Windstream 2006 Annual Report Download - page 178

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
17. Pending Transactions, Continued:
The Share Exchange Agreement provides for a customary working capital adjustment pursuant to which the
parties will make cash payments to each other to the extent that the working capital of the Publishing Business is
less than or greater than a specified target working capital amount at the time of the first-step closing. The Share
Exchange Agreement contains customary representations, warranties and covenants and may be terminated if,
among other things, the first-step closing of the transaction has not been completed within twelve months or the
IRS private letter rulings are not received. The parties have also agreed to customary indemnification for
breaches of representations, warranties, covenants and other matters. In connection with the consummation of the
transactions contemplated by the Share Exchange Agreement, the parties and their affiliates will enter into certain
related Ancillary Agreements, including a Publishing Agreement, a Billing and Collection Agreement and a Tax
Sharing Agreement.
In connection with the consummation of the transactions contemplated by the Share Exchange Agreement, the
parties and their affiliates will enter into certain related ancillary agreements, including a Publishing Agreement,
a Billing and Collection Agreement and a Tax Sharing Agreement. Pursuant to the Publishing Agreement,
Windstream will grant Windstream Yellow Pages, Inc. (“Windstream Yellow Pages”), the Windstream
subsidiary that currently operates the Publishing Business, an exclusive license to publish Windstream
directories. Windstream Yellow Pages will, at no charge to Windstream or its affiliates or subscribers, publish
directories with respect to each Windstream service area in which Windstream or its affiliates are required to
publish such directories by applicable law, tariff or contract. Subject to the termination provisions in the
agreement, the Publishing Agreement will remain in effect for a term of fifty years. As part of this agreement,
Windstream agreed to forego future royalty payments from Windstream Yellow Pages on advertising revenues
generated from its directories for the duration of the Publishing Agreement. In conjunction with the Publishing
Agreement, the Company has entered into an at-market executory contract to purchase minimum advertising in
its directories for a period of three years, with a renewal option for two additional years available to WCAS. Due
to the significant continuing involvement that Windstream will retain in the publishing business, as evidenced by
these ancillary agreements and its obligations to provide telephone listings, publishing results are reflected in
income from continuing operations.
The following table summarizes the net assets of the directory publishing operations that are classified as held for
sale in the accompanying consolidated balance sheets as of December 31:
(Millions) 2006 2005
Current assets $ 71.5 $ 71.3
Net plant property and equipment 8.5 5.1
Other assets - (0.5)
Assets held for sale $ 80.0 $ 75.9
Current liabilities $ 26.5 $ 30.9
Deferred income taxes 5.5 4.3
Other liabilities 0.4 0.9
Liabilities related to assets held for sale $ 32.4 $ 36.1
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