Clearwire 2008 Annual Report Download - page 100

F
SP No. FAS 142-
3
— In Apr
il
2008, t
h
e FASB
i
ssue
d
FASB Sta
ff
Pos
i
t
i
on, w
hi
c
h
we re
f
er to as FSP
,
No. FA
S 142
-
3,
Determination of t
h
e Usefu
l
Life of Intangi
bl
e Asset
s
,
w
hi
c
h
we re
f
er to as FSP No. 142-3. FS
P
No. 142-3 amends the factors that should be considered in developin
g
renewal or extension assumptions used to
d
eterm
i
ne t
h
e use
f
u
l lif
eo
f
a recogn
i
ze
di
ntang
ibl
e asset un
d
er SFAS No. 142. FSP No. 142-3
i
s
i
nten
d
e
d
to
i
mprove t
h
e cons
i
stency
b
etween t
h
e use
f
u
l lif
eo
f
an
i
ntang
ibl
e asset
d
eterm
i
ne
d
un
d
er SFAS No. 142 an
d
t
he
p
eriod of ex
p
ected cash flows used to measure the fair value of the asset under SFAS No. 141, and other U.S. GAAP
.
FSP No. 142-3 is effective for financial statements issued for fiscal years beginning after December 1
5
, 2008, an
d
i
nter
i
m per
i
o
d
sw
i
t
hi
nt
h
ose
fi
sca
ly
ears. We
d
o not expect t
h
ea
d
opt
i
on o
f
FSP No. 142-3 w
ill h
ave a mater
i
a
l
e
ff
ec
t
on our
fi
nanc
i
a
lp
os
i
t
i
on an
d
resu
l
ts o
f
o
p
erat
i
ons.
3
. Strategic Transactions
On May 7, 2008, Sprint announced that it had entered into a definitive agreement with Old Clearwire to
c
om
bi
ne
b
ot
h
o
f
t
h
e
i
rnext
g
enerat
i
on w
i
re
l
ess
b
roa
db
an
db
us
i
nesses to
f
orm a new
i
n
d
epen
d
ent compan
y
to
b
e
c
alled Clearwire. In addition, the Investors a
g
reed to invest $3.2 billion in Clearwire and Clearwire Communi
-
c
ations. On November 28, 2008, Old Clearwire and the S
p
rint WiMAX Business com
p
leted the combination t
o
form Clearwire and Clearwire Communications and the Investors contributed a total of
$
3.2 billion of new equit
y
to
Clearwire and Clearwire Communications. In exchan
g
e for the $3.2 billion, Sprint and the Investors received a
n
a
gg
re
g
ate of 530 million shares of Clearwire Class A Common Stock, par value $0.0001 per share, which we define
as Clearwire Class A Common Stock, and Class B Common Stock, par value
$
0.0001 per share, which we define a
s
C
l
earw
i
re C
l
ass B Common Stoc
k
,an
d
C
l
earw
i
re Commun
i
cat
i
ons C
l
ass B non-vot
i
n
g
common
i
nterest, w
hi
c
h
w
e
r
efer to as Clearwire Communications Class B common interests, at an initial share
p
rice of $20
p
er share.
Upon comp
l
et
i
on o
f
t
h
e Transact
i
ons, Spr
i
nt owne
d
t
h
e
l
ar
g
est
i
nterest
i
nC
l
earw
i
re w
i
t
h
an e
ff
ect
i
ve vot
i
n
g
and economic interest in Clearwire and its subsidiaries of approximatel
y
53%, based on the initial purchase price o
f
$
20.00 per share prior to the post-closing adjustment. The combination is being accounted for as a purchase in
accor
d
ance w
i
t
h
t
h
e prov
i
s
i
ons o
f
SFAS No. 141 an
dh
as
b
een accounte
df
or as a reverse acqu
i
s
i
t
i
on w
i
t
h
t
h
e Spr
i
nt
Wi
MAX Bus
i
ness cons
id
ere
d
t
h
e account
i
n
g
acqu
i
rer. As a resu
l
t, t
h
e
hi
stor
i
ca
lfi
nanc
i
a
l
statements o
f
t
h
e Spr
i
nt
W
iMAX Business have become the financial statements of Clearwire effective as of the Closin
g
. The results o
f
operat
i
ons
f
or t
h
e per
i
o
d
Novem
b
er 29, 2008 t
h
roug
h
Decem
b
er 31, 2008 o
f
t
h
e acqu
i
re
d
ent
i
ty, O
ld
C
l
earw
i
re, are
i
nc
l
u
d
e
di
nt
h
e conso
lid
ate
d
statements o
fCl
ear
wi
re.
