XO Communications 2009 Annual Report Download - page 23

Employees
As of February 28, 2010, we had 4,021 employees, including 1,725 in Business Services, 338 in Carrier
Services, 73 in Concentric, 1,244 in Network Services, 344 in Information Technology, 158 in Finance and
139 in Corporate. None of our employees are represented by a labor union and we have experienced no labor-
related work stoppages.
ITEM 1A. RISK FACTORS
Risks Related to Liquidity, Financial Resources, and Capitalization
We have incurred a net loss from operations in the past and may not generate funds from operations or
financing activities sufficient to meet all of our operating or capital cash requirements and, if we are
unable to meet our needs for additional funding in the future, we may be required to limit, scale back or
cease our operations.
For each period since inception, we have incurred net losses from operations. For 2009, 2008 and 2007 our
net losses from operations were $47.2 million, $84.8 million and $110.1 million, respectively. Our negative
free cash flow (cash flow from operations less our capital expenditures) was $50.4 million, $145.3 million and
$75.6 million for 2009, 2008 and 2007, respectively.
If we are unable to raise additional capital, we may not generate sufficient funds from operations to execute
our long-term, strategic business plan. Consequently, we may be required to delay or reduce the scope of our
capital expenditure activities, eliminate certain expenditures on long-term initiatives and/or implement cash
preservation measures. In such a capital restricted situation, we may be forced to sell assets or securities or
borrow funds on an untimely or unfavorable basis.
We may seek additional financing to fund the redemption of shares of our Class A preferred stock, to
acquire capital assets in support of our operations, to capitalize on opportunities which may arise to
enhance our competitive position, or for general corporate purposes.
Based on our current level of operations, we believe that cash flow from operations as well as cash on hand
and marketable securities will enable us to meet our working capital, capital expenditure, Class A preferred
stock redemption and other obligations for at least the next 12 months. However, our ability to fund our capital
needs depends on our future operating performance and cash flow, which are subject to prevailing economic
conditions and other factors, many of which are beyond our control. We may seek additional financing to
operate and grow our business, including, without limitation, the possibility of a rights offering. There can be
no assurance that such financing will be available on terms acceptable to us or at all. If available financing is
limited or we are forced to fund our operations at a higher cost, we may need to curtail our business activities
or increase our cost of financing, both of which could have an adverse effect on our operating results and
financial condition.
The original terms of our 6% Class A Convertible Preferred Stock (“Class A Preferred Stock”) required that
by January 15, 2010, we 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 Industries Holding Corp. (“ACF Holding”), an affiliate of Mr. Carl Icahn, the
Chairman of our Board of Directors and our majority stockholder (the “Chairman”), agreed to extend the date
on which we 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.
On July 9, 2009, we redeemed 304,314 shares of Class A preferred stock from entities unaffiliated with us at
an aggregate purchase price of approximately $18.4 million, which reduced the number of outstanding shares
of Class A preferred stock to 3,695,686. On January 15, 2010, we 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. We are required to redeem any outstanding ACF Holding Shares for cash at an
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