Windstream 2009 Annual Report Download - page 157

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies and Changes, Continued:
In applying the two-class method, undistributed earnings are allocated to both common shares and non-vested
restricted shares based on the pro-rata weighted average shares outstanding during the period. The Company also
computed dilutive earnings per share using the two-class method as this method is more dilutive than the treasury
stock method.
Under this method, Windstream’s diluted earnings per share is equal to the Company’s calculated basic earnings
per share. Effective January 1, 2009, the Company adopted this revised authoritative guidance for calculating
earnings per share, and commensurate therewith, has retrospectively adjusted prior period earnings per share data,
the impact of which was immaterial.
A reconciliation of net income and number of shares used in computing basic and diluted earnings per share was
as follows for the years ended December 31:
(Millions, except per share amounts) 2009 2008 2007
Basic and diluted earnings per share:
Numerator:
Income from continuing operations $ 334.5 $ 434.9 $ 916.4
Income from continuing operations allocable to non-vested restricted
shares (3.6) (3.7) (6.7)
Adjusted income from continuing operations available to
common shares 330.9 431.2 909.7
Income (loss) from discontinued operations - (22.2) 0.7
Income (loss) from discontinued operations allocable to non-vested
restricted shares - - -
Adjusted income from discontinued operations available to
common shares - (22.2) 0.7
Net income available to common shares $ 330.9 $ 409.0 $ 910.4
Denominator:
Weighted average common shares outstanding for the period 432.9 440.7 471.9
Basic and diluted earnings per share:
From continuing operations $.76 $.98 $1.93
From discontinued operations - (.05) -
Net income $.76 $.93 $1.93
Related Party Transactions – On November 30, 2007 Windstream completed the split off of its directory
publishing business in a tax-free transaction with entities affiliated with Welsh, Carson, Anderson and Stowe
(“WCAS”), a private equity investment firm and a Windstream shareholder. The Company received $506.7
million in consideration in exchange for its publishing business (see Note 3). In connection with the
announcement of the transaction, Anthony J. deNicola, a general partner of WCAS, resigned from the Windstream
Board of Directors on December 14, 2006.
Accounting Changes
Change in Accounting Estimate – Effective January 1, 2009, the Company prospectively changed its estimate of
useful life for its franchise rights from indefinite-lived to 30 years, primarily due to the effects of increasing
competition. Commensurate with this change, the Company reviewed its franchise rights for impairment and
noted that no impairment existed as of January 1, 2009. See “Significant Accounting Policies – Goodwill and
Other Intangible Assets” for further discussion.
Effective October 1, 2007, the Company prospectively reduced the depreciable rates of assets held and used in its
operations in Georgia, Kentucky, Mississippi, Nebraska, New York, Ohio and Oklahoma, and to reflect the results
of studies completed in the fourth quarter of 2007. In addition, during April 2007, the Company completed studies
of the depreciable lives of assets held and used in its Missouri operations and in an operating subsidiary in Texas.
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