Metro PCS 2010 Annual Report Download - page 124

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MetroPCS Communications, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
December 31, 2010, 2009 and 2008
F-18
On July 16, 2010, Wireless entered into an Amendment and Restatement and Resignation and Appointment
Agreement (the “Amendment”) which amends and restates the Senior Secured Credit Facility. The Amendment
amends the Senior Secured Credit Facility to, among other things, extend the maturity of $1.0 billion of existing
term loans under the Senior Secured Credit Facility to November 2016, increase the interest rate to LIBOR plus
3.50% on the extended portion only and reduce the revolving credit facility from $100.0 million to $67.5 million.
The remaining term loans under the Senior Secured Credit Facility will mature in 2013 and the interest rate on the
remainder continues to be LIBOR plus 2.25%. This modification did not result in a loss on extinguishment of debt.
The facilities under the Senior Secured Credit Facility are guaranteed by MetroPCS, MetroPCS, Inc. and each of
Wireless’ direct and indirect present and future wholly-owned domestic subsidiaries. The Senior Secured Credit
Facility contains customary events of default, including cross-defaults. The obligations are also secured by the
capital stock of Wireless as well as substantially all of Wireless’ present and future assets and the capital stock and
substantially all of the assets of each of its direct and indirect present and future wholly-owned subsidiaries (except
as prohibited by law and certain permitted exceptions).
Under the Senior Secured Credit Facility, Wireless is subject to certain limitations, including limitations on its
ability to incur additional debt, make certain restricted payments, sell assets, make certain investments or
acquisitions, grant liens and pay dividends. Wireless is also subject to certain financial covenants, including
maintaining a maximum senior secured consolidated leverage ratio and, under certain circumstances, maximum
consolidated leverage and minimum fixed charge coverage ratios.
The interest rate on the outstanding debt under the Senior Secured Credit Facility is variable. The rate as of
December 31, 2010 was 4.597%, which includes the impact of our interest rate protection agreements (See Note 5).
During the year ended December 31, 2010, the Company received $10.0 million in cash upon the cancellation of
letters of credit that were previously held to collateralize the Royal Street put liability after the Company acquired
the remaining 15% membership interest in Royal Street. During the year ended December 31, 2009, the Company
replaced $14.5 million of previously existing letters of credit drawn under the Senior Secured Credit Facility with
letters of credit that were cash collateralized. The cash collateral is reported in restricted cash and investments in the
accompanying consolidated balance sheets.
Capital Lease Obligations
The Company has entered into various non-cancelable capital lease agreements, with varying expiration terms
through 2025. Assets and future obligations related to capital leases are included in the accompanying consolidated
balance sheets in property and equipment and long-term debt, respectively. Depreciation of assets held under capital
leases is included in depreciation and amortization expense. As of December 31, 2010, the Company had
approximately $254.3 million of capital lease obligations, with $6.0 million and $248.3 million recorded in current
maturities of long-term debt and long-term debt, respectively (See Note 11).
9. Fair Value Measurements:
The Company follows the provisions of ASC 820 (Topic 820, “Fair Value Measurements and Disclosures”).
ASC 820 establishes a three-tiered fair value hierarchy that prioritizes inputs to valuation techniques used in fair
value calculations. The three levels of inputs are defined as follows:
x Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that the
Company has the ability to access.
x Level 2 - Quoted prices for similar assets or liabilities in active markets; quoted prices for identical or
similar assets or liabilities in inactive markets; or valuations based on models where the significant
inputs are observable (e.g., interest rates, yield curves, prepayment speeds, default rates, loss severities,
etc.) or can be corroborated by observable market data.