Windstream 2011 Annual Report Download - page 88

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In addition, our ability to borrow funds in the future will depend in part on the satisfaction of the covenants in our credit
facilities and its other debt agreements. If we are unable to satisfy the financial covenants contained in those agreements, or are
unable to generate cash sufficient to make required debt payments, the lenders and other parties to those arrangements could
accelerate the maturity of some or all of our outstanding indebtedness.
We may not generate sufficient cash flows from operations, or have future borrowings available under our credit facilities or
from other sources sufficient to enable us to make our debt payments or to fund dividends and other liquidity needs. We may
not be able to refinance any of our debt, including our credit facilities, on commercially reasonable terms or at all. If we are
unable to make payments or refinance our debt, or obtain new financing under these circumstances, we would have to consider
other options, such as selling assets, issuing additional equity or debt, or negotiating with our lenders to restructure the
applicable debt. Our credit agreement and the indentures governing our senior notes may restrict, or market or business
conditions may limit, our ability to do some of these things on favorable terms or at all.
As of February 16, 2012, Moody's Investors Service (“Moody's”), S&P and Fitch Ratings (“Fitch”) had granted Windstream
the following senior secured, senior unsecured and corporate credit ratings:
Description
Senior secured credit rating
Senior unsecured credit rating
Corporate credit rating
Outlook
Moody’s
Baa3
Ba3
Ba2
Stable
S&P
BB+
B+
BB-
Stable
Fitch
BBB-
BB+
BB+
Stable
Factors that could affect our short and long-term credit ratings include, but are not limited to, a material decline in our
operating results, increased debt levels relative to operating cash flows resulting from future acquisitions, increased capital
expenditure requirements, or changes to our dividend policy. In addition, we are not currently paying down a significant
amount of debt. If our credit ratings were to be downgraded from current levels, we might incur higher interest costs on future
borrowings, and our access to the public capital markets could be adversely affected.
We may be unable to fully realize expected benefits from our recent acquisitions.
We expect to achieve substantial synergies, cost savings and growth opportunities as a result of our recent acquisitions. If we
are unable to successfully integrate acquired businesses, or integrate them in a timely fashion, we may face material adverse
affects including, but not limited to:
• diversion of management's attention to and potential disruption of our ongoing businesses;
• customer losses;
• the loss of quality employees from the acquired companies;
• adverse developments in vendor relationships;
• declines in our results of operations and financial condition; and
• a decline in the market price of our common stock.
Even if we successfully integrate these businesses, there can be no assurance that these integrations will result in the realization
of the full benefit of the anticipated synergies, cost savings or growth opportunities or that these benefits will be realized within
the expected time frames.
Unfavorable changes in financial markets could adversely affect our pension plan investments resulting in material funding
requirements to meet pension obligations.
Our pension plan invests in marketable securities, including marketable debt and equity securities denominated in foreign
currencies, which are exposed to changes in the financial markets. During 2011, the fair market value of these investments
increased from $870.5 million to $948.9 million due to stock contributions during the first and third quarters of $135.8 million
and return on assets held of $20.2 million, or 2.3 percent. These increases were partially offset by routine benefit payments of
$59.1 million and lump sum payments and administrative expenses of $17.6 million. Returns generated on plan assets have
historically funded a large portion of the benefits paid under our pension plan.
We estimate that the long term rate of return on plan assets will be 8.0 percent, but returns below this estimate could
significantly increase our contribution requirements, which could adversely affect our cash flows from operations. In addition,