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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 through interest income and 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% membership interest in its parent company STX
Wireless, LLC (“STX Wireless”). For more information regarding this venture, see “Note 6. Significant
Acquisitions and Other Transactions.”
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 as well as the operating results and financial position of STX Wireless and its wholly-
owned subsidiaries. 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.
The consolidated financial statements also include the operating results and financial position of Savary
Island Wireless, LLC (“Savary Island”) and its wholly-owned subsidiaries prior to their merger with and into
Cricket on December 28, 2012. Prior to October 1, 2012, the Company consolidated its non-controlling
membership interest in Savary Island in accordance with the authoritative guidance for the consolidation of
variable interest entities because Savary Island was a variable interest entity and, among other factors, the
Company had entered into an agreement with Savary Island’s other member that established a specified purchase
price in the event that it exercised its right to sell its membership interest to the Company. On October 1, 2012,
the Company acquired the remaining 15% controlling membership interest in Savary Island and Savary Island
and its wholly-owned subsidiaries became direct and indirect wholly-owned subsidiaries, respectively, of
Cricket.
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