-- Generated $379 million in net cash from operations
-- Produced $288 million in free cash flow -- a 14 percent increase
year-over-year -- and $823 million in free cash flow for 2009 -- an 8
percent increase from a year ago
-- Reduced dividend payout ratio of free cash flow to 53 percent for the
year -- the lowest rate since company's formation
-- Added more than 27,000 new high-speed Internet customers and about
10,000 new digital TV customers
-- Delivered second consecutive quarter of decelerating access line loss
with 4.8 percent decline year-over-year
LITTLE ROCK, Ark., Feb. 18, 2010 (GLOBE NEWSWIRE) -- Windstream Corporation (Nasdaq:WIN) today reported fourth-quarter and full-year results highlighted by strong free cash flow growth and the lowest dividend payout ratio of free cash flow since the company was formed in 2006.
Free cash flow, defined as net cash provided from operations minus capital expenditures, was $288 million for the quarter and $823 million for the year, an increase of almost $60 million year-over-year, largely due to expense management initiatives and lower cash taxes. Windstream returned approximately $560 million, or 68 percent of its free cash flow, to shareholders in the form of dividends and share repurchases in 2009. The company's dividend payout ratio of free cash flow was 53 percent for the year, the lowest rate in the company's history.
"I am very pleased with our performance for the quarter and all of 2009," said Jeff Gardner, Windstream president and CEO. "We significantly improved the company's strategic and competitive positions through very targeted acquisitions that will help us sustain revenue and cash flow over time. We also reduced our credit market risk by raising the capital needed to fund our announced acquisitions and extending the vast majority of our bank debt maturities.
"In spite of a tough economy, we improved key operating metrics, increased margins and met our financial guidance for the year in two very important areas. We also further lowered our dividend payout ratio of free cash flow to enhance the sustainability of our dividend, which is so important to the total return to our stockholders," Gardner said.
Windstream's fourth-quarter results under Generally Accepted Accounting Principles (GAAP) include the following items, which lowered earnings per share by roughly 8 cents:
-- $15 million in after-tax non-cash pension expense;
-- $12 million in after-tax merger and integration costs;
-- $5 million in after-tax non-cash amortization expense of franchise
rights; and
-- $1 million in after-tax restructuring charges.
Fourth-quarter financial results:
Under GAAP:
-- Revenues were $754 million, a 3 percent decrease from a year ago.
-- Operating income was $235 million, a decrease of 15 percent
year-over-year.
-- Net income was $76 million, a 7 percent decrease from a year ago, or 17
cents of diluted earnings per share.
-- Net cash provided from operations was $379 million, an 8 percent
increase year-over-year.
-- Average service revenue per customer per month was $83.21, a 3 percent
increase from a year ago.
-- Capital expenditures were $91 million, a 7 percent decrease
year-over-year.
Operating income before depreciation and amortization, excluding merger and integration costs and restructuring charges and including results from D&E and Lexcom from the dates that they were acquired in the quarter, was $395 million.
Under pro forma results from current businesses, which include D&E and Lexcom results for the entire fourth quarter:
-- Revenues were $778 million, a 4 percent decrease from a year ago.
-- Operating income before depreciation and amortization (OIBDA) was $404
million, a 4 percent decrease year-over-year.
-- Adjusted OIBDA, which removes the impact of restructuring charges,
pension and restricted stock expense, was $433 million, essentially the
same as a year ago.
-- Operating income was $260 million, a 10 percent decrease from a year
ago.
-- Average service revenue per customer per month was $82.31, a 2 percent
increase from a year ago.
-- Capital expenditures were $93 million, an 11 percent decrease
year-over-year.
Full-year 2009 financial results:
Under GAAP:
-- Revenues were $2.997 billion, a 6 percent decrease from a year ago.
-- Operating income was $957 million, a 15 percent decrease
year-over-year.
-- Net income was $335 million, a 19 percent decrease from a year ago, or
76 cents of diluted earnings per share.
