Windstream 2015 Annual Report Download - page 144

F-14
Our segment operating results presented below are based on how we assess operating performance and internally report financial
information. We evaluate performance of the segments based on segment income, which is computed as segment revenues and
sales less segment operating expenses. Segment revenues are based upon each customer’s classification to an individual segment
and include all services provided to that customer. Certain operating revenues are derived from activities that are centrally-managed
by us and, accordingly, these revenues are not included in the operating results of segments. These other operating revenues include
revenue from federal and state universal service funds, CAF Phase II support, and funds received from federal access recovery
mechanisms. We also generate other service revenues from providing switched access services, which include usage-based revenues
from long-distance companies and other carriers for access to our network to complete long distance calls, as well as reciprocal
compensation received from wireless and other local connecting carriers for the use of network facilities. Other operating revenues
also include certain surcharges assessed to our customers, including billings for our required contributions to federal and state
USF programs. Revenues attributable to the sold data center and directory publishing businesses, as well as the consumer CLEC
business transferred to CS&L are not assigned to the segments and are also included in other service revenues for all periods prior
to the dates of disposal.
Segment expenses include specific expenses incurred as a direct result of providing services and products to segment customers;
selling, general and administrative expenses that are directly associated with specific segment customers or activities; and certain
allocated expenses which include network expenses, facilities expenses and other expenses, such as vehicle and real estate-related
expenses. We do not assign depreciation and amortization expense, merger and integration costs, restructuring charges, stock-
based compensation and pension costs to our segments, because these expenses are centrally managed and are not monitored by
or reported to the chief operating decision maker by segment. Similarly, certain centrally-managed administrative functions, such
as accounting and finance, information technology, legal and human resources, are not assigned to our segments. Interest expense
and loss on early extinguishment of debt have also been excluded from segment operating results because we manage our financing
activities on a total company basis and have not assigned any long-term debt obligations to the segments. Other income (expense),
net and income tax (benefit) expense are not monitored as a part of our segment operations and, therefore, these items have been
excluded from our segment operating results.
See Note 15 to the consolidated financial statements for a reconciliation of total segment revenues and sales to consolidated
revenues and sales and segment income to consolidated net income (loss).
Enterprise
$2,067.2
42%
Consumer and
Small Business -
ILEC
$1,605.5
33%
Carrier
$687.9
14%
Small Business -
CLEC
$559.0
11%
Revenue and Sales by Segment
for the Year Ended December 31, 2015
(Millions)
Enterprise
$240.6
13%
Consumer and
Small Business -
ILEC
$934.5
50%
Carrier
$502.3
27%
Small Business -
CLEC
$180.8
10%
Segment Income
for the Year Ended December 31, 2015
(Millions)