FairPoint Communications 2010 Annual Report Download - page 92
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Table of Contents
The Merger was accounted for using the purchase method of accounting for business combinations and, accordingly, the acquired assets and liabilities of
Legacy FairPoint were recorded at their estimated fair values as of the date of acquisition, and Legacy FairPoint’s results of operations have been included in
the Company’s consolidated financial statements from the date of acquisition. During the first quarter of 2009, the Company recorded an adjustment to its
deferred tax account which decreased the excess of the purchase price over fair value by $24.3 million. Based upon the Company’s purchase price allocation,
the excess of the purchase price over the fair value of the net tangible assets acquired was approximately $846.8 million. The Company recorded an intangible
asset related to the acquired customer relationships of $208.5 million, an intangible asset related to trade names of $42.8 million and an intangible asset related
to a non-compete agreement of $0.4 million. The remaining $595.1 million was recognized as goodwill. The estimated weighted average useful lives of the
intangible assets are 9.7 years for the customer relationships, one year for the non-compete agreement and trade names have an indefinite useful life.
The allocation of the total net purchase price of the Merger is shown in the table below (in thousands):
Cash $ 11,401
Current assets 57,178
Property, plant, and equipment 303,261
Investments 8,748
Excess cost over fair value of net assets acquired 595,120
Intangible assets 251,678
Other assets 127,034
Current liabilities (179,146)
Long-term debt (687,491)
Other liabilities (171,493)
Total net purchase price $ 316,290
The following unaudited pro forma information presents the combined results of operations of the Company as though the Merger and related transactions
had been consummated on January 1, 2008. These results include certain adjustments, mainly associated with increased interest expense on debt and
amortization of intangible assets related to the acquisitions and the related income tax effects. The pro forma financial information does not necessarily reflect
the actual results of operations had the Merger been consummated at the beginning of the period or which may be attained in the future (in thousands, except
per share data).
Revenue $ 1,341,623
Net loss $ (87,582)
Loss per common share:
Basic $ (1.09)
Diluted $ (1.09)
Changes in the carrying amount of goodwill were as follows (in thousands):
Balance, December 31, 2008 $ 619,372
Adjustment to deferred income taxes (24,252)
Balance, December 31, 2009 $595,120
No adjustment —
Balance, December 31, 2010 $595,120
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