Metro PCS 2011 Annual Report Download - page 114

Download and view the complete annual report

Please find page 114 of the 2011 Metro PCS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2011, 2010 and 2009
F-8
Property and Equipment
Property and equipment, net, consisted of the following (in thousands):
2011 2010
Construction-in-progress $ 354,068 $ 425,906
Network infrastructure (1) 5,196,034 4,363,009
Office equipment 319,596 205,895
Leasehold improvements 60,635 57,853
Furniture and fixtures 18,087 15,992
Vehicles 455 401
5,948,875 5,069,056
Accumulated depreciation and amortization (1) (1,930,876)(1,409,611)
Property and equipment, net $ 4,017,999 $ 3,659,445
————————————
(1) As of December 31, 2011 and 2010, approximately $291.2 million and $259.0 million, respectively, of network infrastructure assets were held by the
Company under capital lease arrangements. Accumulated amortization relating to these assets totaled $41.9 million and $23.7 million as of December 31,
2011 and 2010, 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 five to ten
years for network infrastructure assets, three to ten years for capitalized interest, up to fifteen years for capital lease assets,
approximately one to eight years for office equipment, which includes software and computer equipment, approximately 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 and the related construction of its network infrastructure assets. Capitalization
commences with pre-construction period administrative and technical activities, which includes obtaining leases, zoning
approvals and building permits, and ceases at the point in which the asset is ready for its intended use. For the years ended
December 31, 2011, 2010 and 2009, the Company capitalized interest in the amount of $25.3 million, $24.5 million and $37.5
million, respectively.
Impairment of Long-Lived Assets
The Company assesses potential impairments to its long-lived assets, including property and equipment, when there is
evidence that events or changes in circumstances indicate that the carrying value may not be recoverable. An impairment loss
may be required to be recognized when the undiscounted cash flows expected to be generated by a long-lived asset (or group of
such assets) is less than its carrying value. Any required impairment loss would be measured as the amount by which the asset's
carrying value exceeds its fair value and would be recorded as a reduction in the carrying value of the related asset and charged
to results of operations.
Long-Term Investments
The Company accounts for its investment securities in accordance with ASC 320 (Topic 320, “Investments - Debt and
Equity Securities”). At December 31, 2011, all of the Company's long-term investment securities were reported at fair value.
Due to the lack of availability of observable market quotes on the Company's investment portfolio of auction rate securities, the
fair value was estimated based on valuation models that rely exclusively on unobservable inputs including those that are based
on expected cash flow streams and collateral values, including assessments of counterparty credit quality, default risk
underlying the security, discount rates and overall capital market liquidity.
Declines in fair value that are considered other-than-temporary are charged to earnings.
The valuation of the Company's investment portfolio is subject to 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