x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
|
|
|
Exact name of registrant
as specified in its charter
|
|
State or other
jurisdiction of
incorporation or organization
|
|
Commission
File Number
|
|
I.R.S. Employer Identification No.
|
|
|
|
||||
Windstream Holdings, Inc.
|
|
Delaware
|
|
001-32422
|
|
46-2847717
|
Windstream Services, LLC
|
|
Delaware
|
|
001-36093
|
|
20-0792300
|
|
|
|
|
|
4001 Rodney Parham Road
|
|
|
|
|
Little Rock, Arkansas
|
|
72212
|
||
(Address of principal executive offices)
|
|
(Zip Code)
|
||
|
|
|
|
|
|
|
(501) 748-7000
|
|
|
|
(Registrants’ telephone number, including area code)
|
|
||
|
|
|
|
|
|
|
|
|
|
Windstream Holdings, Inc.
|
ý
YES
¨
NO
|
|
|
|
Windstream Services, LLC
|
ý
YES
¨
NO
|
|
|
|
Windstream Holdings, Inc.
|
ý
YES
¨
NO
|
|
|
|
Windstream Services, LLC
|
ý
YES
¨
NO
|
|
|
|
Windstream Holdings, Inc.
|
|
|
Large accelerated filer
ý
|
Accelerated filer
¨
|
|
|
|
Non-accelerated filer
¨
|
(Do not check if a smaller reporting company)
|
|
|
|
|
Smaller reporting company
¨
|
|
|
|
|
Emerging growth company
¨
|
|
|
|
|
|
Windstream Services, LLC
|
|
|
Large accelerated filer
¨
|
Accelerated filer
¨
|
|
|
|
Non-accelerated filer
ý
|
(Do not check if a smaller reporting company)
|
|
|
|
|
Smaller reporting company
¨
|
|
|
|
|
Emerging growth company
¨
|
Windstream Holdings, Inc.
|
¨
YES
¨
NO
|
|
|
|
Windstream Services, LLC
|
¨
YES
¨
NO
|
|
|
|
Windstream Holdings, Inc.
|
¨
YES
ý
NO
|
|
|
|
Windstream Services, LLC
|
¨
YES
ý
NO
|
|
|
|
The Exhibit Index is located on page
86
.
|
|
|
|
|
|
|
|
Page No.
|
|
|
|
Item 1.
|
|
|
|
|
|
|
||
|
||
|
||
|
||
|
||
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
|
||
|
|
|
Item 1.
|
||
Item 1A.
|
||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
*
|
Item 3.
|
Defaults Upon Senior Securities
|
*
|
Item 4.
|
Mine Safety Disclosures
|
*
|
Item 5.
|
Other Information
|
*
|
Item 6.
|
*
|
No reportable information under this item.
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions, except per share amounts)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Revenues and sales:
|
|
|
|
|
|
|
|
|
||||
Service revenues
|
|
|
|
|
|
$
|
1,435.4
|
|
|
$
|
1,344.4
|
|
Product sales
|
|
|
|
|
|
18.9
|
|
|
21.3
|
|
||
Total revenues and sales
|
|
|
|
|
|
1,454.3
|
|
|
1,365.7
|
|
||
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||
Cost of services (exclusive of depreciation and amortization
included below)
|
|
|
|
|
|
736.9
|
|
|
683.8
|
|
||
Cost of products sold
|
|
|
|
|
|
16.8
|
|
|
20.8
|
|
||
Selling, general and administrative
|
|
|
|
|
|
228.8
|
|
|
213.8
|
|
||
Depreciation and amortization
|
|
|
|
|
|
381.8
|
|
|
338.5
|
|
||
Merger, integration and other costs
|
|
|
|
|
|
7.3
|
|
|
57.3
|
|
||
Restructuring charges
|
|
|
|
|
|
13.7
|
|
|
7.4
|
|
||
Total costs and expenses
|
|
|
|
|
|
1,385.3
|
|
|
1,321.6
|
|
||
Operating income
|
|
|
|
|
|
69.0
|
|
|
44.1
|
|
||
Other (expense) income, net
|
|
|
|
|
|
(2.3
|
)
|
|
2.6
|
|
||
Net loss on early extinguishment of debt
|
|
|
|
|
|
—
|
|
|
(3.2
|
)
|
||
Interest expense
|
|
|
|
|
|
(223.1
|
)
|
|
(211.8
|
)
|
||
Loss before income taxes
|
|
|
|
|
|
(156.4
|
)
|
|
(168.3
|
)
|
||
Income tax benefit
|
|
|
|
|
|
(35.0
|
)
|
|
(57.0
|
)
|
||
Net loss
|
|
|
|
|
|
$
|
(121.4
|
)
|
|
$
|
(111.3
|
)
|
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
||||
Net loss
|
|
|
|
|
|
|
($.65
|
)
|
|
|
($.89
|
)
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Net loss
|
|
|
|
|
|
$
|
(121.4
|
)
|
|
$
|
(111.3
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps:
|
|
|
|
|
|
|
|
|
||||
Unrealized gain on designated interest rate swaps
|
|
|
|
|
|
14.8
|
|
|
3.4
|
|
||
Amortization of net unrealized losses on de-designated
interest rate swaps
|
|
|
|
|
|
0.9
|
|
|
1.5
|
|
||
Income tax expense
|
|
|
|
|
|
(4.0
|
)
|
|
(1.9
|
)
|
||
Change in interest rate swaps
|
|
|
|
|
|
11.7
|
|
|
3.0
|
|
||
Postretirement and pension plans:
|
|
|
|
|
|
|
|
|
||||
Amounts included in net periodic benefit cost:
|
|
|
|
|
|
|
|
|
||||
Amortization of net actuarial loss
|
|
|
|
|
|
0.1
|
|
|
—
|
|
||
Amortization of prior service credits
|
|
|
|
|
|
(1.3
|
)
|
|
(0.2
|
)
|
||
Income tax benefit
|
|
|
|
|
|
0.3
|
|
|
0.1
|
|
||
Change in postretirement and pension plans
|
|
|
|
|
|
(0.9
|
)
|
|
(0.1
|
)
|
||
Other comprehensive income
|
|
|
|
|
|
10.8
|
|
|
2.9
|
|
||
Comprehensive loss
|
|
|
|
|
|
$
|
(110.6
|
)
|
|
$
|
(108.4
|
)
|
(Millions, except par value)
|
|
March 31,
2018 |
|
|
December 31,
2017 |
|
||
Assets
|
|
|
|
|
||||
Current Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
60.5
|
|
|
$
|
43.4
|
|
Accounts receivable (less allowance for doubtful
|
|
|
|
|
||||
accounts of $26.4 and $29.7, respectively)
|
|
594.8
|
|
|
643.0
|
|
||
Inventories
|
|
90.3
|
|
|
93.0
|
|
||
Prepaid expenses and other
|
|
197.9
|
|
|
153.1
|
|
||
Total current assets
|
|
943.5
|
|
|
932.5
|
|
||
Goodwill
|
|
2,868.0
|
|
|
2,842.4
|
|
||
Other intangibles, net
|
|
1,405.9
|
|
|
1,454.4
|
|
||
Net property, plant and equipment
|
|
5,263.6
|
|
|
5,391.8
|
|
||
Deferred income taxes
|
|
389.8
|
|
|
370.8
|
|
||
Other assets
|
|
110.5
|
|
|
92.4
|
|
||
Total Assets
|
|
$
|
10,981.3
|
|
|
$
|
11,084.3
|
|
Liabilities and Shareholders’ Deficit
|
|
|
|
|
||||
Current Liabilities:
|
|
|
|
|
||||
Current maturities of long-term debt
|
|
$
|
17.9
|
|
|
$
|
169.3
|
|
Current portion of long-term lease obligations
|
|
194.3
|
|
|
188.6
|
|
||
Accounts payable
|
|
444.1
|
|
|
494.0
|
|
||
Advance payments and customer deposits
|
|
199.9
|
|
|
207.3
|
|
||
Accrued taxes
|
|
75.7
|
|
|
89.5
|
|
||
Accrued interest
|
|
87.1
|
|
|
52.6
|
|
||
Other current liabilities
|
|
269.0
|
|
|
342.1
|
|
||
Total current liabilities
|
|
1,288.0
|
|
|
1,543.4
|
|
||
Long-term debt
|
|
5,929.3
|
|
|
5,674.6
|
|
||
Long-term lease obligations
|
|
4,592.8
|
|
|
4,643.3
|
|
||
Other liabilities
|
|
508.4
|
|
|
521.9
|
|
||
Total liabilities
|
|
12,318.5
|
|
|
12,383.2
|
|
||
Commitments and Contingencies (See Note 15)
|
|
|
|
|
|
|
||
Shareholders’ Deficit:
|
|
|
|
|
||||
Common stock, $.0001 par value, 375.0 shares authorized,
|
|
|
|
|
||||
204.6 and 182.7 shares issued and outstanding, respectively
|
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
|
1,228.9
|
|
|
1,191.9
|
|
||
Accumulated other comprehensive income
|
|
33.9
|
|
|
21.4
|
|
||
Accumulated deficit
|
|
(2,600.0
|
)
|
|
(2,512.2
|
)
|
||
Total shareholders’ deficit
|
|
(1,337.2
|
)
|
|
(1,298.9
|
)
|
||
Total Liabilities and Shareholders’ Deficit
|
|
$
|
10,981.3
|
|
|
$
|
11,084.3
|
|
|
|
Three Months Ended
March 31, |
||||||
(Millions)
|
|
2018
|
|
|
2017
|
|
||
Cash Flows from Operating Activities:
|
|
|
|
|
||||
Net loss
|
|
$
|
(121.4
|
)
|
|
$
|
(111.3
|
)
|
Adjustments to reconcile net loss to net cash provided from operations:
|
|
|
|
|
||||
Depreciation and amortization
|
|
381.8
|
|
|
338.5
|
|
||
Provision for doubtful accounts
|
|
5.6
|
|
|
9.6
|
|
||
Share-based compensation expense
|
|
9.9
|
|
|
16.8
|
|
||
Deferred income taxes
|
|
(34.7
|
)
|
|
(55.2
|
)
|
||
Net loss on early extinguishment of debt
|
|
—
|
|
|
3.2
|
|
||
Other, net
|
|
10.8
|
|
|
2.2
|
|
||
Changes in operating assets and liabilities, net
|
|
|
|
|
||||
Accounts receivable
|
|
43.7
|
|
|
33.8
|
|
||
Prepaid income taxes
|
|
(3.0
|
)
|
|
(5.6
|
)
|
||
Prepaid expenses and other
|
|
(15.5
|
)
|
|
(30.5
|
)
|
||
Accounts payable
|
|
(36.3
|
)
|
|
(61.5
|
)
|
||
Accrued interest
|
|
34.7
|
|
|
29.9
|
|
||
Accrued taxes
|
|
(16.7
|
)
|
|
(2.3
|
)
|
||
Other current liabilities
|
|
(25.5
|
)
|
|
(5.3
|
)
|
||
Other liabilities
|
|
(1.7
|
)
|
|
2.4
|
|
||
Other, net
|
|
7.6
|
|
|
(11.0
|
)
|
||
Net cash provided from operating activities
|
|
239.3
|
|
|
153.7
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
|
||||
Additions to property, plant and equipment
|
|
(217.6
|
)
|
|
(243.4
|
)
|
||
Cash acquired from EarthLink
|
|
—
|
|
|
5.0
|
|
||
Acquisition of MASS
|
|
(37.6
|
)
|
|
—
|
|
||
Other, net
|
|
0.4
|
|
|
(2.5
|
)
|
||
Net cash used in investing activities
|
|
(254.8
|
)
|
|
(240.9
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
|
||||
Dividends paid to shareholders
|
|
—
|
|
|
(23.7
|
)
|
||
Proceeds from issuance of stock
|
|
—
|
|
|
9.6
|
|
||
Repayments of debt and swaps
|
|
(217.1
|
)
|
|
(1,154.6
|
)
|
||
Proceeds from debt issuance
|
|
313.0
|
|
|
1,315.6
|
|
||
Debt issuance costs
|
|
(2.8
|
)
|
|
(7.0
|
)
|
||
Payments under long-term lease obligations
|
|
(44.9
|
)
|
|
(40.6
|
)
|
||
Payments under capital lease obligations
|
|
(13.1
|
)
|
|
(8.7
|
)
|
||
Other, net
|
|
(2.5
|
)
|
|
(11.0
|
)
|
||
Net cash provided from financing activities
|
|
32.6
|
|
|
79.6
|
|
||
Increase (decrease) in cash and cash equivalents
|
|
17.1
|
|
|
(7.6
|
)
|
||
Cash and Cash Equivalents:
|
|
|
|
|
||||
Beginning of period
|
|
43.4
|
|
|
59.1
|
|
||
End of period
|
|
$
|
60.5
|
|
|
$
|
51.5
|
|
Supplemental Cash Flow Disclosures:
|
|
|
|
|
||||
Interest paid, net of interest capitalized
|
|
$
|
184.9
|
|
|
$
|
168.9
|
|
Income taxes refunded, net
|
|
$
|
(3.2
|
)
|
|
$
|
(0.2
|
)
|
(Millions, except per share amounts)
|
|
Common Stock
and Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income
|
|
Accumulated Deficit
|
|
Total
|
||||||||
Balance at December 31, 2017
|
|
$
|
1,191.9
|
|
|
$
|
21.4
|
|
|
$
|
(2,512.2
|
)
|
|
$
|
(1,298.9
|
)
|
Cumulative effect adjustments, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Adoption of ASU 2014-09 (See Note 1)
|
|
—
|
|
|
—
|
|
|
35.3
|
|
|
35.3
|
|
||||
Adoption of ASU 2017-12 (See Note 1)
|
|
—
|
|
|
1.7
|
|
|
(1.7
|
)
|
|
—
|
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
(121.4
|
)
|
|
(121.4
|
)
|
||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Change in postretirement and pension plans
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
(0.9
|
)
|
||||
Amortization of unrealized losses on de-designated
interest rate swaps
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
||||
Change in designated interest rate swaps
|
|
—
|
|
|
11.0
|
|
|
—
|
|
|
11.0
|
|
||||
Comprehensive income (loss)
|
|
—
|
|
|
10.8
|
|
|
(121.4
|
)
|
|
(110.6
|
)
|
||||
Share-based compensation
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
4.3
|
|
||||
Stock issued for pension contribution
|
|
5.8
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
||||
Stock issued to employee savings plan
|
|
28.3
|
|
|
—
|
|
|
—
|
|
|
28.3
|
|
||||
Taxes withheld on vested restricted stock and other
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
||||
Balance at March 31, 2018
|
|
$
|
1,228.9
|
|
|
$
|
33.9
|
|
|
$
|
(2,600.0
|
)
|
|
$
|
(1,337.2
|
)
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Revenues and sales:
|
|
|
|
|
|
|
|
|
||||
Service revenues
|
|
|
|
|
|
$
|
1,435.4
|
|
|
$
|
1,344.4
|
|
Product sales
|
|
|
|
|
|
18.9
|
|
|
21.3
|
|
||
Total revenues and sales
|
|
|
|
|
|
1,454.3
|
|
|
1,365.7
|
|
||
Costs and expenses:
|
|
|
|
|
|
|
|
|
||||
Cost of services (exclusive of depreciation and amortization
included below)
|
|
|
|
|
|
736.9
|
|
|
683.8
|
|
||
Cost of products sold
|
|
|
|
|
|
16.8
|
|
|
20.8
|
|
||
Selling, general and administrative
|
|
|
|
|
|
228.3
|
|
|
213.5
|
|
||
Depreciation and amortization
|
|
|
|
|
|
381.8
|
|
|
338.5
|
|
||
Merger, integration and other costs
|
|
|
|
|
|
7.3
|
|
|
57.3
|
|
||
Restructuring charges
|
|
|
|
|
|
13.7
|
