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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q



|þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended June 30, 2007

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

Commission file number 1-32422

WINDSTREAM CORPORATION

(Exact name of registrant as specified in its charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 20-0792300                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|4001 Rodney Parham Road, Little Rock, Arkansas                 |  | 72212                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code (501) 748-7000



---

(Former name, former address and
former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days. þ YES ̈NO

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ̈Accelerated filer þ            Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). ̈YES þ NO

Number of common shares outstanding as
of July 31, 2007: 477,395,581

The Exhibit Index is located on page 52.



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WINDSTREAM CORPORATION

FORM 10-Q

TABLE OF CONTENTS



|                               |  |                                                                                       |  |         
|------------------------------ |  | ------------------------------------------------------------------------------------- |  | --------
|                               |  |                                                                                       |  | Page No.
|PART I  FINANCIAL INFORMATION
|Item 1.                        |  | Financial Statements                                                                  |  |         
|                               |  | Consolidated Balance Sheets  June 30, 2007 (unaudited) and December 31, 2006         |  | 2       
|                               |  | Consolidated Statements of Income (unaudited)                                         |  | 3       
|                               |  | Consolidated Statements of Cash Flows (unaudited)                                     |  | 4       
|                               |  | Consolidated Statements of Shareholders Equity (unaudited)                           |  | 5       
|                               |  | Notes to Consolidated Financial Statements (unaudited)                                |  | 6       
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 28      
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 47      
|Item 4.                        |  | Controls and Procedures                                                               |  | 48      
|                              
|PART II  OTHER INFORMATION   
|                               |  |                                                                                      
|Item 1.                        |  | Legal Proceedings                                                                     |  | 49      
|Item 1A.                       |  | Risk Factors                                                                          |  | 49      
|Item 2.                        |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | *       
|Item 3.                        |  | Defaults Upon Senior Securities                                                       |  | *       
|Item 4.                        |  | Submission of Matters to a Vote of Security Holders                                   |  | 50      
|Item 5.                        |  | Other Information                                                                     |  | *       
|Item 6.                        |  | Exhibits                                                                              |  | 50      

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|* | No reportable information under this item.
|- | ------------------------------------------



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WINDSTREAM CORPORATION

FORM 10-Q

PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

CONSOLIDATED BALANCE SHEETS

|                                                                                                                 |  |                      |         |   |              |   |         |  
|---------------------------------------------------------------------------------------------------------------- |  | -------------------- | ------- | - | ------------ | - | ------- | -
|(Millions)                                                                                                       |  | (Unaudited) June 30, |         |   | December 31, |  
|Assets                                                                                                           |  | 2007                 |         |   | 2006         |  
|Current Assets:                                                                                                  |  |                      |         |   |              |   |         |  
|Cash and short-term investments                                                                                  |  | $                    | 483.8   |   |              | $ | 386.8   |  
|Accounts receivable (less allowance for doubtful accounts of $11.5 and $10.4, respectively)                      |  |                      | 311.1   |   |              |   | 337.2   |  
|Inventories                                                                                                      |  |                      | 44.3    |   |              |   | 43.5    |  
|Prepaid expenses and other                                                                                       |  |                      | 34.3    |   |              |   | 29.2    |  
|Assets held for sale                                                                                             |  |                      | 75.5    |   |              |   | 80.0    |  
|                                                                                                                 |  |                      |         |   |              |   |         |  
|Total current assets                                                                                             |  |                      | 949.0   |   |              |   | 876.7   |  
|                                                                                                                 |  |                      |         |   |              |   |         |  
|Goodwill                                                                                                         |  |                      | 1,965.0 |   |              |   | 1,965.0 |  
|Other intangibles                                                                                                |  |                      | 1,076.4 |   |              |   | 1,100.4 |  
|Net property, plant and equipment                                                                                |  |                      | 3,893.7 |   |              |   | 3,939.8 |  
|Other assets                                                                                                     |  |                      | 122.3   |   |              |   | 148.8   |  
|Total Assets                                                                                                     |  | $                    | 8,006.4 |   |              | $ | 8,030.7 |  
|                                                                                                                 |  |                      |         |   |              |   |         |  
|Liabilities and Shareholders Equity                                                                             |  |                      |         |   |              |   |         |  
|Current Liabilities:                                                                                             |  |                      |         |   |              |   |         |  
|Current maturities of long-term debt                                                                             |  | $                    | 49.3    |   |              | $ | 32.2    |  
|Accounts payable                                                                                                 |  |                      | 156.1   |   |              |   | 169.5   |  
|Advance payments and customer deposits                                                                           |  |                      | 90.8    |   |              |   | 82.8    |  
|Accrued dividends                                                                                                |  |                      | 119.3   |   |              |   | 119.2   |  
|Accrued taxes                                                                                                    |  |                      | 52.7    |   |              |   | 31.9    |  
|Accrued interest                                                                                                 |  |                      | 143.2   |   |              |   | 148.2   |  
|Other current liabilities                                                                                        |  |                      | 41.3    |   |              |   | 68.4    |  
|Liabilities related to assets held for sale                                                                      |  |                      | 29.2    |   |              |   | 32.4    |  
|                                                                                                                 |  |                      |         |   |              |   |         |  
|Total current liabilities                                                                                        |  |                      | 681.9   |   |              |   | 684.6   |  
|Long-term debt                                                                                                   |  |                      | 5,439.5 |   |              |   | 5,456.2 |  
|Deferred income taxes                                                                                            |  |                      | 1,002.2 |   |              |   | 990.8   |  
|Other liabilities                                                                                                |  |                      | 409.3   |   |              |   | 429.3   |  
|Total liabilities                                                                                                |  |                      | 7,532.9 |   |              |   | 7,560.9 |  
|Commitments and Contingencies (See Note 8)                                                                       |  |                      |         |   |              |   |         |  
|Shareholders Equity:                                                                                            |  |                      |         |   |              |   |         |  
|Common stock, $0.0001 par value, 1,000.0 shares authorized, 477.4 shares issued and outstanding at June 30, 2007 |  |                      |        |   |              |   |        |  
|Additional paid-in capital                                                                                       |  |                      | 562.7   |   |              |   | 550.5   |  
|Accumulated other comprehensive income (loss)                                                                    |  |                      | (136.5  | ) |              |   | (150.8  | )
|Retained earnings                                                                                                |  |                      | 47.3    |   |              |   | 70.1    |  
|                                                                                                                 |  |                      |         |   |              |   |         |  
|Total shareholders equity                                                                                       |  |                      | 473.5   |   |              |   | 469.8   |  
|Total Liabilities and Shareholders Equity                                                                       |  | $                    | 8,006.4 |   |              | $ | 8,030.7 |  

See the accompanying notes to the unaudited interim consolidated financial statements.



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CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

|                                                                                                            |  |                             |        |   |                           |   |       |      |  |   |         |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------- |  | --------------------------- | ------ | - | ------------------------- | - | ----- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                                                            |  | Three Months Ended June 30, |        |   | Six Months Ended June 30, |  
|(Millions, except per share amounts)                                                                        |  | 2007                        |        |   | 2006                      |   |       | 2007 |  |   | 2006    |  
|Revenues and sales:                                                                                         |  |                             |        |   |                           |   |       |      |  |   |         |   |  |   |         |  
|Service revenues                                                                                            |  | $                           | 732.2  |   |                           | $ | 603.5 |      |  | $ | 1,450.1 |   |  | $ | 1,208.2 |  
|Product sales                                                                                               |  |                             | 94.5   |   |                           |   | 127.8 |      |  |   | 160.3   |   |  |   | 226.1   |  
|                                                                                                            |  |                             |        |   |                           |   |       |      |  |   |         |   |  |   |         |  
|Total revenues and sales                                                                                    |  |                             | 826.7  |   |                           |   | 731.3 |      |  |   | 1,610.4 |   |  |   | 1,434.3 |  
|Costs and expenses:                                                                                         |  |                             |        |   |                           |   |       |      |  |   |         |   |  |   |         |  
|Cost of services (excluding depreciation of $101.7, $84.1, $201.6 and $172.1, respectively, included below) |  |                             | 253.0  |   |                           |   | 193.3 |      |  |   | 488.6   |   |  |   | 385.7   |  
|Cost of products sold                                                                                       |  |                             | 51.1   |   |                           |   | 102.1 |      |  |   | 96.6    |   |  |   | 186.4   |  
|Selling, general, administrative and other                                                                  |  |                             | 101.3  |   |                           |   | 84.4  |      |  |   | 204.4   |   |  |   | 164.5   |  
|Depreciation and amortization                                                                               |  |                             | 126.9  |   |                           |   | 98.9  |      |  |   | 252.0   |   |  |   | 201.5   |  
|Royalty expense to Alltel                                                                                   |  |                             |       |   |                           |   | 62.4  |      |  |   |        |   |  |   | 129.6   |  
|Restructuring and other charges                                                                             |  |                             | 1.6    |   |                           |   | 5.0   |      |  |   | 6.4     |   |  |   | 7.5     |  
|Total costs and expenses                                                                                    |  |                             | 533.9  |   |                           |   | 546.1 |      |  |   | 1,048.0 |   |  |   | 1,075.2 |  
|Operating income                                                                                            |  |                             | 292.8  |   |                           |   | 185.2 |      |  |   | 562.4   |   |  |   | 359.1   |  
|                                                                                                            |  |                             |        |  
|Other income, net                                                                                           |  |                             | 6.3    |   |                           |   |      |      |  |   | 11.5    |   |  |   | 1.2     |  
|Intercompany interest income from Alltel                                                                    |  |                             |       |   |                           |   | 18.0  |      |  |   |        |   |  |   | 31.9    |  
|Interest expense                                                                                            |  |                             | (108.1 | ) |                           |   | (4.5  | )    |  |   | (222.8  | ) |  |   | (8.4    | )
|                                                                                                            |  |                             |        |   |                           |   |       |      |  |   |         |   |  |   |         |  
|                                                                                                            |  |                             |        |  
|Income before income taxes                                                                                  |  |                             | 191.0  |   |                           |   | 198.7 |      |  |   | 351.1   |   |  |   | 383.8   |  
|Income taxes                                                                                                |  |                             | 75.1   |   |                           |   | 80.0  |      |  |   | 135.3   |   |  |   | 152.3   |  
|                                                                                                            |  |                             |        |   |                           |   |       |      |  |   |         |   |  |   |         |  
|                                                                                                            |  |                             |        |  
|Net income                                                                                                  |  | $                           | 115.9  |   |                           | $ | 118.7 |      |  | $ | 215.8   |   |  | $ | 231.5   |  
|Earnings per share:                                                                                         |  |                             |        |   |                           |   |       |      |  |   |         |   |  |   |         |  
|Basic                                                                                                       |  |                             | $.24   |   |                           |   | $.29  |      |  |   | $.46    |   |  |   | $.57    |  
|Diluted                                                                                                     |  |                             | $.24   |   |                           |   | $.29  |      |  |   | $.45    |   |  |   | $.57    |  

See the accompanying notes to the unaudited interim consolidated financial statements.



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CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

|                                                                          |  |                           |        |   |      |   |        |  
|------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ---- | - | ------ | -
|                                                                          |  | Six Months Ended June 30, |       
|(Millions)                                                                |  | 2007                      |        |   | 2006 |  
|Cash Provided from Operations:                                            |  |                           |        |   |      |   |        |  
|Net income                                                                |  | $                         | 215.8  |   |      | $ | 231.5  |  
|Adjustments to reconcile net income to net cash provided from operations: |  |                           |        |   |      |   |        |  
|Depreciation and amortization                                             |  |                           | 252.0  |   |      |   | 201.5  |  
|Provision for doubtful accounts                                           |  |                           | 11.2   |   |      |   | 10.3   |  
|Stock-based compensation expense                                          |  |                           | 8.3    |   |      |   | 2.1    |  
|Pension and postretirement benefits expense                               |  |                           | 19.1   |   |      |   | 19.5   |  
|Other, net                                                                |  |                           | 7.3    |   |      |   | 6.4    |  
|Changes in operating assets and liabilities:                              |  |                           |        |   |      |   |        |  
|Accrued taxes                                                             |  |                           | 18.5   |   |      |   | 46.2   |  
|Other current liabilities                                                 |  |                           | (27.3  | ) |      |   | (5.2   | )
|Other, net                                                                |  |                           | 8.6    |   |      |   | 12.2   |  
|                                                                          |  |                           |        |   |      |   |        |  
|Net cash provided from operations                                         |  |                           | 513.5  |   |      |   | 524.5  |  
|Cash Flows from Investing Activities:                                     |  |                           |        |   |      |   |        |  
|Additions to property, plant and equipment                                |  |                           | (178.0 | ) |      |   | (155.4 | )
|Other, net                                                                |  |                           | 1.2    |   |      |   | 19.9   |  
|                                                                          |  |                           |        |   |      |   |        |  
|Net cash used in investing activities                                     |  |                           | (176.8 | ) |      |   | (135.5 | )
|Cash Flows from Financing Activities:                                     |  |                           |        |   |      |   |        |  
|Dividends paid on common shares                                           |  |                           | (238.5 | ) |      |   |       |  
|Dividends paid to Alltel prior to spin-off                                |  |                           |       |   |      |   | (98.8  | )
|Repayments of borrowings                                                  |  |                           | (500.1 | ) |      |   | (0.1   | )
|Debt issued, net of issuance costs                                        |  |                           | 498.9  |   |      |   |       |  
|Changes in advances to Alltel prior to spin-off                           |  |                           |       |   |      |   | (292.0 | )
|                                                                          |  |                           |        |   |      |   |        |  
|Net cash used in financing activities                                     |  |                           | (239.7 | ) |      |   | (390.9 | )
|                                                                          |  |                           |        |   |      |   |        |  
|Increase (decrease) in cash and short-term investments                    |  |                           | 97.0   |   |      |   | (1.9   | )
|Cash and Short-term Investments:                                          |  |                           |        |   |      |   |        |  
|Beginning of the period                                                   |  |                           | 386.8  |   |      |   | 11.9   |  
|End of the period                                                         |  | $                         | 483.8  |   |      | $ | 10.0   |  

See the accompanying notes to the unaudited interim consolidated financial statements.



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CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY (UNAUDITED)

|                                                       |  |                          |       |                                            |   |        |                  |  |   |        |   |  |   |        |  
|------------------------------------------------------ |  | ------------------------ | ----- | ------------------------------------------ | - | ------ | ---------------- |  | - | ------ | - |  | - | ------ | -
|(Millions, except per share amounts)                   |  | AdditionalPaid-InCapital |       | AccumulatedOtherComprehensiveIncome (Loss) |   |        | RetainedEarnings |  |   | Total  |  
|Balance at December 31, 2006                           |  | $                        | 550.5 |                                            | $ | (150.8 | )                |  | $ | 70.1   |   |  | $ | 469.8  |  
|Net income                                             |  |                          |      |                                            |   |       |                  |  |   | 215.8  |   |  |   | 215.8  |  
|Other comprehensive income, net of tax: (See Note 10)  |  |                          |       |                                            |   |        |                  |  |   |        |   |  |   |        |  
|Change in projected benefit obligation of pension plan |  |                          |      |                                            |   | (10.1  | )                |  |   |       |   |  |   | (10.1  | )
|Amortization of actuarial gains/losses                 |  |                          |      |                                            |   | 10.0   |                  |  |   |       |   |  |   | 10.0   |  
|Unrealized holding gains on interest rate swaps        |  |                          |      |                                            |   | 14.4   |                  |  |   |       |   |  |   | 14.4   |  
|Comprehensive income                                   |  |                          |      |                                            |   | 14.3   |                  |  |   | 215.8  |   |  |   | 230.1  |  
|Additional transfers from Alltel (See Note 3)          |  |                          | 3.9   |                                            |   |       |                  |  |   |       |   |  |   | 3.9    |  
|Stock-based compensation expense                       |  |                          | 8.3   |                                            |   |       |                  |  |   |       |   |  |   | 8.3    |  
|Dividends of $0.50 per share declared to stockholders  |  |                          |      |                                            |   |       |                  |  |   | (238.6 | ) |  |   | (238.6 | )
|Balance at June 30, 2007                               |  | $                        | 562.7 |                                            | $ | (136.5 | )                |  | $ | 47.3   |   |  | $ | 473.5  |  

See the accompanying notes to the unaudited interim consolidated financial statements.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

_____



|1. | Preparation of Interim Financial Statements:
|-- | --------------------------------------------

In
this report, Windstream Corporation and its subsidiaries are referred to as Windstream, we, or the Company. For all periods prior to the effective time of the merger with Valor Communications Group, Inc.
(Valor) described herein, references to the Company include Alltel Holding Corp. or the wireline telecommunications division and related businesses of Alltel Corporation (Alltel).

The accompanying unaudited consolidated financial statements have been prepared based upon Securities and Exchange Commission (SEC) rules
that permit reduced disclosure for interim periods. Certain information and footnote disclosures have been condensed or omitted in accordance with those rules and regulations. The accompanying consolidated balance sheet at December 31, 2006 was
derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. In our opinion, these financial statements reflect all adjustments that are necessary for a
fair presentation of results of operations and financial condition for the interim periods shown including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year.
For a more complete discussion of significant accounting policies and certain other information, this report should be read in conjunction with the consolidated financial statements and accompanying notes included in Windstreams Annual Report
on Form 10-K for the year ended December 31, 2006 filed with the SEC on March 1, 2007.

The preparation of financial statements
in conformity with generally accepted accounting principles (GAAP) in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes, including
estimates of probable losses and expenses. Actual results could differ from those estimates, and such differences could be material. Certain amounts previously reported have been reclassified to conform to the current year presentation of the
consolidated financial statements. These reclassifications did not impact net or comprehensive income.



|2. | Accounting Changes:
|-- | -------------------

Discontinuance of the
Application of SFAS No. 71, Accounting for the Effects of Certain Types of Regulation  Historically, the Companys regulated operations, except for certain operations acquired in Kentucky in 2002 and in Nebraska in
1999, followed the accounting for regulated enterprises prescribed by Statement of Financial Accounting Standards (SFAS) No. 71. This accounting recognizes the economic effects of rate regulation by recording costs and a return on
investment as such amounts are recovered through rates authorized by regulatory authorities. Accordingly, certain intercompany revenues and expenses earned and incurred by the Companys regulated subsidiaries were not eliminated because they
were priced in accordance with Federal Communications Commission (FCC) guidelines and recovered through the regulatory process.

Due to continued access line loss resulting from increased levels of competition from alternative voice providers, as well as due to a shift of the customer base from rate-of-return markets to markets under an alternative form of
regulation, Windstream determined in the third quarter 2006 that it was no longer appropriate to continue the application of SFAS No. 71 for reporting its financial results. Accordingly, the Company discontinued the application of SFAS
No. 71 according to the provisions of SFAS No. 101, Regulated Enterprises  Accounting for the Discontinuance of the Application of FASB Statement No. 71, and began eliminating all intercompany revenues and related
expenses.

Transactions with affiliates that were not eliminated under the provisions of SFAS No. 71 during the six months ended
June 30, 2006 primarily included product sales, directory publishing royalties and sales, and sales of other telecommunications services. Sales of telecommunications equipment from the Companys product distribution operations to the
Companys regulated subsidiaries resulted in $33.3 million and $61.9 million in product sales and cost of products sold for the three and six months ended June 30, 2006, respectively. These regulated subsidiaries also recognized $9.5
million and $19.1 million in service revenues for the three and six months ended June 30, 2006, respectively, related to royalties received from the directory publishing subsidiary (Windstream Yellow Pages), with Windstream Yellow
Pages recognizing the offsetting royalty expense in cost of products sold. Miscellaneous billings by Windstream Yellow Pages to the regulated subsidiaries resulted in $2.1 million and $3.8 million in product sales and cost of products sold for the
three and six months ended June 30, 2006, respectively. Amounts billed to other affiliates of the Company for interconnection and toll services resulted in $11.1 million and $21.7 million of service revenues and cost of services for the three
and six months ended June 30, 2006, respectively.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____

|2. | Accounting Changes, Continued:
|-- | ------------------------------



Change in Accounting Estimate  During April 2007, the Company completed studies of the
depreciable lives of assets held and used in its Missouri operations and an operating subsidiary in Texas. The related depreciation rates were changed effective April 1, 2007. The depreciable lives were lengthened to reflect the estimated
remaining useful lives of the wireline plant based on the Companys expected future network utilization and capital expenditure levels required to provide service to its customers. The effect of the change on depreciation rates in the Missouri
and Texas operations resulted in a decrease in depreciation expense of $1.8 million and an increase in net income of $1.1 million for the three months ended June 30, 2007.