-- Net cash provided from operations was $1.12 billion, a 4 percent
increase year-over-year.
-- Average service revenue per customer per month was $81.27, a 1 percent
increase from a year ago.
-- Capital expenditures were $298 million, a 6 percent decrease from a year
ago.
Under pro forma results from current businesses, which include D&E and Lexcom results for the entire year:
-- Revenues were $3.121 billion, a 5 percent decrease from a year ago.
-- OIBDA was $1.591 billion, an 8 percent decrease year-over-year.
-- Adjusted OIBDA was $1.711 billion, a 2 percent decrease from a year
ago.
-- Operating income was $1.016 billion, a 14 percent decrease from a year
ago.
-- Average service revenue per customer per month was $81.46, a 1 percent
increase year-over-year.
-- Capital expenditures were $318 million, an 8 percent decrease from a
year ago.
Windstream ended the year with $1.1 billion in cash and cash equivalents.
Fourth-quarter pro forma operating results:
Windstream added more than 27,000 new high-speed Internet customers during the fourth quarter, bringing its total customer base to approximately 1,132,000 -- an increase of 10 percent year-over-year. Overall broadband penetration is now 37 percent of total access lines and 55 percent of primary residential lines.
Windstream added approximately 10,000 digital TV customers in the quarter, bringing its total customer base to approximately 369,000, or 20 percent penetration of primary residential lines.
Total access lines declined by approximately 35,000, or 4.8 percent year-over-year -- the lowest percentage change in the last five quarters. Total lines at the end of the year were 3.03 million.
Share repurchase plan:
Windstream repurchased 7.8 million shares for $78 million in the fourth quarter as previously reported under a $400 million share repurchase plan authorized by the board of directors in February 2008. Windstream repurchased a total of 29 million shares for $322 million under the share repurchase authorization, which expired at the end of 2009. With dividends and share repurchases, Windstream returned almost $560 million, or 68 percent of free cash flow, to shareholders in 2009.
Financial outlook for 2010
Windstream issued the following pro forma financial guidance for 2010, which includes a full year for NuVox:
2009 Pro Forma Results(a) 2010 Guidance Range % Change
Revenue $3.686 billion $3.540 billion - $3.685 billion (4%) - 0%
OIBDA (b) $1.705 billion $1.693 billion - $1.768 billion (1%) - 4%
Adjusted OIBDA (c) $1.826 billion $1.770 billion - $1.845 billion (3%) - 1%
Capex $386 million $360 million - $390 million
(a) Includes results for NuVox for full year
(b) Guidance range includes expected non-cash pension expense and restricted stock expense
(c) Guidance range excludes expected non-cash pension expense and restricted stock expense
Windstream expects to incur roughly $63 million in non-cash pension expense and about $14 million in restricted stock expense that will not affect free cash flow in 2010. Based on preliminary estimates, the company does not expect to be required to make any cash contribution to the pension plan in 2010.
The guidance assumes net cash interest of approximately $495 million and cash taxes of $195 million to $225 million for 2010.
The company expects to generate $690 million to $765 million in free cash flow in 2010, resulting in a dividend payout ratio between 59 percent and 65 percent.
"I think we are positioned well for a successful 2010 given our four recent acquisitions and related synergy benefits and the progress we are making transforming the company to pursue growth opportunities in broadband and the business customer segment," Gardner said.
Conference call
Windstream will hold a conference call at 7:30 a.m. CST today to review the company's fourth-quarter earnings results.
To access the call:
Interested parties can access the call by dialing 1-866-900-4729, conference ID 50897183, ten minutes prior to the start time.
To access the call replay:
A replay of the call will be available beginning at 9:30 a.m. CST today and ending at midnight CDT on March 18. The replay can be accessed by dialing 1-800-642-1687, conference ID 50897183.
Webcast information:
The conference call also will be streamed live over the company's Web site at www.windstream.com/investors. Financial, statistical and other information related to the call will be posted on the site. A replay of the webcast will be available on the Web site beginning at 10:30 a.m. CST today.
About Windstream
Windstream Corporation is an S&P 500 company with about $3.7 billion in annual revenues. Windstream provides phone, high-speed Internet and high-definition digital TV services to customers in 21 states. The company also offers a wide range of IP-based voice and data services and advanced phone systems and equipment to businesses and government agencies. For more information about Windstream, visit www.windstream.com.
The Windstream Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=7044
Pro forma results from current businesses adjusts results of operations under GAAP to include the acquisitions of D&E Communications, Inc. and Lexcom, Inc. and to exclude the results of the disposed out-of-territory product distribution operations, all merger and integration costs related to strategic transactions and the impairment charge recognized on assets held for sale. A reconciliation of pro forma results from current businesses to the comparable GAAP measures is available on the company's Web site at www.windstream.com/investors.
Windstream claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in the forward-looking statements. Forward-looking statements include, but are not limited to, our financial outlook for 2010; our expectation of no pension contribution in 2010, expected synergies and other benefits from completed and pending acquisitions, expected amount of cash taxes and net cash interest and forecasted capital expenditure amounts. These and other forward-looking statements are based on estimates, projections, beliefs, and assumptions that Windstream believes are reasonable but are not guarantees of future events and results. Actual future events and results of Windstream may differ materially from those expressed in these forward-looking statements as a result of a number of important factors.
Factors that could cause actual results to differ materially from those contemplated in our forward-looking statements include, among others:
-- further adverse changes in economic conditions in the markets served by
Windstream;
-- the extent, timing and overall effects of competition in the
communications business;
-- continued access line loss;
-- the impact of new, emerging or competing technologies;
-- the adoption of inter-carrier compensation and/or universal service
reform proposals by the Federal Communications Commission or Congress
that results in a significant loss of revenue to Windstream;
-- the risks associated with the integration of acquired businesses or the
ability to realize anticipated synergies, cost savings and growth
opportunities;
-- unexpected adverse results related to our data center migration;
-- for our competitive local exchange carrier ("CLEC") operations, adverse
effects on the availability, quality of service and price of facilities
and services provided by other incumbent local exchange carriers on
which our CLEC services depend;
-- the availability and cost of financing in the corporate debt markets;
-- the potential for adverse changes in the ratings given to Windstream's
debt securities by nationally accredited ratings organizations;
-- the effects of federal and state legislation, and rules and regulations
governing the communications industry;
-- material changes in the communications industry that could adversely
affect vendor relationships with equipment and network suppliers and
customer relationships with wholesale customers;
-- unexpected results of litigation;
-- unexpected rulings by state public service commissions in proceedings
regarding universal service funds, inter-carrier compensation or other
matters that could reduce revenues or increase expenses;
-- the effects of work stoppages;
-- the impact of equipment failure, natural disasters or terrorist acts;
-- earnings on pension plan investments significantly below our expected
long term rate of return for plan assets; and
-- those additional factors under the caption "Risk Factors" in
Windstream's Form 10-K for the year ended Dec. 31, 2008, and in
subsequent filings with the Securities and Exchange Commission.
In addition to these factors, actual future performance, outcomes and results may differ materially because of more general factors including, among others, general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes.
Windstream undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause Windstream's actual results to differ materially from those contemplated in the forward-looking statements should be considered in connection with information regarding risks and uncertainties that may affect Windstream's future results included in filings by Windstream with the Securities and Exchange Commission at www.sec.gov.