|
|
7.4
|
|
||
Total costs and expenses
|
|
|
|
|
|
1,384.8
|
|
|
1,321.3
|
|
||
Operating income
|
|
|
|
|
|
69.5
|
|
|
44.4
|
|
||
Other (expense) income, net
|
|
|
|
|
|
(2.3
|
)
|
|
2.6
|
|
||
Net loss on early extinguishment of debt
|
|
|
|
|
|
—
|
|
|
(3.2
|
)
|
||
Interest expense
|
|
|
|
|
|
(223.1
|
)
|
|
(211.8
|
)
|
||
Loss before income taxes
|
|
|
|
|
|
(155.9
|
)
|
|
(168.0
|
)
|
||
Income tax benefit
|
|
|
|
|
|
(34.9
|
)
|
|
(56.9
|
)
|
||
Net loss
|
|
|
|
|
|
$
|
(121.0
|
)
|
|
$
|
(111.1
|
)
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Net loss
|
|
|
|
|
|
$
|
(121.0
|
)
|
|
$
|
(111.1
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps:
|
|
|
|
|
|
|
|
|
||||
Unrealized gain on designated interest rate swaps
|
|
|
|
|
|
14.8
|
|
|
3.4
|
|
||
Amortization of net unrealized losses on de-designated
interest rate swaps
|
|
|
|
|
|
0.9
|
|
|
1.5
|
|
||
Income tax expense
|
|
|
|
|
|
(4.0
|
)
|
|
(1.9
|
)
|
||
Change in interest rate swaps
|
|
|
|
|
|
11.7
|
|
|
3.0
|
|
||
Postretirement and pension plans:
|
|
|
|
|
|
|
|
|
||||
Amounts included in net periodic benefit cost:
|
|
|
|
|
|
|
|
|
||||
Amortization of net actuarial loss
|
|
|
|
|
|
0.1
|
|
|
—
|
|
||
Amortization of prior service credits
|
|
|
|
|
|
(1.3
|
)
|
|
(0.2
|
)
|
||
Income tax benefit
|
|
|
|
|
|
0.3
|
|
|
0.1
|
|
||
Change in postretirement and pension plans
|
|
|
|
|
|
(0.9
|
)
|
|
(0.1
|
)
|
||
Other comprehensive income
|
|
|
|
|
|
10.8
|
|
|
2.9
|
|
||
Comprehensive loss
|
|
|
|
|
|
$
|
(110.2
|
)
|
|
$
|
(108.2
|
)
|
(Millions)
|
|
March 31,
2018 |
|
|
December 31,
2017 |
|
||
Assets
|
|
|
|
|
||||
Current Assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
60.5
|
|
|
$
|
43.4
|
|
Accounts receivable (less allowance for doubtful
|
|
|
|
|
||||
accounts of $26.4 and $29.7, respectively)
|
|
594.8
|
|
|
643.0
|
|
||
Inventories
|
|
90.3
|
|
|
93.0
|
|
||
Prepaid expenses and other
|
|
197.9
|
|
|
153.1
|
|
||
Total current assets
|
|
943.5
|
|
|
932.5
|
|
||
Goodwill
|
|
2,868.0
|
|
|
2,842.4
|
|
||
Other intangibles, net
|
|
1,405.9
|
|
|
1,454.4
|
|
||
Net property, plant and equipment
|
|
5,263.6
|
|
|
5,391.8
|
|
||
Deferred income taxes
|
|
389.8
|
|
|
370.8
|
|
||
Other assets
|
|
110.5
|
|
|
92.4
|
|
||
Total Assets
|
|
$
|
10,981.3
|
|
|
$
|
11,084.3
|
|
Liabilities and Member Deficit
|
|
|
|
|
||||
Current Liabilities:
|
|
|
|
|
||||
Current maturities of long-term debt
|
|
$
|
17.9
|
|
|
$
|
169.3
|
|
Current portion of long-term lease obligations
|
|
194.3
|
|
|
188.6
|
|
||
Accounts payable
|
|
444.1
|
|
|
494.0
|
|
||
Advance payments and customer deposits
|
|
199.9
|
|
|
207.3
|
|
||
Accrued taxes
|
|
75.7
|
|
|
89.5
|
|
||
Accrued interest
|
|
87.1
|
|
|
52.6
|
|
||
Other current liabilities
|
|
269.0
|
|
|
342.1
|
|
||
Total current liabilities
|
|
1,288.0
|
|
|
1,543.4
|
|
||
Long-term debt
|
|
5,929.3
|
|
|
5,674.6
|
|
||
Long-term lease obligations
|
|
4,592.8
|
|
|
4,643.3
|
|
||
Other liabilities
|
|
508.4
|
|
|
521.9
|
|
||
Total liabilities
|
|
12,318.5
|
|
|
12,383.2
|
|
||
Commitments and Contingencies (See Note 15)
|
|
|
|
|
|
|||
Member Deficit:
|
|
|
|
|
||||
Additional paid-in capital
|
|
1,223.7
|
|
|
1,187.1
|
|
||
Accumulated other comprehensive income
|
|
33.9
|
|
|
21.4
|
|
||
Accumulated deficit
|
|
(2,594.8
|
)
|
|
(2,507.4
|
)
|
||
Total member deficit
|
|
(1,337.2
|
)
|
|
(1,298.9
|
)
|
||
Total Liabilities and Member Deficit
|
|
$
|
10,981.3
|
|
|
$
|
11,084.3
|
|
|
|
Three Months Ended
March 31, |
||||||
(Millions)
|
|
2018
|
|
|
2017
|
|
||
Cash Flows from Operating Activities:
|
|
|
|
|
||||
Net loss
|
|
$
|
(121.0
|
)
|
|
$
|
(111.1
|
)
|
Adjustments to reconcile net loss to net cash provided from operations:
|
|
|
|
|
||||
Depreciation and amortization
|
|
381.8
|
|
|
338.5
|
|
||
Provision for doubtful accounts
|
|
5.6
|
|
|
9.6
|
|
||
Share-based compensation expense
|
|
9.9
|
|
|
16.8
|
|
||
Deferred income taxes
|
|
(34.7
|
)
|
|
(55.2
|
)
|
||
Net loss on early extinguishment of debt
|
|
—
|
|
|
3.2
|
|
||
Other, net
|
|
10.8
|
|
|
2.2
|
|
||
Changes in operating assets and liabilities, net
|
|
|
|
|
||||
Accounts receivable
|
|
43.7
|
|
|
33.8
|
|
||
Prepaid income taxes
|
|
(3.0
|
)
|
|
(5.6
|
)
|
||
Prepaid expenses and other
|
|
(15.5
|
)
|
|
(30.5
|
)
|
||
Accounts payable
|
|
(36.3
|
)
|
|
(61.5
|
)
|
||
Accrued interest
|
|
34.7
|
|
|
29.9
|
|
||
Accrued taxes
|
|
(16.7
|
)
|
|
(2.3
|
)
|
||
Other current liabilities
|
|
(25.4
|
)
|
|
(6.1
|
)
|
||
Other liabilities
|
|
(1.7
|
)
|
|
2.4
|
|
||
Other, net
|
|
7.6
|
|
|
(11.0
|
)
|
||
Net cash provided from operating activities
|
|
239.8
|
|
|
153.1
|
|
||
Cash Flows from Investing Activities:
|
|
|
|
|
||||
Additions to property, plant and equipment
|
|
(217.6
|
)
|
|
(243.4
|
)
|
||
Cash acquired from EarthLink
|
|
—
|
|
|
5.0
|
|
||
Acquisition of MASS
|
|
(37.6
|
)
|
|
—
|
|
||
Other, net
|
|
0.4
|
|
|
(2.5
|
)
|
||
Net cash used in investing activities
|
|
(254.8
|
)
|
|
(240.9
|
)
|
||
Cash Flows from Financing Activities:
|
|
|
|
|
||||
Distributions to Windstream Holdings, Inc.
|
|
(0.5
|
)
|
|
(24.3
|
)
|
||
Contribution from Windstream Holdings, Inc.
|
|
—
|
|
|
9.6
|
|
||
Repayments of debt and swaps
|
|
(217.1
|
)
|
|
(1,154.6
|
)
|
||
Proceeds from debt issuance
|
|
313.0
|
|
|
1,315.6
|
|
||
Debt issuance costs
|
|
(2.8
|
)
|
|
(7.0
|
)
|
||
Payments under long-term lease obligations
|
|
(44.9
|
)
|
|
(40.6
|
)
|
||
Payments under capital lease obligations
|
|
(13.1
|
)
|
|
(8.7
|
)
|
||
Other, net
|
|
(2.5
|
)
|
|
(9.8
|
)
|
||
Net cash provided from financing activities
|
|
32.1
|
|
|
80.2
|
|
||
Increase (decrease) in cash and cash equivalents
|
|
17.1
|
|
|
(7.6
|
)
|
||
Cash and Cash Equivalents:
|
|
|
|
|
||||
Beginning of period
|
|
43.4
|
|
|
59.1
|
|
||
End of period
|
|
$
|
60.5
|
|
|
$
|
51.5
|
|
Supplemental Cash Flow Disclosures:
|
|
|
|
|
||||
Interest paid, net of interest capitalized
|
|
$
|
184.9
|
|
|
$
|
168.9
|
|
Income taxes refunded, net
|
|
$
|
(3.2
|
)
|
|
$
|
(0.2
|
)
|
(Millions)
|
|
Additional
Paid-In
Capital
|
|
Accumulated
Other
Comprehensive
Income
|
|
Accumulated Deficit
|
|
Total
|
||||||||
Balance at December 31, 2017
|
|
$
|
1,187.1
|
|
|
$
|
21.4
|
|
|
$
|
(2,507.4
|
)
|
|
$
|
(1,298.9
|
)
|
Cumulative effect adjustments, net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Adoption of ASU 2014-09 (See Note 1)
|
|
—
|
|
|
—
|
|
|
35.3
|
|
|
35.3
|
|
||||
Adoption of ASU 2017-12 (See Note 1)
|
|
—
|
|
|
1.7
|
|
|
(1.7
|
)
|
|
—
|
|
||||
Net loss
|
|
—
|
|
|
—
|
|
|
(121.0
|
)
|
|
(121.0
|
)
|
||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
||||||||
Change in postretirement and pension plans
|
|
—
|
|
|
(0.9
|
)
|
|
—
|
|
|
(0.9
|
)
|
||||
Amortization of unrealized losses on de-designated
interest rate swaps
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
0.7
|
|
||||
Change in designated interest rate swaps
|
|
—
|
|
|
11.0
|
|
|
—
|
|
|
11.0
|
|
||||
Comprehensive income (loss)
|
|
—
|
|
|
10.8
|
|
|
(121.0
|
)
|
|
(110.2
|
)
|
||||
Share-based compensation
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
4.3
|
|
||||
Contributions from Windstream Holdings, Inc.:
|
|
|
|
|
|
|
|
|
||||||||
Stock issued for pension contribution
|
|
5.8
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
||||
Stock contribution to employee savings plan
|
|
28.3
|
|
|
—
|
|
|
—
|
|
|
28.3
|
|
||||
Taxes withheld on vested restricted stock and other
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
||||
Distributions payable to Windstream Holdings, Inc.
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
(0.4
|
)
|
||||
Balance at March 31, 2018
|
|
$
|
1,223.7
|
|
|
$
|
33.9
|
|
|
$
|
(2,594.8
|
)
|
|
$
|
(1,337.2
|
)
|
(Millions)
|
|
December 31, 2017
|
|
ASU 2014-09 Adjustments
|
|
January 1,
2018
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
$
|
643.0
|
|
|
$
|
—
|
|
|
$
|
643.0
|
|
Prepaid expenses and other
|
|
$
|
153.1
|
|
|
$
|
26.0
|
|
|
$
|
179.1
|
|
Other assets
|
|
$
|
92.4
|
|
|
$
|
20.9
|
|
|
$
|
113.3
|
|
Deferred income taxes
|
|
$
|
370.8
|
|
|
$
|
(12.0
|
)
|
|
$
|
358.8
|
|
Liabilities
|
|
|
|
|
|
|
||||||
Advance payments and customer deposits
|
|
$
|
207.3
|
|
|
$
|
(0.5
|
)
|
|
$
|
206.8
|
|
Other current liabilities
|
|
$
|
342.1
|
|
|
$
|
(0.3
|
)
|
|
$
|
341.8
|
|
Other liabilities
|
|
$
|
521.9
|
|
|
$
|
0.4
|
|
|
$
|
522.3
|
|
Accumulated deficit
|
|
$
|
(2,512.2
|
)
|
|
$
|
35.3
|
|
|
$
|
(2,476.9
|
)
|
|
Three Months Ended March 31, 2018
|
||||||||||
(Millions)
|
Under
ASC 605
|
|
Effect of Adoption of
ASU 2014-09
|
|
As reported
|
||||||
Revenue and sales
|
|
|
|
|
|
||||||
Service revenues
|
$
|
1,434.4
|
|
|
$
|
1.0
|
|
|
$
|
1,435.4
|
|
Product sales
|
$
|
18.9
|
|
|
$
|
—
|
|
|
$
|
18.9
|
|
Costs and expenses
|
|
|
|
|
|
||||||
Cost of services
|
$
|
736.4
|
|
|
$
|
0.5
|
|
|
$
|
736.9
|
|
Selling, general and administrative
|
$
|
228.2
|
|
|
$
|
0.6
|
|
|
$
|
228.8
|
|
Income tax benefit
|
$
|
(35.0
|
)
|
|
$
|
—
|
|
|
$
|
(35.0
|
)
|
Net loss
|
$
|
(121.3
|
)
|
|
$
|
(0.1
|
)
|
|
$
|
(121.4
|
)
|
|
March 31, 2018
|
||||||||||
(Millions)
|
Under
ASC 605
|
|
Effect of Adoption of
ASU 2014-09
|
|
As reported
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
594.8
|
|
|
$
|
—
|
|
|
$
|
594.8
|
|
Prepaid expenses and other
|
$
|
165.5
|
|
|
$
|
32.4
|
|
|
$
|
197.9
|
|
Other assets
|
$
|
96.2
|
|
|
$
|
14.3
|
|
|
$
|
110.5
|
|
Deferred income taxes
|
$
|
401.8
|
|
|
$
|
(12.0
|
)
|
|
$
|
389.8
|
|
Liabilities
|
|
|
|
|
|
||||||
Advance payments and customer deposits
|
$
|
200.4
|
|
|
$
|
(0.5
|
)
|
|
$
|
199.9
|
|
Other current liabilities
|
$
|
268.9
|
|
|
$
|
0.1
|
|
|
$
|
269.0
|
|
Other liabilities
|
$
|
508.5
|
|
|
$
|
(0.1
|
)
|
|
$
|
508.4
|
|
Accumulated deficit
|
$
|
(2,635.2
|
)
|
|
$
|
35.2
|
|
|
$
|
(2,600.0
|
)
|
(Millions)
|
|
As Previously Reported
|
|
Reclassification Adjustments
|
|
As
Revised
|
||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
||||||
Adjustments to reconcile net loss to net cash provided from operations:
|
|
|
|
|
|
|
||||||
Noncash portion of net loss on early extinguishment of debt
|
|
$
|
(15.1
|
)
|
|
$
|
15.1
|
|
|
$
|
—
|
|
Net loss on early extinguishment of debt
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
$
|
3.2
|
|
Changes in operating assets and liabilities, net:
|
|
|
|
|
|
|
||||||
Other, net
|
|
$
|
(13.9
|
)
|
|
$
|
2.9
|
|
|
$
|
(11.0
|
)
|
Net cash provided from operating activities
|
|
$
|
132.5
|
|
|
$
|
21.2
|
|
|
$
|
153.7
|
|
Cash Flows from Financing Activities
:
|
|
|
|
|
|
|
||||||
Repayments of debt and swaps
|
|
$
|
(1,133.4
|
)
|
|
$
|
(21.2
|
)
|
|
$
|
(1,154.6
|
)
|
Net cash provided from financing activities
|
|
$
|
100.8
|
|
|
$
|
(21.2
|
)
|
|
$
|
79.6
|
|
(Millions)
|
|
Contract Assets
|
|
Contract Liabilities
|
|
||||
Balance at January 1, 2018
|
|
$
|
13.1
|
|
(a)
|
$
|
(209.3
|
)
|
(b)
|
Revenue recognized included in opening contract balance
|
|
(0.8
|
)
|
|
168.7
|
|
|
||
Cash received, excluding amounts recognized as revenue
|
|
—
|
|
|
(163.1
|
)
|
|
||
Credits granted, excluding amounts recognized as revenue
|
|
0.6
|
|
|
—
|
|
|
||
Balance at March 31, 2018
|
|
$
|
12.9
|
|
(a)
|
$
|
(203.7
|
)
|
(b)
|
(a)
|
Includes
$8.6 million
and
$3.6 million
in prepaid expense and other and
$4.3 million
and
$9.5 million
in other assets as of March 31, 2018 and January 1, 2018, respectively.
