Cricket Wireless 2011 Annual Report Download - page 74

In connection with our issuance of $1,100 million of senior secured notes in June 2009 we repaid all
principal amounts outstanding under our former credit agreement, which amounted to approximately $875.3
million, together with accrued interest and related expenses, a prepayment premium of $17.5 million and a
payment of $8.5 million in connection with the unwinding of associated interest rate swap agreements. In
connection with such repayment, we terminated the former credit agreement and the $200 million revolving
credit facility thereunder. As a result of the termination of the former credit agreement, we recognized a $26.3
million loss on extinguishment of debt during the year ended December 31, 2009, which was comprised of the
$17.5 million prepayment premium, $7.5 million of unamortized debt issuance costs and $1.3 million of
unamortized accumulated other comprehensive loss associated with our interest rate swaps.
Income Tax Expense
During the year ended December 31, 2011, we recorded income tax expense of $39.4 million compared to
income tax expense of $42.5 million recognized in the corresponding period of the prior year. The decrease in
income tax expense during the year ended December 31, 2011 compared to the prior year period was primarily
due to a $23.3 million decrease in income tax expense due to the deferred tax effects of our joint venture
investments, offset in part by a net $6.3 million increase in the current year associated with both the amortization
of wireless licenses and the deferred tax effects of the license exchange transaction we and Savary Island entered
into with T-Mobile. In addition, during the year ended December 31, 2010, we recorded a $15.5 million income
tax benefit in connection with the impairment of our goodwill.
During the year ended December 31, 2010, we recorded income tax expense of $42.5 million compared to
income tax expense of $40.6 million in the corresponding period of the prior year. The increase in income tax
expense during the year ended December 31, 2010 compared to the prior year period was primarily due to a
$20.0 million increase in income tax expense due to the deferred tax effects of our former investments in LCW
Wireless LLC, or LCW, and Denali and our investments in STX Wireless. This income tax expense was partially
offset by a $15.5 million income tax benefit associated with the deferred tax effect related to the impairment of
our goodwill during the year ended December 31, 2010.
Unrestricted Subsidiaries
In July 2011, Leap’s board of directors designated Cricket Music Holdco, LLC (a wholly-owned subsidiary
of Cricket, or Cricket Music) and Cricket Music’s wholly-owned subsidiary Cricket Music Operations, LLC, or
Music Operations, as “Unrestricted Subsidiaries” under the indentures governing our senior notes. Cricket Music
and Music Operations hold certain hardware, software and intellectual property relating to our Muve Music
business. During the year ended December 31, 2011, Cricket Music and Music Operations had no operations or
revenues. Therefore, the most significant components of the financial position and results of operations of our
unrestricted subsidiaries were property and equipment and depreciation expense. As of December 31, 2011,
property and equipment of our unrestricted subsidiaries was approximately $9.4 million, and for the year ended
December 31, 2011, depreciation expense of our unrestricted subsidiaries was approximately $2.2 million,
resulting in a net loss of approximately $2.2 million.
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