Clearwire 2008 Annual Report Download - page 102

C
l
earw
i
re C
l
ass A Common Stoc
kb
e
f
ore t
h
eC
l
os
i
ng. T
hi
s num
b
er re
fl
ects t
h
e tota
li
ssue
d
an
d
outstan
di
n
g
sh
ares o
f
O
ld
C
l
earw
i
re C
l
ass A Common Stoc
k
an
d
O
ld
C
l
earw
i
re C
l
ass B Common Stoc
k
as o
f
Novem
b
er 28
,
2008
.
2
. In connection with the Transactions, all Old Clearwire stock options issued and outstanding at the Closing wer
e
e
xchanged on a one-for-one basis for stock options with equivalent terms. The average fair value of
$
2.69 per
s
hare of the 14,145,035 vested stock options and proportionall
y
vested stock options exchan
g
ed is included i
n
t
he calculation of purchase consideration using the Black-Scholes option pricing model using a share price o
f
$
6.62
.
3. In connect
i
on w
i
t
h
t
h
e Transact
i
ons
,
a
ll
O
ld
C
l
earw
i
re restr
i
cte
d
stoc
k
an
d
restr
i
cte
d
stoc
k
un
i
ts
i
ssue
d
an
d
outstandin
g
at the Closin
g
were exchan
g
ed on a one-for-one basis for restricted stock and restricted stock unit
s
i
n Clearwire, respectivel
y
, with equivalent terms. The fair value of $6.62 of the 211,147 proportionatel
y
vested
r
estr
i
cte
d
stoc
k
un
i
ts exc
h
ange
di
s
i
nc
l
u
d
e
di
nt
h
eca
l
cu
l
at
i
on o
f
purc
h
ase cons
id
erat
i
on at a
f
a
i
rva
l
ue equa
l
t
o
an unrestricted share
.
4
. In accordance with the Transactions, all Old Clearwire warrants issued and outstandin
g
at the Closin
g
were
e
xc
h
ange
d
on a one-
f
or-one
b
as
i
s
f
or warrants
i
nC
l
earw
i
re w
i
t
h
equ
i
va
l
ent terms. T
h
e average
f
a
i
rva
l
ue o
f
$
1.04 of the 17,806,220 warrants exchan
g
ed is included in the calculation of purchase consideration usin
g
th
e
B
lack-Scholes option pricin
g
model usin
g
a share price of $6.62.
5
.Re
p
resents transaction costs we incurred, which are included in the
p
urchase consideration. Included in th
e
t
otal transaction costs are
$
40.3 million in investment banking fees and
$
11.2 million in other professional fees
.
6
. Prior to the Closing, Sprint leased spectrum to Old Clearwire through various spectrum lease agreements. As
p
art of the Transactions, Sprint contributed both the spectrum lease a
g
reements and the spectrum assets
un
d
er
l
y
i
ng t
h
ose agreements to our
b
us
i
ness. As a resu
l
to
f
t
h
e Transact
i
ons, t
h
e spectrum
l
ease agreements ar
e
eff
ect
i
ve
l
y term
i
nate
d
,an
d
t
h
e sett
l
ement o
f
t
h
ose agreements
i
s accounte
df
or as a separate e
l
ement apart
f
ro
m
t
he business combination. The settlement loss reco
g
nized from the termination was valued based on the amoun
t
by which the agreements are favorable or unfavorable to our business relative to current market rates. The
s
pectrum lease agreements are considered to be unfavorable to our business by approximately
$
80.6 million on
a net
b
as
i
s. As suc
h
,were
d
uce
d
t
h
e
p
urc
h
ase cons
id
erat
i
on
p
a
id
an
d
recor
d
e
d
a non-cas
hl
oss on t
h
ee
ff
ect
i
v
e
s
ettlement of these contracts of approximately
$
80.6 million
.
T
he total
p
urchase consideration was allocated to the res
p
ective assets and liabilities based u
p
on thei
r
e
st
i
mate
df
a
i
rva
l
ues on t
h
e
d
ate o
f
t
h
e acqu
i
s
i
t
i
on. At t
h
e
d
ate o
f
acqu
i
s
i
t
i
on, t
h
e est
i
mate
df
a
i
rva
l
ue o
f
t
h
ene
t
assets acquired exceeded the purchase price; therefore, no
g
oodwill is reflected in the purchase price allocation. I
n
accordance with SFAS No. 141, the excess of estimated fair value of net assets ac
q
uired over the
p
urchase
p
rice was
a
ll
ocate
d
to e
li
g
ibl
e non-current assets, spec
ifi
ca
ll
y property, p
l
ant an
d
equ
i
pment, ot
h
er non-current assets an
d
i
ntan
gibl
e assets,
b
ase
d
upon t
h
e
i
rre
l
at
i
ve
f
a
i
rva
l
ues
.
9
0
C
LEARWIRE
CO
RP
O
RATI
O
N AND
SU
B
S
IDIARIE
S
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS —
(
Continued
)