|
(b)
|
Includes
$191.3 million
and
$198.3 million
in advance payments and customer deposits and
$12.4 million
and
$11.0 million
in other liabilities as of March 31, 2018 and January 1, 2018, respectively.
|
(Millions)
|
|
Consumer & Small Business
|
|
Enterprise
|
|
Wholesale
|
|
Consumer CLEC
|
|
Total
|
||||||||||
Revenue from contracts with customers:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Type of service:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
High-speed Internet bundles
|
|
$
|
243.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
24.4
|
|
|
$
|
268.0
|
|
Voice and long-distance
|
|
31.4
|
|
|
242.8
|
|
|
—
|
|
|
—
|
|
|
274.2
|
|
|||||
Video and miscellaneous
|
|
11.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11.4
|
|
|||||
Dial-up, e-mail and miscellaneous
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22.8
|
|
|
22.8
|
|
|||||
Data and integrated services
|
|
—
|
|
|
387.7
|
|
|
—
|
|
|
—
|
|
|
387.7
|
|
|||||
Small business services
|
|
78.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
78.1
|
|
|||||
Core wholesale (a)
|
|
—
|
|
|
—
|
|
|
142.0
|
|
|
—
|
|
|
142.0
|
|
|||||
Resale (b)
|
|
—
|
|
|
—
|
|
|
18.3
|
|
|
—
|
|
|
18.3
|
|
|||||
Wireless TDM
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|
—
|
|
|
3.2
|
|
|||||
Switched access
|
|
8.1
|
|
|
—
|
|
|
9.4
|
|
|
—
|
|
|
17.5
|
|
|||||
Miscellaneous
|
|
—
|
|
|
38.9
|
|
|
—
|
|
|
—
|
|
|
38.9
|
|
|||||
Service revenues from contracts with
customers
|
|
372.6
|
|
|
669.4
|
|
|
172.9
|
|
|
47.2
|
|
|
1,262.1
|
|
|||||
Product sales
|
|
5.5
|
|
|
13.2
|
|
|
0.1
|
|
|
0.1
|
|
|
18.9
|
|
|||||
Total revenue from contracts with
customers
|
|
378.1
|
|
|
682.6
|
|
|
173.0
|
|
|
47.3
|
|
|
1,281.0
|
|
|||||
Other service revenues (c)
|
|
98.4
|
|
|
63.5
|
|
|
10.8
|
|
|
0.6
|
|
|
173.3
|
|
|||||
Total revenues and sales
|
|
$
|
476.5
|
|
|
$
|
746.1
|
|
|
$
|
183.8
|
|
|
$
|
47.9
|
|
|
$
|
1,454.3
|
|
(a)
|
Core wholesale revenues primarily include revenues from providing special access circuits, fiber connections, data transport and wireless backhaul services.
|
(Millions)
|
|
Allocation
as of
December 31, 2017
|
|
Adjustments
|
|
Preliminary
Allocation
|
||||||
Fair value of assets acquired:
|
|
|
|
|
|
|
||||||
Accounts receivable
|
|
$
|
17.4
|
|
|
$
|
—
|
|
|
$
|
17.4
|
|
Other current assets
|
|
7.1
|
|
|
(0.2
|
)
|
|
6.9
|
|
|||
Property, plant and equipment
|
|
37.1
|
|
|
4.2
|
|
|
41.3
|
|
|||
Goodwill
|
|
121.3
|
|
|
(3.8
|
)
|
|
117.5
|
|
|||
Customer lists (a)
|
|
45.0
|
|
|
—
|
|
|
45.0
|
|
|||
Trade names (b)
|
|
21.0
|
|
|
—
|
|
|
21.0
|
|
|||
Developed technology (c)
|
|
10.0
|
|
|
—
|
|
|
10.0
|
|
|||
Deferred income taxes
|
|
9.7
|
|
|
—
|
|
|
9.7
|
|
|||
Other assets
|
|
2.6
|
|
|
(0.2
|
)
|
|
2.4
|
|
|||
Total assets acquired
|
|
271.2
|
|
|
—
|
|
|
271.2
|
|
|||
Fair value of liabilities assumed:
|
|
|
|
|
|
|
||||||
Short-term debt obligations
|
|
160.2
|
|
|
—
|
|
|
160.2
|
|
|||
Other current liabilities
|
|
46.9
|
|
|
—
|
|
|
46.9
|
|
|||
Other liabilities
|
|
0.8
|
|
|
—
|
|
|
0.8
|
|
|||
Total liabilities assumed
|
|
207.9
|
|
|
—
|
|
|
207.9
|
|
|||
Cash paid, net of cash acquired
|
|
$
|
63.3
|
|
|
$
|
—
|
|
|
$
|
63.3
|
|
(a)
|
Customer lists are amortized using the sum-of-years digits methodology over a weighted average life of
10 years
.
|
(b)
|
Trade names are amortized on a straight-line basis over an estimated useful life of
1
and
10 years
.
|
(c)
|
Internally developed technology is amortized on a straight-line basis over an estimated useful life of
5 years
.
|
(Millions)
|
|
Consumer
& Small Business
|
|
Enterprise
|
|
Wholesale
|
|
Consumer CLEC
|
|
Total
|
||||||||||
Balance at December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
|
$
|
2,321.2
|
|
|
$
|
961.8
|
|
|
$
|
1,297.1
|
|
|
$
|
103.1
|
|
|
$
|
4,683.2
|
|
Accumulated impairment loss
|
|
(1,417.8
|
)
|
|
—
|
|
|
(423.0
|
)
|
|
—
|
|
|
(1,840.8
|
)
|
|||||
Balance at December 31, 2017, net
|
|
903.4
|
|
|
961.8
|
|
|
874.1
|
|
|
103.1
|
|
|
2,842.4
|
|
|||||
Changes during the period:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Broadview measurement period adjustments
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|||||
MASS acquisition
|
|
—
|
|
|
29.4
|
|
|
—
|
|
|
—
|
|
|
29.4
|
|
|||||
Balance at March 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
|
2,321.2
|
|
|
987.4
|
|
|
1,297.1
|
|
|
103.1
|
|
|
4,708.8
|
|
|||||
Accumulated impairment loss
|
|
(1,417.8
|
)
|
|
—
|
|
|
(423.0
|
)
|
|
—
|
|
|
(1,840.8
|
)
|
|||||
Balance at March 31, 2018, net
|
|
$
|
903.4
|
|
|
$
|
987.4
|
|
|
$
|
874.1
|
|
|
$
|
103.1
|
|
|
$
|
2,868.0
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||||||||||||||||
(Millions)
|
|
Gross
Cost
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
|
Gross
Cost
|
|
Accumulated
Amortization
|
|
Net Carrying
Value
|
||||||||||||
Franchise rights
|
|
$
|
1,285.1
|
|
|
$
|
(382.5
|
)
|
|
$
|
902.6
|
|
|
$
|
1,285.1
|
|
|
$
|
(371.8
|
)
|
|
$
|
913.3
|
|
Customer lists
|
|
2,114.6
|
|
|
(1,670.0
|
)
|
|
444.6
|
|
|
2,104.6
|
|
|
(1,626.6
|
)
|
|
478.0
|
|
||||||
Cable franchise rights
|
|
17.3
|
|
|
(9.4
|
)
|
|
7.9
|
|
|
17.3
|
|
|
(9.1
|
)
|
|
8.2
|
|
||||||
Trade names
|
|
29.0
|
|
|
(3.3
|
)
|
|
25.7
|
|
|
29.0
|
|
|
(2.2
|
)
|
|
26.8
|
|
||||||
Developed technology and
software
|
|
33.0
|
|
|
(9.5
|
)
|
|
23.5
|
|
|
33.0
|
|
|
(7.1
|
)
|
|
25.9
|
|
||||||
Patents
|
|
10.6
|
|
|
(9.0
|
)
|
|
1.6
|
|
|
10.6
|
|
|
(8.4
|
)
|
|
2.2
|
|
||||||
Balance
|
|
$
|
3,489.6
|
|
|
$
|
(2,083.7
|
)
|
|
$
|
1,405.9
|
|
|
$
|
3,479.6
|
|
|
$
|
(2,025.2
|
)
|
|
$
|
1,454.4
|
|
Intangible Assets
|
|
Amortization Methodology
|
|
Estimated Useful Life
|
Franchise rights
|
|
straight-line
|
|
30 years
|
Customer lists
|
|
sum of years digits
|
|
5.5 - 15 years
|
Cable franchise rights
|
|
straight-line
|
|
15 years
|
Trade names
|
|
straight-line
|
|
1-10 years
|
Developed technology and software
|
|
straight-line
|
|
3-5 years
|
Patents
|
|
straight-line
|
|
3 years
|
Year
|
(Millions)
|
||
2018
|
$
|
225.1
|
|
2019
|
181.8
|
|
|
2020
|
140.6
|
|
|
2021
|
105.0
|
|
|
2022
|
73.2
|
|
(Millions)
|
|
March 31,
2018 |
|
|
December 31,
2017 |
|
||
Issued by Windstream Services:
|
|
|
|
|
||||
Senior secured credit facility, Tranche B6 – variable rates, due March 29, 2021 (a)
|
|
$
|
1,189.6
|
|
|
$
|
1,192.6
|
|
Senior secured credit facility, Tranche B7 – variable rates, due February 17, 2024
|
|
572.7
|
|
|
574.2
|
|
||
Senior secured credit facility, Revolving line of credit – variable rates, due
April 24, 2020
|
|
1,028.0
|
|
|
775.0
|
|
||
2025 Notes – 8.625%, due October 31, 2025 (b)
|
|
600.0
|
|
|
600.0
|
|
||
Debentures and notes, without collateral:
|
|
|
|
|
||||
2020 Notes – 7.750%, due October 15, 2020
|
|
492.9
|
|
|
492.9
|
|
||
2021 Notes – 7.750%, due October 1, 2021
|
|
88.9
|
|
|
88.9
|
|
||
2022 Notes – 7.500%, due June 1, 2022
|
|
41.6
|
|
|
41.6
|
|
||
2023 Notes – 7.500%, due April 1, 2023
|
|
120.4
|
|
|
120.4
|
|
||
2023 Notes – 6.375%, due August 1, 2023
|
|
1,147.6
|
|
|
1,147.6
|
|
||
2024 Notes – 8.750%, due December 15, 2024
|
|
684.3
|
|
|
834.3
|
|
||
Issued by subsidiaries of Windstream Services:
|
|
|
|
|
||||
Windstream Holdings of the Midwest, Inc. – 6.75%, due April 1, 2028 (c)
|
|
100.0
|
|
|
100.0
|
|
||
Net discount on long-term debt (d)
|
|
(59.5
|
)
|
|
(61.6
|
)
|
||
Unamortized debt issuance costs (d)
|
|
(59.3
|
)
|
|
(62.0
|
)
|
||
|
|
5,947.2
|
|
|
5,843.9
|
|
||
Less current maturities
|
|
(17.9
|
)
|
|
(169.3
|
)
|
||
Total long-term debt
|
|
$
|
5,929.3
|
|
|
$
|
5,674.6
|
|
(a)
|
If the maturity of the revolving line of credit is not extended prior to April 24, 2020, the maturity date of the Tranche B6 term loan will be April 24, 2020; provided further, if the 2020 Notes have not been repaid or refinanced prior to July 15, 2020 with indebtedness having a maturity date no earlier than March 29, 2021, the maturity date of the Tranche B6 term loan will be July 15, 2020.
|
(b)
|
The notes are guaranteed by each of our domestic subsidiaries that guarantees debt under Windstream Services’ senior secured credit facility. The notes and the guarantees are secured by a first priority lien on Windstream Services’ and the guarantors’ assets that secure the obligations under the senior secured credit facility.
|
(c)
|
These bonds are secured equally with the senior secured credit facility with respect to the assets of Windstream Holdings of the Midwest, Inc.
|
(d)
|
The net (discount) premium balance and unamortized debt issuance costs are amortized using the interest method over the life of the related debt instrument.
|
(Millions)
|
|
|
|
|
|
|
|
|
||
EarthLink 2019 and 2020 Notes:
|
|
|
|
|
|
|
|
|
||
Premium on early redemption
|
|
|
|
|
|
|
|
$
|
(18.3
|
)
|
Unamortized premium recorded in the Merger
|
|
|
|
|
|
|
|
16.3
|
|
|
Loss on early extinguishment of EarthLink 2019 and 2020 Notes
|
|
|
|
|
|
|
|
(2.0
|
)
|
|
Senior secured credit facility:
|
|
|
|
|
|
|
|
|
||
Unamortized discount on original issuance
|
|
|
|
|
|
|
|
(0.3
|
)
|
|
Unamortized debt issuance costs on original issuance
|
|
|
|
|
|
|
|
(0.9
|
)
|
|
Loss on early extinguishment of senior secured credit facility
|
|
|
|
|
|
|
|
(1.2
|
)
|
|
Net loss on early extinguishment of debt
|
|
|
|
|
|
|
|
$
|
(3.2
|
)
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Interest expense - long-term debt
|
|
|
|
|
|
|
$
|
101.9
|
|
|
$
|
85.9
|
|
Interest expense - long-term lease obligations:
|
|
|
|
|
|
|
|
|
|
||||
Telecommunications network assets
|
|
|
|
|
|
|
118.5
|
|
|
122.8
|
|
||
Real estate contributed to pension plan
|
|
|
|
|
|
|
1.5
|
|
|
1.5
|
|
||
Impact of interest rate swaps
|
|
|
|
|
|
|
0.6
|
|
|
2.8
|
|
||
Interest on capital leases and other
|
|
|
|
|
|
|
1.5
|
|
|
1.1
|
|
||
Less capitalized interest expense
|
|
|
|
|
|
|
(0.9
|
)
|
|
(2.3
|
)
|
||
Total interest expense
|
|
|
|
|
|
|
$
|
223.1
|
|
|
$
|
211.8
|
|
(Millions, except for percentages)
|
|
March 31,
2018 |
|
|
December 31,
2017 |
|
||
Designated portion, measured at fair value:
|
|
|
|
|
||||
Other assets
|
|
$
|
20.0
|
|
|
$
|
11.8
|
|
Other current liabilities
|
|
$
|
5.0
|
|
|
$
|
7.8
|
|
Other non-current liabilities
|
|
$
|
3.9
|
|
|
$
|
10.5
|
|
Accumulated other comprehensive income
|
|
$
|
50.7
|
|
|
$
|
33.7
|
|
De-designated portion, unamortized value:
|
|
|
|
|
||||
Accumulated other comprehensive income
|
|
$
|
(4.5
|
)
|
|
$
|
(5.4
|
)
|
Weighted average fixed rate paid
|
|
0.50
|
%
|
|
0.82
|
%
|
||
Variable rate received
|
|
1.81
|
%
|
|
1.49
|
%
|
(Millions)
|
|
2018
|
|
|
2017
|
|
||
Changes in fair value, net of tax (a)
|
|
$
|
11.0
|
|
|
$
|
2.1
|
|
Amortization of net unrealized losses on de-designated interest rate swaps, net of tax (a)
|
|
$
|
0.7
|
|
|
$
|
0.9
|
|
(a)
|
Included as a component of other comprehensive income (loss) and will be reclassified into earnings as the hedged transaction affects earnings. For 2017, this amount reflects only the effective portion of the change in fair value of the cash flow hedges.
