Cricket Wireless 2010 Annual Report Download - page 105

ended December 31, 2010, 2009 and 2008, the Company’s share of earnings in its equity method investees (net of its
share of their losses) was $1.9 million, $3.9 million and a loss of $0.3 million, respectively.
The Company regularly monitors and evaluates the realizable value of its investments. When assessing an
investment for an other-than-temporary decline in value, the Company considers such factors as, among other
things, the performance of the investee in relation to its business plan, the investee’s revenue and cost trends,
liquidity and cash position, market acceptance of the investee’s products or services, any significant news that has
been released regarding the investee and the outlook for the overall industry in which the investee operates. If events
and circumstances indicate that a decline in the value of these assets has occurred and is other-than-temporary, the
Company records a reduction to the carrying value of its investment and a corresponding charge to the consolidated
statements of operations.
Concentrations
The Company generally relies on one key vendor for billing services, a limited number of vendors for device
logistics, a limited number of vendors for its voice and data communications transport services and a limited
number of vendors for payment processing services. Loss or disruption of these services could materially adversely
affect the Company’s business.
The networks the Company operates do not, by themselves, provide national coverage and it must pay fees to
other carriers who provide roaming or wholesale services to the Company. The Company currently relies on
roaming agreements with several carriers for the majority of its voice services and generally on one key carrier for
its data roaming services. The Company has also entered into a wholesale agreement which permits the Company to
offer Cricket wireless services outside of its current network footprint. If the Company were unable to obtain or
maintain cost-effective roaming or wholesale services for its customers in geographically desirable service areas,
the Company’s competitive position, business, financial condition and results of operations could be materially
adversely affected.
Operating Leases
Rent expense is recognized on a straight-line basis over the initial lease term and those renewal periods that are
reasonably assured as determined at lease inception. The difference between rent expense and rent paid is recorded
as deferred rent and is included in other long-term liabilities in the consolidated balance sheets. Rent expense
totaled $252.5 million, $234.8 million and $179.9 million for the years ended December 31, 2010, 2009 and 2008,
respectively.
Asset Retirement Obligations
The Company recognizes an asset retirement obligation and an associated asset retirement cost when it has a
legal obligation in connection with the retirement of tangible long-lived assets. These obligations arise from certain
of the Company’s leases and relate primarily to the cost of removing its equipment from such lease sites and
restoring the sites to their original condition. When the liability is initially recorded, the Company capitalizes the
cost of the asset retirement obligation by increasing the carrying amount of the related long-lived asset. The liability
is initially recorded at its present value and is accreted to its then present value each period, and the capitalized cost
is depreciated over the useful life of the related asset. Accretion expense is recorded in cost of service in the
consolidated statements of operations. Upon settlement of the obligation, any difference between the cost to retire
the asset and the liability recorded is recognized in operating expenses in the consolidated statements of operations.
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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)