Metro PCS 2008 Annual Report Download - page 127

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2008, 2007 and 2006
F-25
13. Series D Cumulative Convertible Redeemable Participating Preferred Stock:
In July 2000, MetroPCS, Inc. executed a Securities Purchase Agreement, which was subsequently amended (as
amended, the “SPA”). Under the SPA, MetroPCS, Inc. issued shares of Series D Preferred Stock. In July 2004, each
share of MetroPCS, Inc. Series D Preferred Stock was converted into a share of Series D Preferred Stock of
MetroPCS. Dividends accrued at an annual rate of 6% of the liquidation value of $100 per share on the Series D
Preferred Stock. Dividends of $6.5 million and $21.0 million were accrued for the years ended December 31, 2007,
and 2006, respectively, and were included in the Series D Preferred Stock balance.
Each share of Series D Preferred Stock was to automatically convert into common stock upon (i) completion of a
Qualified Public Offering (as defined in the SPA), (ii) MetroPCS’ common stock trading (or in the case of a merger
or consolidation of MetroPCS with another company, other than a sale or change of control of MetroPCS, the shares
received in such merger or consolidation having traded immediately prior to such merger and consolidation) on a
national securities exchange for a period of 30 consecutive trading days above a price that implies a market
valuation of the Series D Preferred Stock in excess of twice the initial purchase price of the Series D Preferred
Stock, or (iii) the date specified by the holders of two-thirds of the outstanding Series D Preferred Stock. The
Series D Preferred Stock and the accrued but unpaid dividends thereon were convertible into common stock at
$3.13 per share of common stock, which per share amount is subject to adjustment in accordance with the terms of
MetroPCS’ Second Amended and Restated Articles of Incorporation. On April 24, 2007, MetroPCS consummated
the Offering and all outstanding shares of Series D Preferred Stock, including accrued but unpaid dividends, were
converted into 144,857,320 shares of common stock.
14. Series E Cumulative Convertible Redeemable Participating Preferred Stock:
MetroPCS entered into a stock purchase agreement, dated as of August 30, 2005, under which MetroPCS issued
500,000 shares of Series E Preferred Stock for $50.0 million in cash. Total proceeds to MetroPCS were
$46.7 million, net of transaction costs of approximately $3.3 million. The Series E Preferred Stock and the Series D
Preferred Stock ranked equally with respect to dividends, conversion rights and liquidation preferences. Dividends
on the Series E Preferred Stock accrued at an annual rate of 6% of the liquidation value of $100 per share. Dividends
of $0.9 million and $3.0 million were accrued for the years ended December 31, 2007 and 2006, respectively, and
were included in the Series E Preferred Stock balance.
Each share of Series E Preferred Stock was to be converted into common stock of MetroPCS upon (i) the
completion of a Qualifying Public Offering, (as defined in the Second Amended and Restated Stockholders
Agreement), (ii) the common stock trading (or, in the case of a merger or consolidation of MetroPCS with another
company, other than as a sale or change of control of MetroPCS, the shares received in such merger or consolidation
having traded immediately prior to such merger or consolidation) on a national securities exchange for a period of
30 consecutive trading days above a price implying a market valuation of the Series D Preferred Stock over twice
the Series D Preferred Stock initial purchase price, or (iii) the date specified by the holders of two-thirds of the
Series E Preferred Stock. The Series E Preferred Stock was convertible into common stock at $9.00 per share, which
per share amount was subject to adjustment in accordance with the terms of the Second Amended and Restated
Articles of Incorporation of MetroPCS. On April 24, 2007, MetroPCS consummated the Offering and all
outstanding shares of Series E Preferred Stock, including accrued but unpaid dividends, were converted into
6,105,324 shares of common stock.
15. Capitalization:
Common Stock Issued to Directors
Non-employee members of MetroPCS’ Board of Directors receive compensation for serving on the Board of
Directors, as provided in MetroPCS’ Non-Employee Director Remuneration Plan (the “Remuneration Plan”). In
2008, the Compensation Committee of the Board of Directors amended and restated the Remuneration Plan (the
“2008 Remuneration Plan”) to be more competitive with the market and to be more reflective of the Company’s
status as a public company. The Remuneration Plan provided, among other things, that each non-employee
director’s annual retainer and meeting fees be paid, at the election of each non-employee director, in cash, common