Supplemental Guarantor Information: | Supplemental Guarantor Information: Debentures and notes, without collateral, issued by Windstream Services, LLC In connection with the issuance of the 7.750 percent senior notes due October 15, 2020, the 7.750 percent senior notes due October 1, 2021, the 7.500 percent senior notes due June 1, 2022, the 7.500 percent senior notes due April 1, 2023, and the 6.375 percent senior notes due August 1, 2023 (“the guaranteed notes”), certain of Windstream Services’ wholly-owned subsidiaries (the “Guarantors”), provide guarantees of those debentures. These guarantees are full and unconditional, subject to certain customary release provisions, as well as joint and several. All personal property assets and related operations of the Guarantors are pledged as collateral on the senior secured credit facility of Windstream Services. Certain Guarantors may be subject to restrictions on their ability to distribute earnings to Windstream Services. The remaining subsidiaries of Windstream Services (the “Non-Guarantors”) are not guarantors of the guaranteed notes. Windstream Holdings is not a guarantor of any Windstream Services debt instruments. Following the acquisitions, the acquired legal entities of EarthLink, Broadview, MASS and ATC have been designated as either Guarantors or Non-Guarantors. Accordingly, the financial information presented herein includes the acquired EarthLink operations beginning on February 27, 2017, the acquired Broadview operations beginning on July 28, 2017, the acquired MASS operations as of March 27, 2018, and the acquired ATC operations as of August 31, 2018. The following information presents condensed consolidating and combined statements of comprehensive income (loss) for the three and nine month periods ended September 30, 2018 and 2017 , condensed consolidating and combined balance sheets as of September 30, 2018 and December 31, 2017 , and condensed consolidating and combined statements of cash flows for the nine-month periods ended September 30, 2018 and 2017 of Windstream Services, the Guarantors and the Non-Guarantors. Investments consist of investments in net assets of subsidiaries held by Windstream Services and other subsidiaries, and have been presented using the equity method of accounting. 14. Supplemental Guarantor Information, Continued: Condensed Consolidating Statement of Comprehensive Income (Loss) (Unaudited) Three Months Ended (Millions) Windstream Services Guarantors Non- Guarantors Eliminations Consolidated Revenues and sales: Service revenues $ — $ 285.5 $ 1,139.9 $ (25.3 ) $ 1,400.1 Product sales — 19.0 1.5 — 20.5 Total revenues and sales — 304.5 1,141.4 (25.3 ) 1,420.6 Costs and expenses: Cost of services — 105.7 619.8 (25.3 ) 700.2 Cost of products sold — 17.1 2.6 — 19.7 Selling, general and administrative — 34.7 190.8 — 225.5 Depreciation and amortization 1.5 111.8 270.5 — 383.8 Merger, integration and other costs — 0.2 8.8 — 9.0 Restructuring charges — 0.7 5.8 — 6.5 Total costs and expenses 1.5 270.2 1,098.3 (25.3 ) 1,344.7 Operating (loss) income (1.5 ) 34.3 43.1 — 75.9 (Losses) earnings from consolidated subsidiaries (33.0 ) 23.5 20.7 (11.2 ) — Other income, net 0.1 — 3.1 — 3.2 Net gain on early extinguishment of debt 190.3 — — — 190.3 Intercompany interest income (expense) 13.6 (12.1 ) (1.5 ) — — Interest expense (109.7 ) (35.2 ) (85.1 ) — (230.0 ) Income (loss) before income taxes 59.8 10.5 (19.7 ) (11.2 ) 39.4 Income tax expense (benefit) 18.3 (8.9 ) (11.5 ) — (2.1 ) Net income (loss) $ 41.5 $ 19.4 $ (8.2 ) $ (11.2 ) $ 41.5 Comprehensive income (loss) $ 41.9 $ 19.4 $ (8.2 ) $ (11.2 ) $ 41.9 14. Supplemental Guarantor Information, Continued: Condensed Consolidating Statement of Comprehensive Income (Loss) (Unaudited) Three Months Ended (Millions) Windstream Services Guarantors Non- Guarantors Eliminations Consolidated Revenues and sales: Service revenues $ — $ 306.8 $ 1,192.9 $ (27.3 ) $ 1,472.4 Product sales — 21.9 3.4 — 25.3 Total revenues and sales — 328.7 1,196.3 (27.3 ) 1,497.7 Costs and expenses: Cost of services — 159.0 648.5 (27.0 ) 780.5 Cost of products sold — 19.1 3.2 — 22.3 Selling, general and administrative — 44.0 187.6 (0.3 ) 231.3 Depreciation and amortization 2.1 72.1 291.2 — 365.4 Merger, integration and other costs — 0.5 33.2 — 33.7 Restructuring charges — 0.7 22.1 — 22.8 Total costs and expenses 2.1 295.4 1,185.8 (27.3 ) 1,456.0 Operating (loss) income (2.1 ) 33.3 10.5 — 41.7 (Losses) earnings from consolidated subsidiaries (57.5 ) (22.3 ) 0.8 79.0 — Other (expense) income, net — (0.2 ) 1.9 — 1.7 Net gain on early extinguishment of debt 4.9 — 0.3 — 5.2 Intercompany interest income (expense) 17.7 (10.2 ) (7.5 ) — — Interest expense (91.5 ) (36.5 ) (88.4 ) — (216.4 ) Loss before income taxes (128.5 ) (35.9 ) (82.4 ) 79.0 (167.8 ) Income tax benefit (27.3 ) (5.0 ) (34.3 ) — (66.6 ) Net loss $ (101.2 ) $ (30.9 ) $ (48.1 ) $ 79.0 $ (101.2 ) Comprehensive loss $ (97.1 ) $ (30.9 ) $ (48.1 ) $ 79.0 $ (97.1 ) 14. Supplemental Guarantor Information, Continued: Condensed Consolidating Statement of Comprehensive Income (Loss) (Unaudited) Nine Months Ended (Millions) Windstream Services Guarantors Non- Guarantors Eliminations Consolidated Revenues and sales: Service revenues $ — $ 872.2 $ 3,469.0 $ (81.1 ) $ 4,260.1 Product sales — 55.1 4.1 — 59.2 Total revenues and sales — 927.3 3,473.1 (81.1 ) 4,319.3 Costs and expenses: Cost of services — 371.4 1,868.5 (80.0 ) 2,159.9 Cost of products sold — 48.1 6.6 — 54.7 Selling, general and administrative — 121.0 557.7 (1.1 ) 677.6 Depreciation and amortization 4.2 359.5 772.6 — 1,136.3 Merger, integration and other costs — 0.2 30.2 — 30.4 Restructuring charges — 3.8 22.2 — 26.0 Total costs and expenses 4.2 904.0 3,257.8 (81.1 ) 4,084.9 Operating (loss) income (4.2 ) 23.3 215.3 — 234.4 (Losses) earnings from consolidated subsidiaries (112.3 ) 94.2 59.3 (41.2 ) — Other income (expense), net 0.5 (0.5 ) 12.9 — 12.9 Net gain on early extinguishment of debt 190.3 — — — 190.3 Intercompany interest income (expense) 44.2 (32.9 ) (11.3 ) — — Interest expense (314.0 ) (107.1 ) (256.4 ) — (677.5 ) (Loss) income before income taxes (195.5 ) (23.0 ) 19.8 (41.2 ) (239.9 ) Income tax benefit (22.8 ) (33.7 ) (10.7 ) — (67.2 ) Net (loss) income $ (172.7 ) $ 10.7 $ 30.5 $ (41.2 ) $ (172.7 ) Comprehensive (loss) income $ (151.4 ) $ 10.7 $ 30.5 $ (41.2 ) $ (151.4 ) 14. Supplemental Guarantor Information, Continued: Condensed Consolidating Statement of Comprehensive Income (Loss) (Unaudited) Nine Months Ended (Millions) Windstream Services Guarantors Non- Guarantors Eliminations Consolidated Revenues and sales: Service revenues $ — $ 885.5 $ 3,468.2 $ (71.3 ) $ 4,282.4 Product sales — 64.8 7.8 — 72.6 Total revenues and sales — 950.3 3,476.0 (71.3 ) 4,355.0 Costs and expenses: Cost of services — 420.6 1,863.9 (69.5 ) 2,215.0 Cost of products sold — 60.3 12.5 — 72.8 Selling, general and administrative — 127.1 545.1 (1.8 ) 670.4 Depreciation and amortization 7.0 282.0 777.3 — 1,066.3 Merger, integration and other costs — 1.5 105.9 — 107.4 Restructuring charges — 5.7 28.0 — 33.7 Total costs and expenses 7.0 897.2 3,332.7 (71.3 ) 4,165.6 Operating (loss) income (7.0 ) 53.1 143.3 — 189.4 (Losses) earnings from consolidated subsidiaries (152.4 ) (23.0 ) 33.1 142.3 — Other income, net — 0.9 7.6 — 8.5 Net gain (loss) on early extinguishment of debt 3.7 (2.0 ) 0.3 — 2.0 Intercompany interest income (expense) 65.7 (32.3 ) (33.4 ) — — Interest expense (266.1 ) (112.8 ) (263.7 ) — (642.6 ) Loss before income taxes (356.1 ) (116.1 ) (112.8 ) 142.3 (442.7 ) Income tax benefit (76.2 ) (34.9 ) (51.7 ) — (162.8 ) Net loss $ (279.9 ) $ (81.2 ) $ (61.1 ) $ 142.3 $ (279.9 ) Comprehensive loss $ (274.5 ) $ (81.2 ) $ (61.1 ) $ 142.3 $ (274.5 ) 14. Supplemental Guarantor Information, Continued: Condensed Consolidating Balance Sheet (Unaudited) As of September 30, 2018 (Millions) Windstream Services Guarantors Non- Guarantors Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ 3.7 $ — $ 33.8 $ (0.2 ) $ 37.3 Accounts receivable, net — 198.0 454.3 (3.3 ) 649.0 Notes receivable - affiliate — 5.0 — (5.0 ) — Affiliates receivable, net — 141.8 1,852.9 (1,994.7 ) — Inventories — 70.0 17.0 — 87.0 Prepaid expenses and other 21.2 37.7 125.4 — 184.3 Total current assets 24.9 452.5 2,483.4 (2,003.2 ) 957.6 Investments in consolidated subsidiaries 5,433.8 701.4 591.1 (6,726.3 ) — Notes receivable - affiliate — 304.2 — (304.2 ) — Goodwill 657.2 1,712.7 506.9 — 2,876.8 Other intangibles, net 457.2 390.4 452.7 — 1,300.3 Net property, plant and equipment 0.6 1,232.0 3,816.6 — 5,049.2 Deferred income taxes — 482.3 189.7 (254.0 ) 418.0 Other assets 33.0 17.5 57.7 — 108.2 Total Assets $ 6,606.7 $ 5,293.0 $ 8,098.1 $ (9,287.7 ) $ 10,710.1 Liabilities and Equity (Deficit) Current Liabilities: Current maturities of long-term debt $ 17.9 $ — $ — $ — $ 17.9 Current portion of long-term lease obligations — 60.3 145.7 — 206.0 Accounts payable — 262.3 221.1 — 483.4 Affiliates payable, net 1,994.7 — — (1,994.7 ) — Notes payable - affiliate — — 5.0 (5.0 ) — Advance payments and customer deposits — 38.4 160.1 (3.3 ) 195.2 Accrued taxes 0.2 19.8 73.5 — 93.5 Accrued interest 66.0 3.4 0.5 — 69.9 Other current liabilities 3.1 91.7 