Cricket Wireless 2012 Annual Report Download - page 134

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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
A summary of the Company’s stock option award activity as of and for the years ended December 31, 2012
and 2011 is as follows (in thousands, except per share data):
Number of
Shares(1)
Weighted-
Average
Exercise
Price Per
Share
Weighted-
Average
Remaining
Contractual
Term
(In Years)
Aggregate
Intrinsic Value
Options outstanding at December 31, 2010 . . . 4,631 $40.73 5.94 $ 137
Options exercisable at December 31, 2010 .... 2,308 $38.98 5.07 $ —
Options granted ....................... 1,138 $10.47
Options forfeited ...................... (2,620) 45.37
Options exercised ..................... (2) 14.89
Options outstanding at December 31, 2011 . . . 3,146 $25.93 6.89 $1,012
Options exercisable at December 31, 2011 .... 1,466 $34.71 4.79 $ —
Options granted ....................... 1,453 $ 8.22
Options forfeited ...................... (1,234) 36.59
Options exercised ..................... — —
Options outstanding at December 31, 2012 . . . 3,365 $14.38 6.82 $ 433
Options exercisable at December 31, 2012 .... 1,222 $23.30 4.23 $ —
(1) The stock options granted and forfeited activity for the year ended December 31, 2011 included the impact
of our stock option exchange program as discussed below. The stock options forfeited activity for the year
ended December 31, 2012 included options surrendered pursuant to the Surrender Agreements discussed
below.
As share-based compensation expense under the authoritative guidance for share-based payments is based
on awards ultimately expected to vest, it is reduced for estimated forfeitures. The guidance requires forfeitures to
be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from
those estimates.
At December 31, 2012, total unrecognized compensation cost related to unvested stock options was $10.4
million, which is expected to be recognized over a weighted-average period of 2.9 years.
Upon option exercise, the Company issues new shares of common stock. Cash received from stock option
exercises was $0 and $32,730 during the years ended December 31, 2012 and 2011, respectively. The Company
did not recognize any income tax benefits from stock option exercises as it continues to record a valuation
allowance on its deferred tax assets, as more fully described in Note 11.
On August 10, 2011, the Company launched a stock option exchange program pursuant to which the
Company offered to exchange eligible outstanding stock options previously granted under the 2004 Plan and
2009 Plan issued to eligible Cricket employees for a lesser number of replacement options to be granted under
the 2004 Plan, with an exercise price equal to the closing price of Leap common stock on the date of the
replacement grant (the “Exchange Offer”). The Company completed the Exchange Offer on September 23, 2011.
Options for an aggregate of approximately 1.6 million shares of Leap common stock, representing approximately
93% of the total number of eligible options, were exchanged in the Exchange Offer for replacement options for
120