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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ROGERS COMMUNICATIONS INC. 2010 ANNUAL REPORT 93
The goodwill has been allocated to the Media reporting segment
and is not tax deductible.
The customer relationships are being amortized over a period of
2 years.
(v) Pro forma disclosures:
Since the acquisition dates, the Company has recorded revenue
relating to these above acquisitions of $30 million, and operating
income relating to these acquisitions of $12 million. If the
acquisitions had occurred on January 1, 2010, the Company’s
revenue would have been $12,207 million and operating
income would have been $2,905 million for the year ended
December31,2010.
(B) ACQUISITIONS SUBSEQUENT TO 2010:
(i) Atria Networks LP:
On January 4, 2011, the Company closed an agreement to purchase
a 100% interest in Atria Networks LP (“Atria”) for cash
consideration of $425 million. Atria, based in Kitchener, Ontario,
owns and operates one of the largest fibre-optic networks in
Ontario, delivering premier business Internet and data services.
The acquisition will augment RBS’s small business and medium-
sized business offerings by enhancing its ability to deliver on-net
data centric services within and adjacent to Cable’s footprint. The
acquisition will be accounted for using the acquisition method
with the results of operations consolidated with those of the
Company effective January 4, 2011. The transaction costs related
to the acquisition amounted to approximately $2 million and have
been charged to integration and restructuring expenses in fiscal
2010. The fair values assigned are preliminary pending finalization
of the valuation of certain net identifiable assets acquired. The
Company expects to finalize the valuation of the PP&E and
identifiable intangible assets acquired during the 2011 fiscal year.
The preliminary estimated fair values of the assets and liabilities
assumed are as follows:
Purchase price $ 425
Current assets $ 10
PP&E 121
Customer relationships 195
Current liabilities (17)
Future income tax liabilities (45)
Preliminary fair value of net identifiable assets acquired $ 264
Goodwill $ 161
The goodwill will be allocated to the RBS reporting segment and is
not tax deductible.
(ii) Other:
On January 31, 2011, the Company closed agreements to acquire
the assets of London, Ontario FM radio station BOB-FM (CHST-FM)
and to acquire the assets of Edmonton, Alberta FM radio station
BOUNCE (CHBN-FM).
(C) 2009 ACQUISITIONS:
(i) K-Rock 1057 Inc.:
On May 31, 2009, the Company acquired the assets of K-Rock 1057
Inc. for cash consideration of $11 million. K-Rock 1057 Inc. held the
assets of radio stations K-Rock and KIX Country in Kingston,
Ontario. The acquisition was accounted for using the purchase
method with the results of operations consolidated with those of
the Company effective May 31, 2009. The fair values of the assets
acquired and liabilities assumed, which were finalized during 2009,
are as follows:
Purchase price $ 11
PP&E $ 1
Broadcast licence 4
Fair value of net identifiable assets acquired $ 5
Goodwill $ 6
The goodwill has been allocated to the Media reporting segment
and is tax deductible.
(ii) Outdoor Life Network:
On July 31, 2008, the Company acquired the remaining two-thirds
of the shares of Outdoor Life Network that it did not already own,
for cash consideration of $39 million. The acquisition was
accounted for using the purchase method with the results of
operations consolidated with those of the Company effective
July31,2008.
During 2009, the Company finalized the purchase price allocation
for the Outdoor Life Network acquisition. This resulted in an
increase in broadcast licence of $15 million, an increase in future
income tax liabilities of $3 million and a corresponding decrease in
goodwill of $12 million. The adjustments had the following effects
on the purchase price allocation from the amounts recorded and
disclosed in the 2008 consolidated financial statements:
As at
December 31,
2008
Adjustments
Final
purchase
price
allocation
Purchase price $ 39 $ – $ 39
Current assets $ 11 $ – $ 11
Broadcast licence – 15 15
Future income tax liabilities – (3) (3)
Current liabilities (3) – (3)
Fair value of net identifiable
assets acquired $ 8 $ 12 $ 20
Goodwill $ 31 $ (12) $ 19
The goodwill has been allocated to the Media reporting segment
and is not tax deductible.