ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses on existing accounts receivable. Management determines the allowance based on historical write-off experience within each of the Company’s regions. Management reviews material past due balances on a monthly basis. Account balances are charged off against the allowance when management determines it is probable that the receivable will not be recovered.

Accounts receivable consisted of the following at December 31, 2011 and 2010 (dollars in thousands):



	2011			2010
Accounts receivable—trade	$	147,822		$	118,265
Accounts receivable—grants	20,753			17,039
Total accounts receivable	168,575			135,304
Less: allowance for doubtful accounts	(2,807		)	(3,079		)
Accounts receivable, net	$	165,768		$	132,225

Activity in the Company’s allowance for doubtful accounts for the years ended December 31, 2011, 2010 and 2009 was as follows (dollars in thousands):



	2011			2010			2009
Balance, beginning of year	$	3,079		$	3,764		$	2,907
Provisions	1,055			1,799			2,250
Charges	(1,327		)	(2,484		)	(1,393		)
Balance, end of year	$	2,807		$	3,079		$	3,764

The Company’s business is subject to credit risk. There is a risk that a customer or counterparty will fail to meet its obligations when due. Customers and counterparties that owe the Company money have defaulted and may continue to default on their obligations to the Company due to bankruptcy, lack of liquidity, operational failure or other reasons. For interline traffic, one railroad typically invoices a customer on behalf of all railroads participating in the route. The invoicing railroad then pays the other railroads their portion of the total amount invoiced on a monthly basis. When the Company is the invoicing railroad, therefore, it is exposed to customer credit risk for the total amount invoiced and the Company is required to pay the other railroads participating in the route even if the Company is not paid by the customer. Although the Company has procedures for reviewing its receivables and credit exposures to specific customers and counterparties to address present credit concerns, default risk may arise from events or circumstances that are difficult to detect or foresee. Some of the Company’s risk management methods depend upon the evaluation of information regarding markets, customers or other matters that are not publicly available or otherwise accessible by the Company and this information may not, in all cases, be accurate, complete, up-to-date or properly evaluated. As a result, unexpected credit exposures could adversely affect the Company’s operating results, financial condition and liquidity