Windstream 2009 Annual Report Download - page 118

•Pension expenses and funding: During 2009, the fair market value of Windstream’s pension plan assets have
increased 19.9 percent from approximately $654.0 million to $784.0 million. This increase is primarily due to a
return on plan assets of $152.0 million, or 23.2 percent, transfers from the D&E pension plan (see Note 8) of
$61.4 million and contributions of $3.3 million. Partially offsetting these increases were $51.1 million in routine
benefit payments, $35.6 million of lump sum distributions and administrative expenses. The Company does not
expect to make any contributions to the plan in 2010. The amount and timing of future contributions will depend
on various factors including future investment performance, the finalization of funding regulations, changes in
future discount rates and changes in demographics of the population participating in the Company’s qualified
pension plan.
STRATEGIC TRANSACTIONS
Pending Transactions
On November 23, 2009, we entered into an agreement and plan of merger, pursuant to which we will acquire all of the
issued and outstanding shares of common stock of Iowa Telecom based in Newton, Iowa. Under the terms of the Iowa
Telecom merger agreement, Iowa Telecom shareholders will receive 0.804 shares of common stock of Windstream and
$7.90 in cash per each share of Iowa Telecom common stock. We expect to issue approximately 26.5 million shares of
Windstream common stock and pay approximately $261.0 million in cash as part of the transaction. We also expect to
repay estimated net debt of approximately $598.0 million. This acquisition is expected to close in mid-2010, subject to
certain conditions including receipt of necessary approvals from federal and state regulators and Iowa Telecom
shareholders. As of September 30, 2009, Iowa Telecom provided services to approximately 256,000 access lines,
95,000 high-speed Internet customers and 26,000 digital TV customers in Iowa and Minnesota. The completion of this
acquisition will provide the Company with increased scale and opportunities for approximately $35.0 million in
operating synergies with existing Windstream operations.
Acquisitions
On February 8, 2010, we completed our previously announced acquisition of NuVox, a competitive local exchange
carrier based in Greenville, South Carolina. Consistent with the Company’s focus on growing revenues from business
customers, the completion of the NuVox acquisition added approximately 90,000 business customer locations in 16
contiguous Southwestern and Midwest states and provides opportunities for approximately $30.0 million in operating
synergies with contiguous Windstream markets. NuVox’s services include voice over internet protocol, local and long-
distance voice, broadband internet access, email, voicemail, web hosting, secure electronic data storage and backup,
internet security and virtual private networks. Many of these services are delivered over a secure, privately-managed IP
network, using a multiprotocol label switch backbone and distributed IP voice switching architecture.
In accordance with the NuVox merger agreement, Windstream acquired all of the issued and outstanding shares of
common stock of NuVox for $199.0 million in cash, net of cash acquired, and issued approximately 18.7 million shares
of Windstream common stock valued at $187.0 million on the date of issuance. Windstream also repaid outstanding
indebtedness and related liabilities on existing swap agreements of NuVox approximating $281.0 million.
On November 10, 2009, we completed our previously announced merger with D&E, which as of the date of acquisition
served approximately 110,000 incumbent local exchange carrier access lines, 35,000 competitive local exchange
carrier access lines, 45,000 high-speed Internet customers and 9,000 cable television customers. This acquisition
increased Windstream’s presence in Pennsylvania and provides the opportunity for approximately $25.0 million in
operating synergies with contiguous Windstream markets. Pursuant to the merger agreement, Windstream acquired all
of the issued and outstanding shares of common stock of D&E, and D&E merged with and into a wholly-owned
subsidiary of Windstream.
In accordance with the D&E Merger Agreement, D&E shareholders received 0.650 shares of Windstream common
stock and $5.00 in cash per each share of D&E Common Stock. Windstream issued approximately 9.4 million shares of
its common stock valued at approximately $94.6 million, based on Windstream’s closing stock price of $10.06 on
November 9, 2009, and paid $56.6 million, net of cash acquired, as part of the transaction. Subsequently, Windstream
repaid outstanding debt of D&E totaling $182.4 million.
On December 1, 2009, we completed our previously announced acquisition of Lexcom, which as of the date of
acquisition served approximately 22,000 access lines, 9,000 high-speed Internet customers and 12,000 cable television
customers in North Carolina. This acquisition increased Windstream’s presence in North Carolina and provides the
opportunity for approximately $5.0 million in operating synergies with contiguous Windstream markets. In accordance
with the Lexcom merger agreement, Windstream acquired all of the issued and outstanding shares of Lexcom for
approximately $138.7 million in cash, net of cash acquired.
On August 31, 2007, Windstream completed the acquisition of CT Communications, Inc. (“CTC”) in a transaction
valued at $584.3 million. Under the terms of the agreement, the shareholders of CTC received $31.50 in cash for each
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