DALLAS, Oct. 30, 2012 /PRNewswire/ --
Third Quarter 2012 Highlights Include:
- Quarterly consolidated total revenues of approximately
$1.3 billion, an increase of 4% over
the third quarter of 2011
- Adjusted EBITDA of $466
million, an increase of 42% over the third quarter of
2011
- Adjusted EBITDA margin of 41.5%, an increase of 1,260 basis
points over the third quarter of 2011
- Quarterly churn of 3.7%, down 80 basis points from the third
quarter of 2011
- Quarterly CPU of $18.38, a
decrease of $1.14 over third quarter
2011
- Surpassed 1 million 4G LTE subscribers, representing
approximately 12% of total subscribers
- Quarterly income from operations of $292 million, an increase of 65% over the third
quarter of 2011
(Logo:
http://photos.prnewswire.com/prnh/20121029/MM02011LOGO)
MetroPCS Communications, Inc. (NYSE: PCS), the nation's leading
provider of no annual contract, unlimited, flat-rate wireless
communications service, today announced financial and operational
results for the quarter ended September
30, 2012. MetroPCS reported quarterly Adjusted EBITDA
of $466 million for the third quarter
2012 and ended the quarter with approximately 9.0 million
subscribers.
Roger D. Linquist, Chairman and
Chief Executive Officer of MetroPCS, said, "With a primary focus on
generating Adjusted EBITDA and cash flow during the third quarter,
we are pleased to report the highest Adjusted EBITDA margin in
Company history of 41.5%. Late in the third quarter, we launched
4G LTE For All and while still early, we are pleased with
initial results, including customer upgrades and churn. As we enter
the fourth quarter, our 4G LTE For All efforts are in
full-swing and with over one million 4G LTE subscribers at the end
of the third quarter, we believe we are well positioned to meet the
current demands for high-speed wireless broadband service. During
the fourth quarter, we plan to focus on re-energizing subscriber
growth, which we expect will put incremental pressure on our CPGA
and CPU. With a robust 4G LTE handset line-up that is growing, we
believe our 4G LTE For All initiative provides unmatched
value, with all taxes and regulatory fees included.
"Our recently announced proposed business combination with
T-Mobile is exciting as it will create a value leader in wireless
with a clear path to offering 4G LTE service over 20x20MHz. It also
provides MetroPCS customers with broader network coverage and
deeper spectrum as well as the ability to gain full access to a
broad array of handsets and services. We plan to continue to
challenge the wireless market and compete aggressively with our
4G LTE For All service offerings," Linquist concluded.
Key
Consolidated Financial and Operating Metrics
|
|
|
|
(in
millions, except percentages, per share, per subscriber and
subscriber amounts)
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
|
|
Nine
Months Ended
|
|
September
30,
|
|
September
30,
|
|
2012
|
2011
|
Change
|
|
2012
|
2011
|
Change
|
Service
revenues
|
$
1,122
|
$
1,131
|
(1%)
|
|
$
3,440
|
$
3,295
|
4%
|
Total
revenues
|
$
1,259
|
$
1,205
|
4%
|
|
$
3,817
|
$
3,609
|
6%
|
Income
from operations
|
$
292
|
$
177
|
65%
|
|
$
702
|
$
532
|
32%
|
Net
income
|
$
193
|
$
69
|
178%
|
|
$
363
|
$
210
|
73%
|
Diluted
EPS
|
$
0.52
|
$
0.19
|
$
0.33
|
|
$
0.99
|
$
0.57
|
$
0.42
|
Adjusted
EBITDA(1)
|
$
466
|
$
327
|
42%
|
|
$
1,205
|
$
970
|
24%
|
Adjusted
EBITDA as a
|
|
|
|
|
|
|
|
percentage of service revenues
|
41.5%
|
28.9%
|
1,260
bps
|
|
35.0%
|
29.4%
|
560
bps
|
|
|
|
|
|
|
|
|
ARPU(1)
|
$
40.50
|
$
40.80
|
$
(0.30)
|
|
$
40.56
|
$
40.57
|
$
(0.01)
|
CPGA(1)
|
$
202.24
|
$
193.95
|
$
8.29
|
|
$
211.98
|
$
175.30
|
$
36.68
|
CPU(1)
|
$
18.38
|
$
19.52
|
$
(1.14)
|
|
$
19.90
|
$
19.41
|
$
0.49
|
Churn-Average Monthly Rate
|
3.7%
|
4.5%
|
(80
bps)
|
|
3.4%
|
3.9%
|
(50
bps)
|
|
|
|
|
|
|
|
|
Consolidated Subscribers
|
|
|
|
|
|
|
|
End of
Period
|
8,979,960
|
9,149,249
|
(2%)
|
|
8,979,960
|
9,149,249
|
(2%)
|
Net
Additions
|
(312,291)
|
69,384
|
(550%)
|
|
(366,699)
|
994,139
|
(137%)
|
Penetration of Covered POPs(2)
|
8.8%
|
9.1%
|
(30
bps)
|
|
8.8%
|
9.1%
|
(30
bps)
|
(1)
|
For a
reconciliation of non-GAAP financial measures, please refer to the
section entitled "Definition of Terms and Reconciliation of
non-GAAP Financial Measures" included at the end of this
release.
|
(2)
|
Number
of covered POPs covered by MetroPCS Communications, Inc. network
increased 1.6 million from 9/30/11 to 9/30/12 to 102
million.
|
Quarterly Consolidated Results
- Consolidated service revenues of approximately $1.1 billion for the third quarter of 2012, a
decrease of $9 million, or 1%, when
compared to the prior year's third quarter.
