Windstream 2007 Annual Report Download - page 91

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ORGANIZATION AND RESULTS OF OPERATIONS
The Company is organized based on the products and services that it offers. Under this organizational structure, its
operations consist of its wireline and product distribution segments, and other operations. The Company’s wireline
segment consists of its retail and wholesale telecommunications services, including local telephone, high-speed
Internet, long distance, network access and video services. The product distribution segment consists of warehouse and
logistics operations, and it procures and sells telecommunications infrastructure equipment to both affiliated and
non-affiliated businesses. The Company’s other operations include results from the Company’s wireless, directory
publishing, and telecommunications information services businesses. Effective with the completion of the split off of
its directory publishing business, as discussed above, the Company’s publishing operations have ceased. Following the
merger with Valor, telecommunications information services are no longer offered as Valor was the only external
customer.
Consolidated Results of Operations
(Millions) 2007 2006 2005
Segment revenues and sales:
Wireline $ 3,112.5 $ 2,758.6 $ 2,551.8
Product distribution 339.9 334.9 307.9
Other operations 137.9 162.3 171.9
Total business segment revenues and sales 3,590.3 3,255.8 3,031.6
Less: affiliated eliminations 329.5 222.5 108.1
Consolidated revenues and sales $ 3,260.8 $ 3,033.3 $ 2,923.5
Segment income
Wireline $ 1,154.2 $ 920.3 $ 649.2
Product distribution (1.4) 4.7 4.4
Other 7.6 12.6 11.4
Total business segment income 1,160.4 937.6 665.0
Merger and integration costs (9.3) (38.8) (31.2)
Consolidated operating income 1,151.1 898.8 633.8
Other income, net 11.1 8.7 11.6
Gain on sale of publishing business 451.3 - -
Loss on extinguishment of debt - (7.9) -
Intercompany interest income - 31.9 23.3
Interest expense (444.4) (209.6) (19.1)
Income before income taxes, extraordinary item and cumulative effect of
accounting change 1,169.1 721.9 649.6
Income taxes 252.0 276.3 267.9
Income before extraordinary item and cumulative effect of accounting
change 917.1 445.6 381.7
Extraordinary item, net of income taxes - 99.7 -
Cumulative effect of accounting change, net of taxes - - (7.4)
Net income $ 917.1 $ 545.3 $ 374.3
The following discussion and analysis details results for Windstream Consolidated Revenues.
The following table reflects the primary drivers of year-over-year changes in consolidated revenues and sales:
Consolidated revenues and sales
Twelve months ended
December 31, 2007
Twelve months ended
December 31, 2006
(Millions)
Increase
(Decrease) %
Increase
(Decrease) %
Due to changes in wireline segment revenues and sales $ 353.9 $ 206.8
Due to changes in product distribution segment revenues and sales 5.0 27.0
Due to changes in other operations segment revenues and sales (24.4) (9.6)
Due to changes in affiliated eliminations (107.0) (114.4)
Total consolidated revenues and sales $ 227.5 8% $ 109.8 4%
F-5