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Integrated voice and data services: Our integrated services deliver voice and data over a single connection, which helps our customers manage voice and data usage and related costs. These services are delivered over an Internet connection, as opposed to a traditional voice line, and can be managed through equipment at the customer premise or through hosted equipment options, which we are able to provide.

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•	Multi-site networking: Our advanced network provides private, secure multi-site connections for large businesses with multiple locations.

•	Data center services: Our data centers offer cloud computing, colocation, dedicated server and disaster recovery solutions. Our data center services offer the highest level of security, reliability and scalability to business customers.

•	Managed services: Through our data centers, we provide a breadth of managed services including managed WAN, managed LAN, managed security and managed voice services that allow our customers to focus on running their business and not running their network.

•	High-speed Internet: We offer high-speed broadband Internet access options designed to help our customers reduce costs and boost productivity. We also offer low cost, high-speed broadband Internet access with reliable connections at speeds up to 24 Mbps.

•	Voice: Voice services consist of basic telephone services, including voice, long-distance and related features delivered over a traditional copper line.

•	Carrier services: Carrier services provide network bandwidth to other telecommunications carriers. These include special access services, which provide access and network transport services to end users, and Ethernet transport up to 10 Gigabits per second ("Gbps"). Carrier services also include fiber-to-the-tower connections to support the growing wireless backhaul market.

•	High-speed Internet access: We offer high-speed Internet access with speeds up to 24 Mbps.

•	Internet security services: Our Security Suite offers customers critical Internet security services, including anti-virus protection, spyware blocking, file back up and restoration.

•	Online backup services: Our online backup service allows consumers to back up and restore important files through the Internet. Additionally, our backup services provide consumers with the ability to store and share files on network-based storage devices. Files can be accessed from any computer with an Internet connection.

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•	the direct sales force, which accounts for the majority of our new sales;

•	our account management team, who also supports existing customers by advising and assisting them with their communications needs;

•	our business call centers, which provide customer service and also generate new sales and upgrades;

•	our indirect sales channel, which partners with third-party dealers who sell directly to customers; and

•	third-party agents, who refer sales of our products and services to our direct sales force.

•	Product simplification: We sell double and triple play bundle packages to consumers at competitive price points, offering high-speed Internet, voice and video services at a better value than when purchasing those services individually or from different providers.

•	Product enhancement: Value-added services to our high-speed Internet product and faster Internet speeds deliver more value to the consumer while growing account revenue.

•	Message integration: A single, consistent consumer message is delivered across all advertising mediums to generate high consumer awareness and strong sales channel interactions.

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•	Cable television companies: Cable television providers are aggressively offering high-speed Internet, voice and video services in our service areas. These services are typically bundled and offered to our customers at competitive prices.

•	Wireless carriers: Wireless providers primarily compete for voice services in our consumer markets. Consumers continue to disconnect residential voice service in favor of wireless service. In addition, wireless companies continue to expand their high-speed Internet offerings, which may result in more intense competition for our high-speed Internet customers.

•	Communications carriers: We are required to lease our facilities and capacity in our consumer areas to other communications carriers. These companies compete with us by providing voice and high-speed Internet services to consumers.

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•	further adverse changes in economic conditions in the markets;

•	the extent, timing and overall effects of competition in the communications business;

•	the impact of new, emerging or competing technologies;

•	for certain operations where we lease facilities from other carriers, adverse effects on the availability, quality of service and price of facilities and services provided by other carriers on which our services depend;

•	the uncertainty regarding the implementation of the Federal Communications Commission's ("FCC") rules on intercarrier compensation adopted in 2011, and the potential for the adoption of further rules by the FCC or Congress on intercarrier compensation and/or universal service reform proposals that result in a significant loss of revenue to us;

•	unfavorable rulings by state public service commissions in proceedings regarding universal service funds, inter-carrier compensation or other matters that could reduce revenues or increase expenses;

•	material changes in the communications industry that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers;

•	earnings on pension plan investments significantly below our expected long term rate of return for plan assets or a significant change in the discount rate;

•	the availability and cost of financing in the corporate debt markets;

•	the potential for adverse changes in the ratings given to our debt securities by nationally accredited ratings organizations;

•	the risks associated with non-compliance with regulations or statutes applicable to government programs under which we receive material amounts of end user revenue and subsidies or non-compliance by us, our partners, or our subcontractors with any terms of our government contracts;

