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

•	High-speed Internet access services: We provide reliable broadband Internet access, including high-speed T1, Dedicated Internet and Ethernet Internet options. We also offer low cost, high-speed broadband Internet access for reliable connections at speeds up to 24 megabits per second ("Mbps").

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

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

•	our indirect sales channel, which partners with third parties to receive referrals for and drive sales of our products and services;

•	third-party dealers who sell directly to customers,

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

•	a variety of other channels, including retail stores and door-to-door sales.

•	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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•	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.

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

•	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 served by us;

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

•	the impact of new, emerging or competing technologies;

•	the uncertainty regarding the implementation of the Federal Communications Commission's ("FCC") rules on intercarrier compensation 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;

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

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

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

•	unfavorable results of litigation;

•	continued access line loss;

•	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;

•	the effects of work stoppages;

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

•	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;

•	and those additional factors under the caption “Risk Factors” in Item 1A of this annual report.

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

•	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.

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•	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 2011 and 2010:

(b)	Not applicable.

(c)	Information pertaining to the repurchase of our shares is included below.

(1)	During 2009, we repurchased 13.0 million shares totaling $121.3 million. This brought total repurchases under a stock repurchase program, which expired on December 31, 2009, to 29.0 million shares for approximately $321.6 million.

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

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

(D)	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.

(E)	Valuation allowance for deferred taxes was established through goodwill related to expected realization of net operating losses assumed from the acquisitions of D&E and Lexcom.

(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.

(I)	Costs primarily include charges for accounting, legal, broker fees and other miscellaneous costs associated with the completed acquisitions of D&E, Lexcom, NuVox and Iowa Telecom. In addition, we incurred a restructuring charge associated with a workforce reduction to realign certain information technology, network operations and business sales functions.

(J)	Includes cash outlays of $15.1 million for restructuring charges and $18.2 million for merger, integration and restructuring costs charged to expense, including employee related transition costs related to the acquisitions of D&E, Lexcom, NuVox and Iowa Telecom.

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•	the acquisition of PAETEC Holding Corp ("PAETEC") on November 30, 2011, which turned us into a national provider of business services and included an attractive customer base of medium and largebusinesses and significantly enhanced our capabilities in strategic growth areas, including Internet protocol ("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;

•	continued activities around integration of our acquired businesses; and

•	refinancing of long-term debt, resulting in an extension of debt maturities and lower future interest costs.

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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 the former D&E and Lexcom operations, NuVox, Iowa Telecom, Hosted Solutions and Q-Comm operations, (collectively known as the “Acquired Companies”) and the former PAETEC operations. In the discussion and analysis provided below regarding changes in consolidated revenues and expenses in 2011 and 2010, the impact of the acquisitions on these changes is considered to be the revenues and expenses recognized during the period of each year for which results from the acquired operations are not included in the comparative period of the prior year.

(b)

Effective during the fourth quarter of 2011, we changed our method of recognizing actuarial gains and losses for pension benefits. We have retrospectively adjusted financial information for all prior periods presented to reflect our voluntary change in accounting principle for pension benefits. See Notes 2 and 8 to the consolidated financial statements. Additionally, certain prior year revenues and expenses were reclassified to reflect the current presentation and these changes had no impact on operating income.

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(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 strong demand from wireless and other carriers, previously discussed.

(c)	Decreases in voice service revenues were primarily attributable to competition and migration of existing customers to integrated services.

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(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.

(a)	Decreases in wholesale voice and miscellaneous revenues in 2010 were primarily due to the decline in payphone and UNE voice lines.

(b)

Decreases in federal USF revenues in 2011 resulted from decreases in federal funds received and line loss, partially offset by increases in USF surcharge revenues, driven by an increase in the USF contribution factor from 12.9 percent to 15.3 percent. Increases in federal USF revenues in 2010 were primarily due to an increase in USF surcharge revenues of $6.5 million, driven by the increase in the USF contribution factor from 12.3 percent to 12.9 percent for the years ended December 31, 2009 and 2010, respectively. The changes to the USF surcharge revenues resulted in a proportionate change in federal USF expense included in cost of services below.

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(c)	Decreases in state USF revenues in 2011 were attributable to the decline in access lines and eligible recoverable costs in that period. Increases in state USF revenues in 2010 were primarily due to an increase in costs recoverable under the program.

(d)

Decreases in switched access revenues in 2011 and 2010 were primarily due to continued declines in voice lines and the phased reduction of interstate access rates for our subsidiaries that converted to price cap regulation and have not reached the Federal Communications Commission's (“FCC”) prescribed target rate. Additional declines in switched access revenues, in 2010, were due to a network efficiency project which maximizes the use of our own network for transporting long-distance traffic in order to decrease our interconnection expense, which has reduced switched access revenues earned from the underlying long-distance carriers.

(a)	Decreases in other revenue were primarily attributable to decreases in consumer service and other rent revenue.

(a)	Increases in contractor sales in 2011 were primarily due to increased sales of outside plant materials. Increases in contractor sales in 2010 were due to modest increases experienced during the second half of 2010 associated with increased infrastructure activity.