214.0 — 308.8 Total current liabilities 2,081.9 475.9 819.9 (2,003.0 ) 1,374.7 Long-term debt 5,621.7 99.6 — — 5,721.3 Long-term lease obligations — 1,304.2 3,182.3 — 4,486.5 Notes payable - affiliate — — 304.2 (304.2 ) — Deferred income taxes 254.0 — — (254.0 ) — Other liabilities 10.0 68.9 409.6 — 488.5 Total liabilities 7,967.6 1,948.6 4,716.0 (2,561.2 ) 12,071.0 Commitments and Contingencies (See Note 15) Equity (Deficit): Common stock — 39.4 81.9 (121.3 ) — Additional paid-in capital 1,241.2 3,958.3 1,404.9 (5,363.2 ) 1,241.2 Accumulated other comprehensive income 44.4 — 7.4 (7.4 ) 44.4 (Accumulated deficit) retained earnings (2,646.5 ) (653.3 ) 1,887.9 (1,234.6 ) (2,646.5 ) Total equity (deficit) (1,360.9 ) 3,344.4 3,382.1 (6,726.5 ) (1,360.9 ) Total Liabilities and Equity (Deficit) $ 6,606.7 $ 5,293.0 $ 8,098.1 $ (9,287.7 ) $ 10,710.1 14. Supplemental Guarantor Information, Continued: Condensed Consolidating Balance Sheet (Unaudited) As of December 31, 2017 (Millions) Windstream Services Guarantors Non- Guarantors Eliminations Consolidated Assets Current Assets: Cash and cash equivalents $ — $ 2.5 $ 40.9 $ — $ 43.4 Accounts receivable, net — 185.2 461.1 (3.3 ) 643.0 Notes receivable - affiliate — 5.0 — (5.0 ) — Affiliates receivable, net — 18.3 1,949.8 (1,968.1 ) — Inventories — 76.9 16.1 — 93.0 Prepaid expenses and other 26.8 44.3 83.2 — 154.3 Total current assets 26.8 332.2 2,551.1 (1,976.4 ) 933.7 Investments in consolidated subsidiaries 5,603.7 575.9 401.0 (6,580.6 ) — Notes receivable - affiliate — 306.9 — (306.9 ) — Goodwill 657.2 1,712.8 472.4 — 2,842.4 Other intangibles, net 479.8 461.7 512.9 — 1,454.4 Net property, plant and equipment 5.8 1,318.3 4,067.7 — 5,391.8 Deferred income taxes — 460.7 205.2 (295.1 ) 370.8 Other assets 24.5 15.5 51.2 — 91.2 Total Assets $ 6,797.8 $ 5,184.0 $ 8,261.5 $ (9,159.0 ) $ 11,084.3 Liabilities and Equity (Deficit) Current Liabilities: Current maturities of long-term debt $ 169.3 $ — $ — $ — $ 169.3 Current portion of long-term lease obligations — 55.2 133.4 — 188.6 Accounts payable — 123.4 370.6 — 494.0 Affiliates payable, net 1,968.1 — — (1,968.1 ) — Notes payable - affiliate — — 5.0 (5.0 ) — Advance payments and customer deposits — 40.7 169.9 (3.3 ) 207.3 Accrued taxes — 23.8 65.7 — 89.5 Accrued interest 50.2 1.8 0.6 — 52.6 Other current liabilities 15.6 102.7 223.8 — 342.1 Total current liabilities 2,203.2 347.6 969.0 (1,976.4 ) 1,543.4 Long-term debt 5,575.0 99.6 — — 5,674.6 Long-term lease obligations — 1,350.1 3,293.2 — 4,643.3 Notes payable - affiliate — — 306.9 (306.9 ) — Deferred income taxes 295.1 — — (295.1 ) — Other liabilities 23.4 77.1 421.4 — 521.9 Total liabilities 8,096.7 1,874.4 4,990.5 (2,578.4 ) 12,383.2 Commitments and Contingencies (See Note 15) Equity (Deficit): Common stock — 39.4 81.9 (121.3 ) — Additional paid-in capital 1,187.1 3,958.6 1,358.1 (5,316.7 ) 1,187.1 Accumulated other comprehensive income 21.4 — 4.0 (4.0 ) 21.4 (Accumulated deficit) retained earnings (2,507.4 ) (688.4 ) 1,827.0 (1,138.6 ) (2,507.4 ) Total equity (deficit) (1,298.9 ) 3,309.6 