Metro PCS 2010 Annual Report Download - page 112

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MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008
F-6
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, 2010, the Company offered services primarily in the metropolitan areas of Atlanta,
Boston, Dallas/Fort 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 Royal Street Communications, LLC (“Royal Street Communications”), to bid on
spectrum auctioned by the Federal Communications Commission (“FCC”) in Auction 58. The Company owned
85% of the limited liability company member interest of Royal Street Communications through December 22, 2010,
when MetroPCS completed the acquisition of the remaining 15% limited liability company member interest in
Royal Street Communications for total consideration of $9.8 million. Prior to the acquisition of the remaining 15%
membership interest, the Company consolidated its interest in Royal Street in accordance with Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 810 (Topic 810, “Consolidation”). Royal
Street qualified as a variable interest entity under ASC 810 because the Company was the primary beneficiary of
Royal Street and absorbed all of Royal Street’s losses. 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-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, 2010, 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 one
reportable segment.
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;
• estimated useful life of property and equipment;
• impairment of long-lived assets and indefinite-lived assets;
• likelihood of realizing benefits associated with temporary differences giving rise to deferred tax assets;