Wednesday, June 19, 2013 Last update: 3:53 AM
Company Tech News as it Breaks
MetroPCS Reports Fourth Quarter and Year End 2012 Results
Submitted by admin on 2/26/2013 @ 3:30 AM
Companies mentioned in this article:
MetroPCS Communications, Inc.
DALLAS, Feb. 26, 2013 /PRNewswire/ --
Fourth Quarter 2012 Highlights Include:
-- Quarterly consolidated total revenues of approximately $1.3 billion, an
increase of 4% over the fourth quarter of 2011
-- Quarterly ARPU of $40.86, an increase of $0.31 over fourth quarter 2011
-- Quarterly churn of 3.6%, a decrease of 10 basis points from the third
quarter of 2012 and from the fourth quarter of 2011
-- Adjusted EBITDA of $307 million and Adjusted EBITDA margin of 27.9%
-- Surpassed 2.2 million 4G LTE subscribers, an increase of 117% from the
third quarter of 2012
-- Consolidated net subscriber losses of 93 thousand
Full Year 2012 Highlights Include:
-- Consolidated total revenues of approximately $5.1 billion, an increase
of 5% over 2011
-- Income from operations of $824 million, an increase of 10% over 2011
-- Record Adjusted EBITDA of over $1.5 billion, an increase of 14% over
2011, and the highest Adjusted EBITDA in Company history
-- Adjusted EBITDA margin of 33.3%, an increase of 320 basis points over
2011
-- ARPU of $40.63, an increase of $0.06 over 2011
-- Annual churn of 3.4%, a decrease of 40 basis points over 2011, and the
lowest annual churn in Company history
-- 4G LTE subscribers represent approximately 26% of total subscribers
-- Serve approximately 8.9 million subscribers
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 and year ended December 31, 2012. MetroPCS reported record Adjusted EBITDA of over $1.5 billion, an increase of 14% over 2011 and ended 2012 with approximately 8.9 million subscribers.
Roger D. Linquist, Chairman and Chief Executive Officer of MetroPCS, said, "The fourth quarter continues our transformation as a company to 4G LTE For All. We ended 2012 with over 2.2 million 4G LTE subscribers, double from where they were at the end of the third quarter of this year. 4G LTE subscribers at the end of 2012 represented 26% of our total subscriber base. 4G LTE high-speed wireless broadband enables an evolution in the wireless experience and we believe our subscribers benefit from the faster speeds and increased capacity. During the quarter, over 75% of upgrades moved to a 4G LTE service plan. Our 4G LTE network is performing well, and we believe it is meeting our customers' current demands for high-speed wireless broadband service. Importantly, we have also introduced RCS on our LTE network which offers a competitive differentiator to 3G data offerings. We plan to continue our push towards 4G LTE and transform the wireless experience for MetroPCS subscribers.
"The proposed business combination with T-Mobile is progressing well. We filed our definitive proxy on February 25, 2013 and our shareholder meeting is scheduled for March 28, 2013. Currently, we anticipate closing the transaction in early April. Post-closing, the combined company will be the leading value wireless carrier in the United States, which will deliver an enhanced customer experience through a broader selection of affordable products and services, more network capacity and broader network coverage and a clear-cut technology path to one common 4G LTE. We believe that the combined company will have the expanded scale, spectrum and financial resources to compete aggressively with the other larger U.S. wireless carriers," Linquist concluded.
2012 Operational Highlights
-- Surpassed 2.2 million 4G LTE subscribers, representing a dramatic
increase from 310 thousand 4G LTE subscribers at December 31, 2011
-- Record Adjusted EBITDA of over $1.5 billion, an increase of 14% over
2011, and the highest Adjusted EBITDA in Company history
-- Adjusted EBITDA margin of 33.3%, an increase of 320 basis points over
2011
-- Annual churn of 3.4%, a decrease of 40 basis points over 2011, and the
lowest annual churn in Company history
-- Announced proposed business combination with T-Mobile USA to create the
leading value wireless carrier in the U.S.
