Newton Independent

Windstream changes pension accounting method; will take 4Q charge

Newton Independent

Windstream Corp., said Wednesday it plans to take a $163 million charge during the fourth quarter as a result of changing its accounting method for its pension plan.

The Little Rock, Ark.-based telecommunications firm said it is changing its method of recognizing actuarial gains and losses by recognizing them in the year in which they occur rather amortized over a period of years. The gains or losses will be reported in the fourth quarter of each year.

The change, the company said in a statement, will improve transparency in Windstream's financial results by more quickly recognizing the effects of economic and interest rate trends on plan investments and assumptions.

There is no impact on Windstream's cash flow or pension funding requirements as a result of the change. Given Windstream's pension contribution in September 2011, the company does not expect to make a contribution to its pension plan in 2012.

The charge being taken due to a decrease in the discount rate and lower than expected returns on plan assets.

Windstream reports net income dropped 16 percent in 3Q

Newton Independent

Windstream Corp., today announced its third quarter earnings that showed net income at $72 million, a 16 percent decrease from the same period a year before.

Total revenues for the Little Rock, Ark., telecommunications firm totaled $1.02 billion for the quarter, a 1 percent decrease from last year.

Business service revenue was $498 million, a 2 percent increase year-over-year, with consumer broadband revenue hitting $118 million, a 7 percent jump. Business and broadband revenue represented approximately 61 percent of total revenues for the quarter.

"I am very pleased with the improvements in revenue trends we have accomplished this year," Windstream CEO Jeff Gardner said. "Our goal over the past few years was to transform our business to achieve revenue and cash flow growth. Given our shifting revenue mix, success-based capital investments and expected deal synergies, we are on the verge of showing growth in both of these areas."

The company added approximately 9,300 new high-speed internet customers during the quarter bringing its total customer base to approximately 1.35 million, an increase of 4 percent year-over-year. Consumer broadband penetration is approximately 65 percent of primary residential lines.

Total access lines declined by approximately 37,000 during the third quareter, 3.9 percent from 2010 levels. Total lines at the end of the quarter stood at 3.22 million.

PAETEC shareholders agree to Windstream merger

Newton Independent

Shareholders of PAETEC, a New York state-based telecommunications firm, today agreed to the $2.3 billion merger agreement with Windstream Corporation, the Little Rock, Ark., company that has made several recent acquisitions, including former Newton-based Iowa Telecom.

PAETEC officials said that during a special meeting in New York City today, approximately 99 percent of the shares voting at the meeting of stockholders voted in favor of the adoption of the merger agreement with Windstream.

Upon completion of the merger, which is expected by the end of the year, PAETEC shareholders will receive 0.460 shares of Windstream common stock for each PAETEC share owned. Windstream expects to issue approximately 73 million shares of stock valued at approximately $891 million.

Windstream will also assume or refinance PAETEC's net debt of approximately $1.4 billion at the time of the closing.

PAETEC has approximately 5,000 employees, including about 875 in the Rochester, N.Y., area. The company was founded in 1998.

Shares of PAETEC were up 13 cents to $5.53 in early afternoon trading with Windstream stock up 30 cents to $12.20.

Windstream reports 18 percent jump in 2Q net income

Newton Independent

Windstream Corp., grew net income in the second quarter of the year to $93 million, an 18 percent increase from a year ago, the company said in releasing its financial results today.

Continuing its transition to a "next generation telecom provider," Windstream said its revenues for the quarter were $1.03 billion, a 12 percent increase over the same period a year ago. Operating income was $293 million, a 15 percent increase year-over-year. It also reported capital expenditures of $172 million, a 74 percent increase from the year before.

"On the heels of five-year anniversary as a public company, it is gratifying to report that we grew revenue and improved the company's profitability year-over-year in the second quarter," said Jeff Gardner, president and CEO of Windstream. "Windstream is successfully executing our strategic initiatives and turning a pivotal corner toward organic growth. I am particularly proud that we have transformed this business while maintaining our dividend and delivering industry-leading shareholder returns."

