Windstream 2006 Annual Report Download - page 165

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
14. Business Segments, Continued:
operating decision maker’s focus is at a level that consolidates the results of all services. In addition, incentive-
based compensation for the wireline segment manager is directly tied to the combined operating results of the
Company’s total wireline operations. Accordingly, the Company manages its wireline-based services as a single
operating segment.
The Company’s product distribution subsidiary is a nationwide provider of telecommunications equipment and
logistics services and operates four warehouses and four counter-sales showrooms across the United States. Other
operations consist of the Company’s directory publishing and telecommunications information services. The
Company’s publishing subsidiary coordinates advertising, sales, printing, and distribution for 378 telephone
directory contracts in 35 states. On December 12, 2006, Windstream announced that it would split off its
directory publishing business (see Note 17). Immediately after the consummation of the spin-off and merger with
Valor, the telecommunications information services operations no longer incurs revenues and expenses for
providing data processing and outsourcing services, as Valor was its sole remaining external customer.
The accounting policies used in measuring segment assets and operating results are the same as those described
in Note 1. The Company accounts for intercompany sales at current market prices. The Company evaluates
performance of the segments based on segment income, which is computed as revenues and sales less operating
expenses, excluding the effects of the restructuring and other charges discussed in Note 10. In addition,
non-operating items such as other income, net, gain on disposal of assets, debt prepayment penalties, interest
expense and income taxes have not been allocated to the segments.
(Millions) For the year ended December 31, 2006
Wireline
Product
Distribution
Other
Operations
Total
Segments
Revenues and sales from unaffiliated customers:
Domestic $2,635.3 $141.0 $150.8 $2,927.1
International - - - -
2,635.3 141.0 150.8 2,927.1
Intercompany revenues and sales 123.3 193.9 11.5 328.7
Total revenues and sales 2,758.6 334.9 162.3 3,255.8
Operating expenses 1,381.8 328.7 147.5 1,858.0
Depreciation and amortization 446.0 1.4 2.2 449.6
Total costs and expenses 1,827.8 330.1 149.7 2,307.6
Segment income $ 930.8 $ 4.8 $ 12.6 $ 948.2
Assets $7,897.1 $ 53.8 $ 79.8 $8,030.7
Capital expenditures $ 373.6 $ 0.2 $ - $ 373.8
(Millions) For the year ended December 31, 2005
Wireline
Product
Distribution
Other
Operations
Total
Segments
Revenues and sales from unaffiliated customers:
Domestic $2,408.0 $130.9 $161.8 $2,700.7
International - - - -
2,408.0 130.9 161.8 2,700.7
Intercompany revenues and sales 143.8 177.0 10.1 330.9
Total revenues and sales 2,551.8 307.9 171.9 3,031.6
Operating expenses 1,427.9 301.6 158.4 1,887.9
Depreciation and amortization 470.2 1.9 2.1 474.2
Total costs and expenses 1,898.1 303.5 160.5 2,362.1
Segment income $ 653.7 $ 4.4 $ 11.4 $ 669.5
Assets $4,798.2 $ 51.6 $ 85.0 $4,934.8
Capital expenditures $ 351.9 $ 0.2 $ 0.8 $ 352.9
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