Windstream 2006 Annual Report Download - page 83

Windstream Corporation
Form 10-K, Part I
Item 1A. Risk Factors
Nevertheless, we will be permitted to take any of the actions described above in the event that the Internal Revenue
Service has granted a favorable ruling to Alltel or us as to the effect of such action on the tax-free status of the merger
and spin-off transactions. To the extent that the tax-free status of the transactions is lost because of a disqualifying
action taken by us or any of our subsidiaries after the distribution date (except to the extent that Alltel has delivered a
previous determination to us permitting such action), we generally will be required to indemnify, defend and hold
harmless Alltel and its subsidiaries (or any successor to any of them) from and against any and all resulting tax-related
losses incurred by Alltel.
Because of these restrictions, we may be limited in the amount of stock that we can issue to make acquisitions in the
two years subsequent to the spin-off and merger. Also, our indemnity obligation to Alltel might discourage, delay or
prevent a change of control during this two-year period that our stockholders may consider favorable.
We have little operating history as an independent company and our historical financial information is not
necessarily representative of the results we would have achieved as an independent publicly traded company and
may not be a reliable indicator of our future results.
The historical financial information included in this Annual Report does not necessarily reflect the financial condition,
results of operations or cash flows we would have achieved as an independent publicly traded company during the
periods presented or those results we will achieve in the future. This results from the fact that our historical financial
results reflect allocations of corporate expenses from Alltel. The actual amount of the comparable expenses we would
have incurred had we operated as an independent publicly traded company may have been greater than those allocated
from Alltel.
Disruption in our networks and infrastructure may cause us to lose customers and incur additional expenses.
To be successful, we will need to continue to provide our customers with reliable service over our networks. Some of
the risks to our networks and infrastructure include: physical damage to access lines, breaches of security, capacity
limitations, power surges or outages, software defects and disruptions beyond our control, such as natural disasters and
acts of terrorism. From time to time in the ordinary course of business, we will experience short disruptions in our
service due to factors such as cable damage, inclement weather and service failures of our third party service providers.
We could experience more significant disruptions in the future. Disruptions may cause interruptions in service or
reduced capacity for customers, either of which could cause us to lose customers and incur expenses, and thereby
adversely affect our business, revenue and cash flow.
Weak economic conditions may decrease demand for our services.
We are sensitive to economic conditions and downturns in the economy. Downturns in the economies and vendor
concentration in the markets we serve could cause our existing customers to reduce their purchases of our basic and
enhanced services and make it difficult for us to obtain new customers.
Adverse developments in our relationship with our employees could adversely affect our business, financial
condition or results of operations.
As of December 31, 2006, approximately 1,955 of our employees, or 24% of all of our employees, at various sites were
covered by collective bargaining agreements. Our relationship with these unions generally has been satisfactory, but
occasional work stoppages have occurred. Within the last five years, one work stoppage occurred at our facility in
Lexington, Kentucky, which involved approximately 350 employees and lasted approximately 120 days. Any work
stoppages in the future could have a material adverse effect on Windstream’s business, financial condition or results of
operations.
19