IWA » Topics » 12. BUSINESS ACQUISITIONS

This excerpt taken from the IWA 10-Q filed Apr 30, 2009.

11. BUSINESS ACQUISITIONS

Bishop Communications. On July 18, 2008, the Company acquired 100% of the outstanding stock of Bishop Communications, a provider of telecommunications, video, and high speed Internet services to customers in portions of rural Minnesota. The acquisition of Bishop Communications expanded the Company’s service area and customer base. The purchase price was $33.1 million in cash, net of cash received, and assumed debt of $13.0 million, subject to working capital adjustments. The transaction did not result in a tax basis step-up, as such, the goodwill acquired is not deductible for tax purposes.

The purchase price allocations for this acquisition are preliminary and subject to revision as more detailed analyses are completed and additional information on the fair value of acquired assets and liabilities is developed. The preliminary allocation of the purchase price of Bishop Communication includes amortizable intangible assets consisting primarily of customer relationship intangibles which have a weighted average useful life of 11.6 years.

The results of operations for the acquired company are included in the Condensed Consolidated Statements of Income beginning on the acquisition date.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Information contained herein contains “forward-looking statements” which can be identified by the use of forward-looking terminology such as “believes”, “expects”, “may”, “will”, “should”, “intend”, or “anticipates” or the negative thereof or variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that the future results covered by the forward-looking statements will be achieved. Some of the matters set forth in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2008 constitute cautionary statements identifying factors with respect to such forward-looking statements, including certain risks and uncertainties, that could cause actual results to vary materially from the future results indicated in such forward-looking statements. Other factors could also cause actual results to vary materially from the future results indicated in such forward-looking statements.

This excerpt taken from the IWA 10-K filed Mar 2, 2009.

20. BUSINESS ACQUISITIONS

 

Montezuma Telephone. On July 1, 2006, the Company acquired Montezuma Mutual Telephone Company, a provider of telecommunications, cable television and Internet services to customers in rural Iowa. The acquisition of Montezuma Telephone expanded the Company’s local exchange service area. The purchase price was $11.9 million and consisted of $11.7 million in cash consideration and $222,000 of direct transaction costs.

 

The allocation of the purchase price of Montezuma Mutual Telephone Company was as follows:

 

     Allocation  
   (dollars in thousands)  

Property, plant & equipment

   $ 3,625  

Current assets

   $ 1,728  

Liabilities

   $ (2,624 )

Amortizable intangible assets

   $ 2,620  

Goodwill

   $ 6,587  

Weighted average useful life of amortizable intangibles

     9 yr  

 

Baker Communications. On August 1, 2006, the Company acquired Baker Communications, Inc. Baker Communications designs, develops and provides ongoing support of technology solutions for clients. The acquisition of Baker Communications provided growth beyond our local exchange service area. The purchase price was $8.8 million and consisted of $8.6 million in cash consideration and $148,000 of direct transaction costs.

 

The allocation of the purchase price of Baker Communications was as follows:

 

     Allocation  
     (dollars in thousands)  

Property, plant & equipment

   $ 881  

Current assets

   $ 3,338  

Liabilities

   $ (4,353 )

Amortizable intangible assets

   $ 3,450  

Goodwill

   $ 5,441  

Weighted average useful life of amortizable intangibles

     6 yr  

 

Bishop Communications. On July 18, 2008, the Company acquired 100% of the outstanding stock of Bishop Communications, a provider of telecommunications, cable video and high speed Internet services to customers in portions of rural Minnesota. The acquisition of Bishop Communications expanded the Company’s service area and customer base. The purchase price was $33.1 million in cash, net of cash received, and assumed debt of $13.0 million, subject to potential working capital adjustments. The transaction did not result in a tax basis step-up, as such, the goodwill acquired is not deductible for tax purposes.

 

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IOWA TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE YEARS ENDED DECEMBER 31, 2006, 2007 AND 2008

 

The preliminary allocation of the purchase price of Bishop Communications is as follows:

 

     Allocation  
     (dollars in thousands)  

Property, plant & equipment

   $ 35,926  

Current assets

   $ 8,031  

Amortizable intangible assets

   $ 2,770  

Goodwill

   $ 7,430  

Other assets

   $ 4,957  

Investment in and receivable from RTFC

   $ 1,933  

Other current liabilities

   $ (3,926 )

Debt

   $ (13,021 )

Deferred tax liability

   $ (6,161 )

 

The purchase price allocation for this acquisition is preliminary and subject to revision as more detailed analyses are completed and additional information on the fair value of acquired assets and liabilities is developed. The preliminary allocation of the purchase price of Bishop Communications includes amortizable intangible assets consisting primarily of customer relationship intangibles which have a weighted average useful life of 11.6 years.

