Delaware
|
20-5361630
|
(State
or other jurisdiction of
|
(I.R.S.
Employer
|
Incorporation
or organization)
|
Identification
No.)
|
12670
High Bluff Drive
|
|
San
Diego, California
|
92130
|
(Address
of principal executive offices)
|
(zip
code)
|
Title
of each class
|
Name
of each exchange on which registered
|
|
Common
Stock, par value $0.001 per share
|
NASDAQ
Global Market
|
Item
|
Page
|
|
PART
I
|
||
1
|
BUSINESS
|
|
1A
|
RISK
FACTORS
|
|
1B
|
UNRESOLVED
STAFF COMMENTS
|
|
2
|
PROPERTIES
|
|
3
|
LEGAL
PROCEEDINGS
|
|
4
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
|
|
||
PART
II
|
||
|
||
5
|
MARKET
FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
|
6
|
SELECTED
FINANCIAL DATA
|
|
7
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
|
7A
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
8
|
FINANCIAL
STATEMENTS AND SUPPLEMENTARY DATA
|
|
9
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
|
9A
|
CONTROLS
AND PROCEDURES
|
|
9B
|
OTHER
INFORMATION
|
|
|
||
|
PART
III
|
|
|
||
10
|
DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT
|
|
11
|
EXECUTIVE
COMPENSATION
|
|
12
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
|
|
13
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
|
14
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
|
PART
IV
|
||
15
|
EXHIBITS
|
|
|
SIGNATURES
|
|
·
|
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
|
|
·
|
the
other risks described under “Risk
Factors.”
|
· |
Improve
the performance of and economics of WiMAX and Wi-Fi networks and
enhance
their ability to cost-effectively handle the large volume of network
traffic associated with bandwidth intensive, multimedia applications
such
as mobile television, video-on-demand, streaming hi-fidelity audio,
two-way video telephony and real-time gaming;
|
· |
Improve
the performance, power consumption and cost characteristics of mobile
broadband enabled subscriber terminals; and
|
· |
Improve
the degree of interoperability and integration between Wi-Fi and
WiMAX
systems for both Local Area Networks (LANs) and Wide Area Networks
(WANs);
|
· |
Improve
the efficiencies, costs, performance of video and audio broadcast
applications over WiMAX networks; and
|
· |
Improve
service provider economics and roaming capabilities by enabling WiMAX
networks and WiMAX enabled devices to seamlessly operate across multiple
frequency bands including the use of certain unlicensed
bands.
|
|
·
|
Remain
connected to their favorite music, movies and
television;
|
|
·
|
Participate
in interactive, real-time gaming;
|
|
·
|
Easily
establish high-speed connections to their desired web
content;
|
|
·
|
Remotely
access their personal Digital Video Recorders and watch recorded
television;
|
|
·
|
Remotely
view real-time images from home or office security
cameras;
|
|
·
|
Conduct
two-way video conferences;
|
|
·
|
Capture,
transmit or receive high resolution digital photos or video to
friends,
family members, and business
associates;
|
|
·
|
Engage
in a wide-range of multimedia shopping services customized via
location
based services;
|
|
·
|
Conduct
a broad range of financial transactions;
|
|
·
|
Make
“landline quality”, VoIP telephone calls;
and
|
|
·
|
Participate
in social network activities with portable devices away from
home or
office.
|
|
·
|
Increasing
global demand by mobile phone users for easy and affordable mobile
access
to the Internet and on-line multimedia content sources on a fully
mobile
basis;
|
|
·
|
A
growing awareness of the limitations of existing third generation
(3G)
wireless networks;
|
|
·
|
Broader
availability of high-quality, multimedia content available for
distribution over wireless
networks;
|
|
·
|
Mandates
by public safety agencies for reliable mobile broadband
services;
|
|
·
|
The
ability of wireless technologies such as WiMAX to serve as a
cost-effective way to deliver broadband to millions of homes in
the U.S.
and abroad with no or limited (e.g., dial-up) Internet connectivity;
and
|
|
·
|
Increasing
market demand for fully integrated wireless local area network
(“LAN”)
and wide
area network (“WAN”)
solutions
that
utilize both Wi-Fi and WiMAX technologies for converged devices,
appliances and consumer
electronics.
|
|
·
|
Mobile
WiMAX enjoys broad support from wireless industry leaders. Members
of the
WiMAX Forum, an industry organization dedicated to promoting and
certifying WiMAX products, include Alcatel, AT&T, Bell Canada, British
Telecom, Broadcom, Cisco, Deutsche Telekom, Ericsson, Intel, Korea
Telecom, LG Electronics, Lucent, Motorola, NEC, Nokia, Nortel,
Samsung,
Siemens, Sprint Nextel and Texas
Instruments.
|
|
·
|
Companies
such as Intel, who are interested in seeing mobile WiMAX integrated
into
laptops and other mobile computing platforms, are actively working
to
drive the market adoption of WiMAX and the deployment of WiMAX
networks.
|
|
·
|
Domestic
and international support by network operators for WiMAX is growing.
To
date, WiMAX networks have been announced in the U.S. by Sprint-Nextel
and
Clearwire. In addition, numerous WiMAX networks have been announced
by
operators in Europe, Asia, South America, and the Middle East.
Activity is
under way within the ITU to include mobile WiMAX in the family
of IMT-2000
approved standards.
|
|
·
|
Mobile
WiMAX economics, including network construction and operating costs,
are
expected to be competitive with those of alternative mobile broadband
technologies.
|
|
·
|
Mobile
WiMAX incorporates quality of service capabilities that are required
to
efficiently handle quality-of-service dependent applications such
as VoIP
telephony, video conferencing and real-time, interactive
gaming.
|
|
·
|
Mobile
WiMAX network performance, including the ability to handle the
high
volumes of traffic associated with mobile TV, mobile video-on-demand
and
video telephony are expected to be competitive with alternative
mobile
broadband technologies.
|
· |
Digital
Baseband ASICs:
An ASIC is an integrated circuit or chip customized for a specific
purpose. Our family of WiMAX/Wi-Fi based digital baseband ASICs
under
development represent the core of our system architecture. Our
first
baseband WiMAX ASIC, the NW1100, is currently in the final stages
of
development and the final description of the circuit is expected
to be
sent to manufacture in Q3 2007. This ASIC includes many of the
enhancements that have been developed by ATG engineers and is designed
to
showcase and validate these innovations.. The family of baseband
ASIC that
ATG is developing include a wide array of interfaces to accommodate
a wide
range of device types including mobile handsets, PDAs, mobile PC
cards,
USB devices, and CPE modems. For this reason, ATG is also creating
a
family of device reference designs, including those for handsets
and media
players, that will highlight the features of its WiMAX ASIC
products.
|
· |
Radio
Frequency Integrated Circuits (RFICs):
An RFIC is part of the front-end of a radio system that receives
a radio
frequency signal, converts it to a lower frequency and modifies it
for
further processing. Designed to utilize multiple spectral bands to
improve
performance and flexibility, our RFICs are part of an advanced radio
frequency subsystem that is matched to our family of baseband ASICs
and is
expected to enable a mobile device to operate over a wide range of
operational frequencies without sacrificing overall performance.
We
believe that enabling WiMAX to operate over multiple frequency bands
will
significantly improve the economics of WiMAX network deployments
for the
following reasons:
|
|
-
|
WiMAX
network operators will have the ability to assemble a licensed
spectrum
footprint using multiple frequency bands as opposed to having to
acquire
scarce spectrum in a single frequency
band;
|
|
-
|
carriers
will have the ability to address network coverage and capacity
issues via
the acquisition of low-cost spectrum as opposed to costly cell
splitting;
|
|
-
|
the
ability of frequency-agile WiMAX devices to roam between multiple
WiMAX
networks will be facilitated; and
|
|
-
|
A
single chipset family capable of addressing markets worldwide
will permit
economies of scale and result in lower device costs.
|
· |
Pico
Base Transceiver Station (BTS): A BTS, also known as a wireless
base
station, includes equipment needed to transmit and receive radio
signals
(transceiver) to and from subscriber devices, antennas, and the
electronics required to communicate with other network elements.
Unlike a
conventional BTS which can provide radio coverage over a radius
of several
miles, a pico BTS is much smaller in size and is intended to provide
low-cost capacity and coverage relief in very small geographic
areas.
NextWave is currently in the design phase of silicon products to
support a
PicoBTS/Access point product family. This design is currently being
implemented in field-programmable gate array (“FPGA”) form and will be
field tested later this year.
|
|
·
|
PacketVideo
is already a global provider of device embedded, mobile multimedia
software and has broad experience in developing software for memory
and
processor limited mobile devices.
|
|
·
|
As
part of NextWave, PacketVideo will have full access to the company’s
extensive mobile broadband technology development activities and
will be
able to develop new multimedia software applications that take
full
advantage of the unique capabilities we are designing into our
products
and technologies.
|
|
·
|
Unlike
the aforementioned PC software environment, there are no dominant
mobile
device operating systems and, in fact, over two dozen such operating
systems are currently in use by mobile handset manufacturers worldwide.
PacketVideo’s software has been engineered to work with virtually all of
the most popular mobile device operating systems in use today.
By
maintaining this flexible approach, we believe that PacketVideo’s next
generation of mobile broadband software will be well-positioned
to enjoy
continued wide scale industry
adoption.
|
· |
WLS
2100 Micro Cellular-Mesh Wi-Fi Sector Base Station:
The WLS 2100 is a 120 degree multi-radio sector panel designed for
easy
installation on building sides, rooftops, towers and utility poles.
The
WLS 2100 is equipped with two xRF-enabled 802.11 b/g access radios
and a
separate 802.11a channel for beamformed
user access and high-performance mesh backhaul.
|
· |
WLP
1100 Pico Cellular-Mesh Wi-Fi- Base Station:
The WLP 1100 is an omni-directional multi-radio weather-proof unit
intended for street-level pole/utility pole Wi-Fi applications. The
WLP
1100 is equipped with one xRF-powered 802.11 b/g access radio and
a
separate 802.11a channel for beamformed
user access and high-performance mesh networking and backhaul.
|
· |
MBW
EMS/NMS Platform:
The MBW EMS/NMS platform offers a sophisticated set of management
tools
for element management as well as network-wide performance monitoring
and
management. From the MBW EMS/NMS console, operators can proactively
monitor network and RF performance and dynamically reconfigure their
Wi-Fi
infrastructure, at the access point level or network-wide, to meet
varying
RF environments, network conditions, traffic and user loads.
|
|
·
|
RF
design;
|
|
·
|
Network
construction;
|
|
·
|
Network
optimization;
|
|
·
|
Network
operations center implementation;
|
|
·
|
IP
core network including security
integration;
|
|
·
|
Core
network integration;
|
|
·
|
Billing
and operational support systems;
|
|
·
|
Customer
support systems; and
|
|
·
|
Network
operations and maintenance, including Network Management Systems
(NMS).
|
|
·
|
Las
Vegas is one of the fastest growing metropolitan areas in the country,
with demographics that are conducive gauging customer
acceptability;
|
|
·
|
Existing
tower inventory and flexible zoning procedures will reduce the
time
required to deploy a network;
|
|
·
|
As
the current operational headquarters for our Network Service Group,
most
of our network engineering and resources needed to design, build,
and
operate a mobile WiMAX/Wi-Fi network are already located in the
market;
and
|
|
·
|
Las
Vegas represents a highly attractive market
for potential service provider
customers.
|
Type
of Spectrum
|
MEA
|
MEA
Name
|
POPs
(mm)
|
BRS/EBS
|
WCS
|
AWS
|
Top
Covered CMAs within MEA (POP Rank)
|
||||
1
|
Boston
|
9.5
|
|
x
|
x
|
Boston
(9), Providence (50)
|
||||
2
|
New
York City
|
31.9
|
x
|
x
|
x
|
New
York (2), Hartford (40)
|
||||
3
|
Buffalo
|
1.5
|
|
x
|
|
Buffalo
(42), Chautauqua (113)
|
||||
4
|
Philadelphia
|
8.8
|
x
|
x
|
x
|
Philadelphia
(5), Wilmington (75)
|
||||
5
|
Washington
|
0.8
|
|
|
x
|
Virginia
10 - Frederick (218)
|
||||
6
|
Richmond
|
1.4
|
x
|
Highland
(261), Roanoke (267)
|
||||||
7
|
Charlotte-Greensboro-Greenville-Raleigh
|
7.0
|
|
|
x
|
Greenville
(68), Columbia SC (89)
|
||||
8
|
Atlanta
|
4.6
|
x
|
Chattanooga
(107), Augusta (115)
|
||||||
9
|
Jacksonville
|
2.8
|
|
x
|
x
|
Jacksonville
(39), Tallahassee (184)
|
||||
10
|
Tampa-St.
