Clearwire Reports Third Quarter 2012 Results
Oct 25, 2012 (Menafn - GlobeNewswire via COMTEX) --
--Raises Guidance for 2012 Adjusted EBITDA; Lowers 2012 Capex Guidance
--1.2 Billion Cash, Cash Equivalents and Investments at Quarter-End
--Significant Advancements in Global TDD-LTE and 2.5GHz Ecosystem
BELLEVUE, Wash., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Clearwire Corporation CLWR, a leading provider of 4G wireless broadband services in the U.S., today reported its financial and operating results for third quarter 2012.
"Recent developments in the U.S. wireless industry serve as a direct reminder of the key strategic role deep spectrum resources and a global LTE ecosystem will play in the long-term success of any 4G mobile broadband operator," said Erik Prusch, President and CEO of Clearwire. "Clearwire's unmatched spectrum assets and focus on serving major population centers will be the foundation on which we will build a critical 4G LTE network positioned to serve the needs of the industry and the rapidly growing base of 4G customers across the country."
"Globally, our ecosystem choices continue to gain traction with a growing list of TDD-LTE deployments and we believe the recent decision in China to allocate 190 MHz of 2.5GHz spectrum to our preferred spectrum band, 3GPP Band 41, to deploy TDD-LTE networks will generate even greater interest from chipset, device and infrastructure vendors. The rising tide of TDD-LTE networks globally in the 2.5GHz band will ultimately allow Clearwire to realize significant economies of scale and provide a valuable competitive advantage."
Third quarter 2012 revenue declined slightly year over year to 313.9 million primarily due to a year over year decline in wholesale revenue. Third quarter 2012 wholesale revenue of 116.5 million, was relatively flat as compared to second quarter 2012 wholesale revenue of 117.6 million, and down (15)% year over year reflecting the fixed wholesale WiMAX revenue terms of the November 2011 Sprint agreement which took effect in 2012. Retail and other revenue increased 1% year over year to 197.4 million in third quarter 2012. Retail ARPU for third quarter 2012 was 45.06, representing a decrease of (1.99) year over year as compared to 47.05 in third quarter 2011 primarily due to lower equipment lease and activation revenue under the new no-contract offering.
Clearwire ended third quarter 2012 with approximately 10.5 million total subscribers, up 10% from 9.5 million subscribers in third quarter 2011. The subscriber base consists of 1.4 million retail subscribers and 9.1 million wholesale subscribers, reflecting 21,000 retail net subscriber adds and 489,000 wholesale net subscriber losses during third quarter 2012. Wholesale subscribers consist primarily of Sprint 3G/4G smartphone customers.
Retail cost per gross addition (CPGA) was 191 in third quarter 2012 compared to 288 in third quarter 2011. The year over year improvement is primarily due to lower retail selling expenses associated with our no-contract offering as well as a lower cost structure resulting from our cost cutting initiatives in 2011. Retail churn was 5.1% in third quarter 2012, up from 4.2% in third 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.
Adjusted EBITDA in third quarter 2012 was a loss of (38.3) million, representing an 8.2 million improvement when compared to third quarter 2011 Adjusted EBITDA loss of (46.4) million.
The company ended third quarter 2012 with cash, cash equivalents and investments of approximately 1.2 billion invested primarily in U.S. Treasury securities, reflecting a sequential decrease of 26 million from second quarter 2012. As compared to the prior year period, cash, cash equivalents and investments increased by 336 million.
Third quarter 2012 capex of 34 million related primarily to ongoing maintenance of Clearwire's mobile WiMAX network and the deployment of our LTE network, and increased 10 million and 17 million, respectively, as compared to 24 million in second quarter 2012 and 17 million of capex in third quarter 2011.
At the end of third quarter 2012, Clearwire operated networks in the U.S. covering areas where approximately 135 million people reside, including approximately 133 million people in markets where we provide 4G services, relatively flat as compared to the prior year period.
