12. goodwill
Ambergris Solutions Inc.: The goodwill addition in the year ended December 31, 2005, none of which is expected to be deductible for tax purposes, arose from the cash acquisition of an effective 52.5% economic interest in Ambergris Solutions Inc., a business process outsourcing company. The acquisition was effected in two steps: one on February 15, 2005, for an effective 49% economic interest and one on May 13, 2005, for an effective 3.5% economic interest. The initial effective 49% economic interest resulted in the Company controlling Ambergris Solutions Inc. as the Company controlled, but did not wholly-own, an intermediate holding company which, in turn, controlled, but did not wholly-own, Ambergris Solutions Inc. This investment was made with a view to enhancing the Company’s competitiveness in contact centre offerings. The primary factor that contributed to a purchase price that resulted in the recognition of goodwill is the low degree of net tangible assets in the industry relative to the market value of established Asian operations. Effective February 15, 2005, Ambergris Solutions Inc.’s results are included in the Company’s Consolidated Statements of Income and are included in the Company’s Wireline segment.
Adcom Inc.: The 2004 goodwill addition, none of which is expected to be deductible for tax purposes, arose from the November 15, 2004, cash acquisition of Adcom Inc., a national videoconferencing company. The investment was made with a view to the ongoing advancement of the Company’s national data and Internet protocol growth strategy. The primary factor that contributed to a purchase price that resulted in the recognition of goodwill is the low degree of net tangible assets relative to the earnings capacity of the acquired business. Effective the same date, Adcom Inc.’s results are included in the Company’s Consolidated Statements of Income and are included in the Company’s Wireline segment.
Summarized balance sheet information: The following is a summarized balance sheet disclosing the fair values assigned to each major asset and liability class as at the dates of acquisition:
Pro forma supplemental information: The following pro forma supplemental information represents certain results of operations as if the business acquisitions had been completed as at the beginning of the periods presented.
