x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE
ACT
OF 1934
|
OR
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF
1934
|
Commission
file number 333-137388
|
Delaware
|
20-5361360
|
|
(State
or other jurisdiction of
|
(IRS
Employer
|
|
incorporation
or organization)
|
Identification
No.)
|
|
|
|
|
12670
High Bluff Drive, San Diego, California
|
92130
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(858)
480-3100
|
(Registrant’s
telephone number, including area
code)
|
NextWave
Wireless LLC
|
(Former
name, former address and former fiscal year, if changed since last
report)
|
Large
accelerated filer o
|
|
Accelerated
filer o
|
|
Non-accelerated
filer ý
|
Explanatory
Note
|
||
PART
I. Financial Information
|
||
Item
1.
|
Consolidated
Financial Statements (Unaudited)
|
|
Condensed
Consolidated Balance Sheets
|
||
Consolidated
Statements of Operations
|
||
Consolidated
Statement of Members’ Equity
|
||
Consolidated
Statements of Cash Flows
|
||
Notes
to Consolidated Financial Statements
|
||
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
|
Item
3.
|
Quantitative
and Qualitative Disclosure About Market Risk
|
|
Item
4.
|
Controls
and Procedures
|
|
PART
II. Other Information
|
||
Item
1.
|
Legal
Proceedings
|
|
Item
1A.
|
Risk
Factors
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
|
Item
5.
|
Other
Information
|
|
Item
6.
|
Exhibits
|
|
Signatures
|
||
Index
to Exhibits
|
·
|
our
limited relevant operating history;
|
|
|
|
|
|
·
|
our
ability to remediate the material weakness in internal controls over
financial reporting identified in connection with our restatement
of
revenues of our PacketVideo subsidiary;
|
|
·
|
our
ability to manage growth or integrate recent or future
acquisitions;
|
|
·
|
competition
from alternative wireless technologies and other technology
companies;
|
|
·
|
our
ability to develop and commercialize mobile broadband products and
technologies;
|
|
·
|
the
ability of vendors to manufacture commercial WiMAX equipment and
devices;
|
|
·
|
consumer
acceptance of WiMAX technology;
|
|
·
|
PacketVideo’s
ability to grow its resources to support larger numbers of device
manufacturers and wireless
carriers;
|
|
·
|
changes
in government regulations;
|
|
·
|
changes
in capital requirements;
|
|
·
|
any
loss of our key executive officers; and
|
·
|
other
risks described in filings with the Securities and Exchange Commission.
|
September
30,
2006
|
December
31,
2005
|
||||||
(Restated)
|
|||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
25,371
|
$
|
93,649
|
|||
Short-term
investments
|
196,801
|
365,582
|
|||||
Accounts
receivable, net of allowance for doubtful accounts of $300 and $391,
respectively
|
5,728
|
3,712
|
|||||
Deposits
for wireless spectrum bids
|
142,866
|
5,400
|
|||||
Prepaid
expenses and other current assets
|
10,266
|
4,175
|
|||||
Total
current assets
|
381,032
|
472,518
|
|||||
Restricted
investments
|
76,792
|
—
|
|||||
Wireless
spectrum licenses, net
|
374,137
|
45,467
|
|||||
Goodwill
|
32,829
|
24,782
|
|||||
Other
intangible assets, net
|
16,306
|
18,100
|
|||||
Property
and equipment, net
|
16,796
|
11,092
|
|||||
Other
assets
|
8,279
|
7,815
|
|||||
Total
assets
|
$
|
906,171
|
$
|
579,774
|
|||
LIABILITIES
AND MEMBERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
2,369
|
$
|
3,406
|
|||
Accrued
expenses
|
19,465
|
5,152
|
|||||
Current
portion of long-term obligations
|
2,681
|
2,200
|
|||||
Deferred
revenue
|
8,053
|
4,103
|
|||||
Current
tax liability
|
40
|
417
|
|||||
Other
current liabilities and deferred credits
|
961
|
822
|
|||||
Total
current liabilities
|
33,569
|
16,100
|
|||||
Deferred
income tax liabilities
|
67,673
|
13
|
|||||
Long-term
deferred credits and reserves
|
8,243
|
8,293
|
|||||
Long-term
obligations, net of current portion
|
292,310
|
14,934
|
|||||
Minority
interest in subsidiary
|
884
|
1,070
|
|||||
Commitments
and contingencies
|
|||||||
Members’
equity:
|
|||||||
Membership
interests; 492,583 and 488,672 interests issued and outstanding as
of
September 30, 2006 and December 31, 2005, respectively
|
619,966
|
589,354
|
|||||
Accumulated
other comprehensive loss
|
(571
|
)
|
(832
|
)
|
|||
Retained
deficit
|
(115,903
|
)
|
(49,158
|
)
|
|||
Total
members’ equity
|
503,492
|
539,364
|
|||||
Total
liabilities and members’ equity
|
$
|
906,171
|
$
|
579,774
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
Inception
(April
13, 2005)
to
September
30,
|
|||||||||||
2006
|
2005
|
2006
|
2005
|
||||||||||
(Restated)
|
(Restated)
|
||||||||||||
Revenues
|
$
|
6,670
|
$
|
1,202
|
$
|
16,868
|
$
|
1,350
|
|||||
Operating
expenses:
|
|||||||||||||
Cost
of revenues
|
3,506
|
1,934
|
7,951
|
2,019
|
|||||||||
Engineering,
research and development
|
11,634
|
5,100
|
36,017
|
8,013
|
|||||||||
General
and administrative
|
14,896
|
6,603
|
35,528
|
9,890
|
|||||||||
Sales
and marketing
|
2,992
|
1,185
|
7,144
|
1,185
|
|||||||||
Purchased
in-process research and development
|
—
|
6,600
|
1,648
|
6,600
|
|||||||||
Total
operating expenses
|
33,028
|
21,422
|
88,288
|
27,707
|
