Business Segment Information

12 Months Ended

Dec. 31, 2013

Segment Reporting [Abstract]

Business Segment Information [Text Block]

Business Segment Information

As of December 31, 2012, and for the period January 1, 2013 through January 23, 2013, we operated four business segments: Wireline, Wireless, IT Services and Hardware, and Data Center Colocation. Effective January 24, 2013, the date of the CyrusOne IPO, we no longer include CyrusOne, our former Data Center Colocation segment, in our consolidated financial statements and now account for our ownership in CyrusOne as an equity method investment. Therefore, at December 31, 2013, we operated three business segments: Wireline, Wireless and IT Services and Hardware. For further details of the CyrusOne IPO, see Note 1 and Note 3 of Notes to consolidated financial statements.

The Wireline segment provides products and services such as local voice, high-speed internet, data transport, long distance, entertainment, voice over internet protocol (VoIP), and other services. Voice local service revenue includes local service, digital trunking, switched access, information services, and other value-added services such as caller identification, voicemail, call waiting, and call return. Data services include Fioptics high-speed internet and DSL internet access primarily for residential consumers. Data services also provide data transport for businesses, including local area network services, dedicated network access, metro-ethernet and Dense Wavelength Division Multiplexing ("DWDM"), 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. 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.

Wireline recognized restructuring charges of $9.1 million, $3.5 million, and $7.7 million in 2013, 2012 and 2011, respectively, for costs associated with employee separation, lease abandonments and contract termination costs. A curtailment gain of $0.6 million was recognized during the second quarter of 2013 due to the remeasurement of the Company's projected benefit obligation following an amendment to the management pension plan that eliminated all future pension service credits as of July 1, 2013. During 2011, a curtailment loss of $4.2 million was recognized from the reduction of future pension benefits for certain bargained employees. Gains on the sale assets were $1.1 million, $1.8 million, and $8.4 million, in 2013, 2012 and 2011, respectively. The gains in 2013 and 2012 were primarily from the sale of copper cabling that was no longer in use. In 2011, the Company sold substantially all of the assets associated with its home security monitoring business. There were no asset impairments in 2013. Asset impairments of $0.5 million in 2012 relate primarily to the write-off of an out-of-territory fiber network. The impairment losses in 2011 of $1.0 million were related to abandoned leasehold improvements on vacated office space and the write-down to fair value of certain assets that were held for sale.

The Wireless segment provides digital wireless voice and data communications services and sales of related handset equipment to customers in the Greater Cincinnati and Dayton, Ohio operating areas. Wireless incurred restructuring charges of $0.2 million in 2013 and $1.6 million in 2012, with no such charges in 2011. In 2013, Wireless recorded a $3.5 million loss on disposal of assets for equipment that had no resale market or has either been disconnected from the wireless network, abandoned or demolished. There was no loss on disposal of assets recorded in 2012 and 2011. 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, and related to the write-off of canceled or abandoned capital projects. There were no such impairments in 2013.

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 2013 and 2011, the IT Services and Hardware segment incurred employee separation charges of $0.7 million and $1.9 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.

The Data Center Colocation segment provided data center colocation services to primarily large businesses. The Data Center Colocation results shown in the accompanying tables reflect the revenues and expenses of our former data center business for the period January 1, 2013 through January 23, 2013. Effective January 24, 2013, we no longer include CyrusOne's operating results in our consolidated financial statements. In 2013, we recognized losses of $10.7 million from our investment in CyrusOne which represented our equity method share of CyrusOne's losses. These losses from CyrusOne were recognized as a component of non-operating income. As of December 31, 2013, the carrying value of our investment in CyrusOne was $471.0 million and is included as an asset of the Corporate segment. 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. Also in 2012, the Data Center Colocation segment recognized restructuring charges of $0.5 million for severance associated with management contracts, and a $0.2 million gain on the sale of assets. No asset impairment, restructuring charges, or gain on the sale of assets were incurred in 2011.

Corporate operating results include compensation expense of $42.6 million associated with awards and other transaction-related incentives associated with the initial public offering of CyrusOne on January 24, 2013. Other transaction costs were $1.6 million in 2013, $6.3 million in 2012, and $2.6 million in 2011. Corporate recognized restructuring charges of $3.7 million and $2.6 million in 2013 and 2011, respectively, and reversed restructuring costs of $1.0 million in 2012.

Our business segment information is as follows:

	Year Ended December 31,
(dollars in millions)	2013			2012			2011
Revenue
Wireline	$	724.8		$	730.5		$	732.1
Wireless	201.5			241.8			277.6
IT Services and Hardware	344.1			315.7			300.5
Data Center Colocation	15.6			221.3			184.7
Intersegment	(29.1		)	(35.4		)	(32.5		)
Total revenue	$	1,256.9		$	1,473.9		$	1,462.4
Intersegment revenue
Wireline	$	16.8		$	19.1		$	23.0
Wireless	2.3			2.3			2.3
IT Services and Hardware	9.6			7.6			5.1
Data Center Colocation	0.4			6.4			2.1
Total intersegment revenue	$	29.1		$	35.4		$	32.5
Operating income
Wireline	$	190.2		$	212.9		$	228.5
Wireless	18.2			51.2			3.3
IT Services and Hardware	8.5			10.3			9.8
Data Center Colocation	3.2			30.4			46.4
Corporate	(56.3		)	(34.7		)	(28.5		)
Total operating income	$	163.8		$	270.1		$	259.5
Expenditures for long-lived assets
Wireline	$	162.6		$	114.2		$	112.6
Wireless	16.0			15.8			17.6
IT Services and Hardware	10.6			9.0			6.8
Data Center Colocation	7.7			228.2			118.5
Total expenditures for long-lived assets	$	196.9		$	367.2		$	255.5
Depreciation and amortization
Wireline	$	112.2		$	106.0		$	102.4
Wireless	41.2			31.9			33.5
IT Services and Hardware	10.5			8.6			8.4
Data Center Colocation	5.2			70.6			54.8
Corporate	0.5			0.3			0.4
Total depreciation and amortization	$	169.6		$	217.4		$	199.5
	As of December 31,
(dollars in millions)	2013			2012
Assets
Wireline	$	780.8		$	723.7
Wireless	247.5			275.6
IT Services and Hardware	48.9			43.3
Data Center Colocation	—			1,208.5
Corporate and eliminations	1,030.1			621.3
Total assets	$	2,107.3		$	2,872.4

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

	Year Ended December 31,
(dollars in millions)	2013		2012		2011
Service revenue
Wireline	$	702.3	$	705.0	$	703.3
Wireless	183.1		222.7		250.8
IT Services and Hardware	138.7		130.2		114.1
Data Center Colocation	15.2		214.9		182.6
Total service revenue	$	1,039.3	$	1,272.8	$	1,250.8
Product revenue
Handsets and accessories	$	21.8	$	23.2	$	30.3
IT, telephony and other equipment	195.8		177.9		181.3
Total product revenue	$	217.6	$	201.1	$	211.6