Windstream 2015 Annual Report Download - page 179

F-49
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Background and Basis for Presentation:
In these consolidated financial statements, unless the context requires otherwise, the use of the terms “Windstream,” “we,” “us”
or “our” shall refer to Windstream Holdings, Inc. and its subsidiaries, including Windstream Services, LLC, and the term
“Windstream Services” shall refer to Windstream Services, LLC and its subsidiaries.
Organizational Structure –Windstream Holdings, Inc. (“Windstream Holdings”) is a publicly traded holding company and the
parent of Windstream Services, LLC (“Windstream Services”), formerly Windstream Corporation. Windstream Holdings common
stock trades on the NASDAQ Global Select Market (“NASDAQ”) under the ticker symbol “WIN”. Effective February 28, 2015,
Windstream Corporation was converted to a limited liability company (“LLC”). Following the conversion, Windstream Holdings
owns a 100 percent interest in Windstream Services. The conversion of Windstream Services to a LLC has been accounted for as
a change in reporting entity and accordingly, the historical equity presentation of Windstream Services reflects the effect of the
LLC conversion for all periods presented. Windstream Services and its guarantor subsidiaries are the sole obligors of all outstanding
debt obligations and, as a result also 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 Services’ debt agreements.
The Windstream Holdings board of directors and officers oversee both companies.
As further discussed in Note 3, on April 24, 2015, we completed the spin-off of certain telecommunications network assets,
including our fiber and copper networks and other real estate into an independent, publicly traded real estate investment trust
(“REIT”). Upon completion of the spin-off, we amended our certificate of incorporation to decrease the number of authorized
shares of common stock from 1.0 billion to 166.7 million and enacted a one-for-six reverse stock split with respect to all of our
outstanding shares of common stock which became effective on April 26, 2015. All share data of Windstream Holdings presented
has been retrospectively adjusted to reflect the effects of the decrease in its authorized shares and the reverse stock split, as
appropriate.
Description of Business – We are a leading provider of advanced network communications and technology solutions for consumers,
businesses, enterprise organizations and carrier partners across the United States. We offer bundled services, including broadband,
security solutions, voice and digital television to consumers. We also provide data, cloud solutions, unified communications and
managed services to business and enterprise clients. We supply core transport solutions on a local and long-haul fiber-optic network
spanning approximately 125,000 miles.
Enterprise service revenues include revenues from integrated voice and data services, advanced data, traditional voice and long-
distance services provided to enterprise customers. Consumer service revenues are generated from the provisioning of high-speed
Internet, voice and video services to consumers. Small business service revenues include revenues from integrated voice and data
services, advanced data and traditional voice and long-distance services provided to small business customers. Carrier revenues
include revenues from other carriers for special access circuits and fiber connections as well as voice and data services sold on a
wholesale basis. Regulatory revenues include switched access revenues, federal and state Universal Service Fund (“USF”) revenues
and amounts received from Connect America Fund - Phase II. Other service revenues include USF surcharge revenues, other
miscellaneous services and consumer revenues generated in markets where we lease the connection to the customer premise. As
further discussed in Note 3, substantially all of this business was transferred to the REIT.
Basis of Presentation – The consolidated financial statements include the accounts of Windstream Holdings, Windstream Services
and the accounts of its subsidiaries. All affiliated transactions have been eliminated.
There are no significant differences between the consolidated results of operations, financial condition, and cash flows of
Windstream Holdings and those of Windstream Services other than for certain expenses incurred directly 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 Services to Windstream Holdings. Earnings per share data has not
been presented for Windstream Services, because that entity has not issued publicly held common stock as defined in accordance
with accounting principles generally accepted in the United States (“U.S. GAAP”). Unless otherwise indicated, the note disclosures
included herein pertain to both Windstream Holdings and Windstream Services.