Cricket Wireless 2010 Annual Report Download - page 106

The following table summarizes the Company’s asset retirement obligations as of and for the years ended
December 31, 2010 and 2009 (in thousands):
2010 2009
Year Ended
December 31,
Asset retirement obligations, beginning of year ........................ $25,749 $16,997
Liabilities incurred ........................................... 270 7,434
Liabilities assumed by STX Wireless in connection with the formation of
thejointventure ........................................... 3,272 —
Accretion expense ............................................ 2,503 1,888
Decommissioned sites ......................................... (131) (570)
Asset retirement obligations, end of year ............................. $31,663 $25,749
Debt Issuance Costs
Debt issuance costs are amortized and recognized as interest expense using the effective interest method over the
expected term of the related debt. Unamortized debt issuance costs related to extinguished debt are expensed at the time
the debt is extinguished and recorded in loss on extinguishment of debt in the consolidated statements of operations.
Unamortized debt issuance costs are recorded in other assets or as a reduction of the respective debt balance, as
applicable, in the consolidated balance sheets.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs totaled $137.6 million, $151.2 million and
$101.0 million for the years ended December 31, 2010, 2009 and 2008, respectively.
Share-based Compensation
The Company accounts for share-based awards exchanged for employee services in accordance with the
authoritative guidance for share-based payments. Under the guidance, share-based compensation expense is
measured at the grant date, based on the estimated fair value of the award, and is recognized as expense, net of
estimated forfeitures, over the employee’s requisite service period. Compensation expense is amortized on a straight-line
basis over the requisite service period for the entire award, which is generally the maximum vesting period of the award.
No share-based compensation was capitalized as part of inventory or fixed assets prior to or during 2010.
Income Taxes
The Company calculates income taxes in each of the jurisdictions in which it operates. This process involves
calculating the current tax expense or benefit and any deferred income tax expense or benefit resulting from temporary
differences arising from differing treatments of items for tax and accounting purposes. These temporary differences
result in deferred tax assets and liabilities. Deferred tax assets are also established for the expected future tax benefits to
be derived from net operating loss (“NOL”) carryforwards, capital loss carryforwards and income tax credits.
The Company periodically assesses the likelihood that its deferred tax assets will be recoverable from future
taxable income. To the extent the Company believes it is more likely than not that its deferred tax assets will not be
recovered, it must establish a valuation allowance. As part of this periodic assessment for the year ended
December 31, 2010, the Company weighed the positive and negative factors and, at this time, does not believe
there is sufficient positive evidence to support a conclusion that it is more likely than not that all or a portion of its
deferred tax assets will be realized, except with respect to the realization of a $2.0 million Texas Margins Tax
(“TMT”) credit. Accordingly, at December 31, 2010 and 2009, the Company recorded a valuation allowance
offsetting substantially all of its deferred tax assets. The Company will continue to monitor the positive and negative
factors to assess whether it is required to continue to maintain a valuation allowance. At such time as the Company
determines that it is more likely than not that all or a portion of the deferred tax assets are realizable, the valuation
100
LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)