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Document and Entity Information
6 Months Ended
Jun. 30, 2011
Jul. 29, 2011
Document Information [Line Items]
Document Type 10-Q
Amendment Flag false
Document Period End Date Jun 30, 2011
Document Fiscal Year Focus 2011
Document Fiscal Period Focus Q2
Entity Registrant Name METROPCS COMMUNICATIONS INC
Entity Central Index Key 0001283699
Current Fiscal Year End Date --12-31
Entity Filer Category Large Accelerated Filer
Entity Common Stock, Shares Outstanding 361,965,610
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Condensed Consolidated Balance Sheets (USD  $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
CURRENT ASSETS:
Cash and cash equivalents  $ 1,855,994  $ 796,531
Short-term investments 299,954 374,862
Inventories 140,048 161,049
Accounts receivable (net of allowance for uncollectible accounts of  $494 and  $2,494 at June 30, 2011 and December 31, 2010, respectively) 62,506 58,056
Prepaid expenses 64,982 50,477
Deferred charges 88,641 83,485
Deferred tax assets 6,290 6,290
Other current assets 49,887 63,135
Total current assets 2,568,302 1,593,885
Property and equipment, net 3,856,869 3,659,445
Restricted cash and investments 2,876 2,876
Long-term investments 8,035 16,700
FCC licenses 2,538,360 2,522,241
Other assets 126,585 123,433
Total assets 9,101,027 7,918,580
CURRENT LIABILITIES:
Accounts payable and accrued expenses 427,922 521,788
Current maturities of long-term debt 32,416 21,996
Deferred revenue 235,461 224,471
Other current liabilities 29,874 34,165
Total current liabilities 725,673 802,420
Long-term debt, net 4,714,512 3,757,287
Deferred tax liabilities 721,143 643,058
Deferred rents 109,237 101,411
Other long-term liabilities 80,744 72,828
Total liabilities 6,351,309 5,377,004
COMMITMENTS AND CONTINGENCIES (See Note 9)    
STOCKHOLDERS' EQUITY:
Preferred stock, par value  $0.0001 per share, 100,000,000 shares authorized; no shares of preferred stock issued and outstanding at June 30, 2011 and December 31, 2010 0 0
Common stock, par value  $0.0001 per share, 1,000,000,000 shares authorized, 361,574,806 and 355,318,666 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively 36 36
Additional paid-in capital 1,763,946 1,686,761
Retained earnings 998,822 858,108
Accumulated other comprehensive loss (7,582) (1,415)
Less treasury stock, at cost, 469,152 and 237,818 treasury shares at June 30, 2011 and December 31, 2010, respectively (5,504) (1,914)
Total stockholders' equity 2,749,718 2,541,576
Total liabilities and stockholders' equity 9,101,027 7,918,580
Issuer Company [Member]
CURRENT ASSETS:
Cash and cash equivalents 252,200 287,942
Short-term investments 0 0
Inventories 124,947 145,260
Prepaid expenses 487 249
Total current assets 2,009,214 1,067,052
Property and equipment, net 31,234 246,249
Long-term investments 1,716 10,381
FCC licenses 3,800 3,800
Total assets 6,486,537 5,397,120
CURRENT LIABILITIES:
Accounts payable and accrued expenses 78,511 150,994
Total current liabilities 168,634 233,678
Long-term debt, net 4,450,097 3,508,948
Other long-term liabilities 8,907 8,433
Total liabilities 5,346,649 4,390,825
STOCKHOLDERS' EQUITY:
Common stock, par value  $0.0001 per share, 1,000,000,000 shares authorized, 361,574,806 and 355,318,666 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively 0 0
Total stockholders' equity 1,139,888 1,006,295
Total liabilities and stockholders' equity 6,486,537 5,397,120
Guarantor Subsidiaries [Member]
CURRENT ASSETS:
Cash and cash equivalents 622 740
Short-term investments 0 0
Inventories 15,101 15,789
Prepaid expenses 64,324 50,228
Total current assets 120,534 106,546
Property and equipment, net 3,825,635 3,413,196
Long-term investments 0 0
FCC licenses 2,534,560 2,518,441
Total assets 6,514,039 6,089,407
CURRENT LIABILITIES:
Accounts payable and accrued expenses 349,411 370,794
Total current liabilities 1,723,935 1,678,961
Long-term debt, net 264,415 248,339
Other long-term liabilities 71,837 64,395
Total liabilities 2,169,617 2,094,854
STOCKHOLDERS' EQUITY:
Common stock, par value  $0.0001 per share, 1,000,000,000 shares authorized, 361,574,806 and 355,318,666 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively 0 0
Total stockholders' equity 4,344,422 3,994,553
Total liabilities and stockholders' equity 6,514,039 6,089,407
Consolidation, Eliminations [Member]
CURRENT ASSETS:
Cash and cash equivalents 0 0
Short-term investments 0 0
Inventories 0 0
Prepaid expenses 0  
Total current assets (1,464,837) (1,110,219)
Property and equipment, net 0 0
Long-term investments 0 0
FCC licenses 0 0
Total assets (6,949,147) (6,111,067)
CURRENT LIABILITIES:
Accounts payable and accrued expenses 0 0
Total current liabilities (1,464,837) (1,110,219)
Long-term debt, net 0 0
Other long-term liabilities 0 0
Total liabilities (1,464,837) (1,110,219)
STOCKHOLDERS' EQUITY:
Common stock, par value  $0.0001 per share, 1,000,000,000 shares authorized, 361,574,806 and 355,318,666 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively 0 0
Total stockholders' equity (5,484,310) (5,000,848)
Total liabilities and stockholders' equity (6,949,147) (6,111,067)
Parent Company [Member]
CURRENT ASSETS:
Cash and cash equivalents 1,603,172 507,849
Short-term investments 299,954 374,862
Inventories 0 0
Prepaid expenses 171 0
Total current assets 1,903,391 1,530,506
Property and equipment, net 0 0
Long-term investments 6,319 6,319
FCC licenses 0 0
Total assets 3,049,598 2,543,120
CURRENT LIABILITIES:
Accounts payable and accrued expenses 0 0
Total current liabilities 297,941 0
Long-term debt, net 0 0
Other long-term liabilities 0 0
Total liabilities 299,880 1,544
STOCKHOLDERS' EQUITY:
Common stock, par value  $0.0001 per share, 1,000,000,000 shares authorized, 361,574,806 and 355,318,666 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively 36 36
Total stockholders' equity 2,749,718 2,541,576
Total liabilities and stockholders' equity  $ 3,049,598  $ 2,543,120
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Condensed Consolidated Balance Sheets Parentheticals (USD  $)
In Thousands, except Share data
Jun. 30, 2011
Dec. 31, 2010
Allowance for uncollectible accounts  $ 494  $ 2,494
Preferred stock, par value  $ 0.0001  $ 0.0001
Preferred stock, shares authorized 100,000,000 100,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value  $ 0.0001  $ 0.0001
Common stock, shares authorized 1,000,000,000 1,000,000,000
Common stock, shares issued 361,574,806 355,318,666
Common stock, shares outstanding 361,574,806 355,318,666
Treasury stock, shares 469,152 237,818
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Condensed Consolidated Statements of Income and Comprehensive Income (USD  $)
In Thousands, except Share data
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
REVENUES:
Service revenues  $ 1,113,292  $ 922,137  $ 2,163,509  $ 1,775,420
Equipment revenues 96,161 90,399 240,320 207,619
Total revenues 1,209,453 1,012,536 2,403,829 1,983,039
OPERATING EXPENSES:
Cost of service (excluding depreciation and amortization expense of  $115,455,  $95,883,  $227,282, and  $190,826 shown separately below) 366,030 308,168 707,447 592,820
Cost of equipment 342,534 235,354 751,796 549,092
Selling, general and administrative expenses (excluding depreciation and amortization expense of  $19,070,  $13,419,  $35,937, and  $26,276 shown separately below) 154,556 158,600 324,327 318,510
Depreciation and amortization 134,525 109,302 263,219 217,102
Loss on disposal of assets 1,553 2,700 1,448 1,872
Total operating expenses 999,198 814,124 2,048,237 1,679,396
Income from operations 210,255 198,412 355,592 303,643
OTHER EXPENSE (INCOME):
Interest expense 66,980 65,503 123,541 132,985
Interest income (511) (392) (1,026) (856)
Other (income) expense, net (186) 479 (442) 934
Loss on extinguishment of debt 9,536 0 9,536 0
Total other expense (75,819) (65,590) (131,609) (133,063)
Income before provision for income taxes 134,436 132,822 223,983 170,580
Provision for income taxes (50,101) (52,907) (83,269) (68,004)
Net income 84,335 79,915 140,714 102,576
Other comprehensive income (loss):
Unrealized gains on available-for-sale securities, net of tax of  $40,  $58,  $102 and  $78, respectively 66 91 165 124
Unrealized losses on cash flow hedging derivatives, net of tax benefit of  $8,299,  $2,658,  $7,923, and  $6,437, respectively (13,374) (4,191) (12,774) (10,218)
Reclassification adjustment for gains on available-for-sale securities included in net income, net of tax of  $57,  $34,  $122, and  $83, respectively (93) (53) (197) (133)
Reclassification adjustment for losses on cash flow hedging derivatives included in net income, net of tax benefit of  $2,319,  $3,214,  $4,118, and  $7,436, respectively 3,762 5,071 6,639 11,805
Total other comprehensive (loss) income (9,639) 918 (6,167) 1,578
Comprehensive income  $ 74,696  $ 80,833  $ 134,547  $ 104,154
Net income per common share
Basic  $ 0.23  $ 0.22  $ 0.39  $ 0.29
Diluted  $ 0.23  $ 0.22  $ 0.38  $ 0.29
Weighted average shares:
Basic 360,226,487 353,278,423 358,616,324 353,032,030
Diluted 365,390,280 355,685,446 363,153,234 355,151,112
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Condensed Consolidated Statements of Income and Comprehensive Income Parentheticals (USD  $)
In Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Depreciation and amortization  $ 134,525  $ 109,302  $ 263,219  $ 217,102
Unrealized gain (loss) on available-for-sale securities, taxes 40 58 102 78
Unrealized gain (loss) on cash flow hedging derivatives, taxes (8,299) (2,658) (7,923) (6,437)
Reclassification adjustment for sale of available-for-sale securities included in net income, taxes (57) (34) (122) (83)
Reclassification adjustment on cash flow hedging derivatives included in net income, taxes 2,319 3,214 4,118 7,436
Cost of Service [Member]
Depreciation and amortization 115,455 95,883 227,282 190,826
Selling, General and Administrative Expense [Member]
Depreciation and amortization  $ 19,070  $ 13,419  $ 35,937  $ 26,276
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Condensed Consolidated Statements of Cash Flows (USD  $)
In Thousands
6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income  $ 140,714  $ 102,576
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 263,219 217,102
Provision for uncollectible accounts receivable 261 58
Deferred rent expense 7,832 10,915
Cost of abandoned cell sites 380 903
Stock-based compensation expense 22,244 23,333
Non-cash interest expense 4,015 6,412
Loss on disposal of assets 1,448 1,872
Loss on extinguishment of debt 9,536 0
Gain on sale of investments (319) (217)
Accretion of asset retirement obligations 2,762 1,285
Other non-cash expense 0 963
Deferred income taxes 81,395 65,700
Changes in assets and liabilities:
Inventories 21,001 (47,962)
Accounts receivable, net (4,710) 3,692
Prepaid expenses (14,512) (17,243)
Deferred charges (5,157) (5,374)
Other assets 20,081 11,082
Accounts payable and accrued expenses (85,346) (51,936)
Deferred revenue 10,990 9,211
Other liabilities 6,266 5,079
Net cash provided by operating activities 482,100 337,451
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (451,573) (315,337)
Change in prepaid purchases of property and equipment (17,691) (18,551)
Proceeds from sale of property and equipment 603 6,356
Purchase of investments (299,826) (312,225)
Proceeds from maturity of investments 375,000 237,500
Change in restricted cash and investments 0 1,762
Acquisitions of FCC licenses and microwave clearing costs (3,283) (1,976)
Cash used in asset acquisitions (7,495) 0
Net cash used in investing activities (404,265) (402,471)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in book overdraft 1,263 (80,337)
Proceeds from debt issuance, net of discount 1,497,500 0
Debt issuance costs (15,351) 0
Repayment of debt (11,598) (8,000)
Retirement of senior secured credit facility debt (535,792) 0
Payments on capital lease obligations (4,474) (1,224)
Purchase of treasury stock (3,591) (852)
Proceeds from exercise of stock options 53,671 2,592
Net cash provided by (used in) financing activities 981,628 (87,821)
INCREASE (DECREASE) CASH AND CASH EQUIVALENTS 1,059,463 (152,841)
CASH AND CASH EQUIVALENTS, beginning of period 796,531 929,381
CASH AND CASH EQUIVALENTS, end of period  $ 1,855,994  $ 776,540
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Basis of Presentation
6 Months Ended
Jun. 30, 2011
Basis of Presentation and Significant Accounting Policies [Abstract]
Basis of Presentation
Basis of Presentation:
The accompanying unaudited condensed consolidated interim financial statements include the balances and results of operations of MetroPCS Communications, Inc. (“MetroPCS”) and its consolidated subsidiaries (collectively, the “Company”).
The condensed consolidated balance sheets as of June 30, 2011 and December 31, 2010, the condensed consolidated statements of income and comprehensive income and cash flows for the periods ended June 30, 2011 and 2010, and the related footnotes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting of normal, recurring adjustments) which are, in the opinion of management, necessary to state fairly the results for the interim periods presented. Certain amounts reported in previous periods have been reclassified to conform to the current period presentation. The results of operations for the interim periods presented are not necessarily indicative of the operating results to be expected for any subsequent interim period or for the fiscal year.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The Company has thirteen operating segments based on geographic region within the United States: Atlanta, Boston, Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco and Tampa/Sarasota. In accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280 (Topic 280, “Segment Reporting”), the Company aggregates its thirteen operating segments into one reportable segment.
Federal Universal Service Fund (“FUSF”), E-911 and various other fees are assessed by various governmental authorities in connection with the services that the Company provides to its customers. The Company offers a family of service plans, which include all applicable taxes and regulatory fees (“tax inclusive plans”). The Company reports regulatory fees for the tax inclusive plans in cost of service on the accompanying condensed consolidated statements of income and comprehensive income. When the Company separately assesses these regulatory fees on its customers, the Company reports these regulatory fees on a gross basis in service revenues and cost of service on the accompanying condensed consolidated statements of income and comprehensive income. For the three months ended June 30, 2011 and 2010, the Company recorded  $17.4 million and  $21.5 million, respectively, of FUSF, E-911 and other fees on a gross basis. For the six months ended June 30, 2011 and 2010, the Company recorded  $35.5 million and  $44.6 million, respectively, of FUSF, E-911 and other fees on a gross basis. Sales, use and excise taxes for all service plans are reported on a net basis in selling, general and administrative expenses on the accompanying condensed consolidated statements of income and comprehensive income.
Recent Accounting Pronouncements
In May 2011, the FASB issued Accounting Standards Update ("ASU") 2011-04, "Fair Value Measurement - Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs," addressing how to measure fair value and what disclosures to provide about fair value measurements. This amendment is largely consistent with the existing GAAP guidance, but aligned the international guidance and eliminated unnecessary wording differences between GAAP and International Financial Reporting Standards ("IFRS"). The amendment is effective for interim and annual periods beginning after December 15, 2011, and should be applied prospectively. The implementation of this standard will not affect the Company's financial condition, results of operations, or cash flows.
In June 2011, the FASB issued ASU 2011-05 "Statement of Comprehensive Income," which revises the manner in which entities present comprehensive income in their financial statements, requiring entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2011 and should be applied retrospectively. The implementation of this standard will not affect the Company's financial condition, results of operations, or cash flows.
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Asset Acquisition
6 Months Ended
Jun. 30, 2011
Significant Asset Acquisition [Abstract]
Asset Acquisition
Asset Acquisition:
In October 2010, the Company entered into an asset purchase agreement to acquire 10 MHz of AWS spectrum and certain related network assets adjacent to the Northeast metropolitan areas for a total purchase price of  $49.2 million. In November 2010, the Company closed on the acquisition of the network assets and paid a total of  $41.1 million in cash. In February 2011, the Company closed on the acquisition of the 10 MHz of AWS spectrum and paid  $8.0 million in cash. In June 2011, the Company completed its final settlement of costs and received  $0.5 million in cash as reimbursement for pre-acquisition payments made on behalf of the seller. The Company used the relative fair values of the assets acquired to allocate the purchase price, of which  $35.6 million was allocated to property and equipment and  $13.6 million was allocated to Federal Communications Commission (“FCC”) licenses.
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Short-term Investments
6 Months Ended
Jun. 30, 2011
Investments, Debt and Equity Securities [Abstract]
Short-term Investments
Short-term Investments:
The Company’s short-term investments consist of securities classified as available-for-sale, which are stated at fair value. The securities include U.S. Treasury securities with an original maturity of over 90 days. Unrealized gains, net of related income taxes, for available-for-sale securities are reported in accumulated other comprehensive income (loss), a component of stockholders’ equity, until realized. The estimated fair values of investments are based on quoted market prices as of the end of the reporting period. The U.S. Treasury securities reported as of June 30, 2011 have contractual maturities of less than one year.
Short-term investments, with an original maturity of over 90 days, consisted of the following (in thousands):
 
 
As of June 30, 2011
 
 
Amortized
Cost
 
Unrealized
Gain in
Accumulated
OCI
 
Unrealized
Loss in
Accumulated
OCI
 
Aggregate
Fair
Value
Equity securities
 
 $
7


 
 $


 
 $
(5
)
 
 $
2


U.S. Treasury securities
 
299,826


 
126


 


 
299,952


Total short-term investments
 
 $
299,833


 
 $
126


 
 $
(5
)
 
 $
299,954


 
 
 
As of December 31, 2010
 
 
Amortized
Cost
 
Unrealized
Gain in
Accumulated
OCI
 
Unrealized
Loss in
Accumulated
OCI
 
Aggregate
Fair
Value
Equity securities
 
 $
7


 
 $


 
 $
(6
)
 
 $
1


U.S. Treasury securities
 
374,681


 
180


 


 
374,861


Total short-term investments
 
 $
374,688


 
 $
180


 
 $
(6
)
 
 $
374,862


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Derivative Instruments and Hedging Activities
6 Months Ended
Jun. 30, 2011
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Instruments and Hedging Activities
Derivative Instruments and Hedging Activities:
In March 2009, MetroPCS Wireless, Inc. (“Wireless”) entered into three separate two-year interest rate protection agreements to manage the Company’s interest rate risk exposure under Wireless’ senior secured credit facility, as amended (the “Senior Secured Credit Facility”). These agreements were effective on February 1, 2010 and cover a notional amount of  $1.0 billion and effectively convert this portion of Wireless’ variable rate debt to fixed rate debt at a weighted average annual rate of 5.927%. These agreements expire on February 1, 2012.
In October 2010, Wireless entered into three separate two-year interest rate protection agreements to manage its interest rate risk exposure under its Senior Secured Credit Facility. These agreements will be effective on February 1, 2012 and will cover a notional amount of  $950.0 million and effectively convert this portion of Wireless’ variable rate debt to fixed rate debt at a weighted average annual rate of 4.933%. The monthly interest settlement periods will begin on February 1, 2012. These agreements expire on February 1, 2014.
In April 2011, Wireless entered into three separate three-year interest rate protection agreements to manage its interest rate risk exposure under its Senior Secured Credit Facility. These agreements were effective on April 15, 2011 and cover a notional amount of  $450.0 million and effectively convert this portion of Wireless’ variable rate debt to fixed rate debt at a weighted average annual rate of 5.242%. The monthly interest settlement periods began on April 15, 2011. These agreements expire on April 15, 2014.
Interest rate protection agreements are entered into to manage interest rate risk associated with Wireless’ variable-rate borrowings under the Senior Secured Credit Facility. The interest rate protection agreements have been designated as cash flow hedges. If a derivative is designated as a cash flow hedge and the hedging relationship qualifies for hedge accounting under the provisions of ASC 815 (Topic 815, “Derivatives and Hedging”), the effective portion of the change in fair value of the derivative is recorded in accumulated other comprehensive income (loss) and reclassified to interest expense in the period in which the hedged transaction affects earnings. The ineffective portion of the change in fair value of a derivative qualifying for hedge accounting is recognized in earnings in the period of the change. For the three months ended June 30, 2011, the change in fair value did not result in ineffectiveness.
At the inception of the cash flow hedges and quarterly thereafter, the Company performs an assessment to determine whether changes in the fair values or cash flows of the derivatives are deemed highly effective in offsetting changes in the fair values or cash flows of the hedged transaction. If at any time subsequent to the inception of the cash flow hedges, the assessment indicates that the derivative is no longer highly effective as a hedge, the Company will discontinue hedge accounting and recognize all subsequent derivative gains and losses in results of operations. The Company estimates that approximately  $18.5 million of net losses that are reported in accumulated other comprehensive loss at June 30, 2011 are expected to be reclassified into earnings within the next 12 months.
Cross-default Provisions
Wireless’ interest rate protection agreements contain cross-default provisions to its Senior Secured Credit Facility. Wireless’ Senior Secured Credit Facility allows interest rate protection agreements to become secured if the counterparty to the agreement is a current lender under the facility. If Wireless were to default on the Senior Secured Credit Facility, it would trigger these provisions, and the counterparties to the interest rate protection agreements could request immediate payment on interest rate protection agreements in net liability positions, similar to their existing rights as a lender. There are no collateral requirements in the interest rate protection agreements. The aggregate fair value of interest rate protection agreements with cross-default provisions that are in a net liability position on June 30, 2011 is  $18.2 million.


