Windstream 2015 Annual Report Download - page 153

F-23
Excluding approximately $200.0 million in capital expenditures related to Project Excel, a capital program begun in late 2015 that
accelerates our plans to upgrade our broadband network by the end of 2016 funded using a portion of the proceeds from the sale
of the data center business, we expect total 2016 capital expenditures to range between $800.0 million and $850.0 million.
Cash Flows – Financing Activities
Cash used in financing activities decreased by $217.5 million in 2015 and $177.0 million in 2014, as compared to the prior year.
Debt repayments during 2015 totaled approximately $3,350.9 million and consisted primarily of $1,907.8 million in repayments
of borrowings under the revolving line of credit agreement, the redemption of $400.0 million 2018 Notes and $450.0 million
PAETEC 2018 Notes, open market repurchases of $299.5 million of aggregate principal amount of senior unsecured notes and,
following the completion of the debt-for-debt exchange, the pay-off of the remaining principal balance of $241.8 million of Tranche
B4 under the senior secured credit facility. Comparatively, during 2014, Windstream Services repaid approximately $1,395.4
million of long-term debt consisting primarily of $1,280.0 million in repayments of borrowings under the revolving line of credit
agreement.
Proceeds from new issuances of long term debt were $2,335.0 million and $1,315.0 million in 2015 and 2014, respectively, and
consisted solely of new borrowings under the revolving line of credit.
Prior to the completion of the spin-off and reverse stock split, on April 24, 2015, we made a cash distribution of $.0659 per share
to our stockholders of record on April 10, 2015, which was equivalent to a pro-rated $.25 per share quarterly dividend. Following
the spin-off and reverse stock split, Windstream expects to pay an annual dividend of $.60 per share, paid on a quarterly basis.
During 2015, dividends paid to shareholders were $369.2 million, which was a decrease of $233.0 million, as compared to 2014,
reflecting the decline in our quarterly dividend rate following the REIT spin-off. On February 10, 2016, we declared a cash dividend
of $.15 per share on our common stock which is payable on April 15, 2016, to shareholders of record on March 31, 2016.
Our dividend practice can be changed at any time at the discretion of our board of directors, and is subject to the restricted payment
capacity under Windstream Services’ debt covenants as further discussed below. Accordingly, we cannot assure you we will
continue paying dividends at the post-spin adjusted rate. See “Risk Factors” in Item 1A of Part I of this Annual Report on Form
10-K for additional information concerning our dividend practice.
Pension Contribution
We did not make a contribution to our qualified pension plan in 2015. During 2014, we contributed 1.0 million shares of our
common stock to the Windstream Pension Plan to meet our quarterly 2014 funding requirements. At the time of the contribution,
the common shares had an appraised value of approximately $8.3 million, as determined by a third party valuation firm. During
the third quarter of 2014, we contributed certain of our owned real property to the Windstream Pension Plan. Independent appraisals
of the properties contributed were obtained and the Windstream Pension Plan recorded the contribution based on the properties’
aggregate fair value of $80.9 million. We subsequently entered into leases for the contributed properties with initial lease terms
of 10 years for certain properties and 20 years for the remaining properties at an aggregate annual rent of approximately $6.3
million. The lease agreements provide for annual rent increases ranging from 2.0 percent to 3.0 percent over the initial lease term
and may be renewed for up to three additional five-year terms. The properties are managed on behalf of the Windstream Pension
Plan by an independent fiduciary and terms of the lease agreements were negotiated with the fiduciary on an arm’s-length basis.
During the fourth quarter of 2015 in conjunction with the sale of the data center business, Windstream Services repurchased at
fair value one of the properties contributed to the Windstream Pension Plan for $8.2 million in cash. Following the repurchase,
annual rent due under the lease agreements declined from approximately $6.3 million to $6.0 million.
The 2016 expected employer contribution for pension benefits consists of $1.0 million to the qualified pension plan to meet our
2016 funding requirements and $0.9 million necessary to fund the expected benefit payments of our unfunded supplemental
executive retirement pension plans to avoid certain benefit restrictions. The amount and timing of future contributions to the
qualified 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 the plan.