Metro PCS 2009 Annual Report Download - page 122

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2009, 2008 and 2007
F-8
Allowance for Uncollectible Accounts Receivable
The Company maintains allowances for uncollectible accounts for estimated losses resulting from the inability of
independent retailers to pay for equipment purchases and for amounts estimated to be uncollectible from other
carriers. The following table summarizes the changes in the Company’s allowance for uncollectible accounts (in
thousands):
2009 2008 2007
Balance at beginning of period....................................................................................... $ 4,106 $ 2,908 $ 1,950
Additions:
Charged to expense...................................................................................................... 199 8 129
Direct reduction to revenue and other accounts........................................................... 595 1,337 1,037
Deductions...................................................................................................................... (2,855) (147) (208)
Balance at end of period ................................................................................................. $ 2,045 $ 4,106 $ 2,908
Prepaid Charges
Prepaid charges consisted of the following (in thousands):
2009 2008
Prepaid vendor purchases ............................................................................................................ $ — $ 17,829
Prepaid rent ................................................................................................................................. 32,236 23,689
Prepaid maintenance and support contracts................................................................................. 4,540 4,482
Prepaid insurance ........................................................................................................................ 2,312 2,165
Prepaid advertising ...................................................................................................................... 2,140 2,331
Other............................................................................................................................................ 7,125 5,851
Prepaid charges............................................................................................................................ $ 48,353 $ 56,347
Property and Equipment
Property and equipment, net, consisted of the following (in thousands):
2009 2008
Construction-in-progress .................................................................................................... $ 283,365 $ 898,454
Network infrastructure (1)................................................................................................... 3,756,300 2,522,206
Office equipment................................................................................................................ 158,732 63,848
Leasehold improvements.................................................................................................... 55,631 47,784
Furniture and fixtures ......................................................................................................... 14,033 10,273
Vehicles.............................................................................................................................. 401 311
4,268,462 3,542,876
Accumulated depreciation and amortization (1) ................................................................. (1,016,249) (695,125)
Property and equipment, net............................................................................................... $ 3,252,213 $ 2,847,751
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(1) As of December 31, 2009 and 2008, approximately $183.4 million and $30.0 million, respectively, of network infrastructure assets were
held by the Company under capital lease arrangements. Accumulated amortization relating to these assets totaled $9.8 million and $1.0
million as of December 31, 2009 and 2008, respectively.
Property and equipment are stated at cost. Additions and improvements are capitalized, while expenditures that
do not enhance or extend the asset’s useful life are charged to operating expenses as incurred. When the Company
sells, disposes of or retires property and equipment, the related gains or losses are included in operating results.
Depreciation is applied using the straight-line method over the estimated useful lives of the assets once the assets are
placed in service, which are seven to ten years for network infrastructure assets, three to ten years for capitalized
interest, up to fifteen years for capital lease assets, three to eight years for office equipment, which includes software
and computer equipment, three to seven years for furniture and fixtures and five years for vehicles. Leasehold
improvements are amortized over the shorter of the remaining term of the lease and any renewal periods reasonably
assured or the estimated useful life of the improvement. Maintenance and repair costs are charged to expense as
incurred. The Company follows the provisions of ASC 835 (Topic 835, “Interest”), with respect to its FCC licenses