Windstream 2010 Annual Report Download - page 147

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. Summary of Significant Accounting Policies and Changes, Continued:
Revenue Arrangements with Multiple Element Deliverables – On September 23, 2009, the FASB reached a
consensus on accounting for revenue arrangements with multiple deliverables. The consensus addresses how to
determine whether an arrangement involving multiple deliverables contains more than one unit of accounting, and
how the arrangement consideration should be allocated among the separate units of accounting. This guidance is
effective for revenue arrangements entered into or materially modified in fiscal years beginning on or after
June 15, 2010. Early adoption is permitted. The Company does not expect this guidance to have a material impact
on its consolidated financial statements.
3. Acquisitions and Dispositions:
Acquisition of Q-Comm – On December 2, 2010, Windstream completed the acquisition of Q-Comm, a privately
held regional fiber transport provider and competitive local exchange carrier (“CLEC”). This acquisition
significantly enhanced the Company’s fiber network with increased scale and business revenues, as well as the
opportunity for operating synergies across the Windstream markets. Under the terms of the merger agreement, the
Company paid $279.1 million in cash, net of cash acquired, and issued approximately 20.6 million shares of
Windstream common stock valued at $271.6 million to acquire all of the issued and outstanding shares of
Q-Comm common stock. The Company also repaid $266.2 million in outstanding indebtedness and related
liabilities on existing swap agreements of Q-Comm. The transaction included Q-Comm’s wholly-owned
subsidiaries Kentucky Data Link, Inc. (“KDL”), a fiber services provider in 23 states and the District of Columbia,
and Norlight, Inc. (“Norlight”), a CLEC serving approximately 5,500 business customers.
Acquisition of Hosted Solutions – On December 1, 2010, Windstream completed the acquisition of Hosted
Solutions in an all-cash transaction valued at $312.8 million, which included a $2.8 million net working capital
adjustment, net of cash acquired. Windstream financed the transaction through cash reserves and revolving credit
capacity. Hosted Solutions, based in Raleigh, N.C., is a leading regional data center and managed hosting provider
focused on enterprise-class Infrastructure as a Service (IaaS) solutions (managed hosting, managed services,
colocation, cloud computing and bandwidth) for small and medium-sized business customers as well as large
enterprises. This acquisition provided Windstream with five state-of-the-art data centers in Raleigh, NC,
Charlotte, NC, and Boston, MA which serve more than 600 customers. As of December 31, 2010, Windstream
operated a total of 12 data centers across the country.
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