3,271.0 (6,580.6 ) (1,298.9 ) Total Liabilities and Equity (Deficit) $ 6,797.8 $ 5,184.0 $ 8,261.5 $ (9,159.0 ) $ 11,084.3 14. Supplemental Guarantor Information, Continued: Condensed Consolidating Statement of Cash Flows (Unaudited) Nine Months Ended (Millions) Windstream Services Guarantors Non- Guarantors Eliminations Consolidated Cash Flows from Operating Activities: Net cash (used in) provided from operating activities $ (259.9 ) $ 397.3 $ 620.0 $ — $ 757.4 Cash Flows from Investing Activities: Additions to property, plant and equipment (0.1 ) (132.7 ) (470.4 ) — (603.2 ) Acquisitions of MASS and ATC, net of cash acquired (46.9 ) — — — (46.9 ) Other, net 1.2 0.5 (9.3 ) — (7.6 ) Net cash used in investing activities (45.8 ) (132.2 ) (479.7 ) — (657.7 ) Cash Flows from Financing Activities: Distributions to Windstream Holdings, Inc. (1.2 ) — — — (1.2 ) Contributions from Windstream Holdings, Inc. 12.2 — — — 12.2 Repayments of debt and swaps (540.4 ) — — — (540.4 ) Proceeds from debt issuance 627.0 — — — 627.0 Debt issuance costs (23.5 ) — — — (23.5 ) Intercompany transactions, net 237.3 (194.3 ) (42.8 ) (0.2 ) — Payments under long-term lease obligations — (40.8 ) (98.7 ) — (139.5 ) Payments under capital lease obligations — (34.9 ) (3.2 ) — (38.1 ) Other, net (2.0 ) 2.4 (2.7 ) — (2.3 ) Net cash provided from (used in) financing activities 309.4 (267.6 ) (147.4 ) (0.2 ) (105.8 ) Increase (decrease) in cash and cash equivalents 3.7 (2.5 ) (7.1 ) (0.2 ) (6.1 ) Cash and Cash Equivalents: Beginning of period — 2.5 40.9 — 43.4 End of period $ 3.7 $ — $ 33.8 $ (0.2 ) $ 37.3 14. Supplemental Guarantor Information, Continued: Condensed Consolidating Statement of Cash Flows (Unaudited) Nine Months Ended (Millions) Windstream Services Guarantors Non- Guarantors Eliminations Consolidated Cash Flows from Operating Activities: Net cash (used in) provided from operating activities $ (175.8 ) $ 265.7 $ 556.7 $ — $ 646.6 Cash Flows from Investing Activities: Additions to property, plant and equipment (0.3 ) (109.2 ) (614.7 ) — (724.2 ) Acquisition of Broadview, net of cash acquired (63.3 ) — — — (63.3 ) Cash acquired from EarthLink — 0.7 4.3 — 5.0 Other, net — — (9.4 ) — (9.4 ) Net cash used in investing activities (63.6 ) (108.5 ) (619.8 ) — (791.9 ) Cash Flows from Financing Activities: Distributions to Windstream Holdings, Inc. (83.4 ) — — — (83.4 ) Contributions from Windstream Holdings, Inc. 9.6 — — — 9.6 Repayments of debt and swaps (1,097.0 ) (453.6 ) (160.0 ) — (1,710.6 ) Proceeds from debt issuance 2,099.6 — — — 2,099.6 Debt issuance costs (7.3 ) — — — (7.3 ) Intercompany transactions, net (671.0 ) 355.1 315.9 — — Payments under long-term lease obligations — (36.6 ) (88.3 ) — (124.9 ) Payments under capital lease obligations — (25.1 ) (4.1 ) — (29.2 ) Other, net (11.1 ) 2.5 (2.5 ) — (11.1 ) Net cash provided from (used in) financing activities 239.4 (157.7 ) 61.0 — 142.7 Decrease in cash and cash equivalents — (0.5 ) (2.1 ) — (2.6 ) Cash and Cash Equivalents: Beginning of period — 2.2 56.9 — 59.1 End of period $ — $ 1.7 $ 54.8 $ — $ 56.5 |