-- Successfully completed consent solicitation to amend indentures
governing 7 7/8% Senior Notes due 2018 and 6 5/8% Senior Notes due 2020
-- Launched 4G LTE For All campaign which transformed the wireless
experience for no-contract offerings
-- 2012 Smartphone Launches include:
-- ZTE Avid(TM) 4G LTE
-- Samsung Galaxy S III 4G LTE
-- Coolpad Quattro(TM) 4G LTE
-- LG Motion(TM) 4G LTE
-- LG Connect 4G LTE Android(TM); world's first commercially available
VoLTE-capable 4G LTE smartphone
-- Huawei Activa(TM) 4G LTE; Huawei's first 4G LTE handset in the
United States
-- 2012 Service Offering Additions:
-- First 4G LTE mobile service provider in the world to deploy Rich
Communication Services (RCS) which provides customers with enriched
services, such as instant messaging, Wi-Fi, video calling, and
simplified sharing
-- Launched world's first commercially available Voice Over LTE (VoLTE)
service
-- 2012 Announced Partnerships:
-- Launched Team Metro with UFC(®) Fighters Cain Velasquez and Frankie
Edgar
-- Partner with After-School All-Stars for programs helping at-risk
youth
-- Deron Williams, USA Basketball National Team Member, becomes
official spokesperson for MetroPCS
-- Announced USA Basketball Dream Tour which stopped in 15 cities
across the nation
Mobile Content Venture (MCV) partnership to enable MetroPCS customers to watch live, local broadcast television on their mobile phones.
Key Consolidated Financial and Operating Metrics
(in millions, except percentages, per share, per subscriber and subscriber amounts)
Three Months Ended December 31, Twelve Months Ended December 31,
2012 2011 Change 2012 2011 Change
---- ---- ------ ---- ---- ------
Service revenues $1,100 $1,134 (3)% $4,540 $4,428 3%
Total revenues $1,284 $1,238 4% $5,101 $4,847 5%
Income from
operations $122 $215 (44)% $824 $748 10%
Net income $32 $91 (65)% $394 $301 31%
Diluted EPS $0.09 $0.25 $(0.16) $1.07 $0.82 $0.25
Adjusted
EBITDA(1) $307 $362 (15)% $1,512 $1,332 14%
Adjusted EBITDA
as a
percentage of
service revenues 27.9% 31.9% (400 bps) 33.3% 30.1% 320 bps
ARPU(1) $40.86 $40.55 $0.31 $40.63 $40.57 $0.06
CPGA(1) $228.04 $165.79 $62.25 $216.15 $173.11 $43.04
CPU(1) $21.91 $20.00 $1.91 $20.38 $19.56 $0.82
Churn-Average
Monthly Rate 3.6% 3.7% (10 bps) 3.4% 3.8% (40 bps)
Consolidated
Subscribers
End of Period 8,886,723 9,346,659 (5)% 8,886,723 9,346,659 (5)%
Net Customer
(Losses)
Additions (93,237) 197,410 (147)% (459,936) 1,191,549 (139)%
Penetration of
Covered POPs(2) 8.6% 9.3% (70 bps) 8.6% 9.3% (70 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 2.7
million from 12/31/11 to 12/31/12 to 103
million.
Quarterly Consolidated Results
-- Consolidated service revenues of approximately $1.1 billion for the
fourth quarter of 2012, a decrease of $34 million, or 3%, when compared
to the prior year's fourth quarter.
-- Income from operations decreased $93 million, or 44%, for the fourth
quarter of 2012 when compared to the prior year's fourth quarter. The
decrease in operating income was primarily driven by a decrease in
service revenues as well as an increase in selling, general and
administrative expenses and depreciation and amortization expense.
-- Adjusted EBITDA of $307 million decreased by $55 million for the fourth
quarter of 2012, or 15%, when compared to the prior year's fourth
quarter. For the fourth quarter of 2012 the Company incurred $8 million
in expenses related to the proposed business combination with T-Mobile.
-- Net income for the quarter was $32 million and includes $7 million in
expenses, net of tax, incurred related to the proposed business
combination with T-Mobile. On a non-GAAP basis excluding the expenses
related to the proposed business combination, net income would have been
$39 million or $0.11 per common share.
-- Average revenue per user (ARPU) of $40.86 for the fourth quarter of 2012
represents an increase of $0.31 when compared to the fourth quarter of
2011. The increase in ARPU was primarily attributable to continued
demand for our 4G LTE service plans partially offset by promotional
service plans.