TDD-LTE and 2.5GHz Ecosystem Developments
Clearwire, as a founding member of the Global TDD-LTE Initiative (GTI), has continued to work closely with wireless infrastructure and carrier partners around the world to promote and develop the TDD-LTE ecosystem with an emphasis on expanding use of the 2.5GHz band we have established with standards bodies (Band 41) around the globe. The TDD-LTE ecosystem continues to grow with commercial or planned deployments in major population centers, and ABI Research recently estimated that continued rollouts of TDD-LTE networks would reach as many as 4.4 billion people worldwide by 2015. Significant progress was recently made on this front with the Ministry of Industry and Information Technology's (China's telecom regulator), announced plans to release the entire 190MHz of their 2.5GHz spectrum for TDD-LTE deployments in China and their adoption of the same Band 41 format advocated by Clearwire and other GTI members around the globe including Softbank Mobile (Softbank). Additionally, Softbank, who launched their TDD-LTE network in Japan in February 2012, broke new ground with their recent introduction of six TDD-LTE smartphones that also support the 2.5GHz band. We believe these developments further position Clearwire and our LTE wholesale partners to leverage significant economies of scale and innovation commensurate with a large global ecosystem of chipsets, devices and infrastructure equipment.
2012 Outlook
Clearwire continues to expect total revenue of 1.20 to 1.30 billion for full year 2012. The company expects 2012 Adjusted EBITDA loss of approximately (150) to (200) million, representing a 25 million improvement (at the midpoints) to previous guidance of (175) to (225) million.
Clearwire plans to have 2,000 LTE sites on air by the end of June 2013 and expects to start receiving Sprint prepayment installments in June 2013. Full year 2012 capital expenditures (capex) are now expected to total 125 to 175 million as compared to most recently provided guidance of 350 to 400 million. The decline in capex guidance is primarily due to the company's decision to defer a portion of its LTE build in order to better align capex with the expected receipt of LTE revenues.
Results of Operations
Cost of goods and services and network costs (COGS) in third quarter 2012 decreased 25% to 211.5 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 5.9 million and 38.7 million in third quarters 2012 and 2011, respectively, and other non-cash network-related charges of 19.7 million and 65.2 million in third quarters 2012 and 2011, respectively. The year over year decrease in non-cash charges for network equipment reserves is primarily due to a decline in write-downs of network equipment no longer required for deployment or sparing as we solidified our LTE network plans. The year over year decrease in other non-cash network related charges is primarily due to a higher provision for unused tower-related leases and other network agreements in third quarter 2011. Excluding non-cash expenses, COGS increased 4% year over year primarily due to an increase in customer premise equipment sales since the launch of our no contract retail model, which requires customers to purchase rather than lease devices, at the beginning of 2012.
Selling, general and administrative (SG&A) expense in third quarter 2012 decreased 21% to 139.4 million compared to 176.5 million in third quarter 2011. The decrease is primarily attributable to the continuing effects of actions taken in conjunction with Clearwire's cost cutting initiatives in 2011 including lower employee-related expenses resulting from headcount reductions and outsourcing of the customer care function, reduced marketing spend, as well as decreased selling commission expense associated with our no-contract product offering which was launched at the beginning of 2012.
Third quarter 2012 reported net loss from continuing operations attributable to Clearwire was (41.3) million, or (0.07) per basic share as compared to (83.5) million, or (0.34) per basic share, respectively in the prior year period. Including the effects of discontinued operations, third quarter 2012 reported net loss attributable to Clearwire was (213.8) million, or (0.38) per basic share, which increased as compared to (84.8) million or (0.35), respectively in the prior year period primarily due to a decrease in the loss allocated to non-controlling interests which resulted from the conversion of Class B common shares to Class A common shares by Time Warner Cable and Comcast during the period.
