Windstream 2010 Annual Report Download - page 106

Dispositions
On August 21, 2009, Windstream completed the sale of its out of territory product distribution operations to Walker
and Associates of North Carolina, Inc. (“Walker”) for approximately $5.3 million in total consideration. The out of
territory product distribution operations primarily consisted of product inventory with a carrying value of $4.9 million
and customer relationships outside of Windstream’s telecommunications operating territories. These operations were
not central to the Company’s strategic goals in its core communications business. Product revenues from these
operations totaled $38.5 million and $76.2 million during 2009 and 2008, respectively, with related cost of products
sold of $34.3 million and $68.3 million for the same periods in 2009 and 2008, respectively. In conjunction with this
transaction, Windstream recognized a gain of $0.4 million in other income, net in its consolidated statements of income
in 2009.
On November 21, 2008, Windstream completed the sale of its wireless business to AT&T Mobility II, LLC for
approximately $56.7 million. The completion of this transaction resulted in the divestiture of approximately 52,000
wireless customers, spectrum licenses and cell sites covering a four-county area of North Carolina with a population of
approximately 450,000 and six retail locations. The operating results of the wireless business have been separately
presented as discontinued operations in the accompanying consolidated statements of income (see Note 3).
ORGANIZATION AND RESULTS OF OPERATIONS
The Company is organized based on the products and services that it offers. The Company’s primary offerings to
business customers include its IP-based voice and data services, MPLS networking, data center and managed hosting
services and communications systems. The Company also delivers high-speed Internet, digital phone, long distance and
high-definition television services to consumers primarily located in rural areas and operates a local and long-haul fiber
network spanning approximately 60,000 route miles.
The Company has historically 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 business 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.
See below a detailed discussion and analysis of revenues and sales in our discussion of consolidated operating results.
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