•	the risks associated with the integration of acquired businesses or the ability to realize anticipated synergies, cost savings and growth opportunities;

•	unfavorable results of litigation or intellectual property infringement claims asserted against us;

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•	the effects of federal and state legislation, and rules and regulations governing the communications industry;

•	continued loss of consumer voice lines;

•	the impact of equipment failure, natural disasters or terrorist acts;

•	the effects of work stoppages by our employees or employees of other communications companies on whom we rely for service; and

•	those additional factors under the caption "Risk Factors" in Item 1A of this annual report and in subsequent filings with the Securities and Exchange Commission at www.sec.gov.

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•	Increase our vulnerability to general adverse economic and industry conditions;

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•	Require us to dedicate a substantial portion of cash flows from operations to interest and principal payments on outstanding debt, thereby limiting the availability of cash flow to fund future capital expenditures, working capital and other general corporate requirements;

•	Limit our flexibility in planning for, or reacting to, changes in our business and the telecommunications industry;

•	Place us at a competitive disadvantage compared with competitors that have less debt; and

•	Limit our ability to borrow additional funds, even when necessary to maintain adequate liquidity.

•	diversion of management's attention to and potential disruption of our ongoing businesses;

•	customer losses;

•	the loss of quality employees from the acquired companies;

•	adverse developments in vendor relationships;

•	declines in our results of operations and financial condition; and

•	a decline in the market price of our common stock.

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(a)	Our common stock is traded on the NASDAQ Global Select Market under the symbol "WIN". The following table reflects the range of high, low and closing prices of our common stock as reported by Dow Jones & Company, Inc. for each quarter in 2012 and 2011:

(b)	Not applicable.

(c)	Not applicable.

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(1)	The Windstream Corporation 2006 Amended and Restated Equity Incentive Plan.

(2)	The PAETEC Holding Corp. 2011 Omnibus Incentive Plan.

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(a)	Evaluation of disclosure controls and procedures.

(b)	Management’s report on internal control over financial reporting.

(c)	Changes in internal control over financial reporting.

1.	Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets;

2.	Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

3.	Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

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(a)	The following documents are filed as a part of this report:

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(a)	Accounts charged off net of recoveries of amounts previously written off.

(b)	Represents adjustment recorded through goodwill to valuation allowance for deferred taxes related to expected realization of net operating losses assumed from acquisition of PAETEC.

(c)	Valuation allowance for deferred taxes was established through goodwill related to expected realization of net operating losses assumed from the acquisition of PAETEC.

(d)	Valuation allowance to adjust previously recorded allowances related to prior years and the expected realization of net operating losses assumed from the acquisition of D&E.

(e)	Valuation allowance for deferred taxes was established through goodwill related to expected realization of net operating losses assumed from the acquisitions of NuVox and lowa Telecom.

(f)	Costs primarily include charges for accounting, legal, broker fees and other miscellaneous costs associated with the acquisitions of NuVox, Iowa Telecom, Hosted Solutions, Q-Comm and PAETEC. In addition, we incurred employee transition costs, primarily severance related, in conjunction with the integration of NuVox, Iowa Telecom, Hosted Solutions, Q-Comm and PAETEC.

(g)	Represents cash outlays for merger, integration and restructuring costs charged to expense.

(h)	Costs primarily include charges for accounting, legal, broker fees and other miscellaneous costs associated with the acquisitions of D&E, Lexcom, NuVox, Iowa Telecom, Hosted Solutions and Q-Comm. In addition, we incurred employee transition costs, primarily severance related in conjunction with the integration of D&E, Lexcom, NuVox and Iowa Telecom.

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•	the continued integration of PAETEC, which transformed us into a national provider of business services and included an attractive customer base of medium and large businesses and significantly enhanced our capabilities in strategic growth areas, including IP based services, cloud computing and managed services;

•	continued focus on revenue growth opportunities in our business service areas;

•	significant success-based capital investments in our fiber network, designed to accommodate network capacity requirements for wireless carriers as a result of growing wireless data usage;

•	the review of our management structure to increase the efficiency of decision-making and position ourselves for continued success, where approximately 350 management positions were eliminated, resulting in annualized savings of approximately $40.0 million;

•	activities to improve our debt profile including pushing out maturities, lowering interest costs, and creating sufficient availability under our revolver to repay 2013 debt maturities; and

•	the opening of new state-of-the-art data centers in Little Rock, Arkansas, and McLean, Virginia, as well as expanded our data centers in Charlotte, North Carolina, Boston, Massachusetts, and Raleigh, North Carolina, to meet the growing business demand for cloud-based and dedicated managed services and underscore our commitment to our growing business customer base nationwide.

