Windstream 2010 Annual Report Download - page 79

Windstream Corporation
Form 10-K, Part I
Item 1A. Risk Factors
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 Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the
American Jobs and Growth Tax Relief Reconciliation Act of 2003 (the “Act”) for two years. The Act 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 at the end of 2012, 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.
Additionally, our obligations under the grant agreements with the RUS are secured by a retained security interest in the
assets we acquire with the RUS grant funds. A summary of the Company’s investment in property, plant and
equipment is presented below.
The Company owns property, which consists primarily of land and buildings, office and warehouse facilities, central
office equipment, software, 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 Company’s gross investment in property, by category, as of December 31, 2010, was as follows:
(Millions)
Land $ 34.8
Building and improvements 561.5
Central office equipment 4,470.3
Outside communications plant 5,332.1
Furniture, vehicles and other equipment 671.1
Total $ 11,069.8
Item 3. Legal Proceedings
The Company is party to various legal proceedings, the ultimate resolution of which cannot be determined at this time.
Management does not believe that such proceedings, individually or in the aggregate, will have a material adverse
effect on the future consolidated results of income, cash flows or financial condition of the Company.
In addition, management is currently not aware of any environmental matters that, individually or in the aggregate,
would have a material adverse effect on the consolidated financial condition or results of operations of the Company.
Item 4. (Removed and Reserved)
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