Frontier Communications 2011 Annual Report Download - page 75

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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
F-12
The allocation of the purchase price of the Acquired Business is based on the fair value of assets acquired and
liabilities assumed as of July 1, 2010, the effective date of the Transaction. Our assessment of fair value was
final as of June 30, 2011. In the fourth quarter of 2011, the Company recorded an immaterial non-cash revision
to the acquired liability balance for postretirement benefits other than pensions (OPEB) based upon corrected
information obtained regarding the treatment of certain plan provisions. The revision resulted in a decrease to the
acquired OPEB liability of $125,445, a decrease in goodwill of $78,754 and an increase in net deferred tax
liabilities of $46,691.
The final allocation of the purchase price presented below represents the effect of recording the final fair value of
assets acquired, liabilities assumed and related deferred income taxes as of the date of the Transaction, based on
the total transaction consideration of $5.4 billion. The following allocation of purchase price includes revisions
to the preliminary allocation that was reported as of December 31, 2010, primarily for goodwill, deferred taxes,
current liabilities and other liabilities.
($ in thousands)
Total transaction consideration: $ 5,411,705
Current assets $ 454,513
Property, plant & equipment 4,407,676
Goodwill 3,695,397
Other intangibles – primarily customer list 2,532,200
Other noncurrent assets 75,092
Current liabilities (483,118)
Deferred income taxes (1,476,813)
Long-term debt (3,456,782)
Other liabilities (336,460)
Total net assets acquired $ 5,411,705
The fair value of the total consideration issued to acquire the Acquired Business amounted to $5.4 billion and
included $5.2 billion for the issuance of Frontier common shares and cash payments of $105.0 million. As a
result of the Transaction, Verizon stockholders received 678,530,386 shares of Frontier common stock.
Immediately after the closing of the Transaction, Verizon stockholders owned approximately 68.4% of the
combined company’s outstanding equity, and existing Frontier stockholders owned approximately 31.6% of the
combined company’s outstanding equity.
The following unaudited pro forma financial information presents the combined results of operations of Frontier
and the Acquired Business as if the Transaction had occurred as of January 1, 2009. The pro forma information is
not necessarily indicative of what the financial position or results of operations actually would have been had the
Transaction been completed as of January 1, 2009. In addition, the unaudited pro forma financial information is
not indicative of, nor does it purport to project, the future financial position or operating results of Frontier. The
unaudited pro forma financial information excludes acquisition and integration costs and does not give effect to
any estimated and potential cost savings or other operating efficiencies that could result from the Transaction.