For months now, we’ve kept thinking that we won’t be able to write about Qwest Communications for much longer. Indeed, back in March, shortly after the $12.2 billion deal with CenturyLink (CTL) was announced, we bid a bittersweet adieu, after years of poking at Qwest both on the site and in my book, Financial Fine Print.
And then CenturyLink has to go and ruin it by filing this 10-Q earlier this week. There on page 12, under the section “Acquisition of Qwest” was this tasty pearl:
We retrospectively adjusted our previously reported preliminary assignment of the aggregate Qwest consideration for changes to our original estimates of the fair value of certain items at the acquisition date. Identifiable intangible assets—other decreased $179 million due to a decreased tradename valuation and accounts receivable and other current assets increased by $88 million primarily due to a change in deferred income taxes and an insurance reimbursement related to a litigation settlement. Deferred credits and other liabilities increased by $40 million primarily from a change in deferred income taxes and a revision to our pension and post retirement asset valuation. Goodwill increased by $130 million as an offset to the above mentioned changes.
Making these sorts of adjustments post-acquisition isn’t really all that unusual. After all, it usually takes a few months to really get your hands around a situation post-acquisition. Still, adding $130 million in goodwill seems like more than a rounding error to us.
Indeed, if you poke around the filing a bit more, you see that CenturyTel’s goodwill on its balance sheet has blossomed from $8.7 billion at the end of last year to a whopping $19.2 billion, most of that directly tied to the acquisition of Qwest.
We’re sure hoping that this really is our last post on Qwest.
The SEC is closed today in observance of Veteran’s Day and the footnoted team is taking a well-deserved day off after sifting through over hundreds and hundreds of Qs in the past week. We continue to post our best finds over on footnotedPro, where we highlight unusual opportunities and potential problems well in advance of the market. For more information or to inquire about a trial subscription, please contact us.