The net income of $93 million represents 18 cents of diluted earnings per share. The results also include $3 million in after-tax merger and integration costs and $2 million tax-effected loss on the early retirement of debt, which lowered earnings per share by approximately 1 cent.

In the business channel, advanced data and integrated solutions, which are largely connections providing both voice and data services, increased 2 percent year-over-year. Special access circuits increased 9 percent from the year before, driven by increased wireless backhaul demand.

The company added approximately 4,800 new high-speed wireless customers during the quarter bringing its total customer base to approximately 1.34 million, a 5 percent increase year-over-year.

Windstream ended the quarter with approximately 443,500 video customers, a 5 percent increase from the year before.

Total access lines declined by approximately 30,100 during the second quarter, a 3.6 percent dip year-over-year. Total lines at the end of the quarter totaled 3.26 million.

PAETEC Acquisition

Securities litigation firms announced this week that they are investigating whether PAETEC's board of directors breached their financial duty by undervaluing the company when they agreed on Monday to be acquired by Windstream in a $2.3 billion deal.

Similar lawsuits were filed on behalf of Iowa Telecom shareholders when its board of directors agreed to be acquired by Windstream in late 2009. The suits were settled with no changes made to the terms of acquisition agreement.

Windstream acquires PAETEC in $2.3 billion deal

Newton Independent

Windstream Corporation, which last year completed its acquisition of Newton-based Iowa Telecom, today announced an agreement where it will acquire PAETEC Holding Corporation based in Fairport, N.Y., in a deal valued at approximately $2.3 billion.

"This transaction significantly advances our strategy to drive top-line revenue growth by expanding our focus on business and broadband services," said Jeff Gardner, president and CEO of the Little Rock, Ark.-based company. "The combined company will have a nationwide network with a deep fiber footprint to offer enhanced capabilities in strategic growth areas, including IP-based services, data centers, cloud computing and managed services. Financially, we improve our growth profile and lower the payout ratio on our strong dividend, offering investors a unique combination of growth and yield."

PAETEC shareholders will receive 0.460 shares of Windstream common stock for each PAETEC share owned under the terms of the agreement that was approved by the boards of directors of both companies. Windstream expects to issue approximately 73 million shares of stock valued at approximately $891 million.

Windstream will also assume or refinance PAETEC's net debt of approximately $1.4 billion at the time of the closing. PAETEC shareholders are expected to own approximately 13 percent of the combined company upon closing of the transaction.

The new company will serve business customers in 46 states and the District of Columbia with approximately 100,000 fiber route miles across the country. PAETEC has approximately 5,000 employees, including about 875 in the Rochester, N.Y., area. The company was founded in 1998.

Newton man to participate in Nasdaq event

Newton Independent

Jason Derry of Newton will ring the Nasdaq stock market opening bell in New York City on Friday.

Derry is an engineer II with Windstream Corporation. He was selected in a drawing to join Windstream President and CEO Jeff Gardner and other company officials at the event to celebrate the five-year anniversary of the company.

Windstream was formed July 17, 2006, through the spinoff of Alltel Corporation's landline business and merger with VALOR Communications Group, Inc.

The corporation is headquarted in Little Rock, Ark.

Windstream sells business unit

Newton Independent

Windstream Corporation has sold its professional services unit to an Indiana firm after deciding to exit the professional web sit consultation business.

Little Rock, Ark.-based Windstream has sold the business to Evansville-based firm Lieberman Technologies for an undisclosed price.

Windstream acquired the operation through its purchase of Kentucky Data Link, Inc., and Norlight, Inc., both based in Evansville, Ind., and their parent company, Q-Comm Corp., based in Overland Park, Kan., in December 2010.

Windstream sued for patent infringement

Newton Independent

Klausner Technologies, Inc., today filed suit against Windstream Corporation for patent infringement under its U.S. Visual Voicemail patents.

