Frontier Communications 2014 Annual Report Download - page 76

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estimates of the fair value of the assets and liabilities will be recorded as adjustments to those assets
and liabilities and residual amounts will be allocated to goodwill.
($ in thousands)
Current assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 73,631
Property, plant & equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,450,057
Goodwill. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 867,638
Other intangibles—customer list . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 590,000
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 336
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (101,590)
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (647,525)
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (214,760)
Total net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,017,787
The total consideration exceeded the net estimated fair value of the assets acquired and liabilities
assumed by $868 million, which we recognized as goodwill. This goodwill is attributable to strategic
benefits, including enhanced financial and operational scale, market diversification and leveraged
combined networks that we expect to realize. Of this amount, goodwill associated with the Connecticut
Acquisition of $75 million is deductible for income tax purposes.
The securities purchase agreement provides for a post-closing adjustment for working capital,
pension liabilities transferred and pension assets. Frontier and AT&T have not finalized the results of
these calculations. If an adjustment is made for the working capital “true-up,” the purchase price
allocation will be revised.
The following unaudited pro forma financial information presents the combined results of
operations of Frontier and the Connecticut operations as if the Connecticut Acquisition had occurred as
of January 1, 2013. The pro forma information is not necessarily indicative of what the financial position
or results of operations actually would have been had the Connecticut Acquisition been completed as
of January 1, 2013. In addition, the unaudited pro forma financial information is not indicative of, nor
does it purport to project, the future financial position or operating results of Frontier. The unaudited pro
forma financial information excludes acquisition and integration costs and does not give effect to any
estimated and potential cost savings or other operating efficiencies that could result from the
Connecticut Acquisition.
($ in millions, except per share amounts) 2014 2013
(Unaudited)
For the year ended December 31,
Revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,775 $6,011
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 985 $1,049
Net income attributable to common shareholders of
Frontier. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 191 $ 83
Basic and diluted net income per common share
attributable to common shareholders of Frontier . . $ 0.19 $ 0.08
(4) Accounts Receivable:
The components of accounts receivable, net at December 31, 2014 and 2013 are as follows:
($ in thousands) 2014 2013
Retail and Wholesale. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $629,816 $498,717
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55,919 51,855
Less: Allowance for doubtful accounts. . . . . . . . . . . . . . . . . . . . . (71,571) (71,362)
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $614,164 $479,210
F-15
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements