Windstream 2009 Annual Report Download - page 134

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
During 2009, the Company generated $1,120.8 million in cash flows from operations and increased its cash position by
$766.3 million to $1,062.9 million at December 31, 2009, primarily due to the proceeds of a $1,100.0 million debt
offering in 2009 (see “Cash Flows – Financing Activities”). 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, capital
expenditures, scheduled principle payments of long-term debt, the payment of dividends in 2010 and the NuVox
acquisition. In addition, we expect these same sources, together with available capacity under our $500.0 million
revolving credit facility (see Note 5), will be sufficient to finance the acquisition of Iowa Telecom.
The Company’s board of directors has adopted a current dividend practice for the payment of quarterly cash dividends
at a rate of $0.25 per share of the Company’s common stock. This practice can be changed at any time at the discretion
of the board of directors, and is subject to the Company’s restricted payment capacity under its debt covenants as
further discussed below. Dividends paid to shareholders were $1.00 per share during 2009, totaling $437.4 million.
Windstream also paid $109.2 million to shareholders in January 2010 pursuant to a $0.25 quarterly dividend declared
during the fourth quarter of 2009.
In February 2008, the Windstream Board of Directors approved a stock repurchase program for up to $400 million of
the Company’s common stock continuing until December 31, 2009. During 2009, the Company repurchased
13.0 million shares totaling $121.3 million bringing total repurchases under the stock repurchase program to
29.0 million shares for approximately $321.6 million. The stock repurchase program expired on December 31, 2009.
As of December 31, 2009, the Company had approximately $783.0 million of restricted payment capacity as governed
by its credit facility. The Company builds additional capacity through cash generated from operations while dividend
payments, share repurchases and other certain restricted investments reduce the available restricted payments capacity.
The Company will continue to opportunistically consider free cash flow accretive initiatives, including strategic
opportunities and debt repurchases.
Additionally, during October of 2009, Windstream received consent from its lenders to an amendment and restatement
of its $2,148.4 million senior secured credit facility (the “Amendment”). Windstream amended and restated its senior
secured credit facility to, among other things, extend the maturities of the facility and amend certain covenants to
afford Windstream additional flexibility, resulting in increased interest rates on the extended maturities. The extended
maturities and related interest rate increases associated with the Amendment as of December 31, 2009 were as follows:
Non-extended Extended Total
Due
Amount
(Millions)
Interest
Rate Increase
(Basis Points) Due
Amount
(Millions)
Amount
(Millions)
Senior secured credit facility:
Tranche A - variable rates July 17, 2011 $114.4 100 July 17, 2013 $ 168.9 $ 283.3
Tranche B - variable rates July 17, 2013 $289.8 125 December 17, 2015 $1,075.3 $1,365.1
Revolving line of credit -
variable rates (a) July 17, 2011 $152.4 100 July 17, 2013 $ 347.6 $ 500.0
(a) As of December 31, 2009, the Company had repaid the full amount outstanding under the revolving line of credit.
As of December 31, 2009, the Company had $6,295.2 million in long-term debt outstanding, including current maturities
(see Note 5). This outstanding debt is principally comprised of approximately $2,148.4 million secured primarily under
the Company’s senior secured credit facility and approximately $4,146.8 million in unsecured senior notes. Scheduled
principal payments for debt outstanding as of December 31, 2009 for each of the twelve month periods ended
December 31, 2010, 2011, 2012, 2013 and 2014 were $23.8 million, $139.4 million, $50.4 million, $1,242.6 million and
$10.8 million, respectively. Scheduled principle payments remaining after 2014 approximate $4,867.4 million.
The terms of the senior secured credit facility and indentures include customary covenants that, among other things,
require Windstream to maintain certain financial ratios, restrict its ability to incur additional indebtedness and limit its
cash payments. These financial ratios include a maximum leverage ratio of 4.5 to 1.0 and a minimum interest coverage
F-20