Windstream 2010 Annual Report Download - page 152

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3. Acquisitions and Dispositions, Continued:
The following table summarizes the results of the wireless business for the year ended December 31:
(Millions) 2008
Revenues and sales $ 42.0
Operating income from discontinued operations 9.7
Loss on sale of wireless business (21.3)
Income tax expense (10.6)
Net income (loss) from discontinued operations $ (22.2)
The pre-tax loss of $21.3 million was comprised of $1.0 million in transaction related fees and a $20.3 million
reduction in goodwill to reduce the carrying value of the wireless business net assets to the transaction price.
Additionally, in the second quarter of 2008, the Company updated its purchase price allocation through goodwill
for certain tax contingencies, which resulted in a $3.2 million reduction of deferred tax liabilities. Upon
completion of the sale, the Company recorded additional tax expense of $9.7 million related to goodwill that was
not deductible for tax purposes.
4. Goodwill and Other Intangible Assets:
Goodwill represents the excess of cost over the fair value of net identifiable tangible and intangible assets
acquired through various business combinations. The cost of acquired entities at the date of the acquisition is
allocated to identifiable assets, and the excess of the total purchase price over the amounts assigned to identifiable
assets has been recorded as goodwill.
Changes in the carrying amount of goodwill were as follows:
(Millions)
Balance at December 31, 2008 $ 2,198.2
Acquisition of D&E (See Note 3) 88.1
Acquisition of Lexcom (See Note 3) 58.1
Balance at December 31, 2009 2,344.4
Adjustment of D&E (a) 2.2
Adjustment of Lexcom (a) 2.3
Acquisition of NuVox (see Note 3) 269.7
Acquisition of Iowa Telecom (see Note 3) 568.1
Acquisition of Hosted Solutions (see Note 3) 171.8
Acquisition of Q-Comm (see Note 3) 345.5
Balance at December 31, 2010 $ 3,704.0
(a) Adjustments to the carrying value of D&E and Lexcom goodwill were attributable to adjustments in the fair
values of assets acquired and liabilities assumed in these acquisitions recognized during the first quarter of
2010.
As of January 1, 2010, the Company completed the annual impairment review of its goodwill according to
authoritative guidance and determined that no write-down in the carrying value of this asset was required. See
Note 2 for a discussion of the Company’s goodwill valuation approach.
On November 21, 2008, Windstream completed the sale of its wireless business. During the second quarter of
2008 the Company reclassified the associated assets as held for sale, including $52.2 million of goodwill and
$13.4 million of other intangible assets. Commensurate with the classification of the wireless assets as held for
sale, the Company performed an event driven impairment analysis and recognized a corresponding impairment
loss through goodwill of $20.3 million to reduce the carrying value of the assets to the contemplated transaction
price less cost to sell (see Note 2).
F-52