- Income from operations increased $115
million, or 65%, for the third quarter of 2012 when compared
to the prior year's third quarter.
- Net income for the quarter was $193
million and includes a $53
million gain on settlement related to certain securities
that was recognized during the quarter. On a non-GAAP basis
excluding the gain on settlement, net income would have been
$140 million or $0.38 per common share, an increase of 102% or
$0.19 per common share.
- Adjusted EBITDA of $466 million
increased by $139 million for the
third quarter of 2012, or 42%, when compared to the prior year's
third quarter.
- Average revenue per user (ARPU) of $40.50 for the third quarter of 2012 represents a
decrease of $0.30 when compared to
the third quarter of 2011. The decrease in ARPU was primarily
attributable to promotional service plans partially offset by
continued demand for our 4G LTE service plans.
- The Company's cost per gross addition (CPGA) of $202 for the third quarter of 2012 represents an
increase of $8 when compared to the
prior year's third quarter. The increase is primarily driven by a
47% decrease in gross additions as compared to the three months
ended September 30, 2011.
- Cost per user (CPU) was $18.38 in
the third quarter of 2012, a 6% decrease over the third quarter of
2011. The decrease in CPU is primarily driven by a decrease in
retention expense for existing customers, a decrease in long
distance cost and a decrease in taxes and regulatory fees.
These items were partially offset by an increase in costs
associated with our 4G LTE network upgrade and an increase in
commissions paid to independent retailers for customer
reactivations. During the quarter we experienced $2.47 in CPU directly related to handset upgrades
compared to $3.88 in the prior year's
third quarter.
- Churn decreased 80 basis points from 4.5% to 3.7% when compared
to the third quarter of 2011. The decrease in churn was primarily
driven by continued investments in our network and lower
year-to-date subscriber growth.
Financial Guidance for 2012
For the year ending December 31,
2012, MetroPCS today reaffirms its prior guidance,
originally provided on February 23,
2012. MetroPCS currently expects to incur capital
expenditures in the range of $900 million to
$1.0 billion on a consolidated basis for the year ending
December 31, 2012.
MetroPCS Conference Call Information
MetroPCS Communications, Inc. will host a conference call to
discuss its Third Quarter 2012 Earnings Results at 9:00 a.m. Eastern Time (ET) on Tuesday, October 30, 2012.
Date:
|
Tuesday,
October 30, 2012
|
Time:
|
9:00 a.m.
ET
|
Call-in
Numbers:
|
Toll free:
800-432-9830
|
International:
|
719-234-7318
|
Participant Passcode:
|
4396322
|
Please plan on accessing the conference call ten minutes prior
to the scheduled start time.
The conference call will be broadcast live via the Company's
Investor Relations website at investor.metropcs.com. A replay
of the webcast will be available on the website beginning at
approximately 12:30 p.m. ET on
October 30, 2012.
A replay of the conference call will be available for one week
starting shortly after the call concludes and can be accessed by
dialing 888-203-1112 (toll free) or 719-457-0820 (international).
The passcode required to listen to the replay is 4396322.
To automatically receive MetroPCS financial news by e-mail,
please visit the Investor Relations portion of the MetroPCS
website, investor.metropcs.com, and subscribe to E-mail Alerts.
All registered marks, including but not limited to, Wireless
for All, are registered service marks of MetroPCS Wireless,
Inc. All rights reserved. All other company and product names
mentioned may be trademarks or registered marks of the respective
companies with which they are associated.
About MetroPCS Communications, Inc.
Dallas-based MetroPCS
Communications, Inc. (NYSE: PCS) is a provider of no annual
contract, unlimited wireless communications service for a
flat-rate. MetroPCS is the fifth largest facilities-based wireless
carrier in the United States based
on number of subscribers served. With Metro USA(SM), MetroPCS customers can use their
service in areas throughout the United
States covering a population of over 280 million people. As
of September 30, 2012, MetroPCS had
approximately 9.0 million subscribers. For more information please
visit www.metropcs.com.
Forward-Looking Statements
This release includes "forward-looking statements" for the
purpose of the "safe harbor" provisions within the meaning of the
Private Securities Litigation Reform Act of 1995, as amended, and
rule 3(b)-6 under the Securities Exchange Act of 1934, as
amended. Any statements made in this release that are not
statements of historical fact, including statements about our
plans, beliefs, opinions, projections, and expectations, are
forward-looking statements and should be evaluated as such.
