Earthlink 2012 Annual Report Download - page 55

Table of Contents
activities was a $149.2 million decrease in cash used for acquisitions, net of cash acquired. During the year ended December 31, 2010, we used
$192.3 million of net cash for our acquisition of ITC^DeltaCom. During the year ended December 31, 2011, we used $43.1 million of net cash
for acquisitions, primarily due to our acquisitions of One Communications and STS Telecom. The overall increase in cash flows from investing
activities was offset by a $77.9 million increase in capital expenditures, primarily due to the inclusion of capital expenditures of our acquired
companies, network and technology center related projects and customer acquisition costs.
The decrease in cash flows from investing activities during the year ended December 31, 2012
compared to the prior year was primarily
due to a $307.4 million change in cash associated with investments in marketable securities. During the year ended December 31, 2011
, we
received cash of $290.1 million for sales and maturities of investments in marketable securities. During the year ended December 31, 2012
, we
used cash of $17.2 million for purchases of marketable securities, net of sales and maturities. Also contributing to the decrease was a
$45.4
million
increase in capital expenditures, primarily due to a full year of One Communications of capital expenditures, network and technology
center related projects and customer acquisition costs. We continue to focus on investments in our technology infrastructure to support our long-
term strategic plans. The overall decrease in cash flows from investing activities was offset by a $43.1 million
decrease in cash used for
acquisitions, net of cash acquired.
Financing activities
The increase in net cash used in financing activities during the year ended December 31, 2011 compared to the prior year was primarily
due to a $250.3 million net change in cash associated with our debt obligations and a $46.1 million increase in cash used to repurchase common
stock, partially offset by a $44.6 million decrease in dividend payments. During the year ended December 31, 2010, we used $0.9 million to
repurchase 0.1 million shares of our common stock and during the year ended December 31, 2011, we used $47.0 million to repurchase
6.3 million shares of our common stock. Dividend payments decreased to $22.9 million during the year ended December 31, 2011 as we reduced
the amount of our quarterly dividend from $0.16 per share to $0.05 per share in the beginning of 2011.
The decrease in net cash used in financing activities during the year ended December 31, 2012
compared to the prior year was primarily
due to a $215.0 million net change in cash flows from debt activities, a $21.6 million decrease in repurchases of common stock and a
$1.8
million decrease in dividend payments. During the year ended December 31, 2011 , we used $250.3 million
for repayment of debt and capital
lease obligations and during the year ended December 31, 2012 , we used $35.3 million
for repayment of debt and capital lease obligations.
During the year ended December 31, 2011 , we repurchased 6.3 million shares of our common stock for $47.0 million
and during the year ended
December 31, 2012 , we repurchased 3.7 million shares of our common stock for $25.4 million . Dividend payments were $22.9 million
and
$21.1 million during the year ended December 31, 2011 and 2012 , respectively, reflecting quarterly dividends of $0.05 per share.
Future uses of cash
Our primary future cash requirements relate to outstanding indebtedness, capital expenditures, investments in our Business Services
segment, acquisition and integration-
related costs and dividends. In addition, we may use cash in the future to make strategic acquisitions or
repurchase common stock or debt.
Debt and interest.
We expect to use cash to service our outstanding indebtedness, including ITC^DeltaCom's outstanding $324.8
million aggregate principal amount of 10.5% senior secured notes due on April 1, 2016 (the “ITC^DeltaCom Notes”),
our $300.0 million
aggregate principal amount of Senior Notes in May 2011 and our $150.0 million revolving credit facility. We expect to use cash for interest
payments. In December 2012, we redeemed 10%, or $32.5 million
aggregate principal amount, of our outstanding ITC^DeltaCom Notes at a
redemption price of 103% pursuant to the terms of the related indenture. We may use additional cash to redeem the ITC^DeltaCom Notes in
accordance with the terms of the related indenture, to purchase the ITC^DeltaCom Notes in the open market or to refinance with new debt. In
that regard, in February 2013 we launched efforts to obtain a new secured credit facility consisting of up to a $300 million term loan and up to a
$150 million revolving credit facility (the “New Facility”).
The proceeds from borrowings under the New Facility would be used, together with
existing cash, to repay the outstanding ITC^DeltaCom Notes, to replace our existing $150 million revolving credit facility (which has no
borrowings outstanding), and to pay related fees and expenses.
Capital expenditures . We expect to incur capital expenditures of approximately $140.0 million to $155.0 million
during 2013. The
capital expenditures are for expansion of our fiber network, 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.
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