(b)

Increases of business product sales in 2011 were driven by increased sales of equipment associated with growing demand for business services. Decreases in business product sales in 2010 were primarily due to lower demand for these products, which we believe was attributable to the postponement of purchasing decisions by some businesses as a result of continued weakness in the overall economic environment. We experienced modest increases across all product sales during the second half of 2010.

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(a)	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 the increase in pension expense in 2010 was due to a decline in the discount rate from 5.89 percent to 5.31 percent. Lower returns on pension plan assets also contributed to the increase in pension expense in both years.

(b)

Increases in network operations and other expenses during 2011 were due to increases in marketing services, which include charges incurred to provide third party services to customers and charges incurred to provide voice features and value added data services to customers, partially offset by a decrease in network operations expense. Decreases in network operations and other expenses in 2010 were primarily attributable to cost saving measures and storm-related expenses in 2009 that did not recur, partially offset by increases in network support costs and charges incurred to provide third party services to customers.

(c)

Increases in interconnection expense in 2011 were attributable to increased purchases of higher capacity circuits to service the growth in data customers, partially offset by the favorable impact of network efficiency projects, the impact of voice line losses and rate reductions. Decreases in interconnection expenses in 2010 were due to the favorable impact of network efficiency projects, the impact of voice line losses and rate reductions. Partially offsetting these decreases were increases associated with purchases of higher capacity circuits to service the growth in data customers.

(d)	Increases in federal USF contributions in 2011 and 2010 were primarily due to an increase in the USF contribution factors from 12.3 percent to 12.9 percent and 15.3 percent for the years ended December 31, 2009, 2010 and 2011, respectively. This increase resulted in a proportionate increase in federal USF surcharge revenues in 2011 and 2010.

(e)	Decreases in business taxes in 2011 and 2010 were primarily attributable to lower property tax assessments.

(f)	Decreases in 2011 postretirement expense were primarily attributable to the amendment of postretirement benefit plans to eliminate the basic retiree life insurance coverage plan for certain current and future retirees effective January 1, 2012. Decreases in 2010 were driven by plan amendments.

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(a)	Increases in contractor cost of products sold for both periods were consistent with the changes in contractor sales in 2011 and 2010.

(b)	Changes in business cost of products sold were consistent with the changes in business product sales in both periods.

(c)	Decreases in consumer costs of products sold for both periods are primarily due to declines in prices paid for consumer broadband home networking equipment.

(a)	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 the increase in pension expense in 2010 was due to a decline in the discount rate from 5.89 percent to 5.31 percent. Lower returns on pension plan assets also contributed to the increase in pension expense in both years.

(b)	Increases in sales and marketing expenses were due to commissions costs for the business channel and increased advertising expenses.

(c)	Decreases in 2011 postretirement expense were primarily attributable to the amendment of postretirement benefit plans to eliminate the basic retiree life insurance coverage plan for certain and future retirees effective January 1, 2012.

(d)	Decreases in other costs in 2011 were primarily attributable to costs incurred in 2010 to migrate most of our internal systems to a new data center, as well as decreases in medical insurance costs, partially offset by losses related to litigation activity during the period. Increase in other costs during 2010 were primarily due to the data center migration costs.

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(a)	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.

(a)	Transaction costs in 2011 and 2010 primarily relate to accounting, legal, broker fees and other miscellaneous costs associated with the acquisitions of PAETEC and 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 PAETEC and the Acquired Companies.

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

(b)	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, and

•	the provision of additional USF support on a temporary basis.

(a)	Stimulus capital expenditures funded by Windstream are included in our capital expenditure totals for each period presented in the statements of cash flows.

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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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•	ongoing working capital requirements of our operations,

•	planned capital expenditures,

•	scheduled debt principal and interest payments,

•	dividend payments and

•	contributions to our pension and postretirement plans.

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(a)	Adjustments required by the credit facility and indentures primarily consist of the inclusion of PAETEC's preacquisition operating income before depreciation and amortization, pension and stock-based compensation expense and 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 interest expense related to the remaining debt assumed in connection with the acquisition of PAETEC as if it were assumed on January 1, 2011, 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 $97.2 million of unamortized premiums (net of discounts) included in long-term debt at December 31, 2011.

(b)	Variable rates on tranches A and B of the senior secured credit facility are calculated in relation to LIBOR, which was 0.40 percent at December 31, 2011.

(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 $21.4 million of reserves for uncertain tax positions, including interest and penalties, that were included in other liabilities at December 31, 2011 for which we are unable to make a reasonably reliable estimate as to when cash settlements with taxing authorities will occur.

(h)	Includes $30.5 million and $5.8 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, 2011.

(i)	Although no additional pension contribution is required in 2012, contributions may be required in future years, or we could make a contribution on a voluntary basis. 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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•	Fair Value Measurements (first quarter of 2012)

•	Goodwill Impairment (first quarter of 2012)

•	Balance Sheet Offsetting (first quarter of 2013)

•	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;

•	the uncertainty regarding the implementation of the Federal Communications Commission's ("FCC") rules on intercarrier compensation 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;

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

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

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

•	unfavorable results of litigation;

•	continued access line loss;

•	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;

•	the effects of work stoppages;

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

•	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;

•	and those additional factors under the caption “Risk Factors” in Item 1A of this annual report.