Petersburg-Orlando
|
2.1
|
x
|
Florida
4 - Citrus (85), Sarasota (159)
|
||||||
11
|
Miami
|
1.2
|
|
|
x
|
Fort
Myers (99), Florida 1 - Collier
(168)
|
12
|
Pittsburgh
|
2.8
|
x
|
Pittsburgh
(22), Johnstown (283)
|
||||
13
|
Cincinnati-Dayton
|
1.2
|
|
|
x
|
Huntington
(188), Charleston (255)
|
||
14
|
Columbus
|
0.7
|
x
|
Ohio
6 - Morrow (106), Ohio 9 -Ross (259)
|
||||
15
|
Cleveland
|
5.2
|
|
x
|
x
|
Cleveland
(25), Akron (73)
|
||
16
|
Detroit
|
11.0
|
x
|
Detroit
(7), Grand Rapids (60)
|
||||
17
|
Milwaukee
|
5.2
|
|
x
|
|
Milwaukee
(33), Madison (117)
|
||
18
|
Chicago
|
14.2
|
x
|
x
|
Chicago
(3), Gary (80)
|
|||
19
|
Indianapolis
|
2.7
|
|
|
x
|
Indianapolis
(31), Indiana 6 - Randolph (302)
|
||
20
|
Minneapolis-St.
Paul
|
7.0
|
x
|
Minneapolis
- St. Paul (14), Hubbard (202)
|
||||
21
|
Des
Moines-Quad Cities
|
2.9
|
|
x
|
|
Des
Moines (108), Davenport (161)
|
||
22
|
Knoxville
|
1.4
|
x
|
Knoxville
(86), Jonson City (110)
|
||||
23
|
Louisville-Lexington-Evansville
|
2.0
|
|
|
x
|
Louisville
(51), Kentucky 3 - Meade (167)
|
||
24
|
Birmingham
|
0.9
|
x
|
Montgomery
(166), Butler (288)
|
||||
25
|
Nashville
|
1.0
|
|
|
x
|
Tennessee
3 - Macon (144), Clarksville (311)
|
||
26
|
Memphis-Jackson
|
1.6
|
x
|
Tennessee
5 - Fayette (143), Tenn. 1 - Lake (181)
|
||||
27
|
New
Orleans-Baton Rouge
|
2.0
|
|
|
x
|
New
Orleans (41), Mobile (91)
|
||
28
|
Little
Rock
|
2.8
|
x
|
Little
Rock (84), Fayetteville (158)
|
||||
29
|
Kansas
City
|
3.3
|
|
x
|
|
Kansas
City (26), Topeka (317)
|
||
30
|
St.
Louis
|
5.0
|
x
|
x
|
St.
Louis (18), Illinois 8 - Washington (173)
|
|||
31
|
Houston
|
7.3
|
|
x
|
x
|
Houston
(6), Louisiana 5 - Beauregard (137)
|
||
32
|
Dallas-Fort
Worth
|
12.8
|
x
|
x
|
x
|
Dallas-Fort
Worth (4), Austin (36)
|
||
33
|
Denver
|
5.4
|
|
x
|
|
Denver
- Boulder (17), Colorado Springs (87)
|
||
34
|
Omaha
|
1.8
|
x
|
Omaha
(72), Lincoln (228)
|
||||
35
|
Wichita
|
1.2
|
|
x
|
x
|
Wichita
(94), Kansas 14 - Reno (387)
|
||
36
|
Tulsa
|
1.4
|
x
|
x
|
Tulsa
(58), Oklahoma 4 - Nowata (309)
|
|||
37
|
Oklahoma
City
|
1.9
|
|
x
|
x
|
Oklahoma
City (46), Oklahoma 6 - Seminole (289)
|
||
38
|
San
Antonio
|
4.1
|
x
|
San
Antonio (27), McAllen (77)
|
||||
39
|
El
Paso-Albuquerque
|
2.7
|
x
|
x
|
x
|
EL
Paso (71), Albuquerque (74)
|
||
40
|
Phoenix
|
5.6
|
x
|
Phoenix
(13), Tucson (53)
|
||||
41
|
Spokane-Billings
|
2.1
|
|
x
|
x
|
Spokane
(120), Idaho 1 - Boundary (212)
|
||
42
|
Salt
Lake City
|
3.5
|
x
|
x
|
Salt
Lake City (34), Provo (128)
|
|||
43
|
San
Francisco-Oakland-San Jose
|
15.0
|
|
x
|
x
|
San
Francisco (12), Sacramento (24)
|
||
44
|
Los
Angeles-San Diego
|
24.9
|
x
|
x
|
x
|
Los
Angeles (1), San Diego (15)
|
||
45
|
Portland
|
4.0
|
|
x
|
x
|
Portland
(23), Salem (147)
|
||
46
|
Seattle
|
5.1
|
x
|
Seattle
(20), Tacoma (69)
|
||||
47
|
Alaska
|
0.6
|
|
|
x
|
Anchorage
(215), Alaska 2 - Bethel (377)
|
||
48
|
Hawaii
|
1.3
|
x
|
Honolulu
(55), Hawaii 3 - Hawaii (415)
|
||||
49
|
Puerto
Rico and U.S. Virgin Islands
|
3.8
|
|
|
x
|
San
Juan (21), Puerto Rico 2 - Adjuntas (209)
|
||
|
Total
(excluding overlaps)
|
248.9
(approx)
|
x
|
x
|
x
|
|
|
(1)
|
WCS
licenses are assigned by the FCC according to MEAs or REAGs (see
further
explanation below in “WCS Spectrum”). MEAs are named for the largest
metropolitan area contained within the licensed geographic service
area.
An MEA is significantly larger than the metropolitan area for which
it is
named. REAGs are named for the geographic region the license
covers.
|
|
(2)
|
Our
AWS,
WCS and BRS spectrum is held directly through FCC licenses.
Our EBS
spectrum has been leased on a long-term basis from current license
holders.
|
|
(3)
|
AWS
licenses are assigned by the FCC according to REAGs, EAs, or CMAs
(see
further explanation below in “AWS
Spectrum”).
|
|
(4)
|
We
lease EBS spectrum from multiple parties in the greater New York,
NY
metropolitan area, including geographic areas in New York, New
Jersey and
Connecticut. These leases give us access to different amounts of
spectrum
in specific parts of the market area. The term of these leases
range from
20 to up to 60 years when their renewal options are
included.
|
|
(5)
|
We
lease EBS spectrum from The Orange Catholic Foundation in the Los
Angeles,
CA (Orange County) area. This lease has an initial 10 year term
and
contains five renewal options for 10 years each to extend the term
of the
lease.
|
(6)
|
The
source for our POP figure is derived from 2006 composite data contained
in
databases managed by Applied Geographic Solutions Inc. of Newbury
Park CA.
Except for Puerto Rico which is derived from 2000 census
figures.
|
|
·
|
Industry
adoption of wireless standards that compete with mobile WiMAX;
and
|
|
·
|
Mobile
WiMAX semiconductors and related products offered by our
competitors.
|
|
·
|
grant
licenses in the WCS, AWS, BRS and EBS
bands;
|
|
·
|
regulate
the technical parameters and standards governing wireless services,
the
certification, operation and marketing of radio frequency devices
and the
placement of certain transmitting
facilities;
|
|
·
|
impose
build-out or performance requirements as a condition to license
renewals;
|
|
·
|
approve
applications for license renewals;
|
|
·
|
approve
assignments and transfers of control of FCC
licenses;
|
|
·
|
approve
leases covering use of FCC licenses held by other persons and
organizations;
|
|
·
|
resolve
harmful radiofrequency interference between users of various spectrum
bands;
|
|
·
|
impose
fines, forfeitures and license revocations for violations of FCC
rules;
and
|
|
·
|
impose
other obligations that it determines to be in the public
interest.
|
|
·
|
The
NextWave Telecom group abandoned substantially all of its PCS networks,
technology and fixed assets, except the PCS spectrum licenses to
be
acquired by Verizon Wireless.
|
|
·
|
NTI
and its subsidiaries transferred all of their remaining non-PCS
assets to
NextWave Broadband, except cash and the PCS spectrum licenses to
be
acquired by Verizon Wireless. The assets contributed primarily
consisted
of property and equipment not desired by Verizon Wireless, having
a fair
market value of less than $10
million.
|
|
·
|
NextWave
Broadband was transferred to Old NextWave
Wireless.
|
|
·
|
Old
NextWave Wireless retained its investment in CYGNUS preferred stock
and
convertible notes, as well as wireless licenses useful for its
new
technology broadband business with a value of approximately $33.6
million.
|
|
·
|
NTI
and its subsidiaries, including Old NextWave Wireless, obtained
an order
providing a release of claims pursuant to Section 1141 of the Bankruptcy
Code. To the extent that such release did not eliminate all liabilities
of
the NextWave Telecom group, NextWave Wireless assumed and agreed
to
indemnify Verizon Wireless against such
liabilities.
|
|
·
|
NTI
and its subsidiaries (other than Old NextWave Wireless) were sold
to
Verizon Wireless for $3.0 billion.
|
|
·
|
Membership
units of NextWave were distributed to the former stockholders of
NTI,
which distribution was exempt from registration under the Securities
Act
pursuant to Section 1145 of the Bankruptcy Code. Upon this distribution,
on April 13, 2005, Old NextWave Wireless emerged as NextWave
Wireless.
|
|
·
|
Simultaneously
with the distribution, NextWave was capitalized with $550 million
of cash
proceeds from the sale to Verizon Wireless and prior PCS spectrum
license
sales.
|
|
·
|
Pursuant
to the plan, the NTI stockholders received the undivided interests
in the
underlying assets of Old NextWave Wireless as part of their consideration
for the redemption of their NTI shares, which was followed by the
deemed
contribution of these undivided interests to NextWave in return
for
membership interests in NextWave.
|
|
·
|
In
March 2007, we acquired all of the outstanding shares of common
stock of
4253311 Canada Inc., a Canadian company. The total cost of the
acquisition
was approximately $26.0 million in cash. The assets of the company
are
comprised almost entirely of wireless spectrum covering Canadian
markets.
|
·
|
In
February 2007, NextWave acquired all of the outstanding common
stock and
warrants of GO Networks, Inc., for $13.2, million at closing plus
the
assumption of $6.7 million in debt, of which $1.3 million was paid
at
closing. Additional purchase consideration of up to $25.7 million
may be
paid in shares of NextWave common stock, subject to the achievement
of
certain operational milestones in the 18-month period subsequent
to the
closing of the acquisition. NextWave also adopted the GO Networks
Employee
Stock Bonus Plan, whereby certain employees may receive up to an
aggregate
of $5.0 million in shares of NextWave common stock upon the achievement
of
the operational milestones referred to above.
|
|
|
·
|
In
January 2007, PacketVideo acquired all of the shares of SDC Secure
Digital Container AG for cash of $19.0 million. The acquisition
will be
accounted for in the first quarter of 2007 using the purchase method
of
accounting whereby the total purchase price, including any transaction
related expenses, will be allocated to tangible and intangible
assets
acquired based upon their respective fair
values.
|
·
|
In
December 2006, we were awarded 154 spectrum licenses for an aggregate
bid
of $115.6 million in the AWS auction. These licenses significantly
increased our spectrum portfolio to cover approximately 249 million
persons.
|
|
·
|
Since
our emergence as a wireless technology company, we have consummated
transactions to acquire licensed spectrum rights, including subsequent
lease obligations, for amounts totaling approximately $497 million,
including our recent acquisition of WCS Wireless Inc., which
holds
spectrum covering 188.8 million persons, or POPs, in the Central,
Western,
and Northeastern United States, for $160.5 million.
|
|
·
|
In
July 2005 we acquired all of the outstanding shares of PacketVideo
Corporation for $46.7 million in
cash.
|
Name
|
|
Age
|
|
Position
|
Allen
Salmasi
|
|
52
|
|
Chief
Executive Officer and President
|
George
C. Alex
|
|
47
|
|
Executive
Vice President - Chief Financial Officer
|
Roy
D. Berger
|
|
49
|
|
Executive
Vice President - Corporate Marketing &
Communications
|
Frank
A. Cassou
|
50
|
Executive
Vice President - Corporate Development and Chief Legal Counsel,
Secretary
|
||
Kevin
M. Finn
|
|
65
|
|
Executive
Vice President - Chief Compliance Officer
|
Mark
Kelley
|
|
46
|
|
Executive
Vice President - Chief Division Officer (ATG)
|
Richard
Kornfeld
|
|
46
|
|
Executive
Vice President - Chief Strategy Officer
|
Jim
Madsen
|
|
47
|
|
Executive
Vice President - Chief Business Development Officer
|
David
B. Needham
|
|
49
|
|
Executive
Vice President - Chief Division Officer (NSG)
|
R.
