Cricket Wireless 2012 Annual Report Download - page 131

LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The components of the Company’s deferred tax assets (liabilities) are summarized as follows (in thousands):
As of December 31,
2012 2011
Deferred tax assets:
Net operating loss carryforwards .............................. $1,008,492 $ 973,560
Wireless licenses ........................................... 13,291 21,046
Capital loss carryforwards .................................... — 3,031
Reserves and allowances ..................................... 13,990 8,818
Share-based compensation ................................... 29,698 34,631
Deferred charges ........................................... 49,898 53,835
Investments and deferred tax on unrealized losses ................. 395 5,478
Intangible assets ........................................... 15,502 18,545
Goodwill ................................................. 28,546 30,869
Other .................................................... 2,156 2,328
Gross deferred tax assets ....................................... 1,161,968 1,152,141
Deferred tax liabilities:
Property and equipment ..................................... (222,260) (302,373)
Other .................................................... (242) (439)
Net deferred tax assets ......................................... 939,466 849,329
Valuation allowance .......................................... (937,568) (847,399)
Other deferred tax liabilities:
Wireless licenses ........................................... (378,876) (317,682)
Investment in joint ventures .................................. (1,653) (10,236)
Net deferred tax liabilities ...................................... $ (378,631) $ (325,988)
Deferred tax assets (liabilities) are reflected in the accompanying consolidated balance sheets as follows (in
thousands):
As of December 31,
2012 2011
Current deferred tax assets (included in other current assets) ............ 6,480 $ 7,816
Long-term deferred tax liabilities .................................. (385,111) (333,804)
$(378,631) $(325,988)
Except with respect to the $1.9 million TMT credit outstanding as of December 31, 2012 and 2011, the
Company established a full valuation allowance against its net deferred tax assets due to the uncertainty surrounding
the realization of such assets. The valuation allowance is based on available evidence, including the Company’s
historical operating losses. Deferred tax liabilities associated with wireless licenses and investments in certain joint
ventures cannot be considered a source of taxable income to support the realization of deferred tax assets because
these deferred tax liabilities will not reverse until some indefinite future period. Since it has recorded a valuation
allowance against substantially all of its deferred tax assets, the Company carries a net deferred tax liability on its
balance sheet. During the year ended December 31, 2012, the Company recorded a $90.2 million increase to its
valuation allowance, which primarily consisted of $84.3 million and $5.9 million related to changes in the federal
and state net operating loss carryforwards, respectively. During the year ended December 31, 2011, the Company
recorded a $138.9 million increase to its valuation allowance, which primarily consisted of $124.6 million and $11.1
million related to changes in the federal and state net operating loss carryforwards, respectively.
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