Windstream 2011 Annual Report Download - page 160
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
____
F-52
As of January 1, 2011, we completed our annual impairment review of goodwill in accordance with authoritative guidance and
determined that no write-down in carrying value was required. As discussed in Note 2, effective January 1, 2011, we have
determined that we have two reporting units to test for impairment. We assess goodwill impairment by evaluating the carrying
value of shareholder’s equity against the current fair market value of outstanding equity, which is determined to be equal to our
current market capitalization plus a control premium of 20.0 percent. This premium is estimated through a review of recent
market observable transactions involving telecommunication companies.
Intangible assets were as follows at December 31:
(Millions)
Franchise rights (a)
Customer lists (a)
Cable franchise rights (a)
Other (a)
Balance
2011
Gross
Cost
$ 1,285.1
1,939.0
39.8
44.9
$ 3,308.8
Accumulated
Amortization
$ (114.8)
(464.2)
(24.7)
(19.8)
$ (623.5)
Net Carrying
Value
$ 1,170.3
1,474.8
15.1
25.1
$ 2,685.3
2010
Gross
Cost
$ 1,285.1
1,097.5
39.7
19.1
$ 2,441.4
Accumulated
Amortization
$(71.9)
(298.9)
(23.5)
(8.6)
$(402.9)
Net Carrying
Value
$ 1,213.2
798.6
16.2
10.5
$ 2,038.5
(a) Changes in the gross cost of intangible assets were associated with the acquisitions of PAETEC and the Acquired
Companies as previously discussed in Note 3. Effective January 1, 2009, we prospectively changed our assessment of
useful life for our franchise rights from indefinite-lived to 30 years. Effective with this change, these rights are now
amortized on a straight-line basis in accordance with the way in which these operations are expected to contribute to
our undiscounted cash flows.
Intangible asset amortization methodology and useful lives were as follows as of December 31, 2011:
Intangible Assets
Wireline franchise rights
Customer lists
Cable franchise rights
Other
Amortization Methodology
straight-line
sum of years digits
straight-line
straight-line
Estimated Useful Life
30 years
9 - 15 years
15 years
1 - 3 years
Amortization expense for intangible assets subject to amortization was $220.6 million in 2011, $154.1 million in 2010 and
$80.9 million in 2009. Amortization expense for intangible assets subject to amortization is estimated to be $358.4 million,
$299.5 million, $259.9 million, $226.3 million and $153.3 million in 2012, 2013, 2014, 2015 and 2016, respectively.