Fair Values of Derivative Instruments
(in thousands)
 
Liability Derivatives
 
 
As of June 30, 2011
 
As of December 31, 2010
 
 
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Derivatives designated as hedging
instruments under ASC 815
 
 
 
 
 
 
 
 
Interest rate protection agreements
 
Long-term investments
 
 $
1,716


 
Long-term investments
 
 $
10,381


Interest rate protection agreements
 
Other current liabilities
 
(18,508
)
 
Other current liabilities
 
(17,508
)
Interest rate protection agreements
 
Other long-term liabilities
 
(1,457
)
 
Other long-term liabilities
 
(1,182
)
Total derivatives designated as
hedging instruments under ASC
815
 
 
 
 $
(18,249
)
 
 
 
 $
(8,309
)






The Effect of Derivative Instruments on the Condensed Consolidated Statement of Income and Comprehensive Income
For the Three Months Ended June 30,
Derivatives in ASC 815 Cash
Flow Hedging Relationships
 
Amount of Gain (Loss)
Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain (Loss) Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
2011
 
2010
 
2011
 
2010
Interest rate protection agreements
 
 $
(21,673
)
 
 $
(6,849
)
 
Interest expense
 
 $
(6,081
)
 
 $
(8,285
)




The Effect of Derivative Instruments on the Condensed Consolidated Statement of Income and Comprehensive Income
For the Six Months Ended June 30,
Derivatives in ASC 815 Cash
Flow Hedging Relationships
 
Amount of Gain (Loss)
Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain (Loss) Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
2011
 
2010
 
2011
 
2010
Interest rate protection agreements
 
 $
(20,697
)
 
 $
(16,655
)
 
Interest expense
 
 $
(10,757
)
 
 $
(19,241
)
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Intangible Assets
6 Months Ended
Jun. 30, 2011
Goodwill and Intangible Assets Disclosure [Abstract]
Intangible Assets
Intangible Assets:
The Company operates wireless broadband mobile networks under licenses granted by the Federal Communications Commission ("FCC") for a particular geographic area on spectrum allocated by the FCC for terrestrial wireless broadband services. The Company holds personal communications services (“PCS”) licenses, advanced wireless services (“AWS”) licenses, and 700 MHz licenses granted or acquired on various dates. The PCS licenses previously included, and the AWS licenses currently include, the obligation and resulting costs to relocate existing fixed microwave users of the Company’s licensed spectrum if the Company’s use of its spectrum interferes with their systems and/or reimburse other carriers (according to FCC rules) that relocated prior users if the relocation benefits the Company’s system. Accordingly, the Company incurs costs related to microwave relocation in constructing its PCS and AWS networks. FCC Licenses and related microwave relocation costs are recorded at cost.
The change in the carrying value of intangible assets during the six months ended June 30, 2011 is as follows (in thousands):
 
 
FCC Licenses
 
Microwave
Relocation
Costs
Balance at January 1, 2011
 
 $
2,500,192


 
 $
22,049


Additions
 
13,579


 
2,540


Disposals
 


 


Balance at June 30, 2011
 
 $
2,513,771


 
 $
24,589




Although PCS, AWS and 700 MHz licenses are issued with a stated term, ten years in the case of the PCS licenses, fifteen years in the case of the AWS licenses and approximately ten years for 700 MHz licenses, the renewal of PCS, AWS and 700 MHz licenses is generally a routine matter without substantial cost and the Company has determined that no legal, regulatory, contractual, competitive, economic, or other factors currently exist that limit the useful life of its PCS, AWS and 700 MHz licenses. As such, under the provisions of ASC 350, (Topic 350, “Intangibles-Goodwill and Other”), the Company does not amortize its PCS, AWS and 700 MHz licenses and microwave relocation costs (collectively, its “indefinite-lived intangible assets”) as they are considered to have indefinite lives and together represent the cost of the Company’s spectrum.
In accordance with the requirements of ASC 350, the Company performs its annual indefinite-lived intangible assets impairment test as of each September 30th or more frequently if events or changes in circumstances indicate that the carrying value of the indefinite-lived intangible assets might be impaired. The impairment test consists of a comparison of estimated fair value with the carrying value. An impairment loss would be recorded as a reduction in the carrying value of the related indefinite-lived intangible assets and charged to results of operations. No impairment was recognized as a result of the test performed at September 30, 2010. Further, there have been no subsequent indicators of impairment including those indicated in ASC 360 (Topic 360, “Property, Plant, and Equipment”). Accordingly, no subsequent interim impairment tests were performed.
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Long-term Debt
6 Months Ended
Jun. 30, 2011
Debt Disclosure [Abstract]
Long-term Debt
Long-term Debt:
Long-term debt consisted of the following (in thousands):
 
 
June 30,

2011
 
December 31,

2010
Senior Secured Credit Facility
 
 $
2,484,610


 
 $
1,532,000


7 7/8% Senior Notes
 
1,000,000


 
1,000,000


5/8% Senior Notes
 
1,000,000


 
1,000,000


Capital Lease Obligations
 
271,442


 
254,336


Total long-term debt
 
4,756,052


 
3,786,336


Add: unamortized discount on debt
 
(9,124
)
 
(7,053
)
Total debt
 
4,746,928


 
3,779,283


Less: current maturities
 
(32,416
)
 
(21,996
)
Total long-term debt
 
 $
4,714,512


 
 $
3,757,287




7 7/8% Senior Notes due 2018
In September 2010, Wireless completed the sale of  $1.0 billion of principal amount of 7 7/8% Senior Notes due 2018 (“7 7/8% Senior Notes”). The terms of the 7 7/8% Senior Notes are governed by the indenture, the first supplemental indenture, dated September 21, 2010, and the third supplemental indenture, dated December 23, 2010, among Wireless, the guarantors party thereto and the trustee. The net proceeds of the sale of the 7 7/8% Senior Notes were  $974.0 million after underwriter fees, discounts and other debt issuance costs of  $26.0 million.
6 5/8% Senior Notes due 2020
In November 2010, Wireless completed the sale of  $1.0 billion of principal amount of 6 5/8% Senior Notes due 2020 (“6 5/8% Senior Notes”). The terms of the 6 5/8% Senior Notes are governed by the indenture, the second supplemental indenture, dated November 17, 2010, and the fourth supplemental indenture, dated December 23, 2010, among Wireless, the guarantors party thereto and the trustee. The net proceeds of the sale of the 6 5/8% Senior Notes were  $988.1 million after underwriter fees, discounts and other debt issuance costs of approximately  $11.9 million.
Senior Secured Credit Facility
In November 2006, Wireless entered into the Senior Secured Credit Facility, which consisted of a  $1.6 billion term loan facility and a  $100.0 million revolving credit facility. In November 2006, Wireless borrowed  $1.6 billion under the Senior Secured Credit Facility. The term loan facility is repayable in quarterly installments in annual aggregate amounts equal to 1% of the initial aggregate principal amount of  $1.6 billion. The term loan facility will mature in November 2013 and the revolving credit facility will mature in November 2011.
In July 2010, Wireless entered into an Amendment and Restatement and Resignation and Appointment Agreement (the “Amendment”) which amended and restated the Senior Secured Credit Facility. The Amendment amended the Senior Secured Credit Facility to, among other things, extend the maturity of  $1.0 billion of existing term loans (“Tranche B-2 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 (“Tranche B-1 Term Loans”) under the Senior Secured Credit Facility will mature in November 2013 and the interest rate continues to be LIBOR plus 2.25%. This modification did not result in a loss on extinguishment of debt.
In March 2011, Wireless entered into an Amendment and Restatement Agreement (the “New Amendment”) which further amends and restates the Senior Secured Credit Facility. The New Amendment amended the Senior Secured Credit Facility to, among other things, provide for a new tranche of term loans in the amount of  $500.0 million (“Tranche B-3 Term Loans”), with an interest rate of LIBOR plus 3.75% which will mature in March 2018, and increase the interest rate to LIBOR plus 3.821% on the existing Tranche B-1 and Tranche B-2 Term Loans. The Tranche B-3 Term Loans are repayable in quarterly installments of  $1.25 million. In addition, the aggregate amount of the revolving credit facility was increased from  $67.5 million to  $100.0 million and the maturity of the revolving credit facility was extended to March 2016. The net proceeds from the Tranche B-3 Term Loans were  $490.2 million after underwriter fees, discounts and other debt issuance costs of approximately  $9.8 million.


In May 2011, Wireless entered into an Incremental Commitment Agreement (the “Incremental Agreement”) which supplements the New Amendment to provide for an additional  $1.0 billion of Tranche B-3 Term Loans (the “Incremental Tranche B-3 Terms Loans”), which amount was borrowed on May 10, 2011. The Incremental Tranche B-3 Term Loans have an interest rate of LIBOR plus 3.75% and will mature in March 2018. The Incremental Tranche B-3 Term Loans are repayable in quarterly installments of  $2.5 million. A portion of the proceeds from the Incremental Tranche B-3 Term Loans were used to prepay the  $535.8 million in outstanding principal under the Tranche B-1 Term Loans, with the remaining proceeds to be used for general corporate purposes, including opportunistic spectrum acquisitions. The net proceeds from the Incremental Tranche B-3 Term Loans were  $455.9 million after prepayment of the Tranche B-1 Term Loans, underwriter fees, and other debt issuance costs of approximately  $8.3 million. The prepayment of the Tranche B-1 Term Loans resulted in a loss on extinguishment of debt in the amount of  $9.5 million. The Incremental Agreement did not modify the interest rate, maturity date or any of the other terms of the New Amendment applicable to the Tranche B-2 Term Loans or the existing Tranche B-3 Term Loans.
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 under the Senior Secured Credit Facility 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).
The New Amendment modified certain limitations under the Senior Secured Credit Facility, including limitations on Wireless' ability to incur additional debt, make certain restricted payments, sell assets, make certain investments or acquisitions, grant liens and pay dividends. In addition, Wireless is no longer subject to certain financial covenants, including maintaining a maximum senior secured consolidated leverage ratio, except under certain circumstances.
The interest rate on the outstanding debt under the Senior Secured Credit Facility is variable. The weighted average rate as of June 30, 2011 was 5.008%, which includes the impact of the interest rate protection agreements (See Note 4).
Capital Lease Obligations
The Company has entered into various non-cancelable capital lease agreements, with varying expiration terms through 2026. Assets and future obligations related to capital leases are included in the accompanying condensed 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 June 30, 2011, the Company had  $7.0 million and  $264.4 million of capital lease obligations recorded in current maturities of long-term debt and long-term debt, respectively.
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Fair Value Measurements
6 Months Ended
Jun. 30, 2011
Fair Value Disclosures [Abstract]
Fair Value Measurements
Fair Value Measurements:
The Company follows the provisions of ASC 820 (Topic 820, “Fair Value Measurements and Disclosures”) which 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:
 
Level 1 - Unadjusted quoted market prices for identical assets or liabilities in active markets that the Company has the ability to access.
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.
Level 3 - Valuations based on models where significant inputs are not observable. The unobservable inputs reflect the Company’s own assumptions about the assumptions that market participants would use.
ASC 820 requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs. If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation. The Company’s financial assets and liabilities measured at fair value on a recurring basis include cash and cash equivalents, short and long-term investments securities and derivative financial instruments.
 
Included in the Company’s cash equivalents are investments in money market funds consisting of U.S. Treasury securities with an original maturity of 90 days or less. Included in the Company’s short-term investments are securities classified as available-for-sale, which are stated at fair value. These securities include U.S. Treasury securities with an original maturity of over 90 days. Fair value is determined based on observable quotes from banks and unadjusted quoted market prices from identical securities in an active market at the reporting date. Significant inputs to the valuation are observable in the active markets and are classified as Level 1 in the hierarchy.
Included in the Company’s long-term investments securities are certain auction rate securities, some of which are secured by collateralized debt obligations with a portion of the underlying collateral being mortgage securities or related to mortgage securities. Due to the lack of availability of observable market quotes on the Company’s investment portfolio of auction rate securities, the fair value was estimated based on valuation models that rely exclusively on unobservable Level 3 inputs including those that are based on expected cash flow streams and collateral values, including assessments of counterparty credit quality, default risk underlying the security, discount rates and overall capital market liquidity. The valuation of the Company’s investment portfolio is subject to uncertainties that are difficult to predict. Factors that may impact the Company’s valuation include changes to credit ratings of the securities as well as the underlying assets supporting those securities, rates of default of the underlying assets, underlying collateral values, discount rates, counterparty risk and ongoing strength and quality of market credit and liquidity. Significant inputs to the investments valuation are unobservable in the active markets and are classified as Level 3 in the hierarchy.
Included in the Company’s derivative financial instruments are interest rate swaps. Derivative financial instruments are valued in the market using discounted cash flow techniques. These techniques incorporate Level 1 and Level 2 inputs such as interest rates. These market inputs are utilized in the discounted cash flow calculation considering the instrument’s term, notional amount, discount rate and credit risk. Significant inputs to the derivative valuation for interest rate swaps are observable in the active markets and are classified as Level 2 in the hierarchy.
The following table summarizes assets and liabilities measured at fair value on a recurring basis at June 30, 2011, as required by ASC 820 (in thousands):
 
 
Fair Value Measurements
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
Cash equivalents
 
 $
1,853,846


 
 $


 
 $


 
 $
1,853,846


Short-term investments
 
299,954


 


 


 
299,954


Restricted cash and investments
 
2,876


 


 


 
2,876


Long-term investments
 


 


 
6,319


 
6,319


Derivative assets
 


 
1,716


 


 
1,716


Total assets measured at fair value
 
 $
2,156,676


 
 $
1,716


 
 $
6,319


 
 $
2,164,711


Liabilities
 


 


 


 


Derivative liabilities
 
 $


 
 $
19,965


 
 $


 
 $
19,965


Total liabilities measured at fair value
 
 $


 
 $
19,965


 
 $


 
 $
19,965


 
The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2010, as required by ASC 820 (in thousands):
 
 
Fair Value Measurements
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
Cash equivalents
 
 $
787,829


 
 $


 
 $


 
 $
787,829


Short-term investments
 
374,862


 


 


 
374,862


Restricted cash and investments
 
2,876


 


 


 
2,876


Long-term investments
 


 


 
6,319


 
6,319


Derivative assets
 


 
10,381


 


 
10,381


Total assets measured at fair value
 
 $
1,165,567


 
 $
10,381


 
 $
6,319


 
 $
1,182,267


Liabilities
 


 


 


 


Derivative liabilities
 
 $


 
 $
18,690


 
 $


 
 $
18,690


Total liabilities measured at fair value
 
 $


 
 $
18,690


 
 $


 
 $
18,690




The following table summarizes the changes in fair value of the Company’s net derivative liabilities included in Level 2 assets (in thousands):
Fair Value Measurements of Net Derivative Liabilities Using Level 2 Inputs
 
Net Derivative Liabilities
 
 
Three Months Ended June 30,
 
 
2011
 
2010
Beginning balance
 
 $
2,657


 
 $
23,709


Total losses (realized or unrealized):
 


 


Included in earnings (1)
 
6,081


 
8,285


Included in accumulated other comprehensive income (loss)
 
(21,673
)
 
(6,849
)
Transfers in and/or out of Level 2
 


 


Purchases, sales, issuances and settlements
 


 


Ending balance
 
 $
18,249


 
 $
22,273


 ————————————
(1)
Losses included in earnings that are attributable to the reclassification of the effective portion of those derivative liabilities still held at the reporting date as reported in interest expense in the condensed consolidated statements of income and comprehensive income.


Fair Value Measurements of Net Derivative Liabilities Using Level 2 Inputs
 
Net Derivative Liabilities
 
 
Six Months Ended June 30,
 
 
2011
 
2010
Beginning balance
 
 $
8,309


 
 $
24,859


Total losses (realized or unrealized):
 


 


Included in earnings (2)
 
10,757


 
19,241


Included in accumulated other comprehensive income (loss)
 
(20,697
)
 
(16,655
)
Transfers in and/or out of Level 2
 


 


Purchases, sales, issuances and settlements
 


 


Ending balance
 
 $
18,249


 
 $
22,273


 ————————————
(2)
Losses included in earnings that are attributable to the reclassification of the effective portion of those derivative liabilities still held at the reporting date as reported in interest expense in the condensed consolidated statements of income and comprehensive income.
The following table summarizes the changes in fair value of the Company’s Level 3 assets (in thousands):
Fair Value Measurements of Assets Using Level 3 Inputs
 
Long-Term Investments
 
 
Three Months Ended June 30,
 
 
2011
 
2010
Beginning balance
 
 $
6,319


 
 $
6,319


Total losses (realized or unrealized):
 


 


Included in earnings
 


 


Included in accumulated other comprehensive income (loss)
 


 


Transfers in and/or out of Level 3
 


 


Purchases, sales, issuances and settlements
 


 


Ending balance
 
 $
6,319


 
 $
6,319




Fair Value Measurements of Assets Using Level 3 Inputs
 
Long-Term Investments
 
 
Six Months Ended June 30,
 
 
2011
 
2010
Beginning balance
 
 $
6,319


 
 $
6,319


Total losses (realized or unrealized):
 


 


Included in earnings
 


 


Included in accumulated other comprehensive income (loss)
 


 


Transfers in and/or out of Level 3
 


 


Purchases, sales, issuances and settlements
 


 


Ending balance
 
 $
6,319


 
 $
6,319




The carrying value of the Company’s financial instruments, with the exception of long-term debt including current maturities, reasonably approximate the related fair values as of June 30, 2011 and December 31, 2010. The fair value of the Company’s long-term debt is estimated based on the quoted market prices for the same or similar issues or on the current rates offered to the Company for debt of the same remaining maturities. As of June 30, 2011, the carrying value and fair value of long-term debt, including current maturities, were  $4.5 billion and approximately  $4.5 billion, respectively. As of December 31, 2010, the carrying value and fair value of long-term debt, including current maturities, were  $3.5 billion and  $3.5 billion, respectively.
 
Although the Company has determined the estimated fair value amounts using available market information and commonly accepted valuation methodologies, considerable judgment is required in interpreting market data to develop fair value estimates. The fair value estimates are based on information available at June 30, 2011 and December 31, 2010 and have not been revalued since those dates. As such, the Company’s estimates are not necessarily indicative of the amount that the Company, or holders of the instruments, could realize in a current market exchange and current estimates of fair value could differ significantly.
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Net Income Per Common Share
6 Months Ended
Jun. 30, 2011
Earnings Per Share [Abstract]
Net Income Per Common Share
Net Income Per Common Share:
The following table sets forth the computation of basic and diluted net income per common share for the periods indicated (in thousands, except share and per share data):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2011
 
2010
 
2011
 
2010
Basic EPS:
 
 
 
 
 
 
 
 
Net income applicable to common stock
 
 $
84,335


 
 $
79,915


 
 $
140,714


 
 $
102,576


Amount allocable to common shareholders
 
99.0
%
 
99.2
%
 
99.1
%
 
99.2
%
Rights to undistributed earnings
 
 $
83,496


 
 $
79,291


 
 $
139,420


 
 $
101,775


Weighted average shares outstanding—basic
 
360,226,487


 
353,278,423


 
358,616,324


 
353,032,030


Net income per common share—basic
 
 $
0.23


 
 $
0.22


 
 $
0.39


 
 $
0.29


Diluted EPS:
 


 


 


 


Rights to undistributed earnings
 
 $
83,496


 
 $
79,291


 
 $
139,420


 
 $
101,775


Weighted average shares outstanding—basic
 
360,226,487


 
353,278,423


 
358,616,324


 
353,032,030


Effect of dilutive securities:
 


 


 


 


Stock options
 
5,163,793


 
2,407,023


 
4,536,910


 
2,119,082


Weighted average shares outstanding—diluted
 
365,390,280


 
355,685,446


 
363,153,234


 
355,151,112


Net income per common share—diluted
 
 $
0.23


 
 $
0.22


 
 $
0.38


 
 $
0.29




In accordance with ASC 260 (Topic 260, “Earnings Per Share”), unvested share-based payment awards that contain rights to receive non-forfeitable dividends or dividend equivalents, whether paid or unpaid, are considered a “participating security” for purposes of computing earnings or loss per common share and the two-class method of computing earnings per share is required for all periods presented. During the three and six months ended June 30, 2011 and 2010, the Company issued restricted stock awards. Unvested shares of restricted stock are participating securities such that they have rights to receive non-forfeitable dividends. In accordance with ASC 260, the unvested restricted stock was considered a “participating security” for purposes of computing earnings per common share and was therefore included in the computation of basic and diluted earnings per common share.
Under certain of the Company's restricted stock award agreements, unvested shares of restricted stock have rights to receive non-forfeitable dividends. For the three and six months ended June 30, 2011 and 2010, the Company has calculated diluted earnings per share under both the treasury stock method and the two-class method. There was not a significant difference in the per share amounts calculated under the two methods, and the two-class method is disclosed. For the three and six months ended June 30, 2011, approximately 3.7 million and 3.4 million, respectively, of restricted common shares issued to employees have been excluded from the computation of basic net income per common share since the shares are not vested and remain subject to forfeiture. For the three and six months ended June 30, 2010, approximately 2.8 million of restricted common shares issued to employees have been excluded from the computation of basic net income per common share since the shares are not vested and remain subject to forfeiture.
For the three months ended June 30, 2011 and 2010, 10.3 million and 25.8 million, respectively, of stock options were excluded from the calculation of diluted net income per common share since the effect was anti-dilutive. For the six months ended June 30, 2011 and 2010, 14.4 million and 25.2 million, respectively, of stock options were excluded from the calculation of diluted net income per common share since the effect was anti-dilutive.
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Commitments and Contingencies
6 Months Ended
Jun. 30, 2011
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies
Commitments and Contingencies:
The Company has entered into a pricing agreement with a handset manufacturer for the purchase of wireless handsets at specified prices. The term of this agreement expires on March 31, 2012. The total aggregate commitment outstanding under this pricing agreement is  $15.8 million.
 
