Grew broadband customer base for third
consecutive quarterAchieved continued growth in SD-WAN and
Enterprise strategic salesGenerated $2 billion in Adjusted OIBDAR
for the year
Windstream Holdings, Inc., a leading provider of advanced network
communications and technology solutions, today reported
fourth-quarter and full-year 2018 results.
Windstream grew its Kinetic broadband customer base for the
third consecutive quarter, adding 6,000 new subscribers in the
fourth quarter. The company added 14,400 new broadband customers
for the year, which is a significant improvement from a loss of
45,000 customers in 2017.
“Overall, we had a strong, transformational year in 2018. We
continue to benefit from investments in our network infrastructure
that enable us to deliver faster internet speeds to more customers.
We have delivered 12 consecutive months of broadband subscriber
growth through February of this year, and we expect that growth to
continue throughout the year,” said Tony Thomas, president and
chief executive officer of Windstream.
Windstream’s Enterprise segment continued to see strong growth
in strategic products and services, which represent approximately
$180 million in annualized revenues and are growing at
approximately 70 percent year-over-year. Windstream is the largest
SD-WAN service provider in the country, with more than 1,800
customers in over 15,000 locations nationwide and growing.
Windstream generated $1.97 billion in Adjusted OIBDAR for the
year, a decline of two percent year-over-year and a significant
improvement from a decline of 5.5 percent for the year prior.
“As we enter 2019, we will continue to focus on improving our
sales productivity, reducing churn across all of our business
units, improving the customer experience and maintaining our
laser-focus on aggressive cost management and operational
efficiencies. We are confident we will emerge from the financial
restructuring process as a healthier and even stronger company than
we are today, and we are excited about the opportunities that lie
ahead of us,” Thomas said.
Results under GAAP
For the fourth quarter, total revenues and sales were $1.39
billion and total service revenues were $1.38 billion compared to
$1.50 billion and $1.48 billion respectively year-over-year. The
company reported operating income of $64 million in the quarter
compared to an operating loss of $1.79 billion in the same period a
year ago. The company reported a net loss of $549 million or a loss
of $12.92 per share in the quarter compared to a net loss of $1.84
billion or a loss of $51.28 per share a year ago.
For 2018, total revenues and sales were $5.71 billion and total
service revenues were $5.64 billion compared to $5.85 billion and
$5.76 billion respectively year-over-year. The company reported
operating income of $297 million in 2018 compared to an operating
loss of $1.60 billion in 2017. The company reported a net loss of
$723 million or a loss of $17.72 per share in 2018 compared to a
net loss of $2.12 billion or a loss of $62.66 per share in
2017.
Note: During the fourth quarter of 2017, the company recorded a
$1.84 billion non-cash goodwill impairment charge related to its
ILEC Consumer & Small Business and Wholesale segments.
ILEC Consumer and Small Business service revenues were $455
million in the fourth quarter, a 4 percent decline year-over-year,
and $1.85 billion, a decline of 5 percent from 2017. Contribution
margin was $268 million or 58 percent in the fourth quarter and
$1.09 billion or 58 percent for the year.
Enterprise service revenues were $704 million in the fourth
quarter, a decrease of 7 percent year-over-year, and $2.88 billion
for the year, essentially flat from 2017. Contribution margin was
$160 million or approximately 23 percent in the fourth quarter and
$628 million or 21 percent for the year.
Wholesale service revenues were $175 million in the fourth
quarter, a decrease of 7 percent year-over-year, and $722 million
for the year, a decline of 4 percent from 2017. Contribution margin
was $123 million or 70 percent in the fourth quarter and $507
million or 70 percent for the year.
CLEC Consumer service revenues, which primarily consists of
EarthLink’s consumer Internet business, were $43 million in the
fourth quarter, a decline of 17 percent year-over-year, and $181
million for the year, an increase of 3 percent from 2017.
Contribution margin was $23 million or 55 percent in the fourth
quarter and $102 million or 56 percent for the year.
Note: On Dec. 31, 2018, Windstream completed the sale of
substantially all of the CLEC Consumer business. The consumer
operations sold consisted solely of the former EarthLink consumer
business that Windstream acquired in February 2017.
Adjusted Results of Operations
Adjusted total revenues and sales were $1.39 billion in the
fourth quarter, a decline of 7 percent from the same period a year
ago, and $5.71 billion for the year, a decline of 5 percent from
2017.
Adjusted service revenues were $1.38 billion in the fourth
quarter, a decrease of 7 percent year-over-year, and $5.64 billion
for the year, a decline of 5 percent from 2017.
Adjusted OIBDAR was $472 million in the fourth quarter, a
decrease of 9 percent year-over-year, and $1.97 billion for the
year, a decline of less than 2 percent from 2017.
Note: Fourth-quarter and full-year 2018 Adjusted OIBDAR includes
a $22 million cash expense contribution to the company’s 401(k)
program. The cash contribution is a result of the company’s
voluntary filing for restructuring and was not anticipated in the
company’s financial guidance since the company’s matching
contribution historically was made in common stock. Excluding the
contribution, Adjusted OIBDAR was $494 million in the fourth
quarter, a decline of 5 percent year-over-year, and $1.997 billion
for the year, a decline of less than 1 percent from 2017.
ILEC Consumer and Small Business service revenues were $455
million in the fourth quarter, a 4 percent decline year-over-year,
and $1.85 billion for the year, a decline of 5 percent from 2017.
Contribution margin was $268 million or 58 percent in the fourth
quarter and $1.09 billion or 58 percent for 2018.
Enterprise service revenues were $704 million in the fourth
quarter, a decrease of 7 percent year-over-year, and $2.88 billion
for the year, a decrease of 3 percent from 2017. Contribution
margin was $160 million or approximately 23 percent in the fourth
quarter and $628 million or 21 percent for 2018.
Wholesale service revenues were $176 million in the fourth
quarter, a decrease of 8 percent year-over-year, and $722 million
for the year, a decline of 7 percent from 2017. Contribution margin
was $123 million or 70 percent in the fourth quarter and $507
million or 70 percent for 2018.
CLEC Consumer service revenues were $43 million in the fourth
quarter, a decline of 17 percent year-over-year, and $181 million
for the year, a decrease of 12 percent from 2017. Contribution
margin was $23 million or 55 percent in the fourth quarter and $102
million or 56 percent for 2018.
Adjusted capital expenditures were $207 million in the fourth
quarter compared to $172 million in the same period a year ago and
$783 million for 2018 compared to $839 million for 2017.
The company generated $133 million in adjusted free cash flow
for 2018.
Note: Excluding the $22 million cash contribution to the
company’s 401(k) program, adjusted free cash flow was $155 million
for 2018.
Adjusted results of operations are based on the combined
historical financial information of Windstream and EarthLink for
all periods presented. The adjusted results assume the merger was
completed on Jan. 1, 2017. Operating results for Broadview, MASS
Communications and ATC are included beginning on July 28, 2017;
March 27, 2018; and Aug. 31, 2018, respectively the dates of
acquisitions. A reconciliation of adjusted results to the
comparable GAAP measures is included in the financial information
presented below. Additional supplemental quarterly financial
information is available on the company’s website at
investor.windstream.com.
Management Call and Webcast
Management will provide pre-recorded remarks on the company’s
results at 7:30 a.m. CDT on March 15. The remarks will be available
via webcast on the company’s investor relations website at
investor.windstream.com. Financial, statistical and other
information related to the remarks also will be posted on the site.
Management will not be hosting a Q&A.