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated
Balance Sheets
|
|
|
||||||||||||
(Millions)
|
Gross Amount of Recognized
Assets
|
|
Net Amount of
Assets presented in
the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||
March 31, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rate swaps
|
$
|
20.0
|
|
|
$
|
20.0
|
|
|
$
|
(5.7
|
)
|
|
$
|
—
|
|
|
$
|
14.3
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rate swaps
|
$
|
11.8
|
|
|
$
|
11.8
|
|
|
$
|
(2.9
|
)
|
|
$
|
—
|
|
|
$
|
8.9
|
|
|
|
|
|
|
Gross Amounts Not Offset in the Consolidated
Balance Sheets
|
|
|
||||||||||||
(Millions)
|
Gross Amount of Recognized Liabilities
|
|
Net Amount of Liabilities Presented in the Consolidated Balance Sheets
|
|
Financial Instruments
|
|
Cash Collateral Received
|
|
Net Amount
|
||||||||||
March 31, 2018:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rate swaps
|
$
|
8.9
|
|
|
$
|
8.9
|
|
|
$
|
(5.7
|
)
|
|
$
|
—
|
|
|
$
|
3.2
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2017:
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest rate swaps
|
$
|
18.3
|
|
|
$
|
18.3
|
|
|
$
|
(2.9
|
)
|
|
$
|
—
|
|
|
$
|
15.4
|
|
(Millions)
|
|
March 31,
2018 |
|
|
December 31,
2017 |
|
||
Recorded at Fair Value in the Financial Statements:
|
|
|
|
|
||||
Derivatives - Interest rate swap assets - Level 2
|
|
$
|
20.0
|
|
|
$
|
11.8
|
|
Derivatives - Interest rate swap liabilities - Level 2
|
|
$
|
8.9
|
|
|
$
|
18.3
|
|
Not Recorded at Fair Value in the Financial Statements: (a)
|
|
|
|
|
||||
Long-term debt, including current maturities - Level 2
|
|
$
|
4,870.3
|
|
|
$
|
4,824.2
|
|
(a)
|
Recognized at carrying value of
$6,006.5 million
and
$5,905.9 million
in long-term debt, including current maturities, and excluding unamortized debt issuance costs, in the accompanying consolidated balance sheets as of
March 31, 2018
and
December 31, 2017
, respectively.
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Benefits earned during the period (a)
|
|
|
|
|
|
$
|
0.9
|
|
|
$
|
2.1
|
|
Interest cost on benefit obligation (b)
|
|
|
|
|
|
10.2
|
|
|
11.6
|
|
||
Amortization of prior service credit (b)
|
|
|
|
|
|
(1.2
|
)
|
|
(0.1
|
)
|
||
Expected return on plan assets (b)
|
|
|
|
|
|
(14.3
|
)
|
|
(13.6
|
)
|
||
Net periodic benefit income
|
|
|
|
|
|
$
|
(4.4
|
)
|
|
$
|
—
|
|
(a)
|
Included in cost of services and selling, general and administrative expense.
|
(b)
|
Included in other income (expense), net.
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Interest cost on benefit obligation (a)
|
|
|
|
|
|
$
|
0.2
|
|
|
$
|
0.3
|
|
Amortization of net actuarial loss (a)
|
|
|
|
|
|
0.1
|
|
|
—
|
|
||
Amortization of prior service credit (a)
|
|
|
|
|
|
(0.1
|
)
|
|
(0.1
|
)
|
||
Net periodic benefit expense
|
|
|
|
|
|
$
|
0.2
|
|
|
$
|
0.2
|
|
Expected life
|
|
|
6.1 years
|
|
Expected volatility
|
|
|
58.6
|
%
|
Dividend yield
|
|
|
—
|
%
|
Risk-free interest rate
|
|
|
2.6
|
%
|
|
(Thousands)
Number of
Shares Underlying Options
|
|
Weighted
Average
Exercise
Price
|
|
(Years)
Weighted
Average
Remaining Contractual Life
|
|
(Millions)
Aggregate Intrinsic
Value
|
|||||
Outstanding at December 31, 2017
|
170.8
|
|
|
$
|
13.64
|
|
|
|
|
|
||
Granted
|
5,309.0
|
|
|
$
|
1.50
|
|
|
|
|
|
||
Exercised
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Canceled
|
—
|
|
|
$
|
—
|
|
|
|
|
|
||
Forfeited
|
(61.5
|
)
|
|
$
|
16.86
|
|
|
|
|
|
||
Outstanding at March 31, 2018
|
5,418.3
|
|
|
$
|
1.71
|
|
|
9.7
|
|
$
|
9.3
|
|
Vested or expected to vest at March 31, 2018
|
4,940.5
|
|
|
$
|
1.73
|
|
|
9.7
|
|
$
|
8.5
|
|
Exercisable at March 31, 2018
|
109.3
|
|
|
$
|
11.83
|
|
|
1.9
|
|
$
|
1.3
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||
Range of Exercise Prices
|
(Thousands)
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
|
(Thousands)
Number of
Options
|
|
Weighted
Average
Exercise
Price
|
||||||
$1.50
|
5,309.0
|
|
|
$
|
1.50
|
|
|
—
|
|
|
$
|
—
|
|
$2.94 - $9.98
|
33.8
|
|
|
$
|
8.37
|
|
|
33.8
|
|
|
$
|
8.37
|
|
$10.00 - $32.00
|
75.5
|
|
|
$
|
13.38
|
|
|
75.5
|
|
|
$
|
13.38
|
|
|
5,418.3
|
|
|
$
|
1.71
|
|
|
109.3
|
|
|
$
|
11.83
|
|
|
|
(Thousands)
Underlying Number of
Shares
|
|
Per Share
Weighted
Average Fair
Value
|
|||
Non-vested at December 31, 2017
|
|
5,114.1
|
|
|
$
|
6.29
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
Vested
|
|
(2,394.2
|
)
|
|
$
|
7.08
|
|
Forfeited
|
|
(157.0
|
)
|
|
$
|
7.10
|
|
Non-vested at March 31, 2018
|
|
2,562.9
|
|
|
$
|
5.50
|
|
|
|
(Thousands)
Underlying Number of
Shares
|
|
Per Share
Weighted
Average Fair
Value
|
|||
Non-vested at December 31, 2017
|
|
2,603.5
|
|
|
$
|
6.58
|
|
Granted
|
|
—
|
|
|
$
|
—
|
|
Vested
|
|
(501.3
|
)
|
|
$
|
7.22
|
|
Forfeited
|
|
(292.5
|
)
|
|
$
|
5.52
|
|
Non-vested at March 31, 2018
|
|
1,809.7
|
|
|
$
|
5.67
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Restricted stock, restricted units and stock options
|
|
|
|
|
|
$
|
3.6
|
|
|
$
|
10.0
|
|
Employee savings plan (See Note 8)
|
|
|
|
|
|
6.3
|
|
|
6.8
|
|
||
Share-based compensation expense
|
|
|
|
|
|
$
|
9.9
|
|
|
$
|
16.8
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Merger, integration and other costs:
|
|
|
|
|
|
|
|
|
||||
Information technology conversion costs
|
|
|
|
|
|
$
|
0.4
|
|
|
$
|
0.9
|
|
Costs related to merger with EarthLink (a)
|
|
|
|
|
|
4.4
|
|
|
53.1
|
|
||
Costs related to merger with Broadview (b)
|
|
|
|
|
|
1.9
|
|
|
—
|
|
||
Costs related to acquisition of MASS
|
|
|
|
|
|
0.6
|
|
|
—
|
|
||
Network optimization and contract
termination costs
|
|
|
|
|
|
—
|
|
|
3.3
|
|
||
Total merger, integration and other costs
|
|
|
|
|
|
7.3
|
|
|
57.3
|
|
||
Restructuring charges
|
|
|
|
|
|
13.7
|
|
|
7.4
|
|
||
Total merger, integration and other costs and
restructuring charges
|
|
|
|
|
|
$
|
21.0
|
|
|
$
|
64.7
|
|
(a)
|
For the
three month period ended March 31
,
2018
, these amounts include severance and employee benefit costs for EarthLink employees terminated after the Merger of
$3.0 million
and other miscellaneous expenses of
$1.4 million
. Comparatively, during the first quarter of 2017, we incurred investment banking, legal, accounting and other consulting fees of
$23.4 million
, severance and employee benefit costs for EarthLink employees terminated after the Merger of
$24.5 million
, share-based compensation expense of
$4.4 million
attributable to the accelerated vesting of replacement equity awards for terminated EarthLink employees and other miscellaneous expenses of
$0.8 million
.
|
(b)
|
Includes severance and employee benefit costs for Broadview employees terminated after the acquisition of
$1.3 million
and other miscellaneous expenses of
$0.6 million
.
|
|
|
|
Restructuring Charges
|
|
|
||||||||||
(Millions)
|
Merger, Integration and Other Charges
|
|
Severance and Benefit Costs
|
|
Other Exit Costs
|
|
Total
|
||||||||
Balance at December 31, 2017
|
$
|
10.3
|
|
|
$
|
5.0
|
|
|
$
|
4.2
|
|
|
$
|
19.5
|
|
Expenses incurred in period
|
7.3
|
|
|
13.7
|
|
|
—
|
|
|
21.0
|
|
||||
Cash outlays during the period
|
(10.0
|
)
|
|
(12.8
|
)
|
|
(0.9
|
)
|
|
(23.7
|
)
|
||||
Balance at March 31, 2018
|
$
|
7.6
|
|
|
$
|
5.9
|
|
|
$
|
3.3
|
|
|
$
|
16.8
|
|
(Millions)
|
|
March 31,
2018 |
|
|
December 31,
2017 |
|
||
Pension and postretirement plans
|
|
$
|
3.1
|
|
|
$
|
4.0
|
|
Unrealized net gains on interest rate swaps:
|
|
|
|
|
||||
Designated portion
|
|
33.4
|
|
|
20.7
|
|
||
De-designated portion
|
|
(2.6
|
)
|
|
(3.3
|
)
|
||
Accumulated other comprehensive income
|
|
$
|
33.9
|
|
|
$
|
21.4
|
|
(Millions)
|
|
Net Gains on Interest
Rate Swaps
|
|
Pension and
Postretirement
Plans
|
|
Total
|
||||||
Balance at December 31, 2017
|
|
$
|
17.4
|
|
|
$
|
4.0
|
|
|
$
|
21.4
|
|
Cumulative effect of adoption of ASU 2017-12
|
|
1.7
|
|
|
—
|
|
|
1.7
|
|
|||
Other comprehensive income before reclassifications
|
|
11.0
|
|
|
—
|
|
|
11.0
|
|
|||
Amounts reclassified from other accumulated comprehensive
income (a)
|
|
0.7
|
|
|
(0.9
|
)
|
|
(0.2
|
)
|
|||
Balance at March 31, 2018
|
|
$
|
30.8
|
|
|
$
|
3.1
|
|
|
$
|
33.9
|
|
(a)
|
See separate table below for details about these reclassifications.
|
(a)
|
These accumulated other comprehensive income components are included in the computation of net periodic benefit expense (income) (see Note 8).
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions, except per share amounts)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
||||
Numerator:
|
|
|
|
|
|
|
|
|
||||
Net loss
|
|
|
|
|
|
$
|
(121.4
|
)
|
|
$
|
(111.3
|
)
|
Income allocable to participating securities
|
|
|
|
|
|
—
|
|
|
(0.6
|
)
|
||
Net loss attributable to common shares
|
|
|
|
|
|
$
|
(121.4
|
)
|
|
$
|
(111.9
|
)
|
|
|
|
|
|
|
|
|
|
||||
Denominator:
|
|
|
|
|
|
|
|
|
||||
Basic and diluted shares outstanding
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding
|
|
|
|
|
|
187.0
|
|
|
130.4
|
|
||
Weighted average participating securities
|
|
|
|
|
|
—
|
|
|
(4.3
|
)
|
||
Weighted average basic and diluted shares
outstanding
|
|
|
|
|
|
187.0
|
|
|
126.1
|
|
||
Basic and diluted loss per share:
|
|
|
|
|
|
|
|
|
||||
Net loss
|
|
|
|
|
|
|
($.65
|
)
|
|
|
($.89
|
)
|
•
|
Consumer & Small Business
– We manage as one business our residential and small business operations in those markets in which we are the ILEC due to the similarities with respect to service offerings, marketing strategies and customer service delivery. Products and services offered to customers include traditional local and long-distance voice services, high-speed Internet services, and value-added services such as security and online back-up, which are delivered primarily over network facilities operated by us. We offer consumer video services through relationships with DirecTV and Dish Network LLC and we also own and operate cable television franchises in some of our service areas. We offer Kinetic, a premium broadband and video entertainment offering in several of our markets.
|
•
|
Enterprise
– Products and services offered to our business customers include integrated voice and data services, which deliver voice and broadband services over a single Internet connection, data transport services, multi-site networking services which provide a fast and private connection between business locations, as well as a variety of other data services, including cloud computing and collocation and managed services as an alternative to traditional information technology infrastructure.
|
•
|
Wholesale
– Our wholesale operations are focused on providing network bandwidth to other telecommunications carriers, network operators, and content providers. These services include special access services, which provide access and network transport services to end users, Ethernet and Wave transport up to 100 Gbps, and dark fiber and colocation services. Wholesale services also include fiber-to-the-tower connections to support the wireless backhaul market. In addition, we offer voice and data carrier services to other communications providers and to larger-scale purchasers of network capacity. We also offer traditional services including special access services and Time Division Multiplexing (“TDM”) private line transport. The combination of these services allow wholesale customers to provide voice and data services to their customers through the use of our network or in combination with their own networks.
|
•
|
Consumer CLEC
– Products and services offered to customers include traditional voice and long-distance services, nationwide Internet access services, both dial-up and high-speed, as well as value added services including online backup and various e-mail services.
