Clearwire 2007 Annual Report Download - page 82

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$47.1 million less the book value of net assets sold of $26.1 million and transaction related costs of $1.2 million,
which consists of legal fees and employee related termination costs. The transaction closed on August 29, 2006.
The carrying value of the assets and liabilities sold during 2006 are as follows (in thousands):
Inventory ............................................................. $ 8,895
Property, plant and equipment.............................................. 4,620
Other current and long-term assets .......................................... 8,387
Intangible assets ........................................................ 5,211
Goodwill ............................................................. 9,352
Total assets ........................................................... 36,465
Current liabilities ....................................................... 9,888
Other long-term liabilities................................................. 490
Total liabilities ......................................................... 10,378
Net assets disposed ..................................................... $26,087
In connection with the sale of NextNet, Clearwire and Motorola also entered into agreements for the purchase
of certain infrastructure and supply inventory from NextNet (“Supply Agreement”). These agreements cover a
number of topics, including, but not limited to, certain technology development projects and future Clearwire
purchase commitments and a maximum Motorola pricing schedule for network equipment from NextNet. The
aggregate price paid by Clearwire in any calendar year will be no less favorable than the aggregate price paid by
other customers contemporaneously buying similar or lesser aggregate purchases. Clearwire is committed to
purchase no less than $150.0 million of equipment products from Motorola in the first two years after the effective
date of the Supply Agreement. Clearwire is also committed to purchase no less than 25.0% of its Worldwide
Interoperability for Microwave Access (“WiMAX”) subscriber handsets from Motorola as long as the capabilities
and costs of the handsets (and the availability of such handsets) are equal for a given product in similar quantities or
service offered by Motorola and another supplier or suppliers. These commitments are effective for an initial term
of eight years and will be automatically renewed for consecutive one year terms unless either party notifies the other
party in writing of its intent to terminate the agreements at least one hundred and twenty days prior to the expiration
of the initial term or any renewal thereof. Clearwire has also committed to use Motorola as its 100.0% exclusive
supplier for specified Wireless Broad Band Infrastructure products until the fifth anniversary date of the agreement.
After the fifth anniversary date the commitment is reduced to 51.0% until the term ends on August 29, 2014. For the
period from the effective date of the agreement of August 29, 2006, through December 31, 2007, total purchases
from Motorola under these agreements were $98.4 million. The remaining commitment was $51.6 million at
December 31, 2007.
Due to Clearwire’s continuing involvement in NextNet through the various agreements described above, the
sale of NextNet was not classified as discontinued operations in the financial statements as it did not meet the
discontinued operations criteria specified in SFAS No. 144, Accounting for the Impairment or Disposal of Long-
Lived Assets and EITF Issue No. 03-13, Applying the Conditions in Paragraph 42 of SFAS No. 144 in Determining
whether to report Discontinued Operations.
Financing
In an effort to simply its capital structure, access incremental borrowing availability, and extend debt
maturities, on July 3, 2007, the Company entered into a senior term loan facility providing for loans of up to
$1.0 billion. The Company borrowed $379.3 million under the senior term loan facility on the date of closing and
repaid obligations under its existing $125.0 million term loan and fees and costs attributable to the senior term loan
facility. The remainder is being used for capital expenditures, working capital and general corporate purposes. On
74
CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)