Andrew Salony
|
|
54
|
|
Executive
Vice President - Chief Administration Officer
|
Kenneth
Stanwood
|
|
45
|
|
Executive
Vice President - Technical and Standards
Development
|
|
·
|
the
inability to control the amount and timing of resources that
our potential
service provider customers devote to their network deployment
activities;
|
|
·
|
the
possibility that potential service provider customers could move
forward
and deploy networks without the assistance of
NSG;
|
|
·
|
the
possibility that service provider customers may experience financial
or
technical difficulties;
|
|
·
|
a
preference for embedded software licensed by one of PacketVideo’s
competitors;
|
|
·
|
competing
applications;
|
|
·
|
a
decision to discontinue embedding our PacketVideo software, or
mobile
broadband embedded software
altogether;
|
|
·
|
a
carrier’s decision not to provide mobile broadband applications or content
thereby reducing the need for PacketVideo’s
applications;
|
|
·
|
a
carrier’s network encountering technical problems that disrupt the
delivery of content for our
applications;
|
|
·
|
a
manufacturer’s decision to increase the cost of mobile phones and devices
embedded with PacketVideo’s
software;
|
|
·
|
a
manufacturer’s decision to reduce the price it is willing to pay for
embedded software such as PacketVideo’s;
and
|
|
·
|
consolidation
among manufacturers or wireless carriers or the emergence of new
manufacturers or wireless carriers that do not license PacketVideo
software.
|
|
·
|
a
potential lack of capacity to meet
demand;
|
|
·
|
reduced
control over quality and delivery
schedules;
|
|
·
|
risks
of inadequate manufacturing yield or excessive
costs;
|
|
·
|
difficulties
in selecting and integrating
subcontractors;
|
|
·
|
limited
warranties in products supplied to
us;
|
|
·
|
price
increases; and
|
|
·
|
potential
misappropriation of our intellectual
property.
|
|
·
|
significant
research and development costs;
|
|
·
|
research
and development issues and delays;
|
|
·
|
the
financial results of our PacketVideo
subsidiary;
|
|
·
|
spectrum
acquisition costs;
|
|
·
|
manufacturing
issues and delays;
|
|
·
|
fluctuating
market demand for WiMAX services;
|
|
·
|
impact
of competitive products, services and
technologies;
|
|
·
|
changes
in the regulatory environment;
|
|
·
|
the
cost and availability of network infrastructure;
and
|
|
·
|
general
economic conditions.
|
|
·
|
announcements
concerning us or our competitors, including the selection of mobile
WiMAX
wireless communications technology by telecommunications providers
and the
timing of the roll-out of those
systems;
|
|
·
|
receipt
of substantial orders or order cancellations for integrated circuits
and
system software products for mobile WiMAX networks by us or our
competitors;
|
|
·
|
quality
deficiencies in technologies, products or
services;
|
|
·
|
announcements
regarding financial developments or technological
innovations;
|
·
|
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;
|
|
·
|
international
developments, such as technology mandates, political developments
or
changes in economic policies;
|
|
·
|
lack
of capital to invest in WiMAX
networks;
|
|
·
|
new
commercial products;
|
|
·
|
changes
in recommendations of securities
analysts;
|
|
·
|
government
regulations, including FCC regulations governing spectrum
licenses;
|
|
·
|
earnings
announcements;
|
|
·
|
proprietary
rights or product or patent
litigation;
|
|
·
|
strategic
transactions, such as acquisitions and divestitures;
or
|
|
·
|
rumors
or allegations regarding our financial disclosures or
practices.
|
|
·
|
our
directors serve staggered, three-year terms and accordingly, pursuant
to
Delaware law, can only be removed with
cause;
|
|
·
|
no
action can be taken by stockholders except at an annual or special
meeting
of the stockholders called in accordance with our bylaws, and stockholders
may not act by written consent;
|
|
·
|
our
board of directors will be expressly authorized to make, alter
or repeal
our bylaws, and our stockholders will be able to make, alter or
repeal our
bylaws by a vote of 66-2/3% of the issued and outstanding voting
shares;
|
|
·
|
any
vacancies on the board of directors would be filled by a majority
vote of
the board;
|
|
·
|
our
board of directors will be authorized to issue preferred stock
without
stockholder approval; and
|
|
·
|
we
will indemnify officers and directors against losses that they
may incur
in investigations and legal proceedings resulting from their services
to
us, which may include services in connection with takeover defense
measures.
|
High
|
Low
|
|||||||||
2006:
|
||||||||||
Fourth
Quarter
|
$
|
11.00
|
$
|
6.00
|
||||||
2007:
|
||||||||||
First
Quarter (through March
21, 2007)
|
|
$
|
12.75
|
$
|
9.86
|
(in
thousands, except per share data)
|
Year
Ended
December
30, 2006(1)
(2)
|
Inception
(April
13, 2005) to December 31, 2005(3)
|
|||||
Consolidated
Statement of Operations Data:
|
|||||||
Revenues
|
$
|
24,284
|
$
|
4,144
|
|||
Loss
from operations
|
(98,526
|
)
|
(55,687
|
)
|
|||
Net
loss
|
(105,020
|
)
|
(45,952
|
)
|
|||
Basic
and diluted net loss per share
|
$
|
(1.28
|
)
|
$
|
—(4
|
)
|
|
Consolidated
Balance Sheet Data:
|
|||||||
Cash,
cash equivalents and short-term investments
|
$
|
200,685
|
$
|
459,231
|
|||
Restricted
cash(5)
|
75,000
|
—
|
|||||
Wireless
spectrum licenses, net
|
527,998(6
|
)
|
45,467
|
||||
Goodwill
|
32,184
|
24,782
|
|||||
Other
intangible assets, net
|
18,570
|
18,100
|
|||||
Total
assets
|
897,079
|
579,774
|
|||||
Long-term
obligations, net of current portion(5)
|
298,030
|
14,934
|
|||||
Total
shareholders’ equity(1)(7)
|
469,178
|
—
|
|||||
Total
members’ equity(1)
|
—
|
539,364
|
(1) |
On
November 13, 2006, NextWave completed a corporate conversion merger,
whereby a wholly-owned subsidiary of NextWave Wireless Inc. was merged
with and into NextWave Wireless LLC (“Corporate Conversion Merger”). As a
result of the merger, NextWave Wireless LLC became a wholly-owned
subsidiary of NextWave Wireless Inc. Under the terms of the merger
agreement, NextWave Wireless Inc. issued shares of its common stock
to
holders of NextWave Wireless LLC’s membership units in exchange for all of
the outstanding membership units of NextWave Wireless LLC, with NextWave
Wireless LLC unitholders receiving one share of NextWave Wireless
Inc.
common stock for each six membership units of NextWave Wireless LLC
that
they held.
|
(2) |
Effective
January 1, 2006, we changed our fiscal year end and quarterly reporting
periods from quarterly calendar periods ending on December 31 to
a 52-53
week fiscal year ending on the Saturday nearest to December 31 of
the
current calendar year or the following calendar year.
|
(3) |
On
April 13, 2005, pursuant to the plan of reorganization of the NextWave
Telecom group, our equity securities were distributed to the NTI
equity
holders and we were reconstituted as a company with a new capitalization
and a new wireless technology business plan. A summary of the assets
and
liabilities contributed to us on April 13, 2005 is provided in the
Notes
to Consolidated Financial Statements included elsewhere in this Form
10-K.
For more information on our emergence as a new wireless technology
company, see “Business-Our
History.”
|
(4) |
Loss
per share information is not presented for the period from inception
(April 13, 2005) to December 31, 2005 as it would not be meaningful
due to
the Corporate Conversion Merger.
|
(5) |
On
July 17, 2006, NextWave issued 7% Senior Secured Notes due 2010 (the
“Notes”) in the aggregate principal amount of $350.0 million. The Notes
were issued at a fifteen percent (15%) original issue discount, resulting
in gross proceeds of $297.5 million. NextWave is required to maintain
a
minimum balance of $75.0 million in cash or cash equivalents from
funds
other than the proceeds of the Notes in a restricted collateral account
at
all times while the Notes remain
outstanding.
|
(6) |
The
increase in wireless spectrum licenses, net, during 2006, includes
our
July 2006 acquisition of WCS Wireless, Inc. which resulted in the
addition
of $236.4 million of wireless spectrum licenses. The value assigned
to the
wireless spectrum includes the cash purchase price of $160.5 million,
legal costs of $0.1 million, and $75.8 million in associated deferred
tax.
We also acquired other licensed spectrum rights for $245.0 million
in cash
and $4.0 million through the assumption of lease liabilities. These
additions were reduced by amortization during 2006 of $2.9
million.
|
(7) |
On
March 28, 2007, we issued and sold 355,000 shares of our Series A
Senior
Convertible Preferred Stock (the “Series A Preferred Stock”) at a price of
$1,000 per share. We received $351 million in
net proceeds from the sale of the Series A Preferred Stock.
|
(in
millions)
|
Year
Ended December 30, 2006
|
Inception
(April
13, 2005) to December 31, 2005
|
Increase
(Decrease)
|
|||||||
Cost
of revenues
|
$
|
12.1
|
$
|
4.6
|
$
|
7.5
|
||||
Engineering,
research and development
|
52.8
|
17.3
|
35.5
|
|||||||
General
and administrative
|
51.5
|
15.3
|
36.2
|
|||||||
Sales
and marketing
|
10.0
|
3.0
|
7.0
|
|||||||
Business
realignment costs
|
(7.1
|
)
|
13.0
|
(20.1
|
)
|
|||||
Purchased
in-process research and development
|
3.5
|
6.6
|
(3.1
|
)
|
||||||
Total
operating expenses
|
$
|
122.8
|
$
|
59.8
|
$
|
63.0
|
(in
millions)
|
December
30, 2006
|
Decrease
for the Year Ended December 30, 2006
|
December
31, 2005
|
Increase
(Decrease) for the Period from Inception (April 13, 2005) to December
31,
2005
|
Inception
(April
13, 2005)
|
|||||||||||
Working
capital
|
$
|
166.3
|
$
|
(290.1
|
)
|
$
|
456.4
|
$
|
(96.3
|
)
|
$
|
552.7
|
||||
Cash
and cash equivalents
|
33.0
|
(60.6
|
)
|
93.6
|
(461.5
|
)
|
555.1
|
|||||||||
Short-term
investments
|
167.7
|
(197.9
|
)
|
365.6
|
365.6
|
—
|
||||||||||
Total
cash, cash equivalents and investments
|
$
|
200.7
|
$
|
(258.5
|
)
|
$
|
459.2
|
$
|
(95.9
|
)
|
$
|
555.1
|
||||
(in
millions)
|
Year
Ended December 30, 2006
|
Inception
(April
13, 2005)
to
December
31, 2005
|
|||||
Beginning
cash, cash equivalents and investments
|
$
|
459.2
|
$
|
555.1
|
|||
Cash
paid for acquisition of wireless spectrum licenses and subsequent
lease
obligations
|
(402.7
|
)
|
(18.8
|
)
|
|||
Cash
paid for business combinations, net of cash acquired
|
(8.4
|
)
|
(51.1
|
)
|
|||
Proceeds
from long-term obligations, net of costs to issue
|
295.0
|
—
|
|||||
Net
payments to and changes in restricted investment account securing
long-term obligations
|
(75.0
|
)
|
—
|
||||
Cash
used by operating activities
|
(56.3
|
)
|
(18.7
|
)
|
|||
Cash
paid for property and equipment
|
(13.0
|
)
|
(7.3
|
)
|
|||
Other,
net
|
1.9
|
—
|
|||||
Ending
cash, cash equivalents and investments
|
$
|
200.7
|
$
|
459.2
|
· |
We
plan to fund our wireless broadband technology development
activities with our unrestricted cash and investments and net proceeds
from the sale of preferred stock 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
$41.4 million during 2006. Largely due to our planned increase in
engineering personnel, we expect our wireless broadband technology
development expenses to increase by approximately 69% during 2007.
