Windstream 2008 Annual Report Download - page 151

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Fair Value Measurements, Continued:
Prior to the implementation of SFAS No. 157, the fair values of the Company’s long-term debt and interest rate
swaps were as follows at December 31, 2007:
(Millions)
Fair
Value
Carrying
Amount
Long-term debt, including current maturities $ 5,444.6 $ 5,355.5
Interest rate swaps $ 83.2 $ 83.2
The fair value of long-term debt was estimated based on the discounted cash flows of the outstanding long-term
debt using the weighted maturities and interest rates currently available in the long-term financing markets. The
fair values of the interest rate swaps were determined based on the present value of expected future cash flows
using LIBOR swap rates without consideration given to the Company’s non-performance risk.
7. Supplemental Cash Flow Information:
Supplemental cash flow information was as follows for the years ended December 31:
(Millions) 2008 2007 2006
Interest paid $ 412.5 $ 441.2 $ 77.1
Income taxes paid $ 183.2 $ 206.5 $ 396.9
Of the interest and income taxes paid in 2006, $11.3 million and $265.1 million, respectively, was paid by Alltel,
which Windstream funded through advances to Alltel as reflected in financing activities in the consolidated
statements of cash flows.
Additionally, the Company declared and accrued cash dividends of $109.9 million, $113.6 million and $119.2
during the fourth quarters of 2008, 2007 and 2006, respectively, which were subsequently paid on January 14,
2009, January 15, 2008 and January 16, 2007, respectively.
Pursuant to the split off of the publishing business (see Note 3), Windstream and Holdings executed a non-cash
debt-for-debt exchange whereby Windstream received securities from Holdings valued at $210.5 million.
Windstream exchanged these Holdings debt securities for outstanding Windstream debt securities, which were
then retired (see Note 5). In addition to receiving a special cash dividend and debt securities, Windstream received
approximately 19.6 million outstanding shares of its common stock, which were valued at $253.5 million, in
exchange for its contribution of the publishing business to Holdings. These shares were subsequently retired.
Pursuant to the spin off, Alltel transferred certain wireline assets and liabilities to Alltel Holding Corp. at their
historical cost basis. During 2006, Alltel transferred to the Company $101.5 million in net plant assets, $191.6
million in pension assets, $24.2 million of post-retirement benefit obligations, and $62.8 million in related net
deferred income tax assets, which were included in net property, plant and equipment, other assets, other liabilities
and deferred income taxes, respectively, in the Company’s consolidated balance sheet at December 31, 2006.
During the first quarter of 2007, $4.7 million of additional net plant assets, $1.2 million of related deferred tax
liabilities, and $0.4 million of additional pension assets were identified by Alltel as being attributable to Alltel
Holding Corp. The Company recorded this non-cash transfer from Alltel as an adjustment to additional paid-in
capital.
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