Metro PCS 2008 Annual Report Download - page 133

MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2008, 2007 and 2006
F-31
2008 2007
Deferred tax assets:
Net operating loss carry forward...................................................................................................... $ 141,965 $ 70,888
Deferred revenue ............................................................................................................................. 15,917 12,384
Allowance for uncollectible accounts.............................................................................................. 1,645 1,223
Deferred rent.................................................................................................................................... 19,342 13,808
Deferred compensation .................................................................................................................... 28,609 14,841
Asset retirement obligation.............................................................................................................. 2,161 1,003
Credit carry forwards....................................................................................................................... 2,583 2,619
Other comprehensive loss................................................................................................................ 21,464 8,897
Transaction taxes ............................................................................................................................. 3,884 2,087
Unrealized loss on investments........................................................................................................ 47,657 35,717
Other................................................................................................................................................ 19,933 7,782
Gross deferred tax assets.................................................................................................................. 305,160 171,249
Valuation allowance ........................................................................................................................ (47,657) (35,717)
Total deferred tax assets, net............................................................................................................ 257,503 135,532
Deferred tax liabilities:
Depreciation..................................................................................................................................... (352,106) (240,564)
Deferred cost of handset sales.......................................................................................................... (19,349) (13,226)
FCC licenses.................................................................................................................................... (199,422) (136,832)
Partnership interest .......................................................................................................................... (70,284) (22,658)
Other................................................................................................................................................ (4,019) (7,460)
Deferred tax liabilities ..................................................................................................................... (645,180) (420,740)
Net deferred tax liability.................................................................................................................. $ (387,677) $ (285,208)
Deferred tax assets and liabilities at December 31, 2008 and 2007 are as follows (in thousands):
2008 2007
Current deferred tax asset .................................................................................................... $ 1,832 $ 4,920
Non-current deferred tax liability ........................................................................................ (389,509) (290,128)
Net deferred tax liability...................................................................................................... $ (387,677) $ (285,208)
At December 31, 2008 the Company has approximately $382.8 million and $163.1 million of financial reporting
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 $82.3 million and $58.3 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, 2008 the Company has approximately $1.2 million and $0.2 million of alternative minimum tax credit
carry forwards for federal and state income tax purposes, respectively. These alternative minimum tax credits carry
forward indefinitely.
Financial statement deferred tax assets must be reduced by a valuation allowance if, based on the weight of
available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized.
The Company believes that realization of the deferred tax assets is more likely than not based on the future reversal
of existing temporary differences which give rise to the deferred tax liabilities, with the exception of the deferred tax
asset related to the unrealized tax loss. During 2008 and 2007, an impairment of investments was recorded for
financial statement purposes resulting in an unrealized loss. Recognition of this unrealized loss for tax purposes
would result in a capital loss. The Company has not generated capital gains within the carry back period and does
not anticipate generating sufficient capital gains within the carry forward period to realize this deferred tax asset.
Therefore, the Company has recorded a valuation allowance of $47.7 million and $35.7 million as of December 31,
2008 and 2007, respectively.