Windstream 2012 Annual Report Download - page 149

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-51
3. Acquisitions and Dispositions, Continued:
The following table summarizes the final fair values of the assets acquired and liabilities assumed for NuVox and Iowa
Telecom.
NuVox Iowa Telecom
(Millions)
Final
Allocation
Final
Allocation
Fair value of assets acquired:
Assets held for sale (a) $ — $ 34.0
Other current assets 68.0 36.7
Property, plant and equipment 241.7 329.9
Goodwill 270.5 552.4
Wireline franchise rights (b) — 230.0
Cable franchise rights (b) — 5.6
Customer lists (c) 180.0 130.6
Trade name (d) 4.2 3.1
Other assets — 11.1
Total assets acquired 764.4 1,333.4
Fair value of liabilities assumed:
Current maturities of long-term debt (260.7)(610.2)
Other current liabilities (63.8)(49.7)
Deferred income taxes on acquired assets (29.7)(109.6)
Other liabilities (26.8)(29.5)
Total liabilities assumed (381.0)(799.0)
Common stock issued (inclusive of additional paid-in capital) (185.0)(280.8)
Cash paid, net of cash acquired $ 198.4 $ 253.6
(a) Wireless licenses acquired from Iowa Telecom were designated as held for sale.
(b) Wireline franchise rights and cable franchise rights are amortized on a straight-line basis over an estimated life of 30
years and 15 years, respectively.
(c) Customer lists are amortized using the sum-of-years digit methodology over an estimated useful life of nine years.
(d) Trade names were amortized on a straight-line basis over an estimated useful life of one year.
We have conducted appraisals necessary to assess the fair values of the assets acquired and liabilities assumed and the amount
of goodwill recognized as of the respective acquisition dates for NuVox, Iowa Telecom, Hosted Solutions, Q-Comm and
PAETEC (collectively known as the "Acquired Companies"). The accompanying consolidated financial statements reflect our
combined operations with the Acquired Companies for the periods following the respective acquisition dates. Employee
severance and transaction costs incurred by us in conjunction with these acquisitions have been expensed to merger and
integration expense in the accompanying consolidated statements of income (see Note 10).
The costs of the acquisitions were allocated to the assets acquired and liabilities assumed based on their estimated fair values as
of the acquisition dates, with amounts exceeding fair value recognized as goodwill. Goodwill associated with the acquired
companies is attributable to the workforce of acquired businesses and expected synergies. Approximately $173.7 million and
$38.7 million of goodwill associated with the acquisitions of Hosted Solutions and PAETEC, respectively, is expected to be
deductible for tax purposes.
The fair values of the assets acquired and liabilities assumed were determined using income, cost, and market approaches.
Identified intangible assets, consisting primarily of customer lists, were valued primarily on the basis of the present value of
future cash flows, which is an income approach. Significant assumptions utilized in the income approach were based on our
specific information and projections, which are not observable in the market and are thus considered Level 3 measurements as
defined by authoritative guidance. The cost approach, which estimates value by determining the current cost of replacing an