Telus 2010 Annual Report Download - page 70

66 . TELUS 2010 annual report
The discussion in this section is qualified by the Caution regarding
forward-looking statements at the beginning of the MD&A.
The Company’s capital structure financial policies, financing plan
and results are described in Section 4.3. In the normal course, the
Company has generated annual cash flow from operations exceeding
annual capital investment needed to support business growth and
re-invest in technology. In both 2010 and 2009, cash provided by
operating activities exceeded cash used by investing activities, long-
term debt was reduced and the average term to maturity of debt
was extended through financing activities.
Summary of Consolidated statements of cash flows
Years ended December 31
($ millions) 2010 2009 Change
Cash provided by operating activities 2,546 2,904 (12.3)%
Cash (used) by investing activities (1,707) (2,128) 19.8%
Cash (used) by financing activities (863) (739) (16.8)%
Increase (decrease) in cash and
temporary investments, net (24) 37 –
Cash and temporary investments,
net, beginning of period 41 4 –
Cash and temporary investments,
net, end of period 17 41 (58.5)%
7.1 Cash provided by operating activities
Cash provided by operating activities decreased by $358 million in 2010
when compared to 2009. Year-over-year comparative changes in cash
flow included:
.Changes in proceeds from securitized accounts receivable
(included in Net change in non-cash working capital on the consoli-
dated statements of cash flow) are a use of cash when proceeds
are reduced and a source of cash when proceeds are increased.
Proceeds were reduced by $100 million in 2010, as compared to an
increase of $200 million in 2009, for a comparative decrease in cash
flow of $300 million. (See Section 7.6 Accounts receivable sale.)
.EBITDA – excluding restructuring costs increased by $36 million
in 2010 when compared to 2009.
.Employer contributions to defined benefit plans in excess of the
defined benefit expense decreased by $51 million in 2010 when
compared to 2009. The Company made a voluntary one-time pension
contribution of $200 million in January 2011. (See Section 1.5.)
.Interest paid decreased by $96 million in 2010 when compared to
2009. The decrease resulted from lower losses on early redemption
of U.S. dollar Notes ($52 million in September 2010 as compared
to $99 million in December 2009), as well as lower interest rates
on the $2 billion of Series CG and CH notes issued to fund the two
partial early redemptions of the U.S. dollar Notes, and the change
in timing of semi-annual interest payments on the Series CH Notes
to January and July as compared to June and December on the
redeemed Notes. (See Section 7.3.)
.Interest received decreased by $51 million in 2010 when compared
to 2009, mainly due to higher receipts of interest on the settlement
of tax-related matters in 2009.
.Income tax payments net of recoveries were $311 million in 2010
or higher net payments of $45 million, primarily due to the receipt of
higher income tax recoveries in 2009 together with a slight increase
in instalments in 2010.
.Other changes in non-cash working capital.
10
09
08
CASH PROVIDED BY OPERAT ING ACTIVITIES ($ millions)
10 2,546
2,904
2,819
09
08
10
09
08
CAPITA L EXPENDITURES ($ millions)
10 1,721
2,10 3
2,741
8821,859
09
08
08
General capital expenditures AWS spectrum licences
7.2 Cash used by investing activities
Cash used by investing activities decreased by $421 million in 2010
when compared to 2009, principally due to lower capital expenditures
and an acquisition in 2009.
Capital expenditures
Years ended December 31
($ millions, except capital intensity) 2010 2009 Change
Wireless segment 463 770 (39.9)%
Wireline segment 1,258 1,333 (5.6)%
Total capital expenditures 1,721 2,103 (18.2)%
EBITDA less capital expenditures(1) 1,922 1,388 38.5%
Capital intensity(2) (%) 18 22 (4) pts.
(1) See Section 11.1 EBITDA for the calculation and description.
(2) Capital intensity is calculated as capital expenditures divided by operating revenues.
This measure provides a basis for comparing the level of capital expenditures to
other companies of varying size within the same industry.
Total capital expenditures decreased by $382 million in 2010 when
compared to 2009. EBITDA less capital expenditures increased by
$534 million in 2010 when compared to 2009.
7LIQUIDITY AND CAPITAL RESOURCES
A discussion of cash flow, liquidity, credit facilities and other disclosures