Clearwire 2009 Annual Report Download - page 74

Spr
i
nt Nexte
l
Corporat
i
on entere
di
nto an agreement w
i
t
h
O
ld
C
l
earw
i
re to com
bi
ne
b
ot
h
o
f
t
h
e
i
rnext
g
eneration wireless broadband businesses to form a new independent compan
y
. On Closin
g
, Old Clearwire and th
e
S
print WiMAX Business completed the combination to form Clearwire. The Transactions were accounted for as a
r
everse acqu
i
s
i
t
i
on w
i
t
h
t
h
e Spr
i
nt W
i
MAX Bus
i
ness
d
eeme
d
to
b
et
h
e account
i
ng acqu
i
rer
.
At the Closin
g
, the Investors made an a
gg
re
g
ate $3.2 billion capital contribution to Clearwire and it
s
s
u
b
s
idi
ary, C
l
earw
i
re Commun
i
cat
i
ons. In exc
h
ange
f
or t
h
e contr
ib
ut
i
on o
f
t
h
e Spr
i
nt W
i
MAX Bus
i
ness an
d
t
h
e
i
r
i
nvestments, as applicable, Goo
g
le initiall
y
received 25,000,000 shares of Class A Common Stock and Sprint an
d
t
he other Investors received in aggregate
5
0
5
,000,000 shares of Class B Common Stock and an equivalent amount of
Cl
ear
wi
re
C
ommun
i
cat
i
ons
Cl
ass B
C
ommon Interests. T
h
e num
b
er o
f
s
h
ares o
fCl
ass A an
d
B
C
ommon
S
toc
k
an
d
C
l
earw
i
re Commun
i
cat
i
ons C
l
ass B Common Interests, as a
ppli
ca
bl
e, t
h
at t
h
e Investors were ent
i
t
l
e
d
to rece
i
v
e
under the Transaction Agreement was subject to a post-closing adjustment based on the trading price of Class A
Common Stock on NASDAQ over 1
5
randomly-selected trading days during the 30-day period ending on th
e
9
0th da
y
after the Closin
g
, or Februar
y
26, 2009, which we refer to as the Ad
j
ustment Date, with a floor of $17.0
0
p
er share and a cap of $23.00 per share. Durin
g
the measurement period, Class A Common Stock traded below
$
17.00 per share on NASDAQ, so on the Adjustment Date, we issued to the Investors an additional 4,411,765 shares
of Class A Common Stock and 23
,
823
,
529 shares of Class B Common Stock and Clearwire Communication
s
Class B Common Interests to reflect the $17.00 final price per share. Additionall
y
, in accordance with th
e
s
ubscription a
g
reement, on Februar
y
27, 2009, CW Investment Holdin
g
s LLC purchased
5
88,23
5
shares of Class A
Common Stock at
$
17.00 per share for a total investment of
$
10.0 million. For the purpose of determining th
e
n
umber of shares outstandin
g
within the unaudited pro forma condensed combined statements of operations, we
assumed that the additional shares and common interests issued to the Investors and CW Investment Holdin
g
s LLC
on t
h
eA
dj
ustment Date an
d
Fe
b
ruary 27, 2009, respect
i
ve
l
y, were
i
ssue
d
as o
f
t
h
eC
l
os
i
ng an
d
t
h
at t
h
eC
l
os
i
ng was
c
onsummated on Januar
y
1, 2007.
I
n connect
i
on w
i
t
h
t
h
e
i
ntegrat
i
on o
f
t
h
e Spr
i
nt W
i
MAX Bus
i
ness an
d
O
ld
C
l
earw
i
re operat
i
ons, we expec
t
t
hat certain non-recurrin
g
char
g
es will be incurred. We also expect that certain s
y
ner
g
ies mi
g
ht be realized due to
operatin
g
efficiencies or future revenue s
y
ner
g
ies expected to result from the Transactions. However, in preparin
g
th
e unau
di
te
d
pro
f
orma con
d
ense
d
com
bi
ne
d
statements o
f
operat
i
ons, w
hi
c
h
g
i
ve e
ff
ect to t
h
e Transact
i
ons as
if
th
e
y
were consummate
d
on Januar
y
1, 2007, no pro
f
orma a
dj
ustments
h
ave
b
een re
fl
ecte
d
to cons
id
er an
y
suc
h
c
osts or
b
ene
fi
ts
.
(
2) Pro Forma A
dj
ustments Re
l
ate
d
to Purc
h
ase Account
i
ng an
d
Ot
h
er Non-recurr
i
ng C
h
arges
f
or t
h
e Years En
d
e
d
D
ecem
b
er 31, 2008 an
d
200
7
Th
e pro
f
orma a
dj
ustments re
l
ate
d
to purc
h
ase account
i
ng
h
ave
b
een
d
er
i
ve
df
rom t
h
ea
ll
ocat
i
on o
f
t
he
p
urc
h
ase cons
id
erat
i
on to t
h
e
id
ent
ifi
a
bl
e tan
gibl
ean
di
ntan
gibl
e assets acqu
i
re
d
an
dli
a
bili
t
i
es assume
d
o
f
O
ld
Clearwire, including the allocation of the excess of the estimated fair value of net assets acquired over the purchas
e
p
rice.
Art
i
c
l
e11o
f
Re
g
u
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
orm
a
c
ondensed combined statements of operations are directly related to the transaction for which pro forma financial
i
n
f
ormat
i
on
i
s presente
d
an
dh
ave a cont
i
nu
i
ng
i
mpact on t
h
e resu
l
ts o
f
operat
i
ons. Certa
i
nc
h
arges
h
ave
b
een
e
xc
l
u
d
e
di
nt
h
e unau
di
te
d
pro
f
orma con
d
ense
d
com
bi
ne
d
statements o
f
operat
i
ons as suc
h
c
h
ar
g
es were
i
ncurre
di
n
direct connection with or at the time of the Transactions and are not expected to have an on
g
oin
g
impact on th
e
r
esu
l
ts o
f
operat
i
ons a
f
ter t
h
eC
l
os
i
ng
.
(a) Represents the accelerated vestin
g
of stock options for certain members of mana
g
ement upon the Closin
g,
w
hich resulted in a one-time charge of approximately
$
38.9 million recorded by Old Clearwire in its
hi
stor
i
ca
lfi
nanc
i
a
l
statements
f
or t
h
e 11 mont
h
sen
d
e
d
Novem
b
er 28, 2008. As t
h
ese are non-recurr
i
n
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) Represents ad
j
ustments in the depreciation expense on a pro forma basis related to items of Old Clearwir
e
PP&E that are bein
g
depreciated over their estimated remainin
g
useful lives on a strai
g
ht-line basis. Th
e
re
d
uct
i
on
i
n
d
eprec
i
at
i
on expense resu
l
ts
f
rom a
d
ecrease
i
nt
h
e carry
i
ng va
l
ue o
f
O
ld
C
l
earw
i
re PP&
E
64