Cricket Wireless 2011 Annual Report Download - page 108

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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
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, 2011, 2010 and 2009 was $23.4 million, $10.1 million and $5.3 million,
respectively. Estimated amortization expense for other intangible assets is $16.8 million for 2012, $10.6 million
for 2013, $4.6 million for 2014, $2.6 million for 2015, $2.6 million for 2016, 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 $11.0 million and $26.7 million as of December 31, 2011 and 2010, respectively.
During the years ended December 31, 2011, 2010 and 2009, the Company’s share of earnings in its equity
method investees (net of its share of their losses) was $3.0 million, $1.9 million and $3.9 million, respectively.
On June 30, 2011, one of the Company’s equity method investees declared a cash dividend and paid the
dividend with funds borrowed under a third-party line of credit. The Company’s share of the dividend based on
its ownership percentage was $18.2 million and was received in full on July 1, 2011. In the consolidated
statement of cash flows for the year ended December 31, 2011, the Company presented the portion of the
dividend equal to its share of accumulated profits (approximately $6.6 million) as cash from operating activities
and the remainder (approximately $11.6 million) as cash from investing activities, as it represented a return of
the Company’s original investment.
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.
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