Windstream 2007 Annual Report Download - page 152

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Merger, Integration and Restructuring Charges:
A summary of the merger, integration and restructuring charges recorded in 2007 was as follows:
(Millions) Wireline
Product
Distribution
Other
Operations Total
Merger and integration costs
Transaction costs associated with acquisition of CTC $ 0.7 $ - $ 0.1 $ 0.8
Transaction costs associated with split off of
directory publishing - - 3.7 3.7
Signage and other rebranding costs 1.4 - 0.5 1.9
Computer system and conversion costs 2.5 - 0.4 2.9
Total merger and integration costs 4.6 - 4.7 9.3
Restructuring charges 4.5 0.1 - 4.6
Total merger, integration and restructuring charges $ 9.1 $ 0.1 $ 4.7 $ 13.9
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. Restructuring charges,
consisting primarily of severance and employee benefit costs, are triggered by the Company’s continued
evaluation of its operating structure and identification of opportunities for increased operational efficiency and
effectiveness. These costs should not necessarily be viewed as non-recurring, and are included in the
determination of segment income. They are reviewed regularly by the Company’s decision makers and are
included as a component of compensation targets.
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”.
During 2007, the Company incurred transaction costs of $5.6 million to complete the acquisition of CTC, and
incurred $3.7 million in transaction costs to complete the split off of its directory publishing business (See
Note 3). Additionally in 2007, the Company incurred $4.6 million in restructuring costs from a workforce
reduction plan and the announced realignment of its business operations and customer service functions intended
to improve overall support to its customers. Of these charges, $12.2 million was paid in cash during the year. The
remaining liability of $1.7 million will be funded through operating cash flows and paid during 2008.
A summary of the merger, integration and restructuring charges recorded in 2006 was as follows:
(Millions) Wireline
Product
Distribution
Other
Operations Total
Merger and integration costs
Transactions costs associated with the spin off and
merger with Valor $ 27.6 $ - $ - $ 27.6
Transaction costs associated with split off of
directory publishing - - 11.2 11.2
Total merger and integration costs 27.6 - 11.2 38.8
Restructuring charges 10.5 0.1 - 10.6
Total merger, integration and restructuring charges $ 38.1 $ 0.1 $ 11.2 $ 49.4
F-66