-- The Company's cost per gross addition (CPGA) of $228 for the fourth
quarter of 2012 represents an increase of $62 when compared to the prior
year's fourth quarter. The increase is primarily driven by a 29%
decrease in gross additions as well as increased promotional activities
when compared to the three months ended December 31, 2011.
-- Cost per user (CPU) increased to $21.91 in the fourth quarter of 2012,
or a 10% increase over the fourth quarter of 2011. The increase in CPU
is primarily driven by the increase in retention expense for existing
customers, an increase in costs associated with our 4G LTE network
upgrade, an increase in commissions paid to independent retailers for
customer reactivations and an increase in legal and professional fees.
These items were partially offset a decrease in long distance cost and
taxes and regulatory fees. During the quarter we experienced $5.62 in
CPU directly related to handset upgrades compared to $4.36 in the prior
year's fourth quarter.
-- Churn decreased 10 basis points from 3.7% to 3.6%, when compared to the
third quarter of 2012, and decreased 10 basis points when compared to
the fourth quarter of 2011. The decrease in churn was primarily driven
by normal seasonal effects related to traditional retail selling
periods, continued investments in our network and lower year-to-date
subscriber growth.
Annual Consolidated Results
-- Consolidated service revenues of approximately $4.5 billion, an increase
of 3% over the prior year.
-- Income from operations increased $76 million, or 10%, for the year ended
December 31, 2012 as compared to the prior year.
-- Consolidated Adjusted EBITDA of over $1.5 billion increased $180
million, or 14%, when compared to the prior year. For the year ended
December 31, 2012 the Company incurred $18 million in expenses related
to the proposed business combination with T-Mobile.
-- Net income for the year was $394 million and increased $93 million, or
31%, when compared to the prior year. Net income for 2012 includes a $53
million gain on settlement related to certain securities that was
recognized during the year as well as $13 million in expenses, net of
tax, incurred related to the proposed business combination with
T-Mobile. On a non-GAAP basis excluding the gain on settlement as well
as the expenses related to the proposed business combination agreement,
net income would have been $354 million, or $0.97 per common share, an
increase of 18% or $0.15 per common share.
Financial Guidance for 2013
MetroPCS currently expects to incur capital expenditures in the range of $800 million to $900 million on a standalone consolidated basis for the year ending December 31, 2013.
MetroPCS Conference Call Information:
Date: Tuesday, February 26,
2013
Time: 9 a.m. (ET)
Call-in Numbers: 800-432-9830
International: 719-234-7318
Participant Passcode: 9029494
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 http://investor.metropcs.com. A replay of the webcast will be available on the website beginning at approximately 12:30 p.m. (ET) on February 26, 2013.
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 9029494.
To automatically receive MetroPCS financial news by e-mail, please visit the Investor Relations portion of the MetroPCS website, http://www.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 December 31, 2012, MetroPCS had approximately 8.9 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, our ability to predict and meet the demands of our subscribers, the competitive differentiations for our customers, the advantages of a merger with T-Mobile, the anticipated closing date for the business combination with T-Mobile, our plans to challenge the wireless market, the reasons for our operational and financial results, our network capabilities, our guidance on capital expenditures for 2013, 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 highly competitive nature of the wireless broadband mobile industry
and changes in the competitive landscape;
-- ours and our competitors' current and planned promotions and
advertising, marketing, sales and other initiatives, including pricing
decisions, entry into consolidation and alliance activities, and our
ability to respond to and support them;
-- the effects of the T-Mobile Transaction on dealers, retailers, vendors,
suppliers, customers, content and application providers, our equity and
debt holders and our employees;
-- the diversion of management's time and attention while the T-Mobile
Transaction is pending;
-- our ability to operate our business in light of the T-Mobile transaction
and the covenants contained in the Business Combination Agreement;
-- the inability to have developed or to obtain handsets, equipment or
software that our customers want, demand and expect or to have handsets,
equipment or software serviced, updated, revised or maintained in a
timely and cost-effective manner for the prices and the features our
customers want, expect or demand;
-- our ability to construct, operate and manage our network to deliver the
services, content, applications, service quality and speed our customers
expect and demand and to provide, maintain and increase the capacity of