About Windstream
Windstream Holdings, Inc., a FORTUNE 500 company, is a leading
provider of advanced network communications and technology
solutions. Windstream provides data networking, core transport,
security, unified communications and managed services to
mid-market, enterprise and wholesale customers across the U.S. The
company also offers broadband, entertainment and security services
for consumers and small and medium-sized businesses primarily in
rural areas in 18 states. Services are delivered over multiple
network platforms including a nationwide IP network, our
proprietary cloud core architecture and on a local and long-haul
fiber network spanning approximately 150,000 miles. Additional
information is available at windstream.com or
windstreamenterprise.com. Please visit our newsroom at
news.windstream.com or follow us on Twitter at @Windstream or
@WindstreamBiz.
Adjusted OIBDA is operating income before depreciation and
amortization, excluding goodwill impairment, pension expense,
share-based compensation expense, restructuring charges, merger,
integration and certain other costs.
Adjusted OIBDAR is Adjusted OIBDA before the annual cash rent
payment due under the master lease agreement with Uniti Group,
Inc.
Adjusted free cash flow is defined as Adjusted OIBDA, less
adjusted capital expenditures, cash taxes and cash interest on
long-term debt.
Adjusted capital expenditures include applicable amounts for
EarthLink for periods prior to the merger date of February 27, 2017
and exclude post-merger integration capital expenditures for
Broadview and EarthLink and amounts related to Project Excel, a
capital program funded entirely using a portion of the proceeds
from the sale of the data center business completed in December
2015.
Cautionary Statement Regarding Forward Looking
Statements
Windstream claims the protection of the safe-harbor for
forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995 for this press release. This release
contains various forward-looking statements which represent our
expectations or beliefs concerning future events, including,
without limitation, our future performance, our ability to comply
with the covenant in the agreements governing our indebtedness and
the availability of capital and terms thereof. Statements
expressing expectations and projections with respect to future
matters are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. We caution that
these forward-looking statements involve a number of risks and
uncertainties and are subject to many variables which could impact
our future performance. These statements are made on the basis of
management's views, estimates, projections, beliefs, and
assumptions, as of the time the statements are made, regarding
future events and results. There can be no assurance, however, that
management's expectations will necessarily come to pass. Actual
future events and our results may differ materially from those
expressed in these forward-looking statements as a result of a
number of important factors.
A wide range of factors could cause actual results to differ
materially from those contemplated in our forward- looking
statements, including, but not limited to:
- risks and uncertainties relating to the Chapter 11
Cases;
- our ability to pursue our business strategies during the
pendency of the Chapter 11 Cases;
- our ability to generate sufficient cash to fund our operations
during the pendency of the Chapter 11 Cases;
- our ability to propose and implement a business
plan;
- the diversion of management's attention as a result of the
Chapter 11 Cases;
- increased levels of employee attrition as a result of the
Chapter 11 Cases;
- our ability to continue as a going concern;
- volatility of our financial results as a result of the Chapter
11 Cases;
- the conditions to which our debtor-in-possession financing is
subject and the risk that these conditions may not be satisfied for
various reasons, including for reasons outside of our
control;
- our ability to obtain confirmation of a Chapter 11 plan of
reorganization;
- the impact of a protracted restructuring on our
business;
- the impact of any challenge by creditors or other parties to
previously completed transactions;
- risks associated with third-party motions in the Chapter 11
Cases;
- the potential adverse effects of the Chapter 11 Cases on our
liquidity or results of operations and increased legal and other
professional costs necessary to execute our
reorganization;
- trading price and volatility of our common stock;
- our substantial debt could adversely affect our cash flow and
impair our ability to raise additional capital on favorable
terms;
- the cost savings and expected synergies from the mergers with
EarthLink and Broadview may not be fully realized or may take
longer to realize than expected;
- the integration of Windstream and EarthLink and Broadview may
not be successful, may cause disruption in relationships with
customers, vendors and suppliers and may divert attention of
management and key personnel;
- the potential for incumbent carriers to impose monetary
penalties for failure to meet specific volume and term commitments
under their special access pricing and tariff plans, which
Windstream uses to lease last-mile connections to serve its retail
business data service customers, without FCC action;
- the impact of the FCC’s comprehensive business data services
reforms that were confirmed by an appellate court, which may result
in greater capital investments and customer and revenue churn
because of possible price increases by our ILEC suppliers for
certain services we use to serve customer locations where we do not
have facilities;
- the impact of new, emerging or competing technologies and our
ability to utilize these technologies to provide services to our
customers;
- unanticipated increases or other changes in our future cash
requirements, whether caused by unanticipated increases in capital
expenditures, increases in pension funding requirements, or
otherwise;
- for certain operations where we utilize facilities owned by
other carriers, adverse effects on the availability, quality of
service, price of facilities and services provided by other
carriers on which our services depend;
- our election to accept statewide offers under the FCC’s Connect
America Fund, Phase II, and the impact of such election on our
future receipt of federal universal service funds and capital
expenditures, and any return of support received pursuant to the
program or future versions of the program implemented by the
FCC;
- our ability to make rent payments under the master lease to
Uniti, which may be affected by results of operations, changes in
our cash requirements, cash tax payment obligations, or overall
financial position;
- adverse changes in economic conditions in the markets served by
us;
- the extent, timing and overall effects of competition in the
communications business;
- unfavorable rulings by state public service commissions in
current and further proceedings regarding universal service funds,
inter-carrier compensation or other matters that could reduce
revenues or increase expenses;
- material changes in the communications industry that could
adversely affect vendor relationships with equipment and network
suppliers and customer relationships with wholesale
customers;
- earnings on pension plan investments significantly below our
expected long term rate of return for plan assets or a significant
change in the discount rate or other actuarial
assumptions;
- unfavorable results of litigation or intellectual property
infringement claims asserted against us;
- the risks associated with noncompliance by us with regulations
or statutes applicable to government programs under which we
receive material amounts of end-user revenue and government
subsidies, or noncompliance by us, our partners, or our
subcontractors with any terms of our government
contracts;
- the effects of federal and state legislation, and rules and
regulations, and changes thereto, governing the communications
industry;
- loss of consumer households served;
- the impact of equipment failure, natural disasters or terrorist
acts;
- the effects of work stoppages by our employees or employees of
other communications companies on whom we rely for service;
and
- other risks and uncertainties referenced from time to time in
Windstream’s Annual Report on Form 10-K, including those additional
factors under “Risk Factors” in Item 1A, and in other filings of
ours with the SEC at www.sec.gov or not currently known to us or
that we do not currently deem to be material.
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 other filings with the Securities and Exchange Commission at
www.sec.gov.
