Windstream 2008 Annual Report Download - page 52

Windstream Corporation
Form 10-K, Part I
Item 1. Business
Windstream used the proceeds of the special dividend to repurchase approximately three million shares of Windstream
common stock during the fourth quarter. Windstream exchanged all of the outstanding equity of Holdings (the
“Holdings Shares”) for an aggregate of 19,574,422 shares of Windstream common stock (the “Exchanged WIN
Shares”) owned by WCAS, which were then retired. Based on the price of Windstream common stock of $12.95 at
November 30, 2007, the Exchanged WIN Shares had a value of $253.5 million. The total value of the transaction was
$506.7 million, including an adjustment for net working capital of approximately $2.7 million. As a result of
completing this transaction, Windstream recorded a gain on the sale of its publishing business of $451.3 million in the
fourth quarter of 2007 after substantially all performance obligations had been fulfilled.
In connection with the consummation of the transactions, the parties and their affiliates entered into a publishing
agreement whereby Windstream granted Local Insight Yellow Pages, Inc. (“Local Insight Yellow Pages”), the
successor to the Windstream subsidiary that operated the publishing business, an exclusive license to publish
Windstream directories in each of its markets other than the newly acquired CTC markets. Local Insight Yellow Pages
will, at no charge to Windstream or its affiliates or subscribers, publish directories with respect to each Windstream
service area covered under the agreement in which Windstream or its affiliates are required to publish such directories
by applicable law, tariff or contract. Subject to the termination provisions in the agreement, the publishing agreement
will remain in effect for a term of fifty years. As part of this agreement, Windstream agreed to forego future royalty
payments from Local Insight Yellow Pages on advertising revenues generated from covered directories for the duration
of the publishing agreement.
MANAGEMENT
The Company’s staff at its headquarters and regional offices supervise, coordinate and assist subsidiaries in management
activities including investor relations, acquisitions and dispositions, corporate planning, tax planning, cash and debt
management, insurance, sales and marketing support, government affairs, legal matters, and engineering services.
EMPLOYEES
At December 31, 2008, Windstream had 7,349 employees. Within Windstream’s work force, approximately 1,813
employees are part of collective bargaining units. During 2008, Windstream had no material work stoppages due to
labor disputes with its unionized employees (see “Risk Factors”).
ORGANIZATIONAL STRUCTURE AND OPERATING SEGMENTS
Windstream has focused its communications business strategy on enhancing the value of its customer relationships by
offering additional products and services and providing superior customer service. As of December 31, 2008,
Windstream served more than 3.0 million communications customers in 16 states. Additionally, Windstream provides
data services to more than 978,000 high-speed Internet customers. Windstream delivers one-stop shopping to
customers with a full range of communications products and services that include voice and related features, high-
speed Internet, long distance, network access and video.
Windstream is organized based on the products and services that it offers. Under this organizational structure, its
operations consist of its wireline and product distribution segments. Previously, its other operations consisted of
directory publishing, wireless and telecommunications information services operations.
WIRELINE OPERATIONS
The Company’s wireline segment consists of Windstream’s retail and wholesale telecommunications services, whose
primary revenue streams include voice and related features, high-speed Internet service, long distance, data and special
access, switched access and interconnection, and video services.
The following table is a summary of the wireline segment operations for the years ended December 31:
Wireline Segment 2008 2007 2006
Percent of wireline revenues to total operating revenues 91% 87% 85%
Operating revenues from external customers $3,058.8 $3,016.6 $2,635.3
Segment income $1,140.1 $1,154.2 $ 920.3
Total assets $7,972.0 $8,119.8 $7,897.1
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