Windstream 2010 Annual Report Download - page 150

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Acquisitions and Dispositions, Continued:
Pennsylvania and provides the opportunity for operating synergies with contiguous Windstream markets in
Pennsylvania. Pursuant to the merger agreement, Windstream acquired all of the issued and outstanding shares of
common stock of D&E, and D&E merged with and into a wholly-owned subsidiary of Windstream. In accordance
with the D&E Merger Agreement, D&E shareholders received 0.650 shares of Windstream common stock and
$5.00 in cash per each share of D&E Common Stock. Windstream issued approximately 9.4 million shares of its
common stock valued at $94.6 million, based on Windstream’s closing stock price of $10.06 on November 9,
2009, and paid $56.6 million, net of cash acquired, as part of the transaction. Subsequently, Windstream repaid
outstanding debt of D&E totaling $182.4 million including current maturities.
The following table summarizes the final fair values of the assets acquired and liabilities assumed for D&E and
Lexcom. Adjustments to the preliminary purchase price allocation were based on updated information regarding
the fair value of tangible assets acquired and liabilities assumed as of the date of acquisition.
Lexcom D&E
(Millions)
Final
Allocation
Final
Allocation
Fair value of assets acquired:
Current assets $ 1.8 $ 14.4
Property, plant and equipment 73.1 194.8
Goodwill 60.4 90.3
Wireline franchise rights (a) 20.1 80.0
Cable franchise rights (a) 11.6 -
Customer lists (b) 10.5 60.0
Wireless licenses - 16.6
Non-compete agreements - 1.7
Trade names (c) 0.3 1.2
Other assets 1.1 1.1
Total assets acquired 178.9 460.1
Fair value of liabilities assumed:
Current liabilities (3.6) (26.0)
Deferred income taxes on acquired assets (36.1) (92.4)
Long-term debt - (175.3)
Other liabilities (0.5) (15.2)
Total liabilities assumed (40.2) (308.9)
Common stock issued (inclusive of additional paid-in capital) - (94.6)
Cash paid, net of cash acquired $ 138.7 $ 56.6
(a) Wireline franchise rights and cable franchise rights will be amortized on a straight-line basis over an
estimated life of 30 years and 15 years, respectively.
(b) Customer lists will be amortized using the sum-of-years digit methodology over an estimated useful life of
nine years.
(c) Trade names will be amortized on a straight-line basis over an estimated useful life of one year.
These transactions have been accounted for as business acquisitions with Windstream serving as the accounting
acquirer. We have conducted appraisals necessary to assess the fair values of the assets acquired and liabilities
assumed and the amount of goodwill recognized as of the respective acquisition dates for D&E, Lexcom, NuVox
and Iowa Telecom and are currently in the process of conducting the appraisals necessary to assess the fair values
of the assets acquired and liabilities assumed and the amount of goodwill recognized for Hosted Solutions and
Q-Comm. Since the value of the assets and liabilities for Hosted Solutions and Q-Comm are preliminary, they are
subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the
respective acquisition dates. Upon finalization, any changes to the preliminary valuation of assets acquired and
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