Time Warner Cable 2014 Annual Report Download - page 92

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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Clearwire
On September 13, 2012, the Company exchanged all of its beneficially owned shares of Class B common stock of
Clearwire Corporation (“Clearwire”) together with all of its beneficially owned Class B common units of Clearwire
Communications LLC for shares of Class A common stock of Clearwire. On September 27, 2012, the Company sold these
shares of Class A common stock for $64 million in cash. The sale resulted in a pretax gain of $64 million, which is
included in other income, net, in the consolidated statement of operations for the year ended December 31, 2012. In
addition, during the year ended December 31, 2012, the Company recorded an income tax benefit of $19 million primarily
related to the sale of Clearwire’s Class A common stock. The income tax benefit included the reversal of a $46 million
valuation allowance against a deferred income tax asset associated with the Company’s investment in Clearwire, which
had been established due to the uncertainty of realizing the full benefit of such asset. The Company reversed the valuation
allowance as a result of its ability to fully realize the capital losses from the sale of its Clearwire interests by offsetting
capital gains related to SpectrumCo’s sale of its spectrum licenses.
8. INTANGIBLE ASSETS AND GOODWILL
Intangible assets and related accumulated amortization as of December 31, 2014 and 2013 consisted of the following
(in millions):
December 31, 2014 December 31, 2013
Gross
Accumulated
Amortization Net Gross
Accumulated
Amortization Net
Intangible assets subject to
amortization:
Customer relationships ........ $ 600 $ (262) $ 338 $ 531 $ (167) $ 364
Cable franchise renewals and
access rights .............. 297 (130) 167 287 (120) 167
Other ...................... 42 (24) 18 38 (17) 21
Total ...................... $ 939 $ (416) $ 523 $ 856 $ (304) $ 552
Intangible assets not subject to
amortization:
Cable franchise rights ......... $ 26,934 $ (922) $ 26,012 $ 26,934 $ (922) $ 26,012
The Company recorded amortization expense of $135 million in 2014, $126 million in 2013 and $110 million in
2012. Based on the remaining carrying value of intangible assets subject to amortization as of December 31, 2014,
amortization expense is expected to be $131 million in 2015, $127 million in 2016, $123 million in 2017, $45 million in
2018 and $26 million in 2019. These amounts may vary as acquisitions and dispositions occur in the future.
Changes in the carrying value of goodwill from January 1 through December 31 are presented below (in millions):
2014 2013
Balance at beginning of year ................................................... $ 3,196 $ 2,889
Acquisition of DukeNet(a) ..................................................... (61) 310
Other changes and adjustments ................................................. 2 (3)
Balance at end of year(b) ....................................................... $ 3,137 $ 3,196
(a) During the first quarter of 2014, the Company finalized its fair value estimates for certain long-lived assets (e.g., primarily property, plant and
equipment and finite-lived intangible assets) acquired in the acquisition of DukeNet resulting in a net $61 million adjustment to goodwill, which was
allocated to each reporting unit based upon relative fair value as described below.
(b) There were no accumulated goodwill impairment charges as of December 31, 2014 and 2013.
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