Cricket Wireless 2011 Annual Report Download - page 53

On August 30, 2011, our board of directors adopted a Tax Benefit Preservation Plan as a measure intended
to help preserve our ability to use our NOL carryforwards and to deter acquisitions of Leap common stock that
could result in an ownership change under Section 382 of the Internal Revenue Code. The Tax Benefit
Preservation Plan is designed to deter acquisitions of Leap common stock that would result in a stockholder
owning 4.99% or more of Leap common stock (as calculated under Section 382), or any existing holder of 4.99%
or more of Leap common stock acquiring additional shares, by substantially diluting the ownership interest of
any such stockholder unless the stockholder obtains an exemption from our board of directors. Because the Tax
Benefit Preservation Plan may restrict a stockholder’s ability to acquire Leap common stock, it could discourage
a tender offer for Leap common stock or make it more difficult for a third party to acquire a controlling position
in our stock without our approval, and the liquidity and market value of Leap common stock may be adversely
affected while the Tax Benefit Preservation Plan is in effect.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
As of December 31, 2011, we leased approximately 9,500 cell sites, 32 switching centers and five
warehouse facilities (which range in size from approximately 4,000 square feet to 30,000 square feet). In
addition, we had 46 office leases in our individual markets that range from approximately 1,000 square feet to
approximately 40,000 square feet. We also leased approximately 220 retail locations in our markets, including
stores ranging in size from approximately 400 square feet to 10,000 square feet.
As of December 31, 2011, we leased office space totaling approximately 200,000 square feet for our
corporate headquarters in San Diego. We use these offices for engineering and administrative purposes. As of
such date, we also leased space, totaling approximately 94,000 square feet, for our facility in Denver for our sales
and marketing, product development and supply chain functions. We also leased space in Denver, totaling
approximately 23,000 square feet, for our engineering and information technology functions. We do not own any
real property.
As we continue to develop existing Cricket markets, we may lease additional or substitute office facilities,
retail stores, cell sites, switch sites and warehouse facilities.
Item 3. Legal Proceedings
As more fully described below, we are involved in a variety of lawsuits, claims, investigations and
proceedings concerning intellectual property, commercial, business practices and other matters. Due in part to the
expansion and development of our business operations, we have become subject to increased amounts of
litigation, including disputes alleging intellectual property infringement.
We believe that any damage amounts alleged by plaintiffs in the matters discussed below are not necessarily
meaningful indicators of our potential liability. We determine whether we should accrue an estimated loss for a
contingency in a particular legal proceeding by assessing whether a loss is deemed probable and whether its
amount can be reasonably estimated. We reassess our views on estimated losses on a quarterly basis to reflect the
impact of any developments in the matters in which we are involved.
Legal proceedings are inherently unpredictable, and the matters in which we are involved often present
complex legal and factual issues. We vigorously pursue defenses in legal proceedings and engage in discussions
where possible to resolve these matters on terms favorable to us. It is possible, however, that our 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.
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