Windstream 2008 Annual Report Download - page 146

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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. Changes in the carrying amount of goodwill by business segment were as follows:
(Millions) Wireline
Product
Distribution Wireless Totals
Balance at December 31, 2006 $ 1,964.7 $ 0.3 $ - $ 1,965.0
Acquisition of CTC (Note 3) 255.1 - 52.2 307.3
Adjustment to Valor deferred taxes 4.1 - - 4.1
Assets of discontinued operations - - (52.2) (52.2)
Balance at December 31, 2007 2,223.9 0.3 - 2,224.2
Adjustments to Valor and CTC deferred taxes (26.0) - - (26.0)
Balance at December 31, 2008 $ 2,197.9 $ 0.3 $ - $ 2,198.2
As of January 1, 2008, the Company completed the annual impairment review of its goodwill according to the
guidance in SFAS No. 142, and determined that no write-down in the carrying value of this asset was required.
On November 21, 2008, Windstream completed the sale of its wireless business. During the second quarter of
2008 the Company reclassified the associated assets as held for sale, including $52.2 million of goodwill and
$13.4 million of other intangible assets. Commensurate with the classification of the wireless assets as held for
sale, the Company performed an event driven impairment analysis and recognized a corresponding impairment
loss through goodwill of $20.3 million to reduce the carrying value of the assets to the contemplated transaction
price less cost to sell (see Note 16).
The carrying value of the indefinite-lived intangible assets other than goodwill was $955.0 million as of
December 31, 2008 and 2007.
Upon completing the annual impairment reviews of its wireline franchise rights as of January 1, 2008, and 2007,
the Company determined that no write-down in the carrying value of these assets was required.
As a result of the sale of the publishing business, Windstream agreed to forego future royalty payments from the
directory publishing business on advertising revenues generated from its directories. As these royalties contributed
to the carrying value of the wireline franchise rights, Windstream assessed the impact of forgoing these revenues
on that carrying value as of November 30, 2007. The results of the impairment analysis indicated that the fair
value of the indefinite-lived wireline franchise rights still exceeded their carrying value. Therefore, no write-down
was required.
Intangible assets subject to amortization were as follows at December 31:
2008
(Millions)
Gross
Cost
Accumulated
Amortization
Net Carrying
Value
Valor wireline customer list $ 210.0 $ (94.4) $ 115.6
CTC wireline customer list 45.0 (11.7) 33.3
Other wireline customer list 67.6 (40.9) 26.7
Cable franchise rights 22.5 (20.9) 1.6
Balance at December 31, 2008 $ 345.1 $ (167.9) $ 177.2
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