Sprint - Nextel 2008 Annual Report Download - page 126

CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
consideration; however it did result in an equity reallocation of $33.6 million to the non-controlling interests. On
February 27, 2009, CW Investment Holdings LLC, which we refer to as CW Investment Holdings, an affiliate of
John Stanton, a director of Clearwire, contributed $10.0 million in cash in exchange for 588,235 shares of
Class A Common Stock. Concurrent with the Closing, we entered into commercial agreements with each of the
Investors, which establish the framework for development of the combined WiMAX businesses.
The combination was accounted for as a purchase and as a reverse acquisition with the Sprint WiMAX
Business considered the accounting acquirer. As a result, the historical financial statements of the Sprint
WiMAX Business have become the financial statements of Clearwire effective as of the Closing.
Purchase Consideration
As a result of the Transactions, we acquired Old Clearwire’s net assets and each share of Old Clearwire
Class A common stock was exchanged for one share of Class A Common Stock, and each option and warrant to
purchase shares of Old Clearwire Class A Common Stock and each share of restricted stock was exchanged for
an option or warrant to purchase the same number of shares of Class A Common Stock, or a restricted share of
Class A Common Stock, as applicable.
Purchase consideration was based on the fair value of the Old Clearwire Class A common stock as of the
Closing, which had a closing price of $6.62 on November 28, 2008.
The total purchase consideration to acquire Old Clearwire is approximately $1.12 billion, calculated as
follows (in thousands, except per share amount):
Number of shares of Old Clearwire Class A common stock exchanged in the Transactions ........ 164,484
Closing price per share of Old Clearwire Class A common stock ............................ $ 6.62
Fair value of Old Clearwire Class A common stock exchanged ............................. 1,088,884
Fair value adjustment for Old Clearwire stock options exchanged ........................... 38,014
Fair value adjustment for restricted stock units exchanged ................................. 1,398
Fair value adjustment for warrants exchanged ........................................... 18,490
Transaction costs .................................................................. 51,546
Purchase consideration for Old Clearwire before settlement loss ............................ 1,198,332
Less: net loss from settlement of pre-existing relationships ................................. (80,573)
Purchase consideration for Old Clearwire .............................................. $1,117,759
Purchase Price Allocation
The total purchase consideration was allocated to the respective assets and liabilities based upon their
estimated fair values on the date of the acquisition. At the date of acquisition, the estimated fair value of the net
assets acquired exceeded the purchase price; therefore, no goodwill is reflected in the purchase price allocation.
The excess of estimated fair value of net assets acquired over the purchase price was allocated to eligible
non-current assets, specifically property, plant and equipment, other non-current assets and intangible assets,
based upon their relative fair values.
During 2009, we finalized the allocation of the purchase consideration to the identifiable tangible and
intangible assets acquired and liabilities assumed of Old Clearwire. In connection therewith, there was a
reduction in the amount allocated to consolidated property, plant and equipment of approximately $11.3 million,
and a corresponding increase in the amount allocated to spectrum, primarily based on the receipt of additional
information and final appraisal valuations. The following table sets forth the final allocation of the purchase
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