XO Communications 2010 Annual Report Download - page 65

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XO Holdings, Inc.
Notes to Consolidated Financial Statements
4. MARKETABLE SECURITIES − (continued)
The Company did not identify any impairment to marketable securities during 2010 or 2009; however,
impairment of marketable securities for other-than-temporary declines in fair market value for 2008 were
$20.9 million. The impairment loss during 2008 was due to an $18.9 million loss on equity securities and a
$2.0 million loss on corporate debt securities. There were no marketable securities with material unrealized
losses as of December 31, 2010 and 2009. At December 31, 2009, there were $1.1 million in unrealized
holding gains related to equity securities. All debt securities were sold during 2009. At December 31, 2008,
there were $1.8 million in unrealized holding gains and $6.7 million in unrealized losses related to corporate
debt securities. These unrealized gains and losses were recorded on the Consolidated Balance Sheets as a
separate component of stockholders’ equity.
The Company recognized net investment gains of $6.8 million, $60.0 million and $19.2 million for the
years ended December 31, 2010, 2009 and 2008, respectively. The 2010 investment gain primarily resulted
from a $5.4 million distribution related to a legal matter regarding the Company’s holding of Global Crossing
debt securities. The 2009 investment gain is comprised of a $41.2 million gain from the sale of debt
securities, a $12.1 million gain from the sale of equity securities, a $5.8 million gain related to the settlement
agreement associated with the Company’s holding of Global Crossing debt securities and a $0.9 million gain
from the settlement with ATLT of claims related to the Company’s holdings of Allegiance debt securities. The
2008 net investment gains primarily related to a $35.9 million gain from the settlement with ATLT and a
$4.4 million gain from the conversion of a non-publicly traded investment to a publicly traded available-for-
sale investment, partially offset by $20.9 million of impairments from other-than-temporary declines in market
value of marketable securities.
5. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of December 31, (in thousands):
2010 2009
Telecommunications networks and acquired bandwidth ........... $1,570,050 $ 1,376,254
Furniture, fixtures, equipment and other ..................... 446,377 410,063
2,016,427 1,786,317
Less: accumulated depreciation ........................... (1,287,684) (1,112,171)
728,743 674,146
Construction-in-progress, parts and equipment ................. 85,665 75,784
Property and equipment, net ........................... $ 814,408 $ 749,930
Telecommunications networks and acquired bandwidth include the deployment of fiber optic cable and
telecommunications hardware and software for the delivery of telecommunications services. Depreciation and
amortization expense for 2010, 2009 and 2008 was $183.7 million, $180.1 million and $189.2 million,
respectively. Assets classified as construction-in-progress are not being depreciated as they have not yet been
placed in service. For 2010, 2009 and 2008, certain assets included in parts and equipment were disposed of,
resulting in losses of $4.7 million, $9.8 million and $5.6 million, respectively. Interest costs for the
construction of certain long-lived assets are capitalized. During 2010, 2009 and 2008, the Company
capitalized interest on construction costs of $2.1 million, $1.7 million and $2.4 million, respectively.
The useful lives of the Company’s fixed assets are determined based on historical usage with
consideration given to technological changes and trends in the industry, which could impact the network
architecture and asset utilization. Accordingly, in making this assessment, the Company considers (i) its
planned use of the assets, (ii) the views of experts within and outside of the Company, (iii) sources regarding
the impact of technological advances and (iv) trends in the industry on the value and useful lives of its
network assets. Annually, the Company evaluates the estimated useful lives used to depreciate its assets.
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