Media Contact:David
Avery, 501-748-5876david.avery@windstream.com |
|
Investor Contact:Chris
King, 704-319-1025christopher.c.king@windstream.com |
WINDSTREAM HOLDINGS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS |
|
|
|
(In millions, except per share amounts) |
THREE MONTHS ENDED |
|
TWELVE MONTHS ENDED |
|
|
December 31, |
|
December 31, |
|
Increase (Decrease) |
|
December 31, |
|
December 31, |
|
Increase (Decrease) |
|
|
2018 |
|
2017 |
|
Amount |
% |
|
2018 |
|
2017 |
|
Amount |
|
% |
|
UNDER GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues and sales: |
|
|
|
|
Service revenues |
$ |
1,377.1 |
|
|
$ |
1,477.3 |
|
|
$ |
(100.2 |
) |
(7 |
) |
|
$ |
5,637.2 |
|
|
$ |
5,759.7 |
|
|
$ |
(122.5 |
) |
|
(2 |
) |
|
|
Product
sales |
|
16.7 |
|
|
|
20.6 |
|
|
|
(3.9 |
) |
(19 |
) |
|
|
75.9 |
|
|
|
93.2 |
|
|
|
(17.3 |
) |
|
(19 |
) |
|
|
Total
revenues and sales |
|
1,393.8 |
|
|
|
1,497.9 |
|
|
|
(104.1 |
) |
(7 |
) |
|
|
5,713.1 |
|
|
|
5,852.9 |
|
|
|
(139.8 |
) |
|
(2 |
) |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
services (exclusive of depreciation and amortization included
below) |
|
694.9 |
|
|
|
747.7 |
|
|
|
(52.8 |
) |
(7 |
) |
|
|
2,854.8 |
|
|
|
2,962.7 |
|
|
|
(107.9 |
) |
|
(4 |
) |
|
|
Cost of
products sold |
|
14.4 |
|
|
|
20.7 |
|
|
|
(6.3 |
) |
(30 |
) |
|
|
69.1 |
|
|
|
93.5 |
|
|
|
(24.4 |
) |
|
(26 |
) |
|
|
Selling,
general and administrative |
|
209.9 |
|
|
|
224.1 |
|
|
|
(14.2 |
) |
(6 |
) |
|
|
889.0 |
|
|
|
896.1 |
|
|
|
(7.1 |
) |
|
(1 |
) |
|
|
Depreciation and amortization |
|
390.4 |
|
|
|
403.7 |
|
|
|
(13.3 |
) |
(3 |
) |
|
|
1,526.7 |
|
|
|
1,470.0 |
|
|
|
56.7 |
|
|
4 |
|
|
|
Goodwill
impairment |
|
- |
|
|
|
1,840.8 |
|
|
|
(1,840.8 |
) |
(100 |
) |
|
|
- |
|
|
|
1,840.8 |
|
|
|
(1,840.8 |
) |
|
(100 |
) |
|
|
Merger,
integration and other costs |
|
1.5 |
|
|
|
30.0 |
|
|
|
(28.5 |
) |
(95 |
) |
|
|
31.9 |
|
|
|
137.4 |
|
|
|
(105.5 |
) |
|
(77 |
) |
|
|
Restructuring charges |
|
19.0 |
|
|
|
9.3 |
|
|
|
9.7 |
|
104 |
|
|
|
45.0 |
|
|
|
43.0 |
|
|
|
2.0 |
|
|
5 |
|
|
|
Total
costs and expenses |
|
1,330.1 |
|
|
|
3,276.3 |
|
|
|
(1,946.2 |
) |
(59 |
) |
|
|
5,416.5 |
|
|
|
7,443.5 |
|
|
|
(2,027.0 |
) |
|
(27 |
) |
|
Operating income (loss) |
|
63.7 |
|
|
|
(1,778.4 |
) |
|
|
1,842.1 |
|
104 |
|
|
|
296.6 |
|
|
|
(1,590.6 |
) |
|
|
1,887.2 |
|
|
119 |
|
|
Other expense, net |
|
(17.8 |
) |
|
|
(10.8 |
) |
|
|
7.0 |
|
65 |
|
|
|
(4.9 |
) |
|
|
(2.3 |
) |
|
|
2.6 |
|
|
113 |
|
|
Gain on sale of Consumer CLEC business |
|
145.4 |
|
|
|
- |
|
|
|
145.4 |
|
* |
|
|
|
145.4 |
|
|
|
- |
|
|
|
145.4 |
|
|
* |
|
|
Net (loss) gain on early extinguishment of debt |
|
- |
|
|
|
(58.4 |
) |
|
|
58.4 |
|
(100 |
) |
|
|
190.3 |
|
|
|
(56.4 |
) |
|
|
246.7 |
|
|
* |
|
|
Interest expense (A) |
|
(223.8 |
) |
|
|
(232.8 |
) |
|
|
(9.0 |
) |
(4 |
) |
|
|
(901.3 |
) |
|
|
(875.4 |
) |
|
|
25.9 |
|
|
3 |
|
|
Loss before income taxes |
|
(32.5 |
) |
|
|
(2,080.4 |
) |
|
|
(2,047.9 |
) |
(98 |
) |
|
|
(273.9 |
) |
|
|
(2,524.7 |
) |
|
|
(2,250.8 |
) |
|
(89 |
) |
|
Income tax expense (benefit) |
|
516.7 |
|
|
|
(244.7 |
) |
|
|
761.4 |
|
* |
|
|
|
449.1 |
|
|
|
(408.1 |
) |
|
|
857.2 |
|
|
* |
|
|
Net loss |
$ |
(549.2 |
) |
|
$ |
(1,835.7 |
) |
|
$ |
(1,286.5 |
) |
(70 |
) |
|
$ |
(723.0 |
) |
|
$ |
(2,116.6 |
) |
|
$ |
(1,393.6 |
) |
|
(66 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share: |
|
|
|
Net loss |
($12.92 |
) |
|
($51.32 |
) |
|
$38.40 |
|
* |
|
|
($17.72 |
) |
|
($62.66 |
) |
|
$44.94 |
|
|
* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares |
|
42.5 |
|
|
|
35.8 |
|
|
|
6.7 |
|
19 |
|
|
|
40.8 |
|
|
|
33.8 |
|
|
|
7.0 |
|
|
21 |
|
|
Common shares outstanding |
|
42.9 |
|
|
|
36.5 |
|
|
|
6.4 |
|
18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED RESULTS OF OPERATIONS (B): |
|
|
|
|
|
|
|
|
|
|
|
Adjusted service revenues |
$ |
1,377.1 |
|
|
$ |
1,477.3 |
|
|
$ |
(100.2 |
) |
(7 |
) |
|
$ |
5,637.2 |
|
|
$ |
5,909.0 |
|
|
$ |
(271.8 |
) |
|
(5 |
) |
|
Adjusted revenues and sales |
$ |
1,393.8 |
|
|
$ |
1,497.9 |
|
|
$ |
(104.1 |
) |
(7 |
) |
|
$ |
5,713.1 |
|
|
$ |
6,002.4 |
|
|
$ |
(289.3 |
) |
|
(5 |
) |
|
Adjusted OIBDAR (C) |
$ |
472.1 |
|
|
$ |
521.1 |
|
|
$ |
(49.0 |
) |
(9 |
) |
|
$ |
1,974.9 |
|
|
$ |
2,010.5 |
|
|
$ |
(35.6 |
) |
|
(2 |
) |
|
Adjusted OIBDA (D) |
$ |
307.9 |
|
|
$ |
357.7 |
|
|
$ |
(49.8 |
) |
(14 |
) |
|
$ |
1,319.2 |
|
|
$ |
1,357.0 |
|
|
$ |
(37.8 |
) |
|
(3 |
) |
|
Adjusted capital expenditures (E) |
$ |
206.7 |
|
|
$ |
172.0 |
|
|
$ |
34.7 |
|
20 |
|
|
$ |
782.6 |
|
|
$ |
839.4 |
|
|
$ |
(56.8 |
) |
|
(7 |
) |
|
* Not meaningful |
|
|
|
|
|
|
|
(A) |
Includes interest expense associated with the master lease
agreement with Uniti of $114.9 million and $467.0 million for the
three and twelve month periods ended December 31, 2018,
respectively, as compared to $119.7 and $484.9 million for the
three and twelve month periods ended December 31, 2017. |
|
(B) |
Adjusted results of operations are based upon the combined
historical financial information of Windstream and EarthLink for
all periods presented. See Notes to Reconciliation of
Non-GAAP Financial Measures. |
|
(C) |
Adjusted OIBDAR is adjusted OIBDA before the annual cash rent
payment due under the master lease agreement with Uniti. |
|
(D) |
Adjusted OIBDA is operating income before depreciation and
amortization, excluding pension expense, share-based compensation
expense, restructuring charges, merger, integration and certain
other costs. |
|
(E) |
Adjusted capital expenditures includes applicable amounts for
EarthLink for periods prior to the merger date of February 27, 2017
and excludes post-merger integration capital expenditures for
