Metro PCS 2008 Annual Report Download - page 94

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85
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market risk is the potential loss arising from adverse changes in market prices and rates, including interest rates.
We do not routinely enter into derivatives or other financial instruments for trading, speculative or hedging
purposes, unless it is hedging interest rate risk exposure or is required by our senior secured credit facility. We do
not currently conduct business internationally, so we are generally not subject to foreign currency exchange rate
risk.
As of December 31, 2008, we had approximately $1.6 billion in outstanding indebtedness under our senior
secured credit facility that bears interest at floating rates based on the London Inter Bank Offered Rate, or LIBOR,
plus 2.25%. The interest rate on the outstanding debt under our senior secured credit facility as of December 31,
2008 was 6.443%. On November 21, 2006, to manage our interest rate risk exposure and fulfill a requirement of our
senior secured credit facility, we entered into a three-year interest rate protection agreement. This agreement covers
a notional amount of $1.0 billion and effectively converts this portion of our variable rate debt to fixed-rate debt at
an annual rate of 7.169%. The quarterly interest settlement periods began on February 1, 2007. The interest rate
swap agreement expires in 2010. On April 30, 2008, to manage our interest rate risk exposure, we entered into a
two-year interest rate protection agreement. The agreement was effective on June 30, 2008, covers a notional
amount of $500.0 million and effectively converts this portion of our variable rate debt to fixed rate debt at an
annual rate of 5.464%. The monthly interest settlement periods began on June 30, 2008. The interest rate protection
agreement expires on June 30, 2010. If market LIBOR rates increase 100 basis points over the rates in effect at
December 31, 2008, annual interest expense on the approximately $64.0 million in variable rate debt would increase
approximately $0.6 million.
Item 8. Financial Statements and Supplementary Data
The information required by this item is included in Part IV, Item 15(a)(1) and are presented beginning on Page
F-1.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be
disclosed in our Exchange Act reports is recorded, processed, summarized and reported as required by the SEC and
that such information is accumulated and communicated to management, including our CEO and CFO, as
appropriate, to allow for appropriate and timely decisions regarding required disclosure. Our management, with
participation by our CEO and CFO, has designed the Company’s disclosure controls and procedures to provide
reasonable assurance of achieving these desired objectives. As required by SEC Rule 13a-15(b), we conducted an
evaluation, with the participation of our CEO and CFO, of the effectiveness of the design and operation of our
disclosure controls and procedures as of December 31, 2008, the end of the period covered by this report. In
designing and evaluating the disclosure controls and procedures (as defined by SEC Rule 13a-15(e)), our
management recognizes that any controls and procedures, no matter how well designed and operated, can provide
only reasonable assurance of achieving the desired control objectives, and management is necessarily required to
apply judgment in evaluating the cost-benefit relationship of possible controls and objectives. Based upon that
evaluation, our CEO and CFO have concluded that our disclosure controls and procedures are effective as of
December 31, 2008.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial
reporting. Our internal controls over financial reporting are designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles in the United States.