Q4 Charges Push Windstream Into The Red For Year
by February 24, 2015 6:57 am 360 views
Windstream Corp. posted a $77.5 million fourth quarter loss, dragging the Little Rock telecom into the red for the year by $39.5 million.
Revenues during the quarter were off 3% from the previous year at $1.443 billion, the same percentage drop as annual revenues, which stood at $5.829 billion.
One year ago, Windstream posted a $118 million fourth quarter profit and full-year net income of $241 million.
A fourth quarter hit of $128 million due to the company’s pension plan and merger expenses were the major reasons for the quarterly and full-year setbacks.
“GAAP results include a pre-tax expense of $128 million, or 13 cents per share, related to the company’s pension plan,” Windstream noted in its earnings report. “This non-cash charge resulted from a decrease in the discount rate used to measure the company’s pension obligations and changes to mortality assumptions reflecting longer life expectancies of plan participants. Results also include approximately 3 cents in after-tax merger and integration and restructuring expense. Excluding these items, adjusted earnings per share would have been 3 cents for the fourth quarter.”
REIT SPIN-OFF APPROVED, CEO OUTLINES CHANGES
Newly appointed CEO Tony Thomas expressed disappointment in the company’s financial performance, but outlined a number of new initiatives he expected to reverse the company’s trajectory.
Thomas was appointed CEO on Dec. 11, 2014, after the abrupt resignation of former CEO Jeff Gardner.
“Since my appointment as CEO, we have made a number of significant changes to the business to better serve customers and improve profitability. These changes, combined with planned initiatives, will advance our goals of improving the customer experience, operating a best-in-class network and delivering improved financial results and increased value for shareholders,” said Thomas. “Overall 2014 results fell short of our expectations, and we are taking the necessary actions to put us on the path for success. We will make significant progress this year on our goals. We have to do many things faster and better, and we will.”
In the last week, Windstream shareholders approved the spin-off of certain assets into a real estate investment trust (REIT).
The company announced in July that it would form an independent, publicly traded REIT that would own Windstream’s existing fiber and copper network and other fixed assets. In turn, Windstream will lease the network and those assets from the new REIT – Commercial Sales & Leasing — for $650 million annually.
The move is expected to reduce Windstream’s debt, increase its cash flow, and potentially position the company for acquisitions.
Windstream’s shares (NASDAQ: WIN) closed trading Monday at $8.58. In the last year, the company’s shares have traded between $7.65 and $13.30.