Broadview and EarthLink and amounts related to Project Excel, a
capital program funded entirely using a portion of the proceeds
from the sale of the data center business completed in December
2015. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WINDSTREAM HOLDINGS, INC. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UNAUDITED BUSINESS SEGMENT RESULTS UNDER GAAP |
|
|
|
|
|
|
|
|
|
|
|
|
(In millions) |
THREE MONTHS ENDED |
|
TWELVE MONTHS ENDED |
|
|
December 31, |
|
December 31, |
|
Increase (Decrease) |
|
December 31, |
|
December 31, |
|
Increase (Decrease) |
|
|
2018 |
|
2017 |
|
Amount |
|
% |
|
2018 |
|
2017 |
|
Amount |
|
% |
Consumer & Small Business |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
and sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues |
$ |
454.7 |
|
|
$ |
475.6 |
|
|
$ |
(20.9 |
) |
|
(4 |
) |
|
$ |
1,850.5 |
|
|
$ |
1,944.5 |
|
|
$ |
(94.0 |
) |
|
(5 |
) |
|
Product
sales |
|
6.9 |
|
|
|
6.1 |
|
|
|
0.8 |
|
|
13 |
|
|
|
26.5 |
|
|
|
33.8 |
|
|
|
(7.3 |
) |
|
(22 |
) |
|
Total
revenues and sales |
|
461.6 |
|
|
|
481.7 |
|
|
|
(20.1 |
) |
|
(4 |
) |
|
|
1,877.0 |
|
|
|
1,978.3 |
|
|
|
(101.3 |
) |
|
(5 |
) |
|
Costs
and expenses |
|
193.6 |
|
|
|
199.9 |
|
|
|
(6.3 |
) |
|
(3 |
) |
|
|
787.4 |
|
|
|
848.5 |
|
|
|
(61.1 |
) |
|
(7 |
) |
|
Segment
income |
$ |
268.0 |
|
|
$ |
281.8 |
|
|
$ |
(13.8 |
) |
|
(5 |
) |
|
$ |
1,089.6 |
|
|
$ |
1,129.8 |
|
|
$ |
(40.2 |
) |
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Windstream Enterprise & Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
and sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues |
$ |
704.2 |
|
|
$ |
760.7 |
|
|
$ |
(56.5 |
) |
|
(7 |
) |
|
$ |
2,883.7 |
|
|
$ |
2,883.5 |
|
|
$ |
0.2 |
|
|
- |
|
|
Product
sales |
|
9.4 |
|
|
|
14.1 |
|
|
|
(4.7 |
) |
|
(33 |
) |
|
|
48.2 |
|
|
|
58.6 |
|
|
|
(10.4 |
) |
|
(18 |
) |
|
Total
revenues and sales |
|
713.6 |
|
|
|
774.8 |
|
|
|
(61.2 |
) |
|
(8 |
) |
|
|
2,931.9 |
|
|
|
2,942.1 |
|
|
|
(10.2 |
) |
|
- |
|
|
Costs
and expenses |
|
553.3 |
|
|
|
610.4 |
|
|
|
(57.1 |
) |
|
(9 |
) |
|
|
2,303.7 |
|
|
|
2,364.9 |
|
|
|
(61.2 |
) |
|
(3 |
) |
|
Segment
income |
$ |
160.3 |
|
|
$ |
164.4 |
|
|
$ |
(4.1 |
) |
|
(2 |
) |
|
$ |
628.2 |
|
|
$ |
577.2 |
|
|
$ |
51.0 |
|
|
9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wholesale |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
and sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues |
$ |
175.5 |
|
|
$ |
189.7 |
|
|
$ |
(14.2 |
) |
|
(7 |
) |
|
$ |
722.4 |
|
|
$ |
756.3 |
|
|
$ |
(33.9 |
) |
|
(4 |
) |
|
Product
sales |
|
0.3 |
|
|
|
0.2 |
|
|
|
0.1 |
|
|
50 |
|
|
|
0.7 |
|
|
|
0.3 |
|
|
|
0.4 |
|
|
- |
|
|
Total
revenues and sales |
|
175.8 |
|
|
|
189.9 |
|
|
|
(14.1 |
) |
|
(7 |
) |
|
|
723.1 |
|
|
|
756.6 |
|
|
|
(33.5 |
) |
|
(4 |
) |
|
Costs
and expenses |
|
52.9 |
|
|
|
55.4 |
|
|
|
(2.5 |
) |
|
(5 |
) |
|
|
216.5 |
|
|
|
226.8 |
|
|
|
(10.3 |
) |
|
(5 |
) |
|
Segment
income |
$ |
122.9 |
|
|
$ |
134.5 |
|
|
$ |
(11.6 |
) |
|
(9 |
) |
|
$ |
506.6 |
|
|
$ |
529.8 |
|
|
$ |
(23.2 |
) |
|
(4 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CLEC Consumer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
and sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service
revenues |
$ |
42.7 |
|
|
$ |
51.3 |
|
|
$ |
(8.6 |
) |
|
(17 |
) |
|
$ |
180.6 |
|
|
$ |
175.4 |
|
|
$ |
5.2 |
|
|
3 |
|
|
Product
sales |
|
0.1 |
|
|
|
0.2 |
|
|
|
(0.1 |
) |
|
(50 |
) |
|
|
0.5 |
|
|
|
0.5 |
|
|
|
- |
|
|
- |
|
|
Total
revenues and sales |
|
42.8 |
|
|
|
51.5 |
|
|
|
(8.7 |
) |
|
(17 |
) |
|
|
181.1 |
|
|
|
175.9 |
|
|
|
5.2 |
|
|
3 |
|
|
Costs
and expenses |
|
19.4 |
|
|
|
24.0 |
|
|
|
(4.6 |
) |
|
(19 |
) |
|
|
79.0 |
|
|
|
86.9 |
|
|
|
(7.9 |
) |
|
(9 |
) |
|
Segment
income |
$ |
23.4 |
|
|
$ |
27.5 |
|
|
$ |
(4.1 |
) |
|
(15 |
) |
|
$ |
102.1 |
|
|
$ |
89.0 |
|
|
$ |
13.1 |
|
|
15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total segment revenues and sales: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service revenues |
$ |
1,377.1 |
|
|
$ |
1,477.3 |
|
|
$ |
(100.2 |
) |
|
(7 |
) |
|
$ |
5,637.2 |
|
|
$ |
5,759.7 |
|
|
$ |
(122.5 |
) |
|
(2 |
) |
Product sales |
|
16.7 |
|
|
|
20.6 |
|
|
|
(3.9 |
) |
|
(19 |
) |
|
|
75.9 |
|
|
|
93.2 |
|
|
|
(17.3 |
) |
|
(19 |
) |
Total segment revenues and sales |
|
1,393.8 |
|
|
|
1,497.9 |
|
|
|
(104.1 |
) |
|
(7 |
) |
|
|
5,713.1 |
|
|
|
5,852.9 |
|
|
|
(139.8 |
) |
|
(2 |
) |
Total segment costs and expenses |
|
819.2 |
|
|
|
889.7 |
|
|
|
(70.5 |
) |
|
(8 |
) |
|
|
3,386.6 |
|
|
|
3,527.1 |
|
|
|
(140.5 |
) |
|
(4 |
) |
Total segment income |
|
574.6 |
|
|
|
608.2 |
|
|
|
(33.6 |
) |
|
(6 |
) |
|
|
2,326.5 |
|
|
|
2,325.8 |
|
|
|
0.7 |
|
|
- |
|
|
Other
unassigned operating expenses (A) |
|
(100.0 |
) |
|
|
(102.8 |
) |
|
|
2.8 |
|
|
3 |
|
|
|
(426.3 |
) |
|
|
(425.2 |
) |
|
|
(1.1 |
) |
|
- |
|
|
Merger,
integration and other costs |
|
(1.5 |
) |
|
|
(30.0 |
) |
|
|
(28.5 |
) |
|
(95 |
) |
|
|
(31.9 |
) |
|
|
(137.4 |
) |
|
|
(105.5 |
) |
|
(77 |
) |
|
Restructuring charges |
|
(19.0 |
) |
|
|
(9.3 |
) |
|
|
9.7 |
|
|
104 |
|
|
|
(45.0 |
) |
|
|
(43.0 |
) |
|
|
2.0 |
|
|
5 |
|
|
Goodwill
impairment |
|
- |
|
|
|
(1,840.8 |
) |
|
|
(1,840.8 |
) |
|
(100 |
) |
|
|
- |
|
|
|
(1,840.8 |
) |
|
|
(1,840.8 |
) |
|
(100 |
) |
|
Depreciation and amortization |
|
(390.4 |
) |
|
|
(403.7 |
) |
|
|
(13.3 |
) |
|
(3 |
) |
|
|
(1,526.7 |
) |
|
|
(1,470.0 |
) |
|
|
56.7 |
|
|
4 |
|
Operating income (loss) |
$ |
63.7 |
|
|
$ |
(1,778.4 |
) |
|
$ |
1,842.1 |
|
|
104 |
|
|
$ |
296.6 |
|
|
$ |
(1,590.6 |
) |
|
$ |
1,887.2 |
|
|
119 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
These expenses are not allocated to the business segments.