Litigation
The Company is involved in litigation from time to time, including litigation regarding intellectual property claims, that it considers to be in the normal course of business. The Company is not currently party to any pending legal proceedings that the Company believes could, individually or in the aggregate, have a material adverse effect on the Company's financial condition, results of operations or liquidity. However, legal proceedings are inherently unpredictable, and the matters in which the Company is involved often present complex legal and factual issues. The Company intends to vigorously pursue defenses in litigation in which it is involved and engage in discussions where possible to resolve these matters on terms favorable to the Company. The Company believes that any amounts which parties to such litigation allege the Company is liable are not necessarily meaningful indicators of the Company’s potential liability. The Company determines whether it should accrue an estimated loss for a contingency in a particular legal proceeding by assessing whether a loss is probable and can be reasonably estimated. The Company reassesses its views on estimated losses on a quarterly basis to reflect the impact of any developments in the matters in which it is involved. It is possible, however, that the Company’s business, financial condition and results of operations in future periods could be materially adversely affected by increased expense, significant settlement costs and/or unfavorable damage awards relating to such matters.
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Supplemental Cash Flow Information
6 Months Ended
Jun. 30, 2011
Supplemental Cash Flow Information [Abstract]
Supplemental Cash Flow Information
Supplemental Cash Flow Information:
 
 
Six Months Ended June 30,
 
 
2011
 
2010
 
 
(in thousands)
Cash paid for interest
 
 $
113,313


 
 $
134,690


Cash paid for income taxes
 
3,873


 
2,237




Non-cash investing and financing activities
The Company’s accrued purchases of property and equipment were  $96.9 million and  $81.8 million as of June 30, 2011 and 2010, respectively. Included within the Company’s accrued purchases are estimates by management for construction services received based on a percentage of completion.
Assets acquired under capital lease obligations were  $20.3 million and  $10.4 million for the six months ended June 30, 2011 and 2010, respectively.
During the six months ended June 30, 2010, the Company returned obsolete network infrastructure assets to one of its vendors in exchange for  $17.8 million in credits towards the purchase of additional network infrastructure assets with the vendor.
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Related-Party Transactions
6 Months Ended
Jun. 30, 2011
Related Party Transactions [Abstract]
Related-Party Transactions
Related-Party Transactions:
One of the Company’s current directors is a managing director of various investment funds affiliated with one of the Company’s greater than 5% stockholders. These funds own interest in a company that provides services to the Company’s customers, including handset insurance programs. Pursuant to the Company’s agreement with this related-party, the Company bills its customers directly for these services and remits the fees collected from its customers for these services to the related-party. In addition, the Company receives compensation for selling handsets to the related-party.
One of the Company’s current directors is the chairman of an equity firm that owns interest in a company that provides wireless caller ID with name services to the Company. Pursuant to an additional agreement with this related-party, the Company receives compensation for providing access to the Company’s line information database/calling name data storage to the related-party.
One of the Company’s current directors is a managing director of various investment funds affiliated with one of the Company’s greater than 5% stockholders. These funds own interest in a company that provides advertising services to the Company.
One of the Company’s current directors is a managing director of various investment funds affiliated with one of the Company’s greater than 5% stockholders. These funds own interest in a company that provides distributed antenna systems ("DAS") leases and maintenance to wireless carriers, including the Company. In addition, another of the Company’s current directors is a general partner of various investment funds which own interest in the same company. These DAS leases are accounted for as capital or operating leases in the Company’s financial statements.
Transactions associated with the related parties described above are included in various line items in the accompanying condensed consolidated balance sheets, condensed consolidated statements of income and comprehensive income, and condensed consolidated statements of cash flows. The following tables summarize the transactions with related-parties (in millions):
 
 
June 30,

2011
 
December 31,

2010
Network service fees included in prepaid expenses
 
 $
1.5


 
 $
1.5


Receivables from related-party included in other current assets
 
3.0


 
0.6


DAS equipment included in property and equipment, net
 
375.8


 
366.4


Deferred network service fees included in other assets
 
9.1


 
9.9


Payments due to related-party included in accounts payable and accrued expenses
 
9.4


 
7.8


Current portion of capital lease obligations included in current maturities of long-term debt
 
6.2


 
5.2


Non-current portion of capital lease obligations included in long-term debt, net
 
231.1


 
215.4


Deferred DAS service fees included in other long-term liabilities
 
1.3


 
1.2




 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2011
 
2010
 
2011
 
2010
Fees received by the Company as compensation included in service revenues
 
 $
3.9


 
 $
2.9


 
 $
7.4


 
 $
5.1


Fees received by the Company as compensation included in equipment revenues
 
6.7


 
6.8


 
11.3


 
9.9


Fees paid by the Company for services and related expenses included in cost of service
 
5.5


 
5.9


 
9.6


 
10.8


Fees paid by the Company for services included in selling, general and administrative expenses
 
0.9


 
1.0


 
2.6


 
2.8


DAS equipment depreciation included in depreciation expense
 
9.7


 
6.3


 
18.5


 
11.7


Capital lease interest included in interest expense
 
4.8


 
3.5


 
9.4


 
7.0




 
 
Six Months Ended June 30,
 
 
2011
 
2010
Capital lease payments included in financing activities
 
 $
4.0


 
 $
1.0


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Guarantor Subsidiaries
6 Months Ended
Jun. 30, 2011
Guarantor Subsidiaries [Abstract]
Guarantor Subsidiaries
Guarantor Subsidiaries:
In connection with Wireless’ 7 7/8% Senior Notes, 6 5/8% Senior Notes, and the Senior Secured Credit Facility, MetroPCS, together with its wholly owned subsidiaries, MetroPCS, Inc., and each of Wireless’ direct and indirect present and future wholly-owned domestic subsidiaries (the “guarantor subsidiaries”), provided guarantees which are full and unconditional as well as joint and several. Certain provisions of the Senior Secured Credit Facility, the indentures and the supplemental indentures relating to the 7 7/8% Senior Notes and 6 5/8% Senior Notes restrict the ability of Wireless to loan funds to MetroPCS or MetroPCS, Inc. However, Wireless is allowed to make certain permitted payments to MetroPCS under the terms of the Senior Secured Credit Facility, the indentures and the supplemental indentures.
Prior to December 2010, Royal Street Communications, LLC and its subsidiaries (“Royal Street Communications”) and MetroPCS Finance, Inc. (“MetroPCS Finance”) (collectively, the “non-guarantor subsidiaries”) were not guarantors of the 9 1/4% Senior Notes due 2014 , or 9 1/4% Senior Notes, 7 7/8% Senior Notes, 6 5/8% Senior Notes or the Senior Secured Credit Facility. In December 2010, Wireless completed the acquisition of the remaining limited liability company member interest in Royal Street Communications, making Royal Street Communications a wholly-owned subsidiary. In addition, MetroPCS Finance was merged with a subsidiary of Wireless. Therefore, the Company no longer had any non-guarantors of any of its outstanding debt as of December 31, 2010. As a result, the comparative historical condensed consolidating financial information has been revised to present this information as if the new guarantor structure existed for all periods presented with the results of Royal Street Communications and MetroPCS Finance being reported as guarantor subsidiaries.
The following information presents condensed consolidating balance sheets as of June 30, 2011 and December 31, 2010, condensed consolidating statements of income for the three and six months ended June 30, 2011 and 2010, and condensed consolidating statements of cash flows for the six months ended June 30, 2011 and 2010 of the parent company (MetroPCS), the issuer (Wireless), and the guarantor subsidiaries. Investments in subsidiaries held by the parent company and the issuer have been presented using the equity method of accounting.


Condensed Consolidated Balance Sheet
As of June 30, 2011
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
CURRENT ASSETS:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 $
1,603,172


 
 $
252,200


 
 $
622


 
 $


 
 $
1,855,994


Short-term investments
 
299,954


 


 


 


 
299,954


Inventories
 


 
124,947


 
15,101


 


 
140,048


Prepaid expenses
 
171


 
487


 
64,324


 


 
64,982


Deferred charges
 


 
94,931


 


 


 
94,931


Advances to subsidiaries
 


 
1,464,837


 


 
(1,464,837
)
 


Other current assets
 
94


 
71,812


 
40,487


 


 
112,393


Total current assets
 
1,903,391


 
2,009,214


 
120,534


 
(1,464,837
)
 
2,568,302


Property and equipment, net
 


 
31,234


 
3,825,635


 


 
3,856,869


Long-term investments
 
6,319


 
1,716


 


 


 
8,035


Investment in subsidiaries
 
1,139,888


 
4,344,422


 


 
(5,484,310
)
 


FCC licenses
 


 
3,800


 
2,534,560


 


 
2,538,360


Other assets
 


 
96,151


 
33,310


 


 
129,461


Total assets
 
 $
3,049,598


 
 $
6,486,537


 
 $
6,514,039


 
 $
(6,949,147
)
 
 $
9,101,027


CURRENT LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
 $


 
 $
78,511


 
 $
349,411


 
 $


 
 $
427,922


Advances from subsidiaries
 
297,941


 


 
1,166,896


 
(1,464,837
)
 


Other current liabilities
 


 
90,123


 
207,628


 


 
297,751


Total current liabilities
 
297,941


 
168,634


 
1,723,935


 
(1,464,837
)
 
725,673


Long-term debt
 


 
4,450,097


 
264,415


 


 
4,714,512


Deferred credits
 
1,939


 
719,011


 
109,430


 


 
830,380


Other long-term liabilities
 


 
8,907


 
71,837


 


 
80,744


Total liabilities
 
299,880


 
5,346,649


 
2,169,617


 
(1,464,837
)
 
6,351,309


STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
 
Common stock
 
36


 


 


 


 
36


Other stockholders’ equity
 
2,749,682


 
1,139,888


 
4,344,422


 
(5,484,310
)
 
2,749,682


Total stockholders’ equity
 
2,749,718


 
1,139,888


 
4,344,422


 
(5,484,310
)
 
2,749,718


Total liabilities and stockholders’ equity
 
 $
3,049,598


 
 $
6,486,537


 
 $
6,514,039


 
 $
(6,949,147
)
 
 $
9,101,027




 


Condensed Consolidated Balance Sheet
As of December 31, 2010
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
CURRENT ASSETS:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 $
507,849


 
 $
287,942


 
 $
740


 
 $


 
 $
796,531


Short-term investments
 
374,862


 


 


 


 
374,862


Inventories
 


 
145,260


 
15,789


 


 
161,049


Prepaid Expenses
 


 
249


 
50,228


 




 
50,477


Deferred charges
 


 
89,775


 


 


 
89,775


Advances to subsidiaries
 
647,701


 
462,518


 


 
(1,110,219
)
 


Other current assets
 
94


 
81,308


 
39,789


 


 
121,191


Total current assets
 
1,530,506


 
1,067,052


 
106,546


 
(1,110,219
)
 
1,593,885


Property and equipment, net
 


 
246,249


 
3,413,196


 


 
3,659,445


Long-term investments
 
6,319


 
10,381


 


 


 
16,700


Investment in subsidiaries
 
1,006,295


 
3,994,553


 


 
(5,000,848
)
 


FCC licenses
 


 
3,800


 
2,518,441


 


 
2,522,241


Other assets
 


 
75,085


 
51,224


 


 
126,309


Total assets
 
 $
2,543,120


 
 $
5,397,120


 
 $
6,089,407


 
 $
(6,111,067
)
 
 $
7,918,580


CURRENT LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
 $


 
 $
150,994


 
 $
370,794


 
 $


 
 $
521,788


Advances from subsidiaries
 


 


 
1,110,219


 
(1,110,219
)
 


Other current liabilities
 


 
82,684


 
197,948


 


 
280,632


Total current liabilities
 


 
233,678


 
1,678,961


 
(1,110,219
)
 
802,420


Long-term debt
 


 
3,508,948


 
248,339


 


 
3,757,287


Deferred credits
 
1,544


 
639,766


 
103,159


 


 
744,469


Other long-term liabilities
 


 
8,433


 
64,395


 


