Windstream 2008 Annual Report Download - page 69

Windstream Corporation
Form 10-K, Part I
Item 1A. Risk Factors
in 2009, including one contract covering approximately 300 employees in Lexington, Kentucky, and remain subject to
continuing renewal negotiations. Historically, we have succeeded in negotiating new collective bargaining agreements
without work stoppages; however, no assurances can be given that we will succeed in negotiating new collective
bargaining agreements to replace the expiring ones without work stoppages. Increases in organizational activity or any
future work stoppages could have a material adverse effect on our business, financial condition or results of operations.
Windstream cannot assure you that it will continue paying dividends at the current rate.
Windstream’s board of directors has adopted a current dividend practice for the payment of quarterly cash dividends at
a rate of $0.25 per share of the Company’s common stock. This practice can be changed at any time at the discretion of
the board of directors, and Windstream’s common stockholders should be aware that they have no contractual or other
legal right to dividends. In addition, the other risk factors described in this section could materially reduce the cash
available from operations or significantly increase our capital expenditure requirements, and these outcomes could
cause capital to not be available when needed in an amount sufficient to support our current dividend practice. The
amount of dividends that Windstream may distribute is also limited by restricted payment and leverage covenants in
Windstream’s credit facilities and indentures, and, potentially, the terms of any future indebtedness that Windstream
may incur. The amount of dividends that Windstream may distribute is also subject to restrictions under Delaware law.
If Windstream’s board of directors were to adopt a change in its current dividend practice that resulted in a reduction in
the amount of dividends, such change could have a material and adverse effect on the market price of Windstream’s
common stock.
In addition, the American Jobs and Growth Tax Relief Reconciliation Act of 2003 designated qualifying dividend
payments on capital stock as long term capital gains, which capped the federal tax rate on these payments at 15 percent.
The provisions of this act are set to expire in 2010, and if not renewed, dividends will become taxable as ordinary
income to the shareholder at their current federal tax rate. This could adversely effect the market price of Windstream’s
common stock by decreasing the after tax yield of holding the stock.
Item 1B. Unresolved Staff Comments
No reportable information under this item.
Item 2. Properties
The Company’s properties do not provide a basis for description by character or location of principal units. Certain
Windstream properties are pledged as collateral as discussed further in Note 15 to the consolidated financial
statements. The obligations under our senior secured credit facilities are secured by liens on substantially all of the
personal property assets of Windstream and its subsidiaries who are guarantors of our senior secured credit facilities. A
summary of the Company’s investment in property, plant and equipment segregated between the Company’s regulated
wireline and product distribution operations is presented below.
WIRELINE PROPERTY
The Company’s wireline subsidiaries own property in their respective operating territories which consists primarily of
land and buildings, central office equipment, outside plant and related equipment. Outside communications plant
includes aerial and underground cable, conduit, poles and wires. Central office equipment includes digital switches and
peripheral equipment. The gross investment by category in wireline property as of December 31, 2008, was as follows:
(Millions)
Land $ 24.2
Building and improvements 433.6
Central office equipment 3,834.0
Outside communications plant 4,614.8
Furniture, vehicles and other equipment 439.3
Total $ 9,345.9
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