CLEARWIRE CORPORATION
SUMMARY FINANCIAL AND OPERATING DATA FROM CONTINUING OPERATIONS
(In thousands)
(Unaudited)
Three months ended
--------------------------------------------------
SeptemberSeptember
30,June 30,March 31,30,
2012201220122011
--------------------------------------------
REVENUES:
Retail revenue 197,215 199,156 204,810 194,789
Wholesale revenue116,498117,560117,821137,162
Other revenue1692168226
--------------------------------------------
Total revenues313,882316,932322,639332,177
OPERATING EXPENSES:
Cost of goods and
services and network
costs (exclusive of
items shown separately
below)211,540224,426263,790282,459
Selling, general and
administrative expense139,365137,693142,655176,469
Depreciation and
amortization210,781184,566177,973165,560
Spectrum lease expense82,51381,19079,70877,696
Loss from abandonment
of network and other
assets2,58831780,40029,129
--------------------------------------------
Total operating expenses646,787628,192744,526731,313
--------------------------------------------
OPERATING LOSS(332,905)(311,260)(421,887)(399,136)
LESS NON-CASH ITEMS:
Non-cash expenses67,31077,89366,664119,321
Non-cash write-downs16,55114,369139,05667,810
Depreciation and
amortization210,781184,566177,973165,560
--------------------------------------------
Total non-cash items294,642276,828383,693352,691
--------------------------------------------
Adjusted EBITDA (38,263) (34,432) (38,194) (46,445)
Adjusted EBITDA margin(12)%(11)%(12)%(14)%
KEY OPERATING METRICS (k
for '000's, MM for
'000,000's)
Total net subscriber
additions(468)k(41)k586k1,893k
Wholesale(489)k(34)k537k1,858k
Retail21k(8)k49k35k
Total subscribers10,488k10,957k11,000k9,541k
Wholesale (1)9,136k9,625k9,659k8,219k
Retail1,353k1,333k1,341k1,322k
Retail ARPU 45.06 46.12 46.83 47.05
Churn
Wholesale5.4 %3.6 %3.0 %1.5 %
Retail5.1 %4.4 %3.7 %4.2 %
Retail CPGA191226242288
Capital expenditures 34MM 24MM 23MM 17MM
Domestic 4G covered POPS133MM134MM132MM133MM
Cash, cash equivalents
and investments 1,184MM 1,210MM 1,433MM 711MM
(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 third quarter 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 October 25, through Thursday, November 1, by calling 1-855-859-2056, or from outside the U.S. by dialing 1-404-537-3406. The passcode for the replay is 39779854.
About Clearwire
Clearwire Corporation 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(R) 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 and China Mobile 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:
--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. 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.
--Sprint owns just less than 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 our business fails to perform as we expect, if our assumptions
underlying our cash projections prove to be inaccurate, 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 to fund our business and meet our financial obligations beyond
the next 12 months. 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.
--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.
--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 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)
SeptemberDecember 31,
30, 20122011
------------------------
ASSETS
Current assets:
Cash and cash equivalents 247,748 891,929
Short-term investments935,920215,655
Restricted cash2,1781,000
Accounts receivable, net of
allowance of 4,241 and
5,54258,07783,660
Inventory13,90623,832
Prepaids and other assets81,65971,083
------------------------
Total current assets1,339,4881,287,159
Property, plant and equipment,
net2,351,5613,014,277
Restricted cash3,4067,619
Spectrum licenses, net4,263,3674,298,254
Other intangible assets, net28,71840,850
Other assets144,040157,797
Assets of discontinued
operations19,07836,696
------------------------
Total assets 8,149,658 8,842,652
========================
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
expenses 291,505 157,172
Other current liabilities206,965122,756
------------------------
Total current liabilities498,470279,928
Long-term debt, net4,244,4354,019,605
Deferred tax liabilities, net183,374152,182
Other long-term liabilities916,564719,703
Liabilities of discontinued
operations19,09325,196
------------------------
Total liabilities5,861,9365,196,614
Stockholders' equity:
Class A Common Stock, par
value 0.0001, 2,000,000
shares authorized; 682,759
and 452,215 shares
outstanding6845
Class B common stock, par
value 0.0001, 1,400,000
shares authorized; 782,207
and 839,703 shares
outstanding7883
Additional paid-in capital3,128,0812,714,634
Accumulated other
comprehensive income2,6552,793
Accumulated deficit(2,159,239)(1,617,826)
------------------------
