| GENERAL COMMUNICATION INC Item 1A Risk Factors |
| Factors That May Affect Our Business and Future Results Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business operations |
| Any of the following risks could materially and adversely affect our business, financial position, results of operations or liquidity |
| We face competition that may reduce our market share and harm our financial performance |
| There is substantial competition in the communications industry |
| The traditional dividing lines between long-distance telephone service, local telephone service, wireless telephone service, Internet services and video services are increasingly becoming blurred |
| Through mergers and various service integration strategies, major providers are striving to provide integrated communications services offerings within and across geographic markets |
| We expect competition to increase as a result of the rapid development of new technologies, products and services |
| We cannot predict which of many possible future technologies, products or services will be important to maintain our competitive position or what expenditures will be required to develop and provide these technologies, products or services |
| Our ability to compete successfully will depend on marketing and on our ability to anticipate and respond to various competitive factors affecting the industry, including new services that may be introduced, changes in consumer preferences, economic conditions and pricing strategies by competitors |
| To the extent we do not keep pace with technological advances or fail to timely respond to changes in competitive factors in our industry and in our markets, we could lose market share or experience a decline in our revenue and net income |
| Competitive conditions create a risk of market share loss and the risk that customers shift to less profitable lower margin services |
| Competitive pressures also create challenges for our ability to grow new businesses or introduce new services successfully and execute our business plan |
| Each of our business segments also faces the risk of potential price cuts by our competitors that could materially adversely affect our market share and gross margins |
| Long-distance services |
| The long-distance industry is intensely competitive and subject to constant technological change |
| Competition is based upon price and pricing plans, the type of services offered, customer service, billing services, performance, perceived quality, reliability and availability |
| Current or future competitors could be substantially larger than we are, or have greater financial, technical and marketing resources than we do |
| In the long-distance market, we compete against AT&T Alascom, ACS, MTA and certain smaller rural local telephone carrier affiliates |
| There is also the possibility that new competitors will enter the 51 ______________________________________________________________________ Alaska market |
| In addition, wireless services continue to grow as an alternative to wireline services as a means of reaching customers |
| Historically, we have competed in the long-distance market by offering discounts from rates charged by our competitors and by providing desirable packages of services |
| Discounts have been eroded in recent years due to lowering of prices by AT&T Alascom and entry of other competitors into the long-distance markets we serve |
| In addition, our competitors offer their own packages of services |
| If competitors lower their rates further or develop more attractive packages of services, we may be forced to reduce our rates or add additional services, which would have a material adverse effect on our financial position, results of operations or liquidity |
| Our cable television systems face competition from alternative methods of receiving and distributing television signals, including DBS and digital video over telephone lines, and from other sources of news, information and entertainment such as off-air television broadcast programming, newspapers, movie theaters, live sporting events, interactive computer services, Internet services and home video products, including videotape cassettes and video disks |
| Our cable television systems also face competition from potential overbuilds of our existing cable systems by other cable television operators and alternative methods of receiving and distributing television signals |
| The extent to which our cable television systems are competitive depends, in part, upon our ability to provide quality programming and other services at competitive prices |
| We believe that the greatest source of potential competition for video services could come from the DBS industry |
| We also are subject to competition from providers of digital video over telephone lines in the Mat-Su Valley and in Ketchikan in 2006 |
| With the addition of Anchorage local broadcast stations, increased marketing, ILEC and DBS alliances, and emerging technologies creating new opportunities, competition from these sources has increased and will likely continue to increase |
| The changing nature of technology and of the DBS business may result in greater satellite coverage within the State of Alaska |
| The resulting increase in competition may adversely affect our market share and results of operations from our cable services segment |
| Local Telephone Services |
| We plan to provide local telephone service in other locations in the future where we would face other competitors |
| In the local telephone services market, the 1996 Telecom Act, judicial decisions, state and federal legislative and regulatory developments, and new technologies have increased the overall likelihood that barriers to local telephone competition will be substantially reduced or removed |