Change in Accounting Principle  Windstream adopted Financial Accounting Standards Board Interpretation No. 48 (FIN 48),
Accounting for Uncertainty in Income Taxes on January 1, 2007. The adoption of FIN 48 resulted in no impact to either the Companys reserves for uncertain tax positions or to retained earnings. At the adoption date, and as of
June 30, 2007, the Company had approximately $1.3 million of gross unrecognized tax benefits, all of which relate to periods preceding the spin-off from Alltel, and all of which would impact its effective tax rate if recognized.

The Company is indemnified for these reserves for uncertain tax positions in accordance with the Tax Sharing Agreement with Alltel dated July 17,
2006; consequently, a corresponding receivable from Alltel equaling the gross unrecognized tax benefits plus accrued interest expense has been recognized.

Interest and penalties related to uncertain tax positions are recognized in income tax expense. As of June 30, 2007, the Company had accrued approximately $0.2 million of interest expense and penalties related to
uncertain tax positions. For the six months ended June 30, 2007, interest expense recognized related to these uncertain positions was not significant.

The tax years 2003  2006 remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company has identified its federal tax return and state tax returns in Arkansas,
Florida, Georgia, Kentucky, Nebraska, North Carolina, and Texas as major taxing jurisdictions.

The Company does not reasonably
estimate that the unrecognized tax benefits will change significantly within the next twelve months.

Recently Issued Accounting
Pronouncements  In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 clarifies the definition of fair value, establishes a framework for measuring fair value and expands the
disclosures related to fair value measurements that are included in a companys financial statements. SFAS No. 157 does not expand the use of fair value measurements in financial statements, but emphasizes that fair value is a market-based
measurement and not an entity-specific measurement that should be based on an exchange transaction in which a company sells an asset or transfers a liability (exit price). SFAS No. 157 also establishes a fair value hierarchy in which observable
market data would be considered the highest level, while fair value measurements based on an entitys own assumptions would be considered the lowest level. For calendar year companies like Windstream, SFAS No. 157 is effective beginning
January 1, 2008. The Company is currently evaluating the effects, if any, that SFAS No. 157 will have on its consolidated financial statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial LiabilitiesIncluding an Amendment of FASB Statement No. 115. SFAS No. 159
allows measurement at fair value of eligible financial assets and liabilities that are not otherwise measured at fair value. If the fair value option for an eligible item is elected, unrealized gains and losses for that item shall be reported in
current earnings at each subsequent reporting date. SFAS No. 159 also establishes presentation and disclosure requirements designed to draw comparison between the different measurement attributes the company elects for similar types of assets
and liabilities. This statement is effective for fiscal years beginning after November 15, 2007. The Company is in the process of evaluating the application of the fair value option and its effect on its consolidated financial statements.



|3. | Spin-off of Company from Alltel Corporation and Merger with Valor Communications Group, Inc.:
|-- | ---------------------------------------------------------------------------------------------

On November 2, 2005, Alltel Holding Corp. was incorporated as a wholly-owned subsidiary of Alltel to hold Alltels wireline telecommunications
business in connection with a contemplated spin-off of these assets. This wireline business was operated by certain other Alltel subsidiaries, which provided customers with local, long distance, network access, and



7



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|3. | Spin-off of Company from Alltel Corporation and Merger with Valor Communications Group, Inc., Continued:
|-- | --------------------------------------------------------------------------------------------------------



Internet services. These subsidiaries also sold and warehoused telecommunications products, published
telephone directories for affiliates and other independent telephone companies, and provided billing and other information technology services to other carriers.

On July 17, 2006, Alltel completed the spin-off of Alltel Holding Corp. to its stockholders. Pursuant to the spin-off, Alltel transferred certain wireline assets and liabilities to Alltel Holding Corp. at their
historical cost basis. During the first quarter of 2007, $4.7 million of additional net plant assets, $1.2 million of related deferred tax liabilities, and $0.4 million of additional pension assets were identified by Alltel as being attributable to
Alltel Holding Corp. The Company recorded these balances in March 2007 as an adjustment to additional paid-in capital in the consolidated balance sheet.

Immediately after the consummation of the spin-off, Alltel Holding Corp. merged with and into Valor, with Valor continuing as the surviving corporation. The resulting company was renamed Windstream Corporation. The
merger was accounted for using the purchase method of accounting for business combinations in accordance with SFAS No. 141, Business Combinations, with Alltel Holding Corp. serving as the accounting acquirer. The accompanying
unaudited interim consolidated financial statements reflect the combined operations of Alltel Holding Corp. and Valor following the spin-off and merger transactions on July 17, 2006. Results of operations prior to the merger and for all
historical periods presented are for Alltel Holding Corp.

In connection with the merger, the Company recorded $13.7 million of severance
and severance-related costs and $4.1 million of contract termination costs in goodwill in accordance with Emerging Issues Task Force (EITF) Issue No. 95-3, Recognition of Liabilities in Connection with a Purchase Business
Combination. Of this liability, $4.8 million in severance and severance-related costs and $1.0 million of contract termination costs were paid during the six months ended June 30, 2007. The remaining liability of $2.8 million consists of
a lease obligation assumed from Valor for a facility vacated following the merger. This amount will be paid over the remaining term of the lease through 2010 with cash from operations.

The following unaudited pro forma condensed consolidated statements of income of Windstream for the three and six months ended June 30, 2006,
respectively, assume that the spin-off from Alltel and merger with Valor occurred as of January 1, 2006:



(Millions, except per share amounts)

Three Months Ended

Six Months Ended2006

2006Revenues and sales

$852.7

$1,677.3Net income

$106.4

$   210.9Earnings per share:Basic

$.22

$.45Diluted

$.22

$.45


The unaudited pro forma information presents the combined operating results of Alltel
Holding Corp. and Valor, with the results prior to the acquisition date adjusted to include the pro forma impact of the following: the elimination of transactions between Alltel Holding Corp. and Valor; additional amortization of intangible assets
resulting from the merger; the elimination of merger expenses; additional interest expense incurred on notes issued pursuant to the spin-off and merger; and the impact of income taxes on these pro forma adjustments utilizing Windstreams
statutory tax rate of 38.9 percent for the six months ended June 30, 2006.

The unaudited pro forma results are presented for
illustrative purposes only and do not reflect the realization of potential cost savings, or any related restructuring costs. These pro forma results do not purport to be indicative of the results that would have actually been obtained if the merger
occurred as of January 1, 2006, nor does the pro forma data intend to be a projection of results that may be obtained in the future.



8



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____

|4. | Related Party Transactions:
|-- | ---------------------------



For the six months ended June 30, 2006, certain services such as information technology,
accounting, legal, tax, marketing, engineering, and risk and treasury management were provided to the Company by Alltel. Expenses were allocated based on actual direct costs incurred. Where specific identification of expenses was not practicable,
the cost of such services was allocated based on the most relevant allocation method to the service provided: either net sales of the Company as a percentage of net sales of Alltel, total assets of the Company as a percentage of total assets of
Alltel, or headcount of the Company as a percentage of headcount of Alltel. Total expenses allocated to the Company were $83.0 million and $149.3 million in the three and six months ended June 30, 2006, respectively. The costs of these services
charged to the Company and the allocated liabilities assigned to the Company are not necessarily indicative of the costs and liabilities that would have been incurred if the Company had performed these functions as a stand-alone entity. However,
management believes that methods used to make such allocations were reasonable.

For the periods through June 30, 2006, the Company
maintained a licensing agreement with The ALLTEL Kansas Limited Partnership, an Alltel affiliate, under which the Companys regulated subsidiaries were charged a royalty fee for the use of

the Alltel brand name in marketing and distributing telecommunications products and services. The amount of the royalty fee charged was computed by
multiplying the regulated subsidiaries annual revenues and sales by 12.5 percent. In anticipation of the spin-off, Alltel and the Company terminated this licensing agreement on June 30, 2006 as the Company no longer uses the Alltel brand
name.

For the six months ended June 30, 2006, the Company participated in the centralized cash management practices of Alltel. Under
those practices, cash balances were transferred daily to Alltel bank accounts. The Company obtained interim financing from Alltel to fund its daily cash requirements and invested short-term excess funds with Alltel. The Company earned interest
income on receivables due from Alltel and was charged interest expense for payables due to Alltel. Subsequent to the spin-off, Windstream no longer participates in this program as the Company has its own established cash management program. The
interest rates charged on payables to Alltel were 5.95 percent in the six months ended June 30, 2006. Interest rates earned on receivables from Alltel were 4.99 percent in the six months ended June 30, 2006.

Subsequent to the spin-off, Windstream and Alltel continue to provide each other certain of the services discussed above, at negotiated rates pursuant to
a transition services agreement. In addition to the transition services agreement, Windstream and Alltel entered into certain other agreements extending for periods of up to three years. Under those agreements, Alltel will continue to provide
Windstream with network transport for its long distance operations and other services, while Windstream will continue to provide local phone service, long distance and broadband Internet service as well as certain network management services to
Alltel, all at negotiated rates. In addition, Windstream and Alltel entered into a tax-sharing agreement that generally requires Alltel to indemnify Windstream for any taxes attributable to Windstreams operations for periods prior to the
spin-off, while Windstream must indemnify Alltel for any taxes resulting from the spin-off in certain circumstances.



|5. | Goodwill and Other Intangible Assets:
|-- | -------------------------------------

Goodwill
represents the excess of cost over the fair value of net identifiable tangible and intangible assets acquired through various business combinations. The Company has acquired identifiable intangible assets through its acquisitions of interests in
various wireline properties. The cost of acquired entities at the date of the acquisition is allocated to identifiable assets, and the excess of the total purchase price over the amounts assigned to identifiable assets is recorded as goodwill.

As of January 1, 2007, the Company completed the annual impairment reviews of its goodwill and indefinite-lived franchise rights and
determined that no write-down in the carrying value of these assets was required. As of June 30, 2007 and December 31, 2006, the carrying value of the indefinite-lived wireline franchise rights in the state of Kentucky acquired in 2002 was
$265.0 million. As of June 30, 2007 and December 31, 2006, the carrying value of the indefinite-lived wireline franchise rights in the Valor properties acquired during 2006 was $600.0 million.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|5. | Goodwill and Other Intangible Assets, Continued:
|-- | ------------------------------------------------



Intangible assets subject to amortization were as follows:



(Millions)

June 30, 2007GrossCost

AccumulatedAmortization


Net CarryingValueValor customer list

$
210.0

$
(39.1
)

$
170.9Other customer lists


67.6


(31.0
)


36.6Cable franchise rights


22.5


(18.6
)


3.9$
300.1

$
(88.7
)

$
211.4(Millions)

December 31, 2006GrossCost

AccumulatedAmortization


Net CarryingValueValor customer list

$
210.0

$
(19.2
)

$
190.8Other customer lists


67.6


(27.6
)


40.0Cable franchise rights


22.5


(17.9
)


4.6$
300.1

$
(64.7
)

$
235.4


The Valor customer list is amortized on an accelerated sum-of-the-years digits methodology
over its estimated useful life of 9 years. Other customer lists are amortized on a straight-line basis over their estimated useful lives of 10 years. Cable franchise rights subject to amortization are amortized on a straight-line basis over their
estimated useful lives of 15 years. Amortization expense for intangible assets subject to amortization was $12.4 million and $24.0 million for the three and six month periods ended June 30, 2007, respectively, as compared to $2.0 million and
$4.0 million for the same periods in 2006. Amortization expense for intangible assets subject to amortization is estimated to be $48.0 million in 2007, $43.4 million in 2008, $38.7 million in 2009, $32.6 million in 2010 and $27.9 million in 2011.



|6. | Debt and Derivative Instruments:
|-- | --------------------------------

Long-term debt
was as follows:



(Millions)

June 30,


December 31,2007


2006Issued by Windstream Corporation:Senior secured credit facility, Tranche A  variable rates, due July 17, 2011

$
500.0


$
500.0Senior secured credit facility, Tranche B  variable rates, due July 17, 2013 (a)


1,400.0



1,900.0Debentures and notes, without collateral:2016 Notes  8.625%, due August 1, 2016


1,746.0



1,746.02013 Notes  8.125%, due August 1, 2013


800.0



800.02019 Notes  7.00%, due March 15, 2019 (a)


500.0



Issued by subsidiaries of the Company:Valor Telecommunications Enterprises LLC and Valor Telecommunications Finance Corp.  7.75%, due February 15, 2015 (b)


400.0



400.0Windstream Holdings of the Midwest, Inc.  6.75%, due April 1, 2028 (b)


100.0



100.0Debentures and notes, without collateral:Windstream Georgia Communications Corp.  6.50%, due November 15, 2013


70.0



70.0Teleview, Inc.  7.00%, due January 2, 2010 and May 2, 2010


0.7



0.8Discount on long-term debt, net of premiums


(27.9
)


(28.4
)5,488.8



5,488.4Less current maturities


(49.3
)


(32.2
)Total long-term debt

$
5,439.5


$
5,456.2




| | (a) | On February 27, 2007, Windstream issued $500.0 million aggregate principal amount of senior notes due 2019, with an
interest rate of 7.0 percent (the February 27threfinancing transaction). Windstream used the net proceeds of the offering to repay $500.0
million of amounts outstanding under the term loan portion of its senior secured credit facilities.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|6. | Debt and Derivative Instruments, Continued:
|-- | -------------------------------------------



Additionally, Windstream received the consent of lenders to an amendment and
restatement of its $2.9 billion secured credit facilities. Windstream amended and restated its senior secured credit facilities to, among other things, reduce the interest payable under tranche B of the term loan portion of the facilities; modify
the pre-payment provision; and modify certain covenants to permit the consummation of the previously announced split off of its directory publishing business.



| | (b) | The Companys collateralized subsidiary debt is equally and ratably secured with debt under the senior secured credit facilities.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------

The terms of the credit facility and indentures include customary covenants that, among other things, require Windstream to maintain certain financial
ratios and restrict its ability to incur additional indebtedness. These financial ratios include a maximum leverage ratio of 4.5 to 1.0 and a minimum interest coverage ratio of 2.75 to 1.0. The leverage ratio is the ratio of indebtedness to adjusted
EBITDA, and the interest coverage ratio is the ratio of adjusted EBITDA to cash interest expense. Adjusted EBITDA means (1) net income, adjusted to exclude the cumulative effect of accounting changes and certain other exceptions; plus
(2) the following items, to the extent deducted from consolidated adjusted net income: (a) provision for taxes based on income or profits; (b) interest expense, to the extent deducted in computing net income; (c) depreciation,
amortization, goodwill impairment charges and other non-cash expenses, subject to certain exceptions; plus (d) the amount of any minority interest expense deducted in computing net income; plus (e) any non-cash compensation charge arising
from any grant of stock, stock options or other equity-based awards, to the extent deducted in computing net income; plus (f) certain non-cash income (or loss) related to hedging activities, to the extent deducted in computing net income; minus
(g) non-cash items increasing such net income, subject to certain exceptions. In addition, the covenants include restrictions on capital expenditures, which must not exceed a specified amount for any fiscal year (for 2007 this amount is $530.0
million, which includes $80.0 million of unused capacity from 2006). The Company was in compliance with these covenants as of June 30, 2007.

Maturities and sinking fund requirements for debt outstanding as of June 30, 2007 for each of the twelve month periods ended June 30, 2008, 2009, 2010, 2011 and 2012 are $49.3 million, $74.3 million, $99.2 million, $99.0 million,
and $299.0, respectively.

Interest expense was as follows for the three and six months ended June 30:



(Millions)

Three Months Ended


Six Months Ended2007


2006


2007


2006Interest expense related to long-term debt

$
107.8


$
5.1


$
222.6
(a)

$
9.5Impacts of interest rate swaps


1.1







2.0



Other interest expense






0.1



0.1



0.1Less capitalized interest expense


(0.8
)


(0.7
)


(1.9
)


(1.2
)$
108.1


$
4.5


$
222.8


$
8.4




| | (a) | In connection with the February 27, 2007 refinancing transaction, the Company recorded additional non-cash interest expense of $5.3 million due to a write-off of the
unamortized debt issuance costs associated with $500.0 million of the term loan that was paid down.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Due to the interest rate
risk inherent in the variable rate senior secured credit facilities, the Company entered into four pay fixed, receive variable interest rate swap agreements on notional amounts totaling $1,600.0 million to convert variable interest rate payments to
fixed. The four interest rate swap agreements amortize quarterly to a notional value of $906.3 million at maturity on July 17, 2013, and have an unamortized notional value of $1,487.5 million as of June 30, 2007. The variable rate received
by Windstream on these swaps is the three-month LIBOR (London-Interbank Offered Rate), which was 5.36 percent at June 30, 2007. The weighted-average fixed rate paid by Windstream is 5.60 percent. The interest rate swap agreements are designated
as cash flow hedges of the interest rate risk created by the variable interest rate paid on the senior secured credit facilities pursuant to the guidance in SFAS No. 133, Derivative Financial Instruments, as amended.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|6. | Debt and Derivative Instruments, Continued:
|-- | -------------------------------------------



After the completion of the
February 27threfinancing transaction, a portion of one of the four interest rate swap agreements with a notional value of $125.0 million was no
longer considered an effective hedge as the portion of the Companys senior secured credit facility that it was designated to hedge against was repaid. Changes in the market value of this portion of the swap, which has an unamortized notional
value of $115.6 million as of June 30, 2007, are recognized in net income, including $2.5 million and $2.9 million recognized as other income in the unaudited consolidated statement of income for the three and six months ended June 30,
2007, respectively.



|7. | Employee Benefit Plans and Postretirement Benefits Other Than Pensions:
|-- | -----------------------------------------------------------------------

Prior to the spin-off from Alltel, substantially all of the Companys employees participated in a non-contributory, qualified defined benefit pension plan maintained by Alltel. In December 2005, the qualified
defined benefit pension plan was amended such that future benefit accruals for all eligible nonbargaining employees ceased as of December 31, 2005 (December 31, 2010 for employees who had attained age 40 with two years of service as of
December 31, 2005). Following the spin-off, Windstream established a qualified defined benefit pension plan whose provisions are substantially equivalent to the provisions of the plan maintained by Alltel. The Company also assumed certain
obligations from a qualified pension plan formerly sponsored by Valor, which is also non-contributory.

The components of pension expense
were as follows for the three and six months ended June 30, 2007:



(Millions)

Three Months Ended

Six Months Ended2007

2007Service cost

$      3.7

$      7.8Interest cost

13.2

26.0Expected return on plan assets

(19.4)

(38.8)Prior service cost



(0.1)Net actuarial loss

6.6

12.1Net periodic benefit expense

$     4.1

$      7.0


Pension expenses allocated to the Company by Alltel amounted to $5.3 million and $8.2
million for the three and six months ended June 30, 2006, respectively. Pension expenses in both years are included in cost of services and selling, general, administrative and other expenses in the unaudited consolidated statements of income.

Windstream also maintains supplemental executive retirement plans that provide unfunded, non-qualified supplemental retirement benefits to
a select group of former management employees. There are no assets held in these supplemental retirement pension plans, as the Company funds the accrued costs of the plans as benefits are paid. For the six months ended June 30, 2007, Windstream
contributed $0.4 million to fund the supplemental executive retirement plans.