The lawsuit is based on the sale in the United States of Windstream's enterprise voicemail products which allow users to selectively retrieve enterprise voicemail and which allegedly infringe on Klausner's patents.

You can read the full story that appeared this morning on the global financial news wires here.

Windstream reports 1Q earnings

Newton Independent

Windstream Corporation reported a 68 percent drop in net income in the first quarter as it booked charges to pay off debt, results released after the close of the markets Wednesday indicate.

Net income for the quarter was $23.5 million, or 5 cents per diluted share, compared to net income of $74.1 million, or 17 cents a share in the first quarter 2010.

The results were on target for what the company expected as it continues to shift its focus from traditional residential landline service to broadband and business service segments, Windstream CEO Jeff Gardner told shareholders at the company's annual meeting on Wednesday.

Total revenue for the quarter was $1.02 billion, a decline of 1.8 percent from the same time last year. It's business and broadband revenue totaled $618 million, a 3.6 percent increase. The company added 29,000 new broadband customers in the quarter bringing its total internet customer base to 1.3 million, an increase of 6 percent from the first quarter 2010.

Windstream also saw the lowest access line loss in the company's short history at 23,000 for the quarter, a 3.6 percent year-over-year decline in total access lines.

And the company continued its capital expenditure spending, increasing the percentage spent from the same time last year by 164 percent at $159.6 million.

"I am very pleased with our performance in the first quarter and our solid start to 2011," Gardner said in announcing the results. "We delivered strong operating metrics on all fronts and we continued to show improvement in year-over-year revenue trends. We expect our year-over-year financial performance to improve throughout 2011 as a result of the investments we are making in our network and the additional synergies we will realize."

Windstream made several significant acquisitions in 2010, including Newton-based Iowa Telecom in a $1.1 billion cash and debt assumption deal.

Windstream's board of directors also Wednesday approved a quarterly dividend on its common stock of 25 cents a share payable July 15 to shareholders of record June 30.

 

Windstream CEO's pay jumps 20 percent

Newton Independent

The chief executive officer of Windstream Corporation, the Little Rock, Ark.-based company that purchased former Newton-based Iowa Telecom last year, saw his compensation jump 20 percent in 2010, the corporation's recently released proxy statement shows.

Jeff Gardner's earnings, including salary, incentive-based pay and stock awards totaled $7.3 million, a $1.5 million increase from the $5.8 million in earnings he received in 2009.

Revenue for Windstream, under GAAP accounting procedures, was $3.7 billion in 2010, up 24 percent from the year before. Net income was $311 million, a 7 percent drop from 2009.

Former Iowa Telecom CEO Alan Wells, who was given a seat on the board of directors of Windstream as part of the $1.1 billion takeover deal, received $155,827 in total compensation in 2010 for his work on the board, the proxy statement shows.

Windstream will hold its annual stockholders meeting at 11 a.m. May 4 at the Capital Hotel in Little Rock.

Windstream's net income falls, revenues surge

Newton Independent

Windstream Corp. on Friday released fourth-quarter and full-year 2010 results that showed a drop in net income although huge percentage gains in revenues.

For the fourth quarter, net income was $72 million, a 4 percent decrease from a year ago. For the full year, net income was $311 million a 7 percent decline from the year before.

Revenues, however, jumped 30 percent to $981 million in the fourth quarter, the company reported. For the full year, revenues totalled $3.7 billion, a 24 percent increase from 2009 results.

The company added more then 12,000 new high-speed Internet customers during the fourth quarter, bringing its total customer base to approximately 1.3 million, an increase of 6 percent year-over-year. Overall broadband penetration is now 43 percent of total voice lines and 61 percent of primary residential lines.

The company ended the year with approximately 434,000 video customers, an 8 percent increase from a year ago and 23 percent of primary residential customers.

Total access lines, however, declined by approximately 36,000, or 3.6 percent year-over-year. Total lines at the end of the year were 3.3 million.