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Consumer & Small Business:
|
|
|
|
|
|
|
|
|
||||
Revenues and sales
|
|
|
|
|
|
$
|
476.5
|
|
|
$
|
504.4
|
|
Costs and expenses
|
|
|
|
|
|
194.6
|
|
|
215.4
|
|
||
Segment income
|
|
|
|
|
|
$
|
281.9
|
|
|
$
|
289.0
|
|
Enterprise:
|
|
|
|
|
|
|
|
|
||||
Revenues and sales
|
|
|
|
|
|
$
|
746.1
|
|
|
$
|
661.8
|
|
Cost and expenses
|
|
|
|
|
|
600.3
|
|
|
537.8
|
|
||
Segment income
|
|
|
|
|
|
$
|
145.8
|
|
|
$
|
124.0
|
|
Wholesale:
|
|
|
|
|
|
|
|
|
||||
Revenues and sales
|
|
|
|
|
|
$
|
183.8
|
|
|
$
|
178.8
|
|
Costs and expenses
|
|
|
|
|
|
55.5
|
|
|
51.7
|
|
||
Segment income
|
|
|
|
|
|
$
|
128.3
|
|
|
$
|
127.1
|
|
Consumer CLEC:
|
|
|
|
|
|
|
|
|
||||
Revenues and sales
|
|
|
|
|
|
$
|
47.9
|
|
|
$
|
20.7
|
|
Costs and expenses
|
|
|
|
|
|
20.6
|
|
|
10.0
|
|
||
Segment income
|
|
|
|
|
|
$
|
27.3
|
|
|
$
|
10.7
|
|
Total segment revenues and sales
|
|
|
|
|
|
$
|
1,454.3
|
|
|
$
|
1,365.7
|
|
Total segment costs and expenses
|
|
|
|
|
|
871.0
|
|
|
814.9
|
|
||
Total segment income
|
|
|
|
|
|
$
|
583.3
|
|
|
$
|
550.8
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Total segment income
|
|
|
|
|
|
$
|
583.3
|
|
|
$
|
550.8
|
|
Depreciation and amortization
|
|
|
|
|
|
(381.8
|
)
|
|
(338.5
|
)
|
||
Other unassigned operating expenses
|
|
|
|
|
|
(132.5
|
)
|
|
(168.2
|
)
|
||
Other income (expense), net
|
|
|
|
|
|
(2.3
|
)
|
|
2.6
|
|
||
Net loss on early extinguishment of debt
|
|
|
|
|
|
—
|
|
|
(3.2
|
)
|
||
Interest expense
|
|
|
|
|
|
(223.1
|
)
|
|
(211.8
|
)
|
||
Income tax benefit
|
|
|
|
|
|
35.0
|
|
|
57.0
|
|
||
Net loss
|
|
|
|
|
|
$
|
(121.4
|
)
|
|
$
|
(111.3
|
)
|
|
|
Condensed Consolidating Statement of Comprehensive Income (Loss) (Unaudited)
|
||||||||||||||||||
|
|
Three Months Ended
March 31, 2018 |
||||||||||||||||||
(Millions)
|
|
Windstream Services
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues and sales:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenues
|
|
$
|
—
|
|
|
$
|
294.7
|
|
|
$
|
1,168.8
|
|
|
$
|
(28.1
|
)
|
|
$
|
1,435.4
|
|
Product sales
|
|
—
|
|
|
17.7
|
|
|
1.2
|
|
|
—
|
|
|
18.9
|
|
|||||
Total revenues and sales
|
|
—
|
|
|
312.4
|
|
|
1,170.0
|
|
|
(28.1
|
)
|
|
1,454.3
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services
|
|
—
|
|
|
127.7
|
|
|
636.9
|
|
|
(27.7
|
)
|
|
736.9
|
|
|||||
Cost of products sold
|
|
—
|
|
|
15.2
|
|
|
1.6
|
|
|
—
|
|
|
16.8
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
38.8
|
|
|
189.9
|
|
|
(0.4
|
)
|
|
228.3
|
|
|||||
Depreciation and amortization
|
|
1.6
|
|
|
123.6
|
|
|
256.6
|
|
|
—
|
|
|
381.8
|
|
|||||
Merger, integration and other costs
|
|
—
|
|
|
—
|
|
|
7.3
|
|
|
—
|
|
|
7.3
|
|
|||||
Restructuring charges
|
|
—
|
|
|
1.5
|
|
|
12.2
|
|
|
—
|
|
|
13.7
|
|
|||||
Total costs and expenses
|
|
1.6
|
|
|
306.8
|
|
|
1,104.5
|
|
|
(28.1
|
)
|
|
1,384.8
|
|
|||||
Operating (loss) income
|
|
(1.6
|
)
|
|
5.6
|
|
|
65.5
|
|
|
—
|
|
|
69.5
|
|
|||||
(Losses) earnings from consolidated subsidiaries
|
|
(53.9
|
)
|
|
3.7
|
|
|
19.0
|
|
|
31.2
|
|
|
—
|
|
|||||
Other income (expense), net
|
|
0.5
|
|
|
(0.3
|
)
|
|
(2.5
|
)
|
|
—
|
|
|
(2.3
|
)
|
|||||
Intercompany interest income (expense)
|
|
16.8
|
|
|
(10.5
|
)
|
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
|
(100.8
|
)
|
|
(36.1
|
)
|
|
(86.2
|
)
|
|
—
|
|
|
(223.1
|
)
|
|||||
Loss before income taxes
|
|
(139.0
|
)
|
|
(37.6
|
)
|
|
(10.5
|
)
|
|
31.2
|
|
|
(155.9
|
)
|
|||||
Income tax benefit
|
|
(18.0
|
)
|
|
(9.8
|
)
|
|
(7.1
|
)
|
|
—
|
|
|
(34.9
|
)
|
|||||
Net loss
|
|
$
|
(121.0
|
)
|
|
$
|
(27.8
|
)
|
|
$
|
(3.4
|
)
|
|
$
|
31.2
|
|
|
$
|
(121.0
|
)
|
Comprehensive loss
|
|
$
|
(110.2
|
)
|
|
$
|
(27.8
|
)
|
|
$
|
(3.4
|
)
|
|
$
|
31.2
|
|
|
$
|
(110.2
|
)
|
|
|
Condensed Consolidating Statement of Comprehensive Income (Loss) (Unaudited)
|
||||||||||||||||||
|
|
Three Months Ended
March 31, 2017 |
||||||||||||||||||
(Millions)
|
|
Windstream Services
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Revenues and sales:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Service revenues
|
|
$
|
—
|
|
|
$
|
266.9
|
|
|
$
|
1,096.3
|
|
|
$
|
(18.8
|
)
|
|
$
|
1,344.4
|
|
Product sales
|
|
—
|
|
|
19.6
|
|
|
1.7
|
|
|
—
|
|
|
21.3
|
|
|||||
Total revenues and sales
|
|
—
|
|
|
286.5
|
|
|
1,098.0
|
|
|
(18.8
|
)
|
|
1,365.7
|
|
|||||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cost of services
|
|
—
|
|
|
117.5
|
|
|
584.5
|
|
|
(18.2
|
)
|
|
683.8
|
|
|||||
Cost of products sold
|
|
—
|
|
|
18.7
|
|
|
2.1
|
|
|
—
|
|
|
20.8
|
|
|||||
Selling, general and administrative
|
|
—
|
|
|
38.4
|
|
|
175.7
|
|
|
(0.6
|
)
|
|
213.5
|
|
|||||
Depreciation and amortization
|
|
2.7
|
|
|
90.8
|
|
|
245.0
|
|
|
—
|
|
|
338.5
|
|
|||||
Merger, integration and other costs
|
|
—
|
|
|
2.8
|
|
|
54.5
|
|
|
—
|
|
|
57.3
|
|
|||||
Restructuring charges
|
|
—
|
|
|
1.3
|
|
|
6.1
|
|
|
—
|
|
|
7.4
|
|
|||||
Total costs and expenses
|
|
2.7
|
|
|
269.5
|
|
|
1,067.9
|
|
|
(18.8
|
)
|
|
1,321.3
|
|
|||||
Operating (loss) income
|
|
(2.7
|
)
|
|
17.0
|
|
|
30.1
|
|
|
—
|
|
|
44.4
|
|
|||||
Losses from consolidated subsidiaries
|
|
(70.8
|
)
|
|
(15.9
|
)
|
|
(7.2
|
)
|
|
93.9
|
|
|
—
|
|
|||||
Other income, net
|
|
0.2
|
|
|
0.2
|
|
|
2.2
|
|
|
—
|
|
|
2.6
|
|
|||||
Net loss on early extinguishment of debt
|
|
(1.2
|
)
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
(3.2
|
)
|
|||||
Intercompany interest income (expense)
|
|
26.2
|
|
|
(11.7
|
)
|
|
(14.5
|
)
|
|
—
|
|
|
—
|
|
|||||
Interest expense
|
|
(84.8
|
)
|
|
(39.5
|
)
|
|
(87.5
|
)
|
|
—
|
|
|
(211.8
|
)
|
|||||
Loss before income taxes
|
|
(133.1
|
)
|
|
(51.9
|
)
|
|
(76.9
|
)
|
|
93.9
|
|
|
(168.0
|
)
|
|||||
Income tax benefit
|
|
(22.0
|
)
|
|
(13.8
|
)
|
|
(21.1
|
)
|
|
—
|
|
|
(56.9
|
)
|
|||||
Net loss
|
|
$
|
(111.1
|
)
|
|
$
|
(38.1
|
)
|
|
$
|
(55.8
|
)
|
|
$
|
93.9
|
|
|
$
|
(111.1
|
)
|
Comprehensive loss
|
|
$
|
(108.2
|
)
|
|
$
|
(38.1
|
)
|
|
$
|
(55.8
|
)
|
|
$
|
93.9
|
|
|
$
|
(108.2
|
)
|
|
|
Condensed Consolidating Balance Sheet (Unaudited)
|
||||||||||||||||||
|
|
As of March 31, 2018
|
||||||||||||||||||
(Millions)
|
|
Windstream Services
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
22.0
|
|
|
$
|
0.4
|
|
|
$
|
38.1
|
|
|
$
|
—
|
|
|
$
|
60.5
|
|
Accounts receivable, net
|
|
—
|
|
|
238.1
|
|
|
360.0
|
|
|
(3.3
|
)
|
|
594.8
|
|
|||||
Notes receivable - affiliate
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
(5.0
|
)
|
|
—
|
|
|||||
Affiliates receivable, net
|
|
—
|
|
|
—
|
|
|
2,049.0
|
|
|
(2,049.0
|
)
|
|
—
|
|
|||||
Inventories
|
|
—
|
|
|
72.4
|
|
|
17.9
|
|
|
—
|
|
|
90.3
|
|
|||||
Prepaid expenses and other
|
|
26.0
|
|
|
47.7
|
|
|
124.2
|
|
|
—
|
|
|
197.9
|
|
|||||
Total current assets
|
|
48.0
|
|
|
363.6
|
|
|
2,589.2
|
|
|
(2,057.3
|
)
|
|
943.5
|
|
|||||
Investments in consolidated subsidiaries
|
|
5,622.3
|
|
|
596.4
|
|
|
417.3
|
|
|
(6,636.0
|
)
|
|
—
|
|
|||||
Notes receivable - affiliate
|
|
—
|
|
|
305.9
|
|
|
—
|
|
|
(305.9
|
)
|
|
—
|
|
|||||
Goodwill
|
|
657.2
|
|
|
1,712.7
|
|
|
498.1
|
|
|
—
|
|
|
2,868.0
|
|
|||||
Other intangibles, net
|
|
471.9
|
|
|
436.4
|
|
|
497.6
|
|
|
—
|
|
|
1,405.9
|
|
|||||
Net property, plant and equipment
|
|
5.5
|
|
|
1,296.2
|
|
|
3,961.9
|
|
|
—
|
|
|
5,263.6
|
|
|||||
Deferred income taxes
|
|
—
|
|
|
467.5
|
|
|
186.6
|
|
|
(264.3
|
)
|
|
389.8
|
|
|||||
Other assets
|
|
33.3
|
|
|
17.2
|
|
|
60.0
|
|
|
—
|
|
|
110.5
|
|
|||||
Total Assets
|
|
$
|
6,838.2
|
|
|
$
|
5,195.9
|
|
|
$
|
8,210.7
|
|
|
$
|
(9,263.5
|
)
|
|
$
|
10,981.3
|
|
Liabilities and Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current maturities of long-term debt
|
|
$
|
17.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17.9
|
|
Current portion of long-term lease obligations
|
|
—
|
|
|
56.9
|
|
|
137.4
|
|
|
—
|
|
|
194.3
|
|
|||||
Accounts payable
|
|
—
|
|
|
105.2
|
|
|
338.9
|
|
|
—
|
|
|
444.1
|
|
|||||
Affiliates payable, net
|
|
1,957.2
|
|
|
91.8
|
|
|
—
|
|
|
(2,049.0
|
)
|
|
—
|
|
|||||
Notes payable - affiliate
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|
(5.0
|
)
|
|
—
|
|
|||||
Advance payments and customer deposits
|
|
—
|
|
|
38.4
|
|
|
164.8
|
|
|
(3.3
|
)
|
|
199.9
|
|
|||||
Accrued taxes
|
|
0.3
|
|
|
17.6
|
|
|
57.8
|
|
|
—
|
|
|
75.7
|
|
|||||
Accrued interest
|
|
83.1
|
|
|
3.4
|
|
|
0.6
|
|
|
—
|
|
|
87.1
|
|
|||||
Other current liabilities
|
|
5.8
|
|
|
87.3
|
|
|
175.9
|
|
|
—
|
|
|
269.0
|
|
|||||
Total current liabilities
|
|
2,064.3
|
|
|
400.6
|
|
|
880.4
|
|
|
(2,057.3
|
)
|
|
1,288.0
|
|
|||||
Long-term debt
|
|
5,829.7
|
|
|
99.6
|
|
|
—
|
|
|
—
|
|
|
5,929.3
|
|
|||||
Long-term lease obligations
|
|
—
|
|
|
1,335.3
|
|
|
3,257.5
|
|
|
—
|
|
|
4,592.8
|
|
|||||
Notes payable - affiliate
|
|
—
|
|
|
—
|
|
|
305.9
|
|
|
(305.9
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
|
264.3
|
|
|
—
|
|
|
—
|
|
|
(264.3
|
)
|
|
—
|
|
|||||
Other liabilities
|
|
17.1
|
|
|
59.2
|
|
|
432.1
|
|
|
—
|
|
|
508.4
|
|
|||||
Total liabilities
|
|
8,175.4
|
|
|
1,894.7
|
|
|
4,875.9
|
|
|
(2,627.5
|
)
|
|
12,318.5
|
|
|||||
Commitments and Contingencies (See Note 15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Equity (Deficit):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
—
|
|
|
39.4
|
|
|
81.9
|
|
|
(121.3
|
)
|
|
—
|
|
|||||
Additional paid-in capital
|
|
1,223.7
|
|
|
3,958.6
|
|
|
1,395.7
|
|
|
(5,354.3
|
)
|
|
1,223.7
|
|
|||||
Accumulated other comprehensive income
|
|
33.9
|
|
|
—
|
|
|
3.1
|
|
|
(3.1
|
)
|
|
33.9
|
|
|||||
(Accumulated deficit) retained earnings
|
|
(2,594.8
|
)
|
|
(696.8
|
)
|
|
1,854.1
|
|
|
(1,157.3
|
)
|
|
(2,594.8
|
)
|
|||||
Total equity (deficit)
|
|
(1,337.2
|
)
|
|
3,301.2
|
|
|
3,334.8
|
|
|
(6,636.0
|
)
|
|
(1,337.2
|
)
|
|||||
Total Liabilities and Equity (Deficit)
|
|
$
|
6,838.2
|
|
|
$
|
5,195.9
|
|
|
$
|
8,210.7
|
|
|
$
|
(9,263.5
|
)
|
|
$
|
10,981.3
|
|
|
|
Condensed Consolidating Balance Sheet (Unaudited)
|
||||||||||||||||||
|
|
As of December 31, 2017
|
||||||||||||||||||
(Millions)
|
|
Windstream Services
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Assets:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
2.5
|
|
|
$
|
40.9
|
|
|
$
|
—
|
|
|
$
|
43.4
|
|
Accounts receivable, net
|
|
—
|
|
|
185.2
|
|
|
461.1
|
|
|
(3.3
|
)
|
|
643.0
|
|
|||||
Notes receivable - affiliate
|
|
—
|
|
|
5.0
|
|
|
—
|
|
|
(5.0
|
)
|
|
—
|
|
|||||
Affiliates receivable, net
|
|
—
|
|
|
18.3
|
|
|
1,949.8
|
|
|
(1,968.1
|
)
|
|
—
|
|
|||||
Inventories
|
|
—
|
|
|
76.9
|
|
|
16.1
|
|
|
—
|
|
|
93.0
|
|
|||||
Prepaid expenses and other
|
|
25.6
|
|
|
44.3
|
|
|
83.2
|
|
|
—
|
|
|
153.1
|
|
|||||
Total current assets
|
|
25.6
|
|
|
332.2
|
|
|
2,551.1
|
|
|
(1,976.4
|
)
|
|
932.5
|
|
|||||
Investments in consolidated subsidiaries
|
|
5,603.7
|
|
|
575.9
|
|
|
401.0
|
|
|
(6,580.6
|
)
|
|
—
|
|
|||||
Notes receivable - affiliate
|
|
—
|
|
|
306.9
|
|
|
—
|
|
|
(306.9
|
)
|
|
—
|
|
|||||
Goodwill
|
|
657.2
|
|
|
1,712.8
|
|
|
472.4
|
|
|
—
|
|
|
2,842.4
|
|
|||||
Other intangibles, net
|
|
479.8
|
|
|
461.7
|
|
|
512.9
|
|
|
—
|
|
|
1,454.4
|
|
|||||
Net property, plant and equipment
|
|
5.8
|
|
|
1,318.3
|
|
|
4,067.7
|
|
|
—
|
|
|
5,391.8
|
|
|||||
Deferred income taxes
|
|
—
|
|
|
460.7
|
|
|
205.2
|
|
|
(295.1
|
)
|
|
370.8
|
|
|||||
Other assets
|
|
25.7
|
|
|
15.5
|
|
|
51.2
|
|
|
—
|
|
|
92.4
|
|
|||||
Total Assets
|
|
$
|
6,797.8
|
|
|
$
|
5,184.0
|
|
|
$
|
8,261.5
|
|
|
$
|
(9,159.0
|
)
|
|
$
|
11,084.3
|
|
Liabilities and Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current Liabilities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current maturities of long-term debt
|
|
$
|
169.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
169.3
|
|
Current portion of long-term lease obligations
|
|
—
|
|
|
55.2
|
|
|
133.4
|
|
|
—
|
|
|
188.6
|
|
|||||
Accounts payable
|
|
—
|
|
|
123.4
|
|
|
370.6
|
|
|
—
|
|
|
494.0
|
|
|||||
Affiliates payable, net
|
|
1,968.1
|
|
|
—
|
|
|
—
|
|
|
(1,968.1
|
)
|
|
—
|
|
|||||
Notes payable - affiliate
|
|
—
|
|
|
—
|
|
|
5.0
|
|
|
(5.0
|
)
|
|
—
|
|
|||||
Advance payments and customer deposits
|
|
—
|
|
|
40.7
|
|
|
169.9
|
|
|
(3.3
|
)
|
|
207.3
|
|
|||||
Accrued taxes
|
|
—
|
|
|
23.8
|
|
|
65.7
|
|
|
—
|
|
|
89.5
|
|
|||||
Accrued interest
|
|
50.2
|
|
|
1.8
|
|
|
0.6
|
|
|
—
|
|
|
52.6
|
|
|||||
Other current liabilities
|
|
15.6
|
|
|
102.7
|
|
|
223.8
|
|
|
—
|
|
|
342.1
|
|
|||||
Total current liabilities
|
|
2,203.2
|
|
|
347.6
|
|
|
969.0
|
|
|
(1,976.4
|
)
|
|
1,543.4
|
|
|||||
Long-term debt
|
|
5,575.0
|
|
|
99.6
|
|
|
—
|
|
|
—
|
|
|
5,674.6
|
|
|||||
Long-term lease obligations
|
|
—
|
|
|
1,350.1
|
|
|
3,293.2
|
|
|
—
|
|
|
4,643.3
|
|
|||||
Notes payable - affiliate
|
|
—
|
|
|
—
|
|
|
306.9
|
|
|
(306.9
|
)
|
|
—
|
|
|||||
Deferred income taxes
|
|
295.1
|
|
|
—
|
|
|
—
|
|
|
(295.1
|
)
|
|
—
|
|
|||||
Other liabilities
|
|
23.4
|
|
|
77.1
|
|
|
421.4
|
|
|
—
|
|
|
521.9
|
|
|||||
Total liabilities
|
|
8,096.7
|
|
|
1,874.4
|
|
|
4,990.5
|
|
|
(2,578.4
|
)
|
|
12,383.2
|
|
|||||
Commitments and Contingencies (See Note 15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Equity (Deficit):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Common stock
|
|
—
|
|
|
39.4
|
|
|
81.9
|
|
|
(121.3
|
)
|
|
—
|
|
|||||
Additional paid-in capital
|
|
1,187.1
|
|
|
3,958.6
|
|
|
1,358.1
|
|
|
(5,316.7
|
)
|
|
1,187.1
|
|
|||||
Accumulated other comprehensive income
|
|
21.4
|
|
|
—
|
|
|
4.0
|
|
|
(4.0
|
)
|
|
21.4
|
|
|||||
(Accumulated deficit) retained earnings
|
|
(2,507.4
|
)
|
|
(688.4
|
)
|
|
1,827.0
|
|
|
(1,138.6
|
)
|
|
(2,507.4
|
)
|
|||||
Total equity (deficit)
|
|
(1,298.9
|
)
|
|
3,309.6
|
|
|
3,271.0
|
|
|
(6,580.6
|
)
|
|
(1,298.9
|
)
|
|||||
Total Liabilities and Equity (Deficit)
|
|
$
|
6,797.8
|
|
|
$
|
5,184.0
|
|
|
$
|
8,261.5
|
|
|
$
|
(9,159.0
|
)
|
|
$
|
11,084.3
|
|
|
|
Condensed Consolidating Statement of Cash Flows (Unaudited)
|
||||||||||||||||||
|
|
Three Months Ended
March 31, 2018 |
||||||||||||||||||
(Millions)
|
|
Windstream Services
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided from operating
activities
|
|
$
|
(66.1
|
)
|
|
$
|
33.7
|
|
|
$
|
272.2
|
|
|
$
|
—
|
|
|
$
|
239.8
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to property, plant and equipment
|
|
(0.1
|
)
|
|
(51.7
|
)
|
|
(165.8
|
)
|
|
—
|
|
|
(217.6
|
)
|
|||||
Acquisition of MASS
|
|
(37.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.6
|
)
|
|||||
Other, net
|
|
—
|
|
|
0.5
|
|
|
(0.1
|
)
|
|
—
|
|
|
0.4
|
|
|||||
Net cash used in investing activities
|
|
(37.7
|
)
|
|
(51.2
|
)
|
|
(165.9
|
)
|
|
—
|
|
|
(254.8
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Distributions to Windstream Holdings, Inc.
