Cricket Wireless 2012 Annual Report Download - page 36

by us to Sprint, we informed Sprint that certain of those covenants had not been met in 2012 and that, as a result,
we were not subject to the minimum purchase commitment for that year. Sprint disputed that assertion. In
February 2013, the parties resolved the matter.
Other Agreements
Other agreements that we have entered into with significant purchase commitments include our agreements
with music content providers that require us to purchase certain minimum amounts of content for our Muve
Music service. As we continue to expand the size and scope of our business, we may enter into additional
agreements with vendors with significant purchase commitments to enable us to offer enhanced products and
services or to obtain more favorable overall purchasing terms and conditions.
There are numerous risks and uncertainties that could impact our ability to realize the expected benefits
from these arrangements or any new ones we may enter into. We cannot guarantee that customers will accept our
products and service offerings at the levels we expect, that prices will not decline to levels below what we have
negotiated to pay or that we will be able to satisfy any purchase commitments. We are significantly reducing the
number of locations in which we offer our products in the nationwide retail channel from approximately 13,000
locations at June 30, 2012 to approximately 5,000 locations by early 2013, which may impact our sales volumes
and therefore the amount of services we may purchase under the wholesale agreement. Furthermore, we cannot
guarantee that we will be able to renew these agreements or any future agreement on terms that will be
acceptable to us. If we are unable to attract new wireless customers and sell our products and services at the
levels we expect, our ability to derive benefits from these agreements or any future agreement we enter into
could be limited, which could materially adversely affect our business, financial condition and results of
operations.
Our Significant Indebtedness Could Adversely Affect Our Financial Health and Prevent Us from Fulfilling
Our Obligations. We May Be Unable to Refinance Our Indebtedness Prior to Maturity.
We have now and will continue to have a significant amount of indebtedness. As of December 31, 2012, our
total outstanding indebtedness was $3,302.5 million, including $400 million in aggregate principal amount of
outstanding borrowings under our senior secured credit agreement, or the Credit Agreement, $250 million in
aggregate principal amount of 4.5% convertible senior notes due 2014, $1,100 million in aggregate principal
amount of 7.75% senior secured notes due 2016 and $1,600 million in aggregate principal amount of 7.75%
senior notes due 2020.
Our significant indebtedness could have material consequences. For example, it could:
• make it more difficult for us to service or refinance our debt obligations;
• increase our vulnerability to general adverse economic and industry conditions;
• impair our ability to obtain additional financing in the future for working capital needs, capital
expenditures, network build-out and other activities, including acquisitions and general corporate
purposes;
• require us to dedicate a substantial portion of our cash flows from operations to the payment of principal
and interest on our indebtedness, thereby reducing the availability of our cash flows to fund working
capital needs, capital expenditures, acquisitions and other general corporate purposes;
• limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we
operate; and
• place us at a disadvantage compared to our competitors that have less indebtedness.
Any of these risks could impact our ability to fund our operations or limit our ability to expand our business,
which could have a material adverse effect on our business, financial condition and results of operations.
Furthermore, any significant capital expenditures or increased operating expenses associated with the launch of
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