| These initiatives include requirements that local exchange carriers negotiate with entities, including us, to provide interconnection to the existing local telephone network, to allow the purchase, at cost-based rates, of access to unbundled network elements, to establish dialing parity, to obtain access to rights-of-way and to resell services offered by the ILEC We have been able to obtain interconnection, access and related services from the LECs, at rates that allow us to offer competitive services |
| However, if we are unable to continue to obtain these services and access at acceptable rates, our ability to offer local telephone services, and our revenues and net income, could be materially adversely affected |
| To date, we have been successful in capturing a significant portion of the local telephone market in the locations where we are offering these services |
| However, there can be no assurance that we will continue to be successful in attracting or retaining these customers |
| Internet Services |
| The Internet industry is highly competitive, rapidly evolving and subject to constant technological change |
| Competition is based upon price and pricing plans, service packages, the types of services offered, the technologies used, customer service, billing services, perceived quality, reliability and availability |
| We compete with several Alaska-based Internet providers and other domestic, non-Alaska based providers |
| Several of the providers have substantially greater financial, technical and marketing resources than we do |
| 52 ______________________________________________________________________ With respect to our high-speed cable modem service, ACS and other Alaska telephone service providers are providing competitive high-speed Internet access over their telephone lines |
| DBS providers and others also provide wireless high-speed Internet service in competition with our high-speed cable modem services |
| Competitive local fixed wireless providers are providing service in certain of our markets as is a national WiMax based provider in Anchorage with plans for Juneau and Fairbanks |
| WiMax is a standards-based wireless technology that provides high-throughput broadband connections over long distances |
| WiMax can be used for a number of applications, including last mile broadband connections, hotspots and cellular backhaul, and high-speed enterprise connectivity for business |
| Niche providers in the industry, both local and national, compete with certain of our Internet service products, such as web hosting, list services and email |
| Our business is subject to extensive governmental legislation and regulation |
| Applicable legislation and regulations and changes to them could adversely affect our business, financial position, results of operations or liquidity |
| Our success in the local telephone market depends on our continued ability to obtain interconnection, access and related services from local exchange carriers on terms that are just and reasonable and that are based on the cost of providing these services |
| Our local telephone services business faces the risk of the impact of the implementation of current regulations and legislation, unfavorable changes in regulation or legislation or the introduction of new regulations |
| Our ability to enter into the local telephone market depends on our negotiation or arbitration with local exchange carriers to allow interconnection to the carrier’s existing local telephone network, to establish dialing parity, to obtain access to rights-of-way, to resell services offered by the local exchange carrier, and in some cases, to allow the purchase, at cost-based rates, of access to unbundled network elements |
| In many Alaska markets, it also depends on our ability to gain interconnection at economic costs, and in some of these markets, it further depends on our ability to have the rural exemption for certain carriers terminated, so these carriers are obligated to provide access to unbundled network elements at economic costs |
| Future arbitration and rural exemption proceedings with respect to new or existing markets could result in a change in our cost of serving these markets via the facilities of the ILEC or via wholesale offerings |
| Cable Services |
| The cable television industry is subject to extensive regulation at various levels, and many aspects of such regulation are currently the subject of judicial proceedings and administrative or legislative proposals |
| The law permits certified local franchising authorities to order refunds of rates paid in the previous 12-month period determined to be in excess of the reasonable rates |
| It is possible that rate reductions or refunds of previously collected fees may be required of us in the future |
| Currently, pursuant to Alaska law, the basic cable rates in Juneau are the only rates in Alaska subject to regulation by the local franchising authority, and the rates in Juneau were reviewed and approved by the RCA in October 2000 |
| Other existing federal regulations, currently the subject of judicial, legislative, and administrative review, could change, in varying degrees, the manner in which cable television systems operate |
| Neither the outcome of these proceedings nor their impact upon the cable television industry in general, or on our activities and prospects in the cable television business in particular, can be predicted at this time |
| There can be no assurance that future regulatory actions taken by Congress, the FCC or other federal, state or local government authorities will not have a material adverse effect on our business, financial position, results of operations or liquidity |
| Proposals may be made before Congress and the FCC to mandate cable operators provide “open access” over their cable systems to Internet service providers |
| As of the date of this report, the FCC has declined to impose such requirements |
| If the FCC or other authorities mandate additional access 53 ______________________________________________________________________ to our cable systems, we cannot predict the effect that this would have on our Internet service offerings |
