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FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2014, 2013 AND 2012
($ in thousands)
2014 2013 2012
Cash flows provided by (used in) operating activities:
Net income .............................................................. $ 132,893 $ 115,478 $ 153,314
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization . ....................................... 1,138,942 1,169,500 1,266,807
Losses on early extinguishment of debt . . ............................. — 159,780 90,363
Pension settlement costs . . ........................................... — 44,163 —
Pension/OPEB costs . ................................................ (18,026) 37,243 28,087
Stock based compensation expense .................................. 23,462 16,932 16,775
Gains on sale of assets . . . ........................................... (37,041) (14,601) —
Other non-cash adjustments . . . ....................................... 32,129 11,065 10,319
Deferred income taxes ............................................... (77,876) (7,510) 80,501
Change in accounts receivable ....................................... (61,528) 50,487 43,813
Change in accounts payable and other liabilities . . . .................... 89,666 (6,507) (148,906)
Change in prepaid expenses, income taxes and other current assets . . . 47,451 (80,403) 11,400
Net cash provided by operating activities .................................. 1,270,072 1,495,627 1,552,473
Cash flows provided from (used by) investing activities:
Cash paid for the Connecticut Acquisition ............................. (2,017,787) — —
Capital expenditures—Business operations . . . ......................... (572,443) (634,685) (748,407)
Capital expenditures—Integration activities . . . ......................... (115,653) — (54,097)
Network expansion funded by Connect America Fund . . ............... (56,453) (32,748) (4,830)
Grant funds received for network expansion from Connect America
Fund .............................................................. 3,748 63,636 65,981
Proceeds on sale of assets........................................... 38,636 17,755 —
Cash transferred from escrow . ....................................... 11,411 31,249 102,020
Other. . .............................................................. 32,820 12,300 4,394
Net cash used by investing activities ...................................... (2,675,721) (542,493) (634,939)
Cash flows provided from (used by) financing activities:
Long-term debt borrowings ........................................... 1,911,125 750,000 1,360,625
Financing costs paid . ................................................ (40,496) (19,360) (27,852)
Long-term debt payments . ........................................... (259,935) (1,563,022) (756,953)
Premium paid to retire debt........................................... — (159,429) (72,290)
Dividends paid . . ..................................................... (400,892) (399,768) (399,390)
Other. . .............................................................. (2,058) (8,048) (21,236)
Net cash provided from (used by) financing activities. . . .................... 1,207,744 (1,399,627) 82,904
(Decrease)/Increase in cash and cash equivalents ......................... (197,905) (446,493) 1,000,438
Cash and cash equivalents at January 1,.................................. 880,039 1,326,532 326,094
Cash and cash equivalents at December 31, . ............................. $ 682,134 $ 880,039 $1,326,532
Supplemental cash flow information:
Cash paid during the period for:
Interest .............................................................. $ 655,531 $ 667,753 $ 636,485
Income taxes, net .................................................... $ 70,390 $ 94,161 $ 4,715
Non-cash investing and financing activities:
Capital lease obligations. . . ........................................... $ — $ — $ 26,596
Financing obligation for contributions of real property to pension plan. . . $ — $ 23,422 $ —
Reduction of pension obligation ....................................... $ — $ (23,422) $ —
Increase (decrease) in capital expenditures due to changes in accounts
payable. . . ......................................................... $ (15,271) $ 39,847 $ 9,802
The accompanying Notes are an integral part of these Consolidated Financial Statements
F-9