XML 65 R37.htm IDEA: XBRL DOCUMENT v3.20.1
Schedule I - Condensed Financial Information of the Registrant (Parent Company)
 12 Months Ended
Dec. 31, 2019
Condensed Financial Information Disclosure [Abstract]  
Schedule I - Condensed Financial Information of the Registrant (Parent Company)
STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
For the years ended December 31,
(Millions)
 
2019
 
2018
 
2017
Operating revenues:
 
 
 
 
 
 
Leasing income from subsidiaries
 
$
659.1

 
$
655.7

 
$
653.5

Total operating revenues
 
659.1

 
655.7

 
653.5

Costs and expenses:
 
 
 
 
 
 
Cost of services
 
675.2

 
—

 
—

Selling, general and administrative
 
2.2

 
1.8

 
1.9

Depreciation expense
 
—

 
344.0

 
336.2

Total costs and expenses
 
677.4

 
345.8

 
338.1

Operating (loss) income
 
(18.3
)
 
309.9

 
315.4

Interest expense on long-term lease obligation with Uniti
 
—

 
(467.0
)
 
(484.9
)
Loss before income taxes and equity in subsidiaries
 
(18.3
)
 
(157.1
)
 
(169.5
)
Income tax benefit (expense)
 
4.7

 
(799.9
)
 
(374.7
)
Loss before equity in subsidiaries
 
(13.6
)
 
(957.0
)
 
(544.2
)
Equity (losses) earnings from subsidiaries
 
(3,144.2
)
 
234.0

 
(1,572.4
)
Net loss
 
$
(3,157.8
)
 
$
(723.0
)
 
$
(2,116.6
)
Comprehensive loss
 
$
(3,170.8
)
 
$
(714.2
)
 
$
(2,101.1
)


See Notes to Condensed Financial Information (Parent Company) and Notes to Consolidated Financial Statements of Windstream Holdings, Inc. and Subsidiaries included in the Financial Supplement to this Annual Report on Form 10-K
BALANCE SHEETS
(Millions, except par value)
Assets
 
2019
 
2018
Current Assets:
 
 
 
 
Distributions receivable from Windstream Services
 
$
0.7

 
$
0.5

Total current assets
 
0.7

 
0.5

Investment and affiliate related balances
 
—

 
1,383.9

Net property, plant and equipment
 
—

 
1,267.1

Operating lease right-of-use asset
 
3,703.0

 
—

Deferred income taxes
 
4.1

 
—

Total Assets
 
$
3,707.8

 
$
2,651.5

Liabilities and Shareholders’ Deficit
 
 
 
 
Current liabilities:
 
 
 
 
Accrued dividends and other
 
$
0.6

 
$
0.5

Current portion of long-term lease obligation
 
—

 
4,570.3

Total current liabilities
 
0.6

 
4,570.8

Advances/losses in excess of investment in subsidiaries
 
2,062.4

 
—

Liabilities subject to compromise
 
3,719.2

 
—

Total liabilities
 
5,782.2

 
4,570.8

Shareholders’ Deficit:
 
 
 
 
Common stock, $0.0001 par value, 75.0 shares authorized,
 
 
 
 
42.9 and 36.5 shares issued and outstanding, respectively
 
—

 
—

Additional paid-in capital
 
1,253.1

 
1,250.4

Accumulated other comprehensive income
 
22.6

 
35.6

Accumulated deficit
 
(3,350.1
)
 
(3,205.3
)
Total shareholders’ deficit
 
(2,074.4
)
 
(1,919.3
)
Total Liabilities and Shareholders’ Deficit
 
$
3,707.8

 
$
2,651.5



See Notes to Condensed Financial Information (Parent Company) and Notes to Consolidated Financial Statements of Windstream Holdings, Inc. and Subsidiaries included in the Financial Supplement to this Annual Report on Form 10-K

STATEMENTS OF CASH FLOWS
For the years ended December 31,
(Millions)
 
2019
 
2018
 
2017
 
 
 
 
 
 
 
Cash Provided from Operating Activities:
 
 
 
 
 
 
Net loss
 
$
(3,157.8
)
 
$
(723.0
)
 
$
(2,116.6
)
Adjustments to reconcile net loss to net cash provided from
   operations:
 
 
 
 
 
 
Equity losses (earnings) from subsidiaries
 
3,144.2

 
(234.0
)
 
1,572.4

Depreciation expense
 
—

 
344.0

 
336.2

Non-cash portion of rent expense
 
16.1

 
—

 
—

Deferred income taxes
 
(4.1
)
 
800.1

 
376.4

Net cash (used in) provided from operating activities
 
(1.6
)
 
187.1

 
168.4

Cash Flows from Financing Activities:
 
 
 
 
 
 
Distributions from Windstream Services
 
1.6

 
1.6

 
83.7

Dividends paid to shareholders
 
—

 
—

 
(64.4
)
Contribution to Windstream Services
 
—

 
(12.2
)
 
(9.6
)
Proceeds from the issuance of stock
 
—

 
12.2

 
9.6

Stock repurchases
 
—

 
—

 
(19.0
)
Payments under long-term lease obligation
 
—

 
(188.7
)
 
(168.7
)
Net cash provided from (used in) financing activities
 
1.6

 
(187.1
)
 
(168.4
)
Change in cash and cash equivalents
 
—

 
—

 
—

Cash and Cash Equivalents:
 
 
 
 
 
 
Beginning of period
 
—

 
—

 
—

End of period
 
$
—

 
$
—

 
$
—



See Notes to Condensed Financial Information (Parent Company) and Notes to Consolidated Financial Statements of Windstream Holdings, Inc. and Subsidiaries included in the Financial Supplement to this Annual Report on Form 10-K

Background and Basis of Presentation: Notwithstanding the accounting treatment for the spin-off transaction as further discussed below, Windstream Holdings, Inc. (“Windstream Holdings”) has no material assets or operations other than its ownership in Windstream Services, LLC (“Windstream Services”) and its subsidiaries. Windstream Holdings owns a 100 percent interest in Windstream Services.

On April 24, 2015, Windstream Holdings completed the spin-off of certain telecommunications network assets and other real estate, into an independent, publicly traded real estate investment trust (“REIT”), Uniti Group, Inc. (“Uniti”). Following the spin-off transaction, Windstream Holdings entered into a long-term triple-net master lease with Uniti to lease back the telecommunications network assets. As the master lease was entered into by Windstream Holdings for the direct benefit of Windstream Services and its subsidiaries, the effects of the spin-leaseback transaction have also been reflected in the standalone consolidated financial statements of Windstream Services (collectively referred to as the Uniti transactions).
For periods prior to January 1, 2019, the contractual arrangement with Uniti was accounted for as financing due to prohibited continuing involvement, including Windstream Services or its subsidiaries, retaining bare legal title (but not beneficial ownership) to the various easements, permits and pole attachments related to the telecommunications network assets. As a result, the accompanying condensed parent company financial statements as of and for the years ended December 31, 2018 and 2017 included the telecommunications network assets and other real estate assets transferred to Uniti.
As required, effective January 1, 2019, Windstream Holdings adopted Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842). Upon adoption of ASU 2016-02, Windstream Holdings re-evaluated its contractual arrangement with Uniti and concluded that the arrangement should be accounted for prospectively as an operating lease. Under ASU 2016-02, the previous forms of prohibited continuing involvement no longer precluded the application of spin-leaseback accounting to the April 2015 spin-off of assets to Uniti by Windstream Services and the lease of those assets by Windstream Holdings. As a result, on January 1, 2019, Windstream Holdings recorded a cumulative effect adjustment of approximately $3.0 billion from de-recognizing the remaining net book value of assets transferred to Uniti of approximately $1.3 billion, recording a right-of-use asset of approximately $3.9 billion equaling the adjusted Uniti lease liability, which decreased by $0.7 billion, and recording a deferred tax liability of approximately $0.3 billion in accordance with the standard’s transition guidance. See Note 2 to the consolidated financial statements for additional information regarding the adoption of ASU 2016-02 and the change in accounting for the Uniti arrangement from a financing to an operating lease.
Certain covenants within Windstream Services’ senior secured credit facility may restrict its ability to distribute funds to Windstream Holdings in the form of dividends, loans or advances. Accordingly, these condensed financial statements of Windstream Holdings have been presented on a “Parent Only” basis. Under this basis of presentation, Windstream Holdings’ investment in its consolidated subsidiaries are presented under the equity method of accounting. Amounts reflected in these condensed parent company financial statements for investment and affiliated related balances, advances/losses in excess of investment in subsidiaries and equity (losses) earnings from subsidiaries have been adjusted to account for the effects of the telecommunications network assets, right-of-use asset, Uniti lease liability, rent expense, depreciation expense, principal and interest payments on the long-term lease obligation and related income tax effects that are also included in the net loss and member deficit of Windstream Services. Equity (losses) earnings from subsidiaries for 2019 and 2018 includes $12.0 million and $955.6 million of intercompany income related to the Uniti transactions.
As of December 31, 2018, Windstream Holdings recorded a full valuation allowance for its deferred tax assets due to the acceleration of all of Windstream Services long-term debt obligations following an adverse court ruling and subsequent filing of the Chapter 11 Cases. Due to cross-default provisions, the remaining obligations under the contractual arrangement with Uniti also were accelerated, which resulted in classifying the long-term lease obligation has been classified as a current liability in the accompanying balance sheet as of December 31, 2018. See Notes 6, 16 and 17 to the consolidated financial statements included in the Financial Supplement to this Annual Report on Form 10-K for additional information regarding the acceleration of long-term debt obligations and remaining obligations under the contractual arrangement with Uniti, the court ruling, filing of the Chapter 11 Cases and the related effects on income taxes.
The condensed parent company financial statements should be read in conjunction with the consolidated financial statements and notes of Windstream Holdings and subsidiaries included in the Financial Supplement to this Annual Report on Form 10-K.