 
72,828


Total liabilities
 
1,544


 
4,390,825


 
2,094,854


 
(1,110,219
)
 
5,377,004


STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
 
Common stock
 
36


 


 


 


 
36


Other stockholders’ equity
 
2,541,540


 
1,006,295


 
3,994,553


 
(5,000,848
)
 
2,541,540


Total stockholders’ equity
 
2,541,576


 
1,006,295


 
3,994,553


 
(5,000,848
)
 
2,541,576


Total liabilities and stockholders’ equity
 
 $
2,543,120


 
 $
5,397,120


 
 $
6,089,407


 
 $
(6,111,067
)
 
 $
7,918,580




 


Condensed Consolidated Statement of Income
Three Months Ended June 30, 2011
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
REVENUES:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 $


 
 $
6,441


 
 $
1,210,352


 
 $
(7,340
)
 
 $
1,209,453


OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Cost of revenues
 


 
5,907


 
709,997


 
(7,340
)
 
708,564


Selling, general and administrative expenses
 


 
528


 
154,028


 


 
154,556


Other operating expenses
 


 
60


 
136,018


 


 
136,078


Total operating expenses
 


 
6,495


 
1,000,043


 
(7,340
)
 
999,198


(Loss) income from operations
 


 
(54
)
 
210,309


 


 
210,255


OTHER EXPENSE (INCOME):
 
 
 
 
 
 
 
 
 
 
Interest expense
 


 
62,918


 
4,062


 


 
66,980


Non-operating expenses
 
(480
)
 
9,516


 
(197
)
 


 
8,839


Earnings from consolidated subsidiaries
 
(83,855
)
 
(207,631
)
 


 
291,486


 


Total other (income) expense
 
(84,335
)
 
(135,197
)
 
3,865


 
291,486


 
75,819


Income (loss) before provision for income taxes
 
84,335


 
135,143


 
206,444


 
(291,486
)
 
134,436


Provision for income taxes
 


 
(51,288
)
 
1,187


 


 
(50,101
)
Net income (loss)
 
 $
84,335


 
 $
83,855


 
 $
207,631


 
 $
(291,486
)
 
 $
84,335






Condensed Consolidated Statement of Income
Three Months Ended June 30, 2010
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
REVENUES:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 $


 
 $
6,336


 
 $
1,060,203


 
 $
(54,003
)
 
 $
1,012,536


OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Cost of revenues
 


 
6,004


 
591,521


 
(54,003
)
 
543,522


Selling, general and administrative expenses
 


 
331


 
158,269


 


 
158,600


Other operating expenses
 


 
35


 
111,967


 


 
112,002


Total operating expenses
 


 
6,370


 
861,757


 
(54,003
)
 
814,124


(Loss) income from operations
 


 
(34
)
 
198,446


 


 
198,412


OTHER EXPENSE (INCOME):
 
 
 
 
 
 
 
 
 
 
Interest expense
 


 
63,023


 
40,559


 
(38,079
)
 
65,503


Non-operating expenses
 
(367
)
 
(37,591
)
 
(34
)
 
38,079


 
87


Earnings from consolidated subsidiaries
 
(79,548
)
 
(157,921
)
 


 
237,469


 


Total other (income) expense
 
(79,915
)
 
(132,489
)
 
40,525


 
237,469


 
65,590


Income (loss) before provision for
income taxes
 
79,915


 
132,455


 
157,921


 
(237,469
)
 
132,822


Provision for income taxes
 


 
(52,907
)
 


 


 
(52,907
)
Net income (loss)
 
 $
79,915


 
 $
79,548


 
 $
157,921


 
 $
(237,469
)
 
 $
79,915




 
Condensed Consolidated Statement of Income
Six Months Ended June 30, 2011
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
REVENUES:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 $


 
 $
10,924


 
 $
2,408,295


 
 $
(15,390
)
 
 $
2,403,829


OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Cost of revenues
 


 
10,209


 
1,464,424


 
(15,390
)
 
1,459,243


Selling, general and administrative expenses
 


 
715


 
323,612


 


 
324,327


Other operating expenses
 


 
154


 
264,513


 


 
264,667


Total operating expenses
 


 
11,078


 
2,052,549


 
(15,390
)
 
2,048,237


(Loss) income from operations
 


 
(154
)
 
355,746


 


 
355,592


OTHER EXPENSE (INCOME):
 
 
 
 
 
 
 
 
 
 
Interest expense
 


 
115,294


 
8,247


 


 
123,541


Non-operating expenses
 
(986
)
 
9,509


 
(455
)
 


 
8,068


Earnings from consolidated subsidiaries
 
(139,728
)
 
(349,870
)
 


 
489,598


 


Total other (income) expense
 
(140,714
)
 
(225,067
)
 
7,792


 
489,598


 
131,609


Income (loss) before provision for income taxes
 
140,714


 
224,913


 
347,954


 
(489,598
)
 
223,983


Provision for income taxes
 


 
(85,185
)
 
1,916


 


 
(83,269
)
Net income (loss)
 
 $
140,714


 
 $
139,728


 
 $
349,870


 
 $
(489,598
)
 
 $
140,714






Condensed Consolidated Statement of Income
Six Months Ended June 30, 2010
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
REVENUES:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 $


 
 $
9,471


 
 $
2,076,237


 
 $
(102,669
)
 
 $
1,983,039


OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Cost of revenues
 


 
9,035


 
1,235,546


 
(102,669
)
 
1,141,912


Selling, general and administrative expenses
 


 
436


 
318,074


 


 
318,510


Other operating expenses
 


 
66


 
218,908


 


 
218,974


Total operating expenses
 


 
9,537


 
1,772,528


 
(102,669
)
 
1,679,396


(Loss) income from operations
 


 
(66
)
 
303,709


 


 
303,643


OTHER EXPENSE (INCOME):
 
 
 
 
 
 
 
 
 
 
Interest expense
 


 
128,202


 
80,902


 
(76,119
)
 
132,985


Non-operating expenses
 
(823
)
 
(75,180
)
 
(38
)
 
76,119


 
78


Earnings from consolidated subsidiaries
 
(101,753
)
 
(222,845
)
 


 
324,598


 


Total other (income) expense
 
(102,576
)
 
(169,823
)
 
80,864


 
324,598


 
133,063


Income (loss) before provision for
income taxes
 
102,576


 
169,757


 
222,845


 
(324,598
)
 
170,580


Provision for income taxes
 


 
(68,004
)
 


 


 
(68,004
)
Net income (loss)
 
 $
102,576


 
 $
101,753


 
 $
222,845


 
 $
(324,598
)
 
 $
102,576




 
Condensed Consolidated Statement of Cash Flows
Six Months Ended June 30, 2011
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
 
 $
497


 
 $
(126,873
)
 
 $
608,476


 
 $


 
 $
482,100


CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
 


 
(6,950
)
 
(444,623
)
 


 
(451,573
)
Purchase of investments
 
(299,826
)
 


 


 


 
(299,826
)
Proceeds from maturity of investments
 
375,000


 


 


 


 
375,000


Change in advances – affiliates
 
671,631


 
(820,250
)
 


 
148,619


 


Other investing activities, net
 


 
(17,691
)
 
(10,175
)
 


 
(27,866
)
Net cash provided by (used in) investing activities
 
746,805


 
(844,891
)
 
(454,798
)
 
148,619


 
(404,265
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Change in advances – affiliates
 
297,941


 


 
(149,322
)
 
(148,619
)
 


Change in book overfraft
 


 
1,263


 


 


 
1,263


Proceeds from debt issuance, net of discount
 


 
1,497,500


 


 


 
1,497,500


Retirement of senior secured credit facility debt
 


 
(535,792
)
 


 


 
(535,792
)
Proceeds from exercise of stock options
 
53,671


 


 


 


 
53,671


Other financing activities, net
 
(3,591
)
 
(26,949
)
 
(4,474
)
 


 
(35,014
)
Net cash provided by (used in) financing activities
 
348,021


 
936,022


 
(153,796
)
 
(148,619
)
 
981,628


INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS
 
1,095,323


 
(35,742
)
 
(118
)
 


 
1,059,463


CASH AND CASH EQUIVALENTS, beginning of period
 
507,849


 
287,942


 
740


 


 
796,531


CASH AND CASH EQUIVALENTS, end of period
 
 $
1,603,172


 
 $
252,200


 
 $
622


 
 $


 
 $
1,855,994




 


Condensed Consolidated Statement of Cash Flows
Six Months Ended June 30, 2010
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
 
 $
677


 
 $
(110,982
)
 
 $
447,756


 
 $


 
 $
337,451


CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
 


 
(49,899
)
 
(265,438
)
 


 
(315,337
)
Purchase of investments
 
(312,225
)
 


 


 


 
(312,225
)
Proceeds from maturity of investments
 
237,500


 


 


 


 
237,500


Change in advances - affiliates
 
1,638


 
285,848


 


 
(287,486
)
 


Proceeds from affiliate debt
 


 
233,152


 


 
(233,152
)
 


Issuance of affiliate debt
 


 
(333,000
)
 


 
333,000


 


Other investing activities, net
 


 
(16,789
)
 
4,380


 


 
(12,409
)
Net cash (used in) provided by investing activities
 
(73,087
)
 
119,312


 
(261,058
)
 
(187,638
)
 
(402,471
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Change in book overdraft
 


 
(80,394
)
 
57


 


 
(80,337
)
Proceeds from long-term loan
 


 


 
333,000


 
(333,000
)
 


Change in advances - affiliates
 


 


 
(287,486
)
 
287,486


 


Repayment of debt
 


 
(8,000
)
 
(233,152
)
 
233,152


 
(8,000
)
Proceeds from exercise of stock options
 
2,592


 


 


 


 
2,592


Other financing activities, net
 
(852
)
 


 
(1,224
)
 


 
(2,076
)
Net cash provided by (used in) financing activities
 
1,740


 
(88,394
)
 
(188,805
)
 
187,638


 
(87,821
)
DECREASE IN CASH AND CASH EQUIVALENTS
 
(70,670
)
 
(80,064
)
 
(2,107
)
 


 
(152,841
)
CASH AND CASH EQUIVALENTS,
beginning of period
 
642,089


 
269,836


 
17,456


 


