Windstream 2013 Annual Report Download - page 209

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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F-73
10. Merger, Integration and Restructuring Charges:
We incur a significant amount of costs to complete a merger or acquisition and integrate its operations into our business, which
are presented as merger and integration expense in our consolidated results of operations. These costs include transaction costs,
such as accounting, legal and broker fees; severance and related costs; IT and network conversion; rebranding; and consulting
fees. The 2011 acquisition of PAETEC and 2010 acquisitions of NuVox Inc. ("NuVox"), Iowa Telecom, Q-Comm Corporation
("Q-Comm") and Hosted Solutions Acquisitions, LLC ("Hosted Solutions"), (collectively known as the "Acquired
Companies"), account for the merger and integration costs incurred for the periods presented.
Restructuring charges are primarily incurred as a result of evaluations of our operating structure. Among other things, these
evaluations explore opportunities to provide greater flexibility in managing and financing existing and future strategic
operations, for task automation, network efficiency and the balancing of our workforce based on the current needs of our
customers. Severance, lease exit costs and other related charges are included in restructuring charges.
On May 31, 2012, we announced that we were undertaking a review of our existing management structure with the intent of
improving the efficiency of our decision-making processes, ensuring our management structure is as simple and as responsive
to customers as possible and positioning ourselves for continued success. We eliminated approximately 350 management
positions as part of the restructuring. The restructuring was completed in the third quarter of 2012 resulting in severance related
costs of $22.4 million.
The following is a summary of the merger, integration and restructuring charges recorded for the years ended December 31:
(Millions) 2013 2012 2011
Merger and integration costs
Transaction costs associated with acquisitions $ — $ 7.1 $ 40.7
Employee related transition costs 7.8 20.3 22.3
Information technology conversion costs 9.5 6.1 5.7
Rebranding, consulting and other costs 11.9 31.9 1.1
Total merger and integration costs 29.2 65.4 69.8
Restructuring charges 9.6 27.2 1.3
Total merger, integration and restructuring charges $ 38.8 $ 92.6 $ 71.1
Merger, integration and restructuring charges decreased net income $24.3 million, $58.2 million and $44.1 million for the years
ended December 31, 2013, 2012 and 2011, respectively, after giving consideration to tax benefits on deductible items.
The following is a summary of the activity related to the liabilities associated with our merger, integration and restructuring
charges at December 31:
(Millions) 2013 2012
Balance, beginning of period $ 20.1 $ 12.9
Merger, integration and restructuring charges 38.8 92.6
Cash outlays during the period (44.9)(85.4)
Balance, end of period $ 14.0 $ 20.1
As of December 31, 2013, unpaid merger, integration and restructuring liabilities consisted of $0.6 million primarily associated
with the restructuring initiatives and $13.4 million related to merger and integration activities. Payments of these liabilities will
be funded through operating cash flows.