Windstream 2011 Annual Report Download - page 155

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-47
The PAETEC transaction enhances our capabilities in strategic growth areas, including Internet protocol ("IP") based services,
cloud computing and managed services. It significantly advances our strategy to drive top-line revenue growth by expanding
our focus on business and fiber transport services.
The purchase price allocation was based on preliminary information regarding the fair value of assets acquired and liabilities
assumed as of the date of acquisition. We are conducting the appraisals necessary to assess the fair values of the assets
acquired and liabilities assumed and the amount of goodwill recognized as of November 30, 2011. The assessment of fair
value assets and liabilities acquired, including property, plant and equipment, intangible assets and deferred taxes requires a
significant amount of judgment and we have not completed this analysis as it relates the the valuation of PAETEC.
The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed for PAETEC:
(Millions)
Fair value of assets acquired:
Cash and other current assets
Accounts receivable
Property, plant and equipment
Goodwill
Customer lists (a)
Trade names and other (b)
Other assets
Total assets acquired
Fair value of liabilities assumed:
Current maturities of long-term debt and capital lease obligations
Other current liabilities
Deferred income taxes on acquired assets
Long-term debt and capital lease obligations
Other liabilities
Total liabilities assumed
Common stock issued (inclusive of additional paid-in capital)
Preliminary
Allocation
$ 247.9
273.4
880.9
614.1
855.0
22.0
8.4
2,901.7
(19.0)
(453.2)
108.6
(1,643.7)
(52.4)
(2,059.7)
$ 842.0
(a) Customer lists will be amortized using the sum-of-years digit methodology over an estimated useful life of 10 years.
(b) Trade names are being amortized on a straight-line basis over an estimated useful life of one year. Other intangibles,
which includes internally developed software, will be amortized on a straight-line basis over an estimated useful life of
three years.
Supplemental Pro Forma Information (Unaudited) – PAETEC Acquisition - On November 30, 2011, we completed the
acquisition of PAETEC. The amounts of PAETEC's revenue and net loss included in the our consolidated statements of income
for the year ended December 31, 2011, and the revenue and net income from continuing operations of the combined entity for
the twelve months ended December 31, 2011 and 2010 had the acquisition date occurred January 1, 2010, are as follows:
(Millions)
Actual from November 30, 2011 through December 31, 2011
Supplemental pro forma for the twelve months ended December 31, 2011
Supplemental pro forma for the twelve months ended December 31, 2010
Revenue
$ 181.2
$ 6,170.1
$ 5,324.5
Net (Loss)
Income from
Continuing
Operations
$(4.2)
$ 115.0
$ 192.1
The pro forma information presents our combined operating results and PAETEC, with the results prior to the merger closing
date adjusted to include the pro forma effect of the elimination of transactions between us and PAETEC, the adjustment to
amortization expense associated with the estimated acquired fair value of intangible assets, the impact of merger and
integration expenses related to the acquisition and the impact of tax benefits from PAETEC's loss from operations.