Windstream 2007 Annual Report Download - page 153

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
10. Merger, Integration and Restructuring Charges, Continued:
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 as positions
were eliminated and were funded through operating cash flows.
A summary of the merger, integration and restructuring charges recorded by our wireline operations in 2005 was
as follows:
(Millions)
Transactions costs associated with the spin off and merger with Valor $ 31.2
Severance and employee benefit costs 4.5
Total merger, integration and restructuring charges $ 35.7
In connection with the spin off from Alltel and merger with Valor, the Company incurred incremental transaction
costs during the fourth quarter of 2005, which were paid through advances from Alltel. During 2005, the
Company incurred $4.5 million in restructuring costs related to a workforce reduction in its wireline operations.
As of December 31, 2005, Windstream had paid $4.5 million in severance and employee-related expenses, and all
of the employee reductions had been completed.
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) 2007 2006
Balance, beginning of period $ 28.9 $ -
Merger, integration and restructuring charges, net of non-cash charges 13.9 48.6
Merger and integration costs included in goodwill 25.3 17.8
Cash outlays during the period (53.4) (37.5)
Balance, end of period $ 14.7 $ 28.9
As of December 31, 2007, the remaining liability of $14.7 million for accrued merger, integration and
restructuring charges consisted of $10.5 million of costs associated with the acquisition of CTC, Valor lease
termination costs of $3.4 million, $0.3 million of costs associated with the split off of directory publishing, and
$0.5 million of employee-related benefit costs. The CTC transaction costs primarily consist of severance and
related employee costs and will be paid as the remaining CTC employees are terminated following the billing
conversion in the first quarter of 2008. 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 $8.8 million, $36.0 million and $34.1 million
for the years ended December 31, 2007, 2006 and 2005, respectively, giving consideration to tax benefits on
deductible items.
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