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
network services business is not expected to require significant
additional capital expenditures beyond what is necessary to complete
our
Henderson, Nevada office building and test site. With the exception
of
our test site in Henderson, Nevada, we do not intend to
build-out wireless networks, but will provide our technologies, services
and spectrum to service providers who are engaged in these
activities. In 2007, we expect to expend $4.4 million on the deployment
of
our test site in Henderson, Nevada. If that test site is
successful, we anticipate that we will seek service providers to
expand the trial network to cover most of the Las Vegas metropolitan
region.
|
· |
GO
Networks, Inc., acquired in February 2007, develops high-performance
mobile Wi-Fi systems for commercial and municipal service providers.
GO
Networks’ Mobile Broadband Wireless system combines xRFTM
smart-antenna technology with a cellular-mesh Wi-FI architecture
to
provide commercial and municipal service providers with a cost-effective
solution to support bandwidth-intensive mobile broadband services
such as
video streaming, web browsing, real-time gaming, video telephony and
other types of multimedia applications.
|
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
|
|||||||||||||||||||
Deferred
contract costs
|
1,456
|
21
|
1,477
|
2,105
|
(110
|
)
|
1,995
|
2,242
|
772
|
3,014
|
||||||||||||||||||
Prepaid
expenses and other current assets
|
5,745
|
—
|
5,745
|
8,518
|
—
|
8,518
|
7,252
|
—
|
7,252
|
|||||||||||||||||||
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
|
Payments
Due by Period
|
||||||||||||||||
(in
thousands)
|
Total
|
2007
|
Years
2008-2009
|
Years
2010-2011
|
Years
2012
and Thereafter
|
|||||||||||
Long-term
obligations
|
$
|
380,178
|
$
|
3,066
|
$
|
5,744
|
$
|
354,929
|
$
|
16,439
|
||||||
Services
and other purchase agreements
|
12,929
|
7,535
|
5,394
|
—
|
—
|
|||||||||||
Pending
business acquisition
|
19,000
|
19,000
|
—
|
—
|
—
|
|||||||||||
Capital
expenditures(1)
|
8,200
|
8,200
|
—
|
—
|
—
|
|||||||||||
Operating
leases
|
21,362
|
7,037
|
10,879
|
3,084
|
362
|
|||||||||||
Total
|
$
|
441,669
|
$
|
44,838
|
$
|
22,017
|
$
|
358,013
|
$
|
16,801
|
||||||
Significant
contractual obligations entered into subsequent to December 30,
2006:
|
||||||||||||||||
Mandatorily
redeemable senior convertible preferred stock(2)
|
$
|
355,000
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
355,000
|
||||||
Business
acquisition(3)
|
19,863
|
16,283
|
3,580
|
—
|
—
|
|||||||||||
Pending
wireless spectrum acquisition(4)
|
26,015
|
26,015
|
—
|
—
|
—
|
|||||||||||
Pending
wireless spectrum leases(5)
|
23,399
|
7,523
|
1,597
|
1,633
|
12,646
|
|||||||||||
Operating
facility lease(6)
|
17,286
|
1,238
|
6,706
|
7,967
|
1,375
|
(1) |
Our
purchase agreement for an office building in Henderson, Nevada was
amended
in March 2007, reducing the cost of the building to $6.9 million.
The $6.9
million was paid in March 2007. A separate agreement was entered
into in
March 2007 related to the interior construction costs of the building
for
$2.6 million. An additional estimated $1.9 million for non-contracted
fixtures and furniture will also be required to ready the building
for
occupancy. Construction is expected to be completed during the second
quarter of 2007, at which time we expect to occupy the facility and
pay
the remaining costs associated with
occupancy.
|
(2) |
On
March 28, 2007, we issued and sold 355,000 shares of our Series A
Senior
Convertible Preferred Stock (the “Series A Preferred Stock”) at a price of
$1,000 per share. We received $351 million in net proceeds from
the sale of the Series A Preferred Stock.
|
(3) |
In
February 2007, we acquired all of the outstanding common stock and
warrants of GO Networks, Inc., for $13.2 million plus the assumption
of
$6.7 million in debt, of which $1.3 million was paid at closing.
Additional purchase consideration of up to $25.7 million may be paid
in
shares of NextWave common stock, subject to the achievement of certain
operational milestones in the 18-month period subsequent to the closing
of
the acquisition. We also adopted the GO Networks Employee Stock Bonus
Plan, whereby a select group of employees may receive up to an aggregate
of $5.0 million in shares of NextWave common stock upon the achievement
of
certain operational milestones in the 18-month period subsequent
to the
closing of the acquisition.
|
(4) |
In
March 2007, we acquired all of the outstanding shares of common stock
of
4253311 Canada Inc., a Canadian company. The total cost of the acquisition
is expected to be approximately $26.0 million in cash. The assets
of the
company are comprised almost entirely of wireless spectrum.
|
(5) |
During
the first three months of 2007, we entered into three separate wireless
spectrum leases. Approval of one of the license transfer applications
has
been received from the FCC and one is pending. The third application
is
pending with the Swiss Confederated Communications
Commission.
|
(6) |
In
March 2007, we signed a lease agreement for office facilities that
expires
in 2012. The lease requires a $2.5 million letter of credit, which
is
gradually reduced until termination of the lease in
2012.
|
|
Page
|
||
Consolidated
Financial Statements
|
|||
Report
of Ernst & Young LLP, Independent Registered Public Accounting
Firm
|
|
[
]
|
|
Consolidated
Balance Sheets as of December 30, 2006 and December 31,
2005
|
|
[
]
|
|
Consolidated
Statements of Operations for the Year Ended December 30, 2006 and
for the
Period from Inception (April 13, 2005) to December 31,
2005
|
|
[
]
|
|
Consolidated
Statement of Stockholders’/Members’ Equity for the Year Ended December 30,
2006 and for the Period from Inception (April 13, 2005) to December
31,
2005
|
|
[
]
|
|
Consolidated
Statements of Cash Flows for the Year Ended December 30, 2006 and
for the
Period from Inception (April 13, 2005) to December 31,
2005
|
|
[
]
|
|
Notes
to Consolidated Financial Statements
|
|
[
]
|
|
Schedule
II - Valuation and Qualifying Accounts
|
[
]
|
December
30,
2006
|
December
31,
2005
|
||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
32,980
|
$
|
93,649
|
|||
Short-term
investments
|
167,705
|
365,582
|
|||||
Accounts
receivable, net of allowance for doubtful accounts of $321 and $391,
respectively
|
5,056
|
3,712
|
|||||
Deferred
contract costs
|
2,397
|
898
|
|||||
Prepaid
expenses and other current assets
|
7,837
|
8,677
|
|||||
Total
current assets
|
215,975
|
472,518
|
|||||
Restricted
cash
|
75,000
|
—
|
|||||
Wireless
spectrum licenses, net
|
527,998
|
45,467
|
|||||
Goodwill
|
32,184
|
24,782
|
|||||
Other
intangible assets, net
|
18,570
|
18,100
|
|||||
Property
and equipment, net
|
17,529
|
11,092
|
|||||
Other
noncurrent assets
|
9,823
|
7,815
|
|||||
Total
assets
|
$
|
897,079
|
$
|
579,774
|
|||
LIABILITIES
AND STOCKHOLDERS’/MEMBERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
1,630
|
$
|
3,406
|
|||
Accrued
expenses
|
33,537
|
5,152
|
|||||
Current
portion of long-term obligations
|
3,065
|
2,200
|
|||||
Deferred
revenue
|
10,253
|
4,103
|
|||||
Current
tax liability
|
80
|
417
|
|||||
Other
current liabilities and deferred credits
|
1,160
|
822
|
|||||
Total
current liabilities
|
49,725
|
16,100
|
|||||
Deferred
income tax liabilities
|
75,774
|
—
|
|||||
Long-term
deferred credits and reserves
|
3,324
|
8,306
|
|||||
Long-term
obligations, net of current portion
|
298,030
|
14,934
|
|||||
Total
liabilities
|
426,853
|
39,340
|
|||||
Minority
interest in subsidiary
|
1,048
|
1,070
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders’/Members’
equity:
|
|||||||
Preferred
stock, $0.001 par value; 25,000 shares authorized; no shares issued
or
outstanding
|
—
|
—
|
|||||
Common
stock, $0.001 par value; 400,000 shares authorized; 83,716 and 83,715
issued and outstanding, respectively, at December 30, 2006
|
84
|
—
|
|||||
Membership
interests; 488,672 interests issued and outstanding as of December
31,
2005
|
—
|
589,354
|
|||||
Additional
paid-in-capital
|
620,430
|
—
|
|||||
Common
stock in treasury, at cost, 1 share at December 30, 2006
|
(7
|
)
|
—
|
||||
Accumulated
other comprehensive loss
|
(357
|
)
|
(832
|
)
|
|||
Accumulated
deficit
|
(150,972
|
)
|
(49,158
|
)
|
|||
Total
stockholders’/members’ equity
|
469,178
|
539,364
|
|||||
Total
liabilities and stockholders’/members’ equity
|
$
|
897,079
|
$
|
579,774
|
Year
Ended December 30, 2006
|
Inception
(April
13, 2005) to December 31, 2005
|
||||||
Revenues
|
$
|
24,284
|
$
|
4,144
|
|||
Operating
expenses:
|
|||||||
Cost
of revenues
|
12,054
|
4,573
|
|||||
Engineering,
research and development
|
52,810
|
17,349
|
|||||
General
and administrative
|
51,537
|
15,318
|
|||||
Sales
and marketing
|
9,992
|
2,960
|
|||||
Business
realignment costs (credits)
|
(7,121
|
)
|
13,031
|
||||
Purchased
in-process research and development
|
3,538
|
6,600
|
|||||
Total
operating expenses
|
122,810
|
59,831
|
|||||
Loss
from operations
|
(98,526
|
)
|
(55,687
|
)
|
|||
Other
income (expense)
|
|||||||
Interest
income
|
12,533
|
11,051
|
|||||
Interest
expense
|
(20,647
|
)
|
(1,006
|
)
|
|||
Other
income and expense, net
|
(23
|
)
|
(20
|
)
|
|||
Total
other income (expense), net
|
(8,137
|
)
|
10,025
|
||||
Loss
before provision for income taxes and minority interest
|
(106,663
|
)
|
(45,662
|
)
|
|||
Income
tax benefit (provision)
|
35
|
(417
|
)
|
||||
Minority
interest
|
1,608
|
127
|
|||||
Net
loss
|
$
|
(105,020
|
)
|
$
|
(45,952
|
)
|
|
Net
loss per common share - basic and diluted
|
$
|
(1.28
|
)
|
N/A
|
|||
Weighted
average shares used in per share calculation
|
81,841
|
N/A
|
|||||
See
Note 1 for pro forma net loss per common share
information.