The Company provides postretirement healthcare and life
insurance benefits for eligible employees. Employees share in the cost of these benefits. The Company funds the costs of these plans as benefits are paid. The Company also assumed certain obligations from a postretirement healthcare plan formerly
sponsored by Valor, which was merged into the Companys existing plan on December 31, 2006. Windstream contributed $9.8 million to the postretirement plan during the six months ended June 30, 2007. The components of postretirement
benefits expense were as follows for the three and six months ended June 30:



(Millions)

Three Months Ended

Six Months Ended2007

2006

2007

2006Service cost

$
0.1

$


$
0.2

$
Interest cost


3.8


4.8


7.5


7.2Transition obligation


0.2





0.4


Prior service cost


0.6


0.7


1.0


1.2Net actuarial loss


1.4


1.6


3.0


2.9Net periodic benefit expense

$
6.1

$
7.1

$
12.1

$
11.3




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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|7. | Employee Benefit Plans and Postretirement Benefits Other Than Pensions, Continued:
|-- | ----------------------------------------------------------------------------------



The Company has historically sponsored a non-contributory defined contribution plan in the form of
profit-sharing arrangements for eligible non-bargaining employees. On December 31, 2006, this profit-sharing plan was terminated, and as of the period ended March 31, 2007, the profit-sharing plan assets were merged into the employee
savings plan under section 401(k) of the Internal Revenue Code. Pursuant to the merger of these plans, the Company no longer contributes to employee profit sharing accounts, and has increased its matching contribution to employee savings accounts
from a maximum of 4% to a maximum of 6% of employee pretax contributions. The Companys final cash contribution to the profit sharing plan for the 2006 plan year, totaling $5.2 million, was made in the second quarter of 2007 into each
participants 401(k) account. This amount was included in other current liabilities in the accompanying consolidated balance sheet at December 31, 2006.



|8. | Commitments and Contingencies:
|-- | ------------------------------

On
October 16, 2006, the Company received a negative ruling in a binding arbitration proceeding previously brought against Valor Communications Southwest LLC and Valor Communications Group, Inc., by former employees regarding stock option award
agreements. On January 8, 2007, the arbitrator entered a final award for the former employees of $7.2 million for the value of options that the Company asserts were without value immediately prior to Valors initial public offering in
February 2005. The Company had established a liability for this amount accounting for the merger with Valor in 2006. The basis for the award was the arbitrators finding that these particular claimants options were extended past the
initial public offering date. The claimants have filed separate complaints to confirm the award in Oklahoma federal district court. The Company has filed motions in Oklahoma to dismiss, or alternatively to transfer, the complaints to Texas federal
district court and also filed a separate motion to vacate the arbitrators award in Texas federal district court. The Company intends to vigorously assert and defend its position in the matter.

The Company is party to various other legal proceedings. Although the ultimate resolution of these various proceedings cannot be determined at this time,
management of the Company does not believe that such proceedings, individually or in the aggregate, will have a material adverse effect on the future consolidated results of income, cash flows or financial condition of the Company.

In addition, management of the Company is currently not aware of any environmental matters that, individually or in the aggregate, would have a material
adverse effect on the consolidated financial condition or results of operations of the Company.



|9. | Restructuring and Other Charges:
|-- | --------------------------------

The following is
a summary of the restructuring and other charges recorded in the three and six month periods ended June 30:



(Millions)

Three Months Ended

Six Months Ended2007

2006

2007

2006Fees associated with spin-off from Alltel

$


$
5.0

$


$
7.5Severance and employee benefit costs








3.2


Costs associated with split off of directory publishing business


1.6





3.2


Total restructuring and other charges

$
1.6

$
5.0

$
6.4

$
7.5


During the six months ended June 30, 2007, the Company incurred $3.2 million in
accounting and legal fees and other expenses related to the anticipated sale of its directory publishing business (see Note 16). Of the total expenses incurred relating to the spin-off transaction, $1.6 million were recorded in the second quarter of
2007. The company also incurred $3.2 million in severance and employee related costs during the first quarter of 2007, primarily related to the continuation of a workforce reduction plan initiated during the fourth quarter of 2006 and concluded in
the first quarter of 2007.

During the six months ended June 30, 2006, and in connection with the spin-off from Alltel and merger with
Valor, the Company incurred $7.5 million of incremental costs, primarily consisting of consulting and legal fees. Of the total expenses incurred relating to the spin-off transaction, $5.0 million in fees were recorded in the second quarter of 2006.



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|9. | Restructuring and Other Charges, Continued:
|-- | -------------------------------------------



The following is a summary of the activity related to the liabilities associated with the
Companys restructuring and other charges for the six months ended June 30, 2007:



(Millions)Balance, beginning of period

$
28.9Restructuring expenses and other charges


6.4Cash outlays during the period


(19.7
)Balance, end of period

$
15.6


In the Companys unaudited interim consolidated balance sheet at June 30, 2007,
other current liabilities include a portion of this unpaid restructuring liability totaling $5.8 million, which consists of $2.9 million in severance and employee-related expenses related to the realignment of its operational functions, $2.8 million
related to lease obligations on a vacated Valor facility, and $0.1 million of costs related to the spin-off from Alltel. The remaining unpaid restructuring liability of $9.8 million, which relates to fees resulting from the split off of the
publishing business, is included in liabilities related to assets held for sale in the unaudited interim consolidated balance sheet at June 30, 2007.



|10. | Comprehensive Income:
|--- | ---------------------

Comprehensive income was as
follows for the three and six month periods ended June 30:



(Millions)

Three Months Ended

Six Months Ended2007


2006

2007


2006Net Income

$
115.9


$
118.7

$
215.8


$
231.5Other comprehensive income (loss):Change in projected benefit obligation of pension plan


(16.7
)





(16.7
)


Income tax benefit


6.6






6.6



(10.1
)





(10.1
)


Amortization of actuarial gains/losses


8.7






16.4



Income tax expense


(3.4
)





(6.4
)


5.3






10.0



Unrealized holding gains on interest rate swaps


28.3






23.7



Income tax expense


(11.1
)





(9.3
)


17.2






14.4



Other comprehensive income before income taxes


20.3






23.4



Income tax expense


(7.9
)





(9.1
)


Other comprehensive income

$
12.4


$


$
14.3


$
Comprehensive Income

$
128.3


$
118.7

$
230.1


$
231.5




|11. | Earnings per Share:
|--- | -------------------

Basic earnings per share of
common stock was computed by dividing net income applicable to common shares by the weighted average number of common shares outstanding during each period. Diluted earnings per share reflects the potential dilution that could occur assuming
conversion or exercise of all dilutive outstanding stock instruments.

Common shares in historical periods totaled 402.9 million and
represented the shares issued to Alltel shareholders pursuant to the spin-off of the Alltel wireline division. Common shares in current periods include 70.9 million shares assumed through the merger with Valor.



14



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|11. | Earnings per Share, Continued:
|--- | ------------------------------



A reconciliation of the net income and numbers of shares used in computing basic and diluted earnings
per share was as follows for the three and six month periods ended June 30:



(Millions, except per share amounts)

Three Months Ended

Six Months Ended2007

2006

2007

2006Basic earnings per share:Net income applicable to common shares

$
115.9

$
118.7

$
215.8

$
231.5Weighted average common shares outstanding for the period


473.5


402.9


473.5


402.9Basic earnings per share


$.24


$.29


$.46


$.57Diluted earnings per share:Net income applicable to common shares

$
115.9

$
118.7

$
215.8

$
231.5Weighted average common shares outstanding for the period


473.5


402.9


473.5


402.9Increase in shares resulting from:Non-vested restricted stock awards


1.3





1.2


Weighted average common shares assuming conversion


474.8


402.9


474.7


402.9Diluted earnings per share


$.24


$.29


$.45


$.57




|12. | Stock-Based Compensation:
|--- | -------------------------

Under the Company's
stock-based compensation plans, Windstream may issue restricted stock and other equity securities to directors, officers and other key employees. The maximum number of shares available for issuance under the Windstream 2006 Equity Incentive Plan is
10.0 million shares. As of June 30, 2007, the balance available for grant under this Plan is approximately 6.1 million shares.

In May 2007, the Windstream Board of Directors approved an annual grant of restricted stock to certain management employees totaling approximately 215,000 common shares with a fair value on the date of the grant of approximately $3.0
million. This represents a standard annual grant to this employee group as a key component of their annual incentive compensation plan. These shares vest ratably over a three-year service period.

In February 2007, the Windstream Board of Directors approved grants of restricted stock to officers, executives, and non-employee directors totaling
approximately 575,000 common shares with a fair value on the date of the grant of $8.5 million. This represents a standard annual grant to this employee and director group as a key component of their annual incentive compensation plan. Of the shares
granted, approximately 325,000 shares contingently vest over a three-year period if performance-based operating targets are met each period. The operating target for the first vesting period was approved by the Board of Directors on February 6,
2007. Management has determined that it is probable that the target will be met for fiscal year 2007. The remaining shares vest ratably over a three-year service period, with the exception of approximately 35,000 shares granted to non-employee
directors that vest over a one-year service period.

Non-vested Windstream restricted stock activity for the six months ended June 30,
2007 was as follows:



(Thousands)


Weighted AverageFair Value Per ShareNumber ofSharesNon-vested at December 31, 2006

3,243.2


$12.55Granted

790.7


$14.87Vested

(0.3
)

$12.60Forfeited

(135.8
)

$12.84Non-vested at June 30, 2007

3,897.8


$13.01




15



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|12. | Stock-Based Compensation, Continued:
|--- | ------------------------------------



At June 30, 2007, unrecognized compensation expense for non-vested Windstream restricted shares
was $29.6 million. The unrecognized compensation expense for these non-vested restricted shares has a remaining weighted average vesting period of 2.0 years. Stock-based compensation expense was $4.5 million and $8.3 million for the three and six
month periods ended June 30, 2007, respectively, as compared to $1.1 million and $2.1 million for the same periods of 2006. Expense recorded prior to the spin-off from Alltel was related to shares of Alltel common stock issued to the
Companys employees under Alltels stock compensation plans.



|13. | Supplemental Cash Flow Information:
|--- | -----------------------------------

During the
six months ended June 30, 2007, the Company declared and accrued $119.3 million in dividends payable to shareholders of record on June 29, 2007. These dividends were subsequently paid on July 16, 2007. The Company also recorded an
increase in the fair value of its interest rate swap agreements during the period, resulting in a non-cash decrease in other liabilities of $26.6 million.

During the six months ended June 30, 2006, Alltel transferred to the Company various assets and liabilities pursuant to the spin off, including $113.0 million in net plant assets, $200.4 million in pension assets
and $93.7 million in net deferred income tax assets, which were included in net property, plant and equipment, other assets and deferred income taxes, respectively, in the Companys unaudited consolidated balance sheet at June 30, 2006.



|14. | Business Segment Information:
|--- | -----------------------------

The Company
disaggregates its business operations based upon differences in products and services. The Companys wireline segment consists of Windstreams retail and wholesale telecommunications services, including voice service, long distance, data
and special access, switched access and Universal Service Funds and miscellaneous and other services in 16 states. The Company does not have separate segment managers overseeing its retail and wholesale telecommunications services. Therefore, in
assessing operating performance and allocating resources, the chief operating decision makers focus is at a level that consolidates the results of all services. In addition, incentive-based compensation for the wireline segment manager is
directly tied to the combined operating results of the Companys total wireline operations. Accordingly, the Company manages its wireline-based services as a single operating segment.

The product distribution segment consists of warehouse and logistics operations, and it procures and sells telecommunications infrastructure and
equipment to both affiliated and non-affiliated businesses. It operates four warehouses across the United States.

Other operations consist
of the Companys directory publishing and telecommunications information services. The Companys publishing subsidiary coordinates advertising, sales, printing, and distribution for 364 telephone directory contracts in 34 states. On
December 12, 2006, Windstream announced that it would split off its directory publishing business (see Note 16). Immediately after the consummation of the spin-off and merger with Valor, the telecommunications information services operations no
longer incurred revenues and expenses for providing data processing and outsourcing services as Valor was its sole external customer.

The
Company accounts for intercompany sales at current market prices. The evaluation of segment performance is based on segment income, which is computed as revenues and sales less operating expenses, excluding the effects of the restructuring and other
charges discussed in Note 9. In addition, non-operating items such as other income, net, intercompany interest income from Alltel, interest expense and income taxes have not been allocated to the segments.



16



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|14. | Business Segment Information, Continued:
|--- | ----------------------------------------



Segment operating results were as follows for the three and six month periods ended June 30:



(Millions)

Three Months Ended


Six Months Ended2007


2006


2007


2006Revenues and Sales from External Customers:Wireline

$
752.4


$
589.2


$
1,485.0


$
1,179.3Product distribution


33.0



36.6



63.8



70.4Other operations


41.3



49.5



61.6



78.1Total

$
826.7


$
675.3


$
1,610.4


$
1,327.8Intersegment Revenues and Sales:Wireline

$
28.5


$
37.7


$
46.3


$
70.5Product distribution


52.5



46.4



104.9



81.7Other operations


4.6



3.2



6.4



5.1Total

$
85.6


$
87.3


$
157.6


$
157.3Total Revenues and Sales:Wireline

$
780.9


$
626.9


$
1,531.3


$
1,249.8Product distribution


85.5



83.0



168.7



152.1Other operations


45.9



52.7



68.0



83.2Total business segments


912.3



762.6



1,768.0



1,485.1Less intercompany eliminations


(85.6
)


(31.3
)


(157.6
)


(50.8
)Total revenues and sales

$
826.7


$
731.3


$
1,610.4


$
1,434.3Segment Income:Wireline

$
289.4


$
181.6


$
566.6


$
356.9Product distribution


0.3



2.9



(0.5
)


4.1Other operations


4.7



5.7



2.7



5.6Total segment income


294.4



190.2



568.8



366.6Restructuring and other charges


(1.6
)


(5.0
)


(6.4
)


(7.5
)Other income, net


6.3







11.5



1.2Intercompany interest income from Alltel






18.0







31.9Interest expense


(108.1
)


(4.5
)


(222.8
)


(8.4
)Income before income taxes

$
191.0


$
198.7


$
351.1


$
383.8Segment assets were as follows: (Millions)







June 30,2007


December 31,2006Wireline









$
7,882.1


$
7,897.1Product distribution










49.2



53.8Other operations (a)










75.1



79.8Total consolidated assets









$
8,006.4


$
8,030.7


| | (a) | Other segment assets consist of directory publishing assets held for sale.
| | --- | --------------------------------------------------------------------------



17



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|14. | Business Segment Information, Continued:
|--- | ----------------------------------------



Supplemental information pertaining to other operations was as follows for the three and six month
periods ended June 30:



(Millions)

Three Months Ended

Six Months Ended2007

2006

2007

2006Revenues and Sales from External Customers:Directory publishing

$
41.3

$
45.4

$
61.6

$
70.0Telecommunications information services





4.1





8.1Total

$
41.3

$
49.5

$
61.6

$
78.1Intersegment Revenues and Sales:Directory publishing

$
4.6

$
3.2

$
6.4

$
5.1Total

$
4.6

$
3.2

$
6.4

$
5.1Total Revenues and Sales:Directory publishing

$
45.9

$
48.6

$
68.0

$
75.1Telecommunications information services





4.1





8.1Total revenues and sales

$
45.9

$
52.7

$
68.0

$
83.2




18



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NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|15. | Supplemental Guarantor Information:
|--- | -----------------------------------



In connection with the issuance of the 2013 Notes, the 2016 Notes and the 2019 Notes (the
guaranteed notes), certain of our wholly-owned subsidiaries (the Guarantors), including all former subsidiaries of Valor, provided guarantees of those debentures. These guarantees are full and unconditional as well as joint and
several. Certain Guarantors may be subject to restrictions on their ability to distribute earnings to the Company. The remaining subsidiaries (the Non-Guarantors) of Windstream are not guarantors of the guaranteed notes. In conjunction
with the merger with Valor, Windstream assumed $400.0 million principal value of unsecured notes (the Valor Notes) guaranteed by all of Valors operating subsidiaries. The terms of those notes were amended to reflect the non-Valor
Guarantors as guarantors of the Valor Notes.

The following information presents condensed consolidated statements of income for the three
and six months ended June 30, 2007 and 2006, condensed consolidated balance sheets as of June 30, 2007 and December 31, 2006, and condensed consolidated statements of cash flows for the six months ended June 30, 2007 and 2006 of
the parent company, the Guarantors, and the Non-Guarantors. Investments include investments in a non-consolidated affiliate as well as investments in net assets of subsidiaries held by the parent company and have been presented using the equity
method of accounting.



Condensed Consolidated Statement of Income (Unaudited) Three Months Ended June 30, 2007(Millions)

Parent


Guarantors


Non-Guarantors


Eliminations


ConsolidatedRevenues and sales:Service revenues

$



$
193.8


$
558.8


$
(20.4
)

$
732.2Product sales






121.8



13.6



(40.9
)


94.5Total revenues and sales






315.6



572.4



(61.3
)


826.7Costs and expenses:Cost of services






59.0



195.2



(1.2
)


253.0Cost of products sold






101.4



9.8



(60.1
)


51.1Selling, general, administrative and other


(0.4
)


31.8



69.9







101.3Depreciation and amortization






41.8



85.1







126.9Restructuring and other charges






1.6











1.6Total costs and expenses


(0.4
)


235.6



360.0



(61.3
)


533.9Operating income


0.4



80.0



212.4







292.8Earnings from consolidated subsidiaries


186.2



16.7



2.0



(204.9
)


Other income (expense), net


6.8



(0.5
)










6.3Intercompany interest income (expense)


(11.5
)


(8.4
)


19.9







Interest expense


(106.1
)


(1.6
)


(0.4
)






(108.1
)Income before income taxes


75.8



86.2



233.9



(204.9
)


191.0Income taxes (benefit)


(40.1
)


23.9



91.3







75.1Net income

$
115.9


$
62.3


$
142.6


$
(204.9
)

$
115.9




19



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|15. | Supplemental Guarantor Information, Continued:
|--- | ----------------------------------------------



Condensed Consolidated Statement of Income (Unaudited) Six Months Ended June 30, 2007(Millions)

Parent


Guarantors


Non-Guarantors


Eliminations


ConsolidatedRevenues and sales:Service revenues

$



$
386.7


$
1,091.7


$
(28.3
)

$
1,450.1Product sales






218.5



24.9



(83.1
)


160.3Total revenues and sales






605.2



1,116.6



(111.4
)


1,610.4Costs and expenses:Cost of services






110.8



379.9



(2.1
)


488.6Cost of products sold






185.7



20.2



(109.3
)


96.6Selling, general, administrative and other






63.6



140.8







204.4Depreciation and amortization






84.5



167.5







252.0Restructuring and other charges






4.3



2.1







6.4Total costs and expenses






448.9



710.5



(111.4
)


1,048.0Operating income






156.3



406.1







562.4Earnings from consolidated subsidiaries


363.8



26.3



(1.6
)


(388.5
)


Other income (expense), net


11.9



(0.3
)


(0.1
)






11.5Intercompany interest income (expense)


(23.0
)


(18.4
)


41.4







Interest expense


(218.9
)


(3.0
)


(0.9
)






(222.8
)Income before income taxes


133.8



160.9



444.9



(388.5
)


351.1Income taxes (benefit)


(82.0
)


46.7



170.6







135.3Net income

$
215.8


$
114.2


$
274.3


$
(388.5
)

$
215.8




20



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|15. | Supplemental Guarantor Information, Continued:
|--- | ----------------------------------------------



Condensed Consolidated Statement of Income (Unaudited)Three Months Ended June 30, 2006(Millions)

Parent

Guarantors


Non-Guarantors


Eliminations


ConsolidatedRevenues and sales:Service revenues

$


$
77.9


$
520.2


$
5.4


$
603.5Product sales





138.0



9.8



(20.0
)


127.8Total revenues and sales





215.9



530.0



(14.6
)


731.3Costs and expenses:Cost of services





25.2



157.9



10.2



193.3Cost of products sold





118.7



8.0



(24.6
)


102.1Selling, general, administrative and other





17.1



67.3







84.4Depreciation and amortization





16.2



82.7







98.9Royalty expense to Alltel





9.0



53.4







62.4Restructuring and other charges





6.9



(1.9
)






5.0Total costs and expense





193.1



367.4



(14.4
)


546.1Operating income





22.8



162.6



(0.2
)


185.2Earnings from consolidated subsidiaries

















Other income (expense), net





(0.2
)


0.2







Intercompany interest income from Alltel





1.3



16.7







18.0Interest expense





(1.9
)


(2.6
)






(4.5
)Income before income taxes





22.0



176.9



(0.2
)


198.7Income taxes





10.5



69.5







80.0Net income

$


$
11.5


$
107.4


$
(0.2
)

$
118.7




21



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|15. | Supplemental Guarantor Information, Continued:
|--- | ----------------------------------------------



Condensed Consolidated Statement of Income (Unaudited) Six Months Ended June 30, 2006(Millions)

Parent

Guarantors


Non-Guarantors


Eliminations


ConsolidatedRevenues and sales:Service revenues

$


$
156.7


$
1,058.7


$
(7.2
)

$
1,208.2Product sales





227.4



18.9



(20.2
)


226.1Total revenues and sales





384.1



1,077.6



(27.4
)


1,434.3Costs and expenses:Cost of services





48.6



338.8



(1.7
)


385.7Cost of products sold





197.1



14.8



(25.5
)


186.4Selling, general, administrative and other





35.8



128.7







164.5Depreciation and amortization





32.7



168.8







201.5Royalty expense to Alltel





18.3



111.3







129.6Restructuring and other charges





6.9



0.6







7.5Total costs and expense





339.4



763.0



(27.2
)


1,075.2Operating income





44.7



314.6



(0.2
)


