Windstream Reports First-Quarter Results

Windstream Corp. today reported first-quarter results, highlighted by strong sales to business clients and continued growth in consumer broadband earnings.

"Our business and consumer channels delivered a strong performance while the first quarter," said Jeff Gardner, president and CEO of Windstream. "The business channel has gained significant traction with the acquisition of PAETEC, and our combined team is having tremendous success driving new sales opportunities. Our consumer business as well had a very solid quarter driven by growth in broadband service earnings and continued success with our bundling strategy."

The first quarter

Business service earnings were $897 million for the first quarter, up 3.2 percent from the same period a year ago on a pro forma basis.

Consumer broadband service earnings were $113 million, up 5.9 percent from the same period in 2011 on a pro forma basis. Overall consumer service earnings were $338 million, down 2.6 percent from the same period a year ago on a pro forma basis.

Business and consumer broadband earnings represented roughly 68 percent of Windstream's total earnings and sales in the quarter.

Wholesale earnings were $225 million, a decline of 6.3 percent from the same period a year ago on a pro forma basis due largely to the suspension and modification of certain wholesale products that were a part of the PAETEC portfolio.

"I am in the extreme confident in the business that we have built. Through targeted acquisitions and our strategic growth initiatives, we have assembled an attractive set of assets capable of generating consistent cash flows to support our dividend over a long period of time and to provide other opportunities hereafter to increase shareholder value," Gardner said.

In the first quarter pursuant to this agreement Generally Accepted Accounting Principles, Windstream reported total earnings and sales of $1.55 billion, operating income of $253 million and net income of $65 million, or 11 cents per share. That compares to net income of $29 million, or 6 cents per share, on total earnings of roughly $1 billion while the same period in 2011.

Windstream Corp. is a leading provider of advanced network communications, including cloud computing and managed services, to businesses nationwide. The company as well offers broadband, phone and digital TV services to consumers primarily in rural areas. Windstream has more than $6 billion in annual earnings and is listed on the S&P 500 index. For more information, visit www.windstream.com.

NOTES TO UNAUDITED RECONCILIATION OF Earnings AND SALES, OPERATING INCOME AND CAPITAL EXPENDITURES In accordance with GAAP TO PRO FORMA

As disclosed in our Form 8-K furnished on May 10, 2012, we have presented in this package unaudited pro forma results, which includes results from PAETEC for periods prior to the acquisition and excludes all merger and integration costs resulting from the completed transactions discussed above. PAETEC results include results from companies acquired by PAETEC for periods prior to those acquisitions and excludes the results of operations of the energy business acquired as part of PAETEC, which has been classified as discontinued operations. To boot to pro forma adjustments, we have presented certain measures of our operating performance, excluding the impact of restructuring charges, pension and stock-based compensation. We have made certain reclassifications and revisions to prior periods to conform with the current presentation.

The results of the acquired businesses

Our purpose for including the results of the acquired businesses and for excluding non-recurring items, the results of the disposed operations, restructuring charges, pension and stock-based compensation is to improve the comparability of results of operations for the three month periods ended March 31, 2012, to the results of operations for the same periods of 2011 in order to focus on the true revenues capacity associated with providing telecommunication services. Additionally, management believes that presenting current business measures assists investors by providing more meaningful comparisons of results from current and prior periods, and by providing information in other words a better reflection of the core revenues capacity of our current businesses. We use pro forma results, including pro forma earnings and sales, pro forma OIBDA , pro forma adjusted OIBDA, pro forma capital expenditures and adjusted free cash flow 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.