| Changes in the regulatory environment relating to the Internet access market, including changes in legislation, FCC regulation, judicial action or local regulation that affect communications costs or increase competition from the ILEC or other communications services providers, could adversely affect the prices at which we sell Internet services |
| We depend on a small number of customers for a substantial portion of our revenue and business |
| The loss of any of such customers would have a material adverse effect on our financial position, results of operations or liquidity |
| For the year ended December 31, 2005, we provided long-distance services (excluding private lines and other revenue) to MCI, Dobson, and Sprint Nextel which generated combined revenues of approximately 18dtta6prca of our total revenues for 2005 |
| These customers are free to seek out long-distance communications services from our competitors upon expiration of their contracts (in December 2009 in the case of MCI (Verizon beginning January 2006); in 2014 in the case of Dobson; and in March 2007 in the case of Sprint Nextel) or earlier upon the occurrence of certain contractually stipulated events including a default, the occurrence of a force majeure event, or a substantial change in applicable law or regulation under the applicable contract |
| Additionally, the contracts provide for periodic reviews to assure that the prices paid by MCI and Sprint Nextel for their services remain competitive |
| Mergers and acquisitions in the communications industry are relatively common |
| If a change in control of Dobson or Sprint Nextel were to occur, and in the case of the change in control of MCI (to Verizon as of January 2006), such change in control would not permit them to terminate their existing contracts with us, but could in the future result in the termination of or a material adverse change in our relationships with MCI, Dobson or Sprint Nextel |
| In addition, MCI’s, Dobson’s and Sprint Nextel’s need for our long-distance services depends directly upon their ability to obtain and retain their own long-distance and wireless customers and upon the needs of those customers for long-distance services |
| The loss of one or more of MCI, Dobson or Sprint Nextel as customers, a material adverse change in our relationships with either of them or a material loss of or reduction in their long-distance customers would have a material adverse effect on our financial position, results of operations and liquidity |
| Our businesses are currently geographically concentrated in Alaska |
| Any deterioration in the economic conditions in Alaska could have a material adverse effect on our financial position, results of operations or liquidity |
| We offer voice and data communication and video services to customers primarily in the State of Alaska |
| Because of this geographic concentration, our growth and operations depend upon economic conditions in Alaska |
| The economy of Alaska is dependent upon natural resource industries, in particular oil production, as well as tourism, and government spending including substantial amounts for the United States military |
| Any deterioration in these markets could have an adverse impact on the demand for communication and cable television services and on our results of operations and financial condition |
| In addition, the customer base in Alaska is limited |
| Alaska has a population of approximately 655cmam000 people, approximately 41prca of whom are located in the Anchorage area |
| We have already achieved significant market penetration with respect to our service offerings in Anchorage and in other locations in Alaska |
| We may not be able to continue to increase our market share of the existing markets for our services and no assurance can be given that the Alaskan economy will continue to grow and increase the size of 54 ______________________________________________________________________ the markets we serve or increase the demand for the services we offer |
| As a result, the best opportunities for expanding our business may arise in other geographic areas such as the contiguous Lower 48 States |
| There can be no assurance that we will find attractive opportunities to grow our businesses outside the State of Alaska or that we will have the necessary expertise to take advantage of such opportunities |
| The markets in Alaska for voice and data communications and video services are unique and distinct within the United States due to Alaska’s large geographical size and its distance from the rest of the United States |
| The expertise we have developed in operating our businesses in the State of Alaska may not provide us with the necessary expertise to successfully enter other geographic markets |
| We may not develop our wireless services, in which case we could not meet the needs of our customers who desire packaged services |
| We offer wireless mobile services by distributing other providers’ wireless mobile services |
| We offer wireless local telephone services over our own facilities, and have purchased personal communications system, or PCS, and local multipoint distribution system, or LMDS, wireless broadband licenses in FCC auctions covering markets in Alaska |
| We have entered into an agreement to acquire a substantial ownership interest in Alaska Digitel (see “Part I – Item 1 – Business – Historical Development of our Business During the Past Fiscal Year – Alaska Digitel acquisition” for more information |
| ) We have fewer subscribers to our wireless services than to our other service offerings |
| The geographic coverage of our wireless services is also smaller than the geographic coverage of our other services |
| Some of our competitors offer or propose to offer an integrated bundle of communications, entertainment and information services, including wireless services |
| If we are unable to expand and further develop our wireless services, we may not be able to meet the needs of customers who desire packaged services, and our competitors who offer these services would have an advantage |
