Metro PCS 2008 Annual Report Download - page 124

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MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2008, 2007 and 2006
F-22
uncertainties that are difficult to predict. Factors that may impact the Company’s valuation include changes to credit
ratings of the securities as well as the underlying assets supporting those securities, rates of default of the underlying
assets, underlying collateral values, discount rates, counterparty risk and ongoing strength and quality of market
credit and liquidity. Significant inputs to the investments valuation are unobservable in the active markets and are
classified as Level 3 in the hierarchy.
Included in the Company’s derivative financial instruments are interest rate swaps. Derivative financial
instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1
and Level 2 inputs such as interest rates. These market inputs are utilized in the discounted cash flow calculation
considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative
valuation for interest rate swaps are observable in the active markets and are classified as Level 2 in the hierarchy.
The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31,
2008, as required by SFAS No. 157 (in thousands):
Fair Value Measurements
Level 1 Level 2 Level 3 Total
Assets
Cash equivalents .................................................................................. $675,294 $ — $ — $675,294
Long-term investments ........................................................................ — — 5,986 5,986
Total assets at fair value ............................................................................. $675,294 $ — $ 5,986 $681,280
Liabilities
Derivative liabilities............................................................................. $ — $54,963 $ — $54,963
Total liabilities at fair value........................................................................ $ — $54,963 $ — $54,963
The following table summarizes the changes in fair value of the Company’s Level 3 assets, as required by SFAS
No. 157 (in thousands):
Fair Value Measurements of Assets Using Level 3 Inputs
Year Ended
December 31, 2008
Beginning balance .............................................................................................................. $ 36,050
Total losses (gains) (realized or unrealized):
Included in earnings .................................................................................................. 30,857
Included in other comprehensive loss ....................................................................... (830)
Transfers in and/or out of Level 3 ............................................................................. —
Purchases, sales, issuances and settlements............................................................... 37
Ending balance at December 31, 2008................................................................................ $ 5,986
Year Ended
December 31, 2008
Losses included in earnings that are attributable to the change in unrealized losses
relating to those assets still held at the reporting date as reported in impairment loss on
investment securities in the consolidated statements of income and comprehensive
income ................................................................................................................................ $ 30,857
The following methods and assumptions were used to estimate the fair value of each class of financial
instruments for which it is practicable to estimate that value:
Long-Term Debt
The fair value of the Company’s long-term debt is estimated based on the quoted market prices for the same or
similar issues or on the current rates offered to the Company for debt of the same remaining maturities.