Windstream 2008 Annual Report Download - page 160

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Merger, Integration and Restructuring Charges, Continued:
During 2007, the Company incurred transaction costs of $4.5 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 was 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 Total
Merger and integration costs
Transaction costs associated with split 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
During 2006, the Company incurred costs of $38.8 million related to strategic transactions, of which $26.6 million
was paid in cash during 2006. The remaining liability was funded through operating cash flows and paid during
2007.
In the fourth quarter of 2006, the Company announced a realignment of its operational functions to better serve
customers and operate more efficiently. In connection with these activities, the Company recorded a restructuring
charge of $10.6 million, which resulted in the elimination of approximately 180 net employee positions during the
first half of 2007. The related payments were made to affected employees during the first half of 2007 and funded
through operating cash flows as positions were eliminated.
The following is a summary of the activity related to the liabilities associated with the Company’s merger,
integration and restructuring charges at December 31:
(Millions) 2008 2007
Balance beginning of period $ 14.7 $ 28.9
Merger, integration and restructuring charges net of non-cash charges 10.1 13.9
Merger and integration costs included in goodwill - 25.3
Cash outlays during the period (16.5) (53.4)
Balance end of period $ 8.3 $ 14.7
As of December 31, 2008, the remaining liability of $8.3 million for accrued merger, integration and restructuring
charges consisted of $1.9 million of Valor lease termination costs and $6.4 million of severance and employee-
related benefit costs. The severance and related employee costs will be paid as the remaining employees are
terminated in the first quarter of 2009. Valor lease payments will be made over the remaining term of the lease.
Each of these payments will be funded through operating cash flows.
Merger, integration and restructuring charges decreased net income $9.0 million, $8.8 million and $36.0 million
for the years ended December 31, 2008, 2007 and 2006, respectively, giving consideration to tax benefits on
deductible items.
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