Windstream 2007 Annual Report Download - page 113

Adoption of SFAS No. 123(R) – On January 1, 2006, the Company adopted SFAS No. 123(R), “Share-Based
Payment”, which is a revision of SFAS No. 123 and supercedes APB Opinion No. 25. SFAS No. 123(R) requires all
share-based payments to employees, including grants of employee stock options, to be valued at fair value on the date
of grant, and to be expensed over the applicable vesting period.
Adoption of FIN 47 – During the fourth quarter of 2005, the Company adopted FIN 47, “Accounting for Conditional
Asset Retirement Obligations”. Under FIN 47, the Company is required to accrue future costs to be incurred on the
removal of assets over their useful lives.
For additional information concerning the adoption of the above mentioned accounting pronouncements see Note 2.
Recently Issued Accounting Pronouncements
SFAS No. 157 – In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. SFAS No. 157
clarifies the definition of fair value, establishes a framework for measuring fair value and expands the disclosures
related to fair value measurements that are included in a company’s financial statements. SFAS No. 157 does not
expand the use of fair value measurements in financial statements. It emphasizes that fair value is a market-based
measurement and not an entity-specific measurement, and that it should be based on an exchange transaction in which
a company sells an asset or transfers a liability. SFAS No. 157 also establishes a fair value hierarchy in which
observable market data would be considered the highest level, while fair value measurements based on an entity’s own
assumptions would be considered the lowest level. For calendar year companies like Windstream, SFAS No. 157 is
effective beginning January 1, 2008. FASB Staff Position (“FSP”) No. 157-2 allows for a one-year deferral of
implementation for non-financial assets and liabilities, except items recognized or disclosed at fair value on an annual
or more frequently recurring basis. Windstream does not expect the adoption of SFAS No. 157 in the first quarter of
2008 to have a material impact on its consolidated financial statements. However, the Company continues to evaluate
the effects that SFAS No. 157 will have on its consolidated financial statements with regards to non-financial assets
and liabilities that are recognized or disclosed at fair value on a non-recurring basis.
SFAS No. 159 – In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities - Including an amendment of FASB Statement No. 115”. SFAS No. 159 allows the measurement
at fair value of eligible financial assets and liabilities that are not otherwise required to be measured at fair value. If the
fair value option for an eligible item is elected, unrealized gains and losses for that item shall be reported in current
earnings at each subsequent reporting date. SFAS No. 159 also establishes presentation and disclosure requirements
designed to draw comparison between the different measurement attributes the company elects for similar types of
assets and liabilities. This statement is effective for Windstream beginning January 1, 2008. The Company does not
anticipate the election of the fair value option for any of its eligible financial assets and liabilities upon implementation
of SFAS No. 159, and thus does not expect SFAS No. 159 to have any impact on its consolidated financial statements.
SFAS No. 141(R) – In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations”, a revision of
SFAS No. 141. Under SFAS No. 141(R), an acquiring entity will be required to recognize all the assets acquired and
liabilities assumed in a transaction at the acquisition-date fair value with limited exceptions. SFAS No. 141(R) will
change the accounting treatment for certain specific items, including acquisition costs, acquired contingent liabilities,
restructuring costs, deferred tax asset valuation allowances and income tax uncertainties after the acquisition date. For
calendar year companies like Windstream, SFAS No. 141(R) is effective for all business combinations for which the
acquisition date is on or after January 1, 2009. The Company is currently evaluating the effects that SFAS No. 141(R)
will have on its consolidated financial statements with regards to future business combinations.
SFAS No. 160 – In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated
Financial Statements - An Amendment of ARB No. 51”. SFAS No. 160 requires noncontrolling interests to be
recognized as equity in the consolidated financial statements, separate from the parent’s equity. In addition, net income
attributable to the noncontrolling interest will be included in consolidated net income. SFAS No. 160 clarifies that
changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if
the parent retains its controlling financial interest. In addition, when a subsidiary is deconsolidated, the parent must
recognize a gain or loss in net income, measured using the fair value of the noncontrolling equity investment on the
deconsolidation date. Expanded disclosures are also required regarding the interests of the parent and its noncontrolling
interest. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. The Company does not expect SFAS No. 160 to have any impact on its consolidated financial
statements.
Forward-Looking Statements
This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes, and future
filings on Form 10-K, Form 10-Q and Form 8-K and future oral and written statements by Windstream and our
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