Jeff Gardner, Windstream's president and CEO, said "2010 was an incredible year for Windstream, and I am very pleased with all that we accomplished. We continued to improve our top-line trends and achieved our revenue and cash flow goals for the year. Our team did a fantastic job executing our business plan while successfully integrating the four companies we acquired during the year."

The company's press release on its results can be read here. You can read a Morningstar report on the Little Rock, Ark.-based company's results here.

Windstream encounters e-mail glitch as it prepares to convert Iowa Telecom users to new system

By PETER HUSSMANN

Some Iowa Telecom e-mail account users encountered problems sending messages on Monday, a problem traced to a bad computer file, Windstream officials said today.

Windstream is in the process of converting Iowa Telecom e-mail users to their system following the Little Rock, Ark.-based telecommunications firm's acquisition of the former Newton company last year.

Scott Morris, staff manager for Windstream Corporate Communications, said the company first was notified of the e-mail problem around 8 a.m. Monday morning when customers said they were having problems sending messages.

The issue arose during some pre-conversion work Windstream completed yesterday, he said. A bad computer file prevented some e-mails from going out. The technical issue was identified and rectified by noon. There was some additional clean up work that took until about 4 p.m.

Windstream's actual e-mail conversion of Iowa Telecom accounts starts tonight, Morris said.

"Each e-mail box will be individually converted to the Windstream system in a process that takes seconds for virtually all accounts," he said. "The entire conversion will take a couple of days to complete."

Former Iowa Telecom executive takes post with TPI

 

Newton Independent

TPI Composites announced on Tuesday that former Iowa Telecom executive Tim Lockhart has been appointed to the position of director of human resources - global operations.

Lockhart, with more than 20 years experience in multiple industries, will initially be based at TPI Composite's Newton, Iowa wind blade manufacturing facility before eventually relocating to TPI's Scottsdale, Ariz., based corporate facility. He will support TPI's long-term growth initiatives, company officials said in announcing his selection to the post.

Most recently, Lockhart served for more than 10 years as Iowa Telecom's vice president of customer service and human resources in Newton. Previously, he served as a human resource manager with Menasha Corporation in Neenah, Wisc., and in a similar position with Weyerhauser Company's Forest Products Company.

"Tim's experience as an accomplished executive in the human resources field will be of great value as we continue to expand our business worldwide," said TPI Chief Operating Officer Wayne Monie. "With more than 1,400 TPI associates, it is important we have strong leadership in this area and Tim is well prepared for the task."

Windstream continues its M&A activity

Newton Independent

Windstream Corp., continued its skein of merger and acquisition activity on Thursday announcing the completion of the acquisition of Q-Comm Corporation, a privately held regional fiber transport and competitive local exchange carrier, in a transaction valued at approximately $818 million.

Thursday's acquisition announcement follows Windstream's completion of the acquisition of Hosted Solution in a $310 million deal earlier in the week.

The Q-Comm transaction includes its wholly-owned subsidiaries Kentucky Data Link, Inc., a fiber services provider, and Norlight, Inc., a competitive local exchange services company.

Windstream issued approximately 20.6 million common shares valued at $273 million based on Windstream's closing share price on Dec. 1 of $13.24. The company also paid approximately $279 million in cash as part of the deal. Windstream also repaid approximately $266 million of Q-Comm's total outstanding debt. Windstream financed the deal with cash and proceeds rom a bond offering in October.

Kentucky Data provides long-haul and metropolitan fiber services to a diverse base of bandwidth intensive customers, primarily serving wireline and wireless carriers, as well as the large enterprise, government, education and medical markets. The company's contiguous fiber network spans nearly 30,000 fiber route miles in 23 states and the District of Columbia.

Norlight is a competitive local exchange carrier that serves approximately 5,500 small and medium sized business customers in Indiana, Kentucky, Tennessee and Wisconsin.

Windstream expects to achieve annual operating expense and capital expenditure synergies of approximately $25 million.

