Windstream 2008 Annual Report Download - page 159

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Merger, Integration and Restructuring Charges:
A summary of the merger, integration and restructuring charges recorded in 2008 was as follows:
(Millions) Wireline
Product
Distribution Total
Merger and integration costs
Transaction costs associated with acquisition of CTC $ 0.1 $ - $ 0.1
Computer system and conversion costs 6.1 - 6.1
Total merger and integration costs 6.2 - 6.2
Restructuring charges 8.3 0.2 8.5
Total merger, integration and restructuring charges $ 14.5 $ 0.2 $ 14.7
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, as well as
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 2008, the Company recorded transaction costs of $6.2 million to complete the acquisition of CTC. During
the second quarter of 2008, the Company determined not to use certain software acquired in the CTC acquisition;
therefore, we recognized a $5.4 million non-cash charge to abandon this asset, of which $0.8 million was related
to the wireless business. Additionally in 2008, the Company incurred $8.5 million in restructuring costs from an
announced workforce reduction in the fourth quarter of 2008 to realign certain information technology, network
operations and business sales functions. Of these charges, $3.7 million was paid in cash during the year. The
remaining liability of $6.4 million will be funded through operating cash flows and paid during 2009.
A summary of the merger, integration and restructuring charges recorded in 2007 was as follows:
(Millions) Wireline
Product
Distribution Other Total
Merger and integration costs
Transaction costs associated with acquisition of CTC $ 0.7 $ - $ - $ 0.7
Transaction costs associated with split off of directory
publishing - - 3.7 3.7
Signage and other rebranding costs 1.3 - - 1.3
Computer system and conversion costs 2.5 - - 2.5
Total merger and integration costs (a) 4.5 - 3.7 8.2
Restructuring charges 4.5 0.1 - 4.6
Total merger, integration and restructuring charges $ 9.0 $ 0.1 $ 3.7 $ 12.8
(a) Merger and integration costs for 2007 have been revised to reflect that $1.1 million in costs associated with
the wireless business are now presented as discontinued operations.
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