Windstream 2009 Annual Report Download - page 169

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6. Fair Value Measurements, Continued:
discount of its Tranche B senior secured credit facility as the swap agreements are secured by the same collateral.
In addition, the Company routinely monitors and updates its evaluation of counterparty risk, and based on such
evaluation has determined that the swap agreements continue to meet the requirements of an effective cash flow
hedge. The counterparty to each of the four swap agreements is a bank with a current credit rating at or above A+.
The fair value and carrying value of the Company’s long-term debt, including current maturities, was as follows at
December 31:
(Millions) 2009 2008
Fair value $ 6,340.7 $ 4,637.0
Carrying value $ 6,295.2 $ 5,382.5
The fair value of the corporate bonds was calculated based on quoted market prices of the specific issuances in an
active market when available. When an active market is not available for certain bonds and bank notes, the fair
market value was determined based on bid prices and broker quotes. In calculating the fair market value of the
revolving line of credit and Windstream Holdings of the Midwest Inc. bonds, an appropriate market price for
similar instruments in an active market was used with consideration given to credit quality, nonperformance risk
and maturity of the instrument.
7. Supplemental Cash Flow Information:
The Company declared and accrued cash dividends of $109.2 million, $109.9 million and $113.6 million during
the fourth quarters of 2009, 2008 and 2007, respectively, which were subsequently paid in January of the
following year.
On November 10, 2009, the Company issued 9.4 million shares of its common stock with a fair market value of
approximately $94.6 million as part of consideration paid to acquire D&E (see Note 3). Also as part of this
transaction, Windstream assumed $182.4 million in long term debt, which was subsequently repaid as required
under the change of control provisions of the D&E debt agreement.
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.
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 and received from Alltel in conjunction
with the spin off during 2006. The Company recorded this non-cash transfer from Alltel as an adjustment to
additional paid-in capital.
8. Employee Benefit Plans and Postretirement Benefits:
Windstream maintains a non-contributory qualified defined benefit pension plan, which covers most employees.
Prior to establishing the pension plan pursuant to the spin off in 2006, the Company’s employees participated in a
substantially equivalent plan maintained by Alltel. Future benefit accruals for all eligible nonbargaining
employees covered by the pension plan ceased as of December 31, 2005 (December 31, 2010 for employees who
had attained age 40 with two years of service as of December 31, 2005). The Company also maintains
supplemental executive retirement plans that provide unfunded, non-qualified supplemental retirement benefits to
a select group of management employees. Additionally, the Company provides postretirement healthcare and life
insurance benefits for eligible employees. Employees share in, and the Company funds, the costs of these plans as
benefits are paid.
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