 
929,381


CASH AND CASH EQUIVALENTS, end of period
 
 $
571,419


 
 $
189,772


 
 $
15,349


 
 $


 
 $
776,540


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Significant Accounting Policies
6 Months Ended
Jun. 30, 2011
Basis of Presentation and Significant Accounting Policies [Abstract]
Consolidation Policy
The accompanying unaudited condensed consolidated interim financial statements include the balances and results of operations of MetroPCS Communications, Inc. (“MetroPCS”) and its consolidated subsidiaries (collectively, the “Company”).
Basis of Accounting Policy
The condensed consolidated balance sheets as of June 30, 2011 and December 31, 2010, the condensed consolidated statements of income and comprehensive income and cash flows for the periods ended June 30, 2011 and 2010, and the related footnotes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
Use of Estimates Policy
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Segment Reporting Policy
The Company has thirteen operating segments based on geographic region within the United States: Atlanta, Boston, Dallas/Ft. Worth, Detroit, Las Vegas, Los Angeles, Miami, New York, Orlando/Jacksonville, Philadelphia, Sacramento, San Francisco and Tampa/Sarasota. In accordance with the provisions of the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 280 (Topic 280, “Segment Reporting”), the Company aggregates its thirteen operating segments into one reportable segment.
Gross and Net Revenue Presentation Policy
Federal Universal Service Fund (“FUSF”), E-911 and various other fees are assessed by various governmental authorities in connection with the services that the Company provides to its customers. The Company offers a family of service plans, which include all applicable taxes and regulatory fees (“tax inclusive plans”). The Company reports regulatory fees for the tax inclusive plans in cost of service on the accompanying condensed consolidated statements of income and comprehensive income. When the Company separately assesses these regulatory fees on its customers, the Company reports these regulatory fees on a gross basis in service revenues and cost of service on the accompanying condensed consolidated statements of income and comprehensive income. For the three months ended June 30, 2011 and 2010, the Company recorded  $17.4 million and  $21.5 million, respectively, of FUSF, E-911 and other fees on a gross basis. For the six months ended June 30, 2011 and 2010, the Company recorded  $35.5 million and  $44.6 million, respectively, of FUSF, E-911 and other fees on a gross basis. Sales, use and excise taxes for all service plans are reported on a net basis in selling, general and administrative expenses on the accompanying condensed consolidated statements of income and comprehensive income.
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Short-term Investments (Tables)
6 Months Ended
Jun. 30, 2011
Investments, Debt and Equity Securities [Abstract]
Schedule of Available-for-sale Securities
Short-term investments, with an original maturity of over 90 days, consisted of the following (in thousands):
 
 
As of June 30, 2011
 
 
Amortized
Cost
 
Unrealized
Gain in
Accumulated
OCI
 
Unrealized
Loss in
Accumulated
OCI
 
Aggregate
Fair
Value
Equity securities
 
 $
7


 
 $


 
 $
(5
)
 
 $
2


U.S. Treasury securities
 
299,826


 
126


 


 
299,952


Total short-term investments
 
 $
299,833


 
 $
126


 
 $
(5
)
 
 $
299,954


 
 
 
As of December 31, 2010
 
 
Amortized
Cost
 
Unrealized
Gain in
Accumulated
OCI
 
Unrealized
Loss in
Accumulated
OCI
 
Aggregate
Fair
Value
Equity securities
 
 $
7


 
 $


 
 $
(6
)
 
 $
1


U.S. Treasury securities
 
374,681


 
180


 


 
374,861


Total short-term investments
 
 $
374,688


 
 $
180


 
 $
(6
)
 
 $
374,862


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Derivative Instruments and Hedging Activities (Tables)
6 Months Ended
Jun. 30, 2011
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Fair Values of Derivative Instruments
Fair Values of Derivative Instruments
(in thousands)
 
Liability Derivatives
 
 
As of June 30, 2011
 
As of December 31, 2010
 
 
Balance Sheet Location
 
Fair Value
 
Balance Sheet Location
 
Fair Value
Derivatives designated as hedging
instruments under ASC 815
 
 
 
 
 
 
 
 
Interest rate protection agreements
 
Long-term investments
 
 $
1,716


 
Long-term investments
 
 $
10,381


Interest rate protection agreements
 
Other current liabilities
 
(18,508
)
 
Other current liabilities
 
(17,508
)
Interest rate protection agreements
 
Other long-term liabilities
 
(1,457
)
 
Other long-term liabilities
 
(1,182
)
Total derivatives designated as
hedging instruments under ASC
815
 
 
 
 $
(18,249
)
 
 
 
 $
(8,309
)
Effect of Derivative Instruments on the Condensed Consolidated Statement of Income and Comprehensive Income
The Effect of Derivative Instruments on the Condensed Consolidated Statement of Income and Comprehensive Income
For the Three Months Ended June 30,
Derivatives in ASC 815 Cash
Flow Hedging Relationships
 
Amount of Gain (Loss)
Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain (Loss) Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
2011
 
2010
 
2011
 
2010
Interest rate protection agreements
 
 $
(21,673
)
 
 $
(6,849
)
 
Interest expense
 
 $
(6,081
)
 
 $
(8,285
)




The Effect of Derivative Instruments on the Condensed Consolidated Statement of Income and Comprehensive Income
For the Six Months Ended June 30,
Derivatives in ASC 815 Cash
Flow Hedging Relationships
 
Amount of Gain (Loss)
Recognized in OCI on Derivative
(Effective Portion)
 
Location of Gain (Loss) Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
Amount of Gain (Loss)
Reclassified from
Accumulated OCI into
Income (Effective Portion)
 
2011
 
2010
 
2011
 
2010
Interest rate protection agreements
 
 $
(20,697
)
 
 $
(16,655
)
 
Interest expense
 
 $
(10,757
)
 
 $
(19,241
)
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Intangible Assets (Tables)
6 Months Ended
Jun. 30, 2011
Goodwill and Intangible Assets Disclosure [Abstract]
Schedule of Acquired Indefinite-lived Intangible Assets
 
 
FCC Licenses
 
Microwave
Relocation
Costs
Balance at January 1, 2011
 
 $
2,500,192


 
 $
22,049


Additions
 
13,579


 
2,540


Disposals
 


 


Balance at June 30, 2011
 
 $
2,513,771


 
 $
24,589


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Long-term Debt (Tables)
6 Months Ended
Jun. 30, 2011
Debt Disclosure [Abstract]
Schedule of Long-term Debt
Long-term debt consisted of the following (in thousands):
 
 
June 30,

2011
 
December 31,

2010
Senior Secured Credit Facility
 
 $
2,484,610


 
 $
1,532,000


7 7/8% Senior Notes
 
1,000,000


 
1,000,000


5/8% Senior Notes
 
1,000,000


 
1,000,000


Capital Lease Obligations
 
271,442


 
254,336


Total long-term debt
 
4,756,052


 
3,786,336


Add: unamortized discount on debt
 
(9,124
)
 
(7,053
)
Total debt
 
4,746,928


 
3,779,283


Less: current maturities
 
(32,416
)
 
(21,996
)
Total long-term debt
 
 $
4,714,512


 
 $
3,757,287


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Fair Value Measurements (Tables)
6 Months Ended
Jun. 30, 2011
Fair Value Disclosures [Abstract]
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis
The following table summarizes assets and liabilities measured at fair value on a recurring basis at June 30, 2011, as required by ASC 820 (in thousands):
 
 
Fair Value Measurements
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
Cash equivalents
 
 $
1,853,846


 
 $


 
 $


 
 $
1,853,846


Short-term investments
 
299,954


 


 


 
299,954


Restricted cash and investments
 
2,876


 


 


 
2,876


Long-term investments
 


 


 
6,319


 
6,319


Derivative assets
 


 
1,716


 


 
1,716


Total assets measured at fair value
 
 $
2,156,676


 
 $
1,716


 
 $
6,319


 
 $
2,164,711


Liabilities
 


 


 


 


Derivative liabilities
 
 $


 
 $
19,965


 
 $


 
 $
19,965


Total liabilities measured at fair value
 
 $


 
 $
19,965


 
 $


 
 $
19,965


 
The following table summarizes assets and liabilities measured at fair value on a recurring basis at December 31, 2010, as required by ASC 820 (in thousands):
 
 
Fair Value Measurements
 
 
Level 1
 
Level 2
 
Level 3
 
Total
Assets
 
 
 
 
 
 
 
 
Cash equivalents
 
 $
787,829


 
 $


 
 $


 
 $
787,829


Short-term investments
 
374,862


 


 


 
374,862


Restricted cash and investments
 
2,876


 


 


 
2,876


Long-term investments
 


 


 
6,319


 
6,319


Derivative assets
 


 
10,381


 


 
10,381


Total assets measured at fair value
 
 $
1,165,567


 
 $
10,381


 
 $
6,319


 
 $
1,182,267


Liabilities
 


 


 


 


Derivative liabilities
 
 $


 
 $
18,690


 
 $


 
 $
18,690


Total liabilities measured at fair value
 
 $


 
 $
18,690


 
 $


 
 $
18,690


Fair Value, Derivatives Measured On Recurring Basis Observable Input Reconciliation
The following table summarizes the changes in fair value of the Company’s net derivative liabilities included in Level 2 assets (in thousands):
Fair Value Measurements of Net Derivative Liabilities Using Level 2 Inputs
 
Net Derivative Liabilities
 
 
Three Months Ended June 30,
 
 
2011
 
2010
Beginning balance
 
 $
2,657


 
 $
23,709


Total losses (realized or unrealized):
 


 


Included in earnings (1)
 
6,081


 
8,285


Included in accumulated other comprehensive income (loss)
 
(21,673
)
 
(6,849
)
Transfers in and/or out of Level 2
 


 


Purchases, sales, issuances and settlements
 


 


Ending balance
 
 $
18,249


 
 $
22,273


 ————————————
(1)
Losses included in earnings that are attributable to the reclassification of the effective portion of those derivative liabilities still held at the reporting date as reported in interest expense in the condensed consolidated statements of income and comprehensive income.


Fair Value Measurements of Net Derivative Liabilities Using Level 2 Inputs
 
Net Derivative Liabilities
 
 
Six Months Ended June 30,
 
 
2011
 
2010
Beginning balance
 
 $
8,309


 
 $
24,859


Total losses (realized or unrealized):
 


 


Included in earnings (2)
 
10,757


 
19,241


Included in accumulated other comprehensive income (loss)
 
(20,697
)
 
(16,655
)
Transfers in and/or out of Level 2
 


 


Purchases, sales, issuances and settlements
 


 


Ending balance
 
 $
18,249


 
 $
22,273


 ————————————
(2)
Losses included in earnings that are attributable to the reclassification of the effective portion of those derivative liabilities still held at the reporting date as reported in interest expense in the condensed consolidated statements of income and comprehensive income.
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation
The following table summarizes the changes in fair value of the Company’s Level 3 assets (in thousands):
Fair Value Measurements of Assets Using Level 3 Inputs
 
Long-Term Investments
 
 
Three Months Ended June 30,
 
 
2011
 
2010
Beginning balance
 
 $
6,319


 
 $
6,319


Total losses (realized or unrealized):
 


 


Included in earnings
 


 


Included in accumulated other comprehensive income (loss)
 


 


Transfers in and/or out of Level 3
 


 


Purchases, sales, issuances and settlements
 


 


Ending balance
 
 $
6,319


 
 $
6,319




Fair Value Measurements of Assets Using Level 3 Inputs
 
Long-Term Investments
 
 
Six Months Ended June 30,
 
 
2011
 
2010
Beginning balance
 
 $
6,319


 
 $
6,319


Total losses (realized or unrealized):
 


 


Included in earnings
 


 


Included in accumulated other comprehensive income (loss)
 


 


Transfers in and/or out of Level 3
 


 


Purchases, sales, issuances and settlements
 


 


Ending balance
 
 $
6,319


 
 $
6,319


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Net Income Per Common Share (Tables)
6 Months Ended
Jun. 30, 2011
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted
The following table sets forth the computation of basic and diluted net income per common share for the periods indicated (in thousands, except share and per share data):
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2011
 
2010
 
2011
 
2010
Basic EPS:
 
 
 
 
 
 
 