|||||||||
Loss
from operations
|
(26,358
|
)
|
(20,220
|
)
|
(71,420
|
)
|
(26,357
|
)
|
|||||
Other
income (expense)
|
|||||||||||||
Interest
income
|
3,419
|
3,934
|
9,803
|
7,404
|
|||||||||
Interest
expense
|
(9,010
|
)
|
(352
|
)
|
(9,684
|
)
|
(656
|
)
|
|||||
Other
income and expense, net
|
(26
|
)
|
123
|
98
|
146
|
||||||||
Total
other income (expense), net
|
(5,617
|
)
|
3,705
|
217
|
6,894
|
||||||||
Loss
before income taxes and minority interest
|
(31,975
|
)
|
(16,515
|
)
|
(71,203
|
)
|
(19,463
|
)
|
|||||
Income
tax benefit (provision)
|
(93
|
)
|
(145
|
)
|
116
|
(145
|
)
|
||||||
Minority
interest
|
265
|
7
|
1,136
|
7
|
|||||||||
Net
loss
|
$
|
(31,803
|
)
|
$
|
(16,653
|
)
|
$
|
(69,951
|
)
|
$
|
(19,601
|
)
|
Membership
Interests
|
Accumulated
Other
Comprehensive
Loss
|
Retained
Deficit
|
Total
Members’
Equity
|
|||||||||||||
Units
|
Amount
|
|||||||||||||||
Balance
at December 31, 2005
|
488,672
|
$
|
589,354
|
$
|
(832
|
)
|
$
|
(49,158
|
)
|
$
|
539,364
|
|||||
Units
issued for business acquisition
|
1,558
|
1,558
|
—
|
—
|
1,558
|
|||||||||||
Units
issued for unit options exercised
|
1,353
|
1,353
|
—
|
—
|
1,353
|
|||||||||||
Sale
of restricted units
|
1,000
|
1,000
|
—
|
—
|
1,000
|
|||||||||||
Share-based
compensation
|
—
|
3,548
|
—
|
—
|
3,548
|
|||||||||||
Fair
value of warrants to be issued in connection with the issuance of
7%
Senior Secured Notes
|
—
|
24,600
|
—
|
—
|
24,600
|
|||||||||||
Accumulated
deficit of variable interest entity eliminated upon acquisition by
NextWave
|
—
|
—
|
—
|
3,206
|
3,206
|
|||||||||||
Distributions
to members
|
—
|
(1,447
|
)
|
—
|
—
|
(1,447
|
)
|
|||||||||
Unrealized
net gains on investments
|
—
|
—
|
261
|
—
|
261
|
|||||||||||
Net
loss
|
—
|
—
|
—
|
(69,951
|
)
|
(69,951
|
)
|
|||||||||
Balance
at September 30, 2006 (Restated)
|
492,583
|
$
|
619,966
|
$
|
(571
|
)
|
$
|
(115,903
|
)
|
$
|
503,492
|
Nine
Months
Ended
September
30,
2006
|
Inception
(April
13, 2005)
to
September 30,
2005
|
||||||
(Restated)
|
|||||||
OPERATING
ACTIVITIES
|
|||||||
Net
loss
|
$
|
(69,951
|
)
|
$
|
(19,601
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation
|
4,235
|
202
|
|||||
Amortization
of intangible assets
|
3,752
|
1,773
|
|||||
Share-based
compensation
|
3,548
|
677
|
|||||
Accretion
of interest expense
|
4,643
|
611
|
|||||
Purchased
in-process research and development
|
1,648
|
6,600
|
|||||
Loss
on disposal of property and equipment
|
474
|
—
|
|||||
Losses
incurred through strategic investment
|
1,041
|
—
|
|||||
Minority
interest
|
(1,136
|
)
|
—
|
||||
Other
non-cash adjustments
|
872
|
(551
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(2,221
|
)
|
(178
|
)
|
|||
Prepaid
expenses and other current assets
|
(4,113
|
)
|
(4,351
|
)
|
|||
Other
assets
|
1,336
|
(184
|
)
|
||||
Accounts
payable and accrued liabilities
|
11,604
|
993
|
|||||
Deferred
credits and reserves
|
(3,712
|
)
|
1,594
|
||||
Net
cash used in operating activities
|
(40,556
|
)
|
(12,415
|
)
|
|||
INVESTING
ACTIVITIES
|
|||||||
Proceeds
from maturities of available-for-sale securities
|
192,226
|
909,082
|
|||||
Proceeds
from the sale of available-for-sale securities
|
452,951
|
—
|
|||||
Purchases
of available-for-sale securities
|
(475,603
|
)
|
(1,186,220
|
)
|
|||
Cash
paid for business combination, net of cash acquired
|
(4,950
|
)
|
(46,621
|
)
|
|||
Cash
paid for wireless spectrum licenses
|
(397,817
|
)
|
(50
|
)
|
|||
Purchase
of property and equipment
|
(10,990
|
)
|
(3,474
|
)
|
|||
Other,
net
|
(1,866
|
)
|
—
|
||||
Net
cash used in investing activities
|
(246,049
|
)
|
(327,283
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Proceeds
from long-term obligations, net of costs to issue
|
295,098
|
—
|
|||||
Payments
to restricted investments account securing long-term obligations
|
(77,324
|
)
|
—
|
||||
Payments
on long-term obligations
|
(2,374
|
)
|
(11
|
)
|
|||
Cash
distributions paid to members
|
(1,447
|
)
|
—
|
||||
Proceeds
from the sale of membership interests and subsidiary common
stock
|
2,379
|
—
|
|||||
Proceeds
from investment by joint venture partner
|
1,995
|
—
|
|||||
Net
cash provided by (used in) financing activities
|
218,327
|
(11
|
)
|
||||
Net
decrease in cash and cash equivalents
|
(68,278
|
)
|
(339,709
|
)
|
|||
Cash
and cash equivalents, beginning of period
|
93,649
|
555,099
|
|||||
Cash
and cash equivalents, end of period
|
$
|
25,371
|
$
|
215,390
|
1. |
NextWave,
Summary of Significant Accounting Policies and Significant
Accounts
|
Three
Months Ended
September
30,
|
Nine
Months
Ended September 30,
2006
|
Inception
(April
13, 2005) to
September
30,
2005
|
|||||||||||
(in
thousands)
|
2006
|
2005
|
|||||||||||
(Restated)
|
(Restated)
|
||||||||||||
Net
loss, as reported
|
$
|
(31,803
|
)
|
$
|
(16,653
|
)
|
$
|
(69,951
|
)
|
$
|
(19,601
|
)
|
|
Unrealized
net gain (loss) on investments
|
507
|
(409
|
)
|
261
|
(551
|
)
|
|||||||
Total
comprehensive loss
|
$
|
(31,296
|
)
|
$
|
(17,062
|
)
|
$
|
(69,690
|
)
|
$
|
(20,152
|
)
|
|
NextWave
Wireless
LLC
2005
Units
Plan
|
CYGNUS
Communications,
Inc.
