Windstream 2007 Annual Report Download - page 102

Set forth below is a summary of merger and integration costs related to the other operations, which were not included
in the determination of segment income for the years ended December 31:
(Millions) 2007 2006 2005
Transaction costs associated with the acquisition of CTC $ 0.1 $ - $ -
Transaction costs associated with split off of directory publishing 3.7 11.2 -
Signage and other rebranding costs 0.5 - -
Computer system and conversion costs 0.4 - -
Total merger and integration costs $ 4.7 $ 11.2 $ -
The following discussion and analysis details Windstream’s consolidated merger and integration costs.
Merger and Integration Costs
Costs triggered by strategic transactions, including transaction costs, rebranding costs and system conversion costs are
unpredictable by nature and are not included in the determination of segment income.
Set forth below is a summary of merger and integration costs recorded in the years 2007, 2006 and 2005.
(Millions) 2007 2006 2005
Merger and integration costs
Transaction costs associated with the acquisition of CTC $ 0.8 $ - $ -
Transaction costs associated with the split off of directory publishing 3.7 11.2 -
Transaction costs associated with spin off from Alltel - 7.9 31.2
Signage and other rebranding costs 1.9 13.8 -
Computer system and conversion costs 2.9 5.9 -
Total merger and integration costs $ 9.3 $ 38.8 $ 31.2
Transaction costs primarily include charges for accounting, legal, broker fees and other miscellaneous costs associated
with the acquisitions of Valor and CTC and the disposition of the publishing business. Other merger and integration
costs include signage and other costs to rebrand the Company’s offices and vehicles, and computer system and
conversion costs. These costs are considered indirect or general and are expensed when incurred in accordance with
SFAS No. 141 “Business Combinations”.
Summary of Liability Activity Related to Both Merger and Integration Costs and Restructuring Charges
The following table is a summary of liability activity related to both merger and integration costs and restructuring
charges as of December 31:
(Millions) 2007 2006 2005
Accrued merger, integration and restructuring charges at beginning of period $ 28.9 $ - $ -
Total merger and integration costs 9.3 38.8 31.2
Total restructuring charges (a) 4.6 10.6 4.5
Valor merger and integration costs included in goodwill - 17.8 -
CTC merger and integration costs included in goodwill 25.3 - -
Merger, integration and restructuring charges paid (53.4) (37.5) -
Non cash adjustment to expense - (0.8) -
Merger and integration costs transferred to Alltel - - (35.7)
Accrued merger, integration and restructuring charges at end of period $ 14.7 $ 28.9 $ -
(a) Restructuring charges are included in the determination of segment income. See above for the results for each of
the Company’s operating segments and other operations.
As of December 31, 2007, the remaining liability of $14.7 million for accrued merger, integration and restructuring
charges consisted of $10.5 million of costs associated with the acquisition of CTC, Valor lease termination costs of
$3.4 million, $0.3 million of costs associated with the split off of directory publishing, and $0.5 million of employee-
related benefit costs. The CTC transaction costs primarily consist of severance and related employee costs and will be
paid as the remaining CTC employees are terminated following the billing conversion in the first quarter of 2008.
Valor lease payments will be made over the remaining term of the lease. All remaining payments will be funded
through operating cash flows.
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