Windstream 2007 Annual Report Download - page 139

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Acquisitions and Dispositions, Continued:
The cost of the acquisition has been allocated to the assets acquired and liabilities assumed as follows:
(Millions) Total
Fair value of assets acquired:
Current assets $ 61.0
Property, plant and equipment 736.4
Goodwill 750.4
Franchise rights 600.0
Customer list 210.0
Other assets 17.2
Total assets acquired 2,375.0
Fair value of liabilities assumed:
Current liabilities (111.1)
Deferred income taxes established on acquired assets (262.7)
Long-term debt (1,195.6)
Other liabilities (58.7)
Total liabilities assumed (1,628.1)
Common stock issued (815.9)
Cash acquired from Valor $ 69.0
In connection with the merger, the Company recorded $13.7 million of severance and severance-related costs and
$4.1 million of contract termination costs, which are reflected in goodwill in the above allocation of the cost of the
merger in accordance with EITF 95-3. Of these amounts, $4.9 million and $8.8 million in severance and
severance-related costs, and $1.3 million and $0.3 million of contract termination costs were paid in 2007 and
2006, respectively. The remaining costs, consisting of $2.5 million in contract termination costs, are included in
other current liabilities in the consolidated balance sheet as of December 31, 2007, and will be paid over the
remaining term of the contract with cash from operations.
The following unaudited pro forma condensed consolidated results of income of Windstream for 2006 and 2005
assume that the spin off from Alltel and merger with Valor occurred as of January 1, 2005:
(Millions, except per share amounts) 2006 2005
Revenues and sales $ 3,299.7 $ 3,413.5
Income before extraordinary item and cumulative effect of accounting change $ 438.2 $ 358.1
Net income $ 537.9 $ 350.7
Earnings per share before extraordinary item and cumulative effect of accounting
change:
Basic $.93 $.76
Diluted $.92 $.76
Earning per share:
Basic $1.14 $.74
Diluted $1.14 $.74
The unaudited pro forma information presents the combined operating results of Alltel Holding Corp. and Valor,
with the results prior to the acquisition date adjusted to include the pro forma impact of the following: the
elimination of transactions between Alltel Holding Corp. and Valor; additional amortization of intangible assets
resulting from the merger; the elimination of merger expenses; additional interest expense incurred on the notes
issued pursuant to the spin off and merger; and the impact of income taxes on these pro forma adjustments
utilizing Windstream’s statutory tax rate of 39.35 percent for the year ended December 31, 2006.
The unaudited pro forma results are presented for illustrative purposes only and do not reflect the realization of
potential cost savings, or any related restructuring costs. These pro forma results do not purport to be indicative of
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