Metro PCS 2007 Annual Report Download - page 132

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2007, 2006 and 2005
F-33
A reconciliation of income taxes computed at the United States federal statutory income tax rate (35%) to the
provision for income taxes reflected in the consolidated statements of income and comprehensive income for the
years ended December 31, 2007, 2006 and 2005 is as follows (in thousands):
2007 2006 2005
U.S. federal income tax provision at statutory rate...................................... $ 78,225 $ 31,683 $ 114,136
Increase (decrease) in income taxes resulting from:
State income taxes, net of federal income tax impact.................................. 6,423 2,386 10,865
Change in valuation allowance.................................................................... 35,717 (194) 52
Provision for tax uncertainties..................................................................... 1,976 2,557 2,274
Permanent items .......................................................................................... 371 218 98
Other............................................................................................................ 386 67 —
Provision for income taxes .......................................................................... $ 123,098 $ 36,717 $ 127,425
Deferred taxes are provided for those items reported in different periods for income tax and financial reporting
purposes. The Company’ s net deferred tax liability consisted of the following deferred tax assets and liabilities (in
thousands):
2007 2006
Deferred tax assets:
Net operating loss carry forward...................................................................................................... $ 70,888 $ 83,787
Deferred revenue ............................................................................................................................. 12,384 9,407
Allowance for uncollectible accounts.............................................................................................. 1,223 1,214
Deferred rent.................................................................................................................................... 13,808 8,311
Deferred compensation .................................................................................................................... 14,841 5,636
Asset retirement obligation.............................................................................................................. 1,003 592
Partnership interest .......................................................................................................................... — 7,130
Credit carry forwards....................................................................................................................... 2,619 666
Other comprehensive income .......................................................................................................... 8,897 —
Transaction taxes ............................................................................................................................. 2,087 —
Unrealized loss on investments........................................................................................................ 35,717 —
Other................................................................................................................................................ 7,782 2,015
Gross deferred tax assets.................................................................................................................. 171,249 118,758
Valuation allowance ........................................................................................................................ (35,717) —
Total deferred tax assets, net............................................................................................................ 135,532 118,758
Deferred tax liabilities:
Depreciation..................................................................................................................................... (240,564) (188,484)
Deferred cost of handset sales.......................................................................................................... (13,226) (10,251)
FCC licenses.................................................................................................................................... (136,832) (93,269)
Partnership interest .......................................................................................................................... (22,658) —
Other comprehensive income .......................................................................................................... — (949)
Other................................................................................................................................................ (7,460) (2,187)
Deferred tax liabilities ..................................................................................................................... (420,740) (295,140)
Net deferred tax liability .................................................................................................................. $ (285,208) $ (176,382)
Deferred tax assets and liabilities at December 31, 2007 and 2006 are as follows (in thousands):
2007 2006
Current deferred tax asset.................................................................................................... $ 4,920 $ 815
Non-current deferred tax liability ........................................................................................ (290,128) (177,197)
Net deferred tax liability...................................................................................................... $ (285,208) $ (176,382)
At December 31, 2007 the Company has approximately $235.7 million and $156.7 million of net operating
loss carry forwards for federal and state income tax purposes, respectively. The Company’ s net operating loss carry
forwards for federal and state tax purposes were approximately $50.4 million and $28.4 million, respectively,
greater than its net operating loss carry forwards for financial reporting purposes due to the Company’ s inability to
realize excess tax benefits under SFAS 123(R) until such benefits reduce income taxes payable. The federal net
operating loss will begin to expire in 2023. The state net operating losses will begin to expire in 2013. At December
31, 2007 the Company has approximately $1.0 million and $0.1 million of alternative minimum tax credit carry