Merger, Integration and Restructuring Charges:

3 Months Ended

Mar. 31, 2015

Merger Integration and Restructuring Charges [Abstract]

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. Our 2011 acquisition of PAETEC and fees related to the spin-off of certain network and real estate assets 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.

During the first quarter of 2015, we incurred restructuring charges of $3.3 million related to the completion of several small workforce reductions. Additionally, we incurred charges of $3.1 million related to the special shareholder meeting held on February 20, 2015 to approve the one-for-six reverse stock split and the conversion of Windstream Corporation to Windstream Services.

On February 21, 2014, we announced a reduction in our workforce to increase operational efficiency. As a result, we eliminated approximately 400 positions on or before March 3, 2014, with about 175 of the eliminated positions resulting from a voluntary separation initiative. In connection with this workforce reduction, we incurred pre-tax restructuring charges of $12.1 million for the three month period ended March 31, 2014, primarily consisting of severance and other employee benefit costs.

The following is a summary of the merger, integration and restructuring charges recorded for the three month periods ended March 31:



	Three Months Ended
(Millions)	2015		2014
Merger and integration costs:
Information technology conversion costs	$	3.5	$	7.1
Consulting and other costs	10.6		0.8
Total merger and integration costs	14.1		7.9
Restructuring charges	7.0		12.4
Total merger, integration and restructuring charges	$	21.1	$	20.3

9. Merger, Integration and Restructuring Charges, Continued:

After giving consideration to tax benefits on deductible items, merger, integration and restructuring charges decreased net income $13.0 million for the three month period ended March 31, 2015, as compared to $14.0 million for the same period in 2014.

The following is a summary of the activity related to the liabilities associated with merger, integration and restructuring charges at March 31:



(Millions)	2015
Balance, beginning of period	$	11.2
Merger, integration and restructuring charges	21.1
Cash outlays during the period	(19.8		)
Balance, end of period	$	12.5

As of March 31, 2015, unpaid merger, integration and restructuring liabilities consisted of $1.2 million primarily associated with the restructuring initiatives and $11.3 million related to merger and integration activities. Payments of these liabilities will be funded through operating cash flows.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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