Windstream 2007 Annual Report Download - page 125

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies and Changes, Continued:
consolidated balance sheet as of December 31, 2007. These assets are available for immediate sale in their present
condition, and an active program to locate a buyer has been initiated. Management’s intention is to complete the
sale of these assets within the next twelve months.
The following table summarizes the acquired assets held for sale at December 31, 2007:
(Millions) 2007
Net property, plant and equipment $ 14.0
Other assets 12.6
Acquired assets held for sale $ 26.6
These assets have been recorded at their estimated fair values less any expected costs of sale. Net property, plant
and equipment is comprised primarily of CTC’s corporate headquarters facility, including buildings and land, as
well as certain network assets formally used in a video trial by CTC. The sale of the corporate headquarters was
completed in January 2008 resulting in net proceeds of $13.3 million. The Company plans to vacate the facility by
the end of the first quarter of 2008. Included in other assets are various licenses for wireless spectrum within
CTC’s geographic region that are not currently used by the Company in its wireless operations, which are valued
at $9.5 million. Also included in other assets are certain marketable securities and various partnership interests
valued at $3.1 million.
The following table summarizes the net assets of the directory publishing operations that were classified as held
for sale in the accompanying consolidated balance sheets at December 31, 2006:
(Millions) 2006
Current assets $ 71.5
Net property, plant and equipment 8.5
Assets held for sale $ 80.0
Current liabilities $ 26.5
Deferred income taxes 5.5
Other liabilities 0.4
Liabilities related to assets held for sale $ 32.4
Goodwill and Other Intangible Assets – Goodwill represents the excess of cost over the fair value of net
identifiable tangible and intangible assets acquired through various business combinations. The Company has
acquired identifiable intangible assets through its acquisitions of interests in various wireline and wireless
properties. The cost of acquired entities at the date of the acquisition is allocated to identifiable assets, and the
excess of the total purchase price over the amounts assigned to identifiable assets is recorded as goodwill. In
accordance with SFAS No. 142, “Goodwill and Other Intangible Assets”, goodwill is to be assigned to a
company’s reporting units and tested for impairment at least annually using a consistent measurement date, which
for the Company is January 1st of each year. The impairment test for goodwill requires a two-step approach, which
is performed at a reporting unit level. Step one of the test identifies potential impairments by comparing the fair
value of a reporting unit to its carrying amount. Step two, which is only performed if the fair value of a reporting
unit is less than its carrying value, calculates the impairment loss as the difference between the carrying amount of
the reporting unit’s goodwill and the implied fair value of that goodwill. For purposes of completing the annual
impairment reviews, fair value of the reporting units is determined utilizing a weighted combination of the
discounted cash flows of the reporting units and calculated market values of comparable public companies.
The Company’s indefinite-lived intangible assets consist primarily of wireline franchise rights established through
the acquisition of CTC, Valor and certain properties in the state of Kentucky. They also include wireless licenses
acquired from CTC. The Company determined that the wireline franchise rights and wireless licenses met the
indefinite life criteria outlined in SFAS No. 142 because the Company expects both the renewal by the granting
authorities and the cash flows generated from these intangible assets to continue for the foreseeable future.
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