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||||
Repayments of debt and swaps
|
|
(217.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(217.1
|
)
|
|||||
Proceeds from debt issuance
|
|
313.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
313.0
|
|
|||||
Debt issuance costs
|
|
(2.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.8
|
)
|
|||||
Intercompany transactions, net
|
|
35.3
|
|
|
40.3
|
|
|
(75.6
|
)
|
|
—
|
|
|
—
|
|
|||||
Payments under long-term lease obligations
|
|
—
|
|
|
(13.1
|
)
|
|
(31.8
|
)
|
|
—
|
|
|
(44.9
|
)
|
|||||
Payments under capital lease obligations
|
|
—
|
|
|
(12.3
|
)
|
|
(0.8
|
)
|
|
—
|
|
|
(13.1
|
)
|
|||||
Other, net
|
|
(2.1
|
)
|
|
0.5
|
|
|
(0.9
|
)
|
|
—
|
|
|
(2.5
|
)
|
|||||
Net cash provided from (used in) financing
activities
|
|
125.8
|
|
|
15.4
|
|
|
(109.1
|
)
|
|
—
|
|
|
32.1
|
|
|||||
Increase (decrease) in cash and cash equivalents
|
|
22.0
|
|
|
(2.1
|
)
|
|
(2.8
|
)
|
|
—
|
|
|
17.1
|
|
|||||
Cash and Cash Equivalents:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning of period
|
|
—
|
|
|
2.5
|
|
|
40.9
|
|
|
—
|
|
|
43.4
|
|
|||||
End of period
|
|
$
|
22.0
|
|
|
$
|
0.4
|
|
|
$
|
38.1
|
|
|
$
|
—
|
|
|
$
|
60.5
|
|
|
|
Condensed Consolidating Statement of Cash Flows (Unaudited)
|
||||||||||||||||||
|
|
Three Months Ended
March 31, 2017 |
||||||||||||||||||
(Millions)
|
|
Windstream Services
|
|
Guarantors
|
|
Non-
Guarantors
|
|
Eliminations
|
|
Consolidated
|
||||||||||
Cash Flows from Operating Activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash (used in) provided from operating
activities
|
|
$
|
(33.4
|
)
|
|
$
|
72.2
|
|
|
$
|
114.3
|
|
|
$
|
—
|
|
|
$
|
153.1
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Additions to property, plant and equipment
|
|
0.1
|
|
|
(39.9
|
)
|
|
(203.6
|
)
|
|
—
|
|
|
(243.4
|
)
|
|||||
Cash acquired from EarthLink
|
|
—
|
|
|
0.7
|
|
|
4.3
|
|
|
—
|
|
|
5.0
|
|
|||||
Other, net
|
|
—
|
|
|
—
|
|
|
(2.5
|
)
|
|
—
|
|
|
(2.5
|
)
|
|||||
Net cash provided from (used in) investing
activities
|
|
0.1
|
|
|
(39.2
|
)
|
|
(201.8
|
)
|
|
—
|
|
|
(240.9
|
)
|
|||||
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Distributions to Windstream Holdings, Inc.
|
|
(24.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.3
|
)
|
|||||
Contributions from Windstream Holdings, Inc.
|
|
9.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.6
|
|
|||||
Repayments of debt and swaps
|
|
(701.0
|
)
|
|
(453.6
|
)
|
|
—
|
|
|
—
|
|
|
(1,154.6
|
)
|
|||||
Proceeds of debt issuance
|
|
1,315.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,315.6
|
|
|||||
Debt issuance costs
|
|
(7.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.0
|
)
|
|||||
Intercompany transactions, net
|
|
(549.8
|
)
|
|
441.8
|
|
|
108.0
|
|
|
—
|
|
|
—
|
|
|||||
Payments under long-term lease obligations
|
|
—
|
|
|
(11.9
|
)
|
|
(28.7
|
)
|
|
—
|
|
|
(40.6
|
)
|
|||||
Payments under capital lease obligations
|
|
—
|
|
|
(6.4
|
)
|
|
(2.3
|
)
|
|
—
|
|
|
(8.7
|
)
|
|||||
Other, net
|
|
(9.8
|
)
|
|
0.8
|
|
|
(0.8
|
)
|
|
—
|
|
|
(9.8
|
)
|
|||||
Net cash provided from (used in) financing
activities
|
|
33.3
|
|
|
(29.3
|
)
|
|
76.2
|
|
|
—
|
|
|
80.2
|
|
|||||
Increase (decrease) in cash and cash equivalents
|
|
—
|
|
|
3.7
|
|
|
(11.3
|
)
|
|
—
|
|
|
(7.6
|
)
|
|||||
Cash and Cash Equivalents:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Beginning of period
|
|
—
|
|
|
2.2
|
|
|
56.9
|
|
|
—
|
|
|
59.1
|
|
|||||
End of period
|
|
$
|
—
|
|
|
$
|
5.9
|
|
|
$
|
45.6
|
|
|
$
|
—
|
|
|
$
|
51.5
|
|
•
|
Advance our industry-leading Windstream Enterprise & Wholesale product and service capabilities. Our sales strategy is focused on our SD-WAN and unified communications product offerings, including OfficeSuite®, which has broad application across our customer base. We continue to advance our security and on-net solutions, as well as our professional services portfolio. We believe our strategic product set and on-net capabilities has us well positioned in the marketplace.
|
•
|
Launch next-generation broadband deployment technologies that are both faster and more cost-effective. We continue to deploy faster broadband speeds throughout our service territories.
|
•
|
Simplify our business and transform customer-facing and internal user capabilities. We continue to integrate our information technology platforms to allow us to more efficiently manage our product catalog, price quoting and order management systems, as well as eliminate duplicative systems and generate meaningful cost savings.
|
•
|
Drive revenue improvements through enhanced sales and improved customer retention in both our business units. Our Consumer & Small Business segment remains focused on improving our broadband market share while increasing speed and value-added service penetration for each broadband connection, while our Windstream Enterprise & Wholesale segment is focused on increasing strategic sales by leveraging our next generation products. In addition to our revenue objectives, we will continue to aggressively drive our on-going initiatives of network access reductions, automation of processes and enhanced organizational effectiveness, as we align our expenses to our revenue trajectory.
|
•
|
Seek opportunities to optimize our balance sheet and improve our debt maturity profile.
|
•
|
Expanded our premium broadband availability to our Consumer & Small Business customers. Approximately 28 percent of our customer base now subscribe to rate plans offering 25 megabits per second (“Mbps”) speeds or faster compared to only 14 percent for the same period a year ago. This improvement in premium speed availability helped drive in March 2018 the highest number of monthly net high-speed Internet customer additions since August 2012. Contribution margins in our Consumer & Small Business segment increased to 59.2 percent compared to 57.3 percent for the same period a year ago.
|
•
|
Grew strategic sales in our Enterprise segment and increased our Enterprise contribution margin to 19.5 percent compared to 18.7 percent for the same period a year ago. To expand our Enterprise business, we completed on March 27, 2018, the acquisition of MASS Communications (“MASS”), a privately held telecommunications network management company focused on providing custom engineered voice, data and networking solutions to small and mid-sized global enterprises in the financial, legal, healthcare, technology, education and government sectors.
|
•
|
Maintained stable contribution margins in our Wholesale and Consumer CLEC businesses through strong expense management
.
|
•
|
Executed on our initiative to transform our business operations and reduce operating costs including rebranding our Enterprise and Wholesale business unit, optimizing our network and aligning our workforce to improve productivity and reduce costs. In undertaking these initiatives, we incurred incremental rebranding and marketing expenses, network grooming costs associated with the relocation of traffic to existing lower-cost circuits and termination of existing contracts prior to their expiration and third-party consulting fees. We also completed a restructuring of our workforce in January 2018 eliminating approximately 400 employees and an additional 90 positions that will drive cost savings of approximately $50 million in 2018.
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|||||||||||||||
(Millions)
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|
|||
Revenues and sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Service revenues
|
|
|
|
|
|
|
|
|
|
$
|
1,435.4
|
|
|
$
|
1,344.4
|
|
|
$
|
91.0
|
|
|
7
|
|
Product sales
|
|
|
|
|
|
|
|
|
|
18.9
|
|
|
21.3
|
|
|
(2.4
|
)
|
|
(11
|
)
|
|||
Total revenues and sales
|
|
|
|
|
|
|
|
|
|
1,454.3
|
|
|
1,365.7
|
|
|
88.6
|
|
|
6
|
|
|||
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Cost of services (a)
|
|
|
|
|
|
|
|
|
|
736.9
|
|
|
683.8
|
|
|
53.1
|
|
|
8
|
|
|||
Cost of products sold
|
|
|
|
|
|
|
|
|
|
16.8
|
|
|
20.8
|
|
|
(4.0
|
)
|
|
(19
|
)
|
|||
Selling, general and
administrative
|
|
|
|
|
|
|
|
|
|
228.8
|
|
|
213.8
|
|
|
15.0
|
|
|
7
|
|
|||
Depreciation and amortization
|
|
|
|
|
|
|
|
|
|
381.8
|
|
|
338.5
|
|
|
43.3
|
|
|
13
|
|
|||
Merger, integration and other costs
|
|
|
|
|
|
|
|
|
|
7.3
|
|
|
57.3
|
|
|
(50.0
|
)
|
|
(87
|
)
|
|||
Restructuring charges
|
|
|
|
|
|
|
|
|
|
13.7
|
|
|
7.4
|
|
|
6.3
|
|
|
85
|
|
|||
Total costs and expenses
|
|
|
|
|
|
|
|
|
|
1,385.3
|
|
|
1,321.6
|
|
|
63.7
|
|
|
5
|
|
|||
Operating income
|
|
|
|
|
|
|
|
|
|
69.0
|
|
|
44.1
|
|
|
24.9
|
|
|
56
|
|
|||
Other income (expense), net
|
|
|
|
|
|
|
|
|
|
(2.3
|
)
|
|
2.6
|
|
|
(4.9
|
)
|
|
188
|
|
|||
Net loss on early extinguishment of debt
|
|
|
|
|
|
|
|
|
|
—
|
|
|
(3.2
|
)
|
|
3.2
|
|
|
100
|
|
|||
Interest expense
|
|
|
|
|
|
|
|
|
|
(223.1
|
)
|
|
(211.8
|
)
|
|
11.3
|
|
|
5
|
|
|||
Loss before income taxes
|
|
|
|
|
|
|
|
|
|
(156.4
|
)
|
|
(168.3
|
)
|
|
(11.9
|
)
|
|
(7
|
)
|
|||
Income tax benefit
|
|
|
|
|
|
|
|
|
|
(35.0
|
)
|
|
(57.0
|
)
|
|
(22.0
|
)
|
|
(39
|
)
|
|||
Net loss
|
|
|
|
|
|
|
|
|
|
$
|
(121.4
|
)
|
|
$
|
(111.3
|
)
|
|
$
|
10.1
|
|
|
9
|
|
(a)
|
Excludes depreciation and amortization included below.
|
|
|
|
|
Three Months Ended
March 31, 2018 |
||||||
|
|
|
|
Increase (Decrease)
|
||||||
(Millions)
|
|
|
|
|
|
Amount
|
|
|
%
|
|
Increase attributable to acquisitions of EarthLink and Broadview
|
|
|
|
|
|
$
|
198.5
|
|
|
|
Decrease in Consumer CLEC revenues (a)
|
|
|
|
|
|
(0.7
|
)
|
|
|
|
Decrease in Wholesale revenues (b)
|
|
|
|
|
|
(19.1
|
)
|
|
|
|
Decrease in Consumer & Small Business revenues (c)
|
|
|
|
|
|
(24.7
|
)
|
|
|
|
Decrease in Enterprise revenues (d)
|
|
|
|
|
|
(63.0
|
)
|
|
|
|
Net increase in service revenues
|
|
|
|
|
|
$
|
91.0
|
|
|
7
|
(a)
|
Decrease was primarily due to reductions in traditional voice, long-distance and data and integrated services due to increased customer churn attributable to the effects of competition, as well as declines in long-distance usage.
|
(b)
|
Decrease was primarily due to declining demand for dedicated copper-based circuits, as carriers continue to migrate traffic to fiber-based connections.
|
(c)
|
Decrease was primarily from reductions in both Consumer & Small Business voice-only revenues attributable to a decline in customers due to the impacts of competition as well as reductions in switched access revenues and federal USF surcharges due to the impacts of inter-carrier compensation reform.
|
(d)
|
Decrease was primarily due to reductions in voice, long-distance, and Internet service revenues attributable to a declining customer base, reflecting the effects of competition.