2004 Stock
Option
Plan
|
PacketVideo
Corporation
2005
Equity
Incentive
Plan
|
||||||||
Weighted
average risk-free interest rate
|
4.82
|
%
|
4.37
|
%
|
4.91
|
%
|
||||
Weighted
average expected life (in years)
|
3.2
|
4.1
|
3.7
|
|||||||
Expected
stock price volatility
|
50
|
%
|
50
|
%
|
50
|
%
|
||||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||
Annualized
forfeiture rate
|
10
|
%
|
10
|
%
|
10
|
%
|
||||
Weighted
average fair value of options granted
|
$
|
0.39
|
$
|
0.13
|
$
|
0.42
|
2. |
Restatement
of Previously Reported Interim Financial
Statements
|
Three
Months Ended
|
||||||||||||||||||||||||||||
April
1, 2006
|
July
1, 2006
|
September
30, 2006
|
||||||||||||||||||||||||||
(in
thousands)
|
As
Reported
|
Adjustments
|
As
Restated
|
As
Reported
|
Adjustments
|
As
Restated
|
As
Reported
|
Adjustments
|
As
Restated
|
|||||||||||||||||||
Consolidated
Statements
of Operations
|
||||||||||||||||||||||||||||
Revenues
|
$
|
5,673
|
$
|
(1,768
|
)
|
$
|
3,905
|
$
|
8,331
|
$
|
(2,038
|
)
|
$
|
6,293
|
$
|
8,051
|
$
|
(1,381
|
)
|
$
|
6,670
|
|||||||
Operating
expenses:
|
||||||||||||||||||||||||||||
Cost
of revenues
|
2,686
|
(879
|
)
|
1,807
|
3,198
|
(560
|
)
|
2,638
|
4,568
|
(1,062
|
)
|
3,506
|
||||||||||||||||
Engineering,
research and development
|
10,233
|
856
|
11,089
|
12,601
|
693
|
13,294
|
11,455
|
179
|
11,634
|
|||||||||||||||||||
General
and
administrative
|
8,492
|
—
|
8,492
|
12,140
|
—
|
12,140
|
14,896
|
—
|
14,896
|
|||||||||||||||||||
Sales
and marketing
|
1,613
|
—
|
1,613
|
2,539
|
—
|
2,539
|
2,992
|
—
|
2,992
|
|||||||||||||||||||
Purchased
in-process research and development
|
—
|
—
|
—
|
1,648
|
—
|
1,648
|
—
|
—
|
—
|
|||||||||||||||||||
Total
operating expenses
|
23,024
|
(23
|
)
|
23,001
|
32,126
|
133
|
32,259
|
33,911
|
(883
|
)
|
33,028
|
|||||||||||||||||
Loss
from operations
|
(17,351
|
)
|
(1,745
|
)
|
(19,096
|
)
|
(23,795
|
)
|
(2,171
|
)
|
(25,966
|
)
|
(25,860
|
)
|
(498
|
)
|
(26,358
|
)
|
||||||||||
Other
income (expense)
|
||||||||||||||||||||||||||||
Interest
income
|
3,187
|
—
|
3,187
|
3,197
|
—
|
3,197
|
3,419
|
—
|
3,419
|
|||||||||||||||||||
Interest
expense
|
(308
|
)
|
—
|
(308
|
)
|
(366
|
)
|
—
|
(366
|
)
|
(9,010
|
)
|
—
|
(9,010
|
)
|
|||||||||||||
Other
income and expense, net
|
(92
|
)
|
—
|
(92
|
)
|
216
|
—
|
216
|
(26
|
)
|
—
|
(26
|
)
|
|||||||||||||||
Total
other income (expense), net
|
2,787
|
—
|
2,787
|
3,047
|
—
|
3,047
|
(5,617
|
)
|
—
|
(5,617
|
)
|
|||||||||||||||||
Loss
before provision for income taxes and minority interest
|
(14,564
|
)
|
(1,745
|
)
|
(16,309
|
)
|
(20,748
|
)
|
(2,171
|
)
|
(22,919
|
)
|
(31,477
|
)
|
(498
|
)
|
(31,975
|
)
|
||||||||||
Income
tax benefit (provision)
|
209
|
—
|
209
|
—
|
—
|
—
|
(93
|
)
|
—
|
(93
|
)
|
|||||||||||||||||
Minority
interest
|
657
|
—
|
657
|
214
|
—
|
214
|
265
|
—
|
265
|
|||||||||||||||||||
Net
loss
|
$
|
(13,698
|
)
|
$
|
(1,745
|
)
|
$
|
(15,443
|
)
|
$
|
(20,534
|
)
|
$
|
(2,171
|
)
|
$
|
(22,705
|
)
|
$
|
(31,305
|
)
|
$
|
(498
|
)
|
$
|
(31,803
|
)
|
April
1, 2006
|
July
1, 2006
|
September
30, 2006
|
||||||||||||||||||||||||||
(in
thousands)
|
As
Reported
|
Adjustments
|
As
Restated
|
As
Reported
|
Adjustments
|
As
Restated
|
As
Reported
|
Adjustments
|
As
Restated
|
|||||||||||||||||||
Consolidated
Balance
Sheets
|
||||||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||
Current
assets:
|
||||||||||||||||||||||||||||
Cash
and cash equivalents
|
$
|
99,871
|
$
|
—
|
$
|
99,871
|
$
|
30,643
|
$
|
—
|
$
|
30,643
|
$
|
25,371
|
$
|
—
|
$
|
25,371
|
||||||||||
Short-term
investments
|
266,716
|
—
|
266,716
|
309,794
|
—
|
309,794
|
196,801
|
—
|
196,801
|
|||||||||||||||||||
Accounts
receivable, net
|
2,235
|
—
|
2,235
|
5,206
|
—
|
5,206
|
5,728
|
—
|
5,728
|
|||||||||||||||||||
Deposits
for wireless spectrum bids
|
—
|
—
|
—
|
—
|
—
|
—
|
142,866
|
—
|
142,866
|
|||||||||||||||||||
Prepaid
expenses and other current assets
|
7,201
|
21
|
7,222
|
10,623
|
(110
|
)
|
10,513
|
9,494
|
772
|
10,266
|
||||||||||||||||||
Total
current assets
|
376,023
|
21
|
376,044
|
356,266
|
(110
|
)
|
356,156
|
380,260
|
772
|
381,032
|
||||||||||||||||||
Restricted
cash
|
—
|
—
|
—
|
—
|
—
|
—
|
76,792
|
—
|
76,792
|
|||||||||||||||||||
Wireless
spectrum licenses, net
|
130,889
|
—
|
130,889
|
130,374
|
—
|
130,374
|
374,137
|
—
|
374,137
|
|||||||||||||||||||
Goodwill
|
27,001
|
—
|
27,001
|
32,936
|
—
|
32,936
|
32,829
|
—
|
32,829
|
|||||||||||||||||||
Other
intangible assets, net
|
17,449
|
—
|
17,449
|
16,846
|
—
|
16,846
|
16,306
|
—
|
16,306
|
|||||||||||||||||||
Property
and equipment, net
|
15,040
|
—
|
15,040
|
14,632
|
—
|
14,632
|
16,796
|
—
|
16,796
|
|||||||||||||||||||
Prepaid
expenses and other noncurrent assets
|
7,708
|
—
|
7,708
|
6,761
|
—
|
6,761
|
8,279
|
—
|
8,279
|
|||||||||||||||||||
Total
assets
|
$
|
574,110
|
$
|
21
|
$
|
574,131
|
$
|
557,815
|
$
|
(110
|
)
|
$
|
557,705
|
$
|
905,399
|
$
|
772
|
$
|
906,171
|
|||||||||
LIABILITIES
AND MEMBERS’ EQUITY
|
||||||||||||||||||||||||||||
Current
liabilities:
|
||||||||||||||||||||||||||||
Accounts
payable
|
$
|
4,488
|
$
|
—
|
$
|
4,488
|
$
|
2,274
|
$
|
—
|
$
|