WINDSTREAM CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF
INCOME-Page 1
(In millions, except per
share amounts)
THREE MONTHS ENDED
------------------------------
(G) Increase
December December
31, 31, (Decrease)
2009 2008 Amount %
-------- -------- ---------- -----
UNDER GAAP:
Revenues and sales:
Service revenues $ 732.6 $ 734.2 $ (1.6) --
Product sales 21.8 43.3 (21.5)
-------- -------- ---------- (50)
Total revenues and sales 754.4 777.5 (23.1)
-------- -------- ---------- (3)
Costs and expenses:
Cost of services 252.9 245.2 7.7 3
Cost of products sold 17.6 41.8 (24.2) (58)
Selling, general,
administrative and other 89.0 83.5 5.5 7
Depreciation and
amortization 138.7 124.0 14.7 12
Restructuring charges 1.8 6.4 (4.6) (72)
Merger and integration
costs 19.9 -- 19.9 100
Impairment loss on assets
held for sale (A) -- -- --
-------- -------- ---------- --
Total costs and expenses 519.9 500.9 19.0
-------- -------- ---------- 4
Operating income 234.5 276.6 (42.1) (15)
Other income, net (0.3) (7.0) 6.7 96
Interest expense (115.2) (104.5) 10.7
-------- -------- ---------- 10
Income from continuing
operations before income
taxes 119.0 165.1 (46.1) (28)
Income taxes 43.5 74.2 (30.7)
-------- -------- ---------- (41)
Income from continuing
operations 75.5 90.9 (15.4) (17)
Discontinued operations,
net of tax (B) -- (9.8) 9.8
-------- -------- ---------- (100)
Net Income $ 75.5 $ 81.1 $ (5.6)
======== ======== ========== (7)
Weighted average common
shares 430.0 436.1 (6.1) (1)
Earnings per share:
Basic and diluted earnings
per share (C):
Income from continuing
operations $.17 $.21 $(.04) (19)
Loss from discontinued
operations -- (.02) .02
-------- -------- ---------- 100
Net Income $.17 $.19 $(.02) (11)
PRO FORMA RESULTS OF OPERATIONS FROM
CURRENT BUSINESSES (D):
Revenues and sales $ 777.8 $ 808.0 $ (30.2) (4)
OIBDA (E) $ 404.1 $ 422.4 $ (18.3) (4)
Adjusted OIBDA (F) $ 433.3 $ 433.7 $ (0.4) (0)
© (A) During 2008, the Company recognized a non-cash impairment charge to adjust the carrying value of its wireless
spectrum holdings classified as acquired assets held for sale to its fair market value.
(B) In the fourth quarter of 2008, Windstream completed the sale of its wireless business to AT&T Mobility II, LLC.
Accordingly, we have presented the operating results of the wireless business as discontinued operations.
(C) Effective January 1, 2009, the Company adopted the revised authoritative guidance regarding participating shares
for calculating earnings per share, and commensurate therewith, has retrospectively adjusted prior period earnings
per share data, the impact of which was immaterial.
(D) Pro forma results from current businesses adjusts results of operations under GAAP to include the acquisitions of
D&E Communications, Inc. ("D&E") and Lexcom Inc. ("Lexcom"), and to exclude the results of the disposed out of
territory product distribution operations, all merger and integration costs related to strategic transactions and the
impairment charge recognized on assets held for sale. For further details on these adjustments, see the Notes to
Unaudited Reconciliation of Revenues and Sales and Operating Income Under GAAP to Pro Forma Revenues and Sales and
Pro Forma Adjusted OIBDA from Current Businesses.
(E) OIBDA is operating income before depreciation and amortization.
(F) Adjusted OIBDA is OIBDA, adjusted to remove the impacts of restructuring charges, pension and restricted stock
expense. For further details on these adjustments, see the Notes to Unaudited Reconciliation of Revenues and Sales
and Operating Income Under GAAP to Pro Forma Revenues and Sales and Pro Forma Adjusted OIBDA from Current Businesses.
