Windstream 2011 Annual Report Download - page 166

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
____
F-58
which are observable at commonly quoted intervals for the full term of the swaps using discount rates appropriate with
consideration given to our non-performance risk. As of December 31, 2011 and 2010, the fair values of our interest rate swaps
were reduced by $6.9 million and $4.6 million, respectively, to reflect our non-performance risk. Our non-performance risk is
assessed based on the current trading discount of our Tranche B senior secured credit facility as the swap agreements are
secured by the same collateral. In addition, we routinely monitor and update our evaluation of counterparty risk, and based on
such evaluation have determined that the swap agreements continue to meet the requirements of an effective cash flow hedge.
The counterparty to each of the four swap agreements is a bank with a current credit rating at or above A.
The fair value and carrying value of our long-term debt, including current maturities, was as follows at December 31:
(Millions)
Fair value
Carrying value
2011
$ 9,337.6
$ 9,150.4
2010
$ 7,649.1
$ 7,325.8
The fair value of the corporate bonds was calculated based on quoted market prices of the specific issuances in an active market
when available. When an active market is not available for certain bonds and bank debt, the fair market value and revolving
line of credit was determined based on bid prices and broker quotes. In calculating the fair market value of the Windstream
Holdings of the Midwest, Inc., an appropriate market price for the same or similar instruments in an active market is used
considering credit quality, nonperformance risk and maturity of the instrument.
7. Supplemental Cash Flow Information:
We declared and accrued cash dividends of $148.0 million, $126.5 million and $109.2 million during the fourth quarters of
2011, 2010 and 2009, respectively, which were subsequently paid in January of the following year.
On November 30, 2011, we issued 70.0 million shares of our common stock and assumed stock awards for a total transaction
value of $842.0 million, based on the closing price of our stock on November 30, 2011, and the fair value of the equity awards
assumed, as part of the consideration paid to acquire PAETEC (see Note 3). Also as part of this transaction, we assumed
$1,591.3 million in long-term debt net of cash acquired, which includes a net premium of $113.9 million based on the fair value
of the debt on November 30, 2011 and bank debt of $99.5 million that was repaid on December 1, 2011.
On February 28, 2011, we contributed 4.9 million shares of our common stock to our pension plan. At the time of this
contribution, these shares had an appraised value, as determined by a third-party valuation firm, of approximately $60.6
million. On September 21, 2011, we contributed 5.9 million shares of our common stock to our Pension Plan to meet our
remaining 2011 and expected 2012 obligation. At the time of the contribution, these shares had an appraised value, as
determined by an unaffiliated third party valuation firm, of approximately $75.2 million.
On December 2, 2010, we issued 20.6 million shares of our common stock with a fair market value of $271.6 million as part of
the consideration paid to acquire Q-Comm (see Note 3). Also as part of this transaction, we assumed $266.2 million in long-
term debt, including related interest rate swap liabilities, which was subsequently repaid.
On June 1, 2010, we issued 26.7 million shares of our common stock with a fair market value of $280.8 million as part of the
consideration paid to acquire Iowa Telecom (see Note 3). Also as part of this transaction, we assumed $628.9 million in long-
term debt, including related interest rate swap liabilities, which was subsequently repaid.
On February 8, 2010, we issued 18.7 million shares of our common stock with a fair market value of $185.0 million as part of
the consideration paid to acquire NuVox (see Note 3). Also as part of this transaction, we assumed $281.0 million in long-term
debt and related liabilities on existing swap agreements of NuVox, which was subsequently repaid.
On November 10, 2009, we issued 9.4 million shares of our common stock with a fair market value of $94.6 million as part of
consideration paid to acquire D&E (see Note 3). Also as part of this transaction, we assumed $182.4 million in long-term debt,
which was subsequently repaid as required under the change of control provisions of the D&E debt agreement.