Unallocated expenses include stock-based compensation, pension
expense, and shared services, such as accounting and finance,
information technology, legal, human resources, and investor
relations. These expenses are centrally managed and are not
monitored by management at a segment level. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WINDSTREAM HOLDINGS, INC. |
|
|
|
UNAUDITED CONSOLIDATED BALANCE SHEETS |
(In
millions) |
|
|
|
|
|
|
December 31, |
|
December 31, |
|
2018 |
|
2017 |
Assets |
|
|
|
Current Assets: |
|
|
Cash and cash
equivalents |
$ |
355.7 |
|
|
$ |
43.4 |
|
Restricted cash |
|
5.3 |
|
|
|
- |
|
Accounts
receivable, net |
|
653.1 |
|
|
|
643.0 |
|
Inventories |
|
82.4 |
|
|
|
93.0 |
|
Prepaid
expenses and other |
|
159.7 |
|
|
|
154.3 |
|
Total
current assets |
|
1,256.2 |
|
|
|
933.7 |
|
|
|
|
|
Goodwill |
|
2,773.7 |
|
|
|
2,842.4 |
|
Other
intangibles, net |
|
1,213.1 |
|
|
|
1,454.4 |
|
Net
property, plant and equipment |
|
4,920.9 |
|
|
|
5,391.8 |
|
Deferred
income taxes |
|
- |
|
|
|
370.8 |
|
Other
assets |
|
94.0 |
|
|
|
91.2 |
|
Total Assets |
$ |
10,257.9 |
|
|
$ |
11,084.3 |
|
|
|
|
|
Liabilities and Shareholders' Deficit |
|
|
Current Liabilities: |
|
|
Current
portion of long-term debt |
$ |
5,728.1 |
|
|
$ |
169.3 |
|
Current
portion of long-term lease obligations |
|
4,570.3 |
|
|
|
188.6 |
|
Accounts
payable |
|
503.6 |
|
|
|
494.0 |
|
Advance
payments and customer deposits |
|
180.6 |
|
|
|
207.3 |
|
Accrued
taxes |
|
87.4 |
|
|
|
89.5 |
|
Accrued
interest |
|
43.5 |
|
|
|
52.6 |
|
Other
current liabilities |
|
344.2 |
|
|
|
342.1 |
|
Total
current liabilities |
|
11,457.7 |
|
|
|
1,543.4 |
|
|
|
|
|
Long-term debt |
|
- |
|
|
|
5,674.6 |
|
Long-term lease obligations |
|
72.8 |
|
|
|
4,643.3 |
|
Deferred
income taxes |
|
104.3 |
|
|
|
- |
|
Other
liabilities |
|
542.4 |
|
|
|
521.9 |
|
Total
liabilities |
|
12,177.2 |
|
|
|
12,383.2 |
|
|
|
|
|
Shareholders' Deficit: |
|
|
Common
stock |
|
- |
|
|
|
- |
|
Additional paid-in capital |
|
1,250.4 |
|
|
|
1,191.9 |
|
Accumulated other comprehensive income |
|
35.6 |
|
|
|
21.4 |
|
Accumulated deficit |
|
(3,205.3 |
) |
|
|
(2,512.2 |
) |
Total
shareholders' deficit |
|
(1,919.3 |
) |
|
|
(1,298.9 |
) |
Total Liabilities and Shareholders' Deficit |
$ |
10,257.9 |
|
|
$ |
11,084.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
WINDSTREAM HOLDINGS, INC. |
|
|
|
|
|
|
|
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS |
(In
millions) |
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
TWELVE MONTHS ENDED |
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Cash Provided from Operating Activities: |
|
|
|
|
|
|
|
Net
loss |
$ |
(549.2 |
) |
|
$ |
(1,835.7 |
) |
|
$ |
(723.0 |
) |
|
$ |
(2,116.6 |
) |
Adjustments to reconcile net loss to net cash provided from
operations: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
390.4 |
|
|
|
403.7 |
|
|
|
1,526.7 |
|
|
|
1,470.0 |
|
Goodwill
impairment |
|
- |
|
|
|
1,840.8 |
|
|
|
- |
|
|
|
1,840.8 |
|
Provision
for doubtful accounts |
|
11.4 |
|
|
|
12.3 |
|
|
|
37.7 |
|
|
|
45.8 |
|
Share-based compensation expense |
|
(14.2 |
) |
|
|
10.2 |
|
|
|
11.3 |
|
|
|
55.4 |
|
Deferred
income taxes |
|
508.8 |
|
|
|
(267.4 |
) |
|
|
441.2 |
|
|
|
(412.7 |
) |
Gain on
sale of Consumer CLEC business |
|
(145.4 |
) |
|
|
- |
|
|
|
(145.4 |
) |
|
|
- |
|
Net
(gain) loss on early extinguishment of debt |
|
- |
|
|
|
58.4 |
|
|
|
(190.3 |
) |
|
|
56.4 |
|
Other,
net |
|
18.9 |
|
|
|
23.2 |
|
|
|
29.0 |
|
|
|
38.7 |
|
Changes
in operating assets and liabilities, net: |
|
|
|
|
|
|
|
Accounts
receivable |
|
(21.1 |
) |
|
|
26.6 |
|
|
|
(47.0 |
) |
|
|
17.7 |
|
Prepaid
income taxes |
|
7.7 |
|
|
|
6.4 |
|
|
|
3.6 |
|
|
|
0.8 |
|
Prepaid
expenses and other |
|
38.6 |
|
|
|
21.6 |
|
|
|
43.2 |
|
|
|
1.3 |
|
Accounts
payable |
|
17.9 |
|
|
|
74.5 |
|
|
|
5.2 |
|
|
|
43.3 |
|
Accrued
interest |
|
(26.2 |
) |
|
|
(41.3 |
) |
|
|
(8.6 |
) |
|
|
(16.3 |
) |
Accrued
taxes |
|
(6.0 |
) |
|
|
(3.8 |
) |
|
|
(9.4 |
) |
|
|
(0.2 |
) |
Other
current liabilities |
|
37.6 |
|
|
|
18.0 |
|
|
|
35.1 |
|
|
|
4.8 |
|
Other
liabilities |
|
(9.3 |
) |
|
|
(26.9 |
) |
|
|
(2.2 |
) |
|
|
(25.7 |
) |
Other,
net |
|
(3.0 |
) |
|
|
7.4 |
|
|
|
6.0 |
|
|
|
(28.9 |
) |
Net cash
provided from operating activities |
|
256.9 |
|
|
|
328.0 |
|
|
|
1,013.1 |
|
|
|
974.6 |
|
Cash Flows from Investing Activities: |
|
|
|
|
|
|
|
Additions
to property, plant and equipment |
|
(217.0 |
) |
|
|
(184.4 |
) |
|
|
(820.2 |
) |
|
|
(908.6 |
) |
Acquisition of Broadview, net of cash acquired |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(63.3 |
) |
Cash
acquired from EarthLink |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5.0 |
|
Acquisition of MASS and ATC, net of cash acquired |
|
- |
|
|
|
- |
|
|
|
(46.9 |
) |
|
|
- |
|
Proceeds
from sale of Consumer CLEC business |
|
320.9 |
|
|
|
- |
|
|
|
320.9 |
|
|
|
- |
|
Other,
net |
|
(0.4 |
) |
|
|
(6.9 |
) |
|
|
(8.0 |
) |
|
|
(16.3 |
) |
Net cash
provided from (used in) investing activities |
|
103.5 |
|
|
|
(191.3 |
) |
|
|
(554.2 |
) |
|
|
(983.2 |
) |
Cash Flows from Financing Activities: |
|
|
|
|
|
|
|
Dividends
paid to shareholders |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(64.4 |
) |
Proceeds
from issuance of stock |
|
- |
