Windstream 2007 Annual Report Download - page 160

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
15. Supplemental Guarantor Information:
In connection with the issuance of the 2013 Notes, the 2016 Notes and the 2019 Notes (“the guaranteed notes”),
certain of the Company’s wholly-owned subsidiaries (the “Guarantors”), including all former subsidiaries of
Valor, provide guarantees of those debentures. These guarantees are full and unconditional as well as joint and
several. Certain Guarantors may be subject to restrictions on their ability to distribute earnings to the Company.
The remaining subsidiaries (the “Non-Guarantors”) of Windstream are not guarantors of the guaranteed notes. In
conjunction with the merger with Valor, Windstream assumed $400.0 million principal value 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. Following the acquisition of CTC, the guaranteed notes were amended to include certain
subsidiaries of CTC as guarantors.
The following information presents condensed consolidated and combined statements of income for the years
ended December 31, 2007, 2006 and 2005, condensed consolidated balance sheets as of December 31, 2007 and
2006, and condensed consolidated and combined statements of cash flows for the years ended December 31, 2007,
2006 and 2005 of the parent company, the Guarantors, and the Non-Guarantors. Investments consist of
investments in net assets of subsidiaries held by the parent company and other subsidiaries, and have been
presented using the equity method of accounting.
Condensed Consolidated Statement of Income
For the Year Ended December 31, 2007
(Millions) Parent Guarantors
Non-
Guarantors Eliminations Consolidated
Revenues and sales:
Service revenues $ - $ 765.3 $ 2,252.6 $ (58.5) $ 2,959.4
Product sales - 426.6 52.0 (177.2) 301.4
Total revenues and sales - 1,191.9 2,304.6 (235.7) 3,260.8
Costs and expenses:
Cost of services - 227.2 770.4 (5.6) 992.0
Cost of products sold - 367.9 46.4 (230.1) 184.2
Selling, general, administrative and other - 122.5 289.6 - 412.1
Depreciation and amortization - 169.6 337.9 - 507.5
Merger, integration and restructuring charges - 5.0 8.9 - 13.9
Total costs and expenses - 892.2 1,453.2 (235.7) 2,109.7
Operating income - 299.7 851.4 - 1,151.1
Earnings from consolidated subsidiaries 1,218.4 110.8 1.0 (1,330.2) -
Other income, net 9.9 (0.2) 1.4 - 11.1
Gain on sale of publishing business - 86.3 365.0 - 451.3
Intercompany interest income (expense) (56.1) (34.5) 90.6 - -
Interest expense (436.5) (6.0) (1.9) - (444.4)
Income before income taxes 735.7 456.1 1,307.5 (1,330.2) 1,169.1
Income taxes (benefit) (181.4) 87.4 346.0 - 252.0
Net income $ 917.1 $ 368.7 $ 961.5 $ (1,330.2) $ 917.1
F-74