Windstream 2006 Annual Report Download - page 168

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Supplemental Guarantor Information:
On July 17, 2006, Windstream privately placed an $800.0 million aggregate principal amount of 2013 Notes, and
a $1,746.0 million aggregate principal amount of 2016 Notes (collectively “the Notes”). In connection with the
issuance of the Notes, certain of our wholly-owned subsidiaries, including all operations which were formerly a
subsidiary of Valor, provided guarantees of those debentures (the “Guarantors”). These guarantees are full and
unconditional as well as joint and several. The remaining subsidiaries (the “Non-Guarantors”) of Windstream are
not guarantors of the Notes. In conjunction with the merger with Valor, Windstream assumed $400.0 million
principal amount of unsecured notes (the “Valor Notes”) guaranteed by all of Valor’s operating subsidiaries. The
terms of those notes were amended to reflect the non-Valor Guarantors as guarantors of the Valor Notes. On
March 1, 2007, the Company de-registered the Valor Notes.
The following information presents condensed consolidating and combined statements of income for the years
ended December 31, 2006, 2005 and 2004, condensed consolidating balance sheets as of December 31, 2006 and
2005, and condensed consolidating and combined statements of cash flows for the years ended December 31,
2006, 2005 and 2004 of the Parent companies, the Guarantors, and the Non-Guarantors. Investments include
investments in a non-consolidated affiliate as well as investments in net assets of subsidiaries held by the parent
company and have been presented using the equity method of accounting.
Consolidated Statement of Income
For the Year Ended December 31, 2006
(Millions) Parent Guarantors
Non-
Guarantors Eliminations Consolidated
Revenues and sales:
Service revenues $ - $ 521.3 $2,157.3 $ (45.0) $2,633.6
Product sales - 478.9 40.4 (119.6) 399.7
Total revenues and sales - 1,000.2 2,197.7 (164.6) 3,033.3
Costs and expenses:
Cost of services (excluding depreciation of $383.8, included
below) - 157.7 704.5 (3.8) 858.4
Cost of products sold - 410.7 33.2 (162.1) 281.8
Selling, general, administrative and other 0.5 102.4 261.5 1.3 365.7
Depreciation and amortization - 116.6 333.0 - 449.6
Royalty expense to Alltel - 18.3 111.3 - 129.6
Restructuring and other charges - 27.9 21.5 - 49.4
Total costs and expenses 0.5 833.6 1,465.0 (164.6) 2,134.5
Operating income (0.5) 166.6 732.7 - 898.8
Earnings from consolidated subsidiaries 588.8 9.3 (6.4) (591.7) -
Other income, net 7.5 0.8 0.4 - 8.7
Loss on extinguishment of debt - (3.0) (4.9) - (7.9)
Intercompany interest income (expense) (44.2) 10.1 66.0 - 31.9
Interest expense (196.0) (7.3) (6.3) - (209.6)
Income before income taxes and extraordinary item 355.6 176.5 781.5 (591.7) 721.9
Income taxes (benefit) (90.0) 59.2 307.1 - 276.3
Income before extraordinary item 445.6 117.3 474.4 (591.7) 445.6
Extraordinary item (net of income taxes) 99.7 28.3 71.4 (99.7) 99.7
Net income $ 545.3 $ 145.6 $ 545.8 $(691.4) $ 545.3
F-67