Frontier Communications 2014 Annual Report Download - page 40

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Depreciation and amortization expense for 2013 decreased $97 million, or 8%, primarily due to the
accelerated method of amortization related to the customer base that was acquired in the 2010
Acquisition and accelerated amortization for certain software licenses in 2012.
PENSION SETTLEMENT COSTS
($ in thousands) 2014 2013 2012
Pension settlement costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $— $44,163 $—
Our pension plan contains provisions that provide certain employees with the option of receiving a
lump sum payment upon retirement. We record these payments as a settlement only if, in the
aggregate, they exceed the sum of the annual service and interest costs for the plan’s net periodic
pension benefit cost. During 2013, lump sum pension settlement payments to terminated or retired
individuals exceeded the settlement threshold and as a result, the Company was required to recognize
a non-cash settlement charge of $44 million. This non-cash charge was required to accelerate the
recognition of a portion of the previously unrecognized actuarial losses in the pension plan. The
amount of any future non-cash settlement charges will be dependent on the level of lump sum benefit
payments.
ACQUISITION AND INTEGRATION COSTS
2014 2013 2012
($ in thousands) Amount
$ Increase
(Decrease)
% Increase
(Decrease) Amount
$ Increase
(Decrease)
% Increase
(Decrease) Amount
Acquisition and integration
costs. . ..................... $141,605 $131,953 NM $9,652 $(72,085) (88)% $81,737
NM–Not Meaningful
During the fourth quarter of 2013, the Company began to incur acquisition and integration costs in
connection with the Connecticut Acquisition that closed on October 24, 2014. Acquisition costs include
legal, financial advisory, accounting, regulatory and other related costs. Integration costs include
expenses incurred to integrate the network and information technology platforms and to enable other
integration initiatives. In 2014, the Company incurred $15 million in acquisition costs and $127 million
of integration costs related to the Connecticut Acquisition. In 2013, the Company incurred $10 million
of acquisition costs related to the Connecticut Acquisition. In 2012, the Company incurred $82 million
of integration costs in connection with the 2010 Acquisition. All integration activities related to the 2010
Acquisition were completed as of the end of 2012. In 2014, we also invested $116 million in capital
expenditures related to the Connecticut Acquisition.
GAIN ON SALE OF MOHAVE PARTNERSHIP INTEREST
($ in thousands) 2014 2013 2012
Gain on sale of Mohave partnership interest . . . ................................................. $— $14,601 $—
On April 1, 2013, the Company sold its 33
1
⁄
3
% interest in the Mohave partnership, in which
Frontier was the General Partner. The Company received proceeds on sale of $18 million and
recognized a gain on sale of $15 million.
39
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES