Cricket Wireless 2011 Annual Report Download - page 73

Year Ended December 31,
2010 2009 Change
Equity in net income of investees, net ....................... 1,912 3,946 (2,034)
Interest income ......................................... 1,010 3,806 (2,796)
Interest expense ........................................ (243,377) (210,389) (32,988)
Other income, net ....................................... 3,209 469 2,740
Loss on extinguishment of debt ............................ (54,558) (26,310) (28,248)
Income tax expense ..................................... (42,513) (40,609) (1,904)
Equity in Net Income of Investees, Net
Equity in net income of investees, net reflects our share of net income (loss) of regional wireless service
providers in which we hold investments.
Interest Income
Interest income decreased $0.8 million and $2.8 million during the years ended December 31, 2011 and
December 31, 2010, respectively, compared to the corresponding periods of the prior year. These decreases were
primarily attributable to declines in interest rates from the corresponding periods of the prior year.
Interest Expense
Interest expense increased $12.8 million during the year ended December 31, 2011 compared to the
corresponding period of the prior year. The increase in interest expense resulted primarily from our issuance of
$400 million of additional 7.75% senior notes due 2020 in May 2011. This increase was partially offset by the
repurchase and redemption of all of our $1,100 million of 9.375% senior notes due 2014 using proceeds from our
issuance of $1,200 million of 7.75% senior notes due 2020 in November 2010.
Interest expense increased $33.0 million during the year ended December 31, 2010 compared to the
corresponding period of the prior year. The increase in interest expense resulted primarily from the fact that we
did not capitalize interest during the year ended December 31, 2010, compared to $20.8 million of interest
capitalized during the corresponding period of the prior year. We also incurred a full year of interest expense
during 2010 as a result of the $1,100 million of 7.75% senior secured notes due 2016 we issued in June 2009 as
well as additional interest expense from our issuance of $1,200 million of 7.75% senior notes due 2020 in
November 2010.
Other Income (Loss), Net
During the year ended December 31, 2011, we recognized an immaterial loss on the sale of certain of our
investments in asset-backed commercial paper. During the years ended December 31, 2010 and 2009, we
recognized gains of $3.2 million and $0.5 million, respectively, on the sale of certain of our investments in asset-
backed commercial paper. These gains partially offset impairment charges recorded in prior periods.
Loss on Extinguishment of Debt
In connection with our issuance of $1,200 million of 7.75% senior notes due 2020 in November 2010, we
repurchased and redeemed all of our outstanding $1,100 million in aggregate principal amount of 9.375% senior
notes due 2014 through a tender offer and redemption, respectively, and the indenture governing such senior
notes was satisfied and discharged in accordance with its terms. As a result, we recognized a $54.5 million loss
on extinguishment of debt during the year ended December 31, 2010, which was comprised of $46.6 million in
tender offer consideration (including $18.3 million in consent payments), $8.6 million in redemption premium,
$1.1 million in dealer manager fees, $10.7 million in unamortized debt issuance costs and $0.2 million in related
professional fees, net of $12.7 million in unamortized premium.
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