Clearwire 2010 Annual Report Download - page 68

Non-controlling Interests in Net Loss of Consolidated Subsidiaries
(In thousands, except percentages) 2010 2009 2008
Year Ended
December 31,
Non-controlling interests in net loss of consolidated
subsidiaries .................................... $1,815,657 $928,264 $159,721
The non-controlling interests in net loss represent the allocation of a portion of the consolidated net loss to the
non-controlling interests in consolidated subsidiaries based on the ownership by Sprint, Comcast, Time Warner
Cable, Intel, Bright House and Eagle River of Clearwire Communications Class B Common Units. As of
December 31, 2010, 2009 and 2008, the non-controlling interests share in net loss was 75%, 79% and 73%,
respectively. Approximately one month of losses was allocated to the non-controlling interests in 2008 as there were
no non-controlling interests prior to the Closing.
Liquidity and Capital Resource Requirements
To date we have invested heavily in building and augmenting our 4G mobile broadband network. During 2010,
we continued to develop and launch our 4G mobile broadband network in large metropolitan areas in the United
States, including the fourth quarter launches of New York, San Francisco and Los Angeles. In 2011, we plan to focus
on improving the operating performance of our business while seeking to raise additional capital to continue the
operation and expansion of our business and the development of our 4G mobile broadband network.
In 2010, we received aggregate proceeds of approximately $290.3 million from a rights offering that expired in
June 2010. Additionally, we entered into vendor financing and capital lease facilities allowing us to obtain up to
$254.0 million of financing. Notes may be entered into under a $155.3 million vendor financing facility until
January 31, 2012. We utilized $60.3 million of this vendor financing facility in 2010. The proceeds were used to
acquire equipment for the deployment of our 4G mobile broadband network. Capital leases with 4 year lease terms
may be entered into under a $99.0 million capital lease facility until August 16, 2011. In addition to the above
facilities, we also lease certain network construction equipment under capital leases with 12 year lease terms. As of
December 31, 2010, approximately $132.4 million of our outstanding debt, comprised of vendor financing and
capital lease obligations, is secured by assets classified as Network and base station equipment.
During December 2010, Clearwire Communications issued additional $175.0 million of Senior Secured Notes
with the same terms as the Senior Secured Notes issued in December 2009, and we completed an offering of
$500 million 12% Second-Priority Secured Notes due 2017. The Second-Priority Secured Notes provide for bi-
annual payments of interest in June and December and bear interest at the rate of 12% per annum. During December
2010, we also completed an offering of $729.2 million 8.25% Exchangeable Notes due 2040. The Exchangeable
Notes may be redeemed in approximately 7 years because the holders have the right, as of December 17, 2017, to
require us to repurchase the notes and we have the right to redeem the notes at that time. The Exchangeable Notes
provide for bi-annual payments of interest in June and December and bear interest at the rate of 8.25%.
During the year ended December 31, 2010, we incurred $2.30 billion of net losses. We utilized $1.17 billion of
cash in operating activities and spent $2.66 billion on capital expenditures in the development of our networks. We
do not expect our operations to generate positive cash flows during the next twelve months. As of December 31,
2010, we had available cash and short-term investment of approximately $1.74 billion. We believe that, as of
December 31, 2010, we have cash and short-term investments sufficient to cause our estimated liquidity needs to be
satisfied for at least the next 12 months based on our current plans as further discussed below.
Over the next few years, we currently expect the actions we are taking will enable our current business to
generate positive cash flows without the need for additional capital. However, our current plans are based on a
number of assumptions about our future performance, many of which are outside of our control and which may
prove to be inaccurate. These assumptions include, among other things, a favorable resolution of the current
wholesale pricing disputes with Sprint, continued increases in our wholesale subscriber base and increased usages
by such subscribers, our ability to cause the services we offer over our 4G mobile broadband network to remain
competitive with service offerings from our competitors, and our ability to reduce our operating expenses and
capital expenditures. If any of the assumptions underlying our plans prove to be incorrect and, as a result, our
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