Windstream 2010 Annual Report Download - page 165

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Merger, Integration and Restructuring Charges:
Costs triggered by strategic transactions, including transaction, rebranding and system conversion costs are
unpredictable by nature and primarily include charges for accounting, legal, broker fees, employee transition costs
and other miscellaneous costs associated with the completed acquisitions of the acquired businesses. These costs
are considered indirect or general and are expensed when incurred in accordance with authoritative guidance on
business combinations. 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.
The following is a summary of the merger, integration and restructuring charges recorded for the years ended
December 31:
(Millions) 2010 2009 2008 (f)
Merger and integration costs
Transaction costs associated with acquisitions (a) $41.2 $11.4 $ 0.1
Employee related transition costs (b) 26.7 8.6 -
Computer system and conversion costs (c) 4.2 1.6 6.1
Signage and other rebranding costs (d) 5.2 0.7 -
Total merger and integration costs 77.3 22.3 6.2
Restructuring charges (e) 7.7 9.3 8.5
Total merger, integration and restructuring charges $85.0 $31.6 $14.7
(a) During 2010, the Company incurred acquisition related costs for accounting, legal, broker fees and other
miscellaneous costs associated with the acquisitions of the Acquired Companies, D&E and Lexcom. During
2009, the Company incurred acquisition related costs for accounting, legal, broker fees and other
miscellaneous costs associated with the acquisitions of D&E, Lexcom, NuVox and Iowa Telecom. These
costs are considered indirect or general and are expensed when incurred in accordance with authoritative
guidance on business combinations.
(b) During 2010, the Company incurred $26.7 million in employee transition costs, primarily severance related
in conjunction with the integration of D&E, Lexcom, NuVox and Iowa Telecom. During 2009, the Company
incurred $8.2 million and $0.4 million in employee transition costs, primarily severance related, for D&E and
Lexcom, respectively.
(c) During 2010, the Company incurred $4.2 million in system conversion costs related to the acquisitions of the
Acquired Companies. During 2008, the Company incurred $6.1 million in system conversion costs related to
the acquisition of CTC. Of these charges, $5.4 million represented a non-cash charge to abandon certain
software acquired from CTC.
(d) During 2010, the Company incurred $5.2 million in signage and other branding costs related to the
acquisitions of the Acquired Companies.
(e) During 2010, Windstream recognized $7.7 million in severance and employee benefit costs primarily related
to identified opportunities for increased operational efficiency and effectiveness. This resulted from the
Company’s offering of a voluntary workforce reduction program during the fourth quarter of 2010. During
2009, the Company incurred $9.3 million in restructuring costs from an announced workforce reduction in
the third quarter of 2009 to realign certain information technology, network operations and business sales
functions. 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.
(f) An additional $0.8 million in non-cash merger and integrations costs incurred in 2008 associated with the
wireless business are included in discontinued operations.
Merger, integration and restructuring charges decreased net income $59.1 million, $19.4 million and $9.0 million
for the years ended December 31, 2010, 2009 and 2008, respectively, giving consideration to tax benefits on
deductible items.
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