Forward-looking statements include information concerning our plans
and focus for the fourth quarter, our ability to predict and meet
the demands of our subscribers, the impact of increased sales in
our CPU and CPGA and expectations regarding future CPGA, our value
proposition, the advantages of a merger with T-Mobile, our plans to
challenge the wireless market, the reasons for our
operational and financial results, our network capabilities,
our ability to increase subscribers, our ability to drive
profitable growth, our guidance on capital expenditures for 2012
and statements that may relate to our plans, objectives,
strategies, goals, future events, future revenues or performance,
capital expenditures, financing needs, and other information that
is not historical information. These forward-looking statements
often include words such as "anticipate," "expect," "suggests,"
"plan," "believe," "intend," "estimates," "targets," "views,"
"becomes," "projects," "should," "would," "could," "may,"
"will," "forecast," and other similar expressions.
These forward-looking statements are based on reasonable
assumptions at the time they are made, including our current
expectations, plans, beliefs, opinions and assumptions in light of
our experience in the industry, as well as our perceptions of
historical trends, current conditions, expected future developments
and other factors we believe are appropriate under the
circumstances and at such times. Forward-looking statements
are not guarantees of future performance or results. Actual
financial results, performance or results of operations may differ
materially from those expressed in the forward-looking statements.
Factors that may materially affect such forward-looking statements
include, but are not limited to:
- the ability of our vendors to supply the handsets we need in
the time frames we require;
- our and our competitor's current and planned promotions,
marketing, sales and other initiatives and our ability to respond
to and support them;
- our ability to manage our networks to deliver the services,
content, service quality and speed our customers expect and demand
and to maintain and increase the capacity of our networks and
business systems to satisfy the demands of our customers and the
demands placed by devices on our networks;
- the highly competitive nature of our industry and changes in
the competitive landscape;
- our ability to successfully combine with T-Mobile and achieve
the cost and capital expenditures savings and synergies we
expect;
- our ability to remain focused and keep all employees focused on
the business during the pendency of the T-Mobile transaction;
- the current economic environment in the United States; disruptions to the credit
and financial markets in the United
States; and contractions or limited growth on consumer
spending as a result of the uncertainty in the United States economy;
- our ability to manage our growth, achieve planned growth,
manage churn rates, maintain our cost structure, and achieve
additional economies of scale;
- our ability to negotiate and maintain acceptable agreements
with our suppliers and vendors, including roaming
arrangements;
- the seasonality of our business and any failure to have strong
customer growth in the first and fourth quarters;
- the rates, nature, collectability and applicability of taxes
and regulatory fees on the services we provide and increases
or changes in taxes and regulatory fees or the services to, or the
manner in, which such taxes and fees are applied, calculated or
collected;
- governmental regulation affecting our services and changes in
government regulation, and the costs of compliance and our failure
to comply with such regulations;
- the rapid technological changes in our industry, and our
ability to adapt, respond and deploy new technologies, and
successfully offer new services using such new technology;
- our ability to fulfill the demands and expectations of our
customers, provide the customer care our customers want, expect, or
demand, secure the products, services, applications, content and
network infrastructure equipment we need, or which our customers or
potential customers want, expect or demand;
- the availability of additional spectrum, our ability to secure
additional spectrum, or secure it at acceptable prices, when we
need it;
- our ability to adequately defend against suits filed by others
and to enforce or protect our intellectual property rights;
- our capital structure, including our indebtedness amount, the
limitations imposed by the covenants in the agreements governing
our indebtedness and the maintenance of our financial and
disclosure controls and procedures;
- our ability to attract and retain key members of management and
train personnel;
- our reliance on third parties to provide distribution,
products, software content and services that are integral to or
used or sold by our business and the ability of our suppliers to
perform, develop and timely provide us with technological
developments, products and services we need to remain
competitive;
- possible disruptions or intrusions of our network, billing,
operational support and customer care systems which may limit or
disrupt our ability to provide service or which may cause
disclosure or improper use of our customers' information and the
associated harm to our customers, our systems, our reputation and
our goodwill; and
- other factors described or referenced in our annual report on
Form 10-K for the year ended December 31,
2011 filed on February 29,
2012 and from time to time in our quarterly reports on Form
10-Q, including our quarterly report for the quarter ended
September 30, 2012, to be filed on or
before November 9, 2012, as well as
subsequent quarterly reports on Form 10-Q, or current reports on
Form 8-K, all of which are on file with the SEC and may be obtained
free of charge through the SEC's website http://www.sec.gov, from
the Company's website at www.metropcs.com under the investor
relations tab, or from the Company by contacting the Investor
Relations department.
