Cincinnati Bell 2006 Annual Report Download - page 180

The following table presents detail of the purchase price allocated to intangible assets of CBW as of the date
of acquisition:
(dollars in millions)
Fair
Value
Weighted
Average
Amortization
Period
Intangible assets subject to amortization:
Customer relationships — subscribers .............................. $11.6 7 years
Customer relationships — collocation towers ........................ 2.6 15years
Contractual right — license ...................................... 0.7 1year
14.9 8 years
Intangible assets not subject to amortization:
FCC Licenses ................................................. 21.0 n/a
Trademarks ................................................... 6.2 n/a
Total intangible assets ............................................. $42.1
The intangible asset for the relationship CBW has with its subscribers is being amortized using the
sum-of-the-months digits method. Amortization of the customer relationship intangible asset associated with
tower collocations utilizes a straight-line method. Tower collocation revenue is received from other wireless
carriers for the placement of their radios on CBW towers. These amortization methods best reflect the estimated
patterns in which the economic benefits will be consumed. For further discussion on amortization expense, refer
to Note 6 of the Consolidated Financial Statements.
This acquisition has no effect on the Company’s operating income, which historically has included 100% of
CBW’s operating income. However, for periods after the acquisition date, the 19.9% minority interest in the net
income (loss) of CBW was no longer recorded.
The financial information in the table below summarizes the results of operations of the Company, on a pro
forma basis, as though the acquisition had occurred as of the beginning of the periods presented:
Year Ended December 31,
(dollars in millions, except per share amounts) 2006 2005
Revenue ........................................................ $1,270.1 $1,209.6
Net income (loss) ................................................ 85.8 (77.2)
Basic earnings (loss) per share ...................................... 0.31 (0.36)
Diluted earnings (loss) per share ..................................... 0.30 (0.36)
Automated Telecom Inc.
In May 2006, the Company purchased Automated Telecom Inc. (“ATI”) for a purchase price of $3.5 million
to expand its geographical presence in order to better serve its customers located outside of the greater Cincinnati
area. ATI is based in Louisville, Kentucky, with offices also located in Grand Rapids, Michigan, and St. Louis,
Missouri. ATI is a reseller of, and maintenance provider for, telephony equipment. The purchase price was
primarily allocated to customer relationship intangible assets, deferred tax liabilities and goodwill. The financial
results of ATI are included in the Company’s Technology Solutions segment and were immaterial to the
Company’s financial statements for the year ended December 31, 2006.
Wireless Licenses
In 2006, the Company purchased 20 MHz of advanced wireless spectrum for the Cincinnati and Dayton,
Ohio regions and 10 MHz for the Indianapolis, Indiana region in the FCC Advanced Wireless Services spectrum
auction for $37.1 million. These licenses are included in “Intangible assets, net” in the Consolidated Balance
Sheets. To satisfy increasing demand for existing voice minutes of use by customers as well as to provide
enhanced data services such as streaming video, the Company intends to construct a 3G network in its Cincinnati
and Dayton regions and deploy it on the newly purchased AWS spectrum. The Company is considering its
options with respect to the Indianapolis spectrum, which include expansion of its wireless operations into this
area or lease of the spectrum to another wireless provider.
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