|
|
|
- |
|
|
|
12.2 |
|
|
|
9.6 |
|
Repayments of debt and swaps |
|
(206.8 |
) |
|
|
(591.2 |
) |
|
|
(747.2 |
) |
|
|
(2,301.8 |
) |
Proceeds
from debt issuance |
|
189.0 |
|
|
|
515.0 |
|
|
|
816.0 |
|
|
|
2,614.6 |
|
Debt
issuance costs |
|
- |
|
|
|
(19.8 |
) |
|
|
(23.5 |
) |
|
|
(27.1 |
) |
Proceeds
from fiber transaction |
|
45.8 |
|
|
|
- |
|
|
|
45.8 |
|
|
|
- |
|
Stock
repurchases |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(19.0 |
) |
Payments
under long-term lease obligations |
|
(49.3 |
) |
|
|
(43.8 |
) |
|
|
(188.8 |
) |
|
|
(168.7 |
) |
Payments
under capital lease obligations |
|
(15.5 |
) |
|
|
(9.8 |
) |
|
|
(53.6 |
) |
|
|
(39.0 |
) |
Other,
net |
|
0.1 |
|
|
|
(0.2 |
) |
|
|
(2.2 |
) |
|
|
(11.3 |
) |
Net cash
used in financing activities |
|
(36.7 |
) |
|
|
(149.8 |
) |
|
|
(141.3 |
) |
|
|
(7.1 |
) |
Increase
(decrease) in cash, cash equivalents and restricted cash |
|
323.7 |
|
|
|
(13.1 |
) |
|
|
317.6 |
|
|
|
(15.7 |
) |
Cash, Cash Equivalents and Restricted Cash: |
|
|
|
|
|
|
|
Beginning
of period |
|
37.3 |
|
|
|
56.5 |
|
|
|
43.4 |
|
|
|
59.1 |
|
End of
period |
$ |
361.0 |
|
|
$ |
43.4 |
|
|
$ |
361.0 |
|
|
$ |
43.4 |
|
|
|
|
|
|
|
|
|
WINDSTREAM HOLDINGS, INC. |
|
|
|
|
UNAUDITED SUPPLEMENTAL ADJUSTED OPERATING INFORMATION |
|
(In thousands) |
|
|
THREE MONTHS ENDED |
|
TWELVE MONTHS ENDED |
|
December 31, |
December 31, |
Increase (Decrease) |
|
December 31, |
December 31, |
Increase (Decrease) |
|
2018 |
2017 |
Amount |
% |
|
2018 |
2017 |
Amount |
% |
Consumer - ILEC customers |
|
|
|
|
|
|
|
|
|
|
Households served |
1,247.9 |
1,268.8 |
|
(20.9 |
) |
(2 |
) |
|
|
High-speed Internet customers |
1,021.0 |
1,006.6 |
|
14.4 |
|
1 |
|
|
|
|
|
|
|
Net
household losses |
2.6 |
19.4 |
|
(16.8 |
) |
(87 |
) |
|
20.9 |
85.8 |
|
(64.9 |
) |
(76 |
) |
|
Net
high-speed Internet customer additions (losses) |
6.0 |
(10.8 |
) |
16.8 |
|
* |
|
|
14.4 |
(44.5 |
) |
58.9 |
|
* |
|
|
|
|
|
Small Business - ILEC customers |
118.1 |
128.1 |
|
(10.0 |
) |
(8 |
) |
|
|
|
|
|
|
|
|
|
* |
Not
meaningful |
|
|
|
WINDSTREAM HOLDINGS, INC. |
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES - ADJUSTED CAPITAL EXPENDITURES
AND ADJUSTED FREE CASH FLOW |
|
|
|
(In millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
TWELVE MONTHS ENDED |
|
December 31, |
|
December 31, |
|
December 31, |
|
December 31, |
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Adjusted Capital Expenditures: |
|
|
|
|
|
|
|
Capital expenditures
under GAAP |
$ |
217.0 |
|
|
$ |
184.4 |
|
|
$ |
820.2 |
|
|
$ |
908.6 |
|
EarthLink capital expenditures pre-merger |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
15.2 |
|
Project Excel capital expenditures |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(49.9 |
) |
Integration capital expenditures |
|
(10.3 |
) |
|
|
(12.4 |
) |
|
|
(37.6 |
) |
|
|
(34.5 |
) |
Adjusted
capital expenditures (A) |
$ |
206.7 |
|
|
$ |
172.0 |
|
|
$ |
782.6 |
|
|
$ |
839.4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHSENDED |
|
TWELVEMONTHS ENDED |
|
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
2018 |
|
2018 |
Adjusted Free Cash Flow: |
|
|
|
|
|
|
|
Operating income under GAAP |
|
|
|
|
$ |
63.7 |
|
|
$ |
296.6 |
|
Depreciation and amortization |
|
|
|
|
|
390.4 |
|
|
|
1,526.7 |
|
OIBDA |
|
|
|
|
|
454.1 |
|
|
|
1,823.3 |
|
Adjustments: |
|
|
|
|
|
|
|
Merger, integration and other costs |
|
|
|
|
|
1.5 |
|
|
|
31.9 |
|
Restructuring charges |
|
|
|
|
|
19.0 |
|
|
|
45.0 |
|
Other costs (B) |
|
|
|
|
|
10.9 |
|
|
|
59.9 |
|
Pension expense |
|
|
|
|
|
0.8 |
|
|
|
3.5 |
|
Share-based compensation expense |
|
|
|
|
|
(14.2 |
) |
|
|
11.3 |
|
Master lease rent payment |
|
|
|
|
|
(164.2 |
) |
|
|
(655.7 |
) |
Adjusted OIBDA |
|
|
|
|
|
307.9 |
|
|
|
1,319.2 |
|
Adjusted capital expenditures (per above) |
|
|
|
|
|
(206.7 |
) |
|
|
(782.6 |
) |
Cash paid for interest on long-term debt obligations |
|
|
|
|
|
(130.7 |
) |
|
|
(419.1 |
) |
Cash paid for income taxes |
|
|
|
|
|
- |
|
|
|
15.1 |
|
Adjusted free cash flow |
|
|
|
|
$ |
(29.5 |
) |
|
$ |
132.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A) |
Adjusted capital expenditures includes applicable amounts for
EarthLink for periods prior to the merger date of February 27, 2017
and excludes post-merger integration capital expenditures for
Broadview and EarthLink and amounts related to Project Excel, a
capital program funded entirely using a portion of the proceeds
from the sale of the data center business completed in December
2015. |
(B) |
Other costs primarily include business transformation expenses
consisting of consulting fees, incremental marketing and rebranding
costs, incremental labor, travel, training and other transition
costs related to outsourcing certain support functions. These costs
also include incremental network optimization costs incurred in
migrating traffic to existing lower costs circuits and terminating
contracts prior to their expiration. For a detailed breakdown of
these amounts, see note (E) to the "Notes to Reconciliation of
Non-GAAP Financial Measures." |
|
|
|
|
|
|
|
|
|
WINDSTREAM HOLDINGS, INC. |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|
|
|
|
|
|
|
|
|
(In
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
THREE MONTHS ENDED |
|
|
