Frontier Communications 2013 Annual Report Download - page 34

Download and view the complete annual report

Please find page 34 of the 2013 Frontier Communications annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 106

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106

Cash Flows used by Investing Activities
Capital Expenditures
In 2013, 2012 and 2011, our capital expenditures were $634.7 million, $802.5 million and $824.8 million
(including $54.1 million and $76.5 million, respectively, of integration-related capital expenditures in 2012 and
2011 for the 2010 Transaction), respectively. During 2012 and 2013, Frontier received a total of $71.9 million
from the first round of Connect America Fund (CAF) Phase I and $57.6 million related to the second round of
CAF Phase I to support broadband deployment in unserved and underserved high-cost areas. In addition to the
capital expenditures mentioned above, we spent $32.7 million and $4.8 million of the CAF funds on network
expansion in 2013 and 2012, respectively, enabling 64,400 households. We anticipate capital expenditures for
business operations to decrease in 2014 related to our currently owned properties to approximately $575 million
to $625 million, as compared to $634.7 million in 2013. We anticipate an additional $85 million to $105
million of capital expenditures in 2014 related to the integration activities of the pending AT&T Transaction.
Cash Flows used by and provided from Financing Activities
Debt Financings
The 2024 Notes
On April 10, 2013, the Company completed a registered offering of $750.0 million aggregate principal
amount of 7.625% senior unsecured notes due 2024 (the 2024 Notes), issued at a price of 100% of their
principal amount. We received net proceeds of $736.9 million from the offering after deducting underwriting
fees. The Company used the net proceeds from the sale of the notes, together with cash on hand, to finance the
April 2013 debt tender offers discussed below.
The 2021 Notes
On May 17, 2012, the Company completed a registered offering of $500 million aggregate principal
amount of 9.250% senior unsecured notes due 2021 (the 2021 Notes), issued at a price of 100% of their
principal amount. We received net proceeds of $489.6 million from the offering after deducting underwriting
fees and offering expenses. The Company also commenced a tender offer to purchase the maximum aggregate
principal amount of its 8.250% Senior Notes due 2014 (the 2014 Notes) and its 7.875% Senior Notes due 2015
(the April 2015 Notes and, together with the 2014 Notes, the Notes) that it could purchase for up to $500
million in cash (the 2012 Debt Tender Offer).
The 2023 Notes
On August 15, 2012, the Company completed a registered offering of $600 million aggregate principal
amount of 7.125% senior unsecured notes due 2023 (the 2023 Notes), issued at a price of 100% of their
principal amount. We received net proceeds of $588.1 million from the offering after deducting underwriting
fees and offering expenses. The Company used the net proceeds from the sale of the notes to repurchase or
retire existing indebtedness in 2013.
On October 1, 2012, the Company completed a registered offering of $250 million aggregate principal
amount of the 2023 Notes, issued at a price of 104.250% of their principal amount. We received net proceeds
of $255.9 million from the offering after deducting underwriting fees and offering expenses. The notes are an
additional issuance of, are fully fungible with and form a single series voting together as one class with the
$600 million aggregate principal amount of the 2023 Notes issued by the Company on August 15, 2012. The
Company used the net proceeds from the sale of the notes to repurchase or retire existing indebtedness in 2013.
Debt Reduction
During 2013 and 2012, we retired an aggregate principal amount of $1,563.0 million and $757.0 million,
respectively, of debt consisting of $1,562.6 million and $756.1 million, respectively, of senior unsecured debt
and $0.4 million and $0.9 million, respectively, of rural utilities service loan contracts, as discussed in more
detail below.
33
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES