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Clearwire Reports Fourth Quarter And Full Year 2012 Results

(1) Adjusted EBITDA is a non-GAAP financial measure. Adjusted EBITDA is defined as consolidated operating loss excluding depreciation and amortization expenses, non-cash expenses related to operating leases (primarily towers, spectrum leases and buildings), stock-based compensation expense, loss from abandonment of network and other assets, charges for differences between recorded amounts and the results of physical counts, and charges for excessive and obsolete network equipment and CPE inventory. A reconciliation of operating loss to Adjusted EBITDA is as follows:  

  Three months ended
  (Unaudited)
(in thousands) December 31, 2012 September 30, 2012 June 30, 2012 December 31, 2011
Operating loss  $ (312,731)  $ (332,905)  $ (311,260)  $ (433,149)
         
Non-cash expenses:        
Spectrum lease expense  36,260  39,833  32,341  37,228
Building and network related expenses*  25,256  18,741  38,468  113,612
Stock compensation and other*  8,525  8,736  7,084  5,468
Non-cash expenses  70,041  67,310  77,893  156,308
         
Non-cash write-downs:        
Loss from abandonment of network and other assets  (1,099)  2,588  317  123,000
Network equipment reserves and other write-downs*  2,904  13,963  14,052  6,358
Non-cash write-downs  1,805  16,551  14,369  129,358
         
Depreciation and amortization  194,873  210,781  184,566  169,962
         
Adjusted EBITDA  $ (46,012)  $ (38,263)  $ (34,432)  $ 22,479
         
*Amounts included in COGS and SG&A.      
   
  Year ended
  (Unaudited)
  (in thousands) December 31, 2012 December 31, 2011
Operating loss  $ (1,378,783)  $ (2,391,237)
     
Non-cash expenses:    
Spectrum lease expense  144,849  139,340
Building and network related expenses*  106,648  257,296
Stock compensation and other*  30,411  26,624
Non-cash expenses  281,908  423,260
     
Non-cash write-downs:    
Loss from abandonment of network and other assets  82,206  700,341
Network equipment reserves and other write-downs*  89,575  266,100
Non-cash write-downs  171,781  966,441
     
Depreciation and amortization  768,193  687,636
     
Adjusted EBITDA  $ (156,901)  $ (313,900)
     
*Amounts included in COGS and SG&A.  

In a capital-intensive industry, management believes Adjusted EBITDA to be a meaningful measure of the company's operating performance. The company provides this non-GAAP measure as a supplemental performance measure because management believes it facilitates comparisons of the company's operating performance from period to period and comparisons of the company's operating performance to that of other companies by backing out potential differences caused by non-cash expenses related to long-term leases, share-based compensation, non-cash write-downs and depreciation and amortization. Because this non-GAAP measure facilitates internal comparisons of the company's historical operating performance, management also uses this non-GAAP measure for business planning purposes and in measuring the company's performance relative to that of its competitors. In addition, Clearwire believes that Adjusted EBITDA and similar measures are widely used by investors, financial analysts and credit rating agencies as a measure of the company's financial performance over time and to compare the company's financial performance with that of other companies in the industry.

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