loss attributable to Clearwire Corporation per Class A common share:
Basic
$ (0.33)
$ (0.40)
Diluted
$ (0.33)
$ (0.44)
Weighted average Class A common shares outstanding:
Basic
693,901
458,827
Diluted
693,901
1,298,530
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March 31,
2013
2012
Cash flows from operating activities:
Net loss from continuing operations
$ (461,888)
$ (561,026)
Adjustments to reconcile net loss to net cash used in operating activities:
Deferred income taxes
16,194
(15,863)
Non-cash loss on derivative instruments
1,774
4,862
Accretion of discount on debt
12,593
10,188
Depreciation and amortization
183,633
177,973
Amortization of spectrum leases
13,212
14,216
Non-cash rent expense
40,560
46,382
Loss on property, plant and equipment
5,116
139,056
Other non-cash activities
9,644
18,696
Changes in assets and liabilities:
Inventory
(5,269)
5,070
Accounts receivable
844
(42,662)
Prepaids and other assets
1,695
(11,198)
Deferred revenue
(36,630)
154,246
Accounts payable and other liabilities
113,429
119,897
Net cash (used in) provided by operating activities of continuing operations
(105,093)
59,837
Net cash provided by operating activities of discontinued operations
—
5,814
Net cash (used in) provided by operating activities
(105,093)
65,651
Cash flows from investing activities:
Payments to acquire property, plant and equipment
(37,510)
(21,867)
Purchases of available-for-sale investments
(249,988)
(1,022,287)
Disposition of available-for-sale investments
299,450
117,953
Other investing activities
1,599
(845)
Net cash provided by (used in) investing activities of continuing operations
13,551
(927,046)
Net cash provided by investing activities of discontinued operations
—
59
Net cash provided by (used in) investing activities
13,551
(926,987)
Cash flows from financing activities:
Principal payments on long-term debt
(9,844)
(6,295)
Proceeds from issuance of long-term debt
80,000
300,000
Debt financing fees
—
(6,205)
Proceeds from issuance of common stock
46
—
Net cash provided by financing activities of continuing operations
70,202
287,500
Net cash provided by financing activities of discontinued operations
—
—
Net cash provided by financing activities
70,202
287,500
Effect of foreign currency exchange rates on cash and cash equivalents
3
(2,269)
Net decrease in cash and cash equivalents
(21,337)
(576,105)
Cash and cash equivalents:
Beginning of period
193,445
893,744
End of period
172,108
317,639
Less: cash and cash equivalents of discontinued operations at end of period
—
7,505
Cash and cash equivalents of continuing operations at end of period
$ 172,108
$ 310,134
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)
March 31, 2013
December 31, 2012
September 30, 2012
March 31, 2012
(in thousands)
Operating loss
$ (303,686)
$ (312,731)
$ (332,905)
$ (421,887)
Non-cash expenses:
Spectrum lease expense
38,916
36,260
39,833
36,415
Building and network related expenses*
14,856
25,256
18,741
24,183
Stock compensation and other*
9,641
8,525
8,736
6,066
Non-cash expenses
63,413
70,041
67,310
66,664
Non-cash write-downs:
Loss from abandonment of network and other assets
414
(1,099)
2,588
80,400
Network equipment reserves and other write-downs*
4,702
2,904
13,963
58,656
Non-cash write-downs
5,116
1,805
16,551
139,056
Depreciation and amortization
183,633
194,873
210,781
177,973
Adjusted EBITDA
$ (51,524)
$ (46,012)
$ (38,263)
$ (38,194)
*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)
March 31, 2013
December 31, 2012
September 30, 2012
March 31, 2012
(in thousands)
Total revenues
$ 318,042
$ 311,241
$ 313,882
$ 322,639
Wholesale revenue
(114,917)
(116,590)
(116,498)
(117,821)
Device and other revenue
(19,432)
(15,763)
(15,956)
(20,718)
Retail ARPU revenue
$ 183,693
$ 178,888
$ 181,428
$ 184,100
Average retail customers
1,408
1,352
1,342
1,310
Months in period
3
3
3
3
Retail ARPU
$ 43.49
$ 44.10
$ 45.06
$ 46.83
(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)
March 31, 2013
December 31, 2012
September 30, 2012
March 31, 2012
(in thousands)
Selling, general and administrative
$ 141,101
$ 138,489
$ 139,365
$ 142,655
Less: G&A and other
(106,972)
(113,103)
(104,720)
(95,408)
Selling expense
34,129
25,386
34,645
47,247
Plus: Equipment COGS
19,463
16,300
17,707
14,620
Less: Equipment revenue
(12,417)
(9,042)
(9,396)
(14,355)
Total retail CPGA Expense
$ 41,175
$ 32,644
$ 42,956
$ 47,512
Total gross adds
287
211
225
196
Total retail CPGA
$ 143
$ 155
$ 191
$ 242
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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Clearwire Corporation 4400 CARILLON PT , Kirkland, WA 98033-7353 Service provided by Shareholder.com