We believe that the Transactions will allow us to build and operate nationwide wireless broadband networks
t
h
at ena
bl
e
f
ast, s
i
mp
l
e, porta
bl
e, re
li
a
bl
ean
d
a
ff
or
d
a
bl
e commun
i
cat
i
ons. Our networ
k
sw
ill
cover ent
i
re
c
ommun
i
t
i
es,
d
e
li
ver
i
n
g
aw
i
re
l
ess
high
-spee
d
Internet connect
i
on an
d
ena
bli
n
g
ot
h
er serv
i
ces an
df
eatures t
h
at
c
reate a new communications
p
ath into the home or office
.
A
f
ter t
h
e Transact
i
ons, Spr
i
nt an
d
t
h
e Investors, ot
h
er t
h
an Goo
gl
e, own s
h
ares o
f
C
l
earw
i
re C
l
ass B Common
S
tock, which have equal votin
g
ri
g
hts to Clearwire Class A Common Stock, but have onl
y
limited economic ri
g
hts.
U
n
lik
et
h
e
h
o
ld
ers o
f
C
l
earw
i
re C
l
ass A Common Stoc
k,
t
h
e
h
o
ld
ers o
f
C
l
earw
i
re C
l
ass B Common Stoc
kh
ave n
o
ri
g
h
tto
di
v
id
en
d
san
d
no r
i
g
h
t to any procee
d
son
li
qu
id
at
i
on ot
h
er t
h
an t
h
e par va
l
ue o
f
t
h
eC
l
earw
i
re C
l
ass B
Common Stock. Sprint and the Investors, other than Goo
g
le, hold their economic ri
g
hts throu
g
h ownership of
C
l
earw
i
re Commun
i
cat
i
ons C
l
ass B Common Interests. Goog
l
e owns s
h
ares o
f
C
l
earw
i
re C
l
ass A Common Stoc
k
.
The number of shares issued to the Investors was sub
j
ect to a post-closin
g
ad
j
ustment based on the tradin
g
p
rices of the Clearwire Class A Common Stock on NASDAQ Global Select Market over 1
5
randomly-selected
tra
di
n
gd
a
y
s
d
ur
i
n
g
t
h
e 30-
d
a
y
per
i
o
d
en
di
n
g
on t
h
e 90t
hd
a
y
a
f
ter t
h
eC
l
os
i
n
g
,w
hi
c
h
we re
f
er to as t
h
eA
dj
ustmen
t
D
ate, with a floor of $17.00 per share and a cap of $23.00 per share. The ad
j
ustment resulted in an additiona
l
28,23
5
,294 shares bein
g
issued to the Investors. The ad
j
ustment did not affect the purchase consideration. On
Fe
b
ruary 27, 2009, CW Investment Ho
ldi
ngs LLC, w
hi
c
h
we re
f
er to as C
l
earw
i
re Investment Ho
ldi
ngs, an a
ffili
at
e
of John Stanton, a director of Clearwire contributed
$
10.0 million in cash in exchan
g
e for 588,235 shares o
f
Clearwire Class A Common Stock. See Note 21, Subsequent Events, for a discussion re
g
ardin
g
the post-closin
g
88
CLEARWIRE CORPORATION AND
S
UB
S
IDIARIE
S
N
OTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)