|
Common
Stock
|
Membership
Interests
|
Additional
Paid-In
|
Treasury
Stock
|
Accumulated
Other
Compre-hensive
|
Accumulated
|
Total
Stockholders’/
Members’
|
Compre-
hensive
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Units
|
Amount
|
Capital
|
Shares
|
Amount
|
Loss
|
Deficit
|
Equity
|
Loss
|
||||||||||||||||||||||||
Capital
contributions upon inception (April 13, 2005)
|
—
|
$
|
—
|
488,672
|
$
|
588,279
|
$
|
—
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
588,279
|
|||||||||||||||||
Accumulated
deficit of variable interest entity contributed upon inception
(April 13,
2005)
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(3,206
|
)
|
(3,206
|
)
|
||||||||||||||||||||||
Share-based
compensation for non-employee advisory services
|
—
|
—
|
—
|
1,075
|
—
|
—
|
—
|
—
|
—
|
1,075
|
||||||||||||||||||||||||
Unrealized
net losses on investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(832
|
)
|
—
|
(832
|
)
|
$
|
(832
|
)
|
|||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(45,952
|
)
|
(45,952
|
)
|
(45,952
|
)
|
||||||||||||||||||||
Balance
at December 31, 2005
|
—
|
—
|
488,672
|
589,354
|
—
|
—
|
—
|
(832
|
)
|
(49,158
|
)
|
539,364
|
$
|
(46,784
|
)
|
|||||||||||||||||||
Units
issued and stock options exchanged in a business
acquisition
|
—
|
—
|
1,558
|
1,558
|
904
|
—
|
—
|
—
|
—
|
2,462
|
||||||||||||||||||||||||
Shares/units
issued for stock/unit options and warrants exercised, net of
repurchases
|
1,504
|
2
|
1,382
|
1,382
|
13
|
(1
|
)
|
(7
|
)
|
—
|
—
|
1,390
|
||||||||||||||||||||||
Sale
of restricted units
|
—
|
—
|
1,000
|
1,000
|
—
|
—
|
—
|
—
|
—
|
1,000
|
||||||||||||||||||||||||
Share-based
compensation expense
|
—
|
—
|
—
|
3,969
|
1,187
|
—
|
—
|
—
|
—
|
5,156
|
||||||||||||||||||||||||
Distributions
to members
|
—
|
—
|
—
|
(3,481
|
)
|
—
|
—
|
—
|
—
|
—
|
(3,481
|
)
|
||||||||||||||||||||||
Accumulated
deficit of variable interest entity eliminated upon acquisition
by
NextWave
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
3,206
|
3,206
|
||||||||||||||||||||||||
Fair
value of warrants issued in connection with the issuance of
7% Senior
Secured Notes
|
—
|
—
|
—
|
24,626
|
—
|
—
|
—
|
—
|
—
|
24,626
|
||||||||||||||||||||||||
Exchange
membership interests for common shares in conjunction with
the Corporate
Conversion
|
82,212
|
82
|
(492,612
|
)
|
(618,408
|
)
|
618,326
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||||||
Unrealized
net gains on investments
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
475
|
—
|
475
|
$
|
475
|
||||||||||||||||||||||
Net
loss
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
—
|
(105,020
|
)
|
(105,020
|
)
|
(105,020
|
)
|
||||||||||||||||||||
Balance
at December 30, 2006
|
83,716
|
$
|
84
|
—
|
$
|
—
|
$
|
620,430
|
(1
|
)
|
$
|
(7
|
)
|
$
|
(357
|
)
|
$
|
(150,972
|
)
|
$
|
469,178
|
$
|
(104,545
|
)
|
Year
Ended December 30, 2006
|
Inception
(April
13, 2005) to December 31, 2005
|
||||||
OPERATING
ACTIVITIES
|
|||||||
Net
loss
|
$
|
(105,020
|
)
|
$
|
(45,952
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|||||||
Depreciation
|
6,081
|
661
|
|||||
Amortization
of intangible assets
|
5,831
|
2,926
|
|||||
Non-cash
share-based compensation
|
5,156
|
1,075
|
|||||
Non-cash
business realignment costs (credits)
|
(7,121
|
)
|
13,031
|
||||
In-process
research and development
|
3,538
|
6,600
|
|||||
Accretion
of interest expense
|
9,503
|
939
|
|||||
Losses
incurred on strategic investment
|
1,494
|
159
|
|||||
Minority
interest
|
(1,537
|
)
|
—
|
||||
Other
non-cash adjustments
|
848
|
(614
|
)
|
||||
Changes
in operating assets and liabilities:
|
|||||||
Accounts
receivable
|
(1,513
|
)
|
(406
|
)
|
|||
Deferred
contract costs
|
(1,499
|
)
|
(424
|
)
|
|||
Prepaid
expenses and other current assets
|
(2,463
|
)
|
(3,742
|
)
|
|||
Other
assets
|
(724
|
)
|
205
|
||||
Accounts
payable and accrued liabilities
|
22,819
|
4,758
|
|||||
Deferred
revenue
|
8,599
|
1,760
|
|||||
Other
current liabilities and deferred credits
|
(329
|
)
|
350
|
||||
Net
cash used in operating activities
|
(56,337
|
)
|
(18,674
|
)
|
|||
INVESTING
ACTIVITIES
|
|||||||
Proceeds
from maturities of available-for-sale securities
|
457,985
|
1,137,962
|
|||||
Proceeds
from the sale of available-for-sale securities
|
1,091,844
|
—
|
|||||
Purchases
of available-for-sale securities
|
(1,351,477
|
)
|
(1,503,544
|
)
|
|||
Payments
for wireless spectrum licenses
|
(400,337
|
)
|
(18,780
|
)
|
|||
Cash
paid for business combination, net of cash acquired
|
(8,446
|
)
|
(46,621
|
)
|
|||
Payment
for investment in software development company
|
—
|
(4,500
|
)
|
||||
Purchase
of property and equipment
|
(13,036
|
)
|
(7,278
|
)
|
|||
Other,
net
|
(1,909
|
)
|
—
|
||||
Net
cash used in investing activities
|
(225,376
|
)
|
(442,761
|
)
|
|||
FINANCING
ACTIVITIES
|
|||||||
Proceeds
from long-term obligations, net of costs to issue
|
295,018
|
—
|
|||||
Payments
on long-term obligations
|
(2,502
|
)
|
(15
|
)
|
|||
Payment
to restricted cash account securing long-term obligations
|
(75,000
|
)
|
—
|
||||
Proceeds
from the sale of equity interests, net of repurchases
|
2,390
|
—
|
|||||
Proceeds
from investment by joint venture partner
|
2,585
|
—
|
|||||
Cash
distributions paid to members
|
(1,447
|
)
|
—
|
||||
Net
cash provided by (used in) financing activities
|
221,044
|
(15
|
)
|
||||
Net
decrease in cash and cash equivalents
|
(60,669
|
)
|
(461,450
|
)
|
|||
Cash
and cash equivalents, beginning of period
|
93,649
|
555,099
|
|||||
Cash
and cash equivalents, end of period
|
$
|
32,980
|
$
|
93,649
|
(in
thousands)
|
||||
Cash
|
$
|
555,099
|
||
Prepaid
expenses and other current assets
|
1,240
|
|||
Property
and equipment, net
|
9,706
|
|||
Wireless
spectrum licenses
|
33,597
|
|||
Goodwill
|
4,619
|
|||
Deposits
and other noncurrent assets
|
369
|
|||
Lease
obligations for wireless spectrum licenses
|
(16,107
|
)
|
||
Accrued
lease liability
|
(1,260
|
)
|
||
Accrued
expenses and other current liabilities
|
(1,120
|
)
|
||
Minority
interest in variable interest entity
|
(1,070
|
)
|
||
Accumulated
deficit of variable interest entity
|
3,206
|
|||
Total
membership interests
|
$
|
588,279
|
(in
thousands, except per share data)
|
Year
Ended December 30,
2006
|
(Pro
Forma) Inception
(April
13, 2005) to December 31,
2005
|
|||||
Net
loss
|
$
|
(105,020
|
)
|
$
|
(45,952
|
)
|
|
Basic
and diluted loss per common share
|
$
|
(1.28
|
)
|
||||
Pro
forma basic and diluted loss per common share
|
$
|
(0.56
|
)
|
||||
Weighted
average shares used in per share calculation
|
81,841
|
—
|
|||||
Pro
forma weighted average shares used in per share
calculation
|
—
|
81,445
|
|||||
Weighted
average securities that could potentially dilute earnings per share
in the
future that are not included above as they are
antidilutive:
|
|||||||
Outstanding
stock options
|
9,209
|
—
|
|||||
Common
stock warrants
|
2,313
|
—
|
|||||
Restricted
stock
|
149
|
—
|
|||||
Pro
forma outstanding stock options
|
—
|
5,934
|
|||||
Pro
forma common stock warrants
|
—
|
220
|
Gross
Unrealized
|
|||||||||||||
(in
thousands)
|
Amortized
Cost
|
Gains
|
Losses
|
Fair
Value
|
|||||||||
December
30, 2006
|
|||||||||||||
Municipal
securities
|
$
|
177,442
|
$
|
—
|
$
|
(6
|
)
|
$
|
177,436
|
||||
U.S.
Treasury and Agency obligations
|
39,251
|
—
|
(200
|
)
|
39,051
|
||||||||
Corporate
notes
|
25,845
|
—
|
(151
|
)
|
25,694
|
||||||||
Money
market funds
|
500
|
—
|
—
|
500
|
|||||||||
Cash
|
24
|
—
|
—
|
24
|
|||||||||
Total
portfolio
|
243,062
|
—
|
(357
|
)
|
242,705
|
||||||||
Less
restricted portion
|
(75,000
|
)
|
—
|
—
|
(75,000
|
)
|
|||||||
Total
unrestricted short-term investments
|
$
|
168,062
|
$
|
—
|
$
|
(357
|
)
|
$
|
167,705
|
||||
December
31, 2005
|
|||||||||||||
Municipal
securities
|
$
|
280,767
|
$
|
1
|
$
|
(34
|
)
|
$
|
280,734
|
||||
U.S.
Treasury and Agency obligations
|
55,117
|
—
|
(451
|
)
|
54,666
|
||||||||
Corporate
notes
|
30,524
|
—
|
(342
|
)
|
30,182
|
||||||||
Total
short-term investments
|
$
|
366,408
|
$
|
1
|
$
|
(827
|
)
|
$
|
365,582
|
(in
thousands)
|
Amortized
Cost
|
Fair
Value
|
|||||
Due
in less than one year
|
$
|
79,476
|
$
|
79,119
|
|||
Due
in 1 to 5 years
|
3,521
|
3,521
|
|||||
Due
in greater than 5 to 10 years
|
7
|
7
|
|||||
Due
in greater than 10 years
|
160,058
|
160,058
|
|||||
$
|
243,062
|
$
|
242,705
|
Less
than 12 months of Temporary Impairment
|
12
months or More of Temporary Impairment
|
Total
|
||||||||||||||||||||
(dollars
in thousands)
|
Number
of investments
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
Fair
Value
|
Gross
Unrealized
Losses
|
|||||||||||||||
Municipal
securities
|
5
|
$
|
11,411
|
$
|
(6
|
)
|
$
|
—
|
$
|
—
|
$
|
11,411
|
$
|
(6
|
)
|
|||||||
U.S.
Treasury and Agency obligations
|
3
|
4,031
|
(1
|
)
|
34,797
|
(199
|
)
|
38,828
|
(200
|
)
|
||||||||||||
Corporate
notes
|
3
|
—
|
—
|
25,141
|
(151
|
)
|
25,141
|
(151
|
)
|
|||||||||||||
Total
portfolio
|
$
|
15,442
|
$
|
(7
|
)
|
$
|
59,938
|
$
|
(350
|
)
|
$
|
75,380
|
$
|
(357
|
)
|
December
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
|
14.1
|
$
|
82,385
|
$
|
4,438
|
15.0
|
$
|
31,347
|
$
|
1,510
|
|||||||||
Purchased
technology
|
7.0
|
9,614
|
1,821
|
7.0
|
8,600
|
555
|
|||||||||||||
Purchased
customer base
|
8.0
|
5,960
|
1,044
|
8.0
|
5,700
|
321
|
|||||||||||||
Non-compete
agreements
|
4.0
|
2,800
|
1,193
|
4.0
|
2,800
|
537
|
|||||||||||||
Other
|
7.4
|
2,002
|
252
|
3.0
|
16
|
3
|
|||||||||||||
$
|
102,761
|
$
|
8,748
|
$
|
48,463
|
$
|
2,926
|
||||||||||||
Intangible
assets not subject to amortization:
|
|||||||||||||||||||
Wireless
spectrum licenses
|
$
|
450,051
|
$
|
15,630
|
|||||||||||||||
Goodwill
|
32,184
|
24,782
|
|||||||||||||||||
Purchased
tradenames and trademarks
|
2,504
|
2,400
|
|||||||||||||||||
$
|
484,739
|
$
|
42,812
|
(dollars
in thousands)
|
Estimated
Useful
Life
(in
years)
|
December
30,
2006
|
December
31,
2005
|
|||||||
Furniture
and equipment
|
2-7
|
$
|
13,626
|
$
|
7,071
|
|||||
Purchased
software
|
2-3
|
7,296
|
3,459
|
|||||||
Leasehold
improvements
|
1-5
|
2,358
|
879
|
|||||||
Construction
in progress
|
N/A
|
846
|
380
|
|||||||
24,126
|
11,789
|
|||||||||
Less:
Accumulated depreciation
|
(6,597
|
)
|
(697
|
)
|
||||||
Total
property and equipment, net
|
$
|
17,529
|
$
|
11,092
|
(in
thousands)
|
December
30, 2006
|
December
31, 2005
|
|||||
Accrued
interest
|
$
|
11,178
|
$
|
—
|
|||
Accrued
payroll and related expenses
|
9,417
|
3,426
|
|||||
Accrued
professional fees
|
3,746
|
720
|
|||||
Accrued
expenses
|
4,870
|
715
|
|||||
Accrued
equity distributions payable
|
2,034
|
—
|
|||||
Other
|
2,292
|
291
|
|||||
Total
accrued liabilities
|
$
|
33,537
|
$
|
5,152
|
Options for NextWave Wireless Inc | Options for NextWave Wireless Inc. Common Stock Issued Upon Conversion of | Options for CYGNUS Communications, Inc. Common | Options for PacketVideo | ||||||||||
|
Common
Stock
|
CYGNUS
Plan(1)
|
Stock(2)
|
Common
Stock
|
|||||||||
Risk-free
interest rate
|
4.36%-5.11
|
%
|
4.62%-5.03
|
%
|
4.35%-4.39
|
%
|
4.36%-5.11
|
%
|
|||||
Expected
term (in years)
|
1.5-5.5
|
0-4.7
|
2.5-5.9
|
2.5-5.5
|
|||||||||
Expected
and weighted average stock price volatility
|
50
|
%
|
50
|
%
|
50
|
%
|
50
|
%
|
|||||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
0
|
%
|
|||||
Weighted
average grant-date fair value of options granted
|
$
|
2.59
|
$
|
7.51
|
$
|
2.61
|
$
|
0.42
|
(1) |
Represents
assumptions used as of the conversion date to value options to purchase
common stock of NextWave Wireless Inc. that were issued to holders
of
options to purchase common stock of CYGNUS Communications,
Inc.