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•	adds an attractive base of medium-to-large sized business customers;

•	expands our existing business service offerings;

•	provides opportunities for approximately $100.0 million in pre-tax operating cost and $10.0 million in capital synergies;

•	creates a nationwide fiber network, adding 36,700 fiber miles; and

•	adds seven data centers.

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(a)	Results from operations include post-acquisition results from NuVox, Iowa Telecom, Hosted Solutions, Q-Comm, and PAETEC operations, (collectively known as the "Acquired Companies"). In the discussion and analysis provided below regarding changes in consolidated revenues and expenses in 2012 and 2011, the impact of the acquisitions on

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(b)	Certain prior year amounts have been reclassified to conform to the current year financial statement presentation. These reclassifications did not impact net or comprehensive income. Please see Note 2 for additional information.

(c)	Total customers include each individual business customer location to which we provide service and exclude carrier special access circuits.

(a)	Increases in data and integrated services revenues were primarily due to demand for advanced data services and customer migration to our integrated voice and data services, previously discussed.

(b)	Increases in carrier revenues, which primarily represent monthly recurring charges for dedicated circuits, were attributable to demand from wireless and other carriers, previously discussed.

(c)	Increases in data center and managed service revenues, which includes monitoring, maintenance and support services for business customers, is due to increased demand and incremental sales. We opened new data centers, as well as expanded existing data centers, during 2012 to support this increase in demand.

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(d)

Decreases in traditional voice service revenues were primarily attributable to competition and migration of existing customers to integrated services and bundled offerings. These declines were partially offset by $8.9 million due to the implementation of the access recovery charge ("ARC"), which is a monthly charge established by the FCC designed to mitigate revenue reductions resulting from intercarrier compensation reform implemented in the third quarter of 2012.

(a)	Increases in high-speed Internet revenues were primarily due to the increase in high-speed Internet customers, continued migration to higher speeds and increased sales of value added services, as previously discussed.

(b)	Decreases in voice service revenues were primarily attributable to declines in voice lines. These declines were partially offset by $4.8 million due to the implementation of the ARC, described above.

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(a)

Increases in federal USF revenues were primarily due to the implementation of the access recovery mechanism ("ARM") during the third quarter of 2012. The ARM is additional federal universal service support available to help mitigate revenue losses from intercarrier compensation reform not covered by the ARC, previously discussed. Decreases in federal USF revenues in 2011 resulted from decreases in federal funds received and line loss.

(b)	Decreases in state USF revenues were attributable to the decline in voice lines and changes in eligible recoverable costs.

(c)

Decreases in switched access revenues in 2012 were primarily due to the impact of intercarrier compensation reform and continued declines in voice lines. The ARC and ARM, discussed previously, are designed to help mitigate the revenue losses resulting from intercarrier compensation reform. Decreases in 2011 were primarily due to continued declines in voice lines and the phased reduction on interstate access rates for our subsidiaries that converted to price cap regulation.

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(a)	Increases in contractor sales were primarily due to increased sales of outside plant materials.

(a)	Increases in charges incurred to provide third-party services driven by sales of ancillary products as well as costs incurred for product offerings.

(b)	Increases in interconnection expense were attributable to increased purchases of circuits, including circuits to service the growth in data customers, as well as higher capacity circuits to service existing customers and increase the transport capacity of our network, partially offset by the favorable impact of network efficiency projects and rate reductions.

(c)	Increases in federal USF contributions in 2012 and 2011 were primarily due to an increase in the USF contribution factor from 12.9 percent to 15.3 percent to 17.4 percent for the years ended December 31, 2010, 2011 and 2012, respectively. This increase resulted in a proportionate increase in surcharge revenues which is included in other service revenues.

(d)

Decreases in 2011 postretirement expense were primarily attributable to a curtailment gain recognized during the third quarter of 2011 as a result of the elimination of basic retiree life insurance coverage for certain and future retirees effective January 1, 2012. During the second quarter of 2012 there was a curtailment gain recognized related to the elimination of all benefits for certain current and future retirees.

