Windstream 2011 Annual Report Download - page 125

F-17
Intercarrier Compensation
There are pending intercarrier compensation complaint proceedings in Ohio, Kentucky, Pennsylvania and North Carolina. In
those proceedings, it is alleged that our intrastate switched access rates are excessive and should be reduced to the same levels
charged by the largest incumbent carriers or to our interstate access rate levels in each state. The various proceedings are at
different stages of completion; however, the state commissions are evaluating whether they need to proceed since the FCC has
released the Order comprehensively addressing intercarrier compensation reform. We do not believe the proposed intercarrier
compensation proposals in Ohio and North Carolina will have a material impact on our operations if adopted. The evaluations
in the remaining states are in preliminary stages, and we will continue to engage with these states to ensure our interests are
appropriately represented.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Liquidity and Capital Resources
We increased our cash position by $184.7 million to $227.0 million at December 31, 2011 from $42.3 million at December 31,
2010. Cash inflows were largely generated through cash flows from operations of $1,228.8 million, primarily driven by the
Acquired Companies, as well as cash received from issuances of debt. These inflows were partially offset by cash outflows for
repayments of debt and payment of interest, capital expenditures and payments of dividends.
We rely largely on operating cash flows and long-term debt to provide for our liquidity requirements. We expect cash flows
from operations will be sufficient to fund scheduled principal and interest payments through 2012. Due to our operating cash
flows, access to capital markets and available borrowing capacity under our revolving credit agreements, we believe that we
have the ability meet our liquidity needs for the foreseeable future. Those liquidity needs include, but are not limited to:
• ongoing working capital requirements of our operations,
• planned capital expenditures,
• scheduled debt principal and interest payments,
• dividend payments and
• contributions to our pension and postretirement plans.
We are not required to make a pension contribution in 2012, but can make a contribution on a voluntary basis. The amount and
timing of future contributions to the pension plan are dependent upon a myriad of factors including future investment
performance, changes in future discount rates and changes in the demographics of the population participating in our qualified
pension plan.
We anticipate refinancing the majority of the principal amounts maturing in 2013 before they mature as we do not expect that
cash flows from operations will be sufficient to fund the scheduled maturities. See also our discussion of “Our substantial debt
could adversely affect our cash flow and impair our ability to raise additional capital on favorable terms” within “Risk Factors”
in Item 1A of Part I.
Additionally, the actual amount and timing of our future capital requirements may differ materially from our estimates
depending on the demand for our services and new market developments and opportunities, and on other factors, including
those described in Part I, "Item 1A. Risk Factors" in this report. If our plans or assumptions change or prove to be inaccurate,
the foregoing sources of funds may prove to be insufficient. In addition, if we seek to acquire other businesses or to accelerate
the expansion of our business, we may be required to seek material amounts of additional capital. Additional sources may
include equity and debt financing. Further, if we believe we can obtain additional debt financing on advantageous terms, we
may seek such financing at any time, to the extent that market conditions and other factors permit us to do so. The debt
financing we may seek could be in the form of additional term loans under our senior secured credit facilities or additional debt
securities having substantially the same terms as, or different terms from, our outstanding senior notes.