Sprint - Nextel 2010 Annual Report Download - page 39

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Certain actions or defaults by Clearwire would, if viewed as a subsidiary, result in a breach of covenants, including potential
cross-default provisions, under certain agreements relating to our indebtedness. However, we believe the unilateral rights
obtained in December significantly mitigate the possibility of an event that would cross-default against Sprint's debt
obligations.
We expect to remain in compliance with our covenants through at least the end of 2012, although there can be no
assurance that we will do so. Although we expect to improve our postpaid subscriber results, if we do not meet our plan,
depending on the severity of the actual subscriber results versus what we currently anticipate, it is possible that we would not
remain in compliance with our covenants or be able to meet our debt service obligations, which could result in acceleration of
our indebtedness. If such unforeseen events occur, we may engage with our lenders to obtain appropriate waivers or
amendments of our credit facilities or refinance borrowings, although there is no assurance we would be successful in any of
these actions.
Sprint's current liquidity position makes it likely that we will be able to meet our debt service requirements and other
funding needs currently identified through at least the end of 2012 by using our anticipated cash flows from operating activities
as well as our cash and cash equivalents on hand. In addition, we also have available the remaining borrowing capacity under
our revolving bank credit facility. Nevertheless, if we are unable to continue to reduce the rate of losses of postpaid subscribers,
it could have a significant negative impact on cash provided by operating activities and our liquidity in future years.
In determining that we expect to meet our funding needs through at least 2012, we have considered:
• expenses relating to our operations;
• anticipated levels of capital expenditures, including the capacity and upgrading of our networks and the
deployment of new technologies in our networks, and FCC license acquisitions;
• anticipated payments under the Report and Order, as supplemented;
• any contributions we may make to our pension plan;
• scheduled debt service requirements;
• any additional investment we may choose to make in Clearwire; and
• other future contractual obligations and general corporate expenditures.
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 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, as well as our performance and our credit ratings. 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, 2010, Moody's Investor Service, Standard & Poor's Ratings Services, and Fitch Ratings had
assigned the following credit ratings to certain of our outstanding obligations:
Rating Agency
Moody's
Standard and Poor's
Fitch
Rating
Senior Unsecured
Bank Credit
Facility
Baa2
Not Rated
BB-
Senior
Unsecured Debt
Ba3
BB-
BB-
Outlook
Under Review
Negative
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, 2010, we had working capital of $2.0 billion compared to $1.8 billion as of December 31, 2009.
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