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CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The income tax rate computed using the federal statutory rates is reconciled to the reported effective income
tax rate as follows:
Year Ended December 31,
2009 2008 2007
Federal statutory income tax rate ................................ 35.0% 35.0% 35.0%
State income taxes (net of federal benefit) ......................... 0.8 (1.5) (0.8)
Non-controlling interest ....................................... (25.9) — —
Other, net ................................................... 0.7 0.2 0.2
Valuation allowance .......................................... (10.7) (50.3) (42.2)
Effective income tax rate ....................................... (0.1)% (16.6)% (7.8)%
We file income tax returns for Clearwire and our subsidiaries in the United States Federal jurisdiction and
various state and foreign jurisdictions. As of December 31, 2009, the tax returns for Old Clearwire for the years
2003 through 2008 remain open to examination by the Internal Revenue Service and various state tax authorities.
In addition, Old Clearwire acquired United States and foreign entities which operated prior to 2003. Most of the
acquired entities generated losses for income tax purposes and certain tax returns remain open to examination by
United States and foreign tax authorities for tax years as far back as 1998.
Our policy is to recognize any interest related to unrecognized tax benefits in interest expense or interest
income. We recognize penalties as additional income tax expense. As December 31, 2009, we had no uncertain
tax positions and therefore accrued no interest or penalties related to uncertain tax positions.
10. Long-term Debt
Long-term debt at December 31, 2009 and 2008 consisted of the following (in thousands):
December 31,
2009 2008
Senior Secured Notes and Rollover Notes, due in 2015, interest
due-bi-annually ............................................ $2,714,731 $ —
Senior Term Loan Facility, due in 2011, 1% of principal due annually;
residual at maturity ......................................... — 1,364,790
Less: current portion .......................................... — (14,292)
Total long-term debt .......................................... $2,714,731 $1,350,498
Senior Secured Notes and Rollover Notes — On November 24, 2009, we issued $1.60 billion in 12% Senior
Secured Notes due 2015 for cash proceeds of $1.57 billion, net of debt discount. We used $1.16 billion of the
proceeds to retire our Senior Term Loan Facility and recognized a gain on extinguishment of debt of
$8.3 million, net of transaction costs. The Senior Secured Notes provide for bi-annual payments of interest in
June and December, beginning in June 2010, and bear interest at the rate of 12% per annum. In connection with
the issuance of the Senior Secured Notes, on November 24, 2009, we also issued $252.5 million of Rollover
Notes to Sprint and Comcast with identical terms as the Senior Secured Notes. The proceeds from the Rollover
Notes were used in 2009 to retire the principal amounts owed to Sprint and Comcast under our Senior Term Loan
Facility.
On December 9, 2009, we issued an additional $920 million in Senior Secured Notes with the same terms as
the Senior Secured Notes issued on November 24, 2009, which resulted in cash proceeds of $901.1 million, net
of debt discount.
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