our network and business systems to satisfy the demands of our customers
and the demands placed by devices on our network;
-- our plans and expectations relating to, without limitation, (i) our
growth opportunities and competitive position; (ii) our products and
services; (iii) our customer experience; (iv) our results of operations,
including expected synergies from the T-Mobile Transaction, earnings and
cash flows; (v) the impact of the T-Mobile Transaction on our credit
rating; and (vi) integration matters;
-- the federal income tax consequences of the T-Mobile Transaction and the
enactment of additional state, federal, and/or foreign regulatory and
tax laws and regulations;
-- expectations, intentions and outcomes relating to outstanding
litigation, including securities, class action, derivative, patent and
product safety claims, by or against third parties;
-- the possibility that the T-Mobile Transaction is delayed or does not
close, including due to the failure to receive the required stockholder
approval or required approvals from governmental authorities necessary
to satisfy the closing conditions, along with satisfaction or waiver of
other closing conditions, pursuant to the Business Combination
Agreement;
-- alternative acquisition proposals that could delay completion of the
T-Mobile Transaction;
-- our ability to successfully integrate our business with T-Mobile and
realize the expected spectrum, cost and capital expenditure savings and
synergies and other benefits from the T-Mobile Transaction;
-- changes in economic, business, competitive, technological and/or
regulatory factors, including the passage of legislation or action by
governmental or regulatory entities;
-- any changes in the regulatory environment in which we operate, including
any change or increase in restrictions on our ability to operate our
network;
-- terminations of, or limitations imposed on, MetroPCS' or T-Mobile's
business by, contracts entered into by either MetroPCS or T-Mobile, or
the effect of provisions with respect to change in control, exclusivity,
commitments or minimum purchase amounts contained in such contracts;
-- the impact of economic conditions on our business plan, strategy and
stock price;
-- delays in, or changes in policies related to, income tax refunds or
other governmental payments;
-- the impact on our network and business from major equipment failures and
security breaches related to the network or customer information;
-- the ability to obtain financing on terms favorable to us, or at all;
-- the impact of public and private regulations;
-- possible disruptions, cyber attacks, or intrusions of our network,
billing, operational support and customer care systems that may limit or
disrupt our ability to provide service, or which may cause disclosure or
improper use of customers' information and associated harm to our
customers, systems, reputation and goodwill;
-- our continued ability to offer a diverse portfolio of wireless devices;
-- our ability to obtain and continue to obtain roaming on terms that are
reasonable;
-- severe weather conditions, natural disasters, energy shortages, wars or
terrorist attacks, and any resulting financial impact not covered by
insurance;
-- disruptions of our key suppliers' provisioning of products, services,
content or applications;
-- fluctuations in interest and exchange rates;
-- significant increases in benefit plan costs or lower investment returns
on plan assets;
-- material adverse changes in labor matters, including labor negotiations
or additional organizing activity, and any resulting financial and/or
operational impact;
-- the diversion of management's time and attention to litigation,
including litigation relating to the T-Mobile Transaction;
-- write-offs in connection with the transaction, or changes in MetroPCS'
and/or T-Mobile's accounting assumptions that regulatory agencies,
including the SEC, may require or that result from changes in the
accounting rules or their application, which could result in an impact
on earnings;
-- the significant capital commitments of MetroPCS and T-Mobile;
-- 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 the impact of
the economy on consumer demand and fluctuations in consumer demand
generally for the products and services provided;
-- 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 obtaining roaming on reasonable terms;
-- 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;
-- 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 documents 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;
-- governmental regulation affecting our services and changes in government
regulation, and the costs of compliance and our failure to comply with
such regulations; and
-- other factors described or referenced in our annual report on Form 10-K
for the year ended December 31, 2012 to be filed on or before March 1,
2013 , 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 fourth quarter and twelve months ended 2012 may not be reflective of results for any subsequent period. MetroPCS does not plan to update nor reaffirm guidance except through formal public disclosure pursuant to Regulation FD.
