Time Warner Cable 2012 Annual Report Download - page 96

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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
The preliminary purchase price allocation is as follows (in millions):
Property, plant and equipment (primarily distribution systems) .......................................$ 857
Intangible assets subject to amortization (primarily customer relationships)(a) ............................ 477
Intangible assets not subject to amortization (cable franchise rights) ................................... 1,747
Goodwill .................................................................................. 638
Other current and noncurrent assets ............................................................. 178
Long-term debt ............................................................................. (1,734)
Deferred income tax liabilities, net .............................................................. (661)
Other current and noncurrent liabilities .......................................................... (163)
Total purchase price .........................................................................$ 1,339
(a) The amortization period for acquired customer relationships is 6 years.
The allocation of the purchase price, which primarily used a DCF approach with respect to identified intangible assets
and a combination of the cost and market approaches with respect to property, plant and equipment, is being finalized. The
DCF approach was based upon management’s estimates of future cash flows and a discount rate consistent with the inherent
risk of each of the acquired assets.
NewWave Cable Systems Acquisition
On November 1, 2011, TWC completed its acquisition of certain NewWave Communications (“NewWave”) cable
systems in Kentucky and western Tennessee for $259 million in cash. The financial results for the NewWave cable systems,
which served subscribers representing 138,000 PSUs as of the acquisition date, have been included in the Company’s
consolidated financial statements from the acquisition date and did not significantly impact the Company’s consolidated
financial results for the year ended December 31, 2011.
As part of the purchase price allocation, TWC recorded goodwill of $10 million and allocated $79 million to property,
plant and equipment (e.g., primarily distribution systems) and $148 million to intangible assets not subject to amortization
(e.g., cable franchise rights). The purchase price allocation primarily used a DCF approach with respect to identified
intangible assets and a combination of the cost and market approaches with respect to property, plant and equipment. The
DCF approach was based upon management’s estimates of future cash flows and a discount rate consistent with the inherent
risk of each of the acquired assets.
NaviSite Acquisition
On April 21, 2011, TWC completed its acquisition of NaviSite, Inc. (“NaviSite”) for $263 million, net of cash acquired.
At closing, TWC also repaid $44 million of NaviSite’s debt. NaviSite’s financial results have been included in the
Company’s consolidated financial statements from the acquisition date and did not significantly impact the Company’s
consolidated financial results for the year ended December 31, 2011.
As part of the purchase price allocation, TWC recorded goodwill of $144 million and allocated $61 million to property,
plant and equipment (e.g., computer hardware) and $56 million to intangible assets subject to amortization (e.g., customer
relationships, trademarks and developed technology) with a weighted-average amortization period of 6.71 years. The purchase
price allocation primarily used a DCF approach with respect to identified intangible assets and a combination of the cost and
market approaches with respect to property, plant and equipment. The DCF approach was based upon management’s estimates
of future cash flows and a discount rate consistent with the inherent risk of each of the acquired assets.
Other Acquisitions
Additionally, during 2011, TWC completed two acquisitions of cable systems in Texas and Ohio serving subscribers
representing a total of 26,000 PSUs for $38 million in cash. The financial results for these acquisitions have been included in
the Company’s consolidated financial statements from the respective acquisition date and did not significantly impact the
Company’s consolidated financial results for the year ended December 31, 2011.
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