Windstream 2011 Annual Report Download - page 89

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during the fourth quarter of 2011, we changed our policy for accounting for pension costs to immediately recognize gains or
losses resulting from the return on plan assets and other true-ups to other actuarial estimates. While this change does not affect
cash flows, it will introduce the potential for volatility to our earnings reported under accounting principles generally accepted
in the United States ("U.S. GAAP"), especially if the return on plan assets during the year differ significantly from the
estimated rate of return.
Weak economic conditions may decrease demand for our services.
We could be affected by economic conditions and downturns in the economy, especially in regards to our business customers.
Downturns in the economy in the markets we serve could cause our existing customers to reduce their purchases of our services
and make it difficult for us to obtain new customers.
Our relationships with other communications companies are material to our operations and their financial difficulties may
adversely affect us.
We originate and terminate calls for long distance and other voice carriers over our network in exchange for access charges.
These access charges represent a significant portion of our revenues. Additionally, we are making significant capital
investments to deploy fiber-to-the-tower and other network services for wireless companies in return for long-term revenue
generating contracts. If these carriers go bankrupt or experience substantial financial difficulties and we are unable to timely
collect payments from them, it may have a negative effect on our results of operations and financial condition.
Key suppliers may experience financial difficulties that may affect our operations.
Windstream purchases a significant amount of equipment from key suppliers to maintain, upgrade and enhance our network
facilities and operations. Should these suppliers experience financial difficulties, their issues could adversely affect our business
through increased prices to source purchases through alternative vendors or unanticipated delays in the delivery of equipment
and services purchased.
Adverse developments in our relationship with our employees could adversely affect our business, our results of operations
and financial condition.
As of December 31, 2011, 1,724 of our employees at various sites, or 11.8 percent of all of our employees, were covered by
collective bargaining agreements. Our relationship with these unions generally has been satisfactory, but occasional work
stoppages have occurred.
We are currently party to 23 collective bargaining agreements and one National Pension Agreement with several unions, which
expire at various times. Of our existing collective bargaining agreements, eight agreements covering 555 employees are due to
expire in 2012. In addition, the national pension agreement covers 611 employees. This agreement expired in 2010 but has been
extended indefinitely, subject to the right of Windstream or the unions to terminate the agreement with 30 days notice.
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, our results of operations and financial condition.
Cyber security incidents could have a significant operational and financial impact.
We store customers' proprietary business information in our facilities through our colocation, managed services and cloud
computing services. In addition, we maintain certain sensitive customer information in our financial and operating systems.
While we have implemented data security polices and other internal controls to safeguard and protect against misuse or loss of
this information, if their data were compromised through a cyber security incident, it could have a significant impact on our
results of operations and financial condition.
We cannot assure you we will continue paying dividends at the current rate.
Our board of directors maintains a current dividend practice for the payment of quarterly cash dividends at a rate of $0.25 per
share of common stock. This practice can be changed at any time at the discretion of the board of directors, and our 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 funds not to be available when needed in an amount sufficient to
support our current dividend practice.