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(e)

The decrease in 2012 was primarily due to our pension plan assets performing better than expected, partially offset by a decrease in the discount rate from 4.64 percent to 3.85 percent. The increase in pension expense in 2011 was primarily due to a decline in the discount rate from 5.31 percent to 4.64 percent. Lower returns on pension plan assets also contributed to the increase in pension expense in 2011.

(a)	Increases in contractor cost of products sold for both periods were consistent with the changes in contractor sales in 2012 and 2011.

(a)	Increases in medical insurance in 2012 were primarily due to increases in medical claims and related costs.

(b)

Decreases in 2011 postretirement expense were primarily attributable to a curtailment gain recognized during the third quarter of 2011 as a result of the elimination of basic retiree life insurance coverage for certain and future retirees effective January 1, 2012. During the second quarter of 2012 there was a curtailment gain recognized related to the elimination of all benefits for certain current and future retirees. See Note 8 for additional information.

(c)	Decreases in sales and marketing expenses in 2012 were due to lower compensation costs for the business channel and decreased marketing and advertising expenses. Increases in sales and marketing expenses for 2011 were due to commissions costs for the business channel and increased advertising expenses.

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(d)	The decrease in 2012 was primarily due to our pension plan assets performing better than expected, partially offset by a decrease in the discount rate from 4.64 percent to 3.85 percent. The increase in pension expense in 2011 was primarily due to a decline in the discount rate from 5.31 percent to 4.64 percent and lower returns on pension plan assets than expected.

(a)

Increases in depreciation expense were primarily due to additions in property, plant and equipment in 2012. Additionally, we implemented new depreciation rates beginning in 2012 for certain subsidiaries, which resulted in a net increase to depreciation expense of $59.1 million for the year ended December 31, 2012. See Note 2 to the consolidated financial statements. Increases in depreciation expense in 2011 were primarily due to additions in property, plant and equipment.

(b)	Decreases in amortization expense were due to the use of accelerated amortization methods primarily due to the use of sum of the years digits method used for customer lists, which result in declines in expense each year as intangible assets amortize.

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(a)	Transaction costs in 2012, 2011 and 2010 primarily relate to accounting, legal and broker fees and other miscellaneous costs associated with the acquisitions of the Acquired Companies, respectively. These costs are considered indirect or general and are expensed when incurred.

(b)	Employee related transition costs primarily consists of severance related to the integration of the Acquired Companies.

(c)	Increases are primarily due to the nationwide rebranding of the PAETEC markets and consulting fees related to integration activities.

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(a)	The increase for 2012 was primarily due to the sale of wireless assets associated with Iowa Telecom and D&E Communications, Inc ("D&E"). See Note 2 to the consolidated financial statements.

(b)	This increase in expense was due to a charge to earnings related to ineffectiveness of our cash flow hedges during 2012 and 2011, primarily due to declines in the LIBOR rate.

(c)	The decline in 2010 was primarily due to changes in the non-cash, mark-to-market adjustment of the de-designated portion of the interest rate swaps incurred prior to the "blend and extend" swap transaction entered into on December 10, 2010. See Financial Condition, Liquidity and Capital Resources for further discussion of the "blend and extend" swap transaction.

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•	the elimination of terminating switched access rates and other per-minute terminating charges between service providers by 2018 through annual reductions in the rates, mitigated in some cases by two recovery mechanisms; and

•	the provision of USF support for voice and broadband services.

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(a)	Stimulus capital expenditures funded by Windstream are included in our capital expenditure totals for each period presented in the statements of cash flows. This figure includes certain non-reimbursable charges for which we are responsible for the full amount of the cost.

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•	require all providers of broadband Internet access service to disclose network management practices, performance characteristics, and commercial terms of service; and

•	prohibit fixed broadband Internet service providers ("ISPs"), which include our subsidiaries providing broadband services, from blocking lawful content, applications, services, or attachment of non-harmful devices, and/or engaging in unreasonable discrimination.

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•	the redemption of the $300.0 million of PAETEC 2015 Notes using borrowings on our revolving line of credit;

•	the amendment and restatement of our credit facilities in February 2012, which moved $150.4 million from Tranche A2 to Tranche A3, extending its maturity to December 2016;

•	new borrowings of $280.0 million under Tranche A3 of our credit facilities, also due December 2016; and

•	new borrowings of $600.0 million in Tranche B3 and $300.0 million in Tranche A4 of our senior secured facilities, with maturity dates of August 2017 and August 2019, respectively, which were used to pay off the revolving line of credit to create sufficient liquidity for our 2013 debt maturities.

