Windstream 2012 Annual Report Download - page 146

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-48
2. Summary of Significant Accounting Policies and Changes, Continued:
Recently Issued Authoritative Guidance
Balance Sheet Offsetting – In December 2011, the Financial Accounting Standards Board ("FASB") issued authoritative
guidance related to balance sheet offsetting. This guidance requires enhanced disclosures for financial instruments and
derivative instruments that are subject to an enforceable master netting arrangement. In January 2013, the FASB issued an
update to address implementation issues and clarify the scope of the off-setting disclosures. This guidance is effective for fiscal
years beginning on or after January 1, 2013, including interim periods therein and requires retrospective application. We are
currently evaluating the impact this guidance will have on our consolidated financial statements.
Comprehensive Income – In February 2013, the FASB issued final authoritative guidance regarding the presentation of
reclassification adjustments on the statement of comprehensive income. In June 2011, then deferred later that year, the FASB
had issued authoritative guidance requiring reclassification adjustments for items that are reclassified from other
comprehensive income (loss) to net income be presented on the face of the financial statements where the components of net
income and the components of other comprehensive income are presented. This guidance is effective for fiscal years, and
interim periods within those years, beginning after December 15, 2012. We do not expect this guidance to have a material
impact on our consolidated financial statements.
3. Acquisitions and Dispositions:
Acquisition of PAETEC - On November 30, 2011, we completed the acquisition of PAETEC in an all-stock transaction valued
at approximately $2.4 billion. PAETEC shareholders received 0.460 shares of our stock for each PAETEC share owned at
closing. We issued 70.0 million shares and assumed equity awards shares for a total transaction value of $842.0 million, based
on our closing stock price on November 30, 2011, and the fair value of the equity awards assumed. We also assumed PAETEC's
debt, net of cash acquired, of approximately $1,591.3 million, 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. 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 following table summarizes the final fair values of the assets acquired and liabilities assumed for PAETEC.
(Millions)
Final
Allocation
Fair value of assets acquired:
Cash and other current assets $ 240.8
Accounts receivable 227.5
Property, plant and equipment 875.7
Goodwill 653.3
Customer lists (a) 830.0
Trade names and other (b) 15.0
Deferred income taxes on acquired assets 162.8
Other assets 8.4
Total assets acquired 3,013.5
Fair value of liabilities assumed:
Current maturities of long-term debt and capital lease obligations (19.0)
Other current liabilities (453.5)
Long-term debt and capital lease obligations (1,643.7)
Other liabilities (55.3)
Total liabilities assumed (2,171.5)
Common stock issued (inclusive of additional paid-in capital) $ 842.0
(a) Customer lists will be amortized using the sum-of-years digit methodology over an estimated useful life of ten years.