Windstream 2008 Annual Report Download - page 112

payments on the debt issued and assumed pursuant to the spin off and merger transactions until the fourth quarter of
2006. These decreases in cash flows were partially offset by new cash flows generated in 2007 from the acquired Valor
and CTC operations.
Cash Flows – Investing Activities
Cash used in investing activities decreased by $634.0 million in 2008 as compared to 2007, primarily due to net cash
used to acquire CTC. This 2007 cash outlay, totaling $546.8 million, was funded primarily with cash on hand at the
time of the acquisition, with the remainder funded through borrowings from the Company’s revolving line of credit. It
was partially offset by $40.0 million in proceeds received on the sale of the publishing business.
A reduction in capital expenditures in 2008 as compared to 2007 also contributed to the decline in cash used in
investing activities. Capital expenditures were $317.5 million, $365.7 million and $373.8 million for 2008, 2007 and
2006, respectively. Capital expenditures in each of the three years were incurred to construct additional network
facilities and to upgrade the Company’s telecommunications network in order to expand our offering of other
communications services, including high-speed Internet communication services. During each of the three years, the
Company funded its capital expenditures through internally generated funds.
Capital expenditures in 2008 were partially offset by $56.7 million and $17.8 million in net proceeds received on the
sale of the wireless business and acquired assets held for sale, respectively. See Notes 3 and 16 for further discussion.
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 2009:
(Millions)
Range of
Capital Expenditures
Wireline $ 289.8 - $ 319.8
Product distribution 0.2 - 0.2
Totals $ 290.0 - $ 320.0
Capital expenditures for 2009 will be primarily incurred to construct additional network facilities and to upgrade the
Company’s telecommunications network. Windstream will continue to focus capital expenditures on the expansion of
its next generation network services, including Ethernet internet access, Virtual LAN services (“VLS”), and Virtual
Private Network (“VPN”) services. Additionally, Windstream will continue to focus on infrastructure upgrades to
support our suite of enterprise and residential high-speed Internet services and expand our 6 Mb and 12 Mb high-speed
Internet footprint. The forecasted spending levels in 2009 are subject to revision depending on changes in future capital
requirements of our business segments. The Company generated positive cash flows in 2008 sufficient to fund its
day-to-day operations and to fund its capital requirements. As mentioned previously, we expect that cash on hand,
along with cash generated from operations over the next year, will be adequate to finance our ongoing operating
requirements and capital expenditures.
Cash Flows – Financing Activities
As discussed above, the primary use of funds through financing activities is the payment of dividends to shareholders.
These payments decreased by $31.6 million in 2008 primarily due to fewer shares issued and outstanding as of
December 31, 2008 as a result of the stock repurchase program, and the split off of the directory publishing business.
As previously discussed, in 2008 the Company repurchased 16.0 million shares of its common stock at a cost of $200.3
million. 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.
Repayments of borrowings were $354.3 million during 2008. Gross debt issued, net of issuance costs, during the
twelve months ended December 31, 2008 totaled $380.0 million. In 2008, the Company borrowed $380.0 million from
its $500.0 million revolving credit agreement. Gross payments on the revolving credit agreements totaled $330.0
million during 2008, resulting in a $50.0 million net increase in amounts due under the revolving credit agreement.
Other retirements of long-term debt in 2008 reflected the required scheduled principal payments under the Company’s
existing long-term debt obligations.
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