Windstream 2014 Annual Report Download - page 119

F-3
be combined into and become one (1) share of common stock and (ii) to decrease the number of authorized shares of common
stock proportionately from 1.0 billion shares to 166,666,667 shares following the spin-off.
We anticipate that the spin-off will occur in the first half of 2015. On or before March 1, 2015, we intend to convert Windstream
Corp. to Windstream Services, LLC. We plan to maintain our current dividend practice through the close of the transaction. If the
closing date of the spin-off is not on the record date of Windstream’s normal quarterly dividend, we intend to pay a pro rata dividend
to our shareholders based on the number of days elapsed in the quarter. Following the close of the spin-off transaction and the
effects of the 1-for-6 reverse stock split, Windstream expects to pay an annual dividend of $.60 per share and CS&L initially
expects to pay an annual dividend of $2.40 per share.
To illustrate the effects of the spin-off and the 1-for-6 reverse stock split, if a Windstream shareholder currently owns 1,000 shares,
the shareholder will continue to own 1,000 shares of Windstream after the spin-off and will receive approximately 0.20 shares of
CS&L common stock for each Windstream share owned, or 200 CS&L common shares. Following the reverse stock split, the
Windstream shareholder in this example would own 166 Windstream common shares and 200 CS&L common shares, as the
reverse stock split does not affect the number of CS&L common shares owned. Windstream's annual dividend adjusted for the
reverse stock split will be $.60 per share, or $100 annually. CS&L expects to pay an annual dividend of $2.40 per share, or $480
annually.
Completion of the proposed spin-off is contingent on the effectiveness of CS&L’s Form 10 registration statement, final approval
from our board of directors, execution of all definitive agreements, and satisfaction of other customary conditions. We may, at
any time and for any reason until the proposed transaction is complete, abandon the spin-off or modify or change the terms of the
spin-off. See Note 16 to the consolidated financial statements for additional information regarding the proposed spin-off.
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 and small business operations 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 121,000
miles, a robust business sales division and 27 data centers.
EXECUTIVE SUMMARY
During 2014, we remained focused 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. Key strategic initiatives completed during
2014 included:
 effected targeted price increases to help drive revenue growth in our business and consumer broadband service areas;
 implemented new initiatives to enhance business sales and productivity and launched an expanded advertising campaign
to increase brand awareness and highlight our integrated solutions and customized service; and
 continued focus on operational efficiency and cost management strategies.
Each of these initiatives reflected our ongoing efforts to become the premier enterprise communications and services provider. As
further discussed below, operating results for 2014 were adversely impacted by a pretax net actuarial loss related to pension benefits
of $128.6 million compared to an actuarial gain of $110.4 million in 2013, as well as, decreases in voice, long-distance, carrier
and switched access revenues, higher depreciation and amortization expense and restructuring charges associated with the
workforce reductions completed during the year.
For 2015, our goals are focused on improving the customer experience, operating a best-in-class network, and improving our
financial results. To achieve these goals, we will make significant targeted investments to leverage our existing fiber network to
provide faster consumer high-speed Internet services and expand our carrier long-haul network. We will continue to simplify
our IT systems and processes to improve operating efficiency and to better serve our customers.