|
(2) |
Represents
assumptions used to value options to purchase common stock of CYGNUS
Communications, Inc. prior to the Corporate Conversion Merger, at
converted values.
|
(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
|
|||
Fair
value of stock options exchanged
|
904
|
|||
Cash
paid
|
53
|
|||
Less
cash acquired
|
(4,190
|
)
|
||
Total
acquisition cost
|
$
|
9,804
|
||
(in
thousands)
|
||||
Accounts
receivable
|
$
|
196
|
||
Prepaid
expenses and other current assets
|
511
|
|||
Property
and equipment
|
704
|
|||
Goodwill
|
5,447
|
|||
Intangible
assets
|
3,680
|
|||
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
|
$
|
9,804
|
||
(dollars
in thousands)
|
Life
|
Amount
|
|||||
In-process
research and development
|
none
|
$
|
1,890
|
||||
Purchased
technology
|
7
years
|
1,680
|
|||||
Purchased
tradenames and trademarks
|
5
years
|
110
|
|||||
$
|
3,680
|
(in
thousands)
|
Opening
Balance
Sheet
Accrual
|
Adjustment
to Goodwill
|
Interest
Accretion
|
Amounts
Paid in Cash
|
Balance
at December 30,
2006
|
|||||||||||
Unfavorable
lease liability
|
$
|
692
|
$
|
(374
|
)
|
$
|
4
|
$
|
(31
|
)
|
$
|
291
|
(in
thousands)
|
||||
Accounts
receivable
|
$
|
3,498
|
||
Deferred
contract costs
|
474
|
|||
Prepaid
expenses and other current assets
|
792
|
|||
Property
and equipment
|
679
|
|||
Goodwill
|
20,238
|
|||
Intangible
assets
|
26,100
|
|||
Deposits
and other noncurrent assets
|
825
|
|||
Accounts
payable, accrued expenses and other current liabilities
|
(3,047
|
)
|
||
Deferred
revenue
|
(2,343
|
)
|
||
Noncurrent
deferred rent
|
(520
|
)
|
||
Total
acquisition cost
|
$
|
46,696
|
(dollars
in thousands)
|
Life
|
Amount
|
|||||
Purchased
technology
|
7
years
|
$
|
8,600
|
||||
Customer
relationships
|
8
years
|
5,700
|
|||||
In-process
research and development
|
none
|
6,600
|
|||||
Non-compete
agreements
|
4
years
|
2,800
|
|||||
Purchased
tradenames and trademarks
|
indefinite
|
2,400
|
|||||
$
|
26,100
|
(in
thousands) (unaudited)
|
||||
Revenues
|
$
|
8,449
|
||
Net
loss(1)
|
$
|
(48,659
|
)
|
(in
thousands)
|
Year
Ended December 30,
2006
|
Inception
(April
13, 2005) to December 31,
2005
|
|||||
Revenues
from customers located in:
|
|||||||
United
States
|
$
|
16,511
|
$
|
1,858
|
|||
Japan
|
4,657
|
1,324
|
|||||
Europe
|
2,459
|
552
|
|||||
Rest
of the world
|
657
|
410
|
|||||
Total
revenues
|
$
|
24,284
|
$
|
4,144
|
(dollars
in thousands)
|
December
30,
2006
|
December
31,
2005
|
|||||
7%
Senior Secured Notes, $350,000 due 2010, net of unamortized discount
and
fair value of warrants of $69,325, interest payable semiannually
in
January and July each year, secured by $525,643 in FCC licenses and
spectrum leases and $75,000 in restricted cash
|
$
|
280,675
|
$
|
—
|
|||
Wireless
spectrum leases, weighted average imputed interest of 8.43% at December
30, 2006, scheduled maturities ranging from 2011 through 2019, net
of
unamortized discounts of $9,758 and $9,353, respectively, with three
to
five renewal options ranging from 10 to 15 years each, secured by
$39,194
in wireless spectrum licenses
|
20,091
|
17,047
|
|||||
Other
|
329
|
87
|
|||||
Total
long-term obligations
|
301,095
|
17,134
|
|||||
Less
current portion
|
(3,065
|
)
|
(2,200
|
)
|
|||
Long-term
portion
|
$
|
298,030
|
$
|
14,934
|
(in
thousands)
|
||||
Fiscal
Years:
|
||||
2007
|
$
|
3,065
|
||
2008
|
3,070
|
|||
2009
|
2,674
|
|||
2010
|
352,518
|
|||
2011
|
2,411
|
|||
Thereafter
|
16,440
|
|||
380,178
|
||||
Less
unamortized discount
|
(79,083
|
)
|
||
Less
current portion
|
(3,065
|
)
|
||
Total
long-term obligations
|
$
|
298,030
|
December
30, 2006
|
December
31, 2005
|
||||||||||||
(in
thousands)
|
Carrying
Amount
|
Fair
Value
|
Carrying
Amount
|
Fair
Value
|
|||||||||
Financial
assets:
|
|||||||||||||
Cash
and cash equivalents
|
$
|
32,980
|
$
|
32,980
|
$
|
93,649
|
$
|
93,649
|
|||||
Investment
securities
|
167,705
|
167,705
|
365,582
|
365,582
|
|||||||||
Restricted
cash
|
75,000
|
75,000
|
—
|
—
|
|||||||||
Financial
liabilities:
|
|||||||||||||
7%
Senior Secured Notes
|
280,675
|
280,675
|
—
|
—
|
|||||||||
Wireless
spectrum leases
|
20,091
|
15,785
|
17,047
|
17,047
|
(in
thousands)
|
||||
Fiscal
Years:
|
||||
2007
|
$
|
7,535
|
||
2008
|
4,044
|
|||
2009
|
1,350
|
|||
Total
|
$
|
12,929
|
(in
thousands)
|
Lease
Commitments
|
Sublease
Rentals
|
Net
|
|||||||
Fiscal
Years:
|
||||||||||
2007
|
$
|
7,037
|
$
|
(1,099
|
)
|
$
|
5,938
|
|||
2008
|
6,429
|
(198
|
)
|
6,231
|
||||||
2009
|
4,450
|
-
|
4,450
|
|||||||
2010
|
2,808
|
-
|
2,808
|
|||||||
2011
|
276
|
-
|
276
|
|||||||
Thereafter
|
362
|
-
|
362
|
|||||||
$
|
21,362
|
$
|
(1,297
|
)
|
$
|
20,065
|
(in
thousands)
|
Year
Ended December 30,
2006
|
Inception
(April
13, 2005) to December 31,
2005
|
|||||
United
States
|
$
|
(103,272
|
)
|
$
|
(43,737
|
)
|
|
Foreign
|
(3,391
|
)
|
(1,925
|
)
|
|||
$
|
(106,663
|
)
|
$
|
(45,662
|
)
|
(in
thousands)
|
Year
Ended December 30,
2006
|
Inception
(April
13, 2005) to December 31,
2005
|
|||||
Current
income tax expense (benefit):
|
|||||||
Federal
|
$
|
(265
|
)
|
$
|
258
|
||
State
|
10
|
7
|
|||||
Foreign
|
220
|
152
|
|||||
Total
provision (benefit) for taxes
|
$
|
(35
|
)
|
$
|
417
|
(in
thousands)
|
December
30, 2006
|
December
31, 2005
|
|||||
Current
deferred income tax assets:
|
|||||||
Deferred
revenue
|
$
|
4,777
|
$
|
1,709
|
|||
Other
current reserves and accruals
|
1,802
|
811
|
|||||
Total
current deferred income tax assets
|
6,579
|
2,520
|
|||||
Noncurrent
deferred income tax assets:
|
|||||||
Net
operating losses
|
48,453
|
26,390
|
|||||
Research
and development and other credit carryforwards
|
298
|
2,234
|
|||||
Capitalized
start-up expenses
|
24,613
|
13,635
|
|||||
Capitalized
research and experimentation expenditures
|
761
|
2,544
|
|||||
Other
noncurrent reserves and accruals
|
2,532
|
246
|
|||||
Total
noncurrent deferred income tax assets
|
76,657
|
45,049
|
|||||
Noncurrent
deferred income tax liabilities:
|
|||||||
Fixed
assets and other intangible assets
|
(580
|
)
|
(6,155
|
)
|
|||
Intangible
assets not subject to amortization
|
(75,774
|
)
|
—
|
||||
Total
noncurrent deferred income tax liabilities
|
(76,354
|
)
|
(6,155
|
)
|
|||
Valuation
allowance
|
(82,656
|
)
|
(41,414
|
)
|
|||
Net
deferred income tax liability
|
$
|
(75,774
|
)
|
$
|
—
|
Year
Ended December 30, 2006
|
Inception
(April
13, 2005) to December 31, 2005
|
||||||
Federal
statutory rate
|
(35.0
|
)%
|
(35.0
|
)%
|
|||
State
taxes, net of federal effect
|
0.0
|
0.0
|
|||||
Effect
of non-consolidated affiliates
|
3.2
|
(1.3
|
)
|
||||
In-process
research and development
|
1.2
|
4.1
|
|||||
Increase
in valuation allowance
|
30.1
|
37.6
|
|||||
Other
|
0.5
|
(4.5
|
)
|
||||
Total
provision for taxes
|
0.0
|
%
|
0.9
|
%
|
(in
thousands)
|
||||
Stock
options:
|
||||
Granted
and outstanding
|
10,934
|
|||
Available
for future grants
|
1,747
|
|||
Warrants
|
3,106
|
|||
15,787
|
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
|
6,611
|
$
|
5.78
|
||||||||||
Granted
|
5,283
|
$
|
6.43
|
||||||||||
Exercised
|
(267
|
)
|
$
|
5.45
|
|||||||||
Cancellation
of awards modified
|
(314
|
)
|
$
|
2.23
|
|||||||||
Canceled
|
(379
|
)
|
$
|
5.71
|
|||||||||
Outstanding
at December 30, 2006
|
10,934
|
$
|
6.20
|
8.8
|
$
|
49,477
|
|||||||
Exercisable
at December 30, 2006
|
10,132
|
$
|
5.91
|
8.7
|
$
|
48,800
|
Options
(in
thousands)
|
Weighted
Average Grant Date Fair Value per Share
|
||||||
Unvested
at December 31, 2005
|
5,522
|
$
|
—(1)
|
|
|||
Granted
|
5,283
|
$
|
3.13
|
||||
Vested
|
(2,907
|
)
|
$
|
1.03(1)
|
|
||
Effective
cancellation of unvested awards modified
|
(174
|
)
|
$
|
0.02(1)
|
|
||
Canceled
|
(368
|
)
|
$
|
0.35(1)
|
|
||
Early
exercise of unvested options
|
(5
|
)
|
$
|
1.14(1)
|
|
||
Unvested
at December 30, 2006
|
7,351
|
$
|
1.82(1)
|
|
|||
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
|
1,459
|
$
|
1.00
|
||||||||||
Forfeited
|
(285
|
)
|
$
|
1.00
|
|||||||||
Outstanding
at December 30, 2006
|
9,399
|
$
|
1.00
|
5.7
|
$
|
7,426
|
|||||||
Exercisable
at December 30, 2006
|
2,812
|
$
|
1.00
|
5.6
|
$
|
2,222
|
|||||||
Options
(in
thousands)
|
Weighted
Average Grant Date Fair Value per Share
|
||||||
Unvested
at December 31, 2005
|
8,225
|
$
|
—(1)
|
|
|||
Granted
|
1,459
|
$
|
0.42
|
||||
Vested
|
(2,815
|
)
|
$
|
—(1)
|
|
||
Forfeited
|
(282
|
)
|
$
|
0.04(1)
|
|
||
Unvested
at December 30, 2006
|
6,587
|
$
|
0.09(1)
|
|
|||
Options
and Warrants
(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
|
500
|
$
|
6.00
|
||||||||||
Granted
|
287
|
$
|
7.97
|
||||||||||
Outstanding
at December 30, 2006
|
787
|
$
|
6.72
|
5.9
|
$
|
3,155
|
|||||||
Exercisable
at December 30, 2006
|
500
|
$
|
6.00
|
5.6
|
$
|
2,365
|
Options
and Warrants
(in
thousands)
|
Weighted
Average Fair Value per Share
|
||||||
Unvested
at December 31, 2005
|
333
|
$
|
2.48
|
||||
Granted
|
287
|
$
|
7.24
|
||||
Vested
|
(184
|
)
|
$
|
2.91
|
|||
Unvested
at December 30, 2006
|
436
|
$
|
6.84
|
Options
|
Warrants
|
Restricted
Common Shares
|
||||||||
Risk-free
interest rate
|
4.54%-4.79
|
%
|
4.58%-4.68
|
%
|
4.57%-4.78
|
%
|
||||
Expected
life (in years)
|
6.0-9.9
|
3.0-4.0
|
0.1-3.9
|
|||||||