359.1Earnings from consolidated subsidiaries

















Other income, net





0.4



0.8







1.2Intercompany interest income from Alltel





2.2



29.7







31.9Interest expense





(3.8
)


(4.6
)






(8.4
)Income before income taxes





43.5



340.5



(0.2
)


383.8Income taxes





16.0



136.3







152.3Net income

$


$
27.5


$
204.2


$
(0.2
)

$
231.5




22



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|15. | Supplemental Guarantor Information, Continued:
|--- | ----------------------------------------------



Condensed Consolidated Balance Sheet
(Unaudited) As of June 30, 2007(Millions)

Parent


Guarantors


Non-Guarantors


Eliminations


ConsolidatedAssetsCurrent Assets:Cash and short-term investments

$
466.2


$
1.5


$
16.1


$



$
483.8Accounts receivable (less allowance for doubtful accounts of $11.5)


0.6



99.6



210.9







311.1Inventories






29.8



14.5







44.3Prepaid expenses and other


1.4



4.1



28.8







34.3Assets held for sale






75.5











75.5Total current assets


468.2



210.5



270.3







949.0Investments


5,975.5



195.1



4.0



(6,174.6
)


Goodwill and other intangibles






1,539.9



1,501.5







3,041.4Net property, plant and equipment


7.6



1,169.4



2,716.7







3,893.7Other assets


37.2



9.2



75.9







122.3Total Assets

$
6,488.5


$
3,124.1


$
4,568.4


$
(6,174.6
)

$
8,006.4Liabilities and Shareholders EquityCurrent Liabilities:Current maturities of long-term debt

$
39.0


$
0.3


$
10.0


$



$
49.3Accounts payable


10.9



32.6



112.6







156.1Affiliates payable


443.7



976.0



(1,419.7
)






Advance payments and customer deposits






17.7



73.1







90.8Accrued dividends


119.3















119.3Accrued taxes


(45.1
)


38.3



59.5







52.7Accrued interest


140.9



1.7



0.6







143.2Other current liabilities


14.1



10.8



16.4







41.3Liabilities related to assets held for sale






29.2











29.2Total current liabilities


722.8



1,106.6



(1,147.5
)






681.9Long-term debt


5,279.9



100.0



59.6







5,439.5Deferred income taxes


(28.9
)


397.9



633.2







1,002.2Other liabilities


41.2



35.2



332.9







409.3Total liabilities


6,015.0



1,639.7



(121.8
)






7,532.9Commitments and Contingencies (See Note 8)Shareholders Equity:Common stock






(0.4
)


25.9



(25.5
)


Additional paid-in capital


562.7



1,152.8



2,626.8



(3,779.6
)


562.7Accumulated other comprehensive income (loss)


(136.5
)






(127.4
)


127.4



(136.5
)Retained earnings


47.3



332.0



2,164.9



(2,496.9
)


47.3Total shareholders equity


473.5



1,484.4



4,690.2



(6,174.6
)


473.5Total Liabilities and Shareholders Equity

$
6,488.5


$
3,124.1


$
4,568.4


$
(6,174.6
)

$
8,006.4




23



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|15. | Supplemental Guarantor Information, Continued:
|--- | ----------------------------------------------



Condensed Consolidated Balance Sheet
(Unaudited) As of December 31, 2006(Millions)

Parent


Guarantors


Non-Guarantors


Eliminations


ConsolidatedAssetsCurrent Assets:Cash and short-term investments

$
362.4


$
0.6


$
23.8


$



$
386.8Accounts receivable (less allowance for doubtful accounts of $10.4)


0.9



110.0



226.3







337.2Inventories






28.7



14.8







43.5Prepaid expenses and other


10.0



3.1



16.1







29.2Assets held for sale






80.0











80.0Total current assets


373.3



222.4



281.0







876.7Investments


5,779.4



57.9



5.6



(5,842.9
)


Goodwill and other intangibles






1,560.6



1,504.8







3,065.4Net property, plant and equipment


7.6



1,201.3



2,730.9







3,939.8Other assets


43.8



11.3



93.7







148.8Total Assets

$
6,204.1


$
3,053.5


$
4,616.0


$
(5,842.9
)

$
8,030.7Liabilities and Shareholders EquityCurrent Liabilities:Current maturities of long-term debt

$
22.0


$
0.2


$
10.0


$



$
32.2Accounts payable


10.6



35.9



123.0







169.5Affiliates payable


167.9



1,025.6



(1,193.5
)






Advance payments and customer deposits






14.5



68.3







82.8Accrued dividends


119.2















119.2Accrued taxes


(84.3
)


56.6



59.6







31.9Accrued interest


145.8



1.7



0.7







148.2Other current liabilities


13.6



16.3



38.5







68.4Liabilities related to assets held for sale






32.4











32.4Total current liabilities


394.8



1,183.2



(893.4
)






684.6Long-term debt


5,296.5



100.1



59.6







5,456.2Deferred income taxes


(20.2
)


388.8



622.2







990.8Other liabilities


63.2



37.3



328.8







429.3Total liabilities


5,734.3



1,709.4



117.2







7,560.9Commitments and Contingencies (See Note 8)Shareholders Equity:Common stock






(0.4
)


25.9



(25.5
)


Additional paid-in capital


550.5



1,153.0



2,626.6



(3,779.6
)


550.5Accumulated other comprehensive income (loss)


(150.8
)






(127.2
)


127.2



(150.8
)Retained earnings


70.1



191.5



1,973.5



(2,165.0
)


70.1Total shareholders equity


469.8



1,344.1



4,498.8



(5,842.9
)


469.8Total Liabilities and Shareholders Equity

$
6,204.1


$
3,053.5


$
4,616.0


$
(5,842.9
)

$
8,030.7




24



---

##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|15. | Supplemental Guarantor Information, Continued:
|--- | ----------------------------------------------



Condensed Consolidated Statement of Cash Flows
(Unaudited) Six Months Ended June 30, 2007(Millions)

Parent


Guarantors


Non-Guarantors


Eliminations


ConsolidatedCash Provided from Operations:Net income

$
215.8


$
114.2


$
274.3


$
(388.5
)

$
215.8Adjustments to reconcile net income to net cash provided from operations:Depreciation and amortization






84.5



167.5







252.0Provision for doubtful accounts






3.2



8.0







11.2Stock-based compensation expense






0.7



7.6







8.3Pension and postretirement benefits expense


0.1



3.1



15.9







19.1Equity in earnings (losses) from subsidiaries


(363.8
)


(26.3
)


1.6



388.5



Other, net


(13.2
)


10.5



10.0







7.3Changes in operating assets and liabilities, net:


405.1



(131.0
)


(274.3
)






(0.2
)Net cash provided from operations


244.0



58.9



210.6







513.5Cash Flows from Investing Activities:Additions to property, plant and equipment






(41.4
)


(136.6
)






(178.0
)Other, net










1.2







1.2Net cash used in investing activities






(41.4
)


(135.4
)






(176.8
)Cash Flows from Financing Activities:Dividends paid on common shares


(238.5
)














(238.5
)Dividends from subsidiaries


99.0



(16.1
)


(82.9
)






Repayments of borrowings


(500.0
)


(0.1
)










(500.1
)Debt issued, net of issuance costs


499.3



(0.4
)










498.9Net cash used in financing activities


(140.2
)


(16.6
)


(82.9
)






(239.7
)Increase (decrease) in cash and short-term investments


103.8



0.9



(7.7
)






97.0Cash and Short-term Investments:Beginning of the period


362.4



0.6



23.8







386.8End of the period

$
466.2


$
1.5


$
16.1


$



$
483.8




25



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|15. | Supplemental Guarantor Information, Continued:
|--- | ----------------------------------------------



Condensed Consolidated Statement of Cash Flows
(Unaudited) Six Months Ended June 30, 2006(Millions)

Parent

Guarantors


Non-Guarantors


Eliminations


ConsolidatedCash Provided from Operations:Net income

$


$
27.5


$
204.2


$
(0.2
)

$
231.5Adjustments to reconcile net income to net cash provided from operations:Depreciation and amortization





32.7



168.8







201.5Provision for doubtful accounts





10.2



0.1







10.3Stock-based compensation expense









2.1







2.1Pension and postretirement benefits expense





2.9



16.6







19.5Other, net





(10.3
)


16.7







6.4Changes in operating assets and liabilities, net:





(6.4
)


59.6







53.2Net cash provided from operations





56.6



468.1



(0.2
)


524.5Cash Flows from Investing Activities:Additions to property, plant and equipment





(19.5
)


(135.9
)






(155.4
)Other, net





3.5



16.4







19.9Net cash used in investing activities





(16.0
)


(119.5
)






(135.5
)Cash Flows from Financing Activities:Dividends paid to Alltel prior to spin-off





(276.3
)


(379.5
)


557.0



(98.8
)Repayments of borrowings





(0.1
)










(0.1
)Changes in advances to Alltel prior to spin-off





234.4



30.4



(556.8
)


(292.0
)Net cash used in financing activities





(42.0
)


(349.1
)


0.2



(390.9
)Decrease in cash and short-term investments





(1.4
)


(0.5
)






(1.9
)Cash and Short-term Investments:Beginning of the period





7.1



4.8







11.9End of the period

$


$
5.7


$
4.3


$



$
10.0




|16. | Pending Transactions:
|--- | ---------------------

On May 29, 2007 the
Company announced that it entered into a definitive agreement to acquire all of the outstanding shares of CT Communications, Inc. (CTC) for $31.50 per share in cash. Including the assumption of cash and debt, the transaction is valued at
approximately $585.0 million. The acquisition is expected to close in the third quarter of 2007, subject to certain conditions, including necessary approvals from federal and state regulators and CTC shareholders. On July 10, 2007 the Federal
Trade Commission granted early termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Hart-Scott-Rodino Act). Additionally, Windstream has confirmed with the public service commissions
in each state in which CTC operates that further state approvals will not be required. The closing of the transaction is still contingent upon the approvals of the Federal Communications Commission and the vote of CTC shareholders, which is
scheduled for August 23, 2007.

On December 12, 2006, Windstream announced that it would split off its directory publishing
business (the Publishing Business) in what Windstream expects to be a tax-free transaction with entities affiliated with Welsh, Carson, Anderson & Stowe (WCAS), a private equity investment firm and Windstream
shareholder.

Prior to completing the transaction, Windstream will contribute the Publishing Business to a newly formed subsidiary
(Holdings). Holdings will then pay a special dividend to Windstream in an amount equal to Windstream's tax basis in the Publishing Business (currently estimated to be approximately $45.0 million), issue additional shares of Holdings
common stock to Windstream, and distribute to Windstream certain debt securities of Holdings having an aggregate principal amount of approximately $250.0 million less the amount of the special dividend. Windstream expects to exchange the Holdings
debt securities for outstanding Windstream debt with an equivalent fair market value and then retire that Windstream debt. Windstream also intends to use the proceeds of the special dividend to retire Windstream debt or repurchase Windstream



26



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##### Table of Contents

NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS-(Continued)

_____



|16. | Pending Transactions, Continued:
|--- | --------------------------------



equity. Following the completion of these transactions, Windstream will exchange all of the
outstanding equity of Holdings (the Holdings Shares) for an aggregate of 19,574,422 shares of Windstream common stock (the Exchanged WIN Shares), which will then be retired. Based on the trailing average of Windstream common
stock at July 31, 2007 of $13.94, the Exchanged WIN Shares have a value of approximately $275.0 million, and the expected total value of the transaction will be approximately $525.0 million.

The transaction is subject to customary conditions, including (i) expiration of the required waiting period under the Hart-Scott-Rodino Act,
(ii) the parties having received certain private letter rulings from the Internal Revenue Service (IRS) with respect to the tax treatment of the transactions, (iii) the receipt of customary solvency and surplus opinions by the
Boards of Directors of Windstream and Holdings, and (iv) the contribution of the Publishing Business to Holdings and the exchange of Holdings debt for outstanding Windstream debt. The Company has since satisfied the requirements of the
Hart-Scott-Rodino Act. The final closing of the transaction is conditioned on the absence of any injunction and certain terms of the Companys debt instruments, but the terms of the transaction require it to be completed by December 31,
2008. This transaction is expected to be completed in the third or fourth quarter of 2007.

The Share Exchange Agreement provides for a
customary working capital adjustment pursuant to which the parties will make cash payments to each other to the extent that the working capital of the Publishing Business is less than or greater than a specified target working capital amount at the
time of closing. The Share Exchange Agreement contains customary representations, warranties and covenants and may be terminated if, among other things, the closing of the transaction has not been completed within twelve months or the IRS private
letter rulings are not received. The parties have also agreed to customary indemnification for breaches of representations, warranties, covenants and other matters.

In connection with the consummation of the transaction, the parties and their affiliates will enter into certain related ancillary agreements, including a Publishing Agreement, a Billing and Collection Agreement and a
Tax Sharing Agreement. Pursuant to the Publishing Agreement, Windstream will grant Windstream Yellow Pages, Inc. (Windstream Yellow Pages), the Windstream subsidiary that currently operates the Publishing Business, an exclusive license
to publish Windstream directories. Windstream Yellow Pages will, at no charge to Windstream or its affiliates or subscribers, publish directories with respect to each Windstream service area in which Windstream or its affiliates are required to
publish such directories by applicable law, tariff or contract. Subject to the termination provisions in the agreement, the Publishing Agreement will remain in effect for a term of fifty years. As part of this agreement, Windstream agreed to forego
future royalty payments from Windstream Yellow Pages on advertising revenues generated from its directories for the duration of the Publishing Agreement. In conjunction with the Publishing Agreement, the Company has entered into an at-market
executory contract to purchase minimum advertising in its directories for a period of three years, with a renewal option for two additional years available to WCAS. Due to the significant continuing involvement that Windstream will retain in the
publishing business, as evidenced by these agreements and its obligation to provide telephone listings, publishing results are reflected in income from continuing operations in the accompanying unaudited consolidated statements on income.

The following table summarizes the net assets of the directory publishing operations that are classified as held for sale in the
accompanying consolidated balance sheets:



(Millions)

June 30,2007

December 31,2006Current assets

$
67.0

$
71.5Net property, plant and equipment


8.5


8.5Assets held for sale

$
75.5

$
80.0Current liabilities

$
25.1

$
26.5Deferred income taxes


3.8


5.5Other liabilities


0.3


0.4Liabilities related to assets held for sale

$
29.2

$
32.4




27



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##### Table of Contents

WINDSTREAM CORPORATION

FORM 10-Q

PART IFINANCIAL INFORMATION

Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Basis
of Presentation

The following is a discussion and analysis of the historical results of operations and financial condition of Windstream Corporation
(Windstream, we, or the Company). This discussion should be read in conjunction with the unaudited consolidated financial statements, including the notes thereto, for the interim periods ended June 30, 2007
and 2006 and Windstreams Annual report on Form 10-K for the year ended December 31, 2006 filed with the SEC on March 1, 2007.

The Company
is organized based on the products and services that it offers. Under this organizational structure, its operations consist of its wireline and product distribution segments, and other operations. The Companys wireline segment consists of its
retail and wholesale telecommunications services, including local, long distance, network access, video services, broadband and high-speed data services. The product distribution segment consists of warehouse and logistics operations, and it
procures and sells telecommunications infrastructure and equipment to both affiliated and non-affiliated businesses. The Companys other operations include the Companys directory publishing and telecommunications information services
operations. After the merger with Valor Communications Group, Inc. (Valor), telecommunications information services are no longer offered as Valor was the only external customer. As discussed in detail below, the Company has announced
that it will split off the directory publishing business in the third quarter of 2007.

The management of the Company believes that the assumptions
underlying its financial statements are reasonable. However, the Companys financial statements included herein may not necessarily reflect its results of operations, financial position and cash flows in the future or what its results of
operations, financial position and cash flows would have been had it been a separate, stand-alone company during the periods prior to the spin-off from Alltel Corporation (Alltel).

EXECUTIVE SUMMARY

Windstream is a customer-focused
telecommunications company that provides local telephone, long distance, network access, video services, broadband and high-speed data services to approximately 3.2 million residential and business customers primarily located in rural areas in
16 states. Among the highlights in the second quarter of 2007:



| |  | The Company added approximately 37,000 net broadband customers, increasing its broadband customer base to over 752,000. During the quarter, the Company lost
approximately 35,000 access lines or approximately 1 percent of its total access lines at the beginning of the quarter.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Revenues and sales increased $95.4 million as compared to the second quarter of 2006, due primarily to the acquisition of Valor. The acquisition of Valor accounted
for an increase in revenues and sales of $123.7 million. An offsetting decrease in revenues and sales of $28.3 million was primarily due to the increase in intercompany eliminations from the discontinuance of the application of Statement of
Financial Accounting Standards (SFAS) No. 71, Accounting for the Effects of Certain Types of Regulation.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Operating income increased $107.6 million from a year ago, primarily reflecting the acquisition of Valor, and the termination of a licensing agreement with Alltel
as of June 30, 2006.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company paid $119.3 million in dividends to shareholders, and finished the quarter with $483.8 million in cash and short-term investments.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  | The Company incurred $108.1 million in interest expense in the second quarter of 2007 primarily due to the debt issued and assumed in conjunction with the spin-off
from Alltel and merger with Valor.
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During the remainder of 2007, the Company will continue to face significant challenges resulting from
competition in the telecommunications industry and changes in the regulatory environment, including the effects of potential changes to the rules governing universal service and inter-carrier compensation. In addressing competition, the Company will
continue to focus its efforts on improving customer service, increasing broadband penetration and expanding its service offerings.



28



---

##### Table of Contents

Pending Transactions

On May 29, 2007 the Company announced that it has entered into a definitive agreement to acquire all of the outstanding shares of CT Communications, Inc. (CTC) for $31.50 per share in cash. Including the assumption of cash
and debt, the transaction is valued at approximately $585.0 million. The acquisition is expected to close in the third quarter of 2007, subject to certain conditions, including necessary approvals from federal and state regulators and CTC
shareholders. On July 10, 2007 the Federal Trade Commission granted early termination of the required waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Additionally, Windstream has confirmed with the public service
commissions in each state in which CTC operates that further state approvals will not be required. The closing of the transaction is still contingent upon the approvals of the Federal Communications Commission (FCC) and the vote of CTC
shareholders, which is scheduled for August 23, 2007.

Windstream intends to finance the acquisition primarily with existing cash and additional
borrowings available under its $500.0 million revolving line of credit. Net of approximately $4.0 million in letters of credit, the Company has approximately $496.0 million in remaining capacity under this credit facility. Upon completion of the
transaction, Windstream will add approximately 155,000 access lines, 30,000 broadband customers and 50,000 wireless customers in North Carolina, which are adjacent to existing operations, increasing the number of access lines to approximately
3.4 million and the number of broadband customers to approximately 785,000. Once complete, the transaction will increase Windstreams position in these rural markets where it can leverage the Companys brand and marketing experience
and bring significant value to customers by offering competitive bundled services. CTC has broadband availability to 95 percent of its incumbent local exchange carrier (ILEC) lines, 75 percent of which can offer up to 10Mb speeds.

As discussed in Note 16 in the accompanying notes to the unaudited interim financial statements, the Company has entered into an agreement to split off
its directory publishing business to Welsh, Carson, Anderson & Stowe (WCAS) in a transaction currently valued at approximately $525.0 million. As a result of the transaction, the Company will retire approximately
19.6 million shares of its common stock currently held by WCAS, and will retire up to $250.0 million of debt obligations. In return for this consideration, the Company will forego its royalty fee on directories published by WCAS in its service
territories for a period of 50 years (the Publishing Agreement). The portion of the gain recognized on the sale of the publishing business attributable to the Companys ongoing obligation stipulated by the Publishing Agreement will
be deferred over the term of the agreement. This transaction is expected to be completed in the third quarter of 2007.

Adoption of Accounting Standards

Windstream adopted Financial Accounting Standards Board Interpretation No. 48 (FIN 48), Accounting for Uncertainty in Income
Taxes on January 1, 2007. The adoption of FIN 48 resulted in no impact to either the Companys reserves for uncertain tax positions or to retained earnings. At the adoption date, and as of June 30, 2007, the Company had
approximately $1.3 million of gross unrecognized tax benefits, all of which relate to periods preceding the spin-off from Alltel, and all of which would impact its effective tax rate if recognized.

The Company is indemnified for these reserves for uncertain tax positions in accordance with the Tax Sharing Agreement with Alltel dated July 17, 2006;
consequently, a corresponding receivable from Alltel equaling the gross unrecognized tax benefits plus accrued interest expense has been recognized.