TWELVE MONTHS ENDED |
|
December 31, |
|
December 31, |
|
|
December 31, |
|
December 31, |
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
Reconciliation of Revenues and Sales under GAAP to
Adjusted Revenues and
Sales: |
|
|
|
|
|
|
|
|
|
Service revenues under
GAAP |
|
$ |
1,377.1 |
|
|
$ |
1,477.3 |
|
|
|
$ |
5,637.2 |
|
|
$ |
5,759.7 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
EarthLink
service revenues |
(A) |
|
- |
|
|
|
- |
|
|
(A) |
|
- |
|
|
|
149.3 |
|
Adjusted
service revenues |
|
|
1,377.1 |
|
|
|
1,477.3 |
|
|
|
|
5,637.2 |
|
|
|
5,909.0 |
|
Product
sales under GAAP |
|
|
16.7 |
|
|
|
20.6 |
|
|
|
|
75.9 |
|
|
|
93.2 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
EarthLink
product sales |
(A) |
|
- |
|
|
|
- |
|
|
(A) |
|
- |
|
|
|
0.2 |
|
Adjusted
product sales |
|
|
16.7 |
|
|
|
20.6 |
|
|
|
|
75.9 |
|
|
|
93.4 |
|
Adjusted revenues and sales |
$ |
1,393.8 |
|
|
$ |
1,497.9 |
|
|
|
$ |
5,713.1 |
|
|
$ |
6,002.4 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Loss under GAAP to Adjusted
OIBDA: |
|
|
|
|
|
|
|
|
|
Net
loss |
|
$ |
(549.2 |
) |
|
$ |
(1,835.7 |
) |
|
|
$ |
(723.0 |
) |
|
$ |
(2,116.6 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
Other
expense, net |
(B) |
|
17.8 |
|
|
|
10.8 |
|
|
(B) |
|
4.9 |
|
|
|
2.3 |
|
Gain on
sale of Consumer CLEC business |
(B) |
|
(145.4 |
) |
|
|
- |
|
|
(B) |
|
(145.4 |
) |
|
|
- |
|
Net loss
on early extinguishment of debt |
(B) |
|
- |
|
|
|
58.4 |
|
|
(B) |
|
(190.3 |
) |
|
|
56.4 |
|
Interest
expense |
(B) |
|
223.8 |
|
|
|
232.8 |
|
|
(B) |
|
901.3 |
|
|
|
875.4 |
|
Income
tax benefit |
(B) |
|
516.7 |
|
|
|
(244.7 |
) |
|
(B) |
|
449.1 |
|
|
|
(408.1 |
) |
Operating income (loss) under GAAP |
(B) |
|
63.7 |
|
|
|
(1778.4 |
) |
|
(B) |
|
296.6 |
|
|
|
(1590.6 |
) |
Depreciation and amortization |
(B) |
|
390.4 |
|
|
|
403.7 |
|
|
(B) |
|
1,526.7 |
|
|
|
1,470.0 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
EarthLink
operating income |
(C) |
|
- |
|
|
|
- |
|
|
(C) |
|
- |
|
|
|
30.8 |
|
Goodwill
impairment |
(B) |
|
- |
|
|
|
1,840.8 |
|
|
(B) |
|
- |
|
|
|
1,840.8 |
|
Merger,
integration and other costs |
(B) |
|
1.5 |
|
|
|
30.0 |
|
|
(B) |
|
31.9 |
|
|
|
137.4 |
|
Restructuring charges |
(B) |
|
19.0 |
|
|
|
9.3 |
|
|
(B) |
|
45.0 |
|
|
|
43.0 |
|
Other
costs |
(E) |
|
10.9 |
|
|
|
3.5 |
|
|
(E) |
|
59.9 |
|
|
|
25.8 |
|
Pension
expense |
(B) |
|
0.8 |
|
|
|
2.0 |
|
|
(B) |
|
3.5 |
|
|
|
8.1 |
|
Share-based compensation expense |
(F) |
|
(14.2 |
) |
|
|
10.2 |
|
|
(F) |
|
11.3 |
|
|
|
45.2 |
|
Adjusted
OIBDAR |
|
|
472.1 |
|
|
|
521.1 |
|
|
|
|
1,974.9 |
|
|
|
2,010.5 |
|
Master
lease rent payment |
(D) |
|
(164.2 |
) |
|
|
(163.4 |
) |
|
(D) |
|
(655.7 |
) |
|
|
(653.5 |
) |
Adjusted
OIBDA |
|
$ |
307.9 |
|
|
$ |
357.7 |
|
|
|
$ |
1,319.2 |
|
|
$ |
1,357.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Reconciliation of Non-GAAP Financial
Measures |
|
|
|
|
|
|
|
|
|
|
|
WINDSTREAM HOLDINGS, INC. |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
(In
millions) |
|
THREE MONTHS ENDED |
|
|
TWELVE MONTHS ENDED |
|
|
December 31, |
|
December 31, |
|
|
December 31, |
|
December 31, |
|
|
2018 |
|
2017 |
|
|
2018 |
|
2017 |
Reconciliation of Net Cash Provided from Operating
Activities to Adjusted OIBDA: |
|
|
|
|
|
|
|
|
|
Net Cash Provided From
Operating Activities |
|
$ |
256.9 |
|
|
$ |
327.9 |
|
|
|
$ |
1,013.1 |
|
|
$ |
974.5 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Master
lease rent payment |
(D) |
|
(164.2 |
) |
|
|
(163.4 |
) |
|
(D) |
|
(655.7 |
) |
|
|
(653.5 |
) |
EarthLink
operating income |
(C) |
|
- |
|
|
|
- |
|
|
(C) |
|
- |
|
|
|
30.8 |
|
Merger,
integration and other costs |
(B) |
|
1.5 |
|
|
|
30.0 |
|
|
(B) |
|
31.9 |
|
|
|
137.4 |
|
Restructuring charges |
(B) |
|
19.0 |
|
|
|
9.3 |
|
|
(B) |
|
45.0 |
|
|
|
43.0 |
|
Other
costs |
(E) |
|
10.9 |
|
|
|
3.5 |
|
|
(E) |
|
59.9 |
|
|
|
25.8 |
|
Other
expense (income), net |
(B) |
|
8.0 |
|
|
|
10.8 |
|
|
(B) |
|
(4.9 |
) |
|
|
2.3 |
|
Interest
expense |
(B) |
|
223.8 |
|
|
|
232.7 |
|
|
(B) |
|
901.3 |
|
|
|
875.3 |
|
Income
tax expense (benefit), net of deferred income taxes |
|
|
7.6 |
|
|
|
5.3 |
|
|
|
|
8.4 |
|
|
|
(12.8 |
) |
Provision
for doubtful accounts |
(G) |
|
(11.4 |
) |
|
|
(12.2 |
) |
|
(G) |
|
(37.7 |
) |
|
|
(45.7 |
) |
Other
noncash adjustments, net |
(H) |
|
(8.8 |
) |
|
|
(18.6 |
) |
|
(H) |
|
(16.1 |
) |
|
|
(38.2 |
) |
Changes
in operating assets and liabilities, net |
(G) |
|
(35.4 |
) |
|
|
(67.6 |
) |
|
(G) |
|
(26.0 |
) |
|
|
18.1 |
|
Adjusted
OIBDA |
|
$ |
307.9 |
|
|
$ |
357.7 |
|
|
|
$ |
1,319.2 |
|
|
$ |
1,357.0 |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Net Cash Provided from Operating
Activities to Adjusted Free Cash Flow: |
|
|
|
|
|
|
|
|
|
Net Cash
Provided From Operating Activities |
|
$ |
256.9 |
|
|
|
|
|
$ |
1,013.1 |
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Cash paid
for interest on long-term debt obligations |
|
|
(130.7 |
) |
|
|
|
|
|
(419.1 |
) |
|
|
Cash
refunded for income taxes |
|
|
- |
|
|
|
|
|
|
15.1 |
|
|
|
Capital
expenditures |
|
|
(217.0 |
) |
|
|
|
|
|
(820.2 |
) |
|
|
Integration capital expenditures |
|
|
10.3 |
|
|
|
|
|
|
37.6 |
|
|
|
Master
lease rent payment |
(D) |
|
(164.2 |
) |
|
|
|
(D) |
|
(655.7 |
) |
|
|
Merger,