Expected
stock price volatility
|
50
|
%
|
50
|
%
|
50
|
%
|
||||
Expected
dividend yield
|
0
|
%
|
0
|
%
|
0
|
%
|
||||
Weighted
average fair value of awards
|
$
|
7.24
|
$
|
4.42
|
$
|
5.42
|
(in
thousands)
|
Year
Ended December 30,
2006
|
Inception
(April
13, 2005) to December 31,
2005
|
|||||
Cash
paid for income taxes
|
$
|
124
|
$
|
152
|
|||
Cash
paid for interest
|
—
|
—
|
|||||
Noncash
investing and financing activities:
|
|||||||
Fair
value of warrants issued in connection with the issuance of 7% Senior
Secured Notes
|
24,626
|
—
|
|||||
Wireless
spectrum licenses acquired with lease obligations
|
4,039
|
—
|
|||||
Membership
interests issued for business acquisition
|
1,558
|
—
|
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
|
|||||||||||||||||||
Deferred
contract costs
|
1,456
|
21
|
1,477
|
2,105
|
(110
|
)
|
1,995
|
2,242
|
772
|
3,014
|
||||||||||||||||||
Prepaid
expenses and other current assets
|
5,745
|
—
|
5,745
|
8,518
|
—
|
8,518
|
7,252
|
—
|
7,252
|
|||||||||||||||||||
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, except per share data)
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
|||||||||||
Year
Ended December 30, 2006(1)(2):
|
(Restated)
|
(Restated)
|
(Restated)
|
|||||||||||||
Revenues
|
$
|
3,905
|
$
|
6,293
|
$
|
6,670
|
$
|
7,416
|
$
|
24,284
|
||||||
Net
loss
|
$
|
(15,443
|
)
|
$
|
(22,705
|
)
|
$
|
(31,803
|
)
|
$
|
(35,069
|
)
|
$
|
(105,020
|
)
|
|
Basic
and diluted net loss per common share(3)
|
$
|
(0.19
|
)
|
$
|
(0.28
|
)
|
$
|
(0.39
|
)
|
$
|
(0.43
|
)
|
$
|
(1.28
|
)
|
|
|
First
Quarter
|
Second
Quarter
|
Third
Quarter
|
Fourth
Quarter
|
Total
|
|||||||||||
Period
from Inception (April 13, 2005) to December 31,
2005(2):
|
||||||||||||||||
Revenues
|
N/A
|
$
|
148
|
$
|
1,202
|
$
|
2,794
|
$
|
4,144
|
|||||||
Net
loss(3)
|
N/A
|
$
|
(2,948
|
)
|
$
|
(16,653
|
)
|
$
|
(26,351
|
)
|
$
|
(45,952
|
)
|
(1) |
Effective
January 1, 2006, NextWave changed its fiscal year end and quarterly
reporting periods from quarterly calendar periods ending on December
31 to
a 52-53 week fiscal year ending on the Saturday nearest to December
31 of
the current calendar year or the following calendar year. Fiscal
year 2006
is a 52-week year ending on December 30, 2006 and each of the four
quarters in 2006 include 13 weeks.
|
(2) |
The
results of operations of PacketVideo Corporation and Inquam Broadband
Holding, Inc. are included as of July 19, 2005 and January 6, 2006,
the
respective dates of the acquisitions, which affects the comparability
of
the Quarterly Financial Data. During 2006, NextWave also completed
other
acquisitions that were not material and their results of operations
have
been included from their respective dates of
acquisition.
|
(3) |
Loss
per share information is not presented for the period from inception
(April 13, 2005) to December 31, 2005 as it would not be meaningful
due to
the Corporate Conversion Merger.
|
(in
thousands)
|
Balance
at Beginning of Period
|
Net
Additions Charged (Credited) to Expense
|
Additions
Acquired
from
Business
Combinations
|
Deductions(1)
|
Balance
at
End
of
Period
|
|||||||||||
Year
Ended December 30, 2006:
|
||||||||||||||||
Allowance
for doubtful accounts
|
$
|
391
|
$
|
236
|
$
|
—
|
$
|
(306
|
)
|
$
|
321
|
|||||
Reserve
for contract termination fee
|
$
|
7,121
|
$
|
(7,121
|
)
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||
Unfavorable
lease liability
|
$
|
1,037
|
$
|
75
|
$
|
318
|
$
|
(442
|
)
|
$
|
988
|
|||||
Period
from Inception (April 13, 2005) to December 31,
2005:
|
||||||||||||||||
Allowance
for doubtful accounts
|
$
|
—
|
$
|
218
|
$
|
195
|
$
|
(22
|
)
|
$
|
391
|
|||||
Reserve
for contract termination fee
|
$
|
—
|
$
|
7,121
|
$
|
—
|
$
|
—
|
$
|
7,121
|
||||||
Unfavorable
lease liability
|
$
|
1,260
|
$
|
67
|
$
|
—
|
$
|
(290
|
)
|
$
|
1,037
|
No.
|
||
2.1
|
Third
Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code
of
NextWave Personal Communications Inc., NextWave Power Partners Inc.,
NextWave Partners Inc., NextWave Wireless Inc. and NextWave Telecom
Inc.,
dated January 21, 2005 (incorporated by reference to Exhibit 2.1
to the
Registration Statement on Form 10 of NextWave Wireless LLC filed
May 1,
2006 (the “Form 10”))
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of NextWave Wireless Inc.,
as
restated on November 6, 2006 (incorporated by reference to Exhibit
3.1 to
the Company’s Registration Statement on Form S-4/A filed November 7,
2006)
|
|
|
||
3.2
|
Amended
and Restated By-laws of NextWave Wireless Inc., adopted on September
12,
2006 (incorporated by reference to Exhibit 3.2 to the Company’s
Registration Statement on Form S-4/A filed November 7,
2006)
|
|
4.1
|
Specimen
common stock certificate (incorporated by reference to Exhibit 4.1
to the
Company’s Registration Statement on Form S-4/A filed November 7,
2006)
|
|
4.2
|
Form
of Station 4, LLC Warrant (incorporated by reference to Exhibit 4.2
to the
Registration Statement on Form 10 of NextWave Wireless LLC filed
May 1,
2006 (the “Form 10”))
|
|
4.3
|
Warrant
Agreement, dated as of July 17, 2006, among NextWave Wireless Inc.
and the
Holders listed on Schedule I thereto (incorporated by reference to
Exhibit
4.2 to the Current Report on Form 8-K of NextWave Wireless LLC filed
July
21, 2006 (the "July 21, 2006 Form 8-K"))
|
|
4.4
|
Certificate
of Designations for NextWave Wireless Inc.'s Series A Senior Convertible
Preferred Stock.
|
|
10.1
|
Agreement
and Plan of Merger, dated November 7, 2006, by and among NextWave
Wireless
Inc., NextWave Wireless LLC and NextWave Merger LLC (incorporated
by
reference to Exhibit 2.1 to the Current Report on Form 8-K of NextWave
Wireless Inc. filed November 7, 2006)
|
|
10.2
|
Agreement
and Plan of Merger, dated as of December 31, 2006, by and among NextWave
Wireless Inc., Go Acquisition Corp., GO Networks, Inc. and Nechemia
J.
Peres, as Stockholder Representative (incorporated by reference to
Exhibit
2.1 to the Current Report on Form 8-K of NextWave Wireless Inc. filed
January 3, 2007).
|
|
10.3
|
Agreement
and Plan of Merger, dated as of May 24, 2005, by and among NextWave
Wireless LLC, PVC Acquisition Corp., PacketVideo Corporation and
William
D. Cvengros, as the Stockholder Representative (incorporated by reference
to Exhibit 2.2 to Amendment #1 to the Registration Statement on Form
10 of
NextWave Wireless LLC filed June 29, 2006 (“Amendment #1 to Form 10”)).
|
|
10.4
|
Purchase
Agreement, dated as of July 17, 2006, among NextWave Wireless LLC,
as
issuer, NextWave Broadband Inc., NW Spectrum Co., AWS Wireless Inc.,
and
PacketVideo Corporation, as subsidiary guarantors, the note purchasers
party thereto and The Bank of New York, as collateral agent (incorporated
by reference to Exhibit 4.1 to the Current Report on Form 8-K/A of
NextWave Wireless LLC filed September 8, 2006)
|
|
10.5
|
Registration
Rights Agreement, dated as of July 17, 2006, among NextWave Wireless
Inc.
and the Purchasers listed on Schedule I thereto (incorporated by
reference
to Exhibit 4.3 to the July 21, 2006 Form 8-K)
|
|
10.6
|
NextWave
Wireless Inc. 2005 Stock Incentive Plan (incorporated by reference
to
Exhibit 99.1 to the Company’s Post-Effective Amendment No. 1 on Form S-8
filed January 19, 2007)
|
|
10.7
|
CYGNUS
Communications, Inc. 2004 Stock Option Plan (incorporated by reference
to
Exhibit 10.3 to the Form 10)
|
|
10.8
|
PacketVideo
Corporation 2005 Equity Incentive Plan (incorporated by reference
to
Exhibit 10.2 to the Company’s Registration Statement on Form 10 filed on
May 1, 2006)
|
10.9
|
NextWave
Wireless Inc. 2005 Stock Incentive Plan Award Agreement (incorporated
by
reference to Exhibit 99.3 to the Company’s Registration Statement on Form
S-8 filed December 7, 2006)
|
|
10.10
|
Acquisition
Agreement by and among NextWave Telecom Inc., Cellco Partnership
D/B/A
Verizon Wireless and VZW Corp., dated as of November 4, 2004 (incorporated
by reference to Exhibit 10.4 to the Form 10)
|
|
10.11
|
Acquisition
Agreement, dated as of May 9, 2006, by and among (i) NextWave Wireless
LLC, (ii) NW Spectrum Co., (iii) WCS Wireless, Inc., (iv) Columbia
WCS
III, Inc., (v) TKH Corp., (vi) Columbia Capital Equity Partners III
(Cayman), L.P., the sole stockholder of Columbia WCS III, Inc., (vii)
each
of the stockholders of TKH Corp., namely, Aspen Partners Series A,
Series
of Aspen Capital Partners, L.P., Oak Foundation USA, Inc., Enteraspen
Limited, and The Reed Institute dba Reed College and (viii) Columbia
Capital, LLC, as the Stockholder Representative (incorporated by
reference
to Exhibit 10.7 to Amendment #1 of the Form 10)
|
|
10.12
|
Spectrum
Acquisition Agreement, dated as of October 13, 2005, between NextWave
Broadband Inc. and Bal-Rivgam, LLC (incorporated by reference to
Exhibit
10.8 to Amendment #1 of the Form 10)
|
|
10.13
|
Guaranty,
dated as of July 17, 2006, by and among NextWave Broadband, Inc.,
NW
Spectrum Co., AWS Wireless Inc., PacketVideo Corporation and The
Bank of
New York, as Collateral Agent (incorporated by reference to Exhibit
10.1
to the July 21, 2006 Form 8-K)
|
|
10.14
|
Parent
Guaranty, dated as of July 17, 2006, between NextWave Wireless Inc.
