Cricket Wireless 2010 Annual Report Download - page 104

regulatory, contractual, competitive, economic or other factors currently exist that limit the useful lives of the
Company’s or Savary Island’s PCS and AWS licenses. The Company also tests its wireless licenses for impairment
on an annual basis in accordance with the authoritative guidance for goodwill and other intangible assets. Refer to
Note 6 for further discussion regarding the Company’s impairment evaluation of wireless licenses. On a quarterly
basis, the Company evaluates the remaining useful lives of its indefinite-lived wireless licenses to determine
whether events and circumstances, such as legal, regulatory, contractual, competitive, economic or other factors,
continue to support an indefinite useful life.
Goodwill
The Company records the excess of the purchase price over the fair value of net assets acquired in a business
combination as goodwill. However, as of December 31, 2009, goodwill primarily represented the excess of the
Company’s reorganization value over the fair value of identified tangible and intangible assets recorded in
connection with fresh-start reporting as of July 31, 2004. As of December 31, 2010, goodwill of $31.1 million
represented the excess of the purchase price over the fair values of the assets acquired (net of liabilities assumed,
including the related deferred tax effects) by STX Wireless in connection with the formation of the joint venture.
Refer to Note 7 for further discussion of the Company’s purchase price allocation and determination of goodwill.
Goodwill is tested for impairment annually as well as when an event or change in circumstance indicates an
impairment may have occurred. In addition, on a quarterly basis, the Company evaluates the triggering event criteria
outlined in the authoritative guidance for the impairment or disposal of long-lived assets to determine whether
events or changes in circumstances indicate that an impairment condition may exist. Refer to Note 6 for further
discussion regarding the Company’s goodwill impairment evaluation.
Other Intangible Assets
The Company’s other intangible assets consist of trademarks and customer relationships. The Company’s
trademarks were recorded upon adoption of fresh-start reporting and are being amortized on a straight-line basis
over their estimated useful lives of fourteen years. Customer relationships acquired in connection with the
Company’s acquisition of Hargray Wireless, LLC (“Hargray Wireless”) in 2008 and the formation of the STX
Wireless joint venture in the fourth quarter of 2010 are amortized on an accelerated basis over a useful life of up to
four years. The Company assesses potential impairments to its other intangible assets, when there is evidence that
events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss may
be required to be recognized when the undiscounted cash flows expected to be generated by the intangible asset is
less than its carrying value. Any required impairment loss would be measured as the amount by which the asset’s
carrying value exceeds its fair value and would be recorded as a reduction in the carrying value of the related asset
and charged to results of operations. Amortization expense for other intangible assets for the years ended
December 31, 2010, 2009 and 2008 was $10.1 million, $5.3 million and $23.6 million, respectively. Estimated
amortization expense for other intangible assets is $23.4 million for 2011, $16.8 million for 2012, $10.6 million for
2013, $4.2 million for 2014, $2.6 million for 2015, and $4.2 million thereafter.
Investments in Other Entities
The Company uses the equity method to account for investments in common stock of corporations in which it
has a voting interest of between 20% and 50% or in which the Company otherwise has the ability to exercise
significant influence, and for investments in limited liability companies that maintain specific ownership accounts
in which it has more than a minor but not greater than a 50% ownership interest. Under the equity method, the
investment is originally recorded at cost and is adjusted to recognize the Company’s share of net earnings or losses
of the investee. The Company’s ownership interest in equity method investees ranges from approximately 6% to
20% of outstanding membership units. The carrying value of the Company’s investments in its equity method
investees was $26.7 million and $21.3 million as of December 31, 2010 and 2009, respectively. During the years
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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)