Windstream 2008 Annual Report Download - page 106

SG&A expenses decreased $2.5 million, or 12 percent, in 2008 due primarily to the Company’s efforts to contain costs.
Conversely, in 2007 selling, general, administrative and other expenses increased $5.7 million, or 36 percent, primarily
due to overhead costs that were shared with Alltel prior to the spin off, and are now fully absorbed by the Company.
Restructuring charges amounted to $0.2 million in 2008, and $0.1 million in both 2007 and 2006, respectively. These
charges related to severance and employee benefit costs and were included in segment income for the product
distribution operations.
Declines in product distribution segment income in both 2008 and 2007 are primarily due to declines in sales to higher
margin external customers and reflects higher costs in 2007.
Other Operations
(Millions) 2008 2007 2006
Revenues and sales:
Directory publishing $ - $ 123.0 $ 153.5
Telecommunications information services - - 8.8
Total revenues and sales - 123.0 162.3
Costs and expenses:
Cost of services - - 9.0
Cost of products sold - 90.2 111.0
Selling, general, administrative and other - 27.5 27.5
Depreciation and amortization - - 2.2
Restructuring charges - - -
Total costs and expenses - 117.7 149.7
Segment income (loss) $ - $ 5.3 $ 12.6
Results in 2007 were derived from the publication of directories for affiliated and non-affiliated local exchange
carriers. The Company completed the split off of its directory publishing business during the fourth quarter of 2007, as
previously discussed.
Telecommunications information services revenues decreased $8.8 million in 2007 due to the loss of billings earned
from Valor, which represented the Company’s only remaining unaffiliated customer prior to the Company’s merger
with Valor on July 17, 2006. Following the merger, the Company no longer incurs revenues or recognizes expenses for
these activities.
Merger and integration costs related to the other operations were $3.7 million and $11.2 million for 2007 and 2006,
respectively, and were the result of transaction costs associated with the split off of the directory publishing business.
These costs are not included in the determination of segment income.
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 for the years ended December 31:
(Millions) 2008 2007 2006
Transaction costs associated with the acquisition of CTC $ 0.1 $ 0.7 $ -
Transaction costs associated with spin off from Alltel - - 7.9
Transaction costs associated with the split off of directory publishing - 3.7 11.2
Signage and other rebranding costs - 1.3 13.8
Computer system separation and conversion costs 6.1 2.5 5.9
Total merger and integration costs $ 6.2 $ 8.2 $ 38.8
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 directory publishing business. Other merger and
integration costs include signage and other costs to rebrand the Company’s offices and vehicles, and computer system
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