Metro PCS 2007 Annual Report Download - page 137

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2007, 2006 and 2005
F-38
Year Ended December 31, 2005
Core
Markets
Expansion
Markets Other
Total
Service revenues ........................................................................... $ 868,681 $ 3,419 $ — $ 872,100
Equipment revenues...................................................................... 163,738 2,590 — 166,328
Total revenues............................................................................... 1,032,419 6,009 — 1,038,428
Cost of service .............................................................................. 271,437 11,775 — 283,212
Cost of equipment......................................................................... 293,702 7,169 — 300,871
Selling, general and administrative expenses(2) ........................... 153,321 9,155 — 162,476
Adjusted EBITDA (deficit)(3)...................................................... 316,555 (22,090) —
Depreciation and amortization...................................................... 84,436 2,030 1,429 87,895
Stock-based compensation expense.............................................. 2,596 — — 2,596
Income (loss) from operations ...................................................... 219,777 (24,370) 226,770 422,177
Interest expense ............................................................................ — — 58,033 58,033
Accretion of put option in majority-owned subsidiary.................. — — 252 252
Interest and other income.............................................................. — — (8,658) (8,658)
Loss on extinguishment of debt .................................................... — — 46,448 46,448
Income (loss) before provision for income taxes.......................... 219,777 (24,370) 130,695 326,102
Capital expenditures ..................................................................... 171,783 90,871 3,845 266,499
Total assets ................................................................................... 701,675 378,671 1,078,635 2,158,981
__________
(1) Cost of service for the years ended December 31, 2007 and 2006 includes $1.8 million and $1.3 million, respectively, of stock-based
compensation expense disclosed separately.
(2) Selling, general and administrative expenses include stock-based compensation expense disclosed separately. For the years ended
December 31, 2007, 2006 and 2005, selling, general and administrative expenses include $26.2 million, $13.2 million and $2.6 million,
respectively, of stock-based compensation expense.
(3) Adjusted EBITDA (deficit) is presented in accordance with SFAS No. 131 as it is the primary financial measure utilized by management
to facilitate evaluation of each segments’ ability to meet future debt service, capital expenditures and working capital requirements and to
fund future growth.
(4) Total assets as of December 31, 2006 include the Auction 66 AWS licenses that the Company was granted on November 29, 2006 for a
total aggregate purchase price of approximately $1.4 billion. These AWS licenses are presented in the “Other” column as the Company
had not allocated the Auction 66 licenses to its reportable segments as of December 31, 2006. As of December 31, 2007, the Auction 66
AWS licenses are included in Expansion Markets total assets.
The following table reconciles segment Adjusted EBITDA (Deficit) for the years ended December 31, 2007,
2006 and 2005 to consolidated income before provision for income taxes:
2007 2006 2005
Segment Adjusted EBITDA (Deficit):
Core Markets Adjusted EBITDA................................................................................. $ 654,112 $ 492,773 $ 316,555
Expansion Markets Adjusted EBITDA (Deficit) ......................................................... 12,883 (97,214) (22,090)
Total............................................................................................................................ 666,995 395,559 294,465
Depreciation and amortization..................................................................................... (178,202) (135,028) (87,895)
(Loss) gain on disposal of assets.................................................................................. (655) (8,806) 218,203
Non-cash compensation expense ................................................................................. (28,024) (14,472) (2,596)
Interest expense ........................................................................................................... (201,746) (115,985) (58,033)
Accretion of put option in majority-owned subsidiary................................................. (1,003) (770) (252)
Interest and other income............................................................................................. 63,936 21,543 8,658
Impairment loss on investment securities .................................................................... (97,800) — —
Loss on extinguishment of debt ................................................................................... — (51,518) (46,448)
Consolidated income before provision for income taxes......................................... $ 223,501 $ 90,523 $ 326,102
19. Guarantor Subsidiaries:
In connection with Wireless’ sale of the 91/4% Senior Notes and the entry into the Senior Secured Credit Facility,
MetroPCS and all of MetroPCS’ subsidiaries, other than Wireless and Royal Street (the “guarantor subsidiaries”),
provided guarantees on the 91/4% Senior Notes and Senior Secured Credit Facility. These guarantees are full and
unconditional as well as joint and several. Certain provisions of the Senior Secured Credit Facility and the indenture
relating to the 9¼% Senior Notes restrict the ability of Wireless to loan funds to MetroPCS. However, Wireless is
allowed to make certain permitted payments to MetroPCS under the terms of the Senior Secured Credit Facility and