Interest and penalties related to uncertain tax positions are recognized in income tax expense. As of June 30, 2007, the Company had accrued approximately $0.2 million of interest expense and penalties related to uncertain tax
positions. For the six months ended June 30, 2007, interest expense recognized related to these uncertain positions was not significant.

The tax
years 2003  2006 remain open to examination by the major taxing jurisdictions to which the Company is subject. The Company has identified its federal tax return and state tax returns in Arkansas, Florida, Georgia, Kentucky, Nebraska, North
Carolina, and Texas as major taxing jurisdictions.

The Company does not reasonably estimate that the unrecognized tax benefits will change
significantly within the next twelve months.



29



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##### Table of Contents

CONSOLIDATED RESULTS OF OPERATIONS

|                                           |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|------------------------------------------ |  | -------------------------- | ------ | - | ------------------------ | - | ----- | ---- |  | - | ------- | - |  | - | ------- | -
|                                           |  | Three Months EndedJune 30, |        |   | Six Months EndedJune 30, |  
|(Millions, except per share amounts)       |  | 2007                       |        |   | 2006                     |   |       | 2007 |  |   | 2006    |  
|Revenues and sales:                        |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Service revenues                           |  | $                          | 732.2  |   |                          | $ | 603.5 |      |  | $ | 1,450.1 |   |  | $ | 1,208.2 |  
|Product sales                              |  |                            | 94.5   |   |                          |   | 127.8 |      |  |   | 160.3   |   |  |   | 226.1   |  
|                                           |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Total revenues and sales                   |  |                            | 826.7  |   |                          |   | 731.3 |      |  |   | 1,610.4 |   |  |   | 1,434.3 |  
|                                           |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Costs and expenses:                        |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Cost of services                           |  |                            | 253.0  |   |                          |   | 193.3 |      |  |   | 488.6   |   |  |   | 385.7   |  
|Cost of products sold                      |  |                            | 51.1   |   |                          |   | 102.1 |      |  |   | 96.6    |   |  |   | 186.4   |  
|Selling, general, administrative and other |  |                            | 101.3  |   |                          |   | 84.4  |      |  |   | 204.4   |   |  |   | 164.5   |  
|Depreciation and amortization              |  |                            | 126.9  |   |                          |   | 98.9  |      |  |   | 252.0   |   |  |   | 201.5   |  
|Royalty expense to Alltel                  |  |                            |       |   |                          |   | 62.4  |      |  |   |        |   |  |   | 129.6   |  
|Restructuring and other charges            |  |                            | 1.6    |   |                          |   | 5.0   |      |  |   | 6.4     |   |  |   | 7.5     |  
|                                           |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Total costs and expenses                   |  |                            | 533.9  |   |                          |   | 546.1 |      |  |   | 1,048.0 |   |  |   | 1,075.2 |  
|                                           |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Operating income                           |  |                            | 292.8  |   |                          |   | 185.2 |      |  |   | 562.4   |   |  |   | 359.1   |  
|Other income, net                          |  |                            | 6.3    |   |                          |   |      |      |  |   | 11.5    |   |  |   | 1.2     |  
|Intercompany interest income from Alltel   |  |                            |       |   |                          |   | 18.0  |      |  |   |        |   |  |   | 31.9    |  
|Interest expense                           |  |                            | (108.1 | ) |                          |   | (4.5  | )    |  |   | (222.8  | ) |  |   | (8.4    | )
|                                           |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Income before income taxes                 |  |                            | 191.0  |   |                          |   | 198.7 |      |  |   | 351.1   |   |  |   | 383.8   |  
|Income taxes                               |  |                            | 75.1   |   |                          |   | 80.0  |      |  |   | 135.3   |   |  |   | 152.3   |  
|                                           |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Net income                                 |  | $                          | 115.9  |   |                          | $ | 118.7 |      |  | $ | 215.8   |   |  | $ | 231.5   |  
|Earnings per share:                        |  |                            |        |   |                          |   |       |      |  |   |         |   |  |   |         |  
|Basic                                      |  |                            | $.24   |   |                          |   | $.29  |      |  |   | $.46    |   |  |   | $.57    |  
|Diluted                                    |  |                            | $.24   |   |                          |   | $.29  |      |  |   | $.45    |   |  |   | $.57    |  

Total revenues and sales increased $95.4 million, or 13 percent, and $176.1 million, or 12 percent, in the three
and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. Service revenues, which include voice service, long distance, data and special access, switched access and Universal Service Funds
(USF) and miscellaneous and other revenues, increased year-over-year by $128.7 million, or 21 percent, and $241.9 million, or 20 percent, during these periods, respectively. The acquisition of Valor accounted for $123.7 million and
$247.3 million of the year-over-year increases in total revenues and sales for the three and six months ended June 30, 2007, respectively. Additionally, revenues attributable to long distance and data and special access increased $24.0 million
and $46.5 million during these periods, respectively, as compared to the same periods in 2006. These increases reflect increases in long distance customer billing rates during the fourth quarter of 2006 and the significant net increase in broadband
customers during the twelve months ended June 30, 2007. Partially offsetting these year-over-year increases in service revenues are declines of $15.8 million and $22.8 million in the three and six months ended June 30, 2007, respectively,
due to increases in eliminations of intercompany service revenues. This is due primarily to the discontinued application of SFAS No. 71 as previously discussed. In addition, compared to the same periods a year ago, voice revenues and switched
access and USF revenues decreased $7.2 million and $34.2 million, in the three and six month periods ended June 30, 2007, respectively, primarily as a result of the loss of wireline access lines due to fixed-line competition and wireless
substitution. Partially offsetting this year over year decrease for the three months ended June 30, 2007, the Company entered into a settlement agreement during the period with another carrier to resolve historical traffic disputes resulting in
an increase in switched access revenues of $13.3 million.

Product sales decreased $33.3 million, or 26 percent, and $65.8 million, or 29 percent, for the
three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. Prior to the discontinuance of SFAS No. 71, the Company did not eliminate product sales to affiliates of $32.2 million and $60.7
million during the three and six month periods ended June 30, 2006, respectively. Partially offsetting these decreases, year-over-year increases in product sales of $3.3 million and $4.8 million, respectively, were due to increases in sales of
customer premise equipment and broadband modems to retail customers.

Cost of services, which represents the cost of providing service, as well as business
taxes and bad debt expense, increased $59.7 million, or 31 percent, and $102.9 million, or 27 percent, for the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The acquisition of Valor
accounted for $36.8 million and $69.0 million of the year-over-year increases in cost of services in the three and six month periods ended June 30, 2007,



30



---

##### Table of Contents

respectively. Additional increases of $12.5 million and $26.8 million, respectively, were due to an increase in
interconnection expenses driven by an increase in the volume of long distance and Internet traffic. The remaining increases were due primarily to year-over-year increases in business taxes and USF fees of $7.5 million and $5.4 million during the
three and six month periods ended June 30, 2007, respectively, primarily due to increases in the contribution factors used to determine the Companys USF obligations, and increases in USF contributions related to increases in long distance
revenues.

Cost of products sold decreased $51.0 million, or 50 percent, and $89.8 million, or 48 percent, in the three and six month periods ended
June 30, 2007, respectively, as compared to the same periods of 2006. The decrease was consistent with the decline in product sales as discussed above, and was due primarily to an increase in intercompany eliminations of $48.5 million and $86.0
million during the three and six month periods ended June 30, 2006, respectively, caused by the discontinuance of the application of SFAS No. 71.

Selling, general, administrative and other expenses increased $16.9 million, or 20 percent, and $39.9 million, or 24 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of
2006. The acquisition of Valor accounted for $9.9 million and $18.7 million of these increases, respectively. A portion of the remaining increases were due to increases in advertising of $3.2 million and $8.2 million in the three and six month
periods ended June 30, 2007, respectively, related to aggressive marketing around Windstreams new brand. The remaining increases were caused by a shift from allocated corporate costs from Alltel in 2006 prior to the spin-off to the
Companys stand-alone corporate cost structure in 2007.

Depreciation and amortization expense increased $28.0 million, or 28 percent, and $50.5
million, or 25 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The acquisition of Valor accounted for $30.6 million and $60.9 million of these increases, respectively.
Partially offsetting these increases were declines primarily resulting from a reduction in depreciation rates for certain of the Companys wireline operations, reflecting the results of studies of depreciable lives completed during 2007 and
2006 as further discussed below in Results of Operations by Business Segment.

Royalty expense to Alltel decreased $62.4 million, or 100
percent, and $129.6 million, or 100 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. Historically, certain of the Companys wireline subsidiaries incurred a royalty
charge from Alltel for the use of the Alltel brand name in marketing and distributing telecommunications products and services pursuant to a licensing agreement with an Alltel affiliate. The Company terminated this licensing agreement with Alltel on
June 30, 2006 as the Alltel brand name is no longer used.

Operating income increased $107.6 million, or 58 percent, and $203.3 million, or 57
percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The acquisition of Valor accounted for $45.5 million and $97.6 million of these increases, respectively. The remaining
increases in operating income primarily reflect the decrease in royalty expense due to the termination of the licensing agreement with Alltel and the decrease in depreciation expense resulting from depreciation studies completed during 2007 and
2006, partially offset by the decline in wireline service operating margins resulting from the loss of access lines.

Restructuring and Other Charges

The following is a summary of the restructuring and other charges recorded during the six month period ended June 30, 2007:



|                                                        |  |          |     |                     |   |                 |  |       |     |  |   |    
|------------------------------------------------------- |  | -------- | --- | ------------------- | - | --------------- |  | ----- | --- |  | - | ---
|(Millions)                                              |  | Wireline |     | ProductDistribution |   | OtherOperations |  | Total
|Severance and employee benefit costs                    |  | $        | 3.1 |                     | $ | 0.1             |  | $     |    |  | $ | 3.2
|Costs associated with split off of directory publishing |  |          |    |                     |   |                |  |       | 3.2 |  |   | 3.2
|                                                        |  |          |     |                     |   |                 |  |       |     |  |   |    
|Total restructuring and other charges                   |  | $        | 3.1 |                     | $ | 0.1             |  | $     | 3.2 |  | $ | 6.4

During the six months ended June 30, 2007, the Company incurred $3.2 million in accounting and legal fees and
other expenses related to the anticipated sale of its directory publishing business (see Note 16). Of the total expenses incurred relating to the spin-off transaction, $1.6 million were recorded in the second quarter of 2007. The company also
incurred $3.2 million in severance and employee related costs during the first quarter of 2007, primarily related to the continuation of a workforce reduction plan initiated during the fourth quarter of 2006 and concluded in the first quarter of
2007.



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During the six months ended June 30, 2006, in connection with the spin-off from Alltel and merger with Valor, the
Company incurred $7.5 million of incremental costs, primarily consisting of consulting and legal fees associated with the wireline segment. Of the total expenses incurred relating to the spin-off transaction, $5.0 million were recorded in the second
quarter of 2006.

In the Companys accompanying unaudited interim consolidated balance sheet at June 30, 2007, other current liabilities include
a portion of this unpaid restructuring liability totaling $5.8 million, which consists of $2.9 million in severance and employee-related expenses related to the realignment of its operational functions, $2.8 million related to lease obligations on a
vacated Valor facility, and $0.1 million of costs related to the spin-off from Alltel. The remaining unpaid restructuring liability of $9.8 million, which relates to fees resulting from the split off of the publishing business, is included in
liabilities related to assets held for sale in the unaudited interim consolidated balance sheet at June 30, 2007. Cash outlays for the Valor lease obligations will be disbursed from operating cash flows over the remaining term of the lease
through 2010. The remaining unpaid liability will be disbursed over the remainder of 2007 and will be funded from operating cash flows. (See Note 9 to the unaudited consolidated financial statements for additional information regarding the
restructuring and other charges.)

Other Income, Net

|                                                   |  |                            |      |                          |      |   |      |  |      |      |  |   |    
|-------------------------------------------------- |  | -------------------------- | ---- | ------------------------ | ---- | - | ---- |  | ---- | ---- |  | - | ---
|                                                   |  | Three Months EndedJune 30, |      | Six Months EndedJune 30,
|(Millions)                                         |  | 2007                       |      |                          | 2006 |   | 2007 |  | 2006
|Interest income on cash and short-term investments |  | $                          | 4.0  |                          |      | $ |     |  | $    | 8.3  |  | $ |   
|Mark-to-market of interest rate swap agreement     |  |                            | 2.5  |                          |      |   |     |  |      | 2.9  |  |   |   
|Other income (expense), net                        |  |                            | (0.2 | )                        |      |   |     |  |      | 0.3  |  |   | 1.2
|                                                   |  |                            |      |                          |      |   |      |  |      |      |  |   |    
|Other income, net                                  |  | $                          | 6.3  |                          |      | $ |     |  | $    | 11.5 |  | $ | 1.2

Other income, net increased $6.3 million and $10.3 million in the three and six months ended June 30, 2007,
respectively, as compared to the same periods of 2006, primarily due to interest income earned on cash and short-term investments. Cash and short-term investments totaled $483.8 million in the Companys accompanying unaudited interim
consolidated balance sheet at June 30, 2007. Prior to the spin-off in 2006, excess cash was invested with Alltel pursuant to an intercompany cash management agreement through which interest was earned on invested funds at rates averaging 4.99
percent during the six months ended June 30, 2006. This interest income was included in intercompany interest income from Alltel in the accompanying unaudited consolidated statement of income for the six months ended June 30, 2006. The
increases in other income, net were also due in part to increases in market value of a portion of an interest rate swap agreement that the Company deemed ineffective during the first quarter of 2007, as discussed further in Item 3. Quantitative
and Qualitative Disclosures About Market Risk  Interest Rate Risk. Pursuant to the guidance in SFAS No. 133, Derivative Financial Instruments, as amended, changes in the market value of the ineffective portion of this interest
rate swap are included in net income. The market value calculation of this interest rate swap is based on estimates of forward variable interest rates, and changes in estimated forward rates could result in significant non-cash increases or
decreases in other income, net in future periods.

Intercompany Interest Income from Alltel

Prior to the spin-off from Alltel, the Company participated in a centralized cash management program with Alltel. As discussed above, the Company earned interest on
amounts remitted to Alltel at a rate based on current market rates for short-term investments. Intercompany interest income from Alltel decreased $18.0 million and $31.9 million in the three and six month periods ended June 30, 2007,
respectively, as compared to the same periods of 2006 due to the cancellation of participation in the cash management program following the spin-off from Alltel and the subsequent settlement of intercompany balances with Alltel.

Interest Expense

Interest expense increased $103.6 million and
$214.4 million in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods in 2006, due primarily to the debt issued in the third quarter of 2006 to finance the spin-off and merger transactions.
Additionally, the Company incurred $5.3 million in non-cash interest expense in the first quarter of 2007, due to the write-off of previously capitalized debt issue costs. These debt issue costs were associated with $500.0 million of a term loan
under the Companys senior secured credit facilities that was paid down pursuant to a refinancing transaction during the first quarter of 2007 (see Note 6). The weighted-average interest rate paid on the Companys long-term debt for the
six month period ended June 30, 2007 was 7.7 percent.



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Income Taxes

Income
tax expense decreased $4.9 million, or 6 percent, and $17.0 million, or 11 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The changes in income tax expense were generally
consistent with the decrease in the Companys income before income taxes. Additionally, the Companys effective income tax rate decreased to 39.3 percent and 38.5 percent in the three and six months ended June 30, 2007, as compared to
40.3 percent and 39.7 percent in the corresponding periods of 2006, primarily due to the impact of favorable discrete items recorded within the first half of 2007. Included in discrete items in the first quarter of 2007 was a $3.5 million favorable
adjustment to deferred income taxes due to a reduction of the Kentucky state income tax rate from 7 percent to 6 percent on January 1, 2007. For 2007, the Companys annual effective income tax rate is expected to range between 39.0 and
40.0 percent. In determining its quarterly provision for income taxes, the Company uses an estimated annual effective tax rate, which is based on its expected annual income, statutory rates and tax planning opportunities. Significant or unusual
items are separately recognized in the quarter in which they occur.

Weighted Average Common Shares Outstanding

The increase in weighted average common shares outstanding in the six month period ended June 30, 2007, as compared to the same period of 2006, primarily reflects
the additional 70.9 million common shares assumed through the merger with Valor on July 17, 2006. Common shares in historical periods totaled 402.9 million and represented the shares issued to Alltel shareholders pursuant to the
spin-off of the Alltel wireline division.

RESULTS OF OPERATIONS BY BUSINESS SEGMENT

Wireline Operations



|                                                    |  |                            |         |                           |   |         |  |      |         |  |   |        
|--------------------------------------------------- |  | -------------------------- | ------- | ------------------------- | - | ------- |  | ---- | ------- |  | - | -------
|                                                    |  | Three Months EndedJune 30, |         | Six Months Ended June 30,
|(Millions, access lines and customers in thousands) |  | 2007                       |         | 2006                      |   | 2007    |  | 2006
|Revenues and sales:                                 |  |                            |         |                           |   |         |  |      |         |  |   |        
|Voice service                                       |  | $                          | 314.4   |                           | $ | 282.4   |  | $    | 631.0   |  | $ | 572.1  
|Long distance                                       |  |                            | 63.8    |                           |   | 45.3    |  |      | 125.8   |  |   | 89.3   
|Data and special access                             |  |                            | 168.9   |                           |   | 132.1   |  |      | 331.7   |  |   | 260.8  
|Switched access and USF                             |  |                            | 156.3   |                           |   | 109.6   |  |      | 299.0   |  |   | 219.0  
|Miscellaneous                                       |  |                            | 42.8    |                           |   | 31.1    |  |      | 87.2    |  |   | 62.0   
|Directory publishing rights                         |  |                            | 19.1    |                           |   | 16.1    |  |      | 28.1    |  |   | 26.7   
|Product sales                                       |  |                            | 15.6    |                           |   | 10.3    |  |      | 28.5    |  |   | 19.9   
|                                                    |  |                            |         |                           |   |         |  |      |         |  |   |        
|Total revenues and sales                            |  |                            | 780.9   |                           |   | 626.9   |  |      | 1,531.3 |  |   | 1,249.8
|                                                    |  |                            |         |                           |   |         |  |      |         |  |   |        
|Costs and expenses:                                 |  |                            |         |                           |   |         |  |      |         |  |   |        
|Cost of services                                    |  |                            | 264.4   |                           |   | 200.7   |  |      | 511.3   |  |   | 402.5  
|Cost of products sold                               |  |                            | 11.6    |                           |   | 8.3     |  |      | 23.8    |  |   | 15.7   
|Selling, general, administrative and other          |  |                            | 88.4    |                           |   | 75.9    |  |      | 178.0   |  |   | 145.5  
|Depreciation and amortization                       |  |                            | 127.1   |                           |   | 98.0    |  |      | 251.6   |  |   | 199.6  
|Royalty expense to Alltel                           |  |                            |        |                           |   | 62.4    |  |      |        |  |   | 129.6  
|                                                    |  |                            |         |                           |   |         |  |      |         |  |   |        
|Total costs and expenses                            |  |                            | 491.5   |                           |   | 445.3   |  |      | 964.7   |  |   | 892.9  
|                                                    |  |                            |         |                           |   |         |  |      |         |  |   |        
|Segment income                                      |  | $                          | 289.4   |                           | $ | 181.6   |  | $    | 566.6   |  | $ | 356.9  
|Access lines in service (excludes broadband lines)  |  |                            | 3,179.2 |                           |   | 2,831.7 |  |      |         |  |   |        
|Average access lines in service                     |  |                            | 3,197.7 |                           |   | 2,847.7 |  |      | 3,211.7 |  |   | 2,859.9
|Average revenue per customer per month (a)          |  |                            | $81.40  |                           |   | $73.38  |  |      | $79.46  |  |   | $72.83 
|Broadband customers                                 |  |                            | 752.6   |                           |   | 481.7   |  |      |         |  |   |        
|Digital satellite television customers              |  |                            | 150.2   |                           |   | 33.4    |  |      |         |  |   |        
|Long distance customers                             |  |                            | 1,974.9 |                           |   | 1,761.7 |  |      |         |  |   |        

|(a) | Average revenue per customer per month is calculated by dividing total wireline revenues by average access lines in service for the period.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

Wireline operations consist of the Companys retail and wholesale telecommunications services. Revenues generated from these services include voice, long distance,
data and special access, switched access and USF, miscellaneous, directory publishing rights and product sales. Wireline revenues and sales increased $154.0 million, or 25 percent, and $281.5 million, or 23 percent, in the three and six month
periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The acquisition of Valor accounted for $123.7 million and $247.3 million of the increase in wireline revenue and sales in the three and six month periods of
2007, respectively. Customer access lines increased 12 percent during the twelve months ended June 30, 2007, reflecting the addition of the Valor operations, partially offset by declines in both primary and secondary access lines. During the
three and six month periods ended June 30, 2007, the Company lost



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approximately 35,000 and 64,000 access lines, respectively, as compared to approximately 31,000 and 54,000 access lines lost during the same periods in 2006.
Of the access lines lost during the three and six months ended June 30, 2007, approximately 6,000 and 13,000 lines, respectively, were lost in the former Valor markets. The declines in access lines primarily resulted from the effects of fixed
line competition and wireless substitution, and the Company expects access lines to continue to be impacted by these effects for the remainder of 2007.

