Metro PCS 2007 Annual Report Download - page 46

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The investment of our substantial cash balances are subject to risks which may cause losses.
We can and have historically invested our substantial cash balances in, among other things, securities issued and
fully guaranteed by the United States or any state, highly rated commercial paper and auction rate securities, money
market funds meeting certain criteria, and demand deposits. These investments are subject to credit, liquidity,
market and interest rate risk. For example, we have made investments of $133.9 million in certain auction rate
securities, which had AAA credit ratings at the time of purchase, some of which are secured by collateralized debt
obligations with a portion of the underlying collateral being mortgage securities or related to mortgage securities.
Three auction rate securities held by us have been placed on credit watch. As a result of the lack of liquidity in the
global credit and capital markets, these auction rate securities failed to attract a buyer at scheduled auctions. As a
result, these auction rate securities are illiquid and we have recognized a loss of approximately $97.8 million on
these investments for the year ended December 31, 2007 and we may recognize additional losses in the future if
uncertainties in these markets continue, these markets deteriorate further, or the Company experiences any ratings
downgrades on investments in its portfolio (including the auction rate securities). Such risks, including the continued
failure of future auctions for the auction rate securities, may result in a loss of liquidity, substantial impairment to
our investments, realization of substantial future losses, or a complete loss of the investment in the long-term which
may have a material adverse effect on our business, results of operations, liquidity and financial condition.
Our success depends on our ability to attract and retain qualified management and other personnel, and the
loss of one or more members of our management, including our chief executive officer, could have a negative
impact on our business.
Our business is managed by a small number of key executive officers, including our chief executive officer,
Roger Linquist. The loss of one or more of these persons could disrupt our ability to react quickly to business
developments and changes in market conditions, which could harm our financial results. To provide adequate timing
for succession planning, we have begun a search for a new chief executive officer. None of our managing key
executives has an employment contract, so any such executive officers may leave at any time subject to forfeiture of
any unpaid performance awards and any unvested options. We believe that our future success will also depend in
large part on our continued ability to attract and retain highly qualified executive, technical and management
personnel. We believe competition for highly qualified management, technical and sales personnel is intense, and
there can be no assurance that we will retain our key management, technical and sales employees or that we will be
successful in attracting, assimilating or retaining other highly qualified management, technical and sales personnel
in the future sufficient to support our continued growth. We have occasionally experienced difficulty in recruiting
qualified personnel and there can be no assurance that we will not experience such difficulties in the future. The
departure or retirement of, or our inability to attract or retain, highly qualified executive, technical and management
personnel, including the chief executive officer, could materially and adversely affect our business operations,
financial performance, and stock price.
The Department of Justice has informally stated that it would carefully scrutinize any statement by us in
support of any future efforts by us to acquire divestiture assets and as a result we may have difficulty acquiring
spectrum in this manner in the future.
We acquired the PCS spectrum for the Dallas/Ft. Worth and Detroit Expansion Markets from Cingular Wireless
as a result of a consent decree entered into between Cingular Wireless, AT&T Wireless and the United States
Department of Justice, or the DOJ. When we acquired the spectrum, we communicated certain expectations for our
use of the spectrum to the DOJ, including expectations regarding constructing a combined 1xRTT/EV-DO network
on the spectrum capable of supporting data services. Although we constructed a combined 1xRTT/EV-DO network
in those markets, we expected to be able to support our services as demand increased by upgrading the networks to
an EV-DO Revision A with VoIP when available. As a result of a delay in the availability of EV-DO Revision A
with VoIP, we contacted the DOJ to inform them that we had determined that it was necessary for us to redeploy the
EV-DO network assets at certain cell sites in those markets to 1xRTT CDMA in order to serve our existing
customers. The DOJ requested certain information regarding our construction of our network facilities in these
markets, our use of EV-DO, and the services we are providing in the Dallas/Ft. Worth and Detroit Expansion
Markets. We responded to the initial DOJ request and subsequent follow-up requests. On March 23, 2007, the DOJ
sent us a letter in which they stated that the DOJ would carefully scrutinize any statement by us in support of any
future efforts by us to acquire divestiture assets. This may make it more difficult for us to acquire any spectrum in
the future which may be available as a result of a divestiture required by the DOJ. This also does not preclude the
DOJ from taking any further action against us with respect to this matter. We cannot predict at this time whether the
DOJ will pursue this matter any further and, if they do, what actions they may take or what the outcome may be.