Windstream 2009 Annual Report Download - page 136

As of February 23, 2010, Moody’s Investors Service, Standard & Poor’s Corporation and Fitch Ratings had granted
Windstream the following senior secured, senior unsecured and corporate credit ratings:
Description Moody’s S&P Fitch
Senior secured credit rating Baa3 BB+ BBB-
Senior unsecured credit rating Ba3 B+ BB+
Corporate credit rating Ba2 BB- BB+
Outlook Stable Stable Negative
Factors that could affect Windstream’s short and long-term credit ratings would include, but are not limited to, a
material decline in the Company’s operating results, increased debt levels relative to operating cash flows resulting
from future acquisitions, increased capital expenditure requirements, or changes to our dividend policy. If
Windstream’s credit ratings were to be downgraded, the Company may incur higher interest costs on future
borrowings, and the Company’s access to the public capital markets could be adversely affected. The Company’s
exposure to interest risk is further discussed in the Market Risk section below. 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, as discussed further in Note 5. Windstream’s next significant scheduled debt maturity is in 2013.
Historical Cash Flows
(Millions) 2009 2008 2007
Cash flows provided from (used in):
Operating activities $ 1,120.8 $ 1,080.4 $ 1,033.7
Investing activities (492.8) (233.1) (867.1)
Financing activities 138.3 (622.7) (481.4)
Increase (decrease) in cash and cash equivalents $ 766.3 $ 224.6 $ (314.8)
Cash Flows – Operating Activities
Cash provided from operations is the Company’s primary source of funds. Cash flows from operating activities
increased by $40.4 million in 2009 as compared to 2008, and $46.7 million in 2008 as compared to 2007, primarily
from the deferral of cash tax payments resulting from accelerated depreciation on qualifying asset purchases in 2009 as
provided in the Economic Stimulus Act. In both periods, increases were partially offset by changes in working capital
requirements, including timing differences in the billing and collections of accounts receivable, payment of trade
payables and purchases of inventory. During 2009, the Company generated sufficient cash flows from operations to
fund its capital expenditures, scheduled principle payments of long-term debt and payment of dividends as further
discussed below.
Cash Flows – Investing Activities
Cash used in investing activities increased by $259.7 million in 2009 as compared to 2008, primarily due to net cash
used to acquire D&E and Lexcom, as previously discussed. Proceeds from the 2008 sale of the wireless business and
acquired assets held for sale, totaling $56.7 million and $17.8 million, respectively, also contributed to the increase (see
Notes 2 and 3).
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 2009 as compared to 2008 offset the increase in cash used in investing activities.
Capital expenditures were $298.1 million, $317.5 million and $365.7 million for 2009, 2008 and 2007, 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.
The primary uses of cash for future capital expenditures are for property, plant and equipment necessary to support the
Company’s wireline operations. Capital expenditures are forecasted to be between $360.0 million and $390.0 million
for 2010, which includes the forecasted capital to support the acquired D&E, Lexcom and NuVox networks. Capital
expenditures for 2010 will be primarily incurred to construct additional network facilities and to upgrade the
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