(G) In the first quarter of 2009, the Company reorganized its operations to integrate the sales and administrative
functions of the product distribution segment into its wireline operations. As a result of this change, the chief
operating decision maker no longer reviews the financial statements of the product distribution operations on a stand
alone basis, and the Company operates as a single reporting segment. Segment results of operations have been
retrospectively adjusted to reflect a single segment presentation for all periods presented. Additionally, certain
amounts previously reported have been reclassified to conform to the current year presentation of the consolidated
financial statements. These changes and reclassifications did not impact operating or net income.
©© TWELVE MONTHS ENDED
--------------------------------------------------
(A) Increase
December December
31, 31, (Decrease)
2009 2008 Amount %
---------- ---------- ---------- -----
UNDER GAAP:
Access lines (B)
Net access line additions
(losses):
Internal (143.2) (164.5) 21.3 13
Acquired 166.9 -- 166.9
---------- ---------- ---------- 100
Net access line additions
(losses) 23.7 (164.5) 188.2
---------- ---------- ---------- 114
High-speed Internet customers
Net high-speed Internet
additions:
Internal 98.9 107.4 (8.5) (8)
Acquired 54.4 -- 54.4
---------- ---------- ---------- 100
Net high-speed Internet
additions 153.3 107.4 45.9
---------- ---------- ---------- 43
Digital television customers
(B)
Net digital television
additions:
Internal 51.7 69.6 (17.9) (26)
Acquired 20.7 -- 20.7
---------- ---------- ---------- 100
Net digital television
additions 72.4 69.6 2.8
---------- ---------- ---------- 4
Service revenues $ 2,872.8 $ 2,988.9 $ (116.1) (4)
Average access lines 2,945.6 3,093.2 (147.6) (5)
Average service revenue per
customer per month (C) $81.27 $80.52 $.75 1
Capital expenditures $ 298.1 $ 317.5 $ (19.4) (6)
FROM PRO FORMA RESULTS (D):
Access lines
Net access line (losses) (153.1) (173.9) (20.8) (12)
High-speed Internet customers
Net high-speed Internet
additions 102.3 112.9 (10.6) (9)
Digital television customers
Net digital television
additions 52.4 70.2 (17.8) (25)
Service revenues $ 3,034.8 $ 3,180.8 $ (146.0) (5)
Average access lines 3,104.5 3,276.8 (172.3) (5)
Average service revenue per
customer per month (C) $81.46 $80.89 $.57 1
Capital expenditures $ 318.2 $ 346.3 $ (28.1) (8)
© WINDSTREAM CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS UNDER
GAAP-Page 3
(In millions)
ASSETS
December December
31, 31,
2009 2008
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents $ 1,062.9 $ 296.6
Accounts receivable (less
allowance for
doubtful accounts of
$18.5 and
$16.3, respectively) 291.7 316.6
Inventories 26.1 30.8
Deferred income taxes 21.7 30.8
Prepaid expenses and
other 53.6 33.9
---------- ----------
Total current assets 1,456.0 708.7
---------- ----------
Goodwill 2,344.4 2,198.2
Other intangibles, net 1,253.3 1,132.2
Net property, plant and
equipment 3,992.6 3,897.1
Other assets 99.1 73.1
---------- ----------
TOTAL ASSETS $ 9,145.4 $ 8,009.3
========== ==========
WINDSTREAM CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS
OF CASH FLOWS UNDER GAAP-Page 4
(In millions)
THREE MONTHS ENDED TWELVE MONTHS ENDED
-------------------- -------------------
December December December December
31, 31, 31, 31,
2009 2008 2009 2008
---------- -------- --------- --------
Cash Provided from Operations:
Net income $ 75.5 $ 81.1 $ 334.5 $ 412.7
Adjustments to reconcile net
income to net cash provided from
