Business Combination

ALLO

On December 31, 2015, the Company purchased 92.5 percent of the ownership interests of ALLO for total cash consideration of $46.25 million. On January 1, 2016, the Company sold a 1.0 percent ownership interest in ALLO to a non-related third-party for $0.5 million. The remaining 7.5 percent of the ownership interests of ALLO is owned by ALLO management, who has the opportunity to earn an additional 11.5 percent (up to 19 percent) of the total ownership interests based on the financial performance of ALLO. The additional ownership interests that ALLO management has the opportunity to earn are based on their continued employment with ALLO. Accordingly, the value associated with the ownership interests issued to these employees of $1.0 million will be recognized by ALLO as compensation expense over the performance period.

ALLO provides pure fiber optic service to homes and businesses for internet, television, and telephone services. The acquisition of ALLO provides additional diversification of the Company's revenues and cash flows outside of education. In addition, the acquisition leverages the Company's existing infrastructure, customer service capabilities and call centers, and financial strength and liquidity for continued growth.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the acquisition date. During the first quarter of 2016, the Company recognized certain adjustments to the provisional amounts recorded at December 31, 2015 that were needed to reflect new information obtained about facts and circumstances that existed as of the acquisition date. The net impact of these adjustments was an increase to goodwill, and the adjustments had no impact on operating results.



Cash and cash equivalents	$	334
Restricted cash	850
Accounts receivable	1,935
Property and equipment	32,479
Other assets	371
Intangible assets	11,410
Excess cost over fair value of net assets acquired (goodwill)	21,112
Other liabilities	(4,587		)
Bonds and notes payable	(13,904		)
Net assets acquired	50,000
Minority interest	(3,750		)
Total consideration paid by the Company	$	46,250

The $11.4 million of acquired intangible assets on the date of acquisition had a weighted-average useful life of approximately 12 years. The intangible assets that made up this amount included customer relationships of $6.3 million (10-year useful life) and a trade name of $5.1 million (15-year useful life).

The $21.1 million of goodwill was assigned to the Communications operating segment and is expected to be deductible for tax purposes. The amount allocated to goodwill was primarily attributable to future customers to be generated through the continued expansion of ALLO's services in rural markets.

The proforma impacts of the acquisition on the Company's historical results prior to the acquisition were not material.