integration and other costs |
(B) |
|
1.5 |
|
|
|
|
(B) |
|
31.9 |
|
|
|
Restructuring charges |
(B) |
|
19.0 |
|
|
|
|
(B) |
|
45.0 |
|
|
|
Other
costs |
(E) |
|
10.9 |
|
|
|
|
(E) |
|
59.9 |
|
|
|
Other
expense (income), net |
(B) |
|
8.0 |
|
|
|
|
(B) |
|
(4.9 |
) |
|
|
Interest
expense |
(B) |
|
223.8 |
|
|
|
|
(B) |
|
901.3 |
|
|
|
Income
tax expense, net of deferred income taxes |
|
|
7.6 |
|
|
|
|
|
|
8.4 |
|
|
|
Provision
for doubtful accounts |
(G) |
|
(11.4 |
) |
|
|
|
(G) |
|
(37.7 |
) |
|
|
Other
noncash adjustments, net |
(H) |
|
(8.8 |
) |
|
|
|
(H) |
|
(16.1 |
) |
|
|
Changes
in operating assets and liabilities, net |
(G) |
|
(35.4 |
) |
|
|
|
(G) |
|
(26.0 |
) |
|
|
Adjusted
Free Cash Flow |
|
$ |
(29.5 |
) |
|
|
|
|
$ |
132.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes to Reconciliation of Non-GAAP Financial
Measures |
WINDSTREAM HOLDINGS, INC. |
|
NOTES TO RECONCILIATION OF NON-GAAP FINANCIAL MEASURES |
|
|
Windstream Holdings, Inc. ("Windstream", "we", "us",
"our") has presented in this package unaudited adjusted results,
which includes the results of operations of EarthLink Holdings
Corp. ("EarthLink") as if the merger with EarthLink had been
completed as of January 1, 2016. The adjusted results are based
upon the combined historical financial information of Windstream
and EarthLink for all periods presented. Operating results of
Broadview Networks Holdings, Inc. ("Broadview"), Mass
Communications ("MASS") and American Telephone Company ("ATC") are
included beginning on July 28, 2017, March 27, 2018, and August 31,
2018, respectively, the dates of acquisition.The adjusted results
exclude pension costs, share-based compensation expense,
restructuring charges, merger, integration and certain other costs.
We have made certain reclassifications to the historical financial
information of EarthLink to conform to our presentation. We have
presented certain measures of our operating performance, on an
adjusted basis, that reflects the impact of the annual cash rent
payment due under the master lease agreement with Uniti Group, Inc.
("Uniti"). |
|
|
Our purpose for these adjustments is to improve the
comparability of results of operations for all periods presented in
order to focus on the true earnings capacity of our core business
operations and our ability to generate cash flow. We use adjusted
results, including adjusted OIBDA, adjusted OIBDAR, adjusted free
cash flow and adjusted capital expenditures as key measures of the
operational performance of our business. Our management, including
the chief operating decision-maker, consistently uses these
measures for internal reporting and the evaluation of business
objectives, opportunities and performance. |
|
|
|
|
(A) |
Represents
EarthLink revenues and sales prior to the merger date of February
27, 2017. |
|
(B) |
Represents
applicable amount as reported under GAAP - See Unaudited
Consolidated Statements of Operations. |
|
(C) |
Represents EarthLink operating results for periods prior to the
merger date of February 27, 2017. These amounts exclude
EarthLink's historical depreciation and amortization,
restructuring, merger and integration costs and share-based
compensation. |
|
(D) |
Represents the
impact of the annual cash rent payment due under the master lease
agreement with Uniti. |
|
(E) |
Other costs for the three and twelve month periods ended
December 31, 2018, primarily include business transformation
expenses of $10.9 million and $59.3 million, respectively. These
expenses include consulting fees, incremental marketing and
rebranding costs, incremental labor, travel, training and other
transition costs related to outsourcing certain support functions
of $1.3 million and $32.0 million, respectively. These expenses
include $9.6 million and $27.3 million, respectively, of
incremental network optimization costs incurred in migrating
traffic to existing lower costs circuits and terminating contracts
prior to their expiration. Comparatively, for the three month
period ended December 31, 2017, other costs primarily consist of
incremental expenses of $1.8 million related to Hurricanes Harvey
and Irma and $1.7 million of costs incurred with miscellaneous
network cost initiatives. Other costs for the twelve month
period ended December 31, 2017 also include $8.3 million of costs
incurred with a carrier access settlement and a reserve for a
potential penalty attributable to not meeting certain spend
commitments under a circuit discount plan of approximately of $7.7
million. |
|
(F) |
The adjustment to share-based compensation expense in the
fourth quarter of 2018 reflects the change in the expected funding
of our 2018 annual matching contribution to the Windstream 401k
Plan from Windstream Holdings' common stock to cash. The twelve
month period ended December 31, 2017 excludes $10.1 million of
share-based compensation expense included in merger, integration
and other costs. |
|
(G) |
Represents
applicable amount reported under GAAP - See Unaudited Consolidated
Statements of Cash Flows. |
|
(H) |
Consists of non-cash amortization of debt issuance costs, debt
discounts and premiums, accretion expense related to asset
retirement obligations, gains on the sale of property, and other
non-cash miscellaneous income and expenses. |
|
|