Earthlink 2015 Annual Report Download - page 28

Table of Contents
We may require substantial capital to support business growth, and this capital may not be available to us on acceptable terms, or at all.
We incurred capital expenditures of $87.5 million in 2015, and we expect to incur capital expenditures of approximately $85.0 million to $105.0 million in 2016.
We may require additional capital to support our business growth, including the need to develop new services and products, enhance our operating infrastructure or
acquire complementary businesses and technologies. We may also require substantial capital to maintain, upgrade and enhance our network facilities and
operations. Accordingly, we may need to engage in equity or debt financings to secure additional funds.
We may not be able to secure additional debt or equity financing on favorable terms, or at all, at the time we desire to obtain such funding. If we are unable to
obtain additional capital when needed, we may not be able to pursue our growth strategy, and our business could suffer. If we raise additional funds through further
issuances of equity or convertible debt securities, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any
new equity securities we issue could have rights, preferences and privileges senior to those of holders of our common stock. In addition, any debt financing that we
may obtain in the future could have restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it
more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Our debt agreements include restrictive covenants, and failure to comply with these covenants could trigger acceleration of payment of outstanding
indebtedness.
The agreements that govern our Senior Secured Notes, Senior Notes and senior secured revolving credit facility impose significant operating and financial
restrictions on us. If we breach any of these covenants, a default could result under one or more of these agreements, which may require us to repay some or all of
our indebtedness. These restrictions limit or restrict, among other things, our ability and the ability of our restricted subsidiaries to:
• incur or guarantee additional indebtedness or issue preferred stock;
• pay dividends or make other distributions to stockholders;
• purchase or redeem capital stock or subordinated indebtedness;
• make investments;
• create liens or use assets as security;
• enter into agreements restricting such restricted subsidiaries' ability to pay dividends, make loans or transfer assets to us or other restricted
subsidiaries;
• engage in transactions with affiliates; and
• consolidate or merge with or into other companies or transfer all or substantially all of our or their assets.
Risks Related to Ownership of Our Common Stock
We may reduce, or cease payment of, quarterly cash dividends.
The payment of future quarterly dividends is discretionary and is subject to determination by our Board of Directors each quarter following its review of our
financial condition, results of operations, cash requirements and such other factors as are deemed relevant by our Board of Directors. Changes in our business
needs, including funding for acquisitions, capital expenditures, debt servicing and working capital, or a change in tax laws relating to dividends, among other
factors, could cause our Board of Directors to decide to reduce, or cease the payment of, dividends in the future. In addition, the agreements governing our Senior
Secured Notes, Senior Notes and senior secured revolving credit facility contain restrictions on the amount of dividends we can pay. There can be no assurance that
we will not decrease or discontinue quarterly cash dividends, and if we do, our stock price could be negatively impacted.
Our stock price may be volatile.
The trading price of our common stock may be subject to fluctuations in response to certain events and factors, such as quarterly variations in results of operations;
entry into business combinations or other major transactions; changes in our business strategy; changes in financial estimates; changes in recommendations or
reduced coverage by securities analysts; the operating and stock price performance of other companies that investors may deem comparable to us; news reports
relating to trends in the markets in which we operate; market trends unrelated to our performance; and general economic conditions. A significant drop in our stock
price could also expose us to the risk of securities class action lawsuits, which could result in substantial costs and divert management's attention and resources,
which could adversely affect our business. Finally, volatility or a lack of positive performance
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