Cricket Wireless 2012 Annual Report Download - page 108

Download and view the complete annual report

Please find page 108 of the 2012 Cricket Wireless annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 164

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164

LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
were unable to obtain or maintain cost-effective roaming or wholesale services for its customers in
geographically desirable service areas, the Company’s competitive position, business, financial condition and
results of operations could be materially adversely affected.
Operating Leases
Rent expense is recognized on a straight-line basis over the initial lease term and those renewal periods that
are reasonably assured as determined at lease inception. The difference between rent expense and rent paid is
recorded as deferred rent and is included in other current or long-term liabilities in the consolidated balance
sheets. Rent expense totaled $256.3 million, $260.6 million and $252.5 million for the years ended December 31,
2012, 2011 and 2010, respectively.
Asset Retirement Obligations
The Company recognizes an asset retirement obligation and an associated asset retirement cost when it has a
legal obligation in connection with the retirement of tangible long-lived assets. These obligations arise from
certain of the Company’s leases and relate primarily to the cost of removing its equipment from such lease sites
and restoring the sites to their original condition. When the liability is initially recorded, the Company capitalizes
the cost of the asset retirement obligation by increasing the carrying amount of the related long-lived asset. The
liability is initially recorded at its present value and is accreted to its then present value each period, and the
capitalized cost is depreciated over the useful life of the related asset. Accretion expense is recorded in cost of
service in the consolidated statements of comprehensive income. Upon settlement of the obligation, any
difference between the cost to retire the asset and the liability recorded is recognized in operating expenses in the
consolidated statements of comprehensive income.
The following table summarizes the Company’s asset retirement obligations as of and for the years ended
December 31, 2012 and 2011 (in thousands):
Year Ended
December 31,
2012 2011
Asset retirement obligations, beginning of year .......................... $32,919 $31,663
Liabilities incurred .............................................. 815 193
Liabilities assumed by STX Wireless in connection with the formation of the
joint venture .................................................. — (828)
Accretion expense ............................................... 3,208 3,061
Decommissioned sites ............................................ (712) (1,170)
Asset retirement obligations, end of year ............................... $36,230 $32,919
Debt Issuance Costs
Debt issuance costs are amortized and recognized as interest expense using the effective interest method
over the expected term of the related debt. Unamortized debt issuance costs related to extinguished debt are
expensed at the time the debt is extinguished and recorded in loss on extinguishment of debt in the consolidated
statements of comprehensive income. Unamortized debt issuance costs are recorded in other assets or as a
reduction of the respective debt balance, as applicable, in the consolidated balance sheets.
94