and
The Bank of New York, as Collateral Agent (incorporated by reference
to
Exhibit 10.2 to the July 21, 2006 Form 8-K)
|
|
10.16
|
Pledge
and Security Agreement, dated as of July 17, 2006, by and among NextWave
Wireless LLC, the undersigned direct and indirect subsidiaries of
NextWave
Wireless LLC, each additional Grantor that may become a party thereto
and
The Bank of New York, as Collateral Agent (incorporated by reference
to
Exhibit 10.3 to the July 21, 2006 Form 8-K)
|
|
10.17
|
NextWave
Wireless Inc. 2007 New Employee Stock Incentive Plan(1)
|
|
10.18
|
GO
Networks, Inc. Stock Bonus Plan(1)
|
|
10.19
|
Securities
Purchase Agreement, dated March 28, 2007, by and among NextWave Wireless
Inc. and the Purchasers listed on Schedule I (the “Purchasers”)
thereto(1)
|
|
10.20
|
Registration
Rights Agreement, dated March 28, 2007, among NextWave Wireless Inc.
and
the Purchasers(1)
|
|
14.1
|
NextWave
Wireless Inc. Code of Business Conduct and Ethics (available on the
Company’s website at http://www.nextwave.com)
|
|
21.1
|
Subsidiaries
of the Registrant
|
|
23.1
|
Consent
of Ernst & Young LLP, Independent Registered Public Accounting
Firm(1)
|
|
24.1
|
Power
of Attorney (included in signature page)
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of Allen Salmasi, Chief Executive
Officer(1)
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of George C. Alex, Chief Financial
Officer(1)
|
|
32.1
|
Section 1350
Certification of Allen Salmasi, Chief Executive Officer(1)
|
|
32.2
|
Section
1350 Certification of George C. Alex, Chief Financial
Officer(1)
|
NEXTWAVE WIRELESS INC. | ||
|
|
|
By: |
/s/
Allen Salmasi
|
|
Allen
Salmasi
Chief
Executive Officer
and
President
|
||
Signature
|
Title
|
Date
|
||
/s/
Allen
Salmasi
|
Chairman
of the Board of Directors, Chief Executive Officer and
President
(Principal
Executive Officer)
|
March
30, 2007
|
||
Allen
Salmasi
|
||||
/s/
George
C. Alex
|
Executive
Vice President - Chief Financial Officer
(Principal Financial Officer)
|
March
30, 2007
|
||
George
C. Alex
|
||||
/s/
Fran
J. Harding
|
Senior
Vice President - Corporate Controller (Principal
Accounting Officer)
|
March
30, 2007
|
||
Fran
J. Harding
|
||||
/s/
|
Director
|
March
30, 2007
|
||
Frank
A. Cassou
|
||||
/s/
Kevin
M. Finn
|
Director
|
March
30, 2007
|
||
Kevin
M. Finn
|
Signature
|
Title
|
Date
|
||
Director
|
March
30, 2007
|
|||
Douglas
Manchester
|
|
|
||
/s/
Jack
Rosen
|
Director |
March
30, 2007
|
||
Jack
Rosen
|
||||
/s/
Robert
T. Symington
|
Director
|
March
30, 2007
|
||
Robert
T. Symington
|
||||
/s/
William
H. Webster
|
Director
|
March
30, 2007
|
||
William
H. Webster
|
2.1
|
Third
Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code
of
NextWave Personal Communications Inc., NextWave Power Partners Inc.,
NextWave Partners Inc., NextWave Wireless Inc. and NextWave Telecom
Inc.,
dated January 21, 2005 (incorporated by reference to Exhibit 2.1
to the
Registration Statement on Form 10 of NextWave Wireless LLC filed
May 1,
2006 (the “Form 10”))
|
|
3.1
|
Amended
and Restated Certificate of Incorporation of NextWave Wireless Inc.,
as
restated on November 6, 2006 (incorporated by reference to Exhibit
3.1 to
the Company’s Registration Statement on Form S-4/A filed November 7,
2006)
|
|
3.2
|
Amended
and Restated By-laws of NextWave Wireless Inc., adopted on September
12,
2006 (incorporated by reference to Exhibit 3.2 to the Company’s
Registration Statement on Form S-4/A filed November 7,
2006)
|
|
4.1
|
Specimen
common stock certificate (incorporated by reference to Exhibit 4.1
to the
Company’s Registration Statement on Form S-4/A filed November 7,
2006)
|
|
4.2
|
Form
of Station 4, LLC Warrant (incorporated by reference to Exhibit 4.2
to the
Registration Statement on Form 10 of NextWave Wireless LLC filed
May 1,
2006 (the “Form 10”))
|
|
4.3
|
Warrant
Agreement, dated as of July 17, 2006, among NextWave Wireless Inc.
and the
Holders listed on Schedule I thereto (incorporated by reference to
Exhibit
4.2 to the Current Report on Form 8-K of NextWave Wireless LLC filed
July
21, 2006 (the "July 21, 2006 Form 8-K"))
|
|
4.4
|
Certificate
of Designations for NextWave Wireless Inc.'s Series A Senior Convertible
Preferred Stock.
|
|
10.1
|
Agreement
and Plan of Merger, dated November 7, 2006, by and among NextWave
Wireless
Inc., NextWave Wireless LLC and NextWave Merger LLC (incorporated
by
reference to Exhibit 2.1 to the Current Report on Form 8-K of NextWave
Wireless Inc. filed November 7, 2006)
|
|
10.2
|
Agreement
and Plan of Merger, dated as of December 31, 2006, by and among NextWave
Wireless Inc., Go Acquisition Corp., GO Networks, Inc. and Nechemia
J.
Peres, as Stockholder Representative (incorporated by reference to
Exhibit
2.1 to the Current Report on Form 8-K of NextWave Wireless Inc. filed
January 3, 2007).
|
|
10.3
|
Agreement
and Plan of Merger, dated as of May 24, 2005, by and among NextWave
Wireless LLC, PVC Acquisition Corp., PacketVideo Corporation and
William
D. Cvengros, as the Stockholder Representative (incorporated by reference
to Exhibit 2.2 to Amendment #1 to the Registration Statement on Form
10 of
NextWave Wireless LLC filed June 29, 2006 (“Amendment #1 to Form 10”)).
|
|
10.4
|
Purchase
Agreement, dated as of July 17, 2006, among NextWave Wireless LLC,
as
issuer, NextWave Broadband Inc., NW Spectrum Co., AWS Wireless Inc.,
and
PacketVideo Corporation, as subsidiary guarantors, the note purchasers
party thereto and The Bank of New York, as collateral agent (incorporated
by reference to Exhibit 4.1 to the Current Report on Form 8-K/A of
NextWave Wireless LLC filed September 8, 2006)
|
|
10.5
|
Registration
Rights Agreement, dated as of July 17, 2006, among NextWave Wireless
Inc.
and the Purchasers listed on Schedule I thereto (incorporated by
reference
to Exhibit 4.3 to the July 21, 2006 Form 8-K)
|
|
10.6
|
NextWave
Wireless Inc. 2005 Stock Incentive Plan (incorporated by reference
to
Exhibit 99.1 to the Company’s Post-Effective Amendment No. 1 on Form S-8
filed January 19, 2007)
|
|
10.7
|
CYGNUS
Communications, Inc. 2004 Stock Option Plan (incorporated by reference
to
Exhibit 10.3 to the Form 10)
|
|
10.8
|
PacketVideo
Corporation 2005 Equity Incentive Plan (incorporated by reference
to
Exhibit 10.2 to the Company’s Registration Statement on Form 10 filed on
May 1, 2006)
|
10.9
|
NextWave
Wireless Inc. 2005 Stock Incentive Plan Award Agreement (incorporated
by
reference to Exhibit 99.3 to the Company’s Registration Statement on Form
S-8 filed December 7, 2006)
|
|
10.10
|
Acquisition
Agreement by and among NextWave Telecom Inc., Cellco Partnership
D/B/A
Verizon Wireless and VZW Corp., dated as of November 4, 2004 (incorporated
by reference to Exhibit 10.4 to the Form 10)
|
|
|
||
10.11
|
Acquisition
Agreement, dated as of May 9, 2006, by and among (i) NextWave Wireless
LLC, (ii) NW Spectrum Co., (iii) WCS Wireless, Inc., (iv) Columbia
WCS
III, Inc., (v) TKH Corp., (vi) Columbia Capital Equity Partners III
(Cayman), L.P., the sole stockholder of Columbia WCS III, Inc., (vii)
each
of the stockholders of TKH Corp., namely, Aspen Partners Series A,
Series
of Aspen Capital Partners, L.P., Oak Foundation USA, Inc., Enteraspen
Limited, and The Reed Institute dba Reed College and (viii) Columbia
Capital, LLC, as the Stockholder Representative (incorporated by
reference
to Exhibit 10.7 to Amendment #1 of the Form 10)
|
|
10.12
|
Spectrum
Acquisition Agreement, dated as of October 13, 2005, between NextWave
Broadband Inc. and Bal-Rivgam, LLC (incorporated by reference to
Exhibit
10.8 to Amendment #1 of the Form 10)
|
|
10.13
|
Guaranty,
dated as of July 17, 2006, by and among NextWave Broadband, Inc.,
NW
Spectrum Co., AWS Wireless Inc., PacketVideo Corporation and The
Bank of
New York, as Collateral Agent (incorporated by reference to Exhibit
10.1
to the July 21, 2006 Form 8-K)
|
|
10.14
|
Parent
Guaranty, dated as of July 17, 2006, between NextWave Wireless Inc.
and
The Bank of New York, as Collateral Agent (incorporated by reference
to
Exhibit 10.2 to the July 21, 2006 Form 8-K)
|
|
10.16
|
Pledge
and Security Agreement, dated as of July 17, 2006, by and among NextWave
Wireless LLC, the undersigned direct and indirect subsidiaries of
NextWave
Wireless LLC, each additional Grantor that may become a party thereto
and
The Bank of New York, as Collateral Agent (incorporated by reference
to
Exhibit 10.3 to the July 21, 2006 Form 8-K)
|
|
10.17
|
NextWave
Wireless Inc. 2007 New Employee Stock Incentive Plan(1)
|
|
10.18
|
GO
Networks, Inc. Stock Bonus Plan(1)
|
|
10.19
|
Securities
Purchase Agreement, dated March 28, 2007, by and among NextWave Wireless
Inc. and the Purchasers listed on Schedule I (the “Purchasers”)
thereto(1)
|
|
10.20
|
Registration
Rights Agreement, dated March 28, 2007, among NextWave Wireless Inc.
and
the Purchasers(1)
|
|
14.1
|
NextWave
Wireless Inc. Code of Business Conduct and Ethics (available on the
Company’s website at http://www.nextwave.com)
|
|
21.1
|
Subsidiaries
of the Registrant
|
|
23.1
|
Consent
of Ernst & Young LLP, Independent Registered Public Accounting
Firm(1)
|
|
24.1
|
Power
of Attorney (included in signature page)
|
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification of Allen Salmasi, Chief Executive
Officer(1)
|
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification of George C. Alex, Chief Financial
Officer(1)
|
|
32.1
|
Section 1350
Certification of Allen Salmasi, Chief Executive Officer(1)
|
|
32.2
|
Section
1350 Certification of George C. Alex, Chief Financial
Officer(1)
|