Windstream 2011 Annual Report Download - page 90

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The amount of dividends that we may distribute is also limited by restricted payment and leverage covenants in our credit
facilities and indentures, and, potentially, the terms of any future indebtedness that we may incur. The amount of dividends that
we may distribute is also subject to restrictions under Delaware law. If our board of directors were to adopt a change in our
current dividend practice that results in a reduction in the amount of dividends, such change could have a material and adverse
effect on the market price of our common stock.
On December 31, 2012, current tax rates on dividend income and capital gains are scheduled to expire. The current tax rate, in
effect for both categories since 2003, is 15 percent. Upon expiration, the capital gains rate will revert to 20 percent and
dividend income will be treated as ordinary income. For dividends, this means the rate for taxpayers in the highest bracket will
rise to 39.6 percent. In addition, by the terms of the Patient Protection and Affordable Care Act of 2010, investment income
will be subject to the 3.8 percent Medicare Hospital Insurance tax starting January 1, 2013. While Congress and the White
House continue to debate the impact of such tax changes on equity investors, financial markets, and the economy, current
political conditions do not appear favorable for the extension of the current rates. If rates are allowed to increase, this would
decrease the after-tax yield of our dividend, and if dividend rates are increased to levels higher than the tax rate applicable to
capital gains, our stock may be disadvantaged to other forms of investment. In each case, this development could have a
material and adverse effect on the market price of our common stock.
Item 1B. Unresolved Staff Comments
No reportable information under this item.
Item 2. Properties
Certain of our 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 our personal property assets and
our subsidiaries who are guarantors of our senior secured credit facilities. A summary of our investment in property, plant and
equipment is presented below.
We own 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. As such, our properties do not
provide a basis for description by character or location of principal units.
Our gross investment in property, by category, as of December 31, 2011, was as follows:
Land
Building and improvements
Central office equipment
Outside communications plant
Furniture, vehicles and other equipment
Total
(Millions)
$ 45.5
621.2
4,945.5
5,822.5
1,031.1
$ 12,465.8
Item 3. Legal Proceedings
We are party to various legal proceedings, the ultimate resolution of which cannot be determined at this time. Management
does not believe such proceedings, individually or in the aggregate, will have a material adverse effect on the future
consolidated results of our income, cash flows or financial condition.
In addition, management is currently not aware of any environmental matters, individually or in the aggregate, that would have
a material adverse effect on our consolidated financial condition or results of our operations.
Item 4. Mine Safety Disclosures
Not applicable.