The forward-looking statements speak only as of the date made,
are based on current assumptions and expectations, and are subject
to the factors above, among other things, and involve risks,
uncertainties, events, circumstances and assumptions, many of which
are beyond our ability to foresee, control or predict. You should
not place undue reliance on these forward-looking statements. All
future written and oral forward looking statements attributable to
us or persons acting on our behalf are expressly qualified in their
entirety by our cautionary statements. MetroPCS Communications,
Inc. does not intend to, is not obligated to, and does not
undertake a duty to, update any forward-looking statement to
reflect the occurrence of events or circumstances after the date of
this release, except as required by law. The results for the third
quarter of 2012 may not be reflective of results for any subsequent
period or the full year 2012. MetroPCS does not plan to
update nor reaffirm guidance except through formal public
disclosure pursuant to Regulation FD.
MetroPCS Communications, Inc. and
Subsidiaries
Condensed Consolidated Balance
Sheets
(in
thousands, except share and per share information)
(Unaudited)
|
|
|
September 30,
2012
|
|
December 31,
2011
|
CURRENT
ASSETS:
|
|
|
|
Cash and cash equivalents
|
$
|
2,057,339
|
|
$
|
1,943,282
|
Short-term investments
|
507,943
|
|
299,972
|
Inventories
|
312,632
|
|
239,648
|
Accounts receivable (net of allowance for
uncollectible accounts of $490 and $601 at September 30, 2012 and
December 31, 2011, respectively)
|
95,263
|
|
78,023
|
Prepaid expenses
|
80,040
|
|
55,712
|
Deferred charges
|
71,590
|
|
74,970
|
Deferred tax assets
|
7,666
|
|
7,214
|
Other current assets
|
52,349
|
|
44,772
|
Total current assets
|
3,184,822
|
|
2,743,593
|
Property and equipment, net
|
4,197,399
|
|
4,017,999
|
Restricted cash and investments
|
2,076
|
|
2,576
|
Long-term investments
|
1,679
|
|
6,319
|
FCC licenses
|
2,562,315
|
|
2,539,041
|
Other assets
|
123,618
|
|
173,403
|
Total assets
|
$
|
10,071,909
|
|
$
|
9,482,931
|
CURRENT
LIABILITIES:
|
|
|
|
Accounts payable and accrued expenses
|
$
|
450,087
|
|
$
|
512,346
|
Current maturities of long-term debt
|
36,112
|
|
33,460
|
Deferred revenue
|
232,307
|
|
245,705
|
Other current liabilities
|
66,144
|
|
25,212
|
Total current liabilities
|
784,650
|
|
816,723
|
Long-term debt, net
|
4,731,174
|
|
4,711,021
|
Deferred tax liabilities
|
1,008,870
|
|
817,106
|
Deferred rents
|
133,272
|
|
120,028
|
Other long-term liabilities
|
91,496
|
|
90,453
|
Total liabilities
|
6,749,462
|
|
6,555,331
|
COMMITMENTS AND CONTINGENCIES
|
|
|
|
STOCKHOLDERS' EQUITY:
|
|
|
|
Preferred stock, par value $0.0001 per share,
100,000,000 shares authorized; no shares of preferred stock issued
and outstanding at September 30, 2012 and December 31,
2011
|
—
|
|
—
|
Common stock, par value $0.0001 per share,
1,000,000,000 shares authorized, 363,875,489 and 362,460,395 shares
issued and outstanding at September 30, 2012 and December 31,
2011, respectively
|
36
|
|
36
|
Additional paid-in capital
|
1,815,315
|
|
1,784,273
|
Retained earnings
|
1,521,925
|
|
1,159,418
|
Accumulated other comprehensive loss
|
(4,625)
|
|
(9,295)
|
Less treasury stock, at cost, 965,021 and 602,881
treasury shares at September 30, 2012 and December 31, 2011,
respectively
|
(10,204)
|
|
(6,832)
|
Total stockholders' equity
|
3,322,447
|
|
2,927,600
|
Total liabilities and stockholders' equity
|
$
|
10,071,909
|
|
$
|
9,482,931
|
MetroPCS Communications, Inc. and
Subsidiaries
Condensed Consolidated Statements of Income and
Comprehensive Income
(in
thousands, except share and per share information)
(Unaudited)
|
|
|
|
|
|
|
|
|
For the
Three Months Ended September 30,
|
|
For the
Nine Months Ended September 30,
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
REVENUES:
|
|
|
|
|
|
|
Service revenues
|
$
|
1,121,957
|
|
$
|
1,131,054
|
|
$
|
3,439,678
|
|
$
|
3,294,563
|
Equipment revenues
|
137,203
|
|
74,334
|
|
377,252
|
|
314,654
|
Total revenues
|
1,259,160
|
|
1,205,388
|
|
3,816,930
|
|
3,609,217
|
OPERATING
EXPENSES:
|
|
|
|
|
|
|
Cost of service (excluding depreciation and
amortization expense of $142,892, $120,362, $408,852 and $347,645
shown separately below)
|
373,032
|
|
382,033
|
|
1,130,377
|
|
1,089,480
|
Cost of equipment
|
265,940
|
|
343,473
|
|
1,002,726
|
|
1,095,269
|
Selling, general and administrative expenses
(excluding depreciation and amortization expense of $20,197,
$18,947, $60,406 and $54,883 shown separately below)
|
163,409
|
|
162,459
|
|
507,497
|
|
486,786
|
Depreciation and amortization
|
163,089
|
|
139,309
|
|
469,258
|
|
402,528
|
Loss on disposal of assets
|
1,452
|
|
1,283
|
|
4,618
|
|
2,731
|
Total operating expenses
|
966,922
|
|
1,028,557
|
|
3,114,476
|
|
3,076,794
|
Income
from operations
|
292,238
|
|
176,831
|
|
702,454
|
|
532,423
|
OTHER
EXPENSE (INCOME):
|
|
|
|
|
|
|
Interest expense
|
66,655
|
|
69,511
|
|
206,224
|
|
193,051
|
Interest income
|
(460)
|
|
(531)
|
|
(1,208)
|
|
(1,557)
|
Other (income) expense, net
|
(105)
|
|
(93)
|
|
(418)
|
|
(534)
|
Gain on settlement
|
(52,500)
|
|
—
|
|
(52,500)
|
|
—
|
Loss on extinguishment of debt
|
—
|
|
—
|
|
—
|
|
9,536
|
Total other expense
|
13,590
|
|
68,887
|
|
152,098
|
|
200,496
|
Income
before provision for income taxes
|
278,648
|
|
107,944
|
|
550,356
|
|
331,927
|
Provision for income taxes
|
(85,981)
|
|
(38,618)
|
|
(187,849)
|
|
(121,887)
|
Net
income
|
$
|
192,667
|
|
$
|
69,326
|
|
$
|
362,507
|
|
$
|
210,040
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
Unrealized gains on available-for-sale securities,
net of tax of $49, $25, $100 and $127, respectively
|
3,512
|
|
40
|
|
3,593
|
|
204
|
Unrealized losses on cash flow hedging derivatives,
net of tax benefit of $1,002, $5,790, $3,608 and $13,713,
respectively
|
(1,748)
|
|
(9,286)
|
|
(5,913)
|
|
(22,060)
|
Reclassification adjustment for gains on
available-for-sale securities included in net income, net of tax of
$33, $47, $58 and $169, respectively
|
(56)
|
|
(75)
|
|
(96)
|
|
(272)
|
Reclassification adjustment for losses on cash flow
hedging derivatives included in net income, net of tax benefit of
$1,301, $2,468, $4,324 and $6,587, respectively
|
2,254
|
|
3,956
|
|
7,086
|
|
10,596
|
Total other comprehensive income (loss)
|
3,962
|
|
(5,365)
|
|
4,670
|
|
(11,532)
|
Comprehensive income
|
$
|
196,629
|
|
$
|
63,961
|
|
$
|
367,177
|
|
$
|
198,508
|
Net income
per common share:
|
|
|
|
|
|
|
Basic
|
$
|
0.53
|
|
$
|
0.19
|
|
$
|
0.99
|
|
$
|
0.58
|
Diluted
|
$
|
0.52
|
|
$
|
0.19
|
|
$
|
0.99
|
|
$
|
0.57
|
Weighted
average shares:
|
|
|
|
|
|
|
Basic
|
363,584,552
|
|
362,019,205
|
|
363,190,434
|
|
359,763,082
|
Diluted
|
365,019,836
|
|
364,865,226
|
|
364,440,115
|
|
363,717,798
|
MetroPCS Communications, Inc. and
Subsidiaries
Condensed Consolidated Statements of Cash
Flows
(in
thousands)
(Unaudited)
|
|
|
|
|
|
For the
Nine Months Ended September 30,
|
|
|
2012
|
|
2011
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
Net
income
|
$
|
362,507
|
|
$
|
210,040
|
Adjustments to reconcile net income to net cash
provided by operating activities:
|
|
|
|
Depreciation and amortization
|
469,258
|
|
402,528
|
Provision for uncollectible accounts
receivable
|
3,155
|
|
382
|
Deferred rent expense
|
13,432
|
|
13,457
|
Cost of abandoned cell sites
|
1,357
|
|
650
|
Stock-based compensation expense
|
28,756
|
|
32,142
|
Non-cash interest expense
|
5,563
|
|
6,141
|
Loss on disposal of assets
|
4,618
|
|
2,731
|
Gain on settlement
|
(52,500)
|
|
—
|
Loss on extinguishment of debt
|
—
|
|
9,536
|
Gain on sale of investments
|
(154)
|
|
(441)
|
Accretion of asset retirement obligations
|
4,900
|
|
4,198
|
Deferred income taxes
|
191,243
|
|
119,290
|
Changes in
assets and liabilities:
|
|
|
|
Inventories
|
(72,984)
|
|
14,047
|
Accounts receivable, net
|
(17,152)
|
|
(7,373)
|
Prepaid expenses
|
(24,279)
|
|
(16,289)
|
Deferred charges
|
3,379
|
|
2,307
|
Other assets
|
16,469
|
|
24,755
|
Accounts payable and accrued expenses
|
(82,100)
|
|
(90,087)
|
Deferred revenue
|
(13,398)
|
|
19,225
|
Other liabilities
|
6,398
|
|
6,421
|
Net cash
provided by operating activities
|
848,468
|
|
753,660
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
Purchases of property and equipment