| This could result in the loss of market share for our other service offerings |
| As a PCS and LMDS licensee, we are subject to regulation by the FCC, and must comply with certain build-out and other conditions of the licenses, as well as with the FCC’s regulations governing the PCS and LMDS services |
| The conditions of our PCS licenses required us to satisfy certain build-out requirements on or before June, 2005 |
| In February 2005 we submitted a filing to the FCC supporting our compliance with such requirements, and the FCC renewed the license effective August 30, 2005, for an additional 10-year license term |
| Our efforts to deploy DLPS may be unsuccessful, in which case the margins on our local telephone services business will not improve and we will not recover any capital investment that we have made in DLPS An element of our business strategy is to deploy voice telephone service utilizing our hybrid fiber coax cable facilities |
| In April 2004 we successfully launched our DLPS deployment utilizing our Anchorage coaxial cable facilities |
| DLPS allows us to utilize our own cable facilities to provide local access to our customers and avoid paying local loop charges to the ILEC To continue to successfully deploy this service, we must integrate new technology with our existing facilities and modify our operating procedures to timely detect and effect repairs of our outside plant network |
| The long-term viability of this service depends on the adoption of industry-wide standards for the sending and receiving of voice communications over cable facilities and the availability of the equipment necessary to provide the service at a cost-effective price |
| The deployment of this service requires a substantial capital investment by us |
| If we are unable to successfully deploy DLPS to a sufficiently large portion of our customer base, we will not be able to recover all of the capital investment we may make and the margins on our local telephone services business will not improve |
| Prolonged service interruptions could affect our business |
| 55 ______________________________________________________________________ We rely heavily on our network equipment, communications providers, data and software, to support all of our functions |
| We rely on our networks and the networks of others for substantially all of our revenues |
| We are able to deliver services only to the extent that we can protect our network systems against damage from power or communication failures, computer viruses, natural disasters, unauthorized access and other disruptions |
| While we endeavor to provide for failures in the network by providing back-up systems and procedures, we cannot guarantee that these back-up systems and procedures will operate satisfactorily in an emergency |
| Should we experience a prolonged failure, it could seriously jeopardize our ability to continue operations |
| In particular, should a significant service interruption occur, our ongoing customers may choose a different provider, and our reputation may be damaged, reducing our attractiveness to new customers |
| To the extent that any disruption or security breach results in a loss or damage to our customers’ data or applications, or inappropriate disclosure of confidential information, we may incur liability and suffer from adverse publicity |
| In addition, we may incur additional costs to remedy the damage caused by these disruptions or security breaches |
| If failures occur in our undersea fiber optic cables, our ability to immediately restore the entirety of our service may be limited, which could lead to a material adverse effect on our business, financial position, results of operations or liquidity |
| Our communications facilities include an undersea fiber optic cable that carries a large portion of our Internet voice and data traffic to and from the contiguous Lower 48 States |
| We completed construction of AULP West in June 2004 that provides an alternative backup communications facility |
| If a failure of both sides of the ring of our undersea fiber optic facilities occurs and we are not able to secure alternative facilities, some of the communications services we offer to our customers could be interrupted, which could have a material adverse effect on our business, financial position, results of operations or liquidity |
| If a failure occurs in our satellite communications systems, our ability to immediately restore the entirety of our service may be limited |
| We serve many rural and remote Alaska locations solely via satellite communications |
| Each of our C and Ku-band satellite transponders is backed up on the same spacecraft with multiple backup transponders |
| The primary spacecraft we use to provide voice, data and internet services to our rural Alaska customers is PanAmSat’s Galaxy XR, but we also lease capacity on two other spacecraft for services we provide, SES Americom’s AMC-7 and AMC-8 |
| On Galaxy XR, we use 7 C-band transponders |
| Galaxy XR experienced a failure August 3, 2004 of its secondary xenon ion propulsion system (XIPS) that maintains the satellite’s proper orbital position |
| The primary XIPS failed in February 2004 |
| The satellite is now using its backup bi-propellant thrusters to maintain its orbital position |
| These thrusters are a space flight proven technology |
| The failure of the primary and secondary XIPS had no short term impact on service to our customers |
| PanAmSat, the owner and operator of Galaxy XR, believes the satellite has sufficient fuel to continue normal operations until April 2008 |
| The terms of our Galaxy XR transponder purchase agreement extends through March 2012 |
| We purchased a warranty with the original agreement to cover a loss of this nature |
| We have had an agreement in place that provides backup transponder capacity on the Galaxy XIII satellite in the event of a catastrophic failure of Galaxy XR If such a failure occurs, service may not be fully restored for up to a week or longer due to the time necessary to redirect earth station antennae |
