Windstream 2006 Annual Report Download - page 68

Windstream Corporation
Form 10-K, Part I
Item 1. Business
The Company has since satisfied the requirements of the Hart-Scott-Rodino Act. The second-step closing is
conditioned only on the absence of any injunction, but will not occur until Windstream is able to exchange the
remaining shares in compliance with the terms of its debt instruments. The terms of the Share Exchange Agreement
require the transaction to be completed by December 31, 2008.
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 after signing 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. 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.
MANAGEMENT
The Company’s staff at its headquarters and regional offices supervise, coordinate and assist subsidiaries in
management activities, investor relations, acquisitions and dispositions, corporate planning, tax planning, cash
management, insurance, sales and marketing support, government affairs, legal matters, and engineering services. They
also coordinate the financing program for all of the Company’s operations.
EMPLOYEES
At December 31, 2006, Windstream had 8,017 employees. Within Windstream’s work force, approximately 1,955
employees are part of collective bargaining units. During 2006, Windstream had no material work stoppages due to
labor disputes with its unionized employees.
ORGANIZATIONAL STRUCTURE AND OPERATING SEGMENTS
Windstream has focused its communications business strategy on enhancing the value of its customer relationships by
offering additional products and services and providing superior customer service. Through the acquisition of Valor’s
wireline properties, Windstream added more than 500,000 customers. As of December 31, 2006, including customers
of its wireline and long distance services, Windstream serves more than 3.2 million communications customers in 16
states. Additionally, Windstream provides high speed data services to more than 656,000 broadband customers.
Windstream operates its communications businesses in order to deliver one-stop shopping to customers for a full range
of communications products and services. In addition to its wireline and long distance service offerings, Windstream
also provides network access, video services, broadband products and services (“DSL”), and cable television services
in select markets.
Windstream is organized based on the products and services that it offers. Under this organizational structure, its
operations consist of its wireline segment, its product distribution segment, and its directory publishing and
telecommunications information services operations, which are reported together as other operations.
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