Metro PCS 2009 Annual Report Download - page 120

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2009, 2008 and 2007
F-6
Notes to Consolidated Financial Statements
1. Organization and Business Operations:
MetroPCS Communications, Inc. (“MetroPCS”), a Delaware corporation, together with its consolidated
subsidiaries (the “Company”), is a wireless telecommunications carrier that offers wireless broadband mobile
services. As of December 31, 2009, the Company offered services primarily in the metropolitan areas of Atlanta,
Boston, Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia,
Sacramento, San Francisco and Tampa/Sarasota. The Company sells products and services to customers through
Company-owned retail stores as well as through relationships with independent retailers.
On November 24, 2004, MetroPCS, through its wholly-owned subsidiaries, and C9 Wireless, LLC, an
independent third-party, formed a limited liability company called Royal Street Communications, LLC (“Royal
Street Communications”), to bid on spectrum auctioned by the Federal Communications Commission (“FCC”) in
Auction 58. The Company owns 85% of the limited liability company member interest of Royal Street
Communications, but may only elect two of the five members of Royal Street Communications’ management
committee (See Note 3). The consolidated financial statements include the balances and results of operations of
MetroPCS and its wholly-owned subsidiaries as well as the balances and results of operations of Royal Street
Communications and its wholly-owned subsidiaries (collectively, “Royal Street”). The Company consolidates its
interest in Royal Street in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards
Codification (“ASC”) 810 (Topic 810, “Consolidation”). Royal Street qualifies as a variable interest entity under
ASC 810 because the Company is the primary beneficiary of Royal Street and would absorb all of Royal Street’s
expected losses. The redeemable minority interest in Royal Street is included in long-term liabilities. All
intercompany accounts and transactions between the Company and Royal Street have been eliminated in the
consolidated financial statements.
2. Summary of Significant Accounting Policies:
Consolidation
The accompanying consolidated financial statements include the balances and results of operations of MetroPCS
and its wholly- and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated
in consolidation.
Operating Segments
ASC 280 (Topic 280, “Segment Reporting”), establishes standards for the way that public business enterprises
report information about operating segments in annual financial statements. At December 31, 2009, the Company
had thirteen operating segments based on geographic regions within the United States: Atlanta, Boston,
Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia,
Sacramento, San Francisco and Tampa/Sarasota. The Company aggregates its operating segments into two
reportable segments: Core Markets and Northeast Markets (See Note 17).
Use of Estimates in Financial Statements
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported
amounts of certain assets and liabilities and disclosure of contingent liabilities at the date of the financial statements
and the reported amounts of expenses during the reporting period. Actual results could differ from those estimates.
The most significant of such estimates used by the Company include:
• valuation of inventories;
• valuation of investment securities;
• estimated useful life of assets;