Earthlink 2014 Annual Report Download - page 48

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Table of Contents
Investing activities
The decrease in net cash used in investing activities during the year ended December 31, 2013 compared to the prior year was primarily due to a
$64.1 million change in net cash from purchases and sales of marketable securities, as we generated more cash from the sale of marketable
securities (net of purchases) during the year ended December 31, 2013 as compared to the year ended December 31, 2012. Also contributing was
a $3.7 million decrease in capital expenditures. Partially offsetting these decreases was $16.8 million of cash used for our acquisition of
CenterBeam in July 2013.
The decrease in net cash used in investing activities during the year ended December 31, 2014 compared to the prior year was primarily due to a
$40.8 million decrease in capital expenditures and a $16.8 million decrease in cash used for acquisitions, partially offset by $46.9 million of net
cash generated from sales and maturities of marketable securities, net of purchases, during the year ended December 31, 2013. The decrease in
capital expenditures during the year ended December 31, 2014 was due to additional cash used in 2013 to expand our fiber network and upgrade
our network and technology infrastructure, which was substantially complete by the end of 2013, and a focused effort in 2014 to reduce capital
expenditures. Capital expenditures during the year ended December 31, 2014 primarily related to enhancing our network and technology
infrastructure and the acquisition of new customers.
Financing activities
The decrease in net cash used in financing activities during the year ended December 31, 2013 compared to the prior year was primarily due to a
$19.3 million decrease in repurchases of common stock, a $9.4 million decrease in net cash used for debt and capital lease transactions
(repayments net of proceeds) and a $0.3 million decrease in dividends paid. We repurchased 3.7 million shares of our common stock for $25.4
million during the year ended December 31, 2012, compared to 1.1 million shares of our common stock for $6.1 million during the year ended
December 31, 2013. Dividend payments were $21.1 million and $20.8 million during the years ended December 31, 2012 and 2013,
respectively, reflecting quarterly dividends of $0.05 per share.
The decrease in net cash used in financing activities during the year ended December 31, 2014 compared to the prior year was primarily due to a
$24.3 million decrease in net cash used for debt and capital lease transactions, a $4.8 million decrease in dividends paid and a $3.9 million
decrease in repurchases of common stock. The decrease in dividends paid was due to the timing of our quarterly dividend payment to
shareholders. During the years ended December 31, 2013 and 2014, cash dividends declared were $0.20 per share. However, our fourth quarter
2013 payment was paid to shareholders within the quarter and our fourth quarter 2014 was paid to shareholders subsequent to the quarter in
January 2015. We repurchased 1.1 million shares of our common stock for $6.1 million during the year ended December 31, 2013, compared to
0.7 million shares of our common stock for $2.2 million during the year ended December 31, 2014.
Future uses of cash
Our cash requirements depend on numerous factors, including the costs required to maintain our network infrastructure, the outcome of various
telecommunications-
related disputes and proceedings, the pricing of our services, the level of resources used for our sales and marketing
activities, the level of restructuring activities, interest payments on outstanding debt, the costs incurred to redeem or repurchase debt and the size
and types of future acquisitions in which we may engage, among others. The following is a summary of our primary future cash requirements:
43
•
Debt and interest.
We expect to use cash to service our outstanding indebtedness, including our $300.0 million aggregate principal
amount of Senior Notes due in May 2019, our $300.0 million aggregate principal amount of Senior Secured Notes due in June 2020 and
any future borrowings under our $135.0 million revolving credit facility.
• Capital expenditures . We expect to incur capital expenditures of approximately $90.0 million to $100.0 million
during 2015. The
capital expenditures primarily relate to the acquisition of new customers and to maintain and upgrade our network and technology
infrastructure. The actual amount of capital expenditures may fluctuate due to a number of factors which are difficult to predict and
could change significantly over time. Additionally, technological advances may require us to make capital expenditures to develop or
acquire new equipment or technology in order to replace aging or obsolete equipment.
•
Investments in our growth Business Services.
We expect to invest cash in sales and marketing efforts and other resources required to
support our strategy related to our growth Business Services products.