Business Segment Information

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Business Segment Information [Text Block]

Business Segment Information

During 2012, the Company operated in four business segments: Wireline, Wireless, Data Center Colocation, and IT Services and Hardware, as described below. The Company’s segments are strategic business units that offer distinct products and services and are aligned with its internal management structure and reporting. On January 24, 2013, we completed the IPO of CyrusOne, which owns and operates our former data center colocation business. For further details of this transaction, see Note 20 of Notes to Consolidated Financial Statements.

The Wireline segment provides local voice, data, long distance, entertainment, voice over internet protocol ("VoIP"), and other services over its owned and other wireline networks. Local voice services include local telephone service, switched access, and value-added services such as caller identification, voicemail, call waiting, and call return. Data services include high-speed internet using digital subscriber line technology and over fiber using its gigabit passive optical network. Data services also provide data transport for businesses, including local area network services, dedicated network access, and metro ethernet and dense wavelength division multiplexing ("DWDM")/optical wave data transport, which principally are used to transport large amounts of data over private networks. Long distance and VoIP services include long distance voice, audio conferencing, VoIP and other broadband services including private line and multi-protocol label switching, a technology that enables a business customer to privately interconnect voice and data services at its locations. Entertainment services are comprised of television media through our Fioptics product suite and DirecTV®. Other services primarily include inside wire installation for business enterprises and rental revenue. These services are primarily provided to customers in southwestern Ohio, northern Kentucky, and southeastern Indiana. In 2011, the Company sold substantially all of the assets associated with its home security monitoring business and recognized a pretax gain of $8.4 million. Wireline recognized restructuring charges of $3.5 million, $7.7 million, and $8.2 million in 2012, 2011 and 2010, respectively, for costs associated with employee separation, lease abandonments and contract termination costs.

The Wireless segment provides advanced digital wireless voice and data communications services and sales of related handset equipment to customers in the Greater Cincinnati and Dayton, Ohio operating areas. In 2011, the Wireless segment recognized a goodwill impairment loss of $50.3 million. In 2012 and 2011, other asset impairments were $0.4 million and $1.1 million, respectively, related to the write-off of canceled or abandoned capital projects. Wireless incurred restructuring charges of $1.6 million in 2012 and $1.0 million in 2010, with no such charges in 2011.

The Data Center Colocation segment provided data center colocation services to primarily large businesses. As of December 31, 2012, we owned or maintained 24 data centers in Texas, Ohio, Kentucky, Indiana, Illinois, Arizona, England, and Singapore. In 2012, the Data Center Colocation segment recognized impairment losses of $13.3 million on long-lived assets and a customer relationship intangible primarily related to our GramTel acquisition. In 2012, the Data Center Colocation segment recognized restructuring charges of $0.5 million for severance associated with management contracts. In 2010, a restructuring charge of $1.4 million was incurred to conform the Cincinnati-based operation’s commission incentive program to the Cyrus Networks program. No restructuring charges were incurred in 2011. On June 11, 2010, the Company purchased Cyrus Networks, a data center operator based in Texas, for approximately $526 million, net of cash acquired.

The IT Services and Hardware segment provides a range of fully managed and outsourced IT and telecommunications services along with the sale, installation, and maintenance of major branded IT and telephony equipment. During 2011 and 2010, the IT Services and Hardware segment incurred employee separation charges of $1.9 million and $2.8 million, respectively, associated with the elimination of certain functions due to product consolidation and integration within the Wireline segment. In 2012, the IT Services and Hardware segment reversed restructuring costs of $1.2 million due to changes in estimates of liabilities that had been accrued for in the prior year.

Corporate operating results include transaction costs of $6.3 million in 2012, $2.6 million in 2011, and $9.1 million in 2010. Corporate reversed restructuring costs of $1.0 million in 2012 and recognized restructuring charges of $2.6 million and $0.3 million in 2011 and 2010, respectively.

Our business segment information is as follows:

	Year Ended December 31,
(dollars in millions)	2012			2011			2010
Revenue
Wireline	$	730.5		$	732.1		$	742.5
Wireless	241.8			277.6			289.2
Data Center Colocation	221.3			184.7			125.3
IT Services and Hardware	315.7			300.5			254.7
Intersegment	(35.4		)	(32.5		)	(34.7		)
Total revenue	$	1,473.9		$	1,462.4		$	1,377.0
Intersegment revenue
Wireline	$	19.1		$	23.0		$	24.4
Wireless	2.3			2.3			2.6
Data Center Colocation	6.4			2.1			1.8
IT Services and Hardware	7.6			5.1			5.9
Total intersegment revenue	$	35.4		$	32.5		$	34.7
Operating income (loss)
Wireline	$	212.9		$	228.5		$	233.5
Wireless	51.2			3.3			56.3
Data Center Colocation	30.4			46.4			34.2
IT Services and Hardware	10.3			9.8			4.3
Corporate	(34.7		)	(28.5		)	(29.0		)
Total operating income	$	270.1		$	259.5		$	299.3
Expenditures for long-lived assets
Wireline	$	114.2		$	112.6		$	98.7
Wireless	15.8			17.6			11.7
Data Center Colocation	228.2			118.5			557.4
IT Services and Hardware	9.0			6.8			8.6
Total expenditures for long-lived assets	$	367.2		$	255.5		$	676.4
Depreciation and amortization
Wireline	$	106.0		$	102.4		$	103.9
Wireless	31.9			33.5			33.4
Data Center Colocation	70.6			54.8			34.6
IT Services and Hardware	8.6			8.4			7.3
Corporate	0.3			0.4			0.3
Total depreciation and amortization	$	217.4		$	199.5		$	179.5
	As of December 31,
(dollars in millions)	2012			2011			2010
Assets
Wireline	$	723.7		$	713.6		$	694.1
Wireless	275.6			295.2			359.3
Data Center Colocation	1,208.5			964.0			857.2
IT Services and Hardware	43.3			36.6			34.7
Corporate and eliminations	621.3			705.3			708.3
Total assets	$	2,872.4		$	2,714.7		$	2,653.6

Details of our service and product revenues including eliminations are as follows:

	Year Ended December 31,
(dollars in millions)	2012		2011		2010
Service revenue
Wireline	$	705.0	$	703.3	$	710.9
Wireless	222.7		250.8		267.1
Data Center Colocation	214.9		182.6		123.5
IT Services and Hardware	130.2		114.1		97.8
Total service revenue	$	1,272.8	$	1,250.8	$	1,199.3
Product revenue
Handsets and accessories	$	23.2	$	30.3	$	19.5
IT, telephony and other equipment	177.9		181.3		158.2
Total product revenue	$	201.1	$	211.6	$	177.7

The reconciliation of the Consolidated Statements of Cash Flows to expenditures for long-lived assets is as follows:

	Year Ended December 31,
(dollars in millions)	2012		2011		2010
Per Consolidated Statements of Cash Flows:
Capital expenditures	$	367.2	$	255.5	$	149.7
Acquisitions of businesses, net of cash acquired	—		—		526.7
Total expenditures for long-lived assets	$	367.2	$	255.5	$	676.4