FairPoint Communications 2011 Annual Report Download - page 90
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Table of Contents
(g) Reflects the fair value of identifiable intangible assets in connection with fresh start accounting. The Company recognized a $99.0 million customer list
intangible asset, a $58.0 million trade name intangible asset related to the FairPoint Communications trade name and a $0.4 million favorable leasehold
agreement intangible asset.
• The customer list asset was valued based on a cost method which utilized average cost to acquire a new line multiplied by the number of existing
lines within the FairPoint network.
• The trade name was valued based on the relief from royalty method which utilized projected revenue (excluding wholesale revenue), the royalty rate
that would be charged by an asset licensor to an unrelated licensee and a discount rate.
(h) An adjustment of $22.1 million (net) was recorded to measure the pension and other post-retirement employee benefit obligations as of the Effective Date.
This adjustment primarily reflects the change in the weighted average discount rate applied to projected benefit obligations from the prior measurement
date to the Effective Date. The weighted average discount rates applied to projected obligations changed as follows:
Pension Discount Rate 5.75% 5.56%
Post-retirement Healthcare Discount Rate 5.84% 5.65%
(i) Reconciliation of enterprise value to the reorganization value of FairPoint assets, determination of goodwill and reconciliation of reorganization value of
FairPoint assets to the Successor Company equity (in thousands, unaudited):
Plus: Non-debt liabilities 1,018,385
Fair value of FairPoint assets (excluding goodwill) (2,273,682)
During the second quarter of 2011, the Company made a reclassification adjustment to Property, Plant and Equipment related to fresh start accounting,
which reduced goodwill by $12.8 million to $243.2 million.
Reorganization Value of FairPoint Assets $2,516,871
Less: Non-debt liabilities (1,018,385)
Debt (1,000,000)
(j) Reflects the re-measurement of the Company’s deferred tax assets and liabilities, unrecognized tax benefits and other tax related accounts as a result of
implementing the plan of reorganization and fresh start accounting in accordance with accounting guidance.
(k) Reflects the adjustment of assets and liabilities to fair value or other measurement as specified in accounting guidance related to business combinations
as follows (in thousands, unaudited):
Elimination of predecessor goodwill $595,120
Elimination of predecessor intangible assets 187,791
Property, plant and equipment adjustment 56,258
Successor unfavorable agreement liabilities 13,690
Successor intangible assets (157,410)
Successor goodwill (243,189)
Pension and post-retirement healthcare actuarial gain (22,076)
Income tax impact (40,124)
Other adjustments (1,967)
Elimination of accumulated other comprehensive loss 212,311
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