|
(588,332)
|
|
(699,625)
|
Change in prepaid purchases of property and
equipment
|
39,330
|
|
(65,241
|
Proceeds from sale of property and
equipment
|
897
|
|
845
|
Purchases of investments
|
(692,147)
|
|
(462,289)
|
Proceeds from maturity of investments
|
492,500
|
|
537,500
|
Proceeds from gain on settlement
|
52,500
|
|
—
|
Change in restricted cash and investments
|
500
|
|
300
|
Acquisitions of FCC licenses and microwave clearing
costs
|
(22,998)
|
|
(4,003)
|
Cash used in asset acquisitions
|
—
|
|
(7,495)
|
Net cash
used in investing activities
|
(717,750)
|
|
(700,008)
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
Change in book overdraft
|
9,131
|
|
14,081
|
Proceeds from debt issuance, net of
discount
|
—
|
|
1,497,500
|
Debt issuance costs
|
—
|
|
(15,351
|
Repayment of debt
|
(19,042)
|
|
(17,945)
|
Retirement of senior secured credit facility
debt
|
—
|
|
(535,792)
|
Payments on capital lease obligations
|
(6,668)
|
|
(6,222)
|
Purchase of treasury stock
|
(3,373)
|
|
(4,359)
|
Proceeds from exercise of stock options
|
3,291
|
|
58,666
|
Net cash
(used in) provided by financing activities
|
(16,661)
|
|
990,578
|
INCREASE CASH AND CASH EQUIVALENTS
|
114,057
|
|
1,044,230
|
CASH
AND CASH EQUIVALENTS, beginning of period
|
1,943,282
|
|
796,531
|
CASH
AND CASH EQUIVALENTS, end of period
|
$
|
2,057,339
|
|
$
|
1,840,761
|
Definition of Terms and Reconciliation of Non-GAAP Financial
Measures
The Company utilizes certain financial measures and key
performance indicators that are not calculated in accordance with
GAAP to assess our financial and operating performance. A non-GAAP
financial measure is defined as a numerical measure of a company's
financial performance that (i) excludes amounts, or is subject to
adjustments that have the effect of excluding amounts, that are
included in the comparable measure calculated and presented in
accordance with GAAP in the statement of income or statement of
cash flows, or (ii) includes amounts, or is subject to adjustments
that have the effect of including amounts, that are excluded from
the comparable measure so calculated and presented.
Average revenue per user, or ARPU, cost per gross addition, or
CPGA, cost per user, or CPU, and Adjusted EBITDA are non-GAAP
financial measures utilized by the Company's management to judge
the Company's ability to meet its liquidity requirements and to
evaluate its operating performance. Management believes that these
measures are important in understanding the performance of the
Company's operations from period to period, and although every
company in the wireless industry does not define each of these
measures in precisely the same way, management believes that these
measures (which are common in the wireless industry) facilitate key
liquidity and operating performance comparisons with other
companies in the wireless industry. The following tables reconcile
the Company's non-GAAP financial measures with the Company's
financial statements presented in accordance with GAAP.
ARPU - The Company utilizes ARPU to evaluate its per-customer
service revenue realization and to assist in forecasting future
service revenues. ARPU is calculated exclusive of pass through
charges that the Company collects from its customers and remits to
the appropriate government agencies.
Average number of customers for any measurement period is
determined by dividing (a) the sum of the average monthly
number of customers for the measurement period by (b) the
number of months in such period. Average monthly number of
customers for any month represents the sum of the number of
customers on the first day of the month and the last day of the
month divided by two. The Company believes investors use ARPU
primarily as a tool to track changes in its average revenue per
customer and to compare its per customer service revenues to those
of other wireless broadband mobile providers, although other
providers may calculate this measure differently. The following
table reconciles total revenues used in the calculation of ARPU to
service revenues, which the Company considers to be the most
directly comparable GAAP financial measure to ARPU.