2,274
|
$
|
2,369
|
$
|
—
|
$
|
2,369
|
||||||||||
Accrued
expenses
|
7,058
|
—
|
7,058
|
12,104
|
—
|
12,104
|
19,465
|
—
|
19,465
|
|||||||||||||||||||
Current
portion of long-term obligations
|
2,575
|
—
|
2,575
|
2,822
|
—
|
2,822
|
2,681
|
—
|
2,681
|
|||||||||||||||||||
Deferred
revenue
|
4,021
|
1,766
|
5,787
|
3,100
|
3,806
|
6,906
|
2,867
|
5,186
|
8,053
|
|||||||||||||||||||
Current
tax liability
|
—
|
—
|
—
|
—
|
—
|
—
|
40
|
—
|
40
|
|||||||||||||||||||
Other
current liabilities and deferred credits
|
755
|
—
|
755
|
1,009
|
—
|
1,009
|
961
|
—
|
961
|
|||||||||||||||||||
Total
current liabilities
|
18,897
|
1,766
|
20,663
|
21,309
|
3,806
|
25,115
|
28,383
|
5,186
|
33,569
|
|||||||||||||||||||
Deferred
income tax liabilities
|
—
|
—
|
—
|
—
|
—
|
—
|
67,673
|
—
|
67,673
|
|||||||||||||||||||
Long-term
deferred credits and reserves
|
8,203
|
—
|
8,203
|
8,575
|
—
|
8,575
|
8,243
|
—
|
8,243
|
|||||||||||||||||||
Long-term
obligations
|
15,311
|
—
|
15,311
|
15,661
|
—
|
15,661
|
292,310
|
—
|
292,310
|
|||||||||||||||||||
Minority
interest in subsidiary
|
889
|
—
|
889
|
1,143
|
—
|
1,143
|
884
|
—
|
884
|
|||||||||||||||||||
Commitments
and contingencies
|
||||||||||||||||||||||||||||
Members’
equity:
|
||||||||||||||||||||||||||||
Membership
interests
|
591,452
|
—
|
591,452
|
592,389
|
—
|
592,389
|
619,966
|
—
|
619,966
|
|||||||||||||||||||
Accumulated
other comprehensive loss
|
(992
|
)
|
—
|
(992
|
)
|
(1,078
|
)
|
—
|
(1,078
|
)
|
(571
|
)
|
—
|
(571
|
)
|
|||||||||||||
Accumulated
deficit
|
(59,650
|
)
|
(1,745
|
)
|
(61,395
|
)
|
(80,184
|
)
|
(3,916
|
)
|
(84,100
|
)
|
(111,489
|
)
|
(4,414
|
)
|
(115,903
|
)
|
||||||||||
Total
members’ equity
|
530,810
|
(1,745
|
)
|
529,065
|
511,127
|
(3,916
|
)
|
507,211
|
507,906
|
(4,414
|
)
|
503,492
|
||||||||||||||||
Total
liabilities and members’ equity
|
$
|
574,110
|
$
|
21
|
$
|
574,131
|
$
|
557,815
|
$
|
(110
|
)
|
$
|
557,705
|
$
|
905,399
|
$
|
772
|
$
|
906,171
|
3. |
Composition
of Certain Financial Statement
Items
|
(in
thousands)
|
September
30,
2006
|
December
31,
2005
|
|||||
U.S.
state governments, agencies and municipal securities
|
$
|
176,807
|
$
|
280,734
|
|||
U.S.
Treasury and agency obligations
|
19,994
|
54,666
|
|||||
Corporate
notes
|
—
|
30,182
|
|||||
Total
short-term investments
|
$
|
196,801
|
$
|
365,582
|
(in
thousands)
|
September
30,
2006
|
|||
U.S.
Treasury and agency obligations
|
$
|
35,065
|
||
Corporate
notes
|
25,471
|
|||
U.S.
state governments, agencies and municipal securities
|
16,256
|
|||
Total
restricted investments
|
$
|
76,792
|
September
30, 2006
|
December
31, 2005
|
||||||||||||||||||
(dollars
in thousands)
|
Weighted
Average Life
(in
Years
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Weighted
Average Life (in Years)
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
|||||||||||||
Amortized
intangible assets:
|
|||||||||||||||||||
Leased
wireless spectrum licenses
|
14.2
|
$
|
51,137
|
$
|
3,310
|
15.0
|
$
|
31,347
|
$
|
1,510
|
|||||||||
Purchased
technology
|
7.0
|
8,600
|
1,476
|
7.0
|
8,600
|
555
|
|||||||||||||
Purchased
customer base
|
8.0
|
5,700
|
856
|
8.0
|
5,700
|
321
|
|||||||||||||
Non-compete
agreements
|
4.0
|
2,800
|
1,029
|
4.0
|
2,800
|
537
|
|||||||||||||
Other
|
6.5
|
174
|
7
|
3.0
|
16
|
3
|
|||||||||||||
$
|
68,411
|
$
|
6,678
|
$
|
48,463
|
$
|
2,926
|
||||||||||||
Intangible
assets not subject to amortization:
|
|||||||||||||||||||
Wireless
spectrum licenses
|
$
|
326,310
|
$
|
15,630
|
|||||||||||||||
Goodwill
|
32,829
|
24,782
|
|||||||||||||||||
Purchased
tradenames and trademarks
|
2,400
|
2,400
|
|||||||||||||||||
$
|
361,539
|
$
|
42,812
|
(in
thousands)
|
Estimated
Useful
life
(in
years)
|
September
30, 2006
|
December
31, 2005
|
|||||||
Furniture
and equipment
|
2-10
|
$
|
11,865
|
$
|
7,071
|
|||||
Purchased
software
|
2-3
|
7,184
|
3,459
|
|||||||
Leasehold
improvements
|
1-5
|
1,788
|
879
|
|||||||
Construction
in progress
|
N/A
|
829
|
380
|
|||||||
21,666
|
11,789
|
|||||||||
Less
accumulated depreciation
|
(4,870
|
)
|
(697
|
)
|
||||||
Total
property and equipment, net
|
$
|
16,796
|
$
|
11,092
|
||||||
4. |
Business
Combinations
|
(in
thousands)
|
||||
Advances
to CYGNUS, including interest
|
$
|
18,145
|
||
Accumulated
CYGNUS losses while consolidated in accordance with FIN 46R
|
(8,550
|
)
|
||
Conversion
of convertible preferred stock into common stock
|
1,884
|
|||
Membership
interests issued
|
1,558
|
|||
Cash
paid
|
53
|
|||
Less
cash acquired
|
(4,190
|
)
|
||
Total
acquisition cost
|
$
|
8,900
|
||
(in
thousands)
|
||||
Accounts
receivable
|
$
|
196
|
||
Prepaid
expenses and other current assets
|
511
|
|||
Property
and equipment
|
704
|
|||
Goodwill
|
8,223
|
|||
Deposits
and other noncurrent assets
|
658
|
|||
Accounts
payable, accrued expenses and other current liabilities
|
(613
|
)
|
||
Unfavorable
lease liability
|
(692
|
)
|
||
Long-term
obligations
|
(87
|
)
|
||
Total
acquisition cost
|
$
|
8,900
|
(in
thousands)
|
Opening
Balance
Sheet
Accrual
|
Adjustment
to Goodwill
|
Balance
at
September
30,
2006
|
|||||||
Unfavorable
lease liability
|
$
|
692
|
$
|
(374
|
)
|
$
|
318
|
|||
5.