|
|
|
|
|
Three Months Ended
March 31, 2018 |
|||||||
|
|
|
|
Increase (Decrease)
|
|||||||
(Millions)
|
|
|
|
|
|
Amount
|
|
|
%
|
|
|
Increase attributable to acquisitions of EarthLink and Broadview
|
|
|
|
|
|
$
|
0.6
|
|
|
|
|
Increase in Enterprise product sales
|
|
|
|
|
|
0.2
|
|
|
|
||
Decrease in Consumer & Small Business product sales (a)
|
|
|
|
|
|
(3.2
|
)
|
|
|
||
Net decrease in product sales
|
|
|
|
|
|
$
|
(2.4
|
)
|
|
(11
|
)
|
(a)
|
The decrease was primarily due to declines in sales of network equipment on a wholesale basis to contractors due to lower demand.
|
|
|
|
|
Three Months Ended
March 31, 2018 |
||||||
|
|
|
|
Increase (Decrease)
|
||||||
(Millions)
|
|
|
|
|
|
Amount
|
|
|
%
|
|
Increase attributable to acquisitions of EarthLink and Broadview
|
|
|
|
|
|
$
|
123.7
|
|
|
|
Increase in federal USF expense
|
|
|
|
|
|
0.5
|
|
|
|
|
Decrease in pension expense
|
|
|
|
|
|
(1.2
|
)
|
|
|
|
Decrease in network operations (a)
|
|
|
|
|
|
(13.1
|
)
|
|
|
|
Decrease in other expenses (b)
|
|
|
|
|
|
(16.3
|
)
|
|
|
|
Decrease in interconnection expense (c)
|
|
|
|
|
|
(40.5
|
)
|
|
|
|
Net increase in cost of services
|
|
|
|
|
|
$
|
53.1
|
|
|
8
|
(a)
|
The decrease in network operations reflects reduced labor costs, primarily attributable to workforce reductions completed during 2017 and 2018, partially offset by higher leased network facilities costs attributable to expansion of our fiber transport network.
|
(b)
|
The decrease reflects reduced labor costs, primarily attributable to workforce reductions completed during 2017 and 2018, partially offset by incremental network optimization costs of
$5.4 million
incurred in migrating traffic to existing lower costs circuits and terminating contracts prior to their expiration.
|
(c)
|
Decrease in interconnection expense was primarily attributable to rate reductions and cost improvements from the continuation of network efficiency projects, increased customer churn, and lower long distance usage, partially offset by an increase in higher capacity circuits to service existing customers and increase the transport capacity of our network.
|
|
|
|
|
Three Months Ended
March 31, 2018 |
|||||||
|
|
|
|
Increase (Decrease)
|
|||||||
(Millions)
|
|
|
|
|
|
Amount
|
|
|
%
|
|
|
Increase attributable to acquisitions of EarthLink and Broadview
|
|
|
|
|
|
$
|
0.2
|
|
|
|
|
Decrease in product sales to Enterprise customers
|
|
|
|
|
|
(1.1
|
)
|
|
|
||
Decrease in product sales to Consumer & Small Business customers
|
|
|
|
|
|
(3.1
|
)
|
|
|
||
Net decrease in cost of products sold
|
|
|
|
|
|
$
|
(4.0
|
)
|
|
(19
|
)
|
|
|
|
|
Three Months Ended
March 31, 2018 |
||||||
|
|
|
|
Increase (Decrease)
|
||||||
(Millions)
|
|
|
|
|
|
Amount
|
|
|
%
|
|
Increase attributable to acquisitions of EarthLink and Broadview
|
|
|
|
|
|
$
|
35.1
|
|
|
|
Increase in other costs (a)
|
|
|
|
|
|
5.0
|
|
|
|
|
Increase in sales and marketing expenses
|
|
|
|
|
|
0.7
|
|
|
|
|
Decrease in medical insurance
|
|
|
|
|
|
(2.8
|
)
|
|
|
|
Decrease in share-based compensation
|
|
|
|
|
|
(3.3
|
)
|
|
|
|
Decrease in salaries and other benefits (b)
|
|
|
|
|
|
(19.7
|
)
|
|
|
|
Net increase in SG&A
|
|
|
|
|
|
$
|
15.0
|
|
|
7
|
(a)
|
The increase was primarily due to incremental business transformation expenses of
$8.7 million
consisting of consulting fees.
|
(b)
|
The decrease was primarily due to reduced labor costs, primarily attributable to workforce reductions completed during 2017 and 2018.
|
|
|
|
|
Three Months Ended
March 31, 2018 |
||||||
|
|
|
|
Increase (Decrease)
|
||||||
(Millions)
|
|
|
|
|
|
Amount
|
|
|
%
|
|
Increase attributable to acquisitions of EarthLink and Broadview
|
|
|
|
|
|
$
|
37.8
|
|
|
|
Increase in depreciation expense (a)
|
|
|
|
|
|
12.1
|
|
|
|
|
Decrease in amortization expense (b)
|
|
|
|
|
|
(6.6
|
)
|
|
|
|
Net increase in depreciation and amortization expense
|
|
|
|
|
|
$
|
43.3
|
|
|
13
|
(a)
|
Increase was primarily due to additions of property, plant and equipment.
|
(b)
|
Decrease reflected the use of the sum-of-the-years-digits method for customer lists. The effect of using an accelerated amortization method results in an incremental decline in expense each period as the intangible assets amortize.
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Merger, integration and other costs:
|
|
|
|
|
|
|
|
|
||||
Information technology conversion costs
|
|
|
|
|
|
$
|
0.4
|
|
|
$
|
0.9
|
|
Costs related to merger with EarthLink (a)
|
|
|
|
|
|
4.4
|
|
|
53.1
|
|
||
Costs related to merger with Broadview (b)
|
|
|
|
|
|
1.9
|
|
|
—
|
|
||
Costs related to acquisition of MASS
|
|
|
|
|
|
0.6
|
|
|
—
|
|
||
Network optimization and contract termination costs
|
|
|
|
|
|
—
|
|
|
3.3
|
|
||
Total merger, integration and other costs
|
|
|
|
|
|
7.3
|
|
|
57.3
|
|
||
Restructuring charges
|
|
|
|
|
|
13.7
|
|
|
7.4
|
|
||
Total merger, integration and other costs and restructuring
charges
|
|
|
|
|
|
$
|
21.0
|
|
|
$
|
64.7
|
|
(a)
|
For the
three month period ended March 31
,
2018
, these amounts include severance and employee benefit costs for EarthLink employees terminated after the Merger of
$3.0 million
and other miscellaneous expenses of
$1.4 million
. During the first quarter of 2017, we incurred investment banking, legal, accounting and other consulting fees of
$23.4 million
, severance and employee benefit costs for EarthLink employees terminated after the Merger of
$24.5 million
, share-based compensation expense of
$4.4 million
attributable to the accelerated vesting of replacement equity awards for terminated EarthLink employees and other miscellaneous expenses of
$0.8 million
.
|
(b)
|
Includes severance and employee benefit costs for Broadview employees terminated after the acquisition of
$1.3 million
and other miscellaneous expenses of
$0.6 million
.
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Loss on disposal of data center operations
|
|
|
|
|
|
$
|
(7.3
|
)
|
|
$
|
—
|
|
Non-operating pension income
|
|
|
|
|
|
5.3
|
|
|
2.1
|
|
||
Non-operating postretirement benefits expense
|
|
|
|
|
|
(0.2
|
)
|
|
(0.2
|
)
|
||
Other, net
|
|
|
|
|
|
(0.1
|
)
|
|
0.7
|
|
||
Other expense (income), net
|
|
|
|
|
|
$
|
(2.3
|
)
|
|
$
|
2.6
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Senior secured credit facility, Tranche B
|
|
|
|
|
|
$
|
25.6
|
|
|
$
|
22.7
|
|
Senior secured credit facility, revolving line of
credit
|
|
|
|
|
|
9.0
|
|
|
5.2
|
|
||
Secured 2025 Notes
|
|
|
|
|
|
13.8
|
|
|
—
|
|
||
Senior unsecured notes
|
|
|
|
|
|
51.8
|
|
|
54.1
|
|
||
Notes issued by subsidiaries
|
|
|
|
|
|
1.7
|
|
|
3.9
|
|
||
Interest expense - long-term lease obligations:
|
|
|
|
|
|
|
|
|
||||
Telecommunications network assets
|
|
|
|
|
|
118.5
|
|
|
122.8
|
|
||
Real estate contributed to pension plan
|
|
|
|
|
|
1.5
|
|
|
1.5
|
|
||
Impacts of interest rate swaps
|
|
|
|
|
|
0.6
|
|
|
2.8
|
|
||
Interest on capital leases and other
|
|
|
|
|
|
1.5
|
|
|
1.1
|
|
||
Less capitalized interest expense
|
|
|
|
|
|
(0.9
|
)
|
|
(2.3
|
)
|
||
Total interest expense
|
|
|
|
|
|
$
|
223.1
|
|
|
$
|
211.8
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|||||||||||||||
(Millions)
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|
|||
Revenues and sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Service revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
High-speed Internet bundles (a)
|
|
|
|
|
|
|
|
|
|
$
|
255.1
|
|
|
$
|
266.1
|
|
|
$
|
(11.0
|
)
|
|
(4
|
)
|
Voice-only (b)
|
|
|
|
|
|
|
|
|
|
31.4
|
|
|
33.6
|
|
|
(2.2
|
)
|
|
(7
|
)
|
|||
Video and miscellaneous
|
|
|
|
|
|
|
|
|
|
11.4
|
|
|
11.0
|
|
|
0.4
|
|
|
4
|
|
|||
Total consumer
|
|
|
|
|
|
|
|
|
|
297.9
|
|
|
310.7
|
|
|
(12.8
|
)
|
|
(4
|
)
|
|||
Small business (
c)
|
|
|
|
|
|
|
|
|
|
78.1
|
|
|
83.4
|
|
|
(5.3
|
)
|
|
(6
|
)
|
|||
Switched access (d)
|
|
|
|
|
|
|
|
|
|
8.1
|
|
|
11.0
|
|
|
(2.9
|
)
|
|
(26
|
)
|
|||
CAF Phase II funding and frozen
federal USF (e)
|
|
|
|
|
|
|
|
|
|
46.0
|
|
|
48.1
|
|
|
(2.1
|
)
|
|
(4
|
)
|
|||
State USF and ARM support (e)
|
|
|
|
|
|
|
|
|
|
24.2
|
|
|
27.2
|
|
|
(3.0
|
)
|
|
(11
|
)
|
|||
End user surcharges (e)
|
|
|
|
|
|
|
|
|
|
16.7
|
|
|
15.3
|
|
|
1.4
|
|
|
9
|
|
|||
Total service revenues
|
|
|
|
|
|
|
|
|
|
471.0
|
|
|
495.7
|
|
|
(24.7
|
)
|
|
(5
|
)
|
|||
Product sales (f)
|
|
|
|
|
|
|
|
|
|
5.5
|
|
|
8.7
|
|
|
(3.2
|
)
|
|
(37
|
)
|
|||
Total revenues and sales
|
|
|
|
|
|
|
|
|
|
476.5
|
|
|
504.4
|
|
|
(27.9
|
)
|
|
(6
|
)
|
|||
Costs and expenses
(g)
|
|
|
|
|
|
|
|
|
|
194.6
|
|
|
215.4
|
|
|
(20.8
|
)
|
|
(10
|
)
|
|||
Segment income
|
|
|
|
|
|
|
|
|
|
$
|
281.9
|
|
|
$
|
289.0
|
|
|
$
|
(7.1
|
)
|
|
(2
|
)
|
(a)
|
The decrease is due to fewer broadband units in service as further discussed below and the effects of implementing new lower priced acquisition and customer retention rate plans.
|
(b)
|
The decrease in voice-only revenues was primarily due to fewer voice only lines in service consistent with the declines in households served as further discussed below.
|
(c)
|
The decrease was primarily attributable to lower usage for voice-only and high-speed Internet services previously driven by declines in customers due to the impacts of competition.
|
(d)
|
Switched access revenues include usage sensitive revenues from long-distance companies and other carriers for access to our network in connection with the completion of long-distance calls, as well as reciprocal compensation received from wireless and other local connecting carriers for use of our network facilities. The decrease was primarily due to the effects of inter-carrier compensation reform. See “Regulatory Matters” for a further discussion.
|
(e)
|
Universal Service Fund (“USF”) revenues are government subsidies designed to partially offset the cost of providing wireline services in high-cost areas. CAF Phase II funding is provided for the purpose of expanding and supporting broadband service in rural areas and effectively replaces frozen federal USF support in those states in which we elected to receive the CAF Phase II funding. The access recovery mechanism (“ARM”) is additional federal universal service support available to help mitigate revenue losses from inter-carrier compensation reform not covered by the access recovery charge (“ARC”). The decreases in state USF, and ARM support, as well as the decline in USF surcharge revenues was primarily due to the effects of inter-carrier compensation reform. See “Regulatory Matters” for a further discussion of state and federal regulatory actions impacting these revenues and our election of CAF Phase II funding.
|
(f)
|
The decrease was primarily due to declines in sales of network equipment on a wholesale basis to contractors due to lower demand.
|
(g)
|
The decrease was primarily due to reductions in contract labor and interconnection expense, reflecting lower voice-only revenues due to the decline in households. The decrease also reflects reduced labor costs attributable to workforce reductions completed during the quarter.
|
|
|
|
|
|
March 31, |
|
Increase (Decrease)
|
||||||||||||
(Thousands)
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|
Consumer Operating Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Households served (a)
|
|
|
|
|
|
|
|
|
1,257.3
|
|
|
1,337.5
|
|
|
(80.2
|
)
|
|
(6
|
)
|
High-speed Internet customers (b)
|
|
|
|
|
|
|
|
|
1,004.4
|
|
|
1,047.6
|
|
|
(43.2
|
)
|
|
(4
|
)
|
Digital television customers (c)
|
|
|
|
|
|
|
|
|
267.1
|
|
|
310.0
|
|
|
(42.9
|
)
|
|
(14
|
)
|
Small Business customers (d)
|
|
|
|
|
|
|
|
|
125.0
|
|
|
136.8
|
|
|
(11.8
|
)
|
|
(9
|
)
|
(a)
|
The decrease in the number of consumer households served was primarily attributable to the effects of competition from wireless carriers, cable companies and other providers using emerging technologies. For the
three month period ended March 31
,
2018
, consumer households served decreased by
11,500
, compared to a decrease of
17,100
, respectively, for the same period in
2017
.
|
(b)
|
The decrease in consumer high-speed Internet customers was primarily due to the effects of competition from other service providers and increased penetration in the marketplace, as the number of households without high-speed Internet service continues to shrink. As of
March 31, 2018
, we provided high-speed Internet service to approximately
82 percent
of our primary residential lines in service and approximately
77 percent
of our total voice lines had high-speed Internet competition, primarily from cable service providers. For the
three month period ended March 31
,
2018
, consumer high-speed Internet customers decreased by
2,200
, compared to a decrease of
3,500
for the same period in
2017
.
|
(c)
|
For the
three month period ended March 31
,
2018
, digital television customers decreased by
10,800
, compared to a decrease of
11,000
for the same period in
2017
, primarily due to competition from other service providers.
|
(d)
|
The decrease in small business customers was primarily due to business closures and competition from cable companies. For the
three month period ended March 31
,
2018
, small business customers decreased by
3,100
, compared to a decrease of
2,900
for the same period in
2017
.
