XO Communications 2009 Annual Report Download - page 56

XO Holdings, Inc.
Notes to Consolidated Financial Statements
1. DESCRIPTION OF BUSINESS
XO Holdings, Inc. together with its consolidated subsidiaries (“XOH” or the “Company”) is a leading
facilities-based, competitive telecommunications services provider that delivers a comprehensive array of
telecommunications services to the telecommunications provider, business and government markets. The
Company uses its nationwide IP network, extensive local metropolitan networks and broadband wireless
facilities to offer a broad portfolio of services. Core services include products using next generation IP
technologies and transport services and include Broadband services and Integrated/Voice services. Legacy/
TDM services are primarily deployed using TDM and circuit switched voice technologies such as voice
services and managed IP, data and end-to-end communications solutions.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Consolidation
The Company’s consolidated financial statements include all of the assets, liabilities and results of operations
of subsidiaries in which the Company has a controlling interest. All intercompany accounts and transactions
have been eliminated in consolidation.
b. Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual results could differ
materially from these estimates. Management’s estimates and assumptions are evaluated on an ongoing basis
and are based on historical experience, current conditions and available information. Significant items subject
to such estimates and assumptions include: estimated customer life related to revenue recognition; estimated
collection of accounts receivable; accrued balances and disputed amounts payable for cost of service provided
by other telecommunication carriers; liability estimates related to loss contingencies, asset retirement
obligations and accruals for underutilized space; estimated useful lives and recoverability of long-lived fixed
assets and intangible assets; and valuation of preferred stock.
c. Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less at the
date of purchase to be cash equivalents.
d. Marketable Securities
The Company’s marketable securities consist of equity investments in publicly traded companies. The
Company classifies its investments as available-for-sale and records such investments at fair value based on
quoted market prices. Unrealized gains and losses on available-for-sale marketable securities are excluded
from net loss and reported as other comprehensive income, except for unrealized losses determined to be
other-than-temporary which are recorded as a component of net investment gain. Any realized gains and losses
on the sale of marketable securities are recognized as a component of net investment gain. The cost of
investments sold is determined in accordance with the specific identification method.
e. Property and Equipment, Net
Property and equipment are stated at cost less accumulated depreciation. Direct costs of constructing property
and equipment are capitalized if they extend the useful life or the operating efficiency of the asset, including
interest costs related to construction. The cost and related accumulated depreciation of assets sold or otherwise
disposed of are removed from the accounts and any resulting gain or loss is included in the Consolidated
Statements of Operations.
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