Sprint - Nextel 2008 Annual Report Download - page 140

CLEARWIRE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
As of December 31, 2009, we have signed agreements to acquire approximately $30.0 million in new
spectrum, subject to closing conditions. These transactions are expected to be completed within the next twelve
months.
Network equipment purchase obligations — We have purchase commitments with take-or-pay obligations
and/or volume commitments for equipment that are non-cancelable and outstanding purchase orders for network
equipment for which we believe delivery is likely to occur.
Other purchase obligations — We have purchase obligations that include minimum purchases we have
committed to purchase from suppliers over time and/or unconditional purchase obligations where we guarantee
to make a minimum payment to suppliers for goods and services regardless of whether suppliers fully deliver
them. They include, among other things, agreements for backhaul, customer devices and IT related and other
services. In addition, we are party to various arrangements that are conditional in nature and create an obligation
to make payments only upon the occurrence of certain events, such as the actual delivery and acceptance of
products or services. Because it is not possible to predict the timing or amounts that may be due under these
conditional arrangements, no such amounts have been included in the table above. The table above also excludes
blanket purchase order amounts where the orders are subject to cancellation or termination at our discretion or
where the quantity of goods or services to be purchased or the payment terms are unknown because such
purchase orders are not firm commitments.
AMDOCS Agreement — On March 31, 2009, we entered into a Customer Care and Billing Services
Agreement, which we refer to as the AMDOCS Agreement, with AMDOCS Software Systems Limited, which
we refer to as AMDOCS, under which AMDOCS will provide a customized customer care and billing platform,
which we refer to as the Platform, to us. In connection with the provision of these services and the establishment
of the Platform, AMDOCS will also license certain of its software to us.
The initial term of the AMDOCS Agreement commences on March 31, 2009 and ends on the earliest to
occur of seven years from the date of the AMDOCS Agreement (to be extended under certain circumstances
relating to conversion of subscribers to the new system) or the termination of the AMDOCS Agreement pursuant
to its terms, as defined. Under the terms of the AMDOCS Agreement, we are required to pay AMDOCS
licensing fees, implementation fees, monthly subscriber fees, and reimbursable expenses. In addition, the
AMDOCS Agreement contains detailed terms governing implementation and maintenance of the Platform;
performance specifications; acceptance testing; charges, credits and payments; and warranties. We capitalized
$52.9 million in costs incurred during the application development stage associated with the Platform for the year
ended December 31, 2009.
Legal proceedings — As more fully described below, we are involved in a variety of lawsuits, claims,
investigations and proceedings concerning intellectual property, business practices, commercial and other
matters. We determine whether we should accrue an estimated loss for a contingency in a particular legal
proceeding by assessing whether a loss is deemed probable and can be reasonably estimated. We reassess our
views on estimated losses on a quarterly basis to reflect the impact of any developments in the matters in which
we are involved. Legal proceedings are inherently unpredictable, and the matters in which we are involved often
present complex legal and factual issues. We vigorously pursue defenses in legal proceedings and engage in
discussions where possible to resolve these matters on terms favorable to us. It is possible, however, that our
business, financial condition and results of operations in future periods could be materially affected by increased
litigation expense, significant settlement costs and/or unfavorable damage awards.
On December 1, 2008, Adaptix, Inc., which we refer to as Adaptix, filed suit for patent infringement against
us and Sprint in the United States District Court for the Eastern District of Texas, alleging that we and Sprint
infringed six patents purportedly owned by Adaptix. On February 10, 2009, Adaptix filed an Amended
Complaint alleging infringement of a seventh patent. Adaptix alleges that by offering 4G mobile WiMAX
services to subscribers in compliance with the 802.16e WiMAX standard, and by making, using and/or selling
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