This summer, Windstream completed the acquisition of Newton-based Iowa Telecom in a $1.2 billion stock, cash and debt assumption deal. At the end of this month, Windstream plans to complete its integration of Iowa Telecom with the elimination of an additional 146 positions from its Newton location. Early next year, Windstream plans to move back to the former Iowa Telecom headquarters building on South Second Avenue West in downtown Newton. Iowa Telecom had purchased the former Maytag headquarters building after Whirlpool shut the facility down. Local development officials are actively marketing the building.

Windstream completes acquistion of Hosted Solutions

Newton Independent

Windstream Corp. on Wednesday announced that it had completed its acquisition of Hosted Solutions from ABRY Partners in an all-cash transaction valued at $310 million.

Windstream financed the transaction through cash and revolving credit borrowings.

Hosted Solutions, based in Raleigh, N.C., is a regional data center and managed hosting provider focused on enterprise-class Infrastructure as a Service (IaaS) solutions (managed hosting, managed services, cloud computing and bandwidth) for small and medium-sized business customers, as well as large enterprises.

Hosted Solutions operates five state-of-the-art SAS 70 Type II certified data centers in Raleigh, Charlotte, N.C., and Boston and serves more than 600 customers. Windstream now operates a total of 12 data centers in eight states.

Windstream announces strong earnings for third quarter

Newton Independent

Windstream Corporation today announced net income of $85 million for the third quarter, a 7 percent increase from a year ago, driven by total revenues of $966 million, up 32 percent from the same period in 2009.

"I am very pleased with our third quarter results," said Jeff Gardner, Windstream's president and CEO. "We are executing well on all fronts as evidenced by the improving revenue trends in both our business and consumer channels. In addition, our integration efforts of recent acquisitions are proceeding as planned."

Windstream added 15,700 new high-speed internet customers during the third quarter, bringing its total customer base to approximately 1.29 million, an 8 percent increase from the same period a year ago. Broadband penetration now stands at 42 percent of total voice lines and 60 percent of primary residential lines.

The Little Rock, Ark.,-headquartered communications firm, which completed the acquisition of Newton-based Iowa Telecom in June, also added more than 13,000 digital TV customers in the quarter bringing its total to approximately 433,000. That represents a 22 percent penetration rate of primary residential lines.

Total access lines for the quarter, however, declined about 30,700, a 3.7 percent decline year-over-year. Total lines at the end of the third quarter stood at approximately 3.3 million.

You can read the full press release on Windstream's third quarter earnings here.

Windstream to acquire Hosted Solutions

Newton Independent

Windstream Corporation announced today that it has entered into an agreement with ABRY Partners to acquire Hosted Solutions in an all cash deal valued at $310 million.

Hosted Solutions, based in Raleigh, N.C., is a regional data center and managed hosted provider targeting small and medium-sized businesses, as well as large enterprises. The company serves more than 600 customers and has approximately 125 employees.

Windstream said the acquisition will transform the Little Rock, Ark.-based company's data center business, increasing the scale and scope by adding five state-of-the-art SAS 70 Type II certified data centers in Raleigh, Charlotte, N.C., and Boston with a total of 68,000 square feet of data center capacity. As a result, Windstream will have a combined total of 12 data centers across the U.S.

"Data center space is increasingly in demand among our existing business customers," said Jeff Gardner, president and CEO of Windstream. "Hosted Solutions is an excellent complement to our existing enterprise service portfolio."

The transaction is expected to close before the end of the year.

For the full press release, go here.

You can download a fact sheet on Windstream's acquisition of the company below.

Download Hosted_Solutions_Fact_Sheet

Windstream to cut 146 more positions in Newton

Newton Independent

Windstream Corporation announced today that it will eliminate 146 positions from its operations in Newton as it continues to integrate Iowa Telecom into its corporate network and billing systems.

Windstream plans to eliminate a total of 220 positions at former Iowa Telecom sites in Iowa and Minnesota as part of the restructuring. Most of the positions will be eliminated by the end of the year, with the rest phased out in early 2011. The positions are primarily in network operations, information technology and finance.

