FairPoint Communications 2010 Annual Report Download - page 41

Table of Contents

To be successful, we will need to continue to provide our customers reliable service over our expanded network. Some of the risks to our network and
infrastructure include:
 physical damage to access lines;
 widespread power surges or outages;
 software defects in critical systems;
 disruptions beyond our control; and
 capacity limitations resulting from changes in our customers’ usage patterns.
From time to time, in the ordinary course of business, we could experience short disruptions in our service due to factors such as cable damage, inclement
weather and service failures of our third-party service providers. We could experience more significant disruptions in the future. In addition, certain portions of
our network may lack adequate redundancy to allow for expedient recovery of service to affected customers. Disruptions may cause interruptions in service or
reduced capacity for customers, either of which could cause us to lose customers and incur expenses, which could have a material adverse impact on our
business, financial condition, results of operations, liquidity and/or the market price of our Common Stock.

Our success depends upon the talents and efforts of our senior management team. None of our senior executives, with the exception of Paul H. Sunu, our
Chief Executive Officer, are employed pursuant to an employment agreement. Mr. Sunu’s current employment agreement expires on August 24, 2013. The loss
of any member of our senior management team, due to retirement or otherwise, and the inability to attract and retain highly qualified technical and management
personnel in the future, could have a material adverse effect on our business, financial condition, results of operations, liquidity and/or the market price of our
Common Stock.




As of December 31, 2010 2,578 of our 4,032 employees were covered by fourteen collective bargaining agreements. Disputes with regard to the terms of
these agreements or our potential inability to negotiate acceptable contracts with these unions could result in, among other things, strikes, work stoppages or
other slowdowns by the affected workers. If unionized workers were to engage in a strike, work stoppage or other slowdown, or other employees were to
become unionized, we could experience a significant disruption of our operations or higher ongoing labor costs, either of which could have a material adverse
effect on our business, financial condition, results of operations, liquidity and/or the market price of our Common Stock. Additionally, future renegotiation of
labor agreements or provisions of labor agreements could adversely impact our service reliability and significantly increase our costs for healthcare, wages and
other benefits, which could have a material adverse impact on our business, financial condition, results of operations, liquidity and/or the market price of our
Common Stock.





As discussed in “Part II—Item 9A. Controls and Procedures,” we concluded that the following material weaknesses in our internal controls over financial
reporting existed as of December 31, 2010:
40