Cricket Wireless 2010 Annual Report Download - page 117

The following amounts represent the preliminary fair value of identifiable assets acquired and liabilities
assumed by the Company as of the acquisition date (in thousands):
Fair Value
Assets:
Inventories......................................................... $ 2,331
Other current assets .................................................. 1,204
Property and equipment ............................................... 41,971
Wireless licenses .................................................... 33,716
Customer relationships ................................................ 50,435
Goodwill .......................................................... 31,094
Total Assets ........................................................ 160,751
Liabilities:
Accounts payable and accrued liabilities ................................... $ 4,020
Deferred revenue .................................................... 4,224
Deferred tax liability.................................................. 10,693
Other long-term liabilities .............................................. 1,190
Total liabilities ...................................................... 20,127
Total net assets acquired ................................................. $140,624
Goodwill primarily represents the future economic benefits arising from other assets acquired that could not be
individually identified and separately recognized. The goodwill arising from the transaction consists largely of the
synergies expected from the joint venture. As part of the valuation, the Company recorded approximately
$50.4 million of finite-lived intangible assets, representing the fair value of customer relationships, which are
amortized on an accelerated basis over an estimated useful life of 4 years. Additionally, the Company recorded
approximately $33.7 million of wireless licenses acquired in the transaction. Consistent with the Company’s policy
regarding the useful lives of its wireless licenses, the wireless licenses acquired have an indefinite useful life.
Transaction-related expenses totaling approximately $1.4 million were recorded as general and administrative
expenses in the Company’s consolidated statement of operations. The Company has not presented pro forma
financial information reflecting the effects of the transaction because such effects are not material.
Pocket’s 24.25% non-controlling membership interest in STX Wireless was recorded in mezzanine equity as a
component of redeemable non-controlling interests. The non-controlling interest was initially recognized as part of
the purchase accounting in the amount of $51.5 million. The $51.5 million comprises the sum of Pocket’s
proportionate share (24.25%) of the fair value in the Pocket business and its proportionate shares (24.25%) of the net
equity of the business contributed by Cricket.
A gain of $48.4 million arose from the transaction representing Cricket’s exchange of a 24.25% non-
controlling interest in its South Texas business for a controlling interest in the business acquired from Pocket. The
gain is equal to Cricket’s proportionate interest (75.75%) in the fair value of the Pocket business acquired less the
proportionate interest (24.25%) in the book value of Cricket’s South Texas business given up, and cash paid of
$40.7 million. Because the Company maintained control over the newly formed joint venture after the transaction
was closed, the gain was recognized in additional paid-in capital within stockholders’ equity.
The joint venture is controlled and managed by Cricket under the terms of the amended and restated limited
liability company agreement (the “STX LLC Agreement”). Under the STX LLC Agreement, Pocket has the right to
put, and the Company has the right to call, all of Pocket’s membership interests in STX Wireless, which rights are
generally exercisable on or after April 1, 2014. In addition, in the event of a change of control of Leap, Pocket is
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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)