To
slow the decline of revenue from access line loss during the remainder of 2007, the Company will continue to emphasize sales of enhanced services and bundling of its various product offerings including broadband, voice and digital satellite
television. Windstreams Greenstreak program launched across all markets in the first quarter of 2007 and offers broadband along with measured local phone service that allows unlimited incoming calls, 911 access and outgoing local
calls for 10 cents a minute. Additionally, the Company announced in the first quarter of 2007 a multi-year extension of an agreement with EchoStar Communications Corporation to offer DISH Network digital satellite television service to residential
customers as part of a bundled product offering. Digital television service bundled with Windstream voice and broadband service offers added value and convenience for customers, and is consistent with the Companys strategy to bundle services
as a communications and entertainment company. In an effort to further develop enhanced services and bundled product offerings, the Company plans to continue to invest in its network to offer faster broadband speeds. Speeds of up to 3Mb are
currently offered to approximately 80 percent of broadband addressable lines, and up to 6Mb to approximately 23 percent of those addressable lines. By year-end, Windstream plans to introduce broadband service in its largest markets at 10 to 12
megabits per second - two to six times faster than current speeds.

Deployment of high-speed broadband service is also an important strategic initiative
for the Company. As of June 30, 2007, 80 percent of addressable lines were broadband-capable. During the three and six month periods ended June 30, 2007, the Company added approximately 37,000 and 96,000 broadband customers, respectively,
increasing its broadband customer base to over 752,000 customers. This represents a penetration rate of 24 percent of total access lines in service. The growth in the Companys broadband customers more than offset the decline in customer access
lines noted above. As a result, increases in revenues generated from the sales of data and special services for the period ending June 30, 2007 partially offset the revenue decline from access line losses.

Voice revenues consist of local exchange telephone services provided to both residential and business customers. These revenues include monthly recurring charges for
basic services such as local dial-tone and enhanced services such as caller identification, voicemail and call waiting. They also include non-recurring charges for service activation and reconnection of service. Voice revenues increased $32.0
million, or 11 percent, and $58.9 million, or 10 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The acquisition of Valor accounted for $46.9 million and $94.4 million of
these increases in voice revenues, respectively. Partially offsetting these increases were declines in voice revenues primarily due to the overall decline in access lines discussed above. In addition, declines in voice revenues in 2007 reflect
year-over-year reductions in expanded calling area rate plans of $3.7 million and $8.0 million during the three and six months ended June 30, 2007, respectively. As further discussed below, the Company is offering new long distance rate plans
in select markets, which has resulted in customers moving from expanded calling area plans to unlimited long distance calling plans.

Revenues attributable
to long distance services increased 41 percent, or $18.5 million and $36.5 million during the three and six month periods ended June 30, 2007, respectively, as compared to the same periods in 2006. The acquisition of Valor accounted for $7.9
million and $15.9 million of these increases, respectively. In addition, the Company increased customer billing rates in select markets during the fourth quarter of 2006, which resulted in $7.8 million and $15.8 million year-over-year revenue
increases for the three and six month periods ended June 30, 2007, respectively. The increase in long distance revenues in 2007 was also driven by new rate plans initiated in various markets during 2006 that provide packages of minutes or
unlimited minutes of long distance services for a flat monthly recurring charge. The Company continues to introduce long distance rate plans that provide customers with various billing options.

Data and special access revenues increased $36.8 million, or 28 percent, and $70.9 million, or 27 percent, in the three and six month periods ended June 30, 2007,
respectively, as compared to the same periods of 2006. The acquisition of Valor accounted for $23.4 million and $45.0 million of these increases, respectively. In addition, data revenues, consisting primarily of retail broadband offerings, increased
$11.6 million and $22.3 million in the three and six month periods of 2007, respectively, as compared to the same periods in 2006, which reflects the net addition of over 270,000 broadband customers as discussed above. The remaining increase is due
primarily to special access revenues, which represents monthly flat-rate end user charges for dedicated circuits. The Company has realized increases in special access revenues due to strong demand from wireless and other carriers.



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Switched access and USF revenues include usage sensitive charges to long distance companies for access to our network in
connection with the completion of interstate and intrastate long distance calls, as well as receipts from federal and state universal service funds that further subsidize the cost of providing wireline services. Switched access and USF revenues
increased $46.7 million, or 43 percent, and $80.0 million, or 37 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The acquisition of Valor accounted for $39.0 million and
$78.7 million of these increases, respectively, including $47.2 million in Texas state USF support for the six months ended June 30, 2007. During the three month period ended June 30, 2007, the Company entered into a settlement agreement
with another carrier to resolve historical traffic disputes, resulting in an increase in switched access revenues of $13.3 million. Funds associated with the settlement were received in the second quarter of 2007. Partially offsetting this increase
were year-over-year decreases in switched access revenues of $11.6 million and $18.6 million in the three and six months ended June 30, 2007, respectively. Decreases in switched access revenues are primarily due to the overall decline in access
lines discussed above and declining minutes of use.

Under the federal USF program, the Company has realized year-over-year increases in federal universal
service support for common line, interstate access and local switch support revenues of $5.8 million and $10.0 million in the three and six months ended June 30, 2007, respectively. These federal USF programs provide federal subsidies to cover
the costs of services in order to keep basic service rates affordable. Partially offsetting increases in revenues from these support programs are year-over-year decreases in revenues earned in these periods from High Cost Loop Support
(HCLS) of $1.3 million and $2.7 million, respectively. The decreases in HCLS funding primarily result from increases in the national average cost per loop, as defined by the FCC, combined with the effects of the Companys cost
control efforts. Receipts from the HCLS fund are based on a comparison of each companys embedded cost per loop to a national average cost per loop. Additional decreases in USF revenues are due to declines in state USF funding of $1.0 million
and $2.2 million in the three and six month periods ended June 30, 2007, as compared to the same periods in 2006. Windstreams participation in state USF programs is discussed further below under State Regulation. During 2006,
Windstream received federal USF support of approximately $95.0 million, and state USF support of approximately $85.0 million. Of these amounts, approximately $5.0 million and $50.0 million, respectively, were received in the former Valor markets.
During 2007, Windstream expects to receive federal USF support of approximately $95.0 million, and state USF support of approximately $135.0 million. Partially offsetting expected increases due to the first full year of support in the former Valor
markets, declines in federal USF support are expected due to continued increases in the national average cost per loop, and continued focus on controlling operating costs.

Miscellaneous revenues primarily consist of charges for service fees, rentals, billing and collections services, and commissions earned from activations of digital satellite television service. Miscellaneous revenues
increased by $11.7 million, or 38 percent, and $25.2 million, or 41 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The acquisition of Valor accounted for $3.5 million and
$7.4 million of the increases in miscellaneous revenues in the three and six month periods of 2007, respectively. During the third quarter of 2006, Windstream began providing certain network management services to Alltel pursuant to multi-year
contracts, which resulted in the recognition of $4.4 million and $8.8 million in revenues during the three and six month periods of 2007, respectively. Also, $2.3 million and $6.7 million in digital television revenues were earned during the three
and six month periods ended June 30, 2007, respectively, which is an increase of $0.4 million and $3.3 million, as compared to the same periods of 2006. The remaining increases in miscellaneous revenues was primarily driven by increases in
service charges, including $2.2 million and $5.2 million of increases in late fees during the three and six month periods of 2007, respectively, due to late fee rate increases in certain states.

Product sales represent equipment sales to customers, including sales of broadband modems and customer premise equipment. Product sales increased $5.3 million, or 51
percent, and $8.6 million, or 43 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. Of these increases, $3.3 million and $4.8 million, respectively, were due to increases in
customer premise equipment sales to retail customers, with the remaining increases due primarily to broadband modem sales. During the fourth quarter 2006, Windstream began selling broadband modems to customers subject to a rebate offer. The rebate
offer is for a fixed amount per modem and expires after 45 days if not claimed by the customer. Modem sales revenues recognized in the six months ended June 30, 2007 pursuant to the rebate program have been reduced by the portion of rebates
expected to be claimed by customers.

Average revenue per customer per month increased 11 percent and 9 percent in the three and six month periods of 2007,
respectively, as compared to the same periods in 2006, primarily due to broadband customer growth and pricing increases on long distance services as discussed above. In addition, $1.39, or 2 percent, and $0.69, or 1 percent, of the year-over-year
increases in average revenue per customer per month in the three and six month periods of 2007, respectively, were due to the increase in switched access revenues relating to a carrier settlement agreement discussed above. Future growth in



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average revenue per customer per month will depend on the Companys success in sustaining growth in sales of broadband and other enhanced services to
new and existing customers.

Cost of services increased $63.7 million, or 32 percent, and $108.8 million, or 27 percent, in the three and six month periods
ended June 30, 2007, respectively, as compared to the same periods in the prior year. The acquisition of Valor accounted for $36.8 million and $69.0 million of these increases, respectively. Additionally, year-over-year increases in
interconnection expenses totaling $12.5 million and $26.8 million for the three and six months ended June 30, 2007, respectively, were primarily due to an increase in the volume of long distance traffic carried due to the increases in customers
on packaged minute and unlimited usage rate plans discussed above. Increases in interconnection expense are also attributable to increases in Internet usage associated with the increases in broadband customers as discussed above. Additional
year-over-year increases in business taxes and USF fees of $7.5 million and $5.4 million, respectively, were due to increases in the contribution factors used to determine the Companys USF obligations, and increases in USF contributions
related to the increases in long distance revenues discussed above. Cost of services also increased by $3.4 million and $2.9 million for the three and six months ended June 30, 2007, respectively, as compared to the same periods in 2006, due to
increases in cost of removal expense, which was included in depreciation expense under the application of SFAS No. 71 in 2006. The Company also incurred year-over-year increases in pole attachment expense of $2.6 million and $2.4 million,
respectively, as several underlying utility providers completed pricing reviews that resulted in the retroactive application of higher fees as allowed under those contracts.

Cost of products sold increased $3.3 million, or 40 percent, and $8.1 million, or 52 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006,
primarily due to costs associated with sales of broadband-capable modems, as well as due to an increase in customer premise equipment sales to retail customers as discussed above.

Selling, general, administrative and other expenses increased $12.5 million, or 16 percent, and $32.5 million, or 22 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to
the same periods of 2006. The acquisition of Valor accounted for $9.9 million and $18.7 million of these increases, respectively. A portion of the remaining increases were due to year-over-year increases in advertising of $3.2 million and $8.2
million in the three and six month periods ended June 30, 2007, respectively, related to aggressive marketing around Windstreams new brand. The Companys advertising expense in the first six months of 2006 was an allocation of
Alltels overall marketing campaign, and did not yet reflect the Windstream branding efforts. The remaining increases in selling, general, administrative and other expenses were due to a shift from allocated corporate costs from Alltel in 2006
prior to the spin-off to the Companys stand-alone corporate cost structure in 2007.

Depreciation and amortization expense increased $29.1 million,
or 30 percent, and $52.0 million, or 26 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. The acquisition of Valor accounted for $30.6 million and $60.9 million of the
increases in depreciation and amortization expense in the three and six month periods of 2007, respectively. An offsetting decrease in depreciation and amortization expense resulted primarily from a reduction in depreciation rates reflecting the
results of studies completed during the second quarter of 2007 and during 2006. The depreciable lives were revised to reflect the estimated remaining useful lives of the wireline plant based on the Companys expected future network utilization
and capital expenditure levels required to provide service to its customers. See Note 2 to the accompanying unaudited interim consolidated financial statements for additional information regarding these changes. During the remainder of 2007, the
Company expects to review the depreciation rates utilized in its remaining wireline operations that have not been reviewed over the last three years.

Royalty expense decreased $62.4 million, or 100 percent, and $129.6 million, or 100 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. Historically, certain of the
Companys wireline subsidiaries incurred a royalty expense from Alltel for the use of the Alltel brand name in marketing and distributing telecommunications products and services pursuant to a licensing agreement with an Alltel affiliate. In
anticipation of the spin-off and merger with Valor, Alltel and the Company terminated this licensing agreement on June 30, 2006 as the Company no longer uses the Alltel brand name.

Wireline segment income increased $107.8 million, or 59 percent, and $209.7 million, or 59 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006.
The acquisition of Valor accounted for $45.5 million and $97.6 million of these increases, respectively. The remaining increase in segment income in 2007 primarily resulted from the termination of the licensing agreement with Alltel and the
favorable effects of reduced depreciation rates, partially offset by the decline in revenues and sales due to the loss of access lines, as discussed above.



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Set forth below is a summary of the restructuring and other charges related to the wireline operations that were not
included in the determination of wireline segment income for the six months ended June 30:



|                                           |  |      |     |      |   |    
|------------------------------------------ |  | ---- | --- | ---- | - | ---
|(Millions)                                 |  | 2007 |     | 2006
|Costs associated with spin-off from Alltel |  | $    |    |      | $ | 2.5
|Severance and employee benefit costs       |  |      | 3.1 |      |   |   
|                                           |  |      |     |      |   |    
|Total restructuring and other charges      |  | $    | 3.1 |      | $ | 2.5

Regulatory Matters  Wireline Operations

Our incumbent local exchange carrier subsidiaries (our ILECs) are regulated by both federal and state agencies. Our interstate products and services and the related earnings are subject to federal
regulation by the FCC and our local and intrastate products and services and the related earnings are subject to regulation by state Public Service Commissions (PSCs). The FCC has principal jurisdiction over interstate switched and
special access rates and broadband service offerings and regulates the rates that ILECs may charge for the use of their local networks in originating or terminating interstate and international transmissions. State PSCs have principal jurisdiction
over matters including local service rates, intrastate access rates, quality of service, depreciation rates, the disposition of public utility property, the issuance of securities or debt by the local operating companies, and the accounting systems
used by telecommunication companies.

Federal Regulation

Communications service providers are regulated differently depending primarily upon the network technology used to deliver the service. This patchwork regulatory approach advantages certain companies and disadvantages others. It impedes
market-based competition where service providers, regardless of technology, exchange telecommunications traffic between their networks and compete for customers.

It is difficult to predict what kind of reform efforts, if any, may be introduced in Congress and ultimately become law. Windstream strongly supports the modernization of the nations telecommunications laws, but at this time cannot
predict the timing and the resulting financial impact of any possible federal legislative efforts.

Inter-carrier Compensation

Our local exchange subsidiaries currently receive compensation from other telecommunications providers, including long distance companies, for origination and termination
of inter-exchange traffic through network access charges or toll settlements that are established in accordance with state and federal laws.

With the
exception of the Nebraska, New Mexico and a portion of the Kentucky, Oklahoma and Texas operations (collectively the price-cap ILEC companies), our interstate ILEC operations, consisting primarily of network access services, are subject
to rate-of-return regulation by the FCC. Under rate-of-return regulation, our interstate rates are established based on forecasted investment and expenses plus a return on investment, currently 11.25%. The price-cap ILEC companies interstate
operations are subject to price-cap regulation by the FCC. Under price-cap regulation, interstate rates are not established in direct relation to forecasted investment and expense but are adjusted periodically based on economic indices. Companies
meeting certain criteria had the option to elect price-cap regulation for interstate services as part of an FCC order issued in May 2000 (the CALLS plan). The CALLS plan expired on July 1, 2005, and to date, the FCC has not
established a successor mechanism for regulating price-cap companies. Nonetheless, the rules put in place by adoption of the CALLS plan remain in effect until the FCC modifies or otherwise replaces them. Subsequent to June 30, 2007, Windstream
filed a petition with the FCC to convert the majority of its remaining interstate rate-of-return regulated operations to price cap regulation. Under price cap regulation, rates for interstate services are no longer directly tied to forecasted
investment and expense and broadband services can be deregulated. The Company expects its petition to be approved by the FCC prior to July 1, 2008.

In April 2001, the FCC released a notice of proposed rulemaking addressing inter-carrier compensation. Under this rulemaking, the FCC proposed a bill and keep compensation methodology under which each telecommunications carrier
would be required to recover all of its costs to originate and terminate telecommunications traffic from its end-user customers rather than charging other carriers. The proposed bill and keep method would significantly overhaul the
existing rules governing inter-carrier compensation. On March 3, 2005, the FCC released a further notice of proposed rulemaking addressing inter-carrier compensation. Under this proposed rulemaking, the FCC requested comment on several
alternative inter-carrier compensation proposals, including bill and keep.

In July 2006 the National Association of Regulatory Utility
Commissioners Task Force on Inter-carrier Compensation filed an industry-sponsored reform plan called the Missoula Plan which proposes a comprehensive reform to the current inter-carrier compensation system. In summary, the
Missoula Plan proposes to reduce rates carriers charge one another to



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originate and terminate calls between networks, making up the difference by allowing end user retail rates to increase and creating additional funding
through an expanded universal service program. The Company supports the proposed Missoula Plan because it would bring stability and certainty to the marketplace and encourage continued network investment for the benefit of customers and carriers.
The outcome of this proceeding would change the way the Company receives compensation from, and remits compensation to, other carriers and its end user customers as well as the federal universal service fund. Until the FCCs inter-carrier
compensation proceeding concludes, and any changes to the existing rules are established, the Company cannot estimate the impact of the changes on its ILEC revenues and expenses or when the changes would occur.

On July 6, 2005, a hearing examiner issued a recommended order to the Georgia PSC that, if adopted, would prospectively preclude LECs from assessing access charges
for non-local intrastate calls between 0 and 16 miles that originate on the network of one LEC and terminate on the network of a different LEC. We, along with other LECs in Georgia, requested that the Georgia PSC reject the recommended order and
find that network access charges continue to apply to these intrastate calls. If the Georgia PSC ultimately adopts the recommended order, we would incur a reduction in annual revenues of approximately $12.0 million. A final order has not yet been
issued by the PSC, and it appears less likely that the PSC will affirm the recommended decision as time passes.

Universal Service

The federal universal service program is under legislative, regulatory and industry scrutiny as a result of the growth in the fund and structural changes within the
telecommunications industry. The primary structural change is the increase in the number of Eligible Telecommunications Carriers (ETCs) receiving money from the USF. There are several FCC proceedings underway that are likely to change
the way the universal service programs are funded and the way universal service funds are disbursed to program recipients. The specific proceedings are discussed in greater detail below.

On May 1, 2007, the Federal/State Joint Board on Universal Service (the Joint Board) released a recommended decision for consideration by the FCC whereby an interim cap would be placed on the amount
of high-cost support that competitive ETCs may receive. The interim cap would be determined on a state level based on the average level of support distributed to competitive ETCs in 2006. The FCC will determine whether or not to adopt the
recommended interim cap. The Company does not expect material changes to its existing federal support as a result of the Joint Boards recommendation and likely adoption by the FCC.

In addition, the Joint Board committed to make further recommendations for more comprehensive universal service reform within six months from the date of its recommended decision. Specifically, the Joint Board is
considering the use of reverse auctions for distribution of high-cost support. The Joint Board must still consider whether geo-coded information, used to identify the precise location of customers, could be used to better target support to high-cost
areas, whether the requirement that support to competitive ETCs be based on the ILECs costs should be changed, and whether broadband should be added to the list of services supported by the high-cost programs. The Company cannot estimate at this
time the impact resulting from the Joint Boards recommended changes, if any, to the universal service programs.

The FCC is also considering
proposals regarding the contribution methodology, which could change the types of service providers required to contribute to the fund (i.e. local exchange providers, wireless providers, long distance providers, Voice Over Internet Protocol
(VoIP) providers, etc.) and the basis on which they contribute. In most cases, service providers recover the amount of their required contributions to the federal universal service fund from their customers. Without more specificity
regarding the likely outcome of the proceeding, we cannot estimate the impact a change in carrier contribution obligations would have on our operations.