| We also own one Ku-band satellite transponder on the same primary spacecraft (Galaxy XR) that provides our C-band service |
| In the event of total primary spacecraft failure, we believe we would be able to restore our Ku-band transponder traffic on Galaxy XIII, although no pre-arrangement for its backup is currently in place |
| We also lease approximately 13 megahertz of protected and backed-up C-band capacity on SES Americom’s AMC-8 spacecraft |
| SES 56 ______________________________________________________________________ Americom’s AMC-7 is the backup spacecraft for AMC-8 |
| We also lease certain C-band transponder capacity on AMC-7 that can be preempted in the case of a satellite failure |
| The services that are preempted would not be immediately restored should AMC-7 fail or be called up to provide restoration of another of SES Americom’s spacecraft |
| We depend on a limited number of third-party vendors to supply communications equipment |
| If we do not obtain the necessary communications equipment, we will not be able to meet the needs of our customers |
| We depend on a limited number of third-party vendors to supply cable, Internet, DLPS and telephony-related equipment |
| If our providers of this equipment are unable to timely supply the equipment necessary to meet our needs or provide them at an acceptable cost, we may not be able to satisfy demand for our services and competitors may fulfill this demand |
| We do not have insurance to cover certain risks to which we are subject, which could lead to the incurrence of uninsured liabilities that adversely affect our financial position, results of operations or liquidity |
| We are self-insured for damage or loss to certain of our transmission facilities, including our buried, under sea and above-ground transmission lines |
| If we become subject to substantial uninsured liabilities due to damage or loss to such facilities, our financial position, results of operations or liquidity may be adversely affected |
| New corporate governance rules impose increased costs and internal control assessment requirements on us |
| The Sarbanes-Oxley Act of 2002 and rules subsequently implemented by the SEC, the Public Company Accounting Oversight Board, and the Nasdaq National Market have required changes in corporate governance practices of public companies |
| For example, Section 404 of the Sarbanes-Oxley Act of 2002 requires that we evaluate and report on our system of internal controls over financial reporting and have our auditor attest to such evaluation |
| We expect to incur ongoing costs to comply with these rules and regulations, as well as increased legal and financial compliance costs |
| We recently identified a material weakness in our internal control over financial reporting |
| Based on our evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2005, we identified a material weakness resulting from an ineffective review of a new unified billing and provisioning system that we implemented in September 2005 |
| Please see our Management’s Report on Internal Control Over Financial Reporting in Item 9A below for a more detailed description of this weakness and the steps that we have taken to correct it |
| Because our systems, processes and internal controls change over time, we cannot assure you that we will not identify other deficiencies in the future |
| We must apply a direct value method to determine the fair value of our cable certificate assets for purposes of impairment testing on an annual basis |
| Impairment testing may result in a material, non-cash write-down of our cable certificate or goodwill assets and could have a material adverse impact on our results of operations |
| Under Statement of Financial Accounting Standard Nodtta 142, “Goodwill and Other Intangible Assets,” we must test our goodwill and other intangible assets with indefinite lives for impairment at least annually |
| On September 29, 2004, the SEC issued SEC Staff Announcement Topic “Use of the Residual Method to Value Acquired Assets Other than Goodwill,” requiring us to apply no later than January 1, 2005 a direct value method to determine the fair value of our intangible assets with indefinite lives other than goodwill for purposes of impairment testing |
| We must also recognize previously unrecognized intangible assets, if any, in the determination of fair value for impairment testing purposes |
| Our cable certificate assets are our only indefinite-lived assets other than goodwill as of December 31, 2005 |
| Our cable certificate assets were originally valued and recorded using the residual method |
| Impairment testing of our cable certificate assets in future periods under Statement of Financial Accounting Standard Nodtta 142 must use a direct value method pursuant to such SEC Staff Announcement, which may result in a material, non-cash write-down of our cable certificate assets and could have a material adverse impact on our results of operations |
| 57 ______________________________________________________________________ Our significant debt could adversely affect our business and prevent us from fulfilling our obligations under our senior notes |
| We have and will continue to have a significant amount of debt |
| Our high level of debt could have important consequences, including the following: • use of a large portion of our cash flow to pay principal and interest on our senior notes, the senior secured credit facility and our other debt, which will reduce the availability of our cash flow to fund working capital, capital expenditures, research and development expenditures and other business activities; • current and future debt under our senior secured credit facility will continue to be secured; • increase our vulnerability to general adverse economic and industry conditions; • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • restrict us from making strategic acquisitions or exploiting business opportunities; • make it more difficult for us to satisfy our obligations with respect to the senior notes and our other debt; • place us at a competitive disadvantage compared to our competitors that have less debt; and • limit, along with the financial and other restrictive covenants in our debt, among other things, our ability to borrow additional funds, dispose of assets or pay cash dividends |