|
Long-Term
Obligations
|
(dollars
in thousands)
|
September
30,
2006
|
December
31,
2005
|
|||||
7%
Senior Secured Notes, $350,000 due 2010, net of unamortized discount
and
fair value of warrants of $73,604, interest payable semiannually
in
January and July each year
|
$
|
276,396
|
$
|
—
|
|||
Wireless
spectrum lease, imputed interest at 8%, due 2019, net of unamortized
discounts of $8,281 and $9,353, respectively, with three renewal
options
for 15 years each
|
15,919
|
17,047
|
|||||
Wireless
spectrum lease, imputed interest at 8%, due 2015, net of unamortized
discount of $1,036, with five renewal options for 10 years
each
|
2,356
|
—
|
|||||
Research
and development funding due to Tekes, the National Technology Agency
of
Finland, interest at 3%, due annually in December through
2008
|
320
|
—
|
|||||
Industrial
research assistance contribution from the Canadian government, paid
in
full August 2006
|
—
|
87
|
|||||
294,991
|
17,134
|
||||||
Less
current portion
|
(2,681
|
)
|
(2,200
|
)
|
|||
$
|
292,310
|
$
|
14,934
|
||||
(in
thousands)
|
||||
Fiscal
Years Ending,
|
||||
2006
(remaining three months)
|
$
|
261
|
||
2007
|
2,680
|
|||
2008
|
2,685
|
|||
2009
|
2,175
|
|||
2010
|
352,175
|
|||
Thereafter
|
17,936
|
|||
377,912
|
||||
Less
unamortized discounts
|
(82,921
|
)
|
||
Less
current portion
|
(2,681
|
)
|
||
Total
long-term obligations
|
$
|
292,310
|
6. |
Income
Taxes
|
7. |
Commitments
and Contingencies
|
(in
thousands)
|
||||
Fiscal
Years Ending,
|
||||
2006
(remaining three months)
|
$
|
6,811
|
||
2007
|
278
|
|||
2008
|
282
|
|||
2009
|
286
|
|||
2010
|
290
|
|||
Thereafter
|
6,262
|
|||
$
|
14,209
|
|||
(in
thousands)
|
||||
Fiscal
Years Ending,
|
||||
2006
(remaining three months)
|
$
|
4,102
|
||
2007
|
4,972
|
|||
2008
|
7,121
|
|||
Total
|
$
|
16,195
|
(in
thousands)
|
Lease
Commitments
|
Sublease
Rentals
|
Net
|
||||||||||
Fiscal
Years Ending,
|
|||||||||||||
2006
(remaining three months)
|
$
|
1,432
|
$
|
(761
|
)
|
$
|
671
|
||||||
2007
|
5,995
|
(1,099
|
)
|
4,896
|
|||||||||
2008
|
5,580
|
(198
|
)
|
5,382
|
|||||||||
2009
|
4,077
|
—
|
4,077
|
||||||||||
2010
|
2,473
|
—
|
2,473
|
||||||||||
Thereafter
|
49
|
—
|
49
|
||||||||||
$
|
19,606
|
$
|
(2,058
|
)
|
$
|
17,548
|
|||||||
8. |
Equity
Compensation Plans
|
Options
(in
thousands)
|
Weighted
Average Exercise Price per Unit
|
Weighted
Average Remaining Contractual Term (in Years)
|
Aggregate
Intrinsic Value (in thousands)
|
||||||||||
Outstanding
at December 31, 2005
|
37,383
|
$
|
1.00
|
||||||||||
Granted
|
25,418
|
$
|
1.00
|
||||||||||
Exercised
|
(1,353
|
)
|
$
|
1.00
|
|||||||||
Forfeited
|
(1,897
|
)
|
$
|
1.00
|
|||||||||
Outstanding
at September 30, 2006
|
59,551
|
$
|
1.00
|
9.0
|
$
|
—
|
|||||||
Exercisable
at September 30, 2006
|
59,551
|
$
|
1.00
|
9.0
|
$
|
—
|
Options
(in
thousands)
|
Weighted
Average Grant Date Fair Value per Unit
|
||||||
Unvested
at December 31, 2005
|
31,310
|
$
|
—(1)
|
|
|||
Granted
|
25,418
|
$
|
0.37
|
||||
Vested
|
(13,147
|
)
|
$
|
0.12(1)
|
|
||
Forfeited
|
(1,839
|
)
|
$
|
0.06(1)
|
|
||
Early
exercise of unvested options
|
(35
|
)
|
$
|
0.17(1)
|
|
||
Unvested
at September 30, 2006
|
41,707
|
$
|
0.18(1)
|
(1)
|
The
weighted average grant date fair value per unit includes options
granted
prior to January 1, 2006 which have no grant date fair value assigned
as
NextWave has adopted the provisions of FAS 123R using the prospective
transition method, whereby it continues to account for unvested equity
awards to employees outstanding at December 31, 2005 using APB 25,
and
apply FAS 123R to all awards granted or modified after that
date.
|
Options
(in
thousands)
|
Weighted
Average Exercise Price per Share
|
Weighted
Average Remaining Contractual Term (in Years)
|
Aggregate
Intrinsic Value
(in
thousands)
|
||||||||||
Outstanding
at December 31, 2005
|
7,465
|
$
|
0.11
|
||||||||||
Granted
|
30
|
$
|
0.31
|
||||||||||
Exercised
|
(257
|
)
|
$
|
0.10
|
|||||||||
Forfeited
|
(609
|
)
|
$
|
0.11
|
|||||||||
Outstanding
at September 30, 2006
|
6,629
|
$
|
0.11
|
5.9
|
$
|
1,277
|
|||||||
Exercisable
at September 30, 2006
|
4,863
|
$
|
0.11
|
6.2
|
$
|
930
|
Options
(in
thousands)
|
Weighted
Average Grant Date Fair Value per Share
|
||||||
Unvested
at December 31, 2005
|
5,963
|
$
|
—(1)
|
|
|||
Granted
|
30
|
$
|
0.13
|
||||
Vested
|
(1,821
|
)
|
$
|
—(1)
|
|
||
Forfeited
|
(601
|
)
|
$
|
—(1)
|
|||
Unvested
at September 30, 2006
|
3,571
|
$
|
—(1)
|
|
(1)
|
The
weighted average grant date fair value per share includes options
granted
prior to January 1, 2006 which have no grant date fair value assigned
as
NextWave has adopted the provisions of FAS 123R using the prospective
transition method, whereby it continues to account for unvested equity
awards to employees outstanding at December 31, 2005 using APB 25,
and
apply FAS 123R to all awards granted or modified after that
date.
