Windstream 2009 Annual Report Download - page 78

Windstream Corporation
Form 10-K, Part I
Item 1. Business
“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 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, human resources
and engineering services.
EMPLOYEES
At December 31, 2009, Windstream had 7,385 employees. Within Windstream’s work force, approximately 1,693
employees are part of collective bargaining units. During 2009, 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, 2009,
Windstream served more than 3.0 million access lines and 1.1 million high-speed Internet customers in 16 states.
Windstream’s service offerings include phone, high-speed Internet and digital television. The Company also offers a
wide range of IP-based voice and data services to businesses and government agencies.
Windstream is organized based on the products and services that it offers. Under this organizational structure,
Windstream currently operates as a single wireline reporting segment focused on providing communications products
and services. Previously, the Company reported a product distribution segment, but in the first quarter of 2009, the
Company reorganized its operations to integrate the sales and administrative functions of the product distribution
segment into its wireline operations. As a result of this change, the chief operating decision maker no longer reviews
the financial statements of the product distribution operations on a stand alone basis, and the Company operates its
wireline and product distribution operations as a single reporting segment (the “wireline segment”). As required by the
authoritative guidance for segment presentation, segment results of operations have been retrospectively adjusted to
reflect this change for all periods presented.
In November 2007, the Company sold its directory publishing business, as further discussed in “Item 1 – Material
Dispositions Completed During the Last Five Years”. Prior to this sale, the Company reported the results of these
operations as its directory publishing segment.
CONSOLIDATED WIRELINE SEGMENT
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.
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