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(a)	Adjustments required by the credit facility and indentures primarily consist of the inclusion of pension and share-based compensation expense, non-recurring merger, integration and restructuring charges.

(b)	The gross leverage ratio is computed by dividing total debt by adjusted EBITDA.

(c)	Adjustments required by the credit facility and indentures primarily consist of the inclusion of capitalized interest and amortization of the discount on long-term debt, net of premiums.

(d)	The interest coverage ratio is computed by dividing adjusted EBITDA by adjusted interest expense.

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(a)	Excludes $62.1 million and $30.7 million of unamortized premiums (net of discounts) and capital lease obligations, respectively included in long-term debt at December 31, 2012.

(b)	Variable rates on the senior secured credit facility are calculated in relation to one-month and three-month LIBOR rates, which were 0.21 percent and 0.34 percent, respectively, at December 31, 2012.

(c)	Capital leases include non-cancellable leases, consisting principally of leases for facilities and equipment.

(d)	Operating leases consist of non-cancellable operating leases, consisting principally of leases for network facilities, real estate, office space and office equipment.

(e)	Purchase obligations include open purchase orders not yet receipted and amounts payable under non-cancellable contracts. The portion attributable to non-cancellable contracts primarily represents agreements for network capacity and software licensing.

(f)	Other long-term liabilities and commitments primarily consist of deferred tax liabilities, pension and other postretirement benefit obligations, interest rate swaps, asset retirement obligations and long-term deferred revenue.

(g)	Excludes $21.2 million of reserves for uncertain tax positions, including interest and penalties, that were included in other liabilities at December 31, 2012 for which we are unable to make a reasonably reliable estimate as to when cash settlements with taxing authorities will occur.

(h)

Includes $29.0 million and $23.8 million in current portion of interest rate swaps and pension and postretirement benefit obligations, respectively that were included in current portion of interest rate swaps and other current liabilities at December 31, 2012. The current portion of pension and postretirement benefit obligations includes $20.0 million for expected pension contributions in 2013. Although no additional pension contributions may be required in 2013, due to uncertainties inherent in the pension funding calculation, the amount and timing of any remaining contributions are unknown and therefore have been reflected as due in more than 5 years.

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(a)	OIBDA is defined as operating income plus depreciation and amortization expense. Management believes this measure provides investors with insight into the core earnings capacity of providing telecommunications services to its customers.

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•	Balance Sheet Offsetting (first quarter of 2013)

•	Comprehensive Income (first quarter of 2013)

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•	further adverse changes in economic conditions in the markets served by us;

•	the extent, timing and overall effects of competition in the communications business;

•	the impact of new, emerging or competing technologies;

•	for certain operations where we lease facilities from other carriers, adverse effects on the availability, quality of service, price of facilities and services provided by other carriers on which our services depend;

•	the uncertainty regarding the implementation of the Federal Communications Commission's ("FCC") rules on intercarrier compensation adopted in 2011, and the potential for the adoption of further rules by the FCC or Congress on intercarrier compensation and/or universal service reform proposals that result in a significant loss of revenue to us;

•	unfavorable rulings by state public service commissions in proceedings regarding universal service funds, inter-carrier compensation or other matters that could reduce revenues or increase expenses;

•	material changes in the communications industry that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale customers;

•	earnings on pension plan investments significantly below our expected long term rate of return for plan assets or a significant change in the discount rate;

•	the availability and cost of financing in the corporate debt markets;

•	the potential for adverse changes in the ratings given to our debt securities by nationally accredited ratings organizations;

•	the risks associated with non-compliance by us with regulations or statutes applicable to government programs under which we receive material amounts of end user revenue and government subsidies, or non-compliance by us, our partners, or our subcontractors with any terms of our government contracts;

•	the risks associated with the integration of acquired businesses or the ability to realize anticipated synergies, cost savings and growth opportunities;

•	unfavorable results of litigation or intellectual property infringement claims asserted against us;

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•	the effects of federal and state legislation, and rules and regulations governing the communications industry;

•	continued loss of consumer voice lines;

•	the impact of equipment failure, natural disasters or terrorist acts;

•	the effects of work stoppages by our employees or employees of other communications companies on whom we rely for service; and

•	those additional factors under the caption "Risk Factors" in Item 1A of this annual report and in subsequent filings with the Securities and Exchange Commission at www.sec.gov.