|
Options
(in thousands)
|
Weighted
Average Exercise Price per Share
|
Weighted
Average Remaining Contractual Term (in Years)
|
Aggregate
Intrinsic Value (in thousands)
|
||||||||||
Outstanding
at December 31, 2005
|
8,225
|
$
|
1.00
|
||||||||||
Granted
|
1,145
|
$
|
1.00
|
||||||||||
Forfeited
|
(267
|
)
|
$
|
1.00
|
|||||||||
Outstanding
at September 30, 2006
|
9,103
|
$
|
1.00
|
5.9
|
$
|
—
|
|||||||
Exercisable
at September 30, 2006
|
2,337
|
$
|
1.00
|
5.8
|
$
|
—
|
|||||||
Options
(in
thousands)
|
Weighted
Average Grant Date Fair Value per Share
|
||||||
Unvested
at December 31, 2005
|
8,225
|
$
|
—(1)
|
|
|||
Granted
|
1,145
|
$
|
0.42
|
||||
Vested
|
(2,314
|
)
|
$
|
—(1)
|
|
||
Forfeited
|
(267
|
)
|
$
|
0.03(1)
|
|
||
Unvested
at September 30, 2006
|
6,789
|
$
|
0.07(1)
|
|
(1)
|
The
weighted average grant date fair value per share includes options
granted
prior to January 1, 2006 which have no grant date fair value assigned
as
NextWave has adopted the provisions of FAS 123R using the prospective
transition method, whereby it continues to account for unvested equity
awards to employees outstanding at December 31, 2005 using APB 25,
and
apply FAS 123R to all awards granted or modified after that
date.
|
9. |
Supplemental
Cash Flow Information
|
(in
thousands)
|
Nine
Months Ended
September
30,
2006
|
Inception
(April
13, 2005) to
September
30,
2005
|
|||||
Cash
paid for taxes
|
$
|
109
|
$
|
145
|
|||
Cash
paid for interest
|
—
|
—
|
|||||
Noncash
investing and financing activities:
|
|||||||
Fair
value of warrants issued in connection with the issuance of 7% Senior
Secured Notes
|
24,600
|
—
|
|||||
Wireless
spectrum licenses acquired with lease obligations
|
2,478
|
—
|
|||||
Membership
interests issued for business acquisitions
|
1,558
|
—
|
10. |
Subsequent
Events
|
Three
Months Ended
|
||||||||||||||||||||||||||||
April
1, 2006
|
July
1, 2006
|
September
30, 2006
|
||||||||||||||||||||||||||
(in
thousands)
|
As
Reported
|
Adjustments
|
As
Restated
|
As
Reported
|
Adjustments
|
As
Restated
|
As
Reported
|
Adjustments
|
As
Restated
|
|||||||||||||||||||
Consolidated
Statements
of Operations
|
||||||||||||||||||||||||||||
Revenues
|
$
|
5,673
|
$
|
(1,768
|
)
|
$
|
3,905
|
$
|
8,331
|
$
|
(2,038
|
)
|
$
|
6,293
|
$
|
8,051
|
$
|
(1,381
|
)
|
$
|
6,670
|
|||||||
Operating
expenses:
|
||||||||||||||||||||||||||||
Cost
of revenues
|
2,686
|
(879
|
)
|
1,807
|
3,198
|
(560
|
)
|
2,638
|
4,568
|
(1,062
|
)
|
3,506
|
||||||||||||||||
Engineering,
research and development
|
10,233
|
856
|
11,089
|
12,601
|
693
|
13,294
|
11,455
|
179
|
11,634
|
|||||||||||||||||||
General
and administrative
|
8,492
|
—
|
8,492
|
12,140
|
—
|
12,140
|
14,896
|
—
|
14,896
|
|||||||||||||||||||
Sales
and marketing
|
1,613
|
—
|
1,613
|
2,539
|
—
|
2,539
|
2,992
|
—
|
2,992
|
|||||||||||||||||||
Purchased
in-process research and development
|
—
|
—
|
—
|
1,648
|
—
|
1,648
|
—
|
—
|
—
|
|||||||||||||||||||
Total
operating expenses
|
23,024
|
(23
|
)
|
23,001
|
32,126
|
133
|
32,259
|
33,911
|
(883
|
)
|
33,028
|
|||||||||||||||||
Loss
from operations
|
(17,351
|
)
|
(1,745
|
)
|
(19,096
|
)
|
(23,795
|
)
|
(2,171
|
)
|
(25,966
|
)
|
(25,860
|
)
|
(498
|
)
|
(26,358
|
)
|
||||||||||
Other
income (expense)
|
||||||||||||||||||||||||||||
Interest
income
|
3,187
|
—
|
3,187
|
3,197
|
—
|
3,197
|
3,419
|
—
|
3,419
|
|||||||||||||||||||
Interest
expense
|
(308
|
)
|
—
|
(308
|
)
|
(366
|
)
|
—
|
(366
|
)
|
(9,010
|
)
|
—
|
(9,010
|
)
|
|||||||||||||
Other
income and expense, net
|
(92
|
)
|
—
|
(92
|
)
|
216
|
—
|
216
|
(26
|
)
|
—
|
(26
|
)
|
|||||||||||||||
Total
other income (expense), net
|
2,787
|
—
|
2,787
|
3,047
|
—
|
3,047
|
(5,617
|
)
|
—
|
(5,617
|
)
|
|||||||||||||||||
Loss
before provision for income taxes and minority interest
|
(14,564
|
)
|
(1,745
|
)
|
(16,309
|
)
|
(20,748
|
)
|
(2,171
|
)
|
(22,919
|
)
|
(31,477
|
)
|
(498
|
)
|
(31,975
|
)
|
||||||||||
Income
tax benefit (provision)
|
209
|
—
|
209
|
—
|
—
|
—
|
(93
|
)
|
—
|
(93
|
)
|
|||||||||||||||||
Minority
interest
|
657
|
—
|
657
|
214
|
—
|
214
|
265
|
—
|
265
|
|||||||||||||||||||
Net
loss
|
$
|
(13,698
|
)
|
$
|
(1,745
|
)
|
$
|
(15,443
|
)
|
$
|
(20,534
|
)
|
$
|
(2,171
|
)
|
$
|
(22,705
|
)
|
$
|
(31,305
|
)
|
$
|
(498
|
)
|
$
|
(31,803
|
)
|
April
1, 2006
|
July
1, 2006
|
September
30, 2006
|
||||||||||||||||||||||||||
(in
thousands)
|
As
Reported
|
Adjustments
|
As
Restated
|
As
Reported
|
Adjustments
|
As
Restated
|
As
Reported
|
Adjustments
|
As
Restated
|
|||||||||||||||||||
Consolidated
Balance
Sheets
|
||||||||||||||||||||||||||||
ASSETS
|
||||||||||||||||||||||||||||
Current
assets:
|
||||||||||||||||||||||||||||
Cash
and cash equivalents
|
$
|
99,871
|
$
|
—
|
$
|
99,871
|
$
|
30,643
|
$
|
—
|
$
|
30,643
|
$
|
25,371
|
$
|
—
|
$
|
25,371
|
||||||||||
Short-term
investments
|
266,716
|
—
|
266,716
|
309,794
|
—
|
309,794
|
196,801
|
—
|
