Windstream 2007 Annual Report Download - page 79

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WINDSTREAM CORPORATION
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(Dollars in Millions)
Column A Column B Column C
Additions
Column D Column E
Description
Balance at
Beginning
of Period
Charged to
Cost and
Expenses
Charged
to Other
Accounts Deductions
Balance at
End of
Period
Allowance for doubtful accounts,
customers and other:
For the years ended:
December 31, 2007 $ 10.4 $ 28.5 $ - $25.6 (A) $ 13.3
December 31, 2006 $ 9.7 $ 18.4 $ - $17.7 (A) $ 10.4
December 31, 2005 $ 11.3 $ 29.2 $ - $30.8 (A) $ 9.7
Valuation allowance for deferred tax assets:
For the years ended:
December 31, 2007 $ 10.6 $ - $ 3.5 (B) $ 1.5 (C) $ 12.6
December 31, 2006 $ - $ - $ 10.6 (D) $ - $ 10.6
December 31, 2005 $ - $ - $ - $ - $ -
Accrued liabilities related to merger, integration
and restructuring charges:
For the years ended:
December 31, 2007 $ 28.9 $ 13.9 (E) $ 25.3 (F) $53.4 (G) $ 14.7
December 31, 2006 $ - $ 48.6 (H) $ 17.8 (I) $37.5 (J) $ 28.9
December 31, 2005 $ - $ 35.7 (K) $ - $35.7 (L) $ -
Notes:
(A) Accounts charged off net of recoveries of amounts previously written off.
(B) Valuation allowance for deferred taxes was established related to expected realization of net operating losses assumed
from the acquisition of CTC.
(C) Adjustment to the net operating loss carry forwards acquired from Valor.
(D) Valuation allowance for deferred taxes was established related to expected realization of net operating losses assumed
from Valor in the merger.
(E) During 2007, the Company incurred total merger and integration 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. 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.
(F) CTC transaction charges included in goodwill in the amount of $25.3 million consisted primarily of capitalized transaction
and employee-related costs.
(G) Includes cash outlays of $32.4 million for merger, integration and restructuring costs charged to expense, and $21.0
million in cash outlays for CTC and Valor transaction costs charged to goodwill.
(H) During 2006, the Company incurred $26.8 million of incremental costs, principally consisting of rebranding costs,
consulting and legal fees, and system conversion costs related to the spin off of the Alltel wireline telecommunication
business and merger with Valor. These costs do not include a $0.8 million non-cash charge related to the accelerated
vesting of employees’ Alltel restricted stock, which was recorded against paid-in capital. Windstream also incurred $10.6
million in restructuring charges, which consisted of severance and employee benefit costs related to a workforce reduction,
and $11.2 million in investment banker, audit and legal fees associated with the announced split off of its directory
publishing business.
(I) Valor integration charges included in goodwill in the amount of $17.8 million consisted primarily of severance and lease
termination penalties.
(J) Includes cash outlays of $28.4 million for merger, integration and restructuring costs charged to expense, and $9.1 million
in cash outlays for Valor integration charged to goodwill.
(K) During 2005, the Company incurred $4.5 million of severance and employee benefit costs related to a workforce reduction
in its wireline operations. The Company also incurred $31.2 million of incremental costs, principally consisting of
investment banker, audit and legal fees, related to the spin off from Alltel and merger with Valor.
(L) Includes cash outlays of $35.7 million for expenses in 2005.
See Note 10, “Merger, Integration and Restructuring Charges”, to the consolidated financial statements on pages F-66 to F-67 in the
Financial Supplement, which is incorporated herein by reference, for additional information regarding the merger, integration and
restructuring charges recorded by the Company in 2007, 2006 and 2005.
33