MetroPCS Communications, Inc. and Subsidiaries
Consolidated Balance Sheets
(in thousands, except share and per share information)
December 31, December 31,
2012 2011
---- ----
CURRENT ASSETS:
Cash and cash equivalents $2,368,302 $1,943,282
Short-term investments 244,990 299,972
Inventories 259,157 239,648
Accounts receivable (net of allowance
for uncollectible accounts of $476 and
$601 at December 31, 2012 and 2011,
respectively) 98,653 78,023
Prepaid expenses 65,069 55,712
Deferred charges 78,181 74,970
Deferred tax assets 3,493 7,214
Other current assets 69,458 44,772
------ ------
Total current assets 3,187,303 2,743,593
Property and equipment, net 4,292,061 4,017,999
Restricted cash and investments 4,929 2,576
Long-term investments 1,679 6,319
FCC licenses 2,562,407 2,539,041
Other assets 141,036 173,403
------- -------
Total assets $10,189,415 $9,482,931
=========== ==========
CURRENT LIABILITIES:
Accounts payable and accrued expenses $501,929 $512,346
Current maturities of long-term debt 36,640 33,460
Deferred revenue 237,635 245,705
Other current liabilities 71,599 25,212
------ ------
Total current liabilities 847,803 816,723
Long-term debt, net 4,724,112 4,711,021
Deferred tax liabilities 1,031,374 817,106
Deferred rents 136,456 120,028
Other long-term liabilities 90,763 90,453
------ ------
Total liabilities 6,830,508 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 December 31, 2012 and
2011 - -
Common stock, par value $0.0001 per
share, 1,000,000,000 shares authorized,
364,492,637 and 362,460,395 shares
issued and outstanding at December 31,
2012 and 2011, respectively 37 36
Additional paid-in capital 1,826,044 1,784,273
Retained earnings 1,553,590 1,159,418
Accumulated other comprehensive loss (9,602) (9,295)
Less treasury stock, at cost, 1,057,237
and 602,881 treasury shares at December
31, 2012 and 2011, respectively (11,162) (6,832)
------- ------
Total stockholders' equity 3,358,907 2,927,600
--------- ---------
Total liabilities and stockholders'
equity $10,189,415 $9,482,931
=========== ==========
MetroPCS Communications, Inc. and Subsidiaries
Consolidated Statements of Income and Comprehensive Income
(in thousands, except share and per share information)
For the Three Months Ended For the Year Ended
December 31, December 31,
------------ ------------
2012 2011 2012 2011
---- ---- ---- ----
REVENUES:
Service revenues $1,100,099 $1,133,645 $4,539,777 $4,428,208
Equipment revenues 184,249 104,519 561,501 419,174
------- ------- ------- -------
Total revenues 1,284,348 1,238,164 5,101,278 4,847,382
OPERATING EXPENSES:
Cost of service (excluding depreciation and
amortization expense of $150,878, $115,978,
$559,730 and $463,624 shown separately
below) 359,850 384,356 1,490,227 1,473,836
Cost of equipment 437,098 344,326 1,439,824 1,439,595
Selling, general and administrative expenses
(excluding depreciation and amortization
expense of $21,288, $20,328, $81,695 and
$75,211 shown separately below) 189,292 157,173 696,789 643,959
Depreciation and amortization 172,166 136,306 641,425 538,835
Loss on disposal of assets 4,426 888 9,044 3,619
Total operating expenses 1,162,832 1,023,049 4,277,309 4,099,844
--------- --------- --------- ---------
Income from operations 121,516 215,115 823,969 747,538
OTHER EXPENSE (INCOME):
Interest expense 69,270 68,021 275,494 261,073
Interest income (395) (471) (1,603) (2,028)
Other (income) expense, net (4,462) (164) (4,880) (699)
Loss on extinguishment of debt - - - 9,536
Gain on settlement - - (52,500) -
--- --- ------- ---
Total other expense 64,413 67,386 216,511 267,882
Income before provision for income taxes 57,103 147,729 607,458 479,656
Provision for income taxes (25,437) (56,458) (213,286) (178,346)
------- ------- -------- --------
Net income $31,666 $91,271 $394,172 $301,310
======= ======= ======== ========
Other comprehensive income (loss):
Unrealized gains on available-for-sale
securities, net of tax of $48, $7, $148 and
$134, respectively 68 7 3,661 212
Unrealized losses on cash flow hedging
derivatives, net of tax benefit of $299,