| In addition, a substantial amount of our debt bears interest at variable rates |
| If market interest rates increase, variable-rate debt will create higher debt service requirements, which would adversely affect our financial position, results of operations or liquidity |
| We will require a significant amount of cash to service our debt |
| Our ability to generate cash depends on many factors beyond our control |
| Our ability to make payments on and to refinance our debt and to fund planned capital expenditures and business development efforts will depend on our ability to generate cash in the future |
| Our business may not generate sufficient cash flow from operations and future borrowings may not be available to us under our senior secured credit facility or otherwise in an amount sufficient to enable us to pay our debt or to fund our other liquidity needs |
| We may not be able to refinance any of our debt on commercially reasonable terms or at all |
| Despite our current significant level of debt, we may still be able to incur substantially more debt |
| This could further exacerbate the risks associated with our substantial debt |
| Although the indenture governing the senior notes contains restrictions on the incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions and, under certain circumstances, debt incurred in compliance with these restrictions could be substantial |
| If new debt is added to our current debt levels, the substantial risks described above would intensify |
| 58 ______________________________________________________________________ The terms of our debt impose restrictions on us that may affect our ability to successfully operate our business and our ability to make payments on the senior notes |
| The indenture governing our senior notes contains and/or the credit agreement governing our senior secured credit facility contains covenants that, among other things, limit our ability to: • incur additional debt and issue preferred stock; • pay dividends or make other restricted payments; • make certain investments; • create liens; • allow restrictions on the ability of certain of our subsidiaries to pay dividends or make other payments to us; • sell assets; • merge or consolidate with other entities; and • enter into transactions with affiliates |
| The senior secured credit facility also requires us to comply with specified financial ratios and tests, including, but not limited to, minimum interest coverage ratio, maximum leverage ratio and maximum annual capital expenditures |
| These covenants could materially and adversely affect our ability to finance our future operations or capital needs and to engage in other business activities that may be in our best interest |
| Our ability to comply with these covenants may be affected by events beyond our control, such as prevailing economic conditions and changes in regulations, and if such events occur, we cannot be sure that we will be able to comply |
| A breach of these covenants could result in a default under the indenture governing our senior notes and/or the senior secured credit facility |
| If there were an event of default under the indenture for the senior notes and/or the senior secured credit facility, holders of such defaulted debt could cause all amounts borrowed under these instruments to be due and payable immediately |
| Additionally, if we fail to repay the debt under the senior secured credit facility when it becomes due, the lenders under the senior secured credit facility could proceed against certain of our assets and capital stock of our subsidiaries that we have pledged to them as security |
| Our assets or cash flow may not be sufficient to repay borrowings under our outstanding debt instruments in the event of a default thereunder |
| A significant percentage of our voting securities are owned by a small number of shareholders and these shareholders can control stockholder decisions on very important matters |
| As of December 31, 2005, our executive officers and directors and their affiliates owned approximately 8dtta9prca of our combined outstanding Class A and class B common stock, representing approximately 28dtta1prca of the combined voting power of that stock |
| These shareholders can significantly influence, if not control, our management policy and all fundamental corporate actions, including mergers, substantial acquisitions and dispositions, and election of directors to the Board |
| Terrorist attacks, such as the attacks that occurred on September 11, 2001, and other attacks or acts of war may adversely affect us |
| The attacks of September 11, 2001, and subsequent events have caused instability in the local, national and international economies and markets and have led, and may continue to lead, to further armed hostilities or to further acts of terrorism in the United States or elsewhere, which could cause further instability in such economies and markets |
| In addition, armed hostilities and further acts of terrorism may directly impact our physical facilities and operations or those of our customers |
| 59 ______________________________________________________________________ Furthermore, terrorist attacks, subsequent events and future developments may adversely affect our customers or their facilities or otherwise result in reduced demand from our customers for our services |
| Any of the foregoing could subject our operations to increased risks and, depending on their magnitude, could have a material adverse effect on our financial position, results of operations or liquidity |