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•	Explanations for significant events affecting our historical operating trends during the periods 2009 through 2011 are provided in Management’s Discussion and Analysis of Results of Operations and Financial Condition.

•	Effective during the fourth quarter of 2011, we changed our method of recognizing actuarial gains and losses for pension benefits. We have retrospectively adjusted financial information for all prior periods presented to reflect our voluntary change in accounting principle for pension benefits. See Notes 2 and 8 to the consolidated financial statements.

•

During 2007, we incurred $4.6 million in restructuring costs from a workforce reduction plan and the announced realignment of our business operations and customer service functions intended to improve overall support to our customers. Of these charges, $4.1 million was paid in cash during the year. In addition, we incurred $3.7 million in transaction costs to complete the split off of our directory publishing business and incurred approximately $1.3 million in rebranding costs associated with the acquisition of CTC.

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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 expense, net in the accompanying consolidated statements of income.

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(a)	A portion of pension costs are capitalized as a part of construction labor.

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

(c)

We have elected to revise historical results for certain previously unrecorded immaterial errors, primarily to adjust deferred income taxes, goodwill and additional paid-in-capital associated with book to tax basis adjustments related to the spin-off from Alltel and acquisitions in prior periods. In addition, we recorded other revisions which had an inconsequential impact on all periods presented.

(d)	After consideration of net income and dividends paid, retained earnings would have been reduced below zero at December 31, 2011 and 2010; therefore, we reduced additional paid in capital to the extent our dividend payments exceeded retained earnings.

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(a)	Customer lists will be amortized using the sum-of-years digit methodology over an estimated useful life of 10 years.

(b)	Trade names are being 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 will be 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 will be amortized on a straight-line basis over and estimated useful life of three years.

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

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(a)	We have designated wireless licenses acquired from Iowa Telecom as held for sale.

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

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

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

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

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

(c)	Trade names will be 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 D&E and Lexcom goodwill were attributable to adjustments in the fair values of assets acquired and liabilities assumed in these acquisitions recognized during the first quarter of 2010.

(b)	We have elected to revise historical results for certain previously unrecorded immaterial errors (See Note 2).

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(a)

Changes in the gross cost of intangible assets were associated with the acquisitions of PAETEC and the Acquired Companies as previously discussed in Note 3. Effective January 1, 2009, we prospectively changed our assessment of useful life for our franchise rights from indefinite-lived to 30 years. Effective with this change, these rights are now amortized on a straight-line basis in accordance with the way in which these operations are expected to contribute to our undiscounted cash flows.

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(a)	We recognized as interest expense in the accompanying consolidated income statements $1.8 million and $6.4 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 and 2009, respectively.

(a)	Recognized at fair value in cash and cash equivalents on the consolidated balance sheet as of December 31, 2011 and 2010.

(b)	Recognized at fair value in current portion of interest rate swaps and other liabilities on the consolidated balance sheet as of December 31, 2011 and 2010.

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(a)

In conjunction with the acquisition of Iowa Telecom on June 1, 2010, we assumed certain obligations related to a non-contributory qualified pension plan and postretirement benefit plan formerly sponsored by Iowa Telecom. As a result, we recognized additional net pension and postretirement benefit obligations of $4.2 million and approximately $2.4 million, respectively, which are included in other liabilities in the accompanying consolidated balance sheet. The Iowa Telecom plans were merged into our pension and postretirement employee benefit plans effective December 31, 2010. In conjunction with the acquisition of D&E on November 10, 2009, we assumed certain obligations related to a non-contributory qualified pension plan and postretirement benefit plan formerly sponsored by D&E. As a result we recognized additional net pension and postretirement benefit obligations of $12.4 million and approximately $1.8 million, respectively, as of November 10, 2009, which are included in other liabilities in the accompanying consolidated balance sheet. The D&E plans were merged into our pension and postretirement employee benefit plans effective December 31, 2009.

(b)	During both periods of 2011 and 2010, pension benefits paid from Windstream's assets totaled $0.7 million respectively. All postretirement benefits in both years were paid from Windstream's assets.

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(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 as of June 1, 2011 by $38.3 million, with a corresponding decrease in accumulated other comprehensive loss, net of tax. As a result, the revised benefit obligation was $59.7 million as of June 1, 2011. The reduction in the obligation is being amortized to postretirement benefits expense over the average remaining service life of active employees beginning June 1, 2011. In remeasuring the postretirement obligations to reflect these amendments, updated assumptions as of June 1, 2011 were used. Specifically, the discount rate was decreased from 5.25 percent to 5.20 percent.

(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 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 year ended December 31, 2011 are reflected in the table below. Changes for the year ended December 31, 2010 were inconsequential.

(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.

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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.

(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).

•	We completed the acquisitions of NuVox, Iowa Telecom, Hosted Solutions and Q-Comm on February 8, 2010, June 1, 2010, December 1, 2010 and December 2, 2010, respectively. The operating results from these businesses are included in our results for periods subsequent to their acquisitions (see Note 3).