Cricket Wireless 2010 Annual Report Download - page 135

Allocation of Share-based Compensation Expense
Total share-based compensation expense related to all of the Company’s share-based awards for the years
ended December 31, 2010, 2009 and 2008 was allocated as follows (in thousands, except per share data):
2010 2009 2008
Year Ended December 31,
Cost of service ....................................... $ 3,673 $ 3,546 $ 3,060
Selling and marketing expenses ........................... 5,781 6,264 4,580
General and administrative expenses ....................... 27,155 32,903 27,575
Share-based compensation expense ....................... $36,609 $42,713 $35,215
Share-based compensation expense per share:
Basic ............................................. $ 0.48 $ 0.59 $ 0.52
Diluted ........................................... $ 0.48 $ 0.59 $ 0.52
Note 13. Employee Savings and Retirement Plan
The Company’s 401(k) plan allows eligible employees to contribute up to 30% of their salary, subject to annual
limits. The Company matches a portion of the employee contributions and may, at its discretion, make additional
contributions based upon earnings. The Company’s contributions were approximately $5.4 million, $4.8 million
and $2.8 million for the years ended December 31, 2010, 2009 and 2008, respectively.
Note 14. Commitments and Contingencies
As more fully described below, the Company is involved in a variety of lawsuits, claims, investigations and
proceedings concerning intellectual property, securities, commercial, consumer and business practices and other
matters. Due in part to the growth and expansion of its business operations, the Company has become subject to
increased amounts of litigation, including disputes alleging intellectual property infringement.
The Company believes that any damage amounts alleged by plaintiffs in the matters discussed below are not
necessarily meaningful indicators of its potential liability. The Company determines whether it should accrue an
estimated loss for a contingency in a particular legal proceeding by assessing whether a loss is deemed probable and
whether the amount can be reasonably estimated. The Company reassesses its views on estimated losses on a
quarterly basis to reflect the impact of any developments in the matters in which it is involved.
Legal proceedings are inherently unpredictable, and the matters in which the Company is involved often
present complex legal and factual issues. The Company vigorously pursues defenses in legal proceedings and
engages in discussions where possible to resolve these matters on favorable terms. The Company’s policy is to
recognize legal costs as incurred. It is possible, however, that the Company’s business, financial condition and
results of operations in future periods could be materially adversely affected by increased litigation expense,
significant settlement costs and/or unfavorable damage awards.
Patent Litigation
Freedom Wireless
On November 2, 2010, a matter between Freedom Wireless, Inc. (“Freedom Wireless”) and, the Company was
dismissed with prejudice following the parties’ entry on July 23, 2010 into a license agreement covering the patents
at issue in the matter. The Company was sued by Freedom Wireless, Inc. on December 10, 2007 in the United States
District Court for the Eastern District of Texas, Marshall Division, for alleged infringement of U.S. Patent
No. 5,722,067 entitled “Security Cellular Telecommunications System,” U.S. Patent No. 6,157,823 entitled
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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)