$261, $3,907 and $13,975, respectively (240) (85) (6,153) (22,145)
Reclassification adjustment for gains on
available-for-sale securities included in
net income, net of tax of $50, $22, $108
and $191, respectively (6,933) (30) (7,029) (303)
Reclassification adjustment for losses on
cash flow hedging derivatives included in
net income, net of tax benefit of $1,527,
$2,473, $5,850 and $9,059, respectively 2,128 3,760 9,214 14,356
----- ----- ----- ------
Total other comprehensive (loss) income (4,977) 3,652 (307) (7,880)
------ ----- ---- ------
Comprehensive income $26,689 $94,923 $393,865 $293,430
======= ======= ======== ========
Net income per common share:
Basic $0.09 $0.25 $1.08 $0.83
===== ===== ===== =====
Diluted $0.09 $0.25 $1.07 $0.82
===== ===== ===== =====
Weighted average shares:
Basic 364,219,319 362,330,324 363,449,061 360,410,168
=========== =========== =========== ===========
Diluted 365,980,541 363,536,388 364,880,303 363,837,940
=========== =========== =========== ===========
MetroPCS Communications, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(in thousands)
For the Year Ended
December 31,
------------
2012 2011
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $394,172 $301,310
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 641,425 538,835
Provision for uncollectible
accounts receivable 3,256 518
Deferred rent expense 16,476 18,828
Cost of abandoned cell sites 2,331 1,099
Stock-based compensation expense 37,974 41,791
Non-cash interest expense 7,509 6,595
Loss on disposal of assets 9,044 3,619
Loss on extinguishment of debt - 9,536
Gain on settlement (52,500) -
Gain on maturity or sale of
investments (7,137) (493)
Accretion of asset retirement
obligations 6,626 5,224
Deferred income taxes 216,808 174,617
Changes in assets and liabilities:
Inventories (19,508) (78,599)
Accounts receivable, net (20,642) (20,485)
Prepaid expenses (9,292) (5,244)
Deferred charges (3,212) 8,515
Other assets 5,433 24,380
Accounts payable and accrued
expenses (51,718 1,919
Deferred revenue (8,070 21,234
Other liabilities 12,476 8,609
------ -----
Net cash provided by operating
activities 1,181,451 1,061,808
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and
equipment (845,850) (889,769)
Change in prepaid purchases of
property and equipment 28,641 (61,815)
Proceeds from sale of and grants
received for property and
equipment 3,325 1,118
Purchase of investments (692,147) (599,765)
Proceeds from maturity of
investments 755,569 675,000
Proceeds from gain on settlement 52,500 -
Change in restricted cash and
investments (2,354) 300
Acquisitions of FCC licenses and
microwave clearing costs (23,114) (4,445)
Cash used in asset acquisitions - (7,495)
--- ------
Net cash used in investing
activities (723,430) (886,871)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in book overdraft 9,680 3,445
Proceeds from debt issuance, net
of discount - 1,497,500
Debt issuance and modification
costs (10,000) (15,351)
Repayment of debt (25,390) (24,292)
Retirement of long-term debt - (535,792)
Payments on capital lease
obligations (9,069) (7,855)
Purchase of treasury stock (4,330) (4,918)
Proceeds from exercise of stock
options 6,108 59,077
----- ------
Net cash (used in) provided by
financing activities (33,001) 971,814
------- -------
INCREASE CASH AND CASH
EQUIVALENTS 425,020 1,146,751
CASH AND CASH EQUIVALENTS,
beginning of period 1,943,282 796,531
--------- -------
CASH AND CASH EQUIVALENTS, end of
period $2,368,302 $1,943,282
========== ==========
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 December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
(in thousands, except average number of customers and ARPU)
Calculation of
Average Revenue
Per User
(ARPU):
Service revenues $1,100,099 $1,133,645 $4,539,777 $4,428,208
Less: Pass
through charges (11,453) (19,264) (56,109) (81,060)
------- ------- ------- -------
Net service
revenues $1,088,646 $1,114,381 $4,483,668 $4,347,148
---------- ---------- ---------- ----------
Divided by:
Average number
