Sprint - Nextel 2010 Annual Report Download - page 82

We are involved in multiple state income tax examinations related to various years beginning with 1996, which are in
various stages of the examination, administrative review or appellate process. Based on our current knowledge of the
examinations, administrative reviews and appellate processes, we believe it is reasonably possible a number of our uncertain
tax positions may be resolved during the next twelve months which could result in a reduction of up to $90 million in our
unrecognized tax benefits.
Note 11. Commitments and Contingencies
Litigation, Claims and Assessments
A number of cases that allege Sprint Communications Company L.P. failed to obtain easements from property
owners during the installation of its fiber optic network in the 1980's have been filed in various courts. Several of these cases
sought certification of nationwide classes, and in one case, a nationwide class was certified. In 2003, a nationwide settlement of
these claims was approved by the U.S. District Court for the Northern District of Illinois, but objectors appealed the
preliminary approval order to the Seventh Circuit Court of Appeals, which overturned the settlement and remanded the case to
the trial court for further proceedings. We reached an agreement in principle to settle the claims for an amount not material to
our consolidated financial position or results of operations. The Court issued its preliminary approval of the settlement on
July 17, 2008, but on September 10, 2009, the Court announced that it would not approve the settlement. The Court did not
decide whether the settlement was fair or in the best interest of class members, but denied on jurisdictional grounds. As a result,
the agreement terminated, and the parties have continued their efforts to reach a settlement. We do not expect the resolution of
this matter to have a material adverse effect on our consolidated financial position or results of operations.
In December 2010, the U.S. District Court for the District of Kansas granted summary judgment in favor of Sprint
and the other defendants, in a class action lawsuit filed in 2003, which alleged 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.
No appeal was taken from that decision, and the case is now closed.
On January 6, 2011, the U.S. District Court for the District of Kansas denied our motion to dismiss a shareholder
lawsuit, Bennett v. Sprint Nextel Corp., that alleges that the company and three of its former officers violated Section 10(b) of
the Securities Exchange Act of 1934 and Rule 10b-5 by failing adequately to disclose certain alleged operations difficulties
subsequent to the Sprint-Nextel merger, and by purportedly issuing false and misleading statements regarding the write-down
of goodwill. The complaint was originally filed in March 2009 and is allegedly brought on behalf of purchasers of company
stock from October 26, 2006 to February 27, 2008. On January 20, 2011, we moved to certify the January 6th order for
interlocutory appeal. We believe the complaint is without merit and intend to defend the matter vigorously. We do not expect
the resolution of this matter to have a material adverse effect on our consolidated financial position or results of operations.
Two related shareholder derivative suits were filed against the company and certain of its present and/or former
officers and directors. The first, Murphy v. Forsee, was filed in state court in Kansas in April 2009, was removed to federal
court, and was stayed by the court pending resolution of the motion to dismiss the Bennett case. The second, Randolph v.
Forsee, was filed in July 2010 in state court in Kansas, was removed to federal court, and was remanded back to state court.
The parties are discussing a schedule for these cases going forward in light of the pendency of the Bennett case.
We are currently engaged in an arbitration with Clearwire relating to the pricing of service on Clearwire's 4G network
for dual-mode wireless handsets used by Sprint customers, pursuant to our MVNO agreement with Clearwire. The cost and
timing of resolution of this matter cannot be determined at this time. We do not expect the resolution of this matter will have a
material adverse 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”). 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.
Table of Contents SPRINT NEXTEL CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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