"System conversion is a key part of the integration of our two companies in that it eliminates redundancies and enhances efficiency," said Brent Whittington, chief operating officer. "As we move forward, Windstream is committed to maintaining a significant operation in Newton, including the call center there. Additionally, our field staff, including network technicians and business sales teams, are largely unaffected by the restructuring and will continue in their roles serving customers."

Employees affected by the change can apply for other open positions within Windstream. The company will provide severance benefits to eligible employees along with outplacement services.

Officials with Windstream said the Little Rock, Ark.,-based company plans to list the former Maytag headquarters building for sale while continuing to search for tenants to lease vacant space in the building.

The remaining work-groups at the site - customer service, operations, engineering and business sales - will relocate to the former Iowa Telecom headquarters building in the 100 block of South Second Avenue West early next year.

When Windstream took control of Iowa Telecom on June 1, there were 316 employees working in Newton, company officials said. Today that number stands at 265. At the conclusion of today's announced job cuts, Windstream's workforce in Newton will stand at 119.

Workforce changes coming at Windstream

Newton Independent

Officials with Windstream said a release will be provided within the hour concerning "some workforce changes we are announcing today related to the integration of the two companies."

This would be the second round of job eliminations since Windstream acquired Iowa Telecom in a $1.2 billion deal on June 1. Two days after the acquisition, Windstream Corporation announced the elimination of 35 positions at its Newton facility effective Aug. 2.

In addition to the 35 positions in Newton, Windstream cut another 25 positions in other parts of the former Iowa Telecom's service areas.

The positions were primarily in accounting, finance, regulatory and marketing.

Class action lawsuits filed over Iowa Telecom, Windstream merger dismissed

By PETER HUSSMANN

The six class action lawsuits filed in connection with Windstream's takeover of Iowa Telecom were settled and dismissed in an order filed Thursday in Jasper County District Court.

Judge Gregory Hulse approved the settlement agreement reached between the parties, ordered the cases dismissed and awarded more than a half million dollars in attorneys fees to be paid by Iowa Telecom and Windstream.

Thursday's final settlement hearing date was set in an order entered in June.

The six individual class action lawsuits claimed Iowa Telecom and Windstream, as well as the company board members, breached their fiduciary duties to shareholders in agreeing to the merger. The actions were filed in both Jasper County District Court and the Federal Court for the Southern District of Iowa.

In agreeing to settle the case, Iowa Telecom and Windstream made no admission or concession of the truth of any of the allegations. However, the attorneys for the plaintiffs were allowed to review and comment on a revised securities registration form filed in connection with the merger that included information not contained in the initial  form filed with the Securities and Exchange Commission as part of the merger.

"Additional disclosures provided shareholders with material information concerning the synergies Windstream will benefit from as a result of the acquisition, Windstream's anticipated debt leverage ratio if the acquisition is consummated and Windstream's plans for Iowa Telecom's Iowa-based employees, including the fact that did not anticipate making any material staffing changes locally in Newton, Iowa," a court filing entered as part of the final dismissal states.

In addition, the filing states, shareholders were provided additional information on the potential benefits company insiders would receive as a result of the merger.

The settlement does not provide for any additional benefits to shareholders other than what was previously agreed to under the terms of the $1.2 billion merger deal that was completed on June 1.

Iowa Telecom shareholders received 0.804 shares of Windstream stock and $7.90 in cash per each Iowa Telecom share in the transaction. Windstream issued approximately 26.7 million shares of stock valued at $284 million, based on the company's closing price on May 28, and paid approximately $260 million in cash as part of the transaction.

Windstream also repaid all of Iowa Telecom's outstanding debt, which was approximately $613 million.

Judge Hulse dismissed the few shareholder objections filed in connection with the proposed settlement.

Attorneys representing the plaintiffs in the class action suits will be paid a total of $525,000. Sanjay Israni, a shareholder who filed a lawsuit against the merger in federal court in Des Moines, will be paid $3,000 from that amount for his representation of the class.