Windstream 2013 Annual Report Download - page 138

F-2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Unless the context indicates otherwise, the terms "Windstream," "we," "us" or "our" refer to Windstream Holdings, Inc. and its
subsidiaries, including Windstream Corporation, and the term "Windstream Corp." refers to Windstream Corporation and its
subsidiaries.
The following sections provide an overview of our results of operations and highlight key trends and uncertainties in our
business. Certain statements constitute forward-looking statements. See "Forward-Looking Statements" at the end of this
discussion for additional factors relating to such statements, and see "Risk Factors" in Item 1A of Part I of this annual report for
a discussion of certain risk factors applicable to our business, financial condition and results of operations.
CHANGE IN ORGANIZATIONAL STRUCTURE
As further discussed in Note 1 to the consolidated financial statements, on August 30, 2013, through the creation of a new
holding company structure (the "Holding Company Formation"), Windstream Corporation ("Windstream Corp.") became a
wholly-owned subsidiary of a new publicly traded parent company, Windstream Holdings, Inc. ("Windstream Holdings"). We
expect the new holding company design will enhance our corporate structure, strengthen our credit profile and provide greater
flexibility and efficiency in managing and financing existing and future strategic operations. As the Holding Company
Formation occurred at the parent company level, the remainder of our subsidiaries, operations and customers were not affected.
Therefore, the operations of Windstream Corp. are the same as the operations of Windstream Holdings as of December 31,
2013. Accordingly, the historical financial statements reflect the effect of the reorganization for all periods presented. Following
the Holding Company Formation, Windstream Corp. and its guarantor subsidiaries remained the sole obligors on its
outstanding debt obligations and, as a result, will continue to file periodic reports with the Securities and Exchange
Commission ("SEC"). Windstream Holdings is not a guarantor of nor subject to the restrictive covenants included in any of
Windstream Corp.'s debt agreements.
There are no significant differences between the consolidated results of operations, financial condition, and cash flows of
Windstream Holdings and those of Windstream Corp. other than for certain expenses directly incurred by Windstream Holdings
principally consisting of audit, legal and board of director fees, Nasdaq listing fees, other shareholder-related costs, income
taxes, common stock activity, and payables from Windstream Corp. to Windstream Holdings. Through December 31, 2013, the
amount of expenses directly incurred by Windstream Holdings subsequent to the Holding Company Formation totaled
approximately $0.5 million on a pretax basis, or $0.3 million on an after-tax basis. Unless otherwise indicated, the following
discussion of our business strategy, trends and results of operations pertain to both Windstream Holdings and Windstream Corp.
OVERVIEW
Our business strategy is focused on maximizing growth opportunities with our enterprise business customers while optimizing
our cost structure and maintaining the stability of our consumer business with the goal of generating solid and sustainable cash
flows over the long-term to build shareholder value. In implementing our business strategy, we continue to invest in capital
initiatives designed to drive improvements in network performance and to enhance our ability to provide advanced solutions to
our business customers and increase broadband speeds and capacity in our consumer markets.
We provide advanced communications and technology solutions, including managed services and cloud computing, to
businesses nationwide. In addition to business services, we offer broadband, voice and video services to consumers in primarily
rural markets. We have operations in 48 states and the District of Columbia, a local and long-haul fiber network spanning
approximately 118,000 miles, a robust business sales division and 26 data centers.
EXECUTIVE SUMMARY
We continue to make significant progress on our strategy to grow business and consumer broadband revenues to offset
continuing pressure on our consumer voice and long-distance revenues and wholesale revenues. Revenues from businesses and
consumer broadband were 72 percent of total revenues for the year ended December 31, 2013, as compared to 69 percent in the
same period in 2012.