Cricket Wireless 2011 Annual Report Download - page 102

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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The Company
Leap Wireless International, Inc. (“Leap”), a Delaware corporation, together with its subsidiaries and
consolidated joint ventures, is a wireless communications carrier that offers digital wireless services in the United
States under the “Cricket®” brand. Cricket service offerings provide customers with unlimited nationwide
wireless services for a flat rate without requiring a fixed-term contract or a credit check. The Company’s primary
service is Cricket Wireless, which offers customers unlimited nationwide voice and data services for a flat
monthly rate. Leap conducts operations through its subsidiaries and has no independent operations or sources of
income other than interest income and through dividends, if any, from its subsidiaries.
Cricket service is offered by Cricket Communications, Inc. (“Cricket”), a wholly-owned subsidiary of Leap.
Cricket service is also offered in South Texas by the Company’s joint venture, STX Wireless Operations, LLC
(“STX Operations”), which Cricket controls through a 75.75% controlling membership interest in its parent
company STX Wireless, LLC (“STX Wireless”). In addition, Cricket owns an 85% non-controlling membership
interest in Savary Island Wireless, LLC (“Savary Island”), which holds wireless spectrum in the upper Midwest
portion of the U.S. and which leases a portion of that spectrum to Cricket. For more information regarding the
ventures described above, see Note 6.
Leap, Cricket and their subsidiaries and consolidated joint ventures are collectively referred to herein as the
“Company.”
Note 2. Basis of Presentation and Significant Accounting Policies
Basis of Presentation
The consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States of America (“GAAP”). GAAP requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities and the reported amounts of revenues and expenses. By their nature, estimates are subject to an
inherent degree of uncertainty. Actual results could differ from management’s estimates.
Principles of Consolidation
The consolidated financial statements include the operating results and financial position of Leap and its
wholly-owned subsidiaries and consolidated joint ventures. The Company consolidates its non-controlling
interest in Savary Island in accordance with the authoritative guidance for the consolidation of variable interest
entities because Savary Island is a variable interest entity and, among other things, the Company has entered into
an agreement with Savary Island’s other member which establishes a specified purchase price in the event that it
exercises its right to sell its membership interest to the Company. The Company consolidates STX Wireless in
accordance with the authoritative guidance for consolidations based on the voting interest model. All
intercompany accounts and transactions have been eliminated in the consolidated financial statements.
Segment and Geographic Data
The Company operates in a single operating segment and a single reporting unit as a wireless
communications carrier that offers digital wireless services in the United States. As of and for the years ended
December 31, 2011, 2010 and 2009, all of the Company’s revenues and long-lived assets related to operations in
the United States.
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