Windstream 2008 Annual Report Download - page 93

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.
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 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. As a
result of completing the sale of the wireless transaction, operating results of the wireless business have been separately
presented as discontinued operations for all periods.
Consolidated Results of Operations
(Millions) 2008 2007 2006
Segment revenues and sales:
Wireline $ 3,110.9 $ 3,112.5 $ 2,758.6
Product distribution 315.3 339.9 334.9
Other operations - 123.0 162.3
Total business segment revenues and sales 3,426.2 3,575.4 3,255.8
Less affiliated eliminations (254.7) (329.5) (222.5)
Consolidated revenues and sales $ 3,171.5 $ 3,245.9 $ 3,033.3
Segment income:
Wireline $ 1,140.1 $ 1,154.2 $ 920.3
Product distribution (1.5) (1.4) 4.7
Other operations - 5.3 12.6
Total business segment income 1,138.6 1,158.1 937.6
Merger and integration costs (6.2) (8.2) (38.8)
Consolidated operating income $ 1,132.4 $ 1,149.9 $ 898.8
Other income, net 2.1 11.1 8.7
Gain on sale of publishing business - 451.3 -
Loss on extinguishment of debt - - (7.9)
Intercompany interest income - - 31.9
Interest expense (416.4) (444.4) (209.6)
Income from continuing operations before income taxes 718.1 1,167.9 721.9
Income taxes 283.2 251.5 276.3
Income from continuing operations 434.9 916.4 445.6
Discontinued operations, net of income tax (22.2) 0.7 -
Income before extraordinary item 412.7 917.1 445.6
Extraordinary item, net of income taxes - - 99.7
Net income $ 412.7 $ 917.1 $ 545.3
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