operations:
Loss on sale of wireless business -- 4.9 -- 21.3
Depreciation and amortization 138.7 123.6 537.8 494.5
Provision for doubtful accounts 11.6 13.6 44.0 38.7
Stock-based compensation expense 3.1 4.6 17.4 18.1
Pension and post retirement
benefits expense 24.3 1.6 97.1 13.9
Deferred taxes 4.4 35.7 96.8 110.0
Other, net 1.8 9.3 6.0 18.1
Changes in operating assets and
liabilities, net:
Accounts receivable 7.1 2.8 (3.4) (25.1)
Prepaid and other expenses 3.0 18.7 (17.9) 3.1
Accounts payable 11.7 (18.9) 9.6 (27.6)
Accrued interest 78.7 68.7 4.4 (1.1)
Accrued taxes 17.5 (12.1) 12.6 5.4
Other current liabilities 1.5 11.2 (12.4) (1.3)
Other liabilities (1.8) (3.4) (15.0) (13.0)
Other, net 2.3 9.2 9.3 12.7
---------- -------- --------- --------
Net cash provided from
operations 379.4 350.6 1,120.8 1,080.4
---------- -------- --------- --------
Cash Flows from Investing
Activities:
Additions to property, plant and
equipment (91.3) (98.0) (298.1) (317.5)
Acquisition of D&E, net of cash
acquired (56.6) -- (56.6) --
Acquisition of Lexcom, net of cash
acquired (138.7) -- (138.7) --
Disposition of wireless business -- 56.7 -- 56.7
Disposition of acquired assets
held for sale -- 0.5 -- 17.8
Other, net 0.3 (1.7) 0.6 9.9
---------- -------- --------- --------
Net cash used in investing
activities (286.3) (42.5) (492.8) (233.1)
---------- -------- --------- --------
Cash Flows from Financing
Activities:
Dividends paid on common shares (108.8) (109.9) (437.4) (445.2)
Stock repurchase (77.8) -- (121.3) (200.3)
Repayment of debt (195.9) (13.6) (356.6) (354.3)
Proceeds of debt issuance, net of
discount 1,083.6 -- 1,083.6 380.0
Debt issuance costs (33.8) -- (33.8) --
Other, net 12.5 0.4 3.8 (2.9)
---------- -------- --------- --------
Net cash provided from (used in)
financing activities 679.8 (123.1) 138.3 (622.7)
---------- -------- --------- --------
Increase in cash and cash
equivalents 772.9 185.0 766.3 224.6
Cash and Cash Equivalents:
Beginning of period 290.0 111.6 296.6 72.0
---------- -------- --------- --------
End of period $ 1,062.9 $ 296.6 $ 1,062.9 $ 296.6
========== ======== ========= ========
©© NOTES TO UNAUDITED RECONCILIATIONS OF REVENUES AND SALES AND OPERATING INCOME UNDER GAAP TO PRO FORMA REVENUES AND
SALES AND PRO FORMA ADJUSTED OIBDA FROM CURRENT BUSINESSES
Windstream Corporation has entered into various transactions that may cause results reported under Generally Accepted Accounting Principles in the United States ("GAAP") to be not necessarily indicative of future results.
Pending Acquisition:
-- On November 23, 2009, the Company entered into a merger agreement with
Iowa Telecommunications Services, Inc. ("Iowa Telecom"). Under the terms
of the agreement, Iowa shareholders will receive 0.804 shares of
Windstream common stock and $7.90 in cash per each share of outstanding
Iowa Telecom stock. The merger is expected to close in mid-2010 subject
to certain conditions including necessary approvals from federal and
state regulators and Iowa Telecom shareholders.
Completed Acquisitions:
-- On February 8, 2010, Windstream completed the acquisition of NuVox, Inc.
("NuVox"). The Nuvox acquisition added approximately 90,000 business
customers in complementary markets in 16 states across the southeast and
midwest.
-- On December 1, 2009, Windstream completed the acquisition of Lexcom,
Inc. ("Lexcom"). The Lexcom acquisition added approximately 22,000
access lines, 9,000 high-speed Internet customers and 12,000 digital
television customers in North Carolina.
