FairPoint Communications 2013 Annual Report Download - page 51

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Investing activities. Net cash used in investing activities for fiscal 2013 decreased $48.3 million compared to fiscal 2012
primarily driven by the sale of our Idaho-based operations during fiscal 2013 for $30.5 million in cash proceeds and a decrease
in capital expenditures. Capital expenditures were $128.3 million, $145.1 million and $163.6 million for the years ended December
31, 2013, 2012 and 2011, respectively.
Financing activities. Net cash used in financing activities in fiscal 2013 increased $13.0 million compared to fiscal 2012
primarily attributable to the Refinancing, whereby we issued $300.0 million aggregate principal amount of the Notes, entered into
the New Credit Agreement including the $640.0 million New Term Loan and used the proceeds, along with cash on hand, to repay
principal of $946.5 million outstanding on the Old Term Loan and approximately $32.6 million of fees, expenses and other costs
related to the Refinancing. For further information regarding the New Credit Agreement, the Notes and our repayment of the Old
Credit Agreement Loan, see "—Debt" herein and note (8) "Long-Term Debt" to our consolidated financial statements in "Item 8.
Financial Statements and Supplementary Data" included elsewhere in this Annual Report. Net cash used in financing activities
in fiscal 2012 increased $40.8 million compared to fiscal 2011 largely due to the $43.0 million of principal payments on the Old
Term Loan, of which $33.0 million exceeded the scheduled payments and was allocated to the final payment due at maturity.
Pension Contributions and Post-Retirement Healthcare Plan Expenditures
During the year ended December 31, 2013, we contributed $21.8 million to our Company sponsored qualified defined benefit
pension plans and funded benefit payments of $3.7 million under our post-retirement healthcare plans. Contributions to our
qualified defined benefit pension plans in 2013 met the minimum funding requirements under the Pension Protection Act of 2006.
Legislation enacted in 2012 changed the method for determining the discount rate used for calculating a qualified pension
plan’s unfunded liability for ERISA and Code purposes. This legislation included a pension funding stabilization provision which
allowed pension plan sponsors to use higher interest rate assumptions when determining funded status and funding obligations.
As a result, our near-term minimum required pension plan contributions have been lower than they would have been in the absence
of this stabilization provision. On September 25, 2012, we elected to defer use of the higher segment rates under this legislation
until the plan year beginning on January 1, 2013 solely for purposes of determining the adjusted funding target attainment percentage
("AFTAP") used to determine benefit restrictions under Section 436 of the Code.
In 2014, aggregate cash pension contributions and cash post-retirement healthcare payments are expected to be approximately
$35.0 million.
Capital Expenditures
We require significant capital expenditures to maintain, upgrade and enhance our network facilities and operations. In 2013,
our net capital expenditures totaled $128.3 million, compared to $145.1 million in 2012. We anticipate that we will fund future
capital expenditures through cash flows from operations and cash on hand (including amounts available under the New Revolving
Facility).
In 2014, capital expenditures are expected to be approximately $125.0 million.
Debt
The New Credit Agreement. In connection with the Refinancing, we entered into the New Credit Agreement, which provides
for the $75.0 million New Revolving Facility, including a sub-facility for the issuance of up to $40.0 million in letters of credit,
and the $640.0 million New Term Loan. The New Credit Agreement Loans replace the Old Credit Agreement Loans, which were
terminated on the Refinancing Closing Date. The principal amount of the New Term Loan and commitments under the New
Revolving Facility may be increased by an aggregate amount up to $200.0 million, subject to certain terms and conditions specified
in the New Credit Agreement. The New Term Loan will mature on February 14, 2019 and the New Revolving Facility will mature
on February 14, 2018, subject in each case to extensions pursuant to the terms of the New Credit Agreement. As of December
31, 2013, the Company had $59.1 million, net of $15.9 million of outstanding letters of credit, available for borrowing under the
New Revolving Facility.
Interest Rates and Fees. Interest on borrowings under the New Credit Agreement Loans accrue at an annual rate equal to
either LIBOR or the base rate, in each case plus an applicable margin. LIBOR is the per annum rate for an interest period of one,
two, three or six months (at our election), with a minimum LIBOR floor of 1.25% for the New Term Loan. The base rate for any
date is the per annum rate equal to the greatest of (x) the federal funds effective rate plus 0.50%, (y) the rate of interest publicly
quoted from time to time by The Wall Street Journal as the United States ''Prime Rate'' and (z) LIBOR with an interest period of
one month plus 1.00%. The applicable margin for the New Term Loan is (a) 6.25% per annum with respect to term loans bearing
interest based on LIBOR or (b) 5.25% per annum with respect to term loans bearing interest based on the base rate. The applicable
rate for the New Revolving Facility is, initially, (a) 5.50% with respect to revolving loans bearing interest based on LIBOR or (b)