Windstream 2007 Annual Report Download - page 50

Windstream Corporation
Form 10-K, Part I
Item 1. Business
In connection with the consummation of the transactions, the parties and their affiliates entered into a publishing
agreement whereby Windstream granted Local Insight Yellow Pages, Inc. (“Local Insight Yellow Pages”), the
successor to the Windstream subsidiary that operated the publishing business, an exclusive license to publish
Windstream directories in each of its markets other than the newly acquired CTC markets. Local Insight Yellow Pages
will, at no charge to Windstream or its affiliates or subscribers, publish directories with respect to each Windstream
service area covered under the agreement in which Windstream or its affiliates are required to publish such directories
by applicable law, tariff or contract. Subject to the termination provisions in the agreement, the publishing agreement
will remain in effect for a term of fifty years. As part of this agreement, Windstream agreed to forego future royalty
payments from Local Insight Yellow Pages on advertising revenues generated from covered directories for the duration
of the publishing agreement. The wireline segment recognized approximately $56.0 million in royalty revenues during
the eleven months ended November 30, 2007.
MANAGEMENT
The Company’s staff at its headquarters and regional offices supervise, coordinate and assist subsidiaries in
management activities, investor relations, acquisitions and dispositions, corporate planning, tax planning, cash
management, insurance, sales and marketing support, government affairs, legal matters, and engineering services. They
also coordinate the financing program for all of the Company’s operations.
EMPLOYEES
At December 31, 2007, Windstream had 7,570 employees. Within Windstream’s work force, approximately 1,819
employees are part of collective bargaining units. During 2007, Windstream had no material work stoppages due to
labor disputes with its unionized employees.
ORGANIZATIONAL STRUCTURE AND OPERATING SEGMENTS
Windstream has focused its communications business strategy on enhancing the value of its customer relationships by
offering additional products and services and providing superior customer service. Through the acquisition of the Valor
and CTC wireline properties, Windstream has added more than 633,000 customers over the last two years. As of
December 31, 2007, Windstream served more than 3.2 million communications customers in 16 states. Additionally,
Windstream provides data services to more than 871,000 high-speed Internet customers. Windstream operates its
communications businesses in order to deliver one-stop shopping to customers for a full range of communications
products and services. In addition to its wireline, high-speed Internet and long distance service offerings, Windstream
also provides network access, video services and wireless products and services in select markets.
Windstream is organized based on the products and services that it offers. Under this organizational structure, its
operations consist of its wireline segment, its product distribution segment, and its other operations, which consist of
directory publishing, wireless and telecommunications information services operations.
WIRELINE OPERATIONS
The Company’s wireline segment consists of Windstream’s retail and wholesale telecommunications services, whose
primary revenue streams include voice and related features, high-speed Internet service, long distance, data and special
access, switched access and interconnection, and video services. Wireline revenues comprised 87 percent of
Windstream’s total operating revenues from business segments in 2007, as compared to 85 percent in 2006 and 84
percent in 2005. In 2007, Windstream’s wireline operations recognized revenues from external customers of $3,019.4
million, realized segment income of $1,154.2 million, and held total assets of $8,066.9 million at December 31, 2007.
Windstream’s wireline subsidiaries provide facilities-based services in 16 states and are primarily focused on rural
America providing local telephone service to customers located in Alabama, Arkansas, Florida, Georgia, Kentucky,
Mississippi, Missouri, Nebraska, New Mexico, New York, North Carolina, Ohio, Oklahoma, Pennsylvania, South
Carolina and Texas.
4