-- On November 10, 2009, Windstream completed the acquisition of D&E
Communication, Inc. ("D&E"). The D&E acquisition added approximately
145,000 access lines, 45,000 high-speed Internet customers and 9,000
digital television customers in central Pennsylvania.
Dispositions:
-- On August 21, 2009, Windstream completed the sale of its out of
territory product distribution operations to Walker and Associates of
North Carolina, Inc. ("Walker") for approximately $5.3 million in total
consideration. These operations were not central to the Company's
strategic goals in its core communications business.
-- On November 21, 2008, the Company completed the sale of the wireless
business acquired from CT Communications, Inc. ("CTC"). The completion
of this transaction resulted in the divestiture of approximately 52,000
wireless customers, spectrum licenses and cell sites covering a
four-county area in North Carolina with a population of 450,000, and six
retail locations. Accordingly, we reported the operating results of the
wireless business as discontinued operations.
Other:
-- In the third quarter of 2008, the Company recognized a non-cash
impairment charge of $6.5 million to reduce the carrying value of
certain wireless spectrum licenses acquired from CTC to their fair
market value. These licenses, which were designated as held for sale,
were reduced to a nominal amount due to the impairment resulting from
general market conditions and limited interest in this bandwidth of
spectrum.
As disclosed in the Windstream Form 8-K filed on February 18, 2010, the Company has presented in this earnings release unaudited pro forma results from current businesses, which includes results from D&E and Lexcom for periods prior to the acquisitions and excludes (1) results from the out of territory product distribution operations prior to the disposition, (2) all merger and integration costs resulting from the completed and pending transactions discussed above and (3) the $6.5 million non-cash impairment charge for acquired assets held for sale. In addition to pro forma adjustments, the Company has made adjustments to exclude the impact of restructuring charges, pension and restricted stock expense.
Windstream's purpose for including the results of acquired businesses and for excluding non-recurring items, the results of disposed operations, restructuring charges, pension and restricted stock expense is to improve the comparability of results of operations for the three and twelve month periods ended December 31, 2009, to the results of operations for the same period of 2008 in order to focus on the true earnings capacity associated with providing telecommunication services. Additionally, management believes that presenting current business measures assists investors by providing more meaningful comparisons of results from current and prior periods, and by providing information that is a better reflection of the core earnings capacity of the businesses. The Company uses pro forma results from current businesses, including pro forma revenues and sales, pro forma OIBDA and pro forma adjusted OIBDA as key measures of its operational performance. Windstream management, including the chief operating decision-maker, consistently use these measures for internal reporting and the evaluation of business objectives, opportunities and performance.
(A) Pro forma results from current businesses adjusts results of operations under GAAP to include the acquisitions of D&E and
Lexcom, and to exclude the results of the disposed out of territory product distribution operations, the split off of the
directory publishing business, all merger and integration costs related to strategic transactions and the impairment charge
recognized on assets held for sale.
(B) To reflect the pre-acquisition operating results of D&E and Lexcom, adjusted to exclude merger and integration costs.
(C) To reflect the Company's disposition of the out of territory product distribution operations.
(D) Represents applicable item as reported under GAAP by D&E and Lexcom, respectively, prior to the acquisitions.
(E) To reflect intangible asset amortization prior to the acquisitions of D&E and Lexcom, respectively.
(F) In 2009, the Company incurred consulting fees associated with the completed acquisitions of Nuvox, D&E and Lexcom,
and the pending acquisition of Iowa Telecom. In 2008, the Company incurred system conversion costs relative to the
acquisition of CTC.
(G) To reflect the non-cash impairment loss on assets held for sale.
(H) Represents applicable expense as reported under GAAP.
(I) Represents depreciation and amortization of D&E and Lexcom, respectively, as adjusted in note (E).
CONTACT: Windstream Corporation
Media Relations Contact:
David Avery
501-748-5876
David.avery@windstream.com
Investor Relations Contact:
Mary Michaels
501-748-7578
mary.michaels@windstream.com