Sprint - Nextel 2008 Annual Report Download - page 47

Our assessment above does not take into account, among other things:
‰any significant additional acquisition transactions or the pursuit of any significant new business
opportunities or spectrum acquisition strategies; and
‰any material increases in the cost of compliance with regulatory mandates.
Any of these events or circumstances could involve significant additional funding needs in excess of
anticipated cash flows from operating activities and the identified currently available funding sources, including
existing cash and cash equivalents, short-term investments and borrowings available under our existing revolving
credit facility. If existing capital resources are not sufficient to meet these funding needs, it would be necessary to
raise additional capital to meet those needs.
Our ability to fund our capital needs from outside sources is ultimately affected by the overall capacity
and terms of the banking and securities markets. Given our recent financial performance as well as the volatility
in these markets, we continue to monitor them closely and to take steps to maintain financial flexibility and a
reasonable cost of capital.
As of December 31, 2009, Moody’s Investor Service, Standard & Poor’s Ratings Services (S&P), and
Fitch Ratings had assigned the following credit ratings to certain of our outstanding obligations:
Rating
Rating Agency
Senior Unsecured
Bank Credit
Facility
Senior
Unsecured Debt Outlook
Moody’s ................. Baa2 Ba3 Negative
Standard and Poor’s ........ NotRated BB Watch Negative
Fitch ..................... BB BB Negative
Downgrades of our current ratings do not accelerate scheduled principal payments of our existing debt.
However, downgrades may cause us to incur higher interest costs on our credit facilities and future borrowings, if
any, and could negatively impact our access to the public capital markets.
As of December 31, 2009, we had working capital of $1.8 billion compared to $2.4 billion as of
December 31, 2008.
CURRENT BUSINESS OUTLOOK
We endeavor to both add new and retain our existing wireless subscribers in order to reverse the net loss
in post-paid wireless subscribers that we have been experiencing. We expect to improve our subscriber trends by
continuing to improve the customer experience and through offers which provide value, simplicity and
productivity.
Given the current economic environment, the difficulties the economic uncertainties create in
forecasting, as well as the inherent uncertainties in predicting future customer behavior, we are unable to say
with assurance the amount of net retail post-paid subscriber losses we will experience during 2010 or thereafter.
However, the Company expects that both post-paid and total subscriber losses will improve in 2010 as compared
to 2009.
Our net subscriber losses have significantly reduced our revenue and operating cash flow. These effects
will continue if we do not attract new subscribers and/or reduce our rate of churn. See “Wireless Segment
Earnings” above for a discussion of how our subscriber trends will impact our segment earnings trends. Also,
these subscriber losses have decreased and will further decrease our adjusted EBITDA, as defined by our
revolving bank credit facility. Management implemented cost reduction programs designed to decrease our cost
structure by reducing our labor and other costs; however, we do not expect that the reduction in costs will fully
offset the revenue declines described above.
The above discussion is subject to the risks and other cautionary and qualifying factors set forth under
“—Forward-Looking Statements” and Part I, Item 1A “Risk Factors” in this report.
45