Windstream 2008 Annual Report Download - page 143

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 $ 30.8
Acquired assets held for sale 29.0
Property, plant and equipment 197.3
Goodwill 307.3
Franchise rights 90.0
Customer lists 53.0
Wireless licenses 7.0
Other assets 8.5
Total assets acquired 722.9
Fair value of liabilities assumed:
Current liabilities $ (42.5)
Deferred income taxes established on acquired assets (77.8)
Long-term debt (37.5)
Other liabilities (18.3)
Total liabilities assumed (176.1)
Acquisition of CTC, net of cash acquired $ 546.8
Included in the valuation of current liabilities were $25.3 million in capitalized transaction and employee-related
costs, which are included in the total cost of the acquisition of $609.6 million. Of these costs, $10.5 million and
$14.8 million were paid in 2008 and 2007, respectively, and are included in net cash flows from operations in the
accompanying statement of cash flows.
Pro forma financial results related to the acquisition of CTC have not been included because the Company does
not consider the CTC acquisition to be significant.
Spin off from Alltel - On July 17, 2006, Alltel completed the spin off of its wireline telecommunications business
to its shareholders (the “Distribution”) and the merger of that business with and into Valor (the “merger”).
Pursuant to the plan of Distribution and immediately prior to the effective time of the merger with Valor described
below, Alltel contributed all of its wireline assets to Alltel Holding Corp. in exchange for: (i) newly issued
common stock of the Company (ii) the payment of a special dividend to Alltel in the amount of $2,275.1 million
and (iii) the distribution by the Company to Alltel of certain debt securities (the “Contribution”).
In connection with the Contribution, the Company assumed approximately $261.0 million of long-term debt that
had been issued by the Company’s wireline operating subsidiaries. Also in connection with the Contribution, the
Company borrowed approximately $2.4 billion through a new senior secured credit agreement that was used to
fund the special dividend and pay down a portion of the wireline subsidiary debt assumed by the Company in the
Contribution. The debt securities issued by the Company to Alltel as part of the Contribution consisted of 8.625
percent senior notes due 2016 with an aggregate principal amount of $1,746.0 million (the “Company
Securities”). These securities were issued at a discount, and accordingly, at the date of their distribution to Alltel,
the Company Securities had a carrying value of $1,703.2 million (par value of $1,746.0 million less discount of
$42.8 million). As part of the Contribution, the Company issued to Alltel approximately 403 million shares of its
common stock, or 1.0339267 shares of common stock for each share of Alltel common stock outstanding as of
July 17, 2006. Alltel then distributed 100 percent of these common shares of the Company to its shareholders as a
tax-free dividend. Alltel also exchanged the Company Securities for certain Alltel debt held by certain investment
banking firms. The investment banking firms subsequently sold the Company Securities in the private placement
market. On November 28, 2006, the Company replaced the Company Securities with registered senior notes in the
same amount with the same maturity.
Pursuant to the Contribution, Alltel transferred cash of $36.2 million to the Company, as required by the
Distribution Agreement between Alltel and the Company. Additionally, Windstream received reimbursement
F-55