Cricket Wireless 2012 Annual Report Download - page 137

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LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Allocation of Share-based Compensation Expense
Total share-based compensation expense related to all of the Company’s share-based awards for the years
ended December 31, 2012, 2011, and 2010 was allocated in the consolidated statements of comprehensive
income as follows (in thousands, except per share data):
Year Ended December 31,
2012 2011 2010
Cost of service ........................................... $ 254 $ 1,734 $ 3,673
Selling and marketing expense ............................... 22 1,985 5,781
General and administrative expense ........................... 7,846 11,609 27,155
Share-based compensation expense ......................... $8,122 $15,328 $36,609
Share-based compensation expense per share:
Basic ................................................. $ 0.11 $ 0.20 $ 0.48
Diluted ............................................... $ 0.11 $ 0.20 $ 0.48
Note 13. Employee Savings and Retirement Plan
The Company’s 401(k) plan allows eligible employees to contribute up to 30% of their salary, subject to
annual limits. The Company matches a portion of the employee contributions and may, at its discretion, make
additional contributions based upon earnings. The Company’s contributions were approximately $5.3 million,
$5.6 million, and $5.4 million for the years ended December 31, 2012, 2011 and 2010, respectively.
Note 14. Commitments and Contingencies
From time to time, the Company is involved in a variety of lawsuits, claims, investigations and proceedings
concerning intellectual property, commercial disputes, business practices and other matters. Due in part to the
expansion and development of its business operations, the Company has become subject to increased amounts of
litigation, including disputes alleging intellectual property infringement. These matters may seek monetary
damages and other relief.
The Company believes that any damage amounts alleged by plaintiffs in matters that may arise are not
necessarily meaningful indicators of its potential liability. The Company determines whether it should accrue an
estimated loss for a contingency in a particular legal proceeding by assessing whether a loss is deemed probable
and whether the amount can be reasonably estimated. The Company reassesses its views on estimated losses on a
quarterly basis to reflect the impact of any developments in the matters in which it is involved.
Legal proceedings are inherently unpredictable, and the matters in which the Company is involved often
present complex legal and factual issues. The Company vigorously pursues defenses in legal proceedings and
engages in discussions where possible to resolve these matters on favorable terms. The Company’s policy is to
recognize legal costs as incurred. It is possible, however, that the Company’s business, financial condition and
results of operations in future periods could be materially adversely affected by increased litigation expense,
significant settlement costs and/or unfavorable damage awards.
Indemnification Agreements
From time to time, the Company enters into indemnification agreements with certain parties in the ordinary
course of business, including agreements with manufacturers, licensors and suppliers who provide it with
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