XO Communications 2009 Annual Report Download - page 75

3
The terms of the Company’s Series A, B and C Warrants provided that all such unexercised warrants expired on January 15, 2010.
4
The original terms of the Company’s Class A preferred stock required that by January 15, 2010, the Company would redeem in cash
and in a manner provided for therein all of the shares of Class A preferred stock then outstanding at a redemption price equal to 100%
of its liquidation preference. On February 5, 2009, ACF Holding agreed to extend the date on which the Company would be required
to redeem the shares of Class A preferred stock held by ACF Holding (the “ACF Holding Shares”) from January 15, 2010 to a date no
later than April 15, 2010. The extension did not affect the redemption date of any of the shares of Class A Preferred Stock other than
the ACF Holding Shares. Accordingly, on January 15, 2010, the Company redeemed all 599,137 shares of Class A preferred stock held
by entities unaffiliated with the Chairman at an aggregate purchase price of approximately $41.4 million. As of March 31, 2010 ACF
Holding is the holder of 100% of the remaining 3,096,549 shares of Class A preferred stock. The Company is required to redeem any
outstanding ACF Holding Shares for cash at an aggregate liquidation preference of up to $217.4 million at a date no later than April 15,
2010.
As a result of his ownership of a majority of the Company’s common stock and voting preferred stock, the
Chairman can elect all of the Company’s directors. Currently, three employees of entities controlled by the
Chairman are members of the Company’s board of directors and certain of its committees. Under applicable
law and the Company’s certificate of incorporation and by-laws, certain actions cannot be taken without the
approval of holders of a majority of the Company’s voting stock, including mergers, acquisitions, the sale of
substantially all of the Company’s assets and amendments to the Company’s certificate of incorporation and
by-laws.
The Company provides certain telecommunications services to companies affiliated with the Chairman. The
total revenue recognized on such services for 2009, 2008 and 2007 was $1.7 million, $1.7 million and
$2.1 million, respectively. Amounts receivable in respect to such services from affiliates related to the
Chairman as of December 31, 2009 and 2008 were not significant.
Icahn Sourcing LLC (“Icahn Sourcing”) is an entity formed and controlled by the Chairman in order to
leverage the potential buying power of a group of entities which the Chairman either owns or with which he
otherwise has a relationship in negotiating with a wide range of suppliers of goods, services, and tangible and
intangible property. The Company is a member of the buying group and, as such, is afforded the opportunity
to purchase goods, services and property from vendors with whom Icahn Sourcing has negotiated rates and
terms. Icahn Sourcing does not guarantee that the Company will purchase any goods, services or property
from any such vendors and the Company is under no legal obligation to do so. The Company does not pay
Icahn Sourcing any fees or other amounts with respect to the buying group arrangement. The Company has
purchased a variety of goods and services as a member of the buying group at prices and on terms that it
believes are more favorable than those which would be achieved on a stand-alone basis.
18. SEGMENT INFORMATION
As previously reported in the Company’s 2008 Annual Report, the Company operated its business in two
reportable segments through two primary operating subsidiaries. XO Communications, LLC operated the
Company’s wireline business under the trade name “XO Communications” (“XOC”) and Nextlink Wireless,
Inc. (“Nextlink”) operated the Company’s fixed-wireless business. XOC and Nextlink were managed
separately; each segment required different resources, expertise and marketing strategies. In April 2009, the
Company decided to integrate Nextlink’s operations into XOC’s existing product offerings, discontinuing
Nextlink as a separate operating segment. As a result of this change, the Company’s chief operating decision
maker no longer reviews the results of Nextlink’s operations to evaluate performance and allocate resources.
Thus, Nextlink ceased to be considered a reportable segment resulting in XOC being the only operating
segment for the Company as of June 30, 2009. XOC continues to use the Nextlink LMDS spectrum assets to
support existing fixed wireless customers, customer growth and network cost reduction opportunities.
71