Sprint - Nextel 2011 Annual Report Download - page 20

Table of Contents
Our credit facility, which expires in October 2013, requires that we maintain a ratio of total indebtedness to trailing four quarters earnings before interest,
taxes, depreciation and amortization and certain other non-recurring items as defined by the credit facility (adjusted EBITDA), of no more than 4.5 to 1.0, as of any fiscal
quarter ending on or before March 31, 2012. The ratio will be reduced to 4.25 to 1.0 after March 31, 2012, and further reduced to 4.0 to 1.0 after December 31, 2012. As
of December 31, 2011, the ratio was 3.7 to 1.0. If we do not continue to satisfy this ratio, we will be in default under our credit facility, which would trigger defaults under
our other debt obligations, which in turn could result in the maturities of certain debt obligations being accelerated. While we recently amended our credit facility to
redefine adjusted EBITDA by adding back certain net equipment costs, there can be no assurance that we will continue to comply with the covenant as modified or that, if
needed, we can obtain amendments or waivers in the future. We also have an unsecured loan agreement with Export Development Canada (EDC), which has terms similar
to those of our credit facility.
In addition to the covenants in our credit facility and the EDC loan, certain indentures, governing our notes limit, among other things, our ability to incur
additional debt, pay dividends, create liens and sell, transfer, lease or dispose of assets. Such restrictions could adversely affect our ability to access the capital markets or
engage in certain transactions.
The trading price of our common stock has been and may continue to be volatile and may not reflect our actual operations and performance.
Market and industry factors may seriously harm the market price of our common stock, regardless of our actual operations and performance. Stock price
volatility and sustained decreases in our share price could subject our shareholders to losses and us to takeover bids or lead to action by the NYSE. The trading price of
our common stock has been, and may continue to be, subject to fluctuations in price in response to various factors, some of which are beyond our control, including, but
not limited to:
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• quarterly announcements and variations in our results of operations or those of our competitors, either alone or in comparison to analysts expectations or
prior company estimates, including announcements of subscriber counts, rates of churn, and operating margins that would result in downward pressure on
our stock price;
• the cost and availability or perceived availability of additional capital and market perceptions relating to our access to this capital;
• seasonality or other variations in our subscriber base, including our rate of churn;
• announcements by us or our competitors of acquisitions, new products, technologies, significant contracts, commercial relationships or capital
commitments;
• the performance of Clearwire and Clearwire's Class A common stock or speculation about the possibility of future actions we or other significant
shareholders may take in connection with Clearwire;
• disruption to our operations or those of other companies critical to our network operations;
• market speculation or announcements by us regarding the entering into, or termination of, material transactions;
• our ability to develop and market new and enhanced technologies, products and services on a timely and cost-effective basis, including implementation of
N
etwork Vision and our networks;
• recommendations by securities analysts or changes in their estimates concerning us;
• the incurrence of additional debt, dilutive issuances of our stock, short sales or hedging of, and other derivative transactions, in our common stock;
• any significant change in our board of directors or management;
• litigation;
• changes in governmental regulations or approvals; and
•
p
erceptions of general market conditions in the technology and communications industries, the U.S. economy and global market conditions.