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•	Explanations for significant events affecting our historical operating trends during the periods 2010 through 2012 are provided in Management’s Discussion and Analysis of Results of Operations and Financial Condition.

•	In connection with the preparation of our consolidated financial statements for the year ended December 31, 2012, we became aware of and corrected an error in the accounting for certain promotional credits for new consumer customers. These errors are non-cash and did not affect our total operating cash flow for any period. See Note 2 for further information.

•

Effective during the fourth quarter of 2011, we changed our method of recognizing actuarial gains and losses for pension benefits to recognize actuarial gains and losses in our operating results in the year in which the gains and losses occur. The effect of this change in methodology can create volatility in actuarial gains and losses recognized based on market fluctuations which impacts pension expense (benefit) for the year. Pension expense amounted to $67.4, $166.8, $54.1, ($23.8), and $388.7 for the years ended December 31, 2012, 2011, 2010, 2009 and 2008.

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Acquisitions were also considered significant events affecting our historical operating trends during the periods 2009 through 2011. On November 30, 2011, we acquired PAETEC. During 2010, Q-Comm, Hosted Solutions, Iowa Telecom and Nuvox were acquired on December 2, 2010, December 1, 2010, June 1, 2010 and February 8, 2010, respectively. During 2009, Lexcom and D&E were acquired on December 1, 2009 and November 10, 2009, respectively.

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(a)	Included as a component of other comprehensive income (loss) and will be reclassified into earnings as the hedged transaction affects earnings.

(b)	Represents non-cash income recorded in other income (expense), net in the accompanying consolidated statements of income.

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(a)	The effect of the revision is also reflected in our consolidated statements of cash flows, net income and relevant adjustments to reconcile net income to net cash provided by operating activities.

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(a)	Customer lists will be amortized using the sum-of-years digit methodology over an estimated useful life of ten years.

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(b)	Trade names were amortized on a straight-line basis over an estimated useful life of one year. Other intangibles, which includes internally developed software, will be amortized on a straight-line basis over an estimated useful life of three years.

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(a)	Customer lists are amortized using the sum-of-years digit methodology over an estimated useful life of 13 years for Hosted Solutions and 15 years for Q-Comm.

(b)	Non-compete agreements are amortized on a straight-line basis over and estimated useful life of three years.

(c)	Trade names were amortized on a straight-line basis over an estimated useful life of one year.

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(a)	Wireless licenses acquired from Iowa Telecom were designated as held for sale.

(b)	Wireline franchise rights and cable franchise rights are amortized on a straight-line basis over an estimated life of 30 years and 15 years, respectively.

(c)	Customer lists are amortized using the sum-of-years digit methodology over an estimated useful life of nine years.

(d)	Trade names were amortized on a straight-line basis over an estimated useful life of one year.

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(a)	Adjustments to the carrying value of goodwill were attributable to adjustments in the fair values of assets acquired and liabilities assumed in the acquisition, as previously discussed in Note 3.

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(a)	Changes in the gross cost of intangible assets were associated with the acquisition of PAETEC as previously discussed in Note 3.

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(a)	We recognized as interest expense in the accompanying consolidated income statements $1.8 million in arrangement and other fees related to the increase in the revolver capacity agreements and amendment and restatement of our senior secured credit facility in 2010, respectively.

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(a)	Recognized at fair value in cash and cash equivalents on the consolidated balance sheet as of December 31, 2012 and 2011, respectively.

(b)	Recognized at carrying value of $8,996.5 million and $9,150.4 million in long-term debt, including current maturities and capital lease obligations, in the accompanying consolidated balance sheets as of December 31, 2012 and 2011, respectively.

(c)	Recognized at fair value in current portion of interest rate swaps and other liabilities on the consolidated balance sheet as of December 31, 2012 and 2011.

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(a)	During both 2012 and 2011, pension benefits paid from Windstream's assets totaled $0.7 million respectively. All postretirement benefits in both years were paid from Windstream's assets.

