Windstream 2012 Annual Report Download - page 119

F-21
Cash Flows – Financing Activities
Cash used in financing activities increased by $379.0 million for the twelve months ended December 31, 2012, as compared to
the same period in 2011. This increase was due to repayments of debt, primarily offset by debt proceeds, discussed below.
Our board of directors maintains a dividend practice for the payment of quarterly cash dividends at a rate of $0.25 per share of
our common stock. This practice can be changed at any time at the discretion of the board of directors, and is subject to our
restricted payment capacity under our debt covenants as further discussed below. Dividends paid to shareholders were $1.00
per share during 2012, totaling $588.0 million,which was an increase of $78.4 million due to additional shares issued and
outstanding resulting from the acquisition of PAETEC. We also paid $147.0 million to shareholders in January 2013 pursuant to
a $0.25 quarterly dividend declared during the fourth quarter of 2012.
We retired $300.0 million in outstanding indebtedness related to the PAETEC 2015 Notes in 2012. Additionally, we borrowed
$730.0 million under the revolving line of credit in our senior secured credit facility and later repaid $1,650.0 million during
2012. During the third quarter of 2012, we incurred new borrowings of $300.0 million of Tranche A4 senior secured credit
facilities due August 8, 2017, and $600.0 million of Tranche B3 senior secured credit facilities due August 8, 2019. During the
first quarter of 2012, we amended and restated $150.4 million of the Tranche A2 senior secured credit facilities outstanding
("Tranche A2") to Tranche A3 senior secured credit facilities ("Tranche A3") and incurred new borrowings of $280.0 million of
Tranche A3 facilities, which will also be due December 30, 2016.
Cash used in financing activities decreased by $265.7 million for the twelve months ended December 31, 2011, as compared to
the same period in 2010. This decrease was due to debt proceeds, partially offset by repayments of debt, discussed below.
During 2011, we issued $1,750.0 million in additional notes and extended the maximum line of credit under our revolving
credit agreement from $750.0 million million to $1,250.0 million. The proceeds from the additional notes, along with
borrowings from the revolving line of credit, were used to retire $2,146.0 million in outstanding indebtedness during the year
ended December 31, 2011. This included $1,746.0 million of our 2016 Notes and all $400.0 million of our Valor Notes. These
transactions allowed us to extend our existing debt maturities and lower our future interest costs. We borrowed $3,170.0 million
under the revolving line of credit in our senior secured credit facility and later repaid $2,400.0 million during 2011.
During 2010, we issued $900.0 million in additional notes. Proceeds from these issuances were used to repay $281.0 million,
$628.9 million and $266.2 million in debt and related swap agreements assumed from NuVox, Iowa Telecom and Q-Comm,
respectively. Additionally, we made regularly scheduled payments of $23.9 million, borrowed $665.0 million under the
revolving line of credit in our senior secured credit facility and later repaid $515.0 million of those revolver borrowings during
2010. Dividends paid to shareholders totaled $464.6 million in 2010.
Pension Contribution
We did not make a pension contribution during 2012. The 2013 expected employer contribution for pension benefits consists of
$0.7 million necessary to fund the expected benefit payments related to the unfunded supplemental executive retirement
pension plans and approximately $20.0 million in contributions to avoid certain benefit restrictions, which we intend to make in
Windstream stock. 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.
During 2011, we contributed 10.8 million shares of our common stock to our qualified pension plan to meet our remaining
2011 and expected 2012 obligation, which allowed us to preserve cash and manage overall net debt leverage. At the time of the
contribution, these shares had an appraised value, as determined by an unaffiliated third party valuation firm, of approximately
$135.8 million. The pension trust subsequently sold all 10.8 million shares for approximately $133.5 million.
Debt and Dividend Capacity
As of December 31, 2012, we had $8,903.7 million in long-term debt outstanding, including current maturities and excluding
the premium and capital lease obligations (see Note 5). As of December 31, 2012, the amount available for borrowing under the
revolving line of credit was $1,234.3 million and will expire December 17, 2015.
As of December 31, 2012, we had approximately $1,108.6 million of restricted payment capacity as governed by our credit
facility, which limits the amount of dividends we may distribute. We build additional capacity through cash generated from