Total Clearwire Corporation
stockholders' equity971,6431,099,729
Non-controlling interests1,316,0792,546,309
------------------------
Total stockholders' equity2,287,7223,646,038
------------------------
Total liabilities and
stockholders' equity 8,149,658 8,842,652
========================
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
-------------------------
September 30,
20122011
-----------------------
Revenues 313,882 332,177
Operating expenses:
Cost of goods and services and
network costs (exclusive of items
shown separately below)211,540282,459
Selling, general and
administrative expense139,365176,469
Depreciation and amortization210,781165,560
Spectrum lease expense82,51377,696
Loss from abandonment of network
and other assets2,58829,129
-----------------------
Total operating expenses646,787731,313
-----------------------
Operating loss(332,905)(399,136)
Other income (expense):
Interest income555534
Interest expense(139,040)(128,596)
Gain (loss) on derivative
instruments(906)59,729
Other income (expense), net137(1,261)
-----------------------
Total other expense, net(139,254)(69,594)
-----------------------
Loss from continuing operations
before income taxes(472,159)(468,730)
Income tax benefit (provision)151,749(10,727)
-----------------------
Net loss from continuing operations(320,410)(479,457)
Less: non-controlling interests in
net loss from continuing
operations of consolidated
subsidiaries279,066395,955
-----------------------
Net loss from continuing operations
attributable to Clearwire
Corporation(41,344)(83,502)
Net loss from discontinued
operations attributable to
Clearwire Corporation, net of tax(172,437)(1,289)
-----------------------
Net loss attributable to Clearwire
Corporation (213,781) (84,791)
=======================
Net loss from continuing operations
attributable to Clearwire
Corporation per Class A Common
Share:
Basic (0.07) (0.34)
Diluted (0.22) (0.53)
Net loss attributable to Clearwire
Corporation per Class A Common
Share:
Basic (0.38) (0.35)
Diluted (0.34) (0.54)
Weighted average Class A Common
Shares outstanding:
Basic558,083248,796
Diluted1,462,272914,864
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Nine Months Ended
--------------------------
September 30,
20122011
------------------------
Revenues 953,453 891,596
Operating expenses:
Cost of goods and services and
network costs (exclusive of items
shown separately below)699,756955,967
Selling, general and
administrative expense419,713569,565
Depreciation and amortization573,320517,674
Spectrum lease expense243,411229,137
Loss from abandonment of network
and other assets83,305577,341
------------------------
Total operating expenses2,019,5052,849,684
------------------------
Operating loss(1,066,052)(1,958,088)
Other income (expense):
Interest income1,3522,063
Interest expense(414,382)(377,133)
Gain on derivative instruments4,895148,227
Other income (expense), net(13,414)966
------------------------
Total other expense, net(421,549)(225,877)
------------------------
Loss from continuing operations
before income taxes(1,487,601)(2,183,965)
Income tax benefit (provision)175,138(28,422)
------------------------
Net loss from continuing operations(1,312,463)(2,212,387)
Less: non-controlling interests in
net loss from continuing
operations of consolidated
subsidiaries945,8861,751,483
------------------------
Net loss from continuing operations
attributable to Clearwire
Corporation(366,577)(460,904)
Net loss from discontinued
operations attributable to
Clearwire Corporation, net of tax(174,836)(19,580)
------------------------
Net loss attributable to Clearwire
Corporation (541,413) (480,484)
========================
Net loss from continuing operations
attributable to Clearwire
Corporation per Class A Common
Share:
Basic (0.72) (1.87)
Diluted (0.97) (2.34)
Net loss attributable to Clearwire
Corporation per Class A Common
Share:
Basic (1.06) (1.95)
Diluted (1.10) (2.42)
Weighted average Class A Common
Shares outstanding:
Basic508,461246,621
Diluted1,376,314955,507
CLEARWIRE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended September
30,
20122011
----------------------------
Cash flows from operating activities:
Net loss from continuing operations (1,312,463) (2,212,387)
Adjustments to reconcile net loss to net
cash used in operating activities:
Deferred income taxes(176,488)27,374
Non-cash gain on derivative instruments(4,895)(148,227)
Accretion of discount on debt30,64830,390
Depreciation and amortization573,320517,674
Amortization of spectrum leases40,06240,699
Non-cash rent expense149,918205,098
Loss on property, plant and equipment169,975837,083
Other non-cash activities34,21922,847
Changes in assets and liabilities:
Inventory8,5068,608
Accounts receivable15,684(68,767)