of customers 8,880,803 9,160,172 9,195,522 8,929,898
--------- --------- --------- ---------
ARPU $40.86 $40.55 $40.63 $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 December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
(in thousands, except gross customer additions and CPGA)
Calculation of Cost Per
Gross Addition (CPGA):
Selling expenses $94,338 $82,933 $347,819 $342,019
Less: Equipment revenues (184,249) (104,519) (561,501) (419,174)
Add: Equipment revenue
not associated with new
customers 126,765 68,655 402,326 261,271
Add: Cost of equipment 437,098 344,326 1,439,824 1,439,595
Less: Equipment costs not
associated with new
customers (276,429) (188,514) (906,344) (704,257)
-------- -------- -------- --------
Gross addition expenses $197,523 $202,881 $722,124 $919,454
-------- -------- -------- --------
Divided by: Gross
customer additions 866,170 1,223,694 3,340,891 5,311,276
------- --------- --------- ---------
CPGA $228.04 $165.79 $216.15 $173.11
======= ======= ======= =======
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 December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
(in thousands, except average number of customers and CPU)
Calculation of Cost Per User
(CPU):
Cost of service $359,850 $384,356 $1,490,227 $1,473,836
Add: General and administrative
expense 94,954 74,240 348,970 301,940
Add: Net loss on equipment
transactions unrelated to
initial customer acquisition 149,664 119,859 504,018 442,986
Less: Stock-based compensation
expense included in cost of
service and general and
administrative expense (9,218) (9,649) (37,974) (41,791)
Less: Pass through charges (11,453) (19,264) (56,109) (81,060)
------- ------- ------- -------
Total costs used in the
calculation of CPU $583,797 $549,542 $2,249,132 $2,095,911
-------- -------- ---------- ----------
Divided by: Average number of
customers 8,880,803 9,160,172 9,195,522 8,929,898
--------- --------- --------- ---------
CPU $21.91 $20.00 $20.38 $19.56
====== ====== ====== ======
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 December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
(in thousands)
Calculation of Adjusted EBITDA:
Net income $31,666 $91,271 $394,172 $301,310
Adjustments:
Depreciation and amortization 172,166 136,306 641,425 538,835
Loss on disposal of assets 4,426 888 9,044 3,619
Stock-based compensation expense 9,218 9,649 37,974 41,791
Interest expense 69,270 68,021 275,494 261,073
Interest income (395) (471) (1,603) (2,028)
Other (income) expense, net (4,462) (164) (4,880) (699)
Gain on settlement - - (52,500) -
Loss on extinguishment of debt - - - 9,536
Provision for income taxes 25,437 56,458 213,286 178,346
------ ------ ------- -------
Adjusted EBITDA $307,326 $361,958 $1,512,412 $1,331,783
======== ======== ========== ==========
Three Months Ended December 31, Year Ended December 31,
------------------------------- -----------------------
2012 2011 2012 2011
---- ---- ---- ----
(in thousands)
Reconciliation of Net Cash
Provided by Operating
Activities to Adjusted
EBITDA:
Net cash provided by
operating activities $332,983 $308,149 $1,181,451 $1,061,808
Adjustments:
Interest expense 69,270 68,021 275,494 261,073
Non-cash interest expense (1,946) (454) (7,509) (6,595)
Interest income (395) (471) (1,603) (2,028)
Other (income) expense, net (4,462) (164) (4,880) (699)
Provision for uncollectible
accounts receivable (100) (137) (3,256) (518)
Deferred rent expense (3,044) (5,278) (16,476) (18,828)
Cost of abandoned cell
sites (974) (450) (2,331) (1,099)
Gain on maturity or sale of
investments 6,983 52 7,137 493
Accretion of asset
retirement obligations (1,726) (1,026) (6,626) (5,224)
Provision for income taxes 25,437 56,458 213,286 178,346
Deferred income taxes (25,566) (55,327) (216,808) (174,617)
Changes in working capital (89,134) (7,415) 94,533 39,671
------- ------ ------ ------
Adjusted EBITDA $307,326 $361,958 $1,512,412 $1,331,783
======== ======== ========== ==========
(Logo: http://photos.prnewswire.com/prnh/20121029/MM02011LOGO)
SOURCE MetroPCS Communications, Inc.