(b)

During 2012, we made changes to our postretirement medical plan, eliminating medical and prescription drug subsidies for certain active and retired participants effective January 1, 2014. In remeasuring the postretirement obligations to reflect this amendment, updated assumptions as of June 29, 2012 were used. During the remeasurement, we updated key assumptions, including the discount rate, which decreased from 3.97 percent to 3.80 percent. The discount rate was selected based on a hypothetical yield curve incorporating high-quality corporate bonds with various maturities adjusted to reflect the timing of our expected benefit payments.

(c)

During 2011, we amended certain of our postretirement medical plans to reduce the subsidies offered for medical and prescription drug insurance premiums. The change will be made in two waves. Effective January 1, 2012, the available subsidy will be reduced to one-half of the current subsidies. Effective January 1, 2013, the subsidy will be further reduced to either $80 per month for participants who are not eligible for Medicare, or $17 per month for Medicare eligible participants. These amendments were accounted for as plan amendments which reduced our benefit obligation

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(d)

During 2011, we communicated the elimination of retiree basic life insurance benefits for certain participants of our plans effective January 1, 2012. For accounting purposes, this change eliminated all retiree basic life insurance benefits provided within one of the accounting plans and triggered a negative plan amendment and a curtailment eliminating retiree basic life insurance benefit obligations for all participants of the accounting plan. As a result, our postretirement benefit obligation was reduced by $13.8 million and the recognition of associated prior service credits of $4.9 million and actuarial losses of $4.0 million was accelerated. In total, we recorded a $14.7 million gain during the third quarter of 2011, of which $11.2 million was recorded in cost of services and $3.5 million in selling, general and administrative expenses. Due to the changes discussed previously, the total accumulated benefit obligation decreased by $13.8 million. In remeasuring the postretirement obligations to reflect these changes, updated assumptions as of August 1, 2011 were used. Specifically, the discount rate was decreased from 5.20 percent to 4.86 percent. The discount rate is selected based on a hypothetical yield curve that incorporates high-quality corporate bonds with various maturities adjusted to reflect expected post retirement benefit payments.

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(a)	Changes in the level 3 investments for the years ended December 31, 2012 and December 31, 2011 are reflected in the table below.

(b)	Valued at their quoted market price on the last day of the year. Securities traded in markets that are not considered active are valued based on quoted market prices, broker or dealer quotes or alternative pricing sources with reasonable levels of price transparency.

(c)

Valued by reference to the funds’ underlying assets and are based on the unit values as reported by the fund manager on the last business day of the year. The underlying assets are mostly comprised of publicly traded equity securities and fixed income securities. These securities are valued at the official closing price of, or the last reported sale prices as of the close of business or, in the absence of any sales, at the latest available bid price.

(d)

Valued at fair value as determined by the investment managers. Private equity is initially valued by the investment managers based upon cost, then adjusted for available market data based upon observations of the trading multiples of public companies considered comparable to the private companies being valued. Such market data used to determine adjustments to accounts for cash flows and company-specified issues include current operating performance and future expectations of the investments, changes in market outlook, and the third-party financing environment. Real estate investments are valued either at amounts based upon appraisal reports prepared by independent third-party appraisers or at amounts as determined by internal appraisals performed by the investment manager, which has been agreed to by an external valuation consultant.

(e)	Based on the value of the underlying contracts adjusted to market value, which recognizes that either long-term assets would have to be sold before contract maturity or new contributions by other contract holders would have to be exchanged for funds being transferred, precluding these contributions from being invested at the current rate of return.

(f)	Consisted primarily of swaps valued based on models that reflect the contractual terms of the instruments.

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(a)	In conjunction with the acquisition of PAETEC, we granted 886,300 restricted stock units to former PAETEC employees to replace outstanding, unvested PAETEC restricted stock units held by these same employees as of acquisition date. The vesting provisions of the original grants were retained. Each recipient is entitled to one restricted share per restricted stock unit.

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(b)

In conjunction with the acquisition of Iowa Telecom, we granted 222,400 shares of restricted stock to former Iowa Telecom employees to replace outstanding, unvested Iowa Telecom restricted stock shares held by these same employees as of acquisition date. The vesting provisions of the original grants were retained, including provisions requiring accelerated vesting upon an involuntary termination following a change of control.

(c)	Represents restricted stock granted to non-employee directors.

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•	We completed the acquisition of PAETEC on November 30, 2011. The operating results from this business are included in our results for periods subsequent to its acquisition (see Note 3).