1062613--3/13/2007--FAIRPOINT_COMMUNICATIONS

related topics

{debt, indebtedness, cash}

{system, service, information}

{acquisition, growth, future}

{stock, price, share}

{regulation, change, law}

{regulation, government, change}

{cost, regulation, environmental}

{product, market, service}

{cost, contract, operation}

{capital, credit, financial}

{personnel, key, retain}

{control, financial, internal}

{tax, income, asset}

{provision, law, control}

{stock, price, operating}

{competitive, industry, competition}

Risks Related to our Common Stock and our Substantial Indebtedness Our stockholders may not receive the level of dividends provided for in the dividend policy our board of directors has adopted or any dividends at all. To expand our business through acquisitions and service our indebtedness, we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. We may not generate sufficient funds from operations to consummate acquisitions, pay dividends with respect to shares of our common stock or repay or refinance our indebtedness at maturity or otherwise. If we have insufficient cash flow to cover the expected dividend payments under our dividend policy due to costs associated with the Merger or other factors we would need to reduce or eliminate dividends or, to the extent permitted under the agreements governing our indebtedness, fund a portion of our dividends with additional borrowings. Our substantial indebtedness could restrict our ability to pay dividends on our common stock and have an adverse impact on our financing options and liquidity position. In anticipation of the Merger, we will spend a significant amount of money on assets and services that are not useful in our existing business. The Company is a holding company and relies on dividends, interest and other payments, advances and transfers of funds from its operating subsidiaries and investments to meet its debt service and other obligations. Our credit facility contains covenants that limit our business flexibility by imposing operating and financial restrictions on our operations and the payment of dividends. If we are unable to comply with the covenants in the agreements governing our indebtedness, we could be in default under our indebtedness which could result in our inability to make dividend payments on our common stock. Limitations on usage of net operating loss carry forwards, and other factors requiring us to pay cash taxes in future periods, may affect our ability to pay dividends. The price of our common stock may fluctuate substantially, which could negatively affect holders of our common stock. Future sales or the possibility of future sales of a substantial amount of our common stock may depress the price of our common stock. Our restated certificate of incorporation and amended and restated by-laws and several other factors could limit another party s ability to acquire us and deprive our investors of the opportunity to obtain a takeover premium for their securities. We may, under certain circumstances, suspend the rights of stock ownership the exercise of which would result in any inconsistency with, or violation of, any applicable communications law. Risks Related to our Business We provide services to our customers over access lines, and if we lose access lines, our business and results of operations may be adversely affected. The Merger may present significant challenges to our management that could divert management s attention from day-to-day operations and have a negative impact on our business. We are subject to competition that may adversely impact us. We may not be able to successfully integrate new technologies, respond effectively to customer requirements or provide new services. Our relationships with other communications companies are material to our operations and their financial difficulties may adversely affect our business and results of operations. We face risks associated with acquired businesses and potential acquisitions. We may need additional capital to continue growing through acquisitions. A system failure could cause delays or interruptions of service, which could cause us to lose customers. Our billing systems may not function properly. We depend on third parties for our provision of long distance and bandwidth services. We may not be able to maintain the necessary rights-of-way for our networks. Our success depends on our ability to attract and retain qualified management and other personnel. We may face significant future liabilities or compliance costs in connection with environmental and worker health and safety matters. We are exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act. Risks Related to our Regulatory Environment We are subject to significant regulations that could change in a manner adverse to us. Regulatory changes in the communications industry could adversely affect our business by facilitating greater competition against us, reducing potential revenues or raising our costs. The failure to obtain necessary regulatory approvals could impede the consummation of a potential acquisition.

Full 10-K form ▸

1062613--3/13/2007--FAIRPOINT_COMMUNICATIONS_INC