|
Three
Months Ended
September 30,
|
|
Nine
Months Ended
September 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
(in thousands, except average
number of customers and ARPU)
|
Calculation of Average Revenue Per User
(ARPU):
|
|
|
|
|
|
|
|
Service
revenues
|
$
|
1,121,957
|
|
$
|
1,131,054
|
|
$
|
3,439,678
|
|
$
|
3,294,563
|
Less: Pass
through charges
|
(12,507)
|
|
(19,785)
|
|
(44,656)
|
|
(61,795)
|
Net
service revenues
|
$
|
1,109,450
|
|
$
|
1,111,269
|
|
$
|
3,395,022
|
|
$
|
3,232,768
|
Divided
by: Average number of customers
|
9,131,181
|
|
9,079,982
|
|
9,300,428
|
|
8,853,141
|
ARPU
|
$
|
40.50
|
|
$
|
40.80
|
|
$
|
40.56
|
|
$
|
40.57
|
CPGA - The Company utilizes CPGA to assess the efficiency of its
distribution strategy, validate the initial capital invested in its
customers and determine the number of months to recover its
customer acquisition costs. This measure also allows management to
compare the Company's average acquisition costs per new customer to
those of other wireless broadband mobile providers, although other
providers may calculate this measure differently. Equipment
revenues related to new customers are deducted from selling
expenses in this calculation as they represent amounts paid by
customers at the time their service is activated that reduce the
Company's acquisition cost of those customers. Additionally,
equipment costs associated with existing customers, net of related
revenues, are excluded as this measure is intended to reflect only
the acquisition costs related to new customers. The Company
believes investors use CPGA primarily as a tool to track changes in
its average cost of acquiring new customers and to compare its per
customer acquisition costs to those of other wireless broadband
mobile providers, although other providers may calculate this
measure differently. The following table reconciles total
costs used in the calculation of CPGA to selling expenses, which
the Company considers to be the most directly comparable GAAP
financial measure to CPGA.
|
Three
Months Ended
September 30,
|
|
|
Nine
Months Ended September 30,
|
|
2012
|
|
|
2011
|
|
2012
|
|
2011
|
|
(in thousands, except gross
customer additions and CPGA)
|
Calculation of Cost Per Gross Addition
(CPGA):
|
|
|
|
|
|
|
|
|
|
|
Selling
expenses
|
$
|
78,770
|
|
$
|
88,702
|
|
$
|
253,481
|
|
$
|
259,086
|
Less: Equipment revenues
|
(137,203)
|
|
(74,334)
|
|
(377,252)
|
|
(314,654)
|
Add: Equipment revenue not associated with new
customers
|
96,911
|
|
58,026
|
|
275,561
|
|
192,615
|
Add: Cost of equipment
|
265,940
|
|
343,473
|
|
1,002,726
|
|
1,095,269
|
Less: Equipment costs not associated with new
customers
|
(164,521)
|
|
(163,610)
|
|
(629,915)
|
|
(515,743)
|
Gross
addition expenses
|
$
|
139,897
|
|
$
|
252,257
|
|
$
|
524,601
|
|
$
|
716,573
|
Divided
by: Gross customer additions
|
691,736
|
|
1,300,611
|
|
2,474,721
|
|
4,087,582
|
CPGA
|
$
|
202.24
|
|
$
|
193.95
|
|
$
|
211.98
|
|
$
|
175.30
|
CPU - The Company utilizes CPU as a tool to evaluate the
non-selling cash expenses associated with ongoing business
operations on a per customer basis, to track changes in these
non-selling cash costs over time, and to help evaluate how changes
in the Company's business operations affect non-selling cash costs
per customer. In addition, CPU provides management with a
useful measure to compare its non-selling cash costs per customer
with those of other wireless broadband mobile providers. The
Company believes investors use CPU primarily as a tool to track
changes in the Company's non-selling cash costs over time and to
compare the Company's non-selling cash costs to those of other
wireless broadband mobile providers, although other providers may
calculate this measure differently. The following table
reconciles total costs used in the calculation of CPU to cost of
service, which the Company considers to be the most directly
comparable GAAP financial measure to CPU.
|
Three
Months Ended
September 30,
|
|
|
Nine
Months Ended September 30,
|
|
2012
|
|
2011
|
|
|
2012
|
|
2011
|
|
(in thousands, except average
number of customers and CPU)
|
Calculation of Cost Per User (CPU):
|
|
|
|
|
|
|
|
|
Cost of
service
|
$
|
373,032
|
|
$
|
382,033
|
|
$
|
1,130,377
|
|
$
|
1,089,480
|
Add: General and administrative expense
|
84,639
|
|
73,757
|
|
254,016
|
|
227,700
|
Add: Net loss on equipment transactions unrelated to
initial customer acquisition
|
67,610
|
|
105,584
|
|
354,354
|
|
323,128
|
Less: Stock-based compensation expense included in
cost of service and general and administrative expense
|
(9,256)
|
|
(9,898)
|
|
(28,756)
|
|
(32,142)
|
Less: Pass through charges
|
(12,507)
|
|
(19,785)
|
|
(44,656)
|
|
(61,795)
|
Total
costs used in the calculation of CPU
|
$
|
503,518
|
|
$
|
531,691
|
|
$
|
1,665,335
|
|
$
|
1,546,371
|
Divided
by: Average number of customers
|
9,131,181
|
|
9,079,982
|
|
9,300,428
|
|
8,853,141
|
CPU
|
$
|
18.38
|
|
$
|
19.52
|
|
$
|
19.90
|
|
$
|
19.41
|
Adjusted EBITDA - The Company utilizes Adjusted EBITDA to
monitor the financial performance of its operations. This
measurement, together with GAAP measures such as revenue and income
from operations, assists management in its decision-making process
related to the operations of the company's business. Adjusted
EBITDA has limitations as an analytical tool and should not be
considered in isolation or as a substitute for income from
operations, net income, or any other measure of financial
performance reported in accordance with GAAP. In addition,
other providers may calculate this measure differently.