The FCC mandated that, effective October 1, 2004, the Universal Service Administrative Company (USAC) begin accounting for the USF program in accordance with generally accepted accounting principles for federal agencies,
rather than the accounting rules that USAC formerly used. This accounting method change subjected USAC to the Anti-Deficiency Act (ADA), the effect of which could have caused delays in payments to USF program recipients and significantly
increased the amount of USF regulatory fees charged to consumers. In April 2005, the FCC tentatively concluded that the high-cost and low-income universal service programs of the universal service fund are compliant with ADA requirements, and has
asked the Office of Management and Budget (OMB) to make a final determination on this issue, which they have yet to do. On February 16, 2007, Congress passed legislation to exempt the USF from ADA requirements until
September 30, 2007. On January 5, 2007 a bill was introduced to exempt permanently the federal USF from ADA requirements. The bill has 23 co-sponsors and has been referred to the House Commerce Committee.



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VoIP Telephony

A
number of carriers have begun offering voice telecommunications services utilizing VoIP telephony. VoIP is challenging existing regulatory definitions and raises questions concerning how Internet Protocol (IP) enabled services should be
regulated, if at all. Several state commissions attempted to assert jurisdiction over VoIP services, but federal courts in New York and Minnesota ruled that the FCC preempts the states with respect to jurisdiction. On March 21, 2007, the U.S.
Court of Appeals for the Eighth Circuit affirmed the FCCs order asserting jurisdiction over certain VoIP services. On March 10, 2004, the FCC released a notice of proposed rulemaking seeking comment on the appropriate regulatory treatment
of IP-enabled communications services. Even though the FCC has not yet determined the regulatory treatment for IP enabled services, it has required VoIP providers that terminate or receive calls from the public switched network to contribute into
the federal universal service fund and to comply with Communications Assistance for Law Enforcement Act (CALEA), Customer Proprietary Network Information (CPNI) and E911 requirements. With regard to inter-carrier
compensation, the extent of federal regulation and payment obligations for VoIP telephony services may depend in large part on whether a particular service is considered a telecommunications service or information service. If
the FCC ultimately determines that VoIP services are generally not subject to existing inter-carrier compensation mechanisms, we would be competitively disadvantaged compared to VoIP service providers.

Broadband Services

On March 15, 2002, the FCC issued a
declaratory ruling concluding that cable modem service was an interstate information service and not a cable service or a telecommunications service. This ruling was upheld by the United States Supreme Court. In addition, on
September 23, 2005, the FCC released an order declaring Digital Subscriber Line (DSL) offerings, as well as other broadband Internet access services offered over wireline technologies, information services functionally
integrated with telecommunications and no longer subject to a higher level of regulation as compared to cable modem service. The order further provides price-cap companies the option to deregulate DSL and rate-of-return companies the option to
de-tariff DSL. The Company elected to deregulate its broadband services in the price-cap ILEC companies effective October 2006 and will benefit from the decreased regulation of its broadband services, providing the Company with additional retail
pricing flexibility and relief from federal universal service fund contributions. On April 1, 2007, the Company de-tariffed its broadband services in certain of its rate-of-return companies, which will also result in decreased regulatory
oversight and additional retail pricing flexibility. The Company de-tariffed broadband services for its remaining rate-of-return companies on July 1, 2007. Rate-of-return properties will continue to include broadband service revenues in their
federal universal service fund assessable revenue base. The Companys broadband products are experiencing significant growth throughout its service areas, and these recent actions improve our regulatory position compared to the non-regulated
cable modem service which is our primary broadband competitor.

Communications Assistance for Law Enforcement Act (CALEA)

Under CALEA we are required to provide law enforcement officials with call content and call identifying information upon receipt of a valid electronic surveillance
warrant. The Company is compliant in all material respects with all CALEA requirements.

Customer Proprietary Network Information (CPNI)

CPNI includes information such as the phone numbers dialed, frequency of calls, duration of calls and retail services purchased by a customer. The
Telecommunications Act of 1996 (the 96 Act) requires service providers to ensure the confidentiality of CPNI and provides that CPNI may be used, disclosed or shared only if required by law, the customer has given consent, or CPNI is
necessary for the provision of services from which CPNI was derived. The FCC has implemented rules that require service providers to establish safeguards to prevent the unauthorized disclosure of CPNI. The Company has implemented all required
safeguards in accordance with FCC rules.

On April 2, 2007, the FCC released an order and adopted a further notice of proposed rulemaking to alter the
requirements to safeguard customers CPNI. The order prohibits carriers from releasing phone records except when the customer provides a password and requires carriers to obtain explicit consent from customers when releasing CPNI to third
parties for the purposes of marketing retail services to that customer. The order also establishes a notification process for law enforcement and customers in the event of a CPNI breach, requires that carriers provide notice to customers immediately
following certain account changes and requires carriers to file annual certifications of CPNI compliance with the FCC. Some parties have filed petitions for reconsideration with the FCC asserting that, in enforcement proceedings, the order
improperly shifts the burden of proof from the FCC to the carriers. The further notice requests comment on what additional steps, if any, the Commission should take to further protect the privacy of consumers. These rules will go into effect during
the fourth quarter of 2007. The Company does not expect any significant financial or operational impacts resulting from the new CPNI requirements.



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##### Table of Contents

State Regulation

Local and Intrastate Rate Regulation

Most states in which our ILEC subsidiaries operate provide alternatives to rate-of-return regulation
for local and intrastate services, either by law or PSC rules. We have elected alternative regulation for our ILEC subsidiaries in all states except New York. On March 20, 2007, the company filed a petition with the Mississippi PSC electing to
be regulated under the small company alternative regulation plan. The petition was approved by the PSC during the second quarter of 2007.

Universal
Service

We receive state universal service support in a limited number of states in which we operate. In the second quarter 2007, Windstream received
$33.8 million in state universal service support. These payments are intended to provide additional support, beyond the federal universal service receipts, for the high cost of operating in rural markets. In the second quarter of 2007, Windstream
received $24.9 million from the Texas USF. The purpose of the Texas USF is to assist telecommunications providers in providing basic local telecommunications services at reasonable rates to customers in high cost rural areas and to qualifying
low-income and disabled customers. By order of the Texas PUC, the Texas USF distributes support to eligible carriers serving areas identified as high cost, on a per-line basis. Texas USF support payments are based on the number of actual lines in
service and therefore are subject to reductions when customers discontinue service or migrate to a competitive carrier. All customers of telecommunications services in Texas contribute to the Texas USF through the payment of a monthly surcharge on
the bill. In September 2005, the Texas Legislature adopted significant telecommunications reform legislation. Part of that legislation directed the Texas PUC to initiate a study of the Texas USF and to make a report to the Texas Legislature. In
addition, the 2005 legislation precludes the Texas PUC from implementing any changes to reduce Texas USF support until after September 1, 2007. The Texas PUC completed its review and issued its report to the 2007 Texas Legislature in December
2006. The report recommended that the high-cost program for small companies be reviewed further to ensure the reasonableness of basic local service rates and the process for determining which lines are eligible for support. Windstream receives
approximately $12.0 million annually from the small company program. The report also concluded that the high-cost program for large companies should be updated and that the Texas PUC conduct a proceeding or rulemaking under current law to consider,
at a minimum, whether any appropriate re-sizing and/or re-targeting of support is necessary. This proceeding is expected to begin in the third quarter of 2007 and a final order from the PUC is not expected until the second quarter of 2008, at the
earliest. Windstream receives approximately $93.0 million from the large company program. The Company cannot estimate at this time the financial impact resulting from changes, if any, to either of the high-cost programs.

Other Regulations

Under applicable state regulations, some of our
subsidiaries are required to obtain the applicable state commission approval for, or are subject to limitations on, any issuance of stock, incurrence of long-term debt, payment of dividends, acquisition or sale of material utility asset or any
change in control of these subsidiaries or their parent companies. As part of certain state proceedings to obtain PSC approval of the change in control related to the 2006 separation from Alltel and merger with Valor, several PSCs imposed
limitations on the amounts of dividends the ILEC operating companies can pay the Company. Limits on such dividends have not had any impact on the Company.

Because certain of the regulatory matters discussed above are under FCC or judicial review, resolution of these matters continues to be uncertain, and the Company cannot predict at this time the specific effects, if any, that the 96 Act,
regulatory decisions and rulemakings, and future competition will ultimately have on its wireline operations.

Product Distribution

|                                           |  |                            |      |                          |   |      |  |   |       |   |  |   |      
|------------------------------------------ |  | -------------------------- | ---- | ------------------------ | - | ---- |  | - | ----- | - |  | - | -----
|                                           |  | Three Months EndedJune 30, |      | Six Months EndedJune 30,
|(Millions)                                 |  | 2007                       |      | 2006                     |   | 2007 |  |   | 2006 
|Revenues and sales:                        |  |                            |      |                          |   |      |  |   |       |   |  |   |      
|Product sales                              |  | $                          | 85.5 |                          | $ | 83.0 |  | $ | 168.7 |   |  | $ | 152.1
|                                           |  |                            |      |                          |   |      |  |   |       |   |  |   |      
|Total revenues and sales                   |  |                            | 85.5 |                          |   | 83.0 |  |   | 168.7 |   |  |   | 152.1
|                                           |  |                            |      |                          |   |      |  |   |       |   |  |   |      
|Costs and expenses:                        |  |                            |      |                          |   |      |  |   |       |   |  |   |      
|Cost of products sold                      |  |                            | 79.9 |                          |   | 77.6 |  |   | 157.8 |   |  |   | 141.9
|Selling, general, administrative and other |  |                            | 5.1  |                          |   | 2.1  |  |   | 11.1  |   |  |   | 5.3  
|Depreciation and amortization              |  |                            | 0.2  |                          |   | 0.4  |  |   | 0.3   |   |  |   | 0.8  
|                                           |  |                            |      |                          |   |      |  |   |       |   |  |   |      
|Total costs and expenses                   |  |                            | 85.2 |                          |   | 80.1 |  |   | 169.2 |   |  |   | 148.0
|                                           |  |                            |      |                          |   |      |  |   |       |   |  |   |      
|Segment income (loss)                      |  | $                          | 0.3  |                          | $ | 2.9  |  | $ | (0.5  | ) |  | $ | 4.1  



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Revenues and sales from the Companys product distribution operations reflect sales of telecommunications equipment
to affiliated wireline subsidiaries and non-affiliated telecommunications companies. Revenues and sales from the Companys product distribution operations increased $2.5 million, or 3 percent, and $16.6 million, or 11 percent, in the three and
six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006. Sales of telecommunications equipment and data products to the Companys affiliated subsidiaries increased $6.1 million and $23.2 million in the
three and six month periods, respectively. This was due primarily to increases in capital expenditures in the Companys wireline operations and increases in modems supplied to new broadband customers. Conversely, sales to external customers
decreased $3.6 million and $6.6 million in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006, reflecting decreases in sales to smaller telecommunications providers and contractors.
Declines in sales to these higher margin external customers along with a shift from allocated corporate costs from Alltel in 2006 prior to the spin-off to the Companys stand-alone corporate cost structure in 2007 contributed to a $2.6 million
and $4.6 million decline in segment income in the three and six month periods of 2007, respectively, as compared to the same periods of 2006.

During the
three months ended March 31, 2007, the product distribution segment incurred $0.1 million in restructuring and other charges related to a workforce reduction, which were not included in the determination of segment income for the period.

Other Operations

|                                           |  |                                |      |                              |      |   |      |  |      |      |  |   |     
|------------------------------------------ |  | ------------------------------ | ---- | ---------------------------- | ---- | - | ---- |  | ---- | ---- |  | - | ----
|                                           |  | Three Months Ended    June
30, |      | Six Months Ended    June
30,
|(Millions)                                 |  | 2007                           |      |                              | 2006 |   | 2007 |  | 2006
|Revenues and sales:                        |  |                                |      |                              |      |   |      |  |      |      |  |   |     
|Directory publishing                       |  | $                              | 45.9 |                              |      | $ | 48.6 |  | $    | 68.0 |  | $ | 75.1
|Telecommunications information services    |  |                                |     |                              |      |   | 4.1  |  |      |     |  |   | 8.1 
|                                           |  |                                |      |                              |      |   |      |  |      |      |  |   |     
|Total revenues and sales                   |  |                                | 45.9 |                              |      |   | 52.7 |  |      | 68.0 |  |   | 83.2
|                                           |  |                                |      |                              |      |   |      |  |      |      |  |   |     
|Costs and expenses:                        |  |                                |      |                              |      |   |      |  |      |      |  |   |     
|Cost of services                           |  |                                |     |                              |      |   | 4.2  |  |      |     |  |   | 7.4 
|Cost of products sold                      |  |                                | 33.9 |                              |      |   | 35.4 |  |      | 50.0 |  |   | 55.2
|Selling, general, administrative and other |  |                                | 7.7  |                              |      |   | 6.8  |  |      | 15.3 |  |   | 13.8
|Depreciation and amortization              |  |                                | (0.4 | )                            |      |   | 0.6  |  |      |     |  |   | 1.2 
|                                           |  |                                |      |                              |      |   |      |  |      |      |  |   |     
|Total costs and expenses                   |  |                                | 41.2 |                              |      |   | 47.0 |  |      | 65.3 |  |   | 77.6
|                                           |  |                                |      |                              |      |   |      |  |      |      |  |   |     
|Segment income                             |  | $                              | 4.7  |                              |      | $ | 5.7  |  | $    | 2.7  |  | $ | 5.6 

Revenues and sales from the Companys other operations are derived from revenues associated with publishing
directories for affiliated and non-affiliated local exchange carriers and charges to non-affiliated telecommunications companies for customer billing and other information services. Revenues and sales attributable to the Companys other
operations decreased $6.8 million, or 13 percent, and $15.2 million, or 18 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods in 2006. Revenues derived from directory publishing
decreased $2.7 million, or 6 percent, and $7.1 million, or 9 percent, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006, due to a decline in the number of directories published for
non-affiliates during the six month period of 2007.

Telecommunications information services revenues decreased 100 percent, or $4.1 million, and $8.1
million, in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods of 2006, due to the loss of billings earned from Valor, which represented the Companys only unaffiliated customer prior to the
merger. The Company no longer recognizes revenues or incurs expenses for these activities.

Other operations segment income decreased $1.0 million and $2.9
million in the three and six month periods ended June 30, 2007, respectively, as compared to the same periods in the prior year, primarily due to the decline in margins associated with the loss of directory and information services revenues.

For the six months ended June 30, 2007, the Company incurred $3.2 million in fees related to the anticipated sale of its directory publishing
business. These charges were not included in the determination of segment income for the three and six month periods ended June 30, 2007.

For further
discussion of the pending sale of the publishing business, see Note 16, Pending Transactions, to the unaudited interim consolidated financial statements.



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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

|                                                       |  |                          |        |   |      |   |        |  
|------------------------------------------------------ |  | ------------------------ | ------ | - | ---- | - | ------ | -
|                                                       |  | Six Months EndedJune 30, |       
|(Millions)                                             |  | 2007                     |        |   | 2006 |  
|Cash flows from (used in):                             |  |                          |        |   |      |   |        |  
|Operating activities                                   |  | $                        | 513.5  |   |      | $ | 524.5  |  
|Investing activities                                   |  |                          | (176.8 | ) |      |   | (135.5 | )
|Financing activities                                   |  |                          | (239.7 | ) |      |   | (390.9 | )
|                                                       |  |                          |        |   |      |   |        |  
|Increase (decrease) in cash and short-term investments |  | $                        | 97.0   |   |      | $ | (1.9   | )

Cash Flows-Operating Activities

Cash provided from operations is the Companys primary source of funds. Cash flows from operating activities decreased by $11.0 million in the six month period ended June 30, 2007, as compared to the same
period in 2006. Of this decrease, $49.8 million was due to increases in payments on taxes and other current liabilities. This decrease was partially offset by cash flows generated in the first six months of 2007 from the acquired Valor operations.
Additionally, cash provided from operations also reflects changes involving timing differences in purchases of inventory, billing and collection of accounts receivable and the payment of trade payables and interest on long-term debt.

During the first six months of 2007, the Company generated sufficient cash flows from operations to fund its capital expenditure requirements, dividend payments and
scheduled long-term debt payments as further discussed below. The Company expects to generate sufficient cash flows from operations to fund its operating requirements during the balance of 2007.

Cash Flows-Investing Activities

Capital expenditures are the
Companys primary use of capital resources. Capital expenditures for the six months ended June 30, 2007 were $178.0 million, as compared to $155.4 million for the same period in 2006. Capital expenditures in both years were incurred to
construct additional network facilities and to upgrade the Companys telecommunications network in order to offer enhanced communications services, including high-speed broadband services. The Company funded its capital expenditures through
internally generated funds.

Cash Flows-Financing Activities

The Companys board of directors has adopted a current dividend policy for the payment of quarterly cash dividends at a rate of $0.25 per share of the Companys common stock. This policy can be changed at any time at the
discretion of the board of directors. On February 7, 2007, the Company declared a dividend in the amount of $0.25 per share of the Company's common stock, totaling $119.3 million, which was paid on April 16, 2007 to shareholders of record
as of March 30, 2007. On May 9, 2007 the Companys board of directors declared a dividend in the amount of $0.25 per share of the Company's common stock. This dividend, totaling $119.3 million, was paid on July 16, 2007 to
shareholders of record as of June 29, 2007.

The Companys ability to pay dividends is subject to compliance with the Companys financial
covenants (including the leverage and interest coverage ratios discussed below), a restricted payments covenant and the absence of a default under the Companys senior secured credit facilities. Under the restricted payments covenant, the
Company may use all available distributable cash for the period (taken as one accounting period) commencing on October 1, 2006 to the end of the most recently ended fiscal quarter for which the Company has delivered a quarterly financial
compliance certificate to the administrative agent to declare and pay dividends.

Available distributable cash for any period means, without duplication
(a) adjusted EBITDA (discussed in the Liquidity and Capital Resources section below); plus (b) any extraordinary or non-recurring cash gain, other than any such gain resulting from any sale, transfer or other disposition of assets; minus
(c) to the extent included in determining such adjusted EBITDA, the sum of (i) cash interest expense; (ii) all taxes paid in cash; and (iii) any extraordinary or nonrecurring loss, expense or charge paid in cash; minus
(d) the sum of (i) dividends and other restricted payments, unless funded from proceeds of certain equity offerings or other sources that are not operating cash flow; (ii) certain permitted investments; (iii) payments to repay,
redeem, retire or refinance any indebtedness, other than repayments of the revolving loans under the credit facility and certain other indebtedness, unless such payments are funded from proceeds of certain equity offerings or other sources that are
not operating cash flow; and (iv) capital expenditures, unless funded from proceeds of certain equity offerings or other sources that are not operating cash flow.



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In periods prior to the spin-off, dividend payments to Alltel were a significant use of capital resources for the
Company. Dividend payments to Alltel amounted to $98.8 million in the six month period ended June 30, 2006.

Repayments of borrowings were $500.1
million for the six months ended June 30, 2007 and $0.1 million for the six months ended June 30, 2006. Debt issued, net of issuance costs, during the three and six months ended June 30, 2007 totaled $498.9 million. Repayments of
borrowings and debt issued during the six months ended June 30, 2007 was primarily due to a debt refinancing transaction discussed in further detail below in the discussion of Liquidity and Capital Resources. Other retirements of long-term debt
in both periods reflected the required scheduled principal payments under the Companys existing long-term debt obligations.

Prior to the spin-off
from Alltel, the Company participated in the centralized cash management practices of Alltel. Under these practices, cash balances were transferred daily to Alltel bank accounts, and the Company obtained interim financing from Alltel to fund its
daily cash requirements and invested short-term excess funds with Alltel. During the six months ended June 30, 2006, the Company reduced its overall net borrowings from Alltel by $292.0 million.

Liquidity and Capital Resources

The Company believes that it has adequate operating cash flows to finance its ongoing operating requirements, including capital expenditures, repayment of long-term debt and payment of dividends. On February 27,
2007, Windstream issued $500.0 million aggregate principal amount of senior notes due 2019, with an interest rate of 7.0 percent (the February 27threfinancing transaction). Windstream used the net proceeds of the offering to repay $500.0 million of amounts outstanding under its term loan portion of its senior secured credit facilities. Additionally, Windstream received consent
of lenders to an amendment and restatement of its $2.9 billion senior secured credit facilities. Windstream amended and restated its senior secured credit facilities to, among other things, reduce the interest payable under tranche B of the term
loan portion of the facilities; modify the pre-payment provision; and modify certain covenants to permit the consummation of the previously announced split off of its directory publishing business.

