XO Communications 2010 Annual Report Download - page 50

$41.4 million and the redemption of 3,096,549 shares of Class A preferred stock on April 15, 2010 for an
aggregate redemption price of $217.5 million. We invested all of our cash provided by operations in strategic,
growth-related capital expenditure investments to grow revenue through enhancing our next generation
broadband network. As part of plans to grow our business, during 2010, we continued the investments in our
long-haul fiber optic network as well as our Ethernet and other Broadband services. We expect our growth-
related capital expenditures will continue to outpace our cash inflows from operations during 2011.
The following table summarizes the components of our cash flows for the years ended December 31 (in
thousands):
2010 2009 2008
Cash provided by operating activities ............. $174,735 $148,541 $ 71,614
Cash used in investing activities ................ $(204,651) $ (16,827) $(293,596)
Cash (used in) provided by financing activities ...... $(263,612) $ (25,302) $ 370,654
Operating Activities. Cash provided by operating activities increased $26.2 million from 2009 to 2010.
This increase principally resulted from a $28.5 million year over year decrease in loss from operations.
Cash provided by operating activities increased $76.9 million from 2008 to 2009. This increase
principally resulted from a $37.6 million year over year decrease in loss from operations and a $34.4 million
improvement in working capital cash flow from 2008 to 2009.
Investing Activities. The $187.8 million increase in cash used in investing activities was primarily due
to the $180.9 million decline in proceeds from the sale of available-for-sale marketable securities from 2009
to 2010. Also contributing to the increase in cash used in investing activities was a $12.7 million increase in
capital expenditures. We continued to focus on investment in our technology infrastructure, operations and
other areas of our business to lay the foundation for our long term strategic plan, which seeks to improve
operational efficiency, accelerate revenue growth and significantly shift our revenue mix.
From 2008 to 2009, the $276.8 million decrease in cash used in investing activities primarily resulted
from proceeds of $180.9 million received from the sale of available-for-sale investments which were
purchased in 2008 for $137.2 million. Also improving cash used in investing activities was an $18.0 million
year-over-year reduction in capital expenditures. These decreases in cash used in investing activities were
partially offset by the $56.6 million decrease in investment recoveries.
We expect that our capital expenditures for 2011 will be between $220 million and $250 million. Without
continued spending, we believe it would be difficult to continue to effectively compete against the ever
increasing pressures from the ILECs as well as wireless and cable providers.
Financing Activities. The primary use of cash for financing activities in 2010 was the purchase and
retirement of all remaining shares of our Class A preferred stock for $258.9 million.
The primary use of cash for financing activities in 2009 was for the redemption of a portion of our
Class A preferred stock for $18.4 million. In addition, payments on our capital leases were $6.9 million during
2009.
Capital Requirements. Our capital requirements in 2011 include investments necessary to support
revenue growth and infrastructure to continue to provide our customers with the highest levels of service,
quality and performance. Our 2011 operating plan includes capital expenditure amounts for continued
investment in, and enhancement of, our (i) metro and long-haul fiber optic network, (ii) new markets,
(iii) Ethernet and IP-based services and (iv) to support our transformation initiative. Our capital expenditures
are dependent upon our ability to generate funds from operations or to raise additional capital.
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