196,801
|
|||||||||||||||||||
Accounts
receivable, net
|
2,235
|
—
|
2,235
|
5,206
|
—
|
5,206
|
5,728
|
—
|
5,728
|
|||||||||||||||||||
Deposits
for wireless spectrum bids
|
—
|
—
|
—
|
—
|
—
|
—
|
142,866
|
—
|
142,866
|
|||||||||||||||||||
Prepaid
expenses and other current assets
|
7,201
|
21
|
7,222
|
10,623
|
(110
|
)
|
10,513
|
9,494
|
772
|
10,266
|
||||||||||||||||||
Total
current assets
|
376,023
|
21
|
376,044
|
356,266
|
(110
|
)
|
356,156
|
380,260
|
772
|
381,032
|
||||||||||||||||||
Restricted
cash
|
—
|
—
|
—
|
—
|
—
|
—
|
76,792
|
—
|
76,792
|
|||||||||||||||||||
Wireless
spectrum licenses, net
|
130,889
|
—
|
130,889
|
130,374
|
—
|
130,374
|
374,137
|
—
|
374,137
|
|||||||||||||||||||
Goodwill
|
27,001
|
—
|
27,001
|
32,936
|
—
|
32,936
|
32,829
|
—
|
32,829
|
|||||||||||||||||||
Other
intangible assets,
net
|
17,449
|
—
|
17,449
|
16,846
|
—
|
16,846
|
16,306
|
—
|
16,306
|
|||||||||||||||||||
Property
and equipment, net
|
15,040
|
—
|
15,040
|
14,632
|
—
|
14,632
|
16,796
|
—
|
16,796
|
|||||||||||||||||||
Prepaid
expenses and other noncurrent assets
|
7,708
|
—
|
7,708
|
6,761
|
—
|
6,761
|
8,279
|
—
|
8,279
|
|||||||||||||||||||
Total
assets
|
$
|
574,110
|
$
|
21
|
$
|
574,131
|
$
|
557,815
|
$
|
(110
|
)
|
$
|
557,705
|
$
|
905,399
|
$
|
772
|
$
|
906,171
|
|||||||||
LIABILITIES
AND
MEMBERS’
EQUITY
|
||||||||||||||||||||||||||||
Current
liabilities:
|
||||||||||||||||||||||||||||
Accounts
payable
|
$
|
4,488
|
$
|
—
|
$
|
4,488
|
$
|
2,274
|
$
|
—
|
$
|
2,274
|
$
|
2,369
|
$
|
—
|
$
|
2,369
|
||||||||||
Accrued
expenses
|
7,058
|
—
|
7,058
|
12,104
|
—
|
12,104
|
19,465
|
—
|
19,465
|
|||||||||||||||||||
Current
portion of long-term obligations
|
2,575
|
—
|
2,575
|
2,822
|
—
|
2,822
|
2,681
|
—
|
2,681
|
|||||||||||||||||||
Deferred
revenue
|
4,021
|
1,766
|
5,787
|
3,100
|
3,806
|
6,906
|
2,867
|
5,186
|
8,053
|
|||||||||||||||||||
Current
tax liability
|
—
|
—
|
—
|
—
|
—
|
—
|
40
|
—
|
40
|
|||||||||||||||||||
Other
current liabilities and deferred credits
|
755
|
—
|
755
|
1,009
|
—
|
1,009
|
961
|
—
|
961
|
|||||||||||||||||||
Total
current liabilities
|
18,897
|
1,766
|
20,663
|
21,309
|
3,806
|
25,115
|
28,383
|
5,186
|
33,569
|
|||||||||||||||||||
Deferred
income tax liabilities
|
—
|
—
|
—
|
—
|
—
|
—
|
67,673
|
—
|
67,673
|
|||||||||||||||||||
Long-term
deferred credits and reserves
|
8,203
|
—
|
8,203
|
8,575
|
—
|
8,575
|
8,243
|
—
|
8,243
|
|||||||||||||||||||
Long-term
obligations
|
15,311
|
—
|
15,311
|
15,661
|
—
|
15,661
|
292,310
|
—
|
292,310
|
|||||||||||||||||||
Minority
interest in subsidiary
|
889
|
—
|
889
|
1,143
|
—
|
1,143
|
884
|
—
|
884
|
|||||||||||||||||||
Commitments
and contingencies
|
||||||||||||||||||||||||||||
Members’
equity:
|
||||||||||||||||||||||||||||
Membership
interests
|
591,452
|
—
|
591,452
|
592,389
|
—
|
592,389
|
619,966
|
—
|
619,966
|
|||||||||||||||||||
Accumulated
other comprehensive loss
|
(992
|
)
|
—
|
(992
|
)
|
(1,078
|
)
|
—
|
(1,078
|
)
|
(571
|
)
|
—
|
(571
|
)
|
|||||||||||||
Accumulated
deficit
|
(59,650
|
)
|
(1,745
|
)
|
(61,395
|
)
|
(80,184
|
)
|
(3,916
|
)
|
(84,100
|
)
|
(111,489
|
)
|
(4,414
|
)
|
(115,903
|
)
|
||||||||||
Total
members’ equity
|
530,810
|
(1,745
|
)
|
529,065
|
511,127
|
(3,916
|
)
|
507,211
|
507,906
|
(4,414
|
)
|
503,492
|
||||||||||||||||
Total
liabilities and members’ equity
|
$
|
574,110
|
$
|
21
|
$
|
574,131
|
$
|
557,815
|
$
|
(110
|
)
|
$
|
557,705
|
$
|
905,399
|
$
|
772
|
$
|
906,171
|
(in
thousands)
|
September
30,
2006
|
Increase
(Decrease) for the Three Months Ended September 30,
2006
|
Increase
(Decrease) for the Nine Months Ended
September
30,
2006
|
July
1,
2006
|
December
31,
2005
|
|||||||||||
Working
capital
|
$
|
347,463
|
$
|
12,506
|
$
|
(108,955
|
)
|
$
|
334,957
|
$
|
456,418
|
|||||
Cash
and cash equivalents
|
25,371
|
(5,272
|
)
|
(68,278
|
)
|
30,643
|
93,649
|
|||||||||
Short-term
investments
|
196,801
|
(112,993
|
)
|
(168,781
|
)
|
309,794
|
365,582
|
|||||||||
Restricted
investments
|
76,792
|
76,792
|
76,792
|
—
|
—
|
|||||||||||
Total
unrestricted and restricted cash, cash equivalents and
investments
|
$
|
298,964
|
$
|
(41,473
|
)
|
$
|
(160,267
|
)
|
$
|
340,437
|
$
|
459,231
|
(in
thousands)
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
Inception
(April
13, 2005)
to
September
30,
|
|||||||
2006
|
2006
|
2005
|
||||||||
Beginning
unrestricted and restricted cash, cash equivalents and
investments
|
$
|
340,437
|
$
|
459,231
|
$
|
555,099
|
||||
Cash
paid for business combinations, net of cash acquired
|
(75
|
)
|
(4,950
|
)
|
(46,621
|
)
|
||||
Cash
paid for acquisition of wireless spectrum licenses and subsequent
lease
obligations
|
(317,615
|
)
|
(400,049
|
)
|
(50
|
)
|
||||
Proceeds
from long-term obligations, net of costs to issue
|
295,098
|
295,098
|
—
|
|||||||
Cash
used by Inquam Broadband Ltd joint venture, net of cash investment
from
