Windstream 2013 Annual Report Download - page 235

DOWN
$45
Million
2014 Cash
Interest Expense
Manageable
Debt Maturities
2013 was a solid year for Windstream. Our business sales team nished strong, generating sequential
revenue growth once again, and our consumer sales team continued to grow broadband revenue and deliver
steady results. In addition, we improved the cost structure, invested in growth initiatives and strengthened the
balance sheet – all of which better position us to deliver value to stockholders.
We made great strides in 2013 toward our goal to become the premier enterprise communications and
services provider.
• We grew strategic revenues by 2 percent. By year’s end, business services and consumer broadband
represented 73 percent of total revenue.
• Our focus on cost management produced adjusted OIBDA of $2.3 billion and stable margins of 39
percent.
• We made strategic investments in our network. Approximately two-thirds of the capital we invested in
2013 went to initiatives that enhanced our capabilities and provided revenue opportunities.
• We improved the balance sheet by renancing almost $4 billion in debt, enabling us to extend debt
maturities and lower cash interest expense. Importantly, we reduced our debt by more than $200 million.
• We returned $594 million, or 67 percent of our adjusted free cash ow, to our stockholders, in the form
The Windstream board of directors recently declared our quarterly 25-cent dividend, which we have paid
consistently for more than 7 years. Our strong free cash ow generation allows us to invest in the growth
drivers of the business, pay an attractive dividend and reduce debt over time.
I am excited about our opportunities and the strategic priorities we will concentrate on in 2014.
• We plan to drive higher business sales through targeted programs designed to increase productivity,
including new sales enablement tools, enhanced analytics to improve lead generation, and greater
focus on the Windstream brand.
• We will make signicant progress on unifying our enterprise systems, enabling our team to manage all
aspects of the customer lifecycle from a single, simplied platform.
• We will continue to deploy ber deeper into our network, enhance our broadband infrastructure and
capture success-based opportunities.
Windstream is focused on a growth-oriented strategy while also managing our legacy business for protability.
I am condent we have a strong and competitive organization dedicated to creating value for our stockholders.
I remain deeply grateful for your continued support.
President and Chief Executive Ofcer
March 25, 2014
Contacts
Transfer Agent:
Computershare Investor Services, LLC
2 North LaSalle Street
Chicago, IL 60602
800-697-8153
http://www.computershare.com/us/investor
Individual Shareholder Contact:
Genesis White
Sr. Consultant Investor Relations and Capital Markets
Windstream Corporation
4001 Rodney Parham Road
Little Rock, AR 72212-2442
Phone: [phone]
E-mail: [email protected]
Institutional Shareholder Contact:
Mary Michaels
Vice President Investor Relations and Treasury
Windstream Corporation
4001 Rodney Parham Road
Little Rock, AR 72212-2442
Phone: [phone]
E-mail: mary[email protected]
THE WINDSTREAM DIFFERENCE
Why invest in Windstream?
93%
118k27
Miles of Fiber Data Centers
Consumer Broadband
Addressability
86
Top U.S. Metros
Service in
Strong
Track
Record
Consistent
dividend since
formed in
2006
Returning Capital to
Shareholders
We generate strong free cash ow and pay an attractive
dividend to our shareholders. Our business model and
strategy are designed to create growth opportunities
and position Windstream
as a market leader in
the enterprise
space while
providing
long-term
support to
our capital
allocation strategy.
1
Growing Strategic
Revenue
Leveraging a Strong
Nationwide Network
Using Capital Wisely Improving the Balance
Sheet
Our strategy is to transition our revenue mix
towards business and broadband services,
our growth drivers. At the same time, we are
maintaining a stable and gradual decline in our
consumer business.
Windstream’s culture of disciplined expense
management has led to consistent OIBDA margins,
even as we have realigned our business in growth
segments.
Our vision is to be the premier Enterprise
communications and services provider.
Consistent investment in our network has
created a platform for future growth.
We are making strategic investments in our network.
Roughly 2/3 of the capital we invested during 2013
was directed toward growth initiatives that enhance our
capabilities and provide revenue opportunities.
Along with consistently improving trends in our
business, we are strengthening our risk prole
by focusing on reducing leverage, lowering our
interest expense and maintaining ample liquidity.
2
34
5 6
Maintaining Consistent
Margins
Notes: Adjusted OIBDA excludes the impact of restructuring charges, pension expense and
stock-based compensation. Pro forma for all transactions.
30%
32%
34%
36%
38%
40%
42%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
38.6%
Adjusted OIBDA Margin
2010 2011 2013 2012
73%
Business &
Broadband Revenue
as a proportion of total revenue
2013
Business
Service Revenue
Growth Y/Y
2013
Broadband
Service Revenue
Growth Y/Y
1.4% 4.3%