 

The results of operations for the acquired company are included in the Consolidated Statements of Income beginning on the acquisition date. The proforma impact of the acquisition was not material to the results of operations.

 

This excerpt taken from the IWA 10-Q filed May 1, 2008.

11. BUSINESS ACQUISITIONS

On February 7, 2008, the Company announced a definitive agreement to acquire Bishop Communications, subject to regulatory approvals. The total purchase price of $43.9 million will be subject to certain future adjustments relating to working capital, other long-term assets and long-term indebtedness as defined in the stock purchase agreement. Bishop Communications is a privately held holding company headquartered in Annandale, Minnesota whose subsidiaries provide a full array of regulated and non-regulated advanced telecommunications services to business and residential customers.

These excerpts taken from the IWA 10-K filed Feb 29, 2008.

20. BUSINESS ACQUISITIONS

 

Montezuma Telephone. On July 1, 2006, the Company acquired Montezuma Mutual Telephone Company, a provider of telecommunications, cable television, and Internet services to customers in rural Iowa. The acquisition of Montezuma Telephone expanded the Company’s local exchange service area. The purchase price was $11.9 million and consisted of $11.7 million in cash consideration and $222,000 of direct transaction costs.

 

The allocation of the purchase price of Montezuma Mutual Telephone Company was as follows:

 

     Allocation  
     (dollars in thousands)  

Property, plant & equipment

   $ 3,625  

Current assets

   $ 1,728  

Liabilities

   $ (2,624 )

Amortizable intangible assets

   $ 2,620  

Goodwill

   $ 6,587  

Weighted average useful life of amortizable intangibles

     9 yr  

 

Baker Communications. On August 1, 2006, the Company acquired Baker Communications, Inc. Baker Communications designs, develops, and provides ongoing support of technology solutions for clients. The acquisition of Baker Communications provides growth beyond our local exchange service area. The purchase price was $8.8 million and consisted of $8.6 million in cash consideration and $148,000 of direct transaction costs.

 

The allocation of the purchase price of Baker Communications was as follows:

 

     Allocation  
     (dollars in thousands)  

Property, plant & equipment

   $ 881  

Current assets

   $ 3,338  

Liabilities

   $ (4,353 )

Amortizable intangible assets

   $ 3,450  

Goodwill

   $ 5,441  

Weighted average useful life of amortizable intangibles

     6 yr  

 

20. BUSINESS ACQUISITIONS

SIZE="1"> 

Montezuma Telephone. On July 1, 2006, the Company acquired Montezuma Mutual Telephone Company, a
provider of telecommunications, cable television, and Internet services to customers in rural Iowa. The acquisition of Montezuma Telephone expanded the Company’s local exchange service area. The purchase price was $11.9 million
and consisted of $11.7 million in cash consideration and $222,000 of direct transaction costs.

 

STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%">The allocation of the purchase price of Montezuma Mutual Telephone Company was as follows:

SIZE="1"> 
























































   Allocation 
   (dollars in thousands) 

Property, plant & equipment

  $3,625 

Current assets

  $1,728 

Liabilities

  $(2,624)

Amortizable intangible assets

  $2,620 

Goodwill

  $6,587 

Weighted average useful life of amortizable intangibles

   9 yr 

 

Baker
Communications.
On August 1, 2006, the Company acquired Baker Communications, Inc. Baker Communications designs, develops, and provides ongoing support of technology solutions for clients. The acquisition of Baker Communications
provides growth beyond our local exchange service area. The purchase price was $8.8 million and consisted of $8.6 million in cash consideration and $148,000 of direct transaction costs.

STYLE="margin-top:0px;margin-bottom:0px"> 

The allocation of the purchase price of Baker Communications was as follows:

 
























































   Allocation 
   (dollars in thousands) 

Property, plant & equipment

  $881 

Current assets

  $3,338 

Liabilities

  $(4,353)

Amortizable intangible assets

  $3,450 

Goodwill

  $5,441 

Weighted average useful life of amortizable intangibles

   6 yr 

 

This excerpt taken from the IWA 10-K filed Mar 5, 2007.