Windstreams credit facility and long-term credit ratings with Moodys Investors Service (Moodys), Standard & Poors
Corporation (S&P) and Fitch Ratings (Fitch) were as follows at June 30, 2007:



|                               |  |         |  |          |  |       
|------------------------------ |  | ------- |  | -------- |  | ------
|Description                    |  | Moodys |  | S&P      |  | Fitch 
|Senior secured credit rating   |  | Baa3    |  | BBB-     |  | BBB-  
|Senior unsecured credit rating |  | Ba3     |  | BB-      |  | BB+   
|Outlook                        |  | Stable  |  | Negative |  | Stable

Factors that could affect Windstreams short and long-term credit ratings would include, but not be limited
to, a material decline in the Companys operating results and increased debt levels relative to operating cash flows resulting from future acquisitions or increased capital expenditure requirements. If Windstreams credit ratings were to
be downgraded from current levels, the Company would incur higher interest costs on its borrowings, and the Companys access to the public capital markets could be adversely affected. A downgrade in Windstreams current short or long-term
credit ratings would not accelerate scheduled principal payments of Windstreams existing long-term debt.

The terms of our credit facility and
indentures include customary covenants that, among other things, require the Company to maintain certain financial ratios and restrict our ability to incur additional indebtedness. In particular, under the senior credit facility, the Company must
maintain the following financial ratios:



|(a) | total leverage ratio must be no greater than 4.5 to 1.0 on the last day of any fiscal quarter,
|--- | ----------------------------------------------------------------------------------------------



|(b) | interest coverage ratio must be greater than 2.75 to 1.0 on the last day of any fiscal quarter, and
|--- | ---------------------------------------------------------------------------------------------------



|(c) | capital expenditures must not exceed a specified amount in any fiscal year (for 2007 this amount is $530.0 million, which includes $80.0 million of unused capacity from 2006).
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The leverage ratio is the ratio of indebtedness to adjusted EBITDA, and the interest coverage ratio is the ratio of adjusted EBITDA to cash
interest expense. Adjusted EBITDA means (1) net income, adjusted to exclude the cumulative effect of accounting changes and certain other exceptions; plus (2) the following items, to the extent deducted from consolidated adjusted net
income: (a) provision for taxes based on income or profits; (b) interest expense, to the extent deducted in computing net income; (c) depreciation, amortization, goodwill impairment charges and other non-cash expenses, subject to
certain exceptions; plus (d) the amount of any minority interest expense deducted in computing net income; plus (e) any non-cash compensation charge arising from any grant of stock, stock options or other equity-based awards, to the extent



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deducted in computing net income; plus (f) certain non-cash income (or loss) related to hedging activities, to the
extent deducted in computing net income; minus (g) non-cash items increasing such net income, subject to certain exceptions. The indentures governing the Companys senior notes contain similar covenants that are generally the same as or
are no more restrictive than those contained in the senior credit facility.

In addition, certain of the Companys debt agreements contain various
covenants and restrictions specific to the subsidiary that is the legal counterparty to the agreement. Under the Companys long-term debt borrowing agreements, acceleration of principal payments would occur upon payment default, violation of
debt covenants not cured within 30 days or breach of certain other conditions set forth in the borrowing agreements. At June 30, 2007, the Company was in compliance with all such covenants and restrictions. At June 30, 2007, current
maturities of long-term debt were $49.3 million. The Company expects to fund the payment of this obligation through operating cash flows.

Because of
restrictions contained in the Merger Agreement with Alltel, Windstream may be limited in the amount of stock that it can issue to make acquisitions or raise additional capital in the two year period ending July 17, 2008. These restrictions are
intended to prevent Windstream from taking any actions that could cause the spin-off from Alltel to be taxable to Alltel under Section 355(e) of the Internal Revenue Code or otherwise jeopardize the tax-free status of the spin-off from Alltel.
In particular, during the two year period ending July 17, 2008, Windstream is prohibited from entering into any agreement, understanding or arrangement or engaging in any substantial negotiations with respect to any transaction involving the
acquisition of Windstream stock or the issuance of shares of Windstreams stock, or options to acquire or other rights in respect of such stock, in excess of a permitted basket of 71,130,989 shares (as adjusted for stock splits, stock
dividends, recapitalizations, reclassifications and similar transactions), unless, generally, the shares are issued to qualifying Windstream employees or retirement plans, each in accordance with safe harbors under regulations issued by
the Internal Revenue Service (IRS). Nevertheless, Windstream can take any of the actions described above in the event that the IRS grants a favorable ruling to Alltel or Windstream as to the effect of such action on the tax-free status
of the spin-off. As previously discussed, the transaction to split off the Companys publishing business with WCAS will result in the repurchase of at least 19,574,422 shares of Windstream common stock, which will accordingly reduce the
permitted basket of shares for use in future transactions until the restricted payment period ends.

Off-Balance Sheet Arrangements

We do not use securitization of trade receivables, affiliation with special purpose entities, variable interest entities or synthetic leases to finance our operations.
Additionally, we have not entered into any arrangement requiring us to guarantee payment of third party debt or to fund losses of an unconsolidated special purpose entity in the future in the normal course of business.

Contractual Obligations and Commitments

Windstream disclosed in its
financial statements for the year ended December 31, 2006 a summary of the Companys material contractual obligations and commitments. As discussed under Liquidity and Capital Resources, on February 27, 2007, Windstream
issued $500.0 million aggregate principal amount of senior notes due 2019 and used the net proceeds of the offering to repay $500.0 million of amounts outstanding under its term loan portion of its senior secured credit facilities.

Set forth below is a summary of future repayments of long-term debt obligations and related interest expense as of
June 30, 2007, in consideration of the February 27threfinancing transaction:



|                                                     |  |                            |       |           |   |           |  |                  |         |       |   |         |  |   |        
|---------------------------------------------------- |  | -------------------------- | ----- | --------- | - | --------- |  | ---------------- | ------- | ----- | - | ------- |  | - | -------
|                                                     |  | Payments Due by Period (a)
|(Millions)                                           |  | Less than1 Year            |       | 1-3 Years |   | 3-5 Years |  | More than 5Years |         | Total
|Long-term debt, including current maturities (b)     |  | $                          | 49.3  |           | $ | 173.4     |  | $                | 398.0   |       | $ | 4,896.0 |  | $ | 5,516.7
|Interest payments on long-term debt obligations (c)  |  |                            | 424.0 |           |   | 831.0     |  |                  | 794.2   |       |   | 1,337.7 |  |   | 3,386.9
|                                                     |  |                            |       |           |   |           |  |                  |         |       |   |         |  |   |        
|Total projected long-term debt and interest payments |  | $                          | 473.3 |           | $ | 1,004.4   |  | $                | 1,192.2 |       | $ | 6,233.7 |  | $ | 8,903.6



| | (a) | Excludes $585.0 million anticipated to be paid to shareholders of CTC pursuant to a definitive purchase agreement. This transaction is expected to be completed during the third
quarter of 2007, but is still pending approval of the FCC and CTC shareholders.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | Excludes $(27.9) million of unamortized discounts included in long-term debt at June 30, 2007.
| | --- | ----------------------------------------------------------------------------------------------



| | (c) | Variable rates are calculated in relation to LIBOR.
| | --- | ---------------------------------------------------

The Company did not
recognize significant obligations as a result of the adoption of FIN 48 on January 1, 2007.



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Critical Accounting Policies

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States. In Managements Discussion and Analysis of Financial Condition and Results of Operations for
the year ended December 31, 2006 in the Companys Annual Report on Form 10-K, the Company identified the critical accounting policies which affect its more significant estimates and assumptions used in preparing its consolidated financial
statements. These critical accounting policies include evaluating the collectibility of trade receivables, accounting for pension and other postretirement benefits, calculating depreciation and amortization expense, determining the fair values of
goodwill and other indefinite-lived intangible assets and accounting for current and deferred income taxes. See Note 2, Accounting Changes, for discussion relating to the Companys adoption of FIN 48. Other than the adoption of FIN
48, there were no material changes to the Companys critical accounting policies during the six month period ended June 30, 2007.

Recently
Issued Accounting Pronouncements

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS No. 157 clarifies
the definition of fair value, establishes a framework for measuring fair value and expands the disclosures related to fair value measurements that are included in a companys financial statements. SFAS No. 157 does not expand the use of
fair value measurements in financial statements, but emphasizes that fair value is a market-based measurement and not an entity-specific measurement that should be based on an exchange transaction in which a company sells an asset or transfers a
liability (exit price). SFAS No. 157 also establishes a fair value hierarchy in which observable market data would be considered the highest level, while fair value measurements based on an entitys own assumptions would be considered the
lowest level. For calendar year companies like Windstream, SFAS No. 157 is effective beginning January 1, 2008. The Company is currently evaluating the effects, if any, that SFAS No. 157 will have on its consolidated financial
statements.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities 
Including an amendment of FASB Statement No. 115. SFAS No. 159 allows measurement at fair value of eligible financial assets and liabilities that are not otherwise measured at fair value. If the fair value option for an eligible item
is elected, unrealized gains and losses for that item shall be reported in current earnings at each subsequent reporting date. SFAS No. 159 also establishes presentation and disclosure requirements designed to draw comparison between the
different measurement attributes the company elects for similar types of assets and liabilities. This statement is effective for fiscal years beginning after November 15, 2007. The company is in the process of evaluating the application of the
fair value option and its effect on its consolidated financial statements.

Forward-Looking Statements

This Management's Discussion and Analysis of Financial Condition and Results of Operations includes, and future filings on Form 10-K, Form 10-Q and Form 8-K and future
oral and written statements by Windstream and our management may include, certain ''forward-looking statements''. Windstream claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995 for the Quarterly Report on Form 10-Q for the period ending June 30, 2007. Forward-looking statements are subject to uncertainties that could cause actual future events and results to differ materially from those expressed in
the forward-looking statements. These forward-looking statements are based on estimates, projections, beliefs, and assumptions that Windstream believes are reasonable but are not guarantees of future events and results. Actual future events and
results of Windstream may differ materially from those expressed in these forward-looking statements as a result of a number of important factors.

Factors
that could cause actual results to differ materially from those contemplated in our forward looking statements include, among others: adverse changes in economic conditions in the markets served by Windstream; the extent, timing and overall effects
of competition in the communications business; continued access line loss; the impact of new, emerging or competing technologies; the risks associated with the integration of acquired businesses or the ability to realize anticipated synergies, cost
savings and growth opportunities; the availability and cost of financing in the corporate debt markets; the potential for adverse changes in the ratings given to Windstreams debt securities by nationally accredited ratings organizations; the
effects of federal and state legislation, rules and regulations governing the communications industry; the adoption of inter-carrier compensation and/or universal service reform proposal by the Federal Communications Commission or Congress that
results in a significant loss of revenue to Windstream; an adverse development regarding the tax treatment of the spin-off from Alltel on July 17, 2006 and the restrictions on certain financing and other activities imposed by the tax sharing
agreement with Alltel; the failure to successfully complete the contemplated split off of our directory publishing business, Windstream Yellow Pages, in what Windstream expects to be a tax-free transaction to affiliates of Welsh, Carson,
Anderson & Stowe; material changes in the communications industry generally that could adversely affect vendor relationships with equipment and network suppliers and customer relationships with wholesale



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customers; unexpected results of litigation; the effects of workstoppages; the impact of equipment failure,
natural disasters or terrorist acts; and those additional factors under the caption Risk Factors in the Form 10-K for the year ended December 31, 2006. In addition to these factors, actual future performance, outcomes and results
may differ materially because of more general factors including, among others, general industry and market conditions and growth rates, economic conditions, and governmental and public policy changes.

Windstream undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing
review of factors that could cause Windstreams actual results to differ materially from those contemplated in the forward-looking statements should be considered in connection with information regarding risks and uncertainties that may affect
Windstreams future results included in this Managements Discussion and Analysis of Financial Condition and Results of Operations and in other filings by Windstream with the Securities and Exchange Commission at www.sec.gov.



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WINDSTREAM CORPORATION

FORM 10-Q

PART I  FINANCIAL INFORMATION

Item 3. Quantitative and Qualitative Disclosures About Market Risk

The Companys market risks at
June 30, 2007 are similar to the market risks discussed in the Companys Annual Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on March 1, 2007. The Company is primarily exposed to market risk from
changes in interest rates. The Company does not own marketable equity securities nor operate in foreign countries, and therefore Windstream is not exposed to market risk from changes in equity prices or foreign currency rates. Windstream has
estimated its interest rate risk using sensitivity analysis. For Windstreams variable rate debt instruments, market risk is defined as the potential change in earnings resulting from a hypothetical adverse change in interest rates. The results
of the sensitivity analysis used to estimate market risk is presented below. Actual results may differ from this estimate.

Interest Rate Risk

Under its current policy, the Company enters into interest rate swap agreements to obtain a targeted mixture of variable and fixed interest rate debt
such that the portion of debt subject to variable rates does not exceed 25 percent of Windstreams total debt outstanding. The Company has established policies and procedures for risk assessment and the approval, reporting, and monitoring of
interest rate swap activity. Windstream does not enter into interest rate swap agreements, or other derivative financial instruments, for trading or speculative purposes. Management periodically reviews Windstreams exposure to interest rate
fluctuations and implements strategies to manage the exposure.

The Companys earnings are affected by changes in variable interest rates related to
Windstreams borrowings under its senior secured credit facilities. Due to the interest rate risk inherent in the variable rate senior secured credit facilities, the Company entered into four pay fixed, receive variable interest rate swap
agreements on notional amounts totaling $1,600.0 million to convert variable interest rate payments to fixed. The four interest rate swap agreements amortize quarterly to a notional value of $906.3 million at maturity on July 17, 2013, and have
an unamortized notional value of $1,487.5 million as of June 30, 2007. The variable rate received by Windstream on these swaps is the three-month LIBOR (London-Interbank Offered Rate), which was 5.36 percent at June 30, 2007. The
weighted-average fixed rate paid by Windstream is 5.60 percent. The interest rate swap agreements are designated as cash flow hedges of the interest rate risk created by the variable interest rate paid on the senior secured credit facilities
pursuant to the guidance in SFAS No. 133, Derivative Financial Instruments, as amended.

After the completion of the February 27threfinancing transaction, a portion of one of the four interest rate swap agreements with a notional
value of $125.0 million was no longer considered an effective hedge as the portion of the Companys senior secured credit facility that it was designated to hedge against was repaid. Changes in the market value of this portion of the swap,
which has an unamortized notional value of $115.6 million as of June 30, 2007, are recognized in net income, including $2.5 million and $2.9 million recognized as other income in the unaudited consolidated statement of income for the three and
six months ended June 30, 2007, respectively.

A hypothetical increase of 100 basis points in variable interest rates would reduce annual
pre-tax earnings by approximately $4.1 million. Conversely, a hypothetical decrease of 100 basis points in variable interest rates would increase annual pre-tax earnings by approximately $4.1 million.



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WINDSTREAM CORPORATION

FORM 10-Q

PART I  FINANCIAL INFORMATION

Item 4. Controls and Procedures

(a)  Evaluation of disclosure controls and procedures.

The term disclosure controls and procedures (defined in Exchange Act Rule 13a-15(e)) refers to the controls and other
procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Securities Exchange Act of 1934 (the Exchange Act) is recorded, processed,
summarized and reported within required time periods. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by the company in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the company's management, including the company's principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure. Windstreams
management, with the participation of the Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company's disclosure controls and procedures as of the end of the period covered by this quarterly report (the
Evaluation Date). Based on that evaluation, Windstreams Chief Executive Officer and Chief Financial Officer have concluded that, as of the Evaluation Date, such disclosure controls and procedures were effective.

(b)  Changes in internal control over financial reporting.

The term internal control over financial reporting (defined in SEC Rule 13a-15(f)) refers to the process of a company that is designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Windstreams management, with the participation of the Chief Executive Officer and Chief Financial Officer,
have evaluated any changes in the Company's internal control over financial reporting that occurred during the period covered by this quarterly report, and they have concluded that there were no changes to Windstreams internal control over
financial reporting that have materially affected, or are reasonably likely to materially affect, Windstreams internal control over financial reporting.



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WINDSTREAM CORPORATION

FORM 10-Q

PART II  OTHER INFORMATION

Item 1. Legal Proceedings

On October 16, 2006, the Company received a negative ruling in a binding arbitration
proceeding previously brought against Valor Communications Southwest LLC and Valor Communications Group, Inc., by former employees regarding stock option award agreements. On January 8, 2007, the arbitrator entered a final award for the former
employees of $7.2 million for the value of options that the Company asserts were without value immediately prior to Valors initial public offering in February 2005. The Company had established a liability for this amount accounting for the
merger with Valor in 2006. The basis for the award was the arbitrators finding that these particular claimants options were extended past the initial public offering date. The claimants have filed separate complaints to confirm the award
in Oklahoma federal district court. The Company has filed motions in Oklahoma to dismiss, or alternatively to transfer, the complaints to Texas federal district court and also filed a separate motion to vacate the arbitrators award in Texas
federal district court. The Company intends to vigorously assert and defend its position in the matter.

The Company is party to various other legal
proceedings. Although the ultimate resolution of these various proceedings cannot be determined at this time, management of the Company does not believe that such proceedings, individually or in the aggregate, will have a material adverse effect on
the future consolidated results of income, cash flows or financial condition of the Company.

In addition, management of the Company is currently not aware
of any environmental matters that, individually or in the aggregate, would have a material adverse effect on the consolidated financial condition or results of operations of the Company.

Item 1A. Risk Factors

During the first six months of 2007, there have been no material changes to the risk factors
affecting Windstreams businesses that were discussed in the Companys Annual Report on Form 10-K for the year ended December 31, 2006, filed with the SEC on March 1, 2007.



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WINDSTREAM CORPORATION

FORM 10-Q

PART II  OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders

The Companys Annual Stockholders
Meeting was held on May 9, 2007 in Little Rock, Arkansas. At the meeting, the following items were submitted to a vote of stockholders:



| | 1. | The stockholders elected all persons nominated to serve as a director as set forth in the Companys Proxy Statement dated March 30, 2007, with the following vote results:
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                             |  |             |  |               
|---------------------------- |  | ----------- |  | --------------
|Nominee                      |  | Votes For   |  | Votes Withheld
|Samuel E. Sandy Beall, III |  | 434,789,505 |  | 7,515,988     
|Dennis E. Foster             |  | 395,114,261 |  | 47,191,232    
|Francis X. Frantz            |  | 432,414,914 |  | 9,890,579     
|Jeffery R. Gardner           |  | 435,287,176 |  | 7,018,317     
|Jeffrey T. Hinson            |  | 435,288,946 |  | 7,016,547     
|Judy K. Jones                |  | 435,261,430 |  | 7,044,063     
|William A. Montgomery        |  | 435,091,219 |  | 7,214,274     
|Frank E. Reed                |  | 435,178,558 |  | 7,126,935     



| | 2. | The stockholders approved Windstreams Performance Incentive Compensation Plan with 421,825,056 votes for, 15,844,771 votes against and 4,635,666 abstentions.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3. | The stockholders ratified the appointment of PricewaterhouseCoopers LLP as Windstreams independent registered public accountant for 2007 with 436,758,900 votes for, 2,223,082
votes against and 3,323,511 abstentions.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 4. | The stockholders voted upon and rejected a stockholder proposal entitled Required Equity Awards to be held with 36,271,270 votes for, 308,698,721 votes against,
5,218,796 abstentions and 92,116,706 broker non-votes.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 6. Exhibits

See the exhibits specified on the Index of Exhibits located at page 52.



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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



| |  |                                                  |  | 
| |  | ------------------------------------------------ |  | 
| |  | WINDSTREAM CORPORATION                           |  | 
| |  | (Registrant)                                     |  | 
| |  |                                                 
| |  | /s/ Brent K. Whittington                         |  | 
| |  | Brent K. Whittington                             |  | 
| |  | Executive Vice PresidentChief Financial Officer |  | 
| |  | (Principal Financial Officer)                    |  | 
| |  | August 8, 2007                                   |  | 



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WINDSTREAM CORPORATION

FORM 10-Q

INDEX OF EXHIBITS



|                     |  |                                                                                                                                                    |  |    
|-------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---
|Form 10-QExhibit No. |  | Description of Exhibits                                                                                                                            |  |    
|                     |  |                                                                                                                                                   
|31(a)                |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                |  | (*)
|                     |  |                                                                                                                                                   
|31(b)                |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                |  | (*)
|                     |  |                                                                                                                                                   
|32(a)                |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | (*)
|                     |  |                                                                                                                                                   
|32(b)                |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |  | (*)

---

|(*) | Filed herewith.
|--- | ---------------



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