Sprint - Nextel 2008 Annual Report Download - page 97

SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
continues to defend the matters vigorously. We do not expect the resolution of this matter to have a material
effect on our consolidated financial position or results of operations.
In September 2004, the U.S. District Court for the District of Kansas denied a motion to dismiss a
shareholder lawsuit alleging that our 2001 and 2002 proxy statements were false and misleading in violation of
federal securities laws to the extent they described new employment agreements with certain senior executives
without disclosing that, according to the allegations, replacement of those executives was inevitable. These
allegations, made in an amended complaint in a lawsuit originally filed in 2003, are asserted against us and
certain former officers and directors, and seek to recover any decline in the value of our tracking stocks during
the class period. The parties have stipulated that the case can proceed as a class action. All defendants have
denied plaintiffs’ allegations and intend to defend this matter vigorously. Allegations in the original complaint,
which asserted claims against the same defendants and our former independent auditor, were dismissed by the
Court in April 2004. Our motion to dismiss the amended complaint was denied, and the parties are engaged in
discovery. We do not expect the resolution of this matter to have a material effect on our consolidated financial
position or results of operations.
Various other suits, proceedings and claims, including purported class actions typical for a large
business enterprise, are pending against us or our subsidiaries. While it is not possible to determine the ultimate
disposition of each of these proceedings and whether they will be resolved consistent with our beliefs, we expect
that the outcome of such proceedings, individually or in the aggregate, will not have a material adverse effect on
our consolidated financial position or results of operations.
Spectrum Reconfiguration Obligations
In 2004, the FCC adopted a Report and Order that included new rules regarding interference in the 800
MHz band and a comprehensive plan to reconfigure the 800 MHz band. The Report and Order provides for the
exchange of a portion of our 800 MHz FCC spectrum licenses, and requires us to fund the cost incurred by public
safety systems and other incumbent licensees to reconfigure the 800 MHz spectrum band. In addition, we
received licenses for 10 MHz of nationwide spectrum in the 1.9 GHz band; however, we are required to relocate
and reimburse the incumbent licensees in this band for their costs of relocation to another band designated by the
FCC.
The minimum cash obligation is approximately $2.8 billion under the Report and Order. We are,
however, obligated to pay the full amount of the costs relating to the reconfiguration plan, even if those costs
exceed $2.8 billion. As required under the terms of the Report and Order, a letter of credit has been secured to
provide assurance that funds will be available to pay the relocation costs of the incumbent users of the 800 MHz
spectrum. These relocation costs are reviewed periodically based on actual costs incurred. As a result of this
review, our letter of credit was reduced from $2.0 billion to $1.9 billion in June 2009, reduced to $1.8 billion in
September 2009, and further reduced to $1.7 billion in November 2009 as approved by the FCC.
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