20. BUSINESS ACQUISITIONS

 

Montezuma Telephone. On July 1, 2006, the Company acquired Montezuma Mutual Telephone Company, a provider of telecommunications, cable television, and Internet services to customers in rural Iowa. The acquisition of Montezuma Telephone expanded the Company’s local exchange service area. The purchase price was $11.9 million and consisted of $11.7 million in cash consideration and $222,000 of direct transaction costs.

 

The allocation of the purchase price of Montezuma Mutual Telephone Company is as follows:

 

      Allocation  
     (dollars in thousands)  

Property, Plant & Equipment

   $ 3,625  

Current Assets

   $ 1,728  

Liabilities

   $ (2,624 )

Amortizable Intangible Assets

   $ 2,620  

Goodwill

   $ 6,587  

Weighted average useful life of amortizable intangibles

     9 yr  

 

Baker Communications. On August 1, 2006, the Company acquired Baker Communications, Inc. Baker Communications designs, develops, and provides ongoing support of technology solutions for clients. The acquisition of Baker Communications provides growth beyond our local exchange service area. The purchase price was $8.8 million and consisted of $8.6 million in cash consideration and $148,000 of direct transaction costs.

 

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IOWA TELECOMMUNICATIONS SERVICES, INC. AND SUBSIDIARIES

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

FOR THE YEARS ENDED DECEMBER 31, 2004, 2005 AND 2006

 

The allocation of the purchase price of Baker Communications is as follows:

 

     Allocation  
     (dollars in thousands)  

Property, Plant & Equipment

   $ 881  

Current Assets

   $ 3,338  

Liabilities

   $ (4,353 )

Amortizable Intangible Assets

   $ 3,450  

Goodwill

   $ 5,441  

Weighted average useful life of amortizable intangibles

     6 yr  

 

This excerpt taken from the IWA 10-Q filed Nov 9, 2006.

12. BUSINESS ACQUISITIONS

Montezuma Mutual Telephone Company. On July 1, 2006, the Company acquired the Montezuma Mutual Telephone Company (“Montezuma Telephone”), a provider of telecommunications, cable television, and Internet services to customers in rural Iowa. The acquisition of Montezuma Telephone expanded the Company’s service area and builds upon the Company’s strategy to pursue transactions that are accretive to free cash flow. The purchase price was $11.9 million and consisted of $11.7 million in cash consideration and $220,000 of direct transaction costs.

The preliminary allocation of the purchase price of Montezuma Mutual Telephone Company is as follows:

 

     Allocation  
     (dollars in thousands)  

Property, Plant & Equipment

   $ 3,625  

Current Assets

   $ 1,728  

Liabilities

   $ (2,624 )

Amortizable Intangible Assets

   $ 2,620  

Goodwill

   $ 6,586  

Weighted average useful life of amortizable intangibles

     9 yr

 

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Baker Communications, Inc. On August 1, 2006, the Company acquired Baker Communications, Inc. a leader in the sales and support of communications and data networking systems to companies across Iowa and Nebraska. The acquisition of Baker Communications expands the Company’s customer base, as Baker Communications’ clients are generally located in communities in which we previously had little presence. This acquisition is consistent with our mission of providing reliable voice and data solutions to our customers and builds upon our strategy to pursue transactions that are accretive to free cash flow. The purchase price was $9.0 million and consisted of $8.8 million in cash consideration and $158,000 of direct transaction costs.

The preliminary allocation of the purchase price of Baker Communications, Inc. is as follows:

 

     Allocation  
     (dollars in thousands)  

Property, Plant & Equipment

   $ 881  

Current Assets

   $ 3,689  

Liabilities

   $ (4,609 )

Amortizable Intangible Assets

   $ 3,450  

Goodwill

   $ 5,586  

Weighted average useful life of amortizable intangibles

     8 yr

The purchase price allocations for these acquisitions are preliminary and subject to revision as more detailed analyses are completed and additional information on the fair value of assets and liabilities become available. The results of operations for each acquired company are included in the Condensed Consolidated Statements of Income beginning on the respective acquisition dates.

 

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