Clearwire 2008 Annual Report Download - page 79

assume
d
,an
d
t
h
e resu
l
t
i
ng amount o
f
t
h
e excess o
f
est
i
mate
df
a
i
rva
l
ue o
f
net assets acqu
i
re
d
over t
h
e purc
h
as
e
p
rice
.
Art
i
c
l
e11o
f
Regu
l
at
i
on S-X requ
i
res t
h
at pro
f
orma a
dj
ustments re
fl
ecte
di
nt
h
e unau
di
te
d
pro
f
orma
s
tatement o
f
operat
i
ons are
di
rect
ly
re
l
ate
d
to t
h
e transact
i
on
f
or w
hi
c
h
pro
f
orma
fi
nanc
i
a
li
n
f
ormat
i
on
i
s presente
d
and have a continuin
g
impact on the results of operations. Certain char
g
es have been excluded in the unaudited pr
o
f
orma com
bi
ne
d
statement o
f
operat
i
ons as suc
h
c
h
arges were
i
ncurre
di
n
di
rect connect
i
on w
i
t
h
or at t
h
et
i
me o
f
t
h
e
Transact
i
ons an
d
are not expecte
d
to
h
ave an ongo
i
ng
i
mpact on t
h
e resu
l
ts o
f
operat
i
ons a
f
ter t
h
eC
l
os
i
ng
.
(a) Represents the accelerated vesting of stock options for certain members of management upon the Closing,
w
hich resulted in a one-time char
g
e of approximatel
y$
38.9 million recorded b
y
Old Clearwire in its
historical financial statements for the 11 months ended November 28, 2008. As these are non-recurrin
g
char
g
es directl
y
attributable to the Transactions, the
y
are excluded from the unaudited pro forma
com
bi
ne
d
statement o
f
operat
i
ons
f
or t
h
e year en
d
e
d
Decem
b
er 31, 2008.
(b) The adjustments are to record depreciation and amortization expense on a pro forma basis related to the
new
b
as
i
so
f
O
ld
C
l
earw
i
re property, p
l
ant an
d
equ
i
pment
i
n purc
h
ase account
i
ng w
hi
c
h
are
b
e
i
n
g
d
eprec
i
ate
d
an
d
amort
i
ze
d
over t
h
e
i
r est
i
mate
d
rema
i
n
i
n
g
use
f
u
lli
ves on a stra
igh
t-
li
ne
b
as
i
s. T
he
reduction in depreciation results from a decrease in the carr
y
in
g
value of propert
y
, plant and equipment a
s
a result of the allocation of the excess of the estimated fair value of net assets ac
q
uired over the
p
urchas
e
pr
i
ce.
(c) Represents t
h
ea
dj
ustments to recor
d
amort
i
zat
i
on on a pro
f
orma
b
as
i
sre
l
ate
d
to t
h
enew
b
as
i
so
f
t
h
eO
ld
Cl
earw
i
re spectrum
l
ease contracts an
d
ot
h
er
i
ntan
gibl
e assets over t
h
e
i
r est
i
mate
d
we
igh
te
d
avera
g
e
remainin
g
useful lives on a strai
g
ht-line basis
.
(
d
) Represents t
h
ee
li
m
i
nat
i
on o
fi
ntercompany ot
h
er
i
ncome an
d
re
l
ate
d
expenses assoc
i
ate
d
w
i
t
h
t
he
historical a
g
reements pre-Closin
g
between the Sprint WiMAX Business and Old Clearwire, where Ol
d
C
learwire leased s
p
ectrum licenses from the S
p
rint WiMAX Business.
(e) Represents the reversal of transaction costs of
$
48.6 million for the
y
ear ended December 31, 2008,
comprised of $33.4 million of investment bankin
g
fees and $15.2 million of other professional fees,
recor
d
e
di
nt
h
eO
ld
C
l
earw
i
re
hi
stor
i
ca
lfi
nanc
i
a
l
statements
f
or t
h
e year en
d
e
d
Decem
b
er 31, 2008. A
s
th
ese are non-recurr
i
ng c
h
arges
di
rect
l
y attr
ib
uta
bl
etot
h
e Transact
i
ons, t
h
ey are exc
l
u
d
e
df
rom t
he
unaudited pro forma combined statement of operations for the
y
ear ended December 31, 2008.
(
f
)Pr
i
or to t
h
eC
l
os
i
n
g
, Spr
i
nt
l
ease
d
spectrum to O
ld
C
l
earw
i
re t
h
rou
gh
var
i
ous spectrum
l
ease a
g
reements
.
As part o
f
t
h
e Transact
i
ons, Spr
i
nt contr
ib
ute
db
ot
h
t
h
e spectrum
l
ease a
g
reements an
d
t
h
e spectru
m
assets underlying those agreements. As a result of the Transactions, the spectrum lease agreements wer
e
e
ff
ect
i
ve
l
y term
i
nate
d
,an
d
t
h
e sett
l
ement o
f
t
h
ose agreements was accounte
df
or as a separate e
l
emen
t
f
rom the business combination. A settlement loss of
$
80.6 million resulted from the termination as the
a
g
reements were considered to be unfavorable to us relative to current market rates. This one-time char
ge
recor
d
e
db
yC
l
earw
i
re at t
h
eC
l
os
i
ng
i
sexc
l
u
d
e
df
rom t
h
e unau
di
te
d
pro
f
orma com
bi
ne
d
statement o
f
o
perat
i
ons
f
or t
h
e year en
d
e
d
Decem
b
er 31, 2008.
(g) Prior to the Closing of the Transactions, Old Clearwire refinanced the Senior Term Loan Facility and
rene
g
ot
i
ate
d
t
h
e
l
oan terms. H
i
stor
i
ca
li
nterest expense re
l
ate
d
to t
h
e Sen
i
or Term Loan Fac
ili
t
yb
e
f
ore t
he
refinancin
g
and amortization of the deferred financin
g
fees recorded b
y
Old Clearwire, in the amounts o
f
$94.1 million and $95.3 million for the years ended December 31, 2008 and 2007, respectively, have bee
n
reverse
d
as
if
t
h
e Transact
i
ons were consummate
d
on January 1, 2007. A
ddi
t
i
ona
ll
y, t
h
e
l
oss on
extin
g
uishment of debt of $159.2 million recorded for the
y
ear ended December 31, 2007 was reversed
in the unaudited
p
ro forma combined statement of o
p
erations.
(
h
) Represents t
h
ea
dj
ustment to recor
d
pro
f
orma
i
nterest expense assum
i
n
g
t
h
e Sen
i
or Term Loan Fac
ili
t
y
and the Sprint Tranche under the Amended Credit Agreement were outstanding as of the beginning of th
e
earliest period presented, January 1, 2007. The Closing would have resulted in an event of default unde
r
th
e terms o
f
t
h
e cre
di
ta
g
reement un
d
er
lyi
n
g
t
h
e Sen
i
or Term Loan Fac
ili
t
y
un
l
ess t
h
e consent o
f
t
h
e
6
7