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
||||||||||||||
(Millions)
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|||
Revenues and sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Voice and long-distance (a)
|
|
|
|
|
|
|
|
|
|
$
|
242.8
|
|
|
$
|
210.1
|
|
|
$
|
32.7
|
|
|
16
|
Data and integrated services (b)
|
|
|
|
|
|
|
|
|
|
408.3
|
|
|
379.1
|
|
|
29.2
|
|
|
8
|
|||
Miscellaneous (c)
|
|
|
|
|
|
|
|
|
|
48.5
|
|
|
34.0
|
|
|
14.5
|
|
|
43
|
|||
End user surcharges
|
|
|
|
|
|
|
|
|
|
33.3
|
|
|
26.0
|
|
|
7.3
|
|
|
28
|
|||
Total service revenues
|
|
|
|
|
|
|
|
|
|
732.9
|
|
|
649.2
|
|
|
83.7
|
|
|
13
|
|||
Product sales
|
|
|
|
|
|
|
|
|
|
13.2
|
|
|
12.6
|
|
|
0.6
|
|
|
5
|
|||
Total revenues and sales
|
|
|
|
|
|
|
|
|
|
746.1
|
|
|
661.8
|
|
|
84.3
|
|
|
13
|
|||
Costs and expenses
(d)
|
|
|
|
|
|
|
|
|
|
600.3
|
|
|
537.8
|
|
|
62.5
|
|
|
12
|
|||
Segment income
|
|
|
|
|
|
|
|
|
|
$
|
145.8
|
|
|
$
|
124.0
|
|
|
$
|
21.8
|
|
|
18
|
(a)
|
The increase was primarily attributable to incremental revenues of
$72.3 million
, as a result of the acquisitions of EarthLink and Broadview, partially offset by decreases in traditional voice, long-distance and data and integrated services due to increased customer churn attributable to the effect of competition, as well as declines in long-distance usage.
|
(b)
|
The increase was primarily due to incremental revenues of
$94.6 million
, respectively, from the acquisitions of EarthLink and Broadview, partially offset by the adverse effects of increased customer churn.
|
(c)
|
The increase was primarily due to incremental revenues of
$21.6 million
from the acquisitions of EarthLink and Broadview, partially offset by lower maintenance revenues.
|
(d)
|
The increase was primarily due to incremental interconnection costs associated with the acquisitions of EarthLink and Broadview of
$44.5 million
, partially offset by rate reductions and costs improvements from the continuation of network efficiency projects, reduced labor costs due to workforce reductions and lower sales and marketing costs.
|
|
|
|
|
|
|
March 31, |
|
Increase (Decrease)
|
||||||||||||
(Thousands)
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|
Enterprise customers
|
|
|
|
|
|
|
|
|
|
120.7
|
|
|
120.8
|
|
|
(0.1
|
)
|
|
—
|
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
|||||||||||||||
(Millions)
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|
|||
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Service revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Core wholesale (a)
|
|
|
|
|
|
|
|
|
|
$
|
152.8
|
|
|
$
|
146.0
|
|
|
$
|
6.8
|
|
|
5
|
|
Resale (b)
|
|
|
|
|
|
|
|
|
|
18.3
|
|
|
16.3
|
|
|
2.0
|
|
|
12
|
|
|||
Wireless TDM (c)
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
5.8
|
|
|
(2.6
|
)
|
|
(45
|
)
|
|||
Switched access (d)
|
|
|
|
|
|
|
|
|
|
9.4
|
|
|
10.7
|
|
|
(1.3
|
)
|
|
(12
|
)
|
|||
Total service revenues
|
|
|
|
|
|
|
|
|
|
183.7
|
|
|
178.8
|
|
|
4.9
|
|
|
3
|
|
|||
Product sales
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
*
|
|
|||
Total revenues and sales
|
|
|
|
|
|
|
|
|
|
183.8
|
|
|
178.8
|
|
|
5.0
|
|
|
3
|
|
|||
Costs and expenses (d)
|
|
|
|
|
|
|
|
|
|
55.5
|
|
|
51.7
|
|
|
3.8
|
|
|
7
|
|
|||
Segment income
|
|
|
|
|
|
|
|
|
|
$
|
128.3
|
|
|
$
|
127.1
|
|
|
$
|
1.2
|
|
|
1
|
|
(a)
|
Core wholesale revenues primarily include revenues from providing special access circuits, fiber connections, data transport and wireless backhaul services. The increase was primarily attributable to incremental revenues of
$24.1 million
due to the acquisitions of EarthLink and Broadview, partially offset by lower usage for voice-only services and higher disconnect activity as a result of carriers migrating to fiber-based networks.
|
(b)
|
Revenues represent voice and data services sold to other communications services providers on a resale basis.
|
(c)
|
The decrease in these revenues was attributable to declines in special access charges for dedicated copper-based circuits as carriers migrate to fiber-based networks. We expect these revenues to be adversely impacted as wireless carriers continue to migrate traffic to fiber-based connections.
|
(d)
|
The increase was primarily related to additional interconnection expense of
$5.2 million
related to the acquisitions of EarthLink and Broadview, partially offset by reductions in long-distance usage by our wholesale customers and rate reductions and costs improvements from the continuation of network efficiency projects.
|
|
|
|
|
|
|
Three Months Ended
March 31, |
|
Increase (Decrease)
|
||||||||||||||
(Millions)
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|||
Revenues and sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
High-speed Internet
|
|
|
|
|
|
|
|
|
|
$
|
24.4
|
|
|
$
|
9.6
|
|
|
$
|
14.8
|
|
|
154
|
Dial-up, e-mail and miscellaneous
|
|
|
|
|
|
|
|
|
|
22.8
|
|
|
10.7
|
|
|
12.1
|
|
|
113
|
|||
End user surcharges
|
|
|
|
|
|
|
|
|
|
0.6
|
|
|
0.4
|
|
|
0.2
|
|
|
50
|
|||
Total service revenues (a)
|
|
|
|
|
|
|
|
|
|
47.8
|
|
|
20.7
|
|
|
27.1
|
|
|
131
|
|||
Product sales
|
|
|
|
|
|
|
|
|
|
0.1
|
|
|
—
|
|
|
0.1
|
|
|
*
|
|||
Total revenues and sales
|
|
|
|
|
|
|
|
|
|
47.9
|
|
|
20.7
|
|
|
27.2
|
|
|
131
|
|||
Cost and expenses
(b)
|
|
|
|
|
|
|
|
|
|
20.6
|
|
|
10.0
|
|
|
10.6
|
|
|
106
|
|||
Segment income
|
|
|
|
|
|
|
|
|
|
$
|
27.3
|
|
|
$
|
10.7
|
|
|
$
|
16.6
|
|
|
155
|
(a)
|
The increase in Consumer CLEC revenues primarily reflects incremental revenues related to the acquisition of EarthLink.
|
(b)
|
The increase was primarily attributable to the incremental costs associated with the acquisition of EarthLink of
$18.1 million
.
|
|
|
|
|
|
|
March 31, |
|
Increase (Decrease)
|
||||||||||||
(Thousands)
|
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
|
|
Amount
|
|
|
%
|
|
Consumer CLEC customers
|
|
|
|
|
|
|
|
641.0
|
|
|
683.1
|
|
|
(42.1
|
)
|
|
(6
|
)
|
•
|
the elimination of terminating switched access rates and other per-minute terminating charges between service providers by 2018, through annual reductions in the rates, mitigated in some cases by two recovery mechanisms; and
|
•
|
the provision of USF support for voice and broadband services.
|
(Millions)
|
2017
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
Total
|
|
||||||
CAF Phase II support
|
$
|
175.7
|
|
$
|
174.9
|
|
$
|
174.9
|
|
$
|
174.9
|
|
$
|
174.9
|
|
$
|
875.3
|
|
Transitional Frozen USF support
|
7.7
|
|
2.8
|
|
—
|
|
—
|
|
—
|
|
10.5
|
|
||||||
New Mexico Frozen USF support
|
4.6
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4.6
|
|
||||||
Total
|
$
|
188.0
|
|
$
|
177.7
|
|
$
|
174.9
|
|
$
|
174.9
|
|
$
|
174.9
|
|
$
|
890.4
|
|
|
|
|
|
Three Months Ended
March 31, |
||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Inter-carrier compensation revenue and ARM support
|
|
|
|
|
|
$
|
19.9
|
|
|
$
|
26.3
|
|
Federal universal service and CAF Phase II support
|
|
|
|
|
|
$
|
46.0
|
|
|
$
|
48.1
|
|
(Millions)
|
|
2018
|
|
|
2017
|
|
||
Cash flows provided from (used in):
|
|
|
|
|
||||
Operating activities
|
|
$
|
239.3
|
|
|
$
|
153.7
|
|
Investing activities
|
|
(254.8
|
)
|
|
(240.9
|
)
|
||
Financing activities
|
|
32.6
|
|
|
79.6
|
|
||
Increase (decrease) in cash and cash equivalents
|
|
$
|
17.1
|
|
|
$
|
(7.6
|
)
|
(a)
|
Adjustments required by the credit facility primarily consist of the inclusion of the annual cash rental payment due under the master lease agreement with Uniti, operating results of acquired companies for applicable periods prior to the date of acquisition and net cost savings from integrating acquired companies not to exceed $25.0 million on a quarterly basis. The required adjustments also consist of the exclusion of pension expense, share-based compensation expense, merger, integration and other costs, restructuring charges, business transformation expenses, costs related to network optimization projects, incremental hurricane-related storm costs, amounts incurred with a carrier access settlement, and a penalty for not meeting certain spend commitments under a circuit discount plan.
|
(b)
|
The gross leverage ratio is computed by dividing total debt by adjusted EBITDA.
|
(c)
|
Adjustments required by the credit facility primarily consist of the inclusion of capitalized interest and amortization of the discount on long-term debt, net of premiums, and the exclusion of the interest expense attributable to the long-term lease obligation under the master lease agreement with Uniti.
|
(d)
|
The interest coverage ratio is computed by dividing adjusted EBITDA by adjusted interest expense.
|
Description
|
|
Moody’s
|
|
S&P
|
|
Fitch
|
Senior secured credit rating (a)
|
|
B3
|
|
B+
|
|
BB
|
Senior unsecured credit rating (a)
|
|
Caa1
|
|
CCC
|
|
B
|
Corporate credit rating (b)
|
|
B3
|
|
B-
|
|
B
|
Outlook (b)
|
|
Negative
|
|
Negative
|
|
Negative
|
(a)
|
Ratings assigned to Windstream Services.
|
(b)
|
Corporate credit rating and outlook assigned to Windstream Services for Moody’s and Fitch, while S&P assigns corporate credit rating and outlook to Windstream Holdings, Inc.
|
|
|
|
Three Months Ended
March 31, |
|||||||||
(Millions)
|
|
|
|
|
|
2018
|
|
|
2017
|
|
||
Operating income
|
|
|
|
|
|
$
|
69.0
|
|
|
$
|
44.1
|
|
Depreciation and amortization
|
|
|
|
|
|
381.8
|
|
|
338.5
|
|
||
OIBDA (a)
|
|
|
|
|
|
$
|
450.8
|
|
|
$
|
382.6
|
|
(a)
|
OIBDA is defined as operating income plus depreciation and amortization expense. We believe this measure provides investors with insight into the true earnings capacity of providing telecommunications services to our customers.
|
•
|
Revenue Recognition
|
•
|
Presentation of Defined Benefit Retirement Costs
|
•
|
Hedging Activities
|
•
|
Statement of Cash Flows
|
•
|
Leases
|
•
|
Financial Instruments - Credit Losses
|
•
|
the cost savings and expected synergies from the mergers with EarthLink and Broadview may not be fully realized or may take longer to realize than expected;
|
•
|
the integration of Windstream and EarthLink and Broadview may not be successful, may cause disruption in relationships with customers, vendors and suppliers and may divert attention of management and key personnel;
|
•
|
the impact of the Federal Communications Commission’s comprehensive business data services reforms or additional FCC reforms or actions that may result in greater capital investments and customer and revenue churn because of possible price increases by our ILEC suppliers for certain services we use to serve customer locations where we do not have facilities;
|
•
|
the potential for incumbent carriers to impose monetary penalties for failure to meet specific volume and term commitments under their special access pricing and tariff plans, which Windstream uses to lease last-mile connections to serve its retail business data service customers, without FCC action;
|
•
|
the impact of new, emerging or competing technologies and our ability to utilize these technologies to provide services to our customers;
|
•
|
the alleged ability of one or more purported noteholders to establish that transactions related to the spin-off of certain assets in 2015 into a publicly-traded real estate investment trust allegedly violated certain covenants in existing indentures governing certain outstanding senior notes allegedly allowing the noteholders to seek to accelerate payment under the indentures;
|
•
|
the benefits of our current capital allocation strategy, which may be changed at anytime at the discretion of our board of directors, and certain cost reduction activities may not be fully realized or may take longer to realize than expected, or the implementation of these initiatives may adversely affect our sales and operational activities or otherwise disrupt our business and personnel;
|
•
|
the availability and cost of financing in the corporate debt markets;
|
•
|
unanticipated increases or other changes in our future cash requirements, whether caused by unanticipated increases in capital expenditures, increases in pension funding requirements, or otherwise;
|
•
|
for certain operations where we lease facilities from other carriers, adverse effects on the availability, quality of service, price of facilities and services provided by other carriers on which our services depend;
|
•
|
our election to accept state-wide offers under the FCC’s Connect America Fund, Phase II, and the impact of such election on our future receipt of federal universal service funds and capital expenditures, and any return of support received pursuant to the program;
|
•
|
our ability to make rent payments under the master lease to Uniti, which may be affected by results of operations, changes in our cash requirements, cash tax payment obligations, or overall financial position;
|
•
|
further adverse changes in economic conditions in the markets served by us;
|
•
|
the extent, timing and overall effects of competition in the communications business;
|
•
|
unfavorable rulings by state public service commissions in current and further proceedings regarding universal service funds, inter-carrier compensation or other matters that could reduce revenues or increase expenses;
|
•
|
material changes in the communications industry that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale and enterprise customers;
|
•
|
the impact of recent adverse changes in the ratings given to our debt securities by nationally accredited ratings organizations and the potential for additional adverse changes in the future;
|
•
|
earnings on pension plan investments significantly below our expected long term rate of return for plan assets or a significant change in the discount rate or other actuarial assumptions;
|
•
|
unfavorable results of litigation or intellectual property infringement claims asserted against us;
|
•
|
the risks associated with non-compliance by us with regulations or statutes applicable to government programs under which we receive material amounts of end-user revenue and government subsidies, or non-compliance by us, our partners, or our subcontractors with any terms of our government contracts;
|
•
|
the effects of federal and state legislation, and rules and regulations, and changes thereto, including changes implemented by administrative agencies, governing the communications industry;
|
•
|
continued loss of consumer households served and consumer high-speed Internet customers;
|
•
|
the impact of equipment failure, natural disasters or terrorist acts;
|
•
|
the effects of work
stoppages by our employees or employees of other communications companies on whom we rely for service; and
|
•
|
those additional factors under “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the year ended December 31, 2017, and in subsequent filings with the Securities and Exchange Commission at www.sec.gov.
|
(a)
|
Evaluation of disclosure controls and procedures.
|
(b)
|
Changes in internal control over financial reporting.
|
(a)
|
Evaluation of disclosure controls and procedures.
|
(b)
|
Changes in internal control over financial reporting.
|
*
|
Incorporated herein by reference as indicated.
|
(a)
|
Filed herewith.
|
WINDSTREAM HOLDINGS, INC.
|
|
WINDSTREAM SERVICES, LLC
|
(Registrant)
|
|
(Registrant)
|
|
|
|
/s/ Robert E. Gunderman
|
|
/s/ Robert E. Gunderman
|
Robert E. Gunderman
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
|
Robert E. Gunderman
Chief Financial Officer and Treasurer
(Principal Financial Officer)
|
May 4, 2018
|
|
May 4, 2018
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Windstream Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Anthony W. Thomas
|
Anthony W. Thomas
|
President and Chief Executive Officer
|
Windstream Holdings, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Windstream Services, LLC;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Anthony W. Thomas
|
Anthony W. Thomas
|
President and Chief Executive Officer
|
Windstream Services, LLC
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Windstream Holdings, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Robert E. Gunderman
|
Robert E. Gunderman
|
Chief Financial Officer
|
Windstream Holdings, Inc.
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Windstream Services, LLC;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ Robert E. Gunderman
|
Robert E. Gunderman
|
Chief Financial Officer
|
Windstream Services, LLC
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Anthony W. Thomas
|
Anthony W. Thomas
|
President and Chief Executive Officer
|
Windstream Holdings, Inc.
|
May 4, 2018
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Anthony W. Thomas
|
Anthony W. Thomas
|
President and Chief Executive Officer
|
Windstream Services, LLC
|
May 4, 2018
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Robert E. Gunderman
|
Robert E. Gunderman
|
Chief Financial Officer
|
Windstream Holdings, Inc.
|
May 4, 2018
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ Robert E. Gunderman
|
Robert E. Gunderman
|
Chief Financial Officer
|
Windstream Services, LLC
|
May 4, 2018
|