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Table of Contents
EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
All of the goodwill will be assigned to the Company's Business Services segment. The goodwill is not expected to be deductible for income tax
purposes.
The following table summarizes the components of intangible assets acquired in connection with the One Communications acquisition (in
thousands):
Saturn Telecommunication Services Inc.
On March 2, 2011, EarthLink acquired Saturn Telecommunication Services Inc. and affiliates ("STS Telecom"), a privately-
held provider
of IP communication and information technology services to small and medium-
sized businesses primarily in Florida. STS Telecom operates a
sophisticated Voice-over-
Internet Protocal ("VoIP") platform. The primary reason for the acquisition was for the Company to leverage STS
Telecom's expertise in managed hosted VoIP on a nationwide basis as part of its VoIP offerings and to gain its customer base and cash flows.
The total consideration transferred was $22.9 million, which consisted of cash paid to acquire the outstanding equity interests of STS
Telecom. In allocating the purchase price based on estimated fair values, EarthLink recorded approximately $21.4 million of goodwill,
$17.9 million of identifiable intangible assets, $2.8 million of tangible assets and $19.2 million of net liabilities assumed. The allocation of the
consideration transferred was based upon a preliminary valuation and the Company's estimates and assumptions are subject to change. The
primary areas of the purchase price allocation that are not yet finalized relate to income and non-
income based taxes and residual goodwill.
EarthLink has included the financial results of STS Telecom in its consolidated financial statements from the date of acquisition. Pro forma
financial information for STS Telecom has not been presented, as the effects were not material to the Company's consolidated financial
statements.
Other
During the year ended December 31, 2011, EarthLink acquired certain other companies and purchased certain assets to expand its services
and products offerings for a total of $13.0 million of cash consideration and $1.2 million of debt repayment. These acquisitions were not
significant individually or in the aggregate. Purchased identifiable intangible assets related to these acquisitions was $5.2 million and residual
goodwill was $8.1 million. The allocation of the consideration transferred was based upon a preliminary valuation and the Company's estimates
and assumptions are subject to change. EarthLink has included the financial results of these companies in its consolidated financial statements
from the date of acquisition. Pro forma financial information has not been presented, as the effects were not material to the Company's
consolidated financial statements.
93
Fair Value Useful Life
Customer relationships
168,600
5 Years
Developed technology
12,000
3 Years
Trade name
3,900
3 Years
Other
1,350
5 Years
Total intangible assets
185,850