Sprint - Nextel 2015 Annual Report Download - page 105

Table of Contents
Index to Consolidated Financial Statements
SPRINT CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the purchase price allocation of consideration in the Clearwire Acquisition:
Purchase Price Allocation (in millions) :
Current assets $ 778
Property, plant and equipment 1,245
Identifiable intangibles 12,870
Goodwill 437
Other assets 25
Current liabilities (1,070)
Long-term debt (4,288)
Deferred tax liabilities (2,130)
Other liabilities (876)
Net assets acquired $ 6,991
SoftBank Transaction
As discussed above, the SoftBank Merger was completed on July 10, 2013 . Sprint Communications, Inc. stockholders received consideration in a
combination of both cash and stock, subject to proration. Cash consideration paid in the SoftBank Merger was $14.1 billion , net of cash acquired of $2.5 billion
and the estimated fair value of the 22% interest in Sprint Corporation issued to the then existing stockholders of Sprint Communications, Inc.
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 SoftBank Merger Date. As a result of the completion of the SoftBank Merger and subsequent open market stock
purchases, SoftBank owned approximately 83% of the outstanding voting common stock of Sprint Corporation and other Sprint stockholders own the remaining
approximately 17% as of March 31, 2016 .
Consideration Transferred and Investments by SoftBank
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) approximately $16.6 billion of cash transferred to Sprint Communications, Inc. stockholders, (b)
approximately $5.3 billion representing shares of Sprint issued to Sprint Communications, Inc. stockholders and (c) approximately $193 million of share-based
payment awards (replacement awards) exchanged for awards held by Sprint employees.
Additionally, SoftBank invested approximately $5.0 billion in the form of a capital contributions to Sprint. 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 SoftBank Merger Date.
Purchase Price Allocation
The consideration transferred was 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 excess of the consideration transferred over the estimated fair values of assets acquired and
liabilities assumed was recorded as goodwill. Goodwill resulting from the SoftBank Merger is allocated to the Wireless segment. The allocation of consideration
transferred was based on management's judgment after evaluating several factors, including a valuation assessment. Management finalized its purchase price
allocation during the quarter ended June 30, 2014. Adjustments made since the initial purchase price allocation decreased recorded goodwill by approximately
$476 million . Indefinite-lived intangible assets increased by approximately $300 million due to additional analysis performed by management during the quarter
ended December 31, 2013 and the quarter ended June 30, 2014 related to the value assigned to certain FCC licenses. The remainder of the decrease was due to
insignificant changes in various accounts.
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