Acquisitions and Dispositions

Acquisition of Cyrus Networks, LLC

On June 11, 2010, the Company purchased Cyrus Networks, LLC, a data center operator based in Texas, for approximately $526 million, net of cash acquired, which was subsequently merged into its CyrusOne Inc. subsidiary ("CyrusOne"). CyrusOne is a wholly-owned subsidiary of the Company. The purchase of CyrusOne was accounted for as a business combination under the acquisition method. Management completed the purchase price allocation early in 2011.

The following table summarizes the allocation of the assets acquired and liabilities assumed at the acquisition date:



(dollars in millions)
Assets acquired
Receivables	$	10.4
Other current assets	0.5
Property, plant and equipment	153.6
Goodwill	269.6
Intangible assets	138.0
Other noncurrent assets	0.1
Total assets acquired	572.2
Liabilities assumed
Accounts payable	3.1
Unearned revenue and customer deposits	7.7
Accrued taxes	1.5
Accrued payroll and benefits	0.7
Other current liabilities	0.8
Noncurrent liabilities	32.1
Total liabilities assumed	45.9
Net assets acquired	$	526.3

As required under ASC 805, we valued the assets acquired and liabilities assumed at fair value. Management determined the fair value of property, plant and equipment, identifiable intangible assets and noncurrent liabilities with the assistance of an independent valuation firm. All other fair value determinations were made solely by management.

The following unaudited pro forma consolidated results assume the acquisition of CyrusOne was completed as of the beginning of the annual reporting periods presented:



	Year Ended December 31,
(dollars in millions, except per share amounts)	2010		2009
Revenue	$	1,408.6	$	1,392.7
Net income	23.3		65.1
Earnings per share:
Basic earnings per common share	$	0.06	$	0.26
Diluted earnings per common share	0.06		0.25

These results include adjustments related to the purchase price allocation and financing of the acquisition, primarily to reduce revenue for the elimination of the unearned revenue liability in the opening balance sheet, to increase depreciation and amortization associated with the higher values of property, plant and equipment and identifiable intangible assets, to increase interest expense for the additional debt incurred to complete the acquisition, and to reflect the related income tax effect and change in tax status. The pro forma information does not necessarily reflect the actual results of operations had the acquisition been consummated at the beginning of the annual reporting period indicated nor is it necessarily indicative of future operating results. The pro forma information does not include any (i) potential revenue enhancements, cost synergies or other operating efficiencies that could result from the acquisition or (ii) transaction or integration costs relating to the acquisition.

Acquisition of Virtual Blocks Inc. and Cintech LLC

In 2009, for a total acquisition price of $2.5 million, Cincinnati Bell Technology Solutions, Inc. (“CBTS”) purchased the assets of Toronto, Canada-based Virtual Blocks Inc., a leading software developer in the area of data center virtualization, and Cincinnati, Ohio-based Cintech LLC, a hosted provider of an outbound notification service. The financial results are included in the IT Services and Hardware segment and were immaterial to our consolidated financial statements for the years ended December 31, 2011, 2010 and 2009.

Disposition of Cincinnati Bell Complete Protection Inc. Assets

On August 1, 2011, we sold substantially all of the assets associated with our home security monitoring business for $11.5 million. The pre-tax gain recognized on the sale of these assets was $8.4 million. The operating results of this business, which were included within the Wireline segment prior to its sale, were immaterial to our consolidated financial statements for the years ended December 31, 2011, 2010 and 2009.

Sale and Leaseback of Wireless Towers

In 2009, we sold 196 wireless towers for $99.9 million in cash proceeds, and leased back a portion of the space on these towers for a term of 20 years. A deferred gain was recognized on this transaction which will be amortized to income on a straight-line basis over the 20 year lease term in "Cost of services" in the Consolidated Statements of Operations. As of December 31, 2011 and 2010, the unamortized balance of this deferred gain was $41.7 million and $44.0 million, respectively. Future minimum lease payments on these capital leases are included within Note 7.