Windstream 2007 Annual Report Download - page 107

The primary uses of cash for future capital expenditures are for property, plant and equipment necessary to support the
Company’s wireline operations. Annual capital expenditures by operating segment are forecasted as follows for 2008:
(Millions)
Range of
Capital Expenditures
Wireline $ 337.0 - $ 367.0
Product distribution 0.3 - 0.3
Other operations 2.7 - 2.7
Totals $ 340.0 - $ 370.0
Capital expenditures for 2008 will be primarily incurred to construct additional network facilities and to upgrade the
Company’s telecommunications network. The forecasted spending levels in 2008 are subject to revision depending on
changes in future capital requirements of our business segments. The Company generated positive cash flows in 2007
sufficient to fund its day-to-day operations and to fund its capital requirements. We expect to continue to generate
sufficient cash flows in 2008 to fund our operations and capital requirements.
Cash Flows – Financing Activities
As discussed above, the primary use of funds through financing activities is the payment of dividends to shareholders.
These payments increased by $374.6 million in 2007 as the Company made only a partial quarterly dividend payment
in 2006 for the period following the spin off on July 17th through the end of the third quarter. The Company also
repurchased approximately 3.0 million shares of its common stock during 2007 using $40.0 million in proceeds from a
special cash dividend received pursuant to the sale of its publishing business. Prior to the spin off, the Company’s
primary recurring financing cash outflows were dividends paid to Alltel, as well as advances paid to Alltel for the
wireline division’s short-term financing needs. Under Alltel’s cash management practices, wireline cash receipts were
transferred daily to Alltel bank accounts, and the Company obtained interim financing from Alltel to fund its daily cash
requirements. Pursuant to the spin off, the Company paid a one-time special dividend of approximately $2.3 billion to
Alltel on July 17, 2006.
Proceeds received from borrowings in 2007, net of issuance costs, totaled $848.9 million, while repayments of
borrowings were $811.0 million. During 2007, the Company issued $500.0 million in senior unsecured notes due 2019.
These proceeds were used to retire $500.0 million in principal borrowings under Tranche B of the senior secured credit
facilities, which was refinanced through this transaction to lower the interest rate on the remainder of Tranche B and
modify the pre-payment provisions. The remaining borrowings in 2007 were from the Company’s revolving line of
credit, which was used in part to fund the acquisition of CTC. The remaining repayments during 2007 included the
payoff of $37.5 million of debt obligations assumed from CTC, scheduled principal payments on the Company’s
outstanding borrowings, and payments to reduce amounts outstanding under the revolving line of credit.
Proceeds received from borrowings in 2006, net of issuance costs, totaled $3,156.1 million, while repayments of
borrowings were $871.4 million. In conjunction with the spin off from Alltel, the Company incurred $2.4 billion of
borrowings under its senior secured credit agreement. In conjunction with the merger with Valor, the Company issued
$800.0 million of subsidiary debt due 2013. The proceeds from these offerings were used in part to pay the special
dividend to Alltel, to repay $780.6 million of debt assumed from Valor, to repay $80.8 million of debt previously
issued by the Company’s wireline operating subsidiaries, and to make other scheduled principal payments on
outstanding borrowings.
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. During March 2007
and December 2006, the Company sold certain customer receivables for approximately $1.9 million and $3.8 million,
respectively, that had previously been deemed uncollectible to a third party collection agency without recourse. The
Company may enter into similar transactions in the future in the normal course of business.
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