Windstream 2006 Annual Report Download - page 152

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. Debt, Continued:
Windstream has a five-year $500.0 million unsecured line of credit under a revolving credit agreement with an
expiration date of July 17, 2011. Letters of credit are deducted in determining the total amount available for
borrowing under the $500.0 million revolving credit agreement. Accordingly, the total amount outstanding under
the letters of credit and the indebtedness incurred under the revolving credit agreement may not exceed $500.0
million. At December 31, 2006, the amount available for borrowing under the revolving credit agreement was
$496.0 million.
Interest expense was as follows for the years ended December 31:
(Millions) 2006 2005 2004
Interest expense related to long-term debt $ 210.8 $ 20.3 $ 22.3
Other interest expense 0.4 1.4 1.0
Impacts of interest rate swaps 1.1 - -
Less capitalized interest expense (2.7) (2.6) (2.9)
$ 209.6 $ 19.1 $ 20.4
On February 27, 2007, Windstream completed the private placement of $500.0 million aggregate principal amount
of senior notes due 2019. The new senior notes were priced with an interest rate of 7.0 percent. 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 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; modify certain covenants to permit the consummation of the
previously announced split-off of its directory publishing business; and make other specified changes.
6. Financial Instruments:
The Company’s financial instruments consist primarily of cash and short-term investments, accounts receivable,
accounts payable and long-term debt. The carrying amount of cash and short-term investments, accounts receivable
and accounts payable was estimated by management to approximate fair value due to the relatively short period of
time to maturity for those instruments. The fair values of the Company’s investments, long-term debt, and interest
rate swaps were as follows at December 31:
(Millions) 2006 2005
Fair
Value
Carrying
Amount
Fair
Value
Carrying
Amount
Investments $ 7.7 $ 7.7 $ 2.0 $ 2.0
Long-term debt, including current maturities $ 5,782.3 $ 5,488.4 $ 281.1 $ 260.8
Interest rate swaps $ 39.0 $ 39.0 $ - $ -
The fair value estimates were based on a discounted cash flow of the outstanding long-term debt using the
weighted maturities and interest rates currently available in the long-term financing markets. There was no impact
to earnings due to hedge ineffectiveness for the interest rate swap agreements.
7. Supplemental Cash Flow Information:
Supplemental cash flow information from continuing operations was as follows for the years ended December 31:
(Millions) 2006 2005 2004
Interest paid, net of amounts capitalized $ 74.0 $ 17.9 $ 19.2
Income taxes paid $ 396.9 $ 215.4 $ 187.9
Of the interest and income taxes paid in 2006, $11.3 million and $265.1 million, respectively, was paid by Alltel,
which Windstrean funded through advances to Alltel as reflected in financing activities in the consolidated
statements of cash flows.
F-51