Cricket Wireless 2012 Annual Report Download - page 139

LEAP WIRELESS INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
purchase commitment for that particular year is credited to the next succeeding year. However, to the extent the
Company’s revenues were to fall beneath the applicable commitment amount for any given year, excess revenues
from a subsequent year could not be carried back to offset such shortfall.
The Company’s obligation to provide the minimum purchase amount for any calendar year is subject to
Sprint’s compliance with specified covenants in the wholesale agreement. Based upon a review of information
provided to the Company by Sprint, the Company informed Sprint that certain of those covenants had not been
met in 2012 and that, as a result, the Company was not subject to the minimum purchase commitment for 2012.
Sprint disputed that assertion. In February 2013, the parties resolved this matter.
In addition, in the event Leap is involved in a change-of-control transaction with another facilities-based
wireless carrier with annual revenues of at least $500 million in the fiscal year preceding the date of the change
of control agreement (other than MetroPCS Communications, Inc. (“MetroPCS”)), either the Company (or the
Company’s successor in interest) or Sprint may terminate the wholesale agreement within 60 days following the
closing of such a transaction. In connection with any such termination, the Company (or its successor in interest)
would be required to pay to Sprint a specified percentage of the remaining aggregate minimum purchase
commitment, with the percentage to be paid depending on the year in which the change of control agreement was
entered into, being 20% for any such agreement entered into in 2013 and 10% for any such agreement entered
into in 2014 or 2015.
In the event that Leap is involved in a change-of-control transaction with MetroPCS during the term of the
wholesale agreement, then the agreement would continue in full force and effect, subject to certain revisions,
including, without limitation, an increase to the total minimum purchase commitment to $350 million, taking into
account any revenue contributed by Cricket prior to the date thereof. In the event Sprint is involved in a change-
of-control transaction, the agreement would bind Sprint’s successor-in-interest.
Capital and Operating Leases
The Company has entered into non-cancelable operating lease agreements to lease its administrative and
retail facilities, and sites for towers, equipment and antennae required for the operation of its wireless network.
These leases typically include renewal options and escalation clauses, some of which escalation clauses are based
on the consumer price index. In general, site leases have 5- to 10-year initial terms with 4 5-year renewal options.
The following table summarizes the approximate future minimum rentals under non-cancelable operating
leases, including renewals that are reasonably assured, and future minimum capital lease payments in effect at
December 31, 2012 (in thousands):
Years Ended December 31:
Capital
Leases
Operating
Leases
2013 ......................................................... $ 9,492 $ 266,301
2014 ......................................................... 9,492 265,201
2015 ......................................................... 8,547 256,778
2016 ......................................................... 7,030 211,464
2017 ......................................................... 5,268 175,357
Thereafter .................................................... 16,344 334,897
Total minimum lease payments ................................... $56,173 $1,509,998
Less amounts representing interest ................................. (13,277)
Present value of minimum lease payments ........................... $42,896
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