Metro PCS 2011 Annual Report Download - page 113

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MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2011, 2010 and 2009
F-7
Derivative Instruments and Hedging Activities
The Company accounts for its hedging activities under ASC 815 (Topic 815, “Derivatives and Hedging”). The standard
requires the Company to recognize all derivatives on the consolidated balance sheet at fair value. Changes in the fair value of
derivatives are to be recorded each period in earnings or on the accompanying consolidated balance sheets in accumulated
other comprehensive income (loss) depending on the type of hedged transaction and whether the derivative is designated and
effective as part of a hedged transaction. Gains or losses on derivative instruments reported in accumulated other
comprehensive income (loss) must be reclassified to earnings in the period in which earnings are affected by the underlying
hedged transaction and the ineffective portion of all hedges must be recognized in earnings in the current period. The
Company's use of derivative financial instruments is discussed in Note 5.
Cash and Cash Equivalents
The Company includes as cash and cash equivalents (i) cash on hand, (ii) cash in bank accounts, (iii) investments in
money market funds, and (iv) U.S. Treasury securities with an original maturity of 90 days or less.
Short-Term Investments
The Company's short-term investments consist of securities classified as available-for-sale, which are stated at fair value.
The securities include U.S. Treasury securities with an original maturity of over 90 days. Unrealized gains, net of related
income taxes, for available-for-sale securities are reported in accumulated other comprehensive loss, a component of
stockholders' equity, until realized. The estimated fair values of investments are based on quoted market prices as of the end of
the reporting period. The U.S. Treasury securities reported as of December 31, 2011 have contractual maturities of less than
one year (See Note 4).
Inventories
Substantially all of the Company's inventories are stated at the lower of average cost or market. Inventories consist mainly
of handsets that are available for sale to customers and independent retailers.
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, for amounts estimated to be uncollectible from other carriers for
intercarrier compensation and for amounts estimated to be uncollectible from customers with mid-cycle plan changes where
service has been provided prior to the receipt of payment based on billing terms. The following table summarizes the changes
in the Company's allowance for uncollectible accounts (in thousands):
2011 2010 2009
Balance at beginning of period $ 2,494 $ 2,045 $ 4,106
Additions:
Charged to expense 518 2 199
Direct reduction to revenue and other accounts 104 602 595
Deductions (2,515)(155)(2,855)
Balance at end of period $ 601 $ 2,494 $ 2,045