Windstream 2009 Annual Report Download - page 120

ORGANIZATION AND RESULTS OF OPERATIONS
The Company is organized based on the products and services that it offers. Under this organizational structure, its
operations consisted of its wireline and directory publishing operations. The Company’s wireline segment offers, on a
retail basis, its IP-based voice and data services and advanced phone systems for businesses and government agencies,
high-speed Internet, phone, long distance, network access and video services and related product offerings.
The Company has historically reported a product distribution segment, but in the first quarter of 2009 the Company
reorganized its operations to integrate the sales and administrative functions of the product distribution segment into its
wireline operations. As a result of this change, the chief operating decision maker no longer reviews the financial
statements of the product distribution operations on a stand alone basis, and the Company operates its wireline and
product distribution operations as a single reporting segment (“the wireline segment”). As required by the authoritative
guidance for segment presentation, segment results of operations have been retrospectively adjusted to reflect this
change for all periods presented.
(Millions) 2009 2008 2007
Segment revenues and sales:
Wireline $ 2,996.6 $ 3,171.5 $ 3,179.6
Directory Publishing - - 123.0
Total business segment revenues and sales 2,996.6 3,171.5 3,302.6
Less affiliated eliminations - - (56.7)
Consolidated revenue and sales 2,996.6 3,171.5 3,245.9
Segment income:
Wireline 979.2 1,138.6 1,152.8
Directory Publishing - - 5.3
Total business segment income 979.2 1,138.6 1,158.1
Merger and integration costs (22.3) (6.2) (8.2)
Consolidated operating income 956.9 1,132.4 1,149.9
Other income, net (1.1) 2.1 11.1
Gain on sale of directory publishing business and other assets - - 451.3
Interest expense (410.2) (416.4) (444.4)
Income from continuing operations before income taxes 545.6 718.1 1,167.9
Income taxes 211.1 283.2 251.5
Income from continuing operations 334.5 434.9 916.4
Discontinued operations, net of tax - (22.2) 0.7
Net income $ 334.5 $ 412.7 $ 917.1
Consolidated revenues and sales decreased $174.9 million, or 5.5 percent in 2009 and decreased $74.4 million, or 2.3
percent in 2008. The decrease in 2009 is primarily due to continued access line losses and the associated impact on
revenues. The decrease in 2008 is primarily due to the sale of the Company’s directory publishing business in the
fourth quarter of 2007, as discussed above, and declines associated with continued access line losses, partially offset by
increases in high-speed Internet customers and the acquisition of CTC.
See below a detailed discussion and analysis of segment revenues and sales in our discussion of segment operating
results.
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