Sprint - Nextel 2013 Annual Report Download - page 138

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SoftBank Merger, which was not distributed to the then existing stockholders and is intended to be used for general corporate purposes.
In addition, pursuant to the Bond Agreement, on October 15, 2012, Sprint Communications, Inc. issued a Bond to Starburst II with a principal amount
of
$3.1 billion , interest rate of 1%, and maturity date of October 15, 2019, which was converted into 590,476,190 shares of Sprint Communications, Inc. common
stock at
$5.25 per share immediately prior to the close of the SoftBank Merger. As a result of the completion of the SoftBank Merger and subsequent open
market stock purchases, SoftBank owns approximately
80% of the outstanding voting common stock of Sprint Corporation and other Sprint stockholders own
the remaining approximately
20% as of December 31, 2013 , which consisted of common shares issued pursuant to the Merger Agreement.
Consideration Transferred
The fair value of consideration transferred, which is measured at the estimated fair value of each element of consideration transferred as of the
SoftBank Merger Date, was determined as the sum of (a) cash transferred to Sprint Communications stockholders, (b) the number of shares of Sprint issued to
Sprint Communications stockholders and (c) share
- based payment awards (replacement awards) exchanged for awards held by Sprint employees. The fair value
of the consideration transferred was based on the most reliable measure for each element of consideration, which was determined to be the market price of Sprint
common shares as of July 11, 2013 for all non
- cash consideration. The estimated fair value of the consideration transferred, based on the market price of Sprint
common stock, as determined using the closing price of Sprint common stock on the New York Stock Exchange as of July 11, 2013, and the investments by
SoftBank consisted of the following:
The fair value of the investments by SoftBank was determined based on the cash transferred, including
$3.1 billion to purchase the Bond and $1.9
billion at the close of the SoftBank Merger. Merger - related costs (included in selling, general and administrative in the results of operations) for the SoftBank
Merger totaled approximately
$129 million , of which $32 million were recognized in 2012 and $97 million were recognized in the 2013 Successor period.
Preliminary Purchase Price Allocation
The consideration transferred has been preliminarily allocated to assets acquired and liabilities assumed based on their estimated fair values as of the
SoftBank Merger Date, inclusive of the Clearwire Acquisition described above. The preliminary allocation of consideration transferred was based on
management's judgment after evaluating several factors, including a preliminary valuation assessment. Additional analysis, including, but not limited to, the
value of intangible assets, and any associated tax impacts, could result in a change in the total amount of goodwill. The preliminary allocation represents
management's current best estimate of fair value, but these amounts could change as additional information is obtained and evaluated. In addition, because
approximately
$46 million of certain merger - related fees of Sprint Communications, the acquiree, were contingent upon the closing of the SoftBank Merger, these
fees were not recorded as an expense subsequent to the close of the transaction. However, these fees are reflected in the preliminary purchase price allocation.
Of the total acquisition
- related costs, approximately $73 million of contingent merger - related costs paid by, or incurred by SoftBank on behalf of, the accounting
acquirer, formerly Starburst II, were recorded as an expense in the
2013 Successor period. Adjustments made since the initial purchase price allocation decreased
recorded goodwill by approximately
$385 million . Indefinite - lived intangible assets increased by approximately $254 million due to additional analysis performed
by
F - 20
Consideration transferred and investments by SoftBank (in millions) :
Cash consideration paid to Sprint Communications stockholders
$
16,640
Issuance of Sprint Corporation common stock to former Sprint Communications stockholders
5,344
Estimated value of Sprint Corporation equity awards issued to holders of Sprint Communications equity awards for service provided in the
pre
- combination period
193
Total purchase price to be allocated
22,177
Convertible Bond
3,100
Additional capital contribution made by SoftBank
1,900
Total consideration transferred and investments by SoftBank
$
27,177