This excerpt taken from the WIN 8-K filed Nov 9, 2009.
UNDER GAAP TO PRO FORMA RESULTS FROM CURRENT BUSINESSES
Windstream Corporation has entered into various transactions that may cause results reported under Generally Accepted Accounting Principles in the United States (GAAP) to be not necessarily indicative of future results. On August 21, 2009, Windstream completed the sale of its out of territory product distribution operations to Walker and Associates of North Carolina, Inc. (Walker) for approximately $5.3 million in total consideration. These operations were not central to the Companys strategic goals in its core communications business. On September 8, 2009, the Company entered into a definitive agreement to acquire Lexcom, Inc. (Lexcom) based in Lexington, North Carolina, for approximately $141.0 million in cash, net of working capital to be acquired. The acquisition is expected to close in the fourth quarter of 2009, subject to certain conditions including the necessary approvals from federal regulators. On May 10, 2009 the Company entered into a definitive agreement to acquire all of the outstanding shares of common stock of D&E Communications, Inc. (D&E). Under the terms of the agreement, D&E shareholders will receive 0.650 shares of Windstream common stock and $5.00 in cash per each share of D&E common stock. The acquisition is expected to close on November 10, 2009. In the third quarter of 2008, the Company recognized a non-cash impairment charge of $6.5 million to reduce the carrying value of certain wireless spectrum licenses designated as held for sale, and not used in operations, to their fair market value. The fair market value of these holdings has been reduced to a nominal amount due to an impairment resulting from general market conditions and limited interest on this bandwidth of spectrum. On August 31, 2007, Windstream completed the acquisition of CT Communications, Inc. (CTC). Subsequently, on November 21, 2008, the Company completed the sale of the wireless business acquired from CTC. The completion of this transaction resulted in the divestiture of approximately 52,000 wireless customers, spectrum licenses and cell sites covering a four-county area in North Carolina with a population of 450,000, and six retail locations. Accordingly, we reported the operating results of the wireless business as discontinued operations. As disclosed in the Windstream Form 8-K filed on November 9, 2009, the Company has presented in this earnings release unaudited pro forma results from current businesses, which excludes (1) results from the out of territory product distribution operations prior to the disposition, (2) all merger and integration costs resulting from the transactions discussed above, and (3) the $6.5 million non-cash impairment charge for acquired assets held for sale.
Windstreams purpose for excluding non-recurring items is to improve the comparability of results of operations for the three and nine month periods ended September 30, 2009, to the results of operations for the same period of 2008. Windstreams purpose for these adjustments is to focus on the true earnings capacity associated with providing telecommunication services. Management believes the items excluded from pro forma results from current businesses are related to strategic activities or other events, specific to the time and opportunity available, and should be treated accordingly when evaluating the Companys operations. Management believes that presenting current business measures assists investors by providing more meaningful comparisons of results from current and prior periods, and by providing information that is a better reflection of the core earnings capacity of the businesses. The Company uses pro forma results from current businesses, including pro forma revenues and sales and pro forma OIBDA from current businesses, as a key measure of its operational performance. Windstream management, including the chief operating decision-maker, uses these measures consistently for all purposes including: internal reporting, the evaluation of business objectives, opportunities and performance, and the determination of management compensation.