joint venture partner
|
(328
|
)
|
(961
|
)
|
—
|
|||||
Cash
used in all other operating activities
|
(16,794
|
)
|
(38,464
|
)
|
(12,415
|
)
|
||||
Acquisition
of property and equipment
|
(3,833
|
)
|
(10,990
|
)
|
(3,474
|
)
|
||||
Proceeds
from the sale of membership interests and subsidiary common
stock
|
2,049
|
2,379
|
—
|
|||||||
Other,
net
|
(25
|
)
|
(2,330
|
)
|
(11
|
)
|
||||
Ending
unrestricted and restricted cash, cash equivalents and
investments
|
$
|
298,964
|
$
|
298,964
|
$
|
492,528
|
· |
We
plan to fund our WiMAX technology development activities with our
$222.2
million of unrestricted cash and investments until such point that
we
begin sales of our chipsets and network component products and enter
into
licensing arrangements for our wireless broadband technologies. Our
wireless broadband products and technologies are in the early stages
of
development and will require a substantial investment before they
may
become commercially viable. Our research and development expenses
for our
wireless broadband products and technologies, including our chipsets
were
$9.0 million in the third quarter of 2006. Largely due to our planned
increase in engineering personnel, we expect our WiMAX development
expenses to increase by approximately 50% over the next twelve months.
Because we are adopting a strategy of licensing our technology and
selling
chipsets to third party equipment manufacturers, we do not anticipate
that
the license and sale of our products and technologies will require
significant additional capital.
|
· |
Our
mobile WiMAX network solutions offerings will involve a service business
and are not expected to require significant additional capital
expenditures beyond what is necessary to complete our Henderson,
Nevada
office building and our trial network. With the exception of our
trial
network in Henderson, Nevada, we will not build-out wireless networks,
but
will provide our technologies, services and spectrum to our network
partners who are engaged in these activities. In 2006, we expect
to expend
$5.0 million on the deployment of our trial network in Henderson,
Nevada.
If that trial network is successful, we anticipate that we will seek
a
network partner to expand the trial network to cover most of the
Las Vegas
metropolitan region.
|
Payments
Due by Period(1)
|
||||||||||||||||
(in
thousands)
|
Total
|
Remainder
of
2006
|
Years
2007-
2008
|
Years
2009-
2010
|
Years
2011
and
Thereafter
|
|||||||||||
Long-term
obligations
|
$
|
377,912
|
$
|
261
|
$
|
5,365
|
$
|
354,350
|
$
|
17,936
|
||||||
Pending
wireless spectrum acquisitions
|
14,209
|
6,811
|
560
|
576
|
6,262
|
|||||||||||
Services
and other purchase agreements
|
16,195
|
4,102
|
12,093
|
—
|
—
|
|||||||||||
Pending
business acquisition
|
3,147
|
3,147
|
—
|
—
|
—
|
|||||||||||
Capital
expenditures
|
8,200
|
—
|
8,200
|
—
|
—
|
|||||||||||
Operating
leases
|
19,606
|
1,432
|
11,575
|
6,550
|
49
|
|||||||||||
Total
|
$
|
439,269
|
$
|
15,753
|
$
|
37,793
|
$
|
361,476
|
$
|
24,247
|
(1)
|
We
are participating with other WCS band license holders in a waiver
process
with the FCC to move the substantial service dates for this license
band
from July 2007 to the later of July 2010 or three years from FCC
adoption
of certain technical rules for the WCS band. If the substantial service
dates are not extended, in order to meet the current substantial
service
date of July 2007, we estimate that an expenditure of up to $40 million
would be required over the next 12
months.
|
ITEM 1. |
Legal
Proceedings
|
ITEM 1A. |
Risk
Factors
|
ITEM 2. |
Unregistered
Sales of Equity Securities and Use of
Proceeds
|
ITEM
3.
|
Defaults
Upon Senior Securities
|
ITEM 4. |
Submission
of Matters to a Vote of Security
Holders
|
ITEM 5. |
Other
Information
|
ITEM 6. |
Exhibits
|
10.1 |
Description
of AWS Purchase Obligation. (1)
|
31.1 |
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Allen
Salmasi.
|
31.2 |
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for George
C.
Alex.
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 for Allen
Salmasi.
|
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 for George C.
Alex.
|
NEXTWAVE
WIRELESS INC.
|
||
(Registrant)
|
||
April
20, 2007
|
By:
|
|
(Date)
|
George
C. Alex
|
|
Executive
Vice President and
|
||
Chief
Financial Officer
|
Exhibit
No.
|
Description
|
|
10.1
|
Description
of AWS Purchase Obligation. (1)
|
|
31.1
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Allen
Salmasi.
|
|
31.2
|
Certification
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for George
C.
Alex.
|
|
32.1
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 for Allen Salmasi.
|
|
32.2
|
Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of
the Sarbanes-Oxley Act of 2002 for George C. Alex.
|
|
_______________________
|
||
(1)
Described in the Registrant’s Current Report on Form 8-K filed on
September 22, 2006.
|