The Company believes that analysts and investors use Adjusted
EBITDA as a supplemental measure to evaluate its overall operating
performance and that this metric facilitates the comparisons with
other wireless communications companies. The Company uses
Adjusted EBITDA internally as a metric to evaluate and compensate
its personnel and management for their performance, and as a
benchmark to evaluate its operating performance in comparison to
its competitors. Management also uses Adjusted EBITDA to
measure, from period-to-period, the company's ability to provide
cash flows to meet future debt services, capital expenditures and
working capital requirements and fund future growth.
The following tables illustrate the calculation of Adjusted
EBITDA and reconcile Adjusted EBITDA to net income and cash flows
from operating activities, which the Company considers to be the
most directly comparable GAAP financial measures to Adjusted
EBITDA.
|
Three
Months Ended
September 30,
|
|
|
Nine
Months Ended September 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
(in
thousands)
|
Calculation of Adjusted EBITDA:
|
|
|
|
|
|
|
|
Net
income
|
$
|
192,667
|
|
$
|
69,326
|
|
$
|
362,507
|
|
$
|
210,040
|
Adjustments:
|
|
|
|
|
|
|
Depreciation and amortization
|
163,089
|
|
139,309
|
|
469,258
|
|
402,528
|
Loss on disposal of assets
|
1,452
|
|
1,283
|
|
4,618
|
|
2,731
|
Stock-based compensation expense
|
9,256
|
|
9,898
|
|
28,756
|
|
32,142
|
Interest expense
|
66,655
|
|
69,511
|
|
206,224
|
|
193,051
|
Interest income
|
(460)
|
|
(531)
|
|
(1,208)
|
|
(1,557)
|
Other (income) expense, net
|
(105)
|
|
(93)
|
|
(418)
|
|
(534)
|
Gain on settlement
|
(52,500)
|
|
—
|
|
(52,500)
|
|
—
|
Loss on extinguishment of debt
|
—
|
|
—
|
|
—
|
|
9,536
|
Provision for income taxes
|
85,981
|
|
38,618
|
|
187,849
|
|
121,887
|
Adjusted EBITDA
|
$
|
466,035
|
|
$
|
327,321
|
|
$
|
1,205,086
|
|
$
|
969,824
|
|
Three
Months Ended September 30,
|
|
|
Nine
Months Ended September 30,
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
(in
thousands)
|
Reconciliation of Net Cash Provided by Operating
Activities to Adjusted EBITDA:
|
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
$
|
391,898
|
|
$
|
271,560
|
|
$
|
848,468
|
|
$
|
753,660
|
Adjustments:
|
|
|
|
|
|
|
|
Interest expense
|
66,655
|
|
69,511
|
|
206,224
|
|
193,051
|
Non-cash interest expense
|
(1,899)
|
|
(2,125)
|
|
(5,563)
|
|
(6,141)
|
Interest income
|
(460)
|
|
(531)
|
|
(1,208)
|
|
(1,557)
|
Other (income) expense, net
|
(105)
|
|
(93)
|
|
(418)
|
|
(534)
|
Benefit (provision) for uncollectible accounts
receivable
|
82
|
|
(121)
|
|
(3,155)
|
|
(382)
|
Deferred rent expense
|
(4,058)
|
|
(5,626)
|
|
(13,432)
|
|
(13,457)
|
Cost of abandoned cell sites
|
(417)
|
|
(270)
|
|
(1,357)
|
|
(650)
|
Gain on sale and maturity of investments
|
89
|
|
122
|
|
154
|
|
441
|
Accretion of asset retirement obligations
|
(1,681)
|
|
(1,436)
|
|
(4,900)
|
|
(4,198)
|
Provision for income taxes
|
85,981
|
|
38,618
|
|
187,849
|
|
121,887
|
Deferred income taxes
|
(84,005)
|
|
(37,895)
|
|
(191,243)
|
|
(119,290)
|
Changes in working capital
|
13,955
|
|
(4,393)
|
|
183,667
|
|
46,994
|
Adjusted EBITDA
|
$
|
466,035
|
|
$
|
327,321
|
|
$
|
1,205,086
|
|
$
|
969,824
|
SOURCE MetroPCS Communications, Inc.