Clearwire 2010 Annual Report Download - page 112

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Each holder of Clearwire Communications Class B Common Interests holds an equivalent number of shares of
Clearwire’s Class B Common Stock and will be entitled at any time to exchange one share of Class B Common
Stock plus one Clearwire Communications Class B Common Interest for one share of Class A Common Stock.
It is intended that at all times, the number of Clearwire Communications Class A Common Interests held by
Clearwire will equal the number of shares of Class A Common Stock issued by Clearwire. Similarly, it is intended
that, at all times, Sprint and each Investor, except Google, will hold an equal number of shares of Class B Common
Stock and Clearwire Communications Class B Common Interests.
Dividend Policy
We have not declared or paid any cash dividends on Class A or Class B Common Stock since the Closing. We
currently expect to retain future earnings, if any, for use in the operations and expansion of our business. We do not
anticipate paying any cash dividends in the foreseeable future. In addition, covenants in the indenture governing our
Senior Secured Notes impose significant restrictions on our ability to pay cash dividends to our stockholders. The
distribution of subscription rights as part of the Rights Offering represents a stock dividend distribution.
Non-controlling Interests in Clearwire Communications
Clearwire Communications is consolidated into Clearwire because we hold 100% of the voting interest in
Clearwire Communications. Therefore, the holders of the Clearwire Communications Class B Common Interests
represent non-controlling interests in a consolidated subsidiary. As a result, the income (loss) consolidated by
Clearwire is decreased in proportion to the outstanding non-controlling interests. As of December 31, 2010, at the
Clearwire level, non-controlling interests represent approximately 75% of the non-economic voting interests.
Warrants
All Old Clearwire warrants issued and outstanding at the Closing were exchanged on a one-for-one basis for
warrants to purchase our Class A Common Stock with equivalent terms. The fair value of the warrants exchanged of
$18.5 million was included in the calculation of purchase consideration using the Black-Scholes option pricing
model and a share price of $6.62. Holders may exercise their warrants at any time, with exercise prices ranging from
$3.00 to $48.00. Old Clearwire granted the holders of the warrants registration rights covering the shares subject to
issuance under the warrants. As of December 31, 2010, there were 16,031,219 warrants outstanding with an
expiration date of May 17, 2011, 1,400,001 warrants outstanding with an expiration date of March 12, 2012 and
375,000 warrants outstanding with an expiration date of November 13, 2012.
107
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)