Prepaids and other assets6,60519,371
Prepaid spectrum licenses(2,283)(4,371)
Deferred revenue157,29171,806
Accounts payable and other liabilities128,15710,910
----------------------------
Net cash used in operating activities of
continuing operations(181,744)(641,892)
Net cash provided by operating activities
of discontinued operations3971,284
----------------------------
Net cash used in operating activities(181,347)(640,608)
----------------------------
Cash flows from investing activities:
Payments to acquire property, plant and
equipment(73,152)(387,099)
Purchases of available-for-sale
investments(1,496,966)(857,035)
Disposition of available-for-sale
investments777,953847,222
Other investing activities(807)22,078
----------------------------
Net cash used in investing activities of
continuing operations(792,972)(374,834)
Net cash provided by (used in) investing
activities of discontinued operations59(3,030)
----------------------------
Net cash used in investing activities(792,913)(377,864)
----------------------------
Cash flows from financing activities:
Principal payments on long-term debt(19,492)(23,633)
Proceeds from issuance of long-term debt300,000--
Debt financing fees(6,205)(1,158)
Proceeds from issuance of common stock58,4683,619
----------------------------
Net cash provided by (used in) financing
activities of continuing operations332,771(21,172)
Net cash provided by financing activities
of discontinued operations----
----------------------------
Net cash provided by (used in) financing
activities332,771(21,172)
----------------------------
Effect of foreign currency exchange rates
on cash and cash equivalents(2,236)(4,145)
----------------------------
Net decrease in cash and cash equivalents(643,725)(1,043,789)
Cash and cash equivalents:
Beginning of period893,7441,233,562
----------------------------
End of period250,019189,773
Less: cash and cash equivalents of
discontinued operations at end of period2,2711,574
----------------------------
Cash and cash equivalents of continuing
operations at end of period 247,748 188,199
============================
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)
SeptemberSeptember
30,June 30,March 31,30,
2012201220122011
------------------------------------------------
(in thousands)
Operating loss (332,905) (311,260) (421,887) (399,136)
Non-cash expenses:
Spectrum lease expense39,83332,34136,41538,845
Building and network
related rents*18,74138,46824,18370,584
Stock compensation and
other*8,7367,0846,0669,892
------------------------------------------------
Non-cash expenses67,31077,89366,664119,321
Non-cash write-downs:
Loss from abandonment of
network and other assets2,58831780,40029,129
Network equipment reserves
and other write-downs*13,96314,05258,65638,681
------------------------------------------------
Non-cash write-downs16,55114,369139,05667,810
Depreciation and
amortization210,781184,566177,973165,560
------------------------------------------------
Adjusted EBITDA (38,263) (34,432) (38,194) (46,445)
================================================
*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) 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)
-----------------------------------------------
SeptemberSeptember
30,June 30,March 31,30,
2012201220122011
-----------------------------------------
(in thousands)
Retail ARPU
Total revenues 313,882 316,932 322,639 332,177
Wholesale revenue(116,498)(117,560)(117,821)(137,162)
Device and other
revenue(15,956)(14,694)(20,718)(10,797)
-----------------------------------------
Retail ARPU revenue181,428184,678184,100184,218
Average retail
customers1,3421,3351,3101,305
Months in period3333
Retail ARPU 45.06 46.12 46.83 47.05
=========================================
(3) 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.
(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)
-----------------------------------------------
SeptemberSeptember
30,June 30,March 31,30,
2012201220122011
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(in thousands)
Retail CPGA
Selling, general and
administrative 139,365 137,693 142,655 176,469
G&A and other*(96,370)(99,719)(95,143)(118,923)
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Total selling expense42,99537,97447,51257,546
Total gross adds225168196200
Total retail CPGA 191 226 242 288
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* Net of equipment
subsidy.
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.
This news release was distributed by GlobeNewswire, www.globenewswire.com
SOURCE: Clearwire Corporation
(Logo:http://media.primezone.com/cache/14309/int/9297.jpg)
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
(C) Copyright 2010 GlobeNewswire, Inc. All rights reserved.