 
Net income applicable to common stock
 
 $
84,335


 
 $
79,915


 
 $
140,714


 
 $
102,576


Amount allocable to common shareholders
 
99.0
%
 
99.2
%
 
99.1
%
 
99.2
%
Rights to undistributed earnings
 
 $
83,496


 
 $
79,291


 
 $
139,420


 
 $
101,775


Weighted average shares outstanding—basic
 
360,226,487


 
353,278,423


 
358,616,324


 
353,032,030


Net income per common share—basic
 
 $
0.23


 
 $
0.22


 
 $
0.39


 
 $
0.29


Diluted EPS:
 


 


 


 


Rights to undistributed earnings
 
 $
83,496


 
 $
79,291


 
 $
139,420


 
 $
101,775


Weighted average shares outstanding—basic
 
360,226,487


 
353,278,423


 
358,616,324


 
353,032,030


Effect of dilutive securities:
 


 


 


 


Stock options
 
5,163,793


 
2,407,023


 
4,536,910


 
2,119,082


Weighted average shares outstanding—diluted
 
365,390,280


 
355,685,446


 
363,153,234


 
355,151,112


Net income per common share—diluted
 
 $
0.23


 
 $
0.22


 
 $
0.38


 
 $
0.29


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Supplemental Cash Flow Information (Tables)
6 Months Ended
Jun. 30, 2011
Supplemental Cash Flow Information [Abstract]
Schedule of Supplemental Cash Flow Disclosures
 
 
Six Months Ended June 30,
 
 
2011
 
2010
 
 
(in thousands)
Cash paid for interest
 
 $
113,313


 
 $
134,690


Cash paid for income taxes
 
3,873


 
2,237


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Related-Party Transactions (Tables)
6 Months Ended
Jun. 30, 2011
Related Party Transactions [Abstract]
Schedule of Related Party Transactions
Transactions associated with the related parties described above are included in various line items in the accompanying condensed consolidated balance sheets, condensed consolidated statements of income and comprehensive income, and condensed consolidated statements of cash flows. The following tables summarize the transactions with related-parties (in millions):
 
 
June 30,

2011
 
December 31,

2010
Network service fees included in prepaid expenses
 
 $
1.5


 
 $
1.5


Receivables from related-party included in other current assets
 
3.0


 
0.6


DAS equipment included in property and equipment, net
 
375.8


 
366.4


Deferred network service fees included in other assets
 
9.1


 
9.9


Payments due to related-party included in accounts payable and accrued expenses
 
9.4


 
7.8


Current portion of capital lease obligations included in current maturities of long-term debt
 
6.2


 
5.2


Non-current portion of capital lease obligations included in long-term debt, net
 
231.1


 
215.4


Deferred DAS service fees included in other long-term liabilities
 
1.3


 
1.2




 
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
 
2011
 
2010
 
2011
 
2010
Fees received by the Company as compensation included in service revenues
 
 $
3.9


 
 $
2.9


 
 $
7.4


 
 $
5.1


Fees received by the Company as compensation included in equipment revenues
 
6.7


 
6.8


 
11.3


 
9.9


Fees paid by the Company for services and related expenses included in cost of service
 
5.5


 
5.9


 
9.6


 
10.8


Fees paid by the Company for services included in selling, general and administrative expenses
 
0.9


 
1.0


 
2.6


 
2.8


DAS equipment depreciation included in depreciation expense
 
9.7


 
6.3


 
18.5


 
11.7


Capital lease interest included in interest expense
 
4.8


 
3.5


 
9.4


 
7.0




 
 
Six Months Ended June 30,
 
 
2011
 
2010
Capital lease payments included in financing activities
 
 $
4.0


 
 $
1.0


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Guarantor Subsidiaries (Tables)
3 Months Ended 6 Months Ended 12 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Dec. 31, 2010
Guarantor Subsidiaries [Abstract]
Schedule of Condensed Consolidated Statements of Financial Position
Condensed Consolidated Balance Sheet
As of June 30, 2011
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
CURRENT ASSETS:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 $
1,603,172


 
 $
252,200


 
 $
622


 
 $


 
 $
1,855,994


Short-term investments
 
299,954


 


 


 


 
299,954


Inventories
 


 
124,947


 
15,101


 


 
140,048


Prepaid expenses
 
171


 
487


 
64,324


 


 
64,982


Deferred charges
 


 
94,931


 


 


 
94,931


Advances to subsidiaries
 


 
1,464,837


 


 
(1,464,837
)
 


Other current assets
 
94


 
71,812


 
40,487


 


 
112,393


Total current assets
 
1,903,391


 
2,009,214


 
120,534


 
(1,464,837
)
 
2,568,302


Property and equipment, net
 


 
31,234


 
3,825,635


 


 
3,856,869


Long-term investments
 
6,319


 
1,716


 


 


 
8,035


Investment in subsidiaries
 
1,139,888


 
4,344,422


 


 
(5,484,310
)
 


FCC licenses
 


 
3,800


 
2,534,560


 


 
2,538,360


Other assets
 


 
96,151


 
33,310


 


 
129,461


Total assets
 
 $
3,049,598


 
 $
6,486,537


 
 $
6,514,039


 
 $
(6,949,147
)
 
 $
9,101,027


CURRENT LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
 $


 
 $
78,511


 
 $
349,411


 
 $


 
 $
427,922


Advances from subsidiaries
 
297,941


 


 
1,166,896


 
(1,464,837
)
 


Other current liabilities
 


 
90,123


 
207,628


 


 
297,751


Total current liabilities
 
297,941


 
168,634


 
1,723,935


 
(1,464,837
)
 
725,673


Long-term debt
 


 
4,450,097


 
264,415


 


 
4,714,512


Deferred credits
 
1,939


 
719,011


 
109,430


 


 
830,380


Other long-term liabilities
 


 
8,907


 
71,837


 


 
80,744


Total liabilities
 
299,880


 
5,346,649


 
2,169,617


 
(1,464,837
)
 
6,351,309


STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
 
Common stock
 
36


 


 


 


 
36


Other stockholders’ equity
 
2,749,682


 
1,139,888


 
4,344,422


 
(5,484,310
)
 
2,749,682


Total stockholders’ equity
 
2,749,718


 
1,139,888


 
4,344,422


 
(5,484,310
)
 
2,749,718


Total liabilities and stockholders’ equity
 
 $
3,049,598


 
 $
6,486,537


 
 $
6,514,039


 
 $
(6,949,147
)
 
 $
9,101,027


Condensed Consolidated Balance Sheet
As of December 31, 2010
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
CURRENT ASSETS:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
 $
507,849


 
 $
287,942


 
 $
740


 
 $


 
 $
796,531


Short-term investments
 
374,862


 


 


 


 
374,862


Inventories
 


 
145,260


 
15,789


 


 
161,049


Prepaid Expenses
 


 
249


 
50,228


 




 
50,477


Deferred charges
 


 
89,775


 


 


 
89,775


Advances to subsidiaries
 
647,701


 
462,518


 


 
(1,110,219
)
 


Other current assets
 
94


 
81,308


 
39,789


 


 
121,191


Total current assets
 
1,530,506


 
1,067,052


 
106,546


 
(1,110,219
)
 
1,593,885


Property and equipment, net
 


 
246,249


 
3,413,196


 


 
3,659,445


Long-term investments
 
6,319


 
10,381


 


 


 
16,700


Investment in subsidiaries
 
1,006,295


 
3,994,553


 


 
(5,000,848
)
 


FCC licenses
 


 
3,800


 
2,518,441


 


 
2,522,241


Other assets
 


 
75,085


 
51,224


 


 
126,309


Total assets
 
 $
2,543,120


 
 $
5,397,120


 
 $
6,089,407


 
 $
(6,111,067
)
 
 $
7,918,580


CURRENT LIABILITIES:
 
 
 
 
 
 
 
 
 
 
Accounts payable and accrued expenses
 
 $


 
 $
150,994


 
 $
370,794


 
 $


 
 $
521,788


Advances from subsidiaries
 


 


 
1,110,219


 
(1,110,219
)
 


Other current liabilities
 


 
82,684


 
197,948


 


 
280,632


Total current liabilities
 


 
233,678


 
1,678,961


 
(1,110,219
)
 
802,420


Long-term debt
 


 
3,508,948


 
248,339


 


 
3,757,287


Deferred credits
 
1,544


 
639,766


 
103,159


 


 
744,469


Other long-term liabilities
 


 
8,433


 
64,395


 


 
72,828


Total liabilities
 
1,544


 
4,390,825


 
2,094,854


 
(1,110,219
)
 
5,377,004


STOCKHOLDERS’ EQUITY:
 
 
 
 
 
 
 
 
 
 
Common stock
 
36


 


 


 


 
36


Other stockholders’ equity
 
2,541,540


 
1,006,295


 
3,994,553


 
(5,000,848
)
 
2,541,540


Total stockholders’ equity
 
2,541,576


 
1,006,295


 
3,994,553


 
(5,000,848
)
 
2,541,576


Total liabilities and stockholders’ equity
 
 $
2,543,120


 
 $
5,397,120


 
 $
6,089,407


 
 $
(6,111,067
)
 
 $
7,918,580


Schedule of Condensed Consolidated Statements of Income
Condensed Consolidated Statement of Income
Three Months Ended June 30, 2011
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
REVENUES:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 $


 
 $
6,441


 
 $
1,210,352


 
 $
(7,340
)
 
 $
1,209,453


OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Cost of revenues
 


 
5,907


 
709,997


 
(7,340
)
 
708,564


Selling, general and administrative expenses
 


 
528


 
154,028


 


 
154,556


Other operating expenses
 


 
60


 
136,018


 


 
136,078


Total operating expenses
 


 
6,495


 
1,000,043


 
(7,340
)
 
999,198


(Loss) income from operations
 


 
(54
)
 
210,309


 


 
210,255


OTHER EXPENSE (INCOME):
 
 
 
 
 
 
 
 
 
 
Interest expense
 


 
62,918


 
4,062


 


 
66,980


Non-operating expenses
 
(480
)
 
9,516


 
(197
)
 


 
8,839


Earnings from consolidated subsidiaries
 
(83,855
)
 
(207,631
)
 


 
291,486


 


Total other (income) expense
 
(84,335
)
 
(135,197
)
 
3,865


 
291,486


 
75,819


Income (loss) before provision for income taxes
 
84,335


 
135,143


 
206,444


 
(291,486
)
 
134,436


Provision for income taxes
 


 
(51,288
)
 
1,187


 


 
(50,101
)
Net income (loss)
 
 $
84,335


 
 $
83,855


 
 $
207,631


 
 $
(291,486
)
 
 $
84,335


Condensed Consolidated Statement of Income
Three Months Ended June 30, 2010
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
REVENUES:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 $


 
 $
6,336


 
 $
1,060,203


 
 $
(54,003
)
 
 $
1,012,536


OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Cost of revenues
 


 
6,004


 
591,521


 
(54,003
)
 
543,522


Selling, general and administrative expenses
 


 
331


 
158,269


 


 
158,600


Other operating expenses
 


 
35


 
111,967


 


 
112,002


Total operating expenses
 


 
6,370


 
861,757


 
(54,003
)
 
814,124


(Loss) income from operations
 


 
(34
)
 
198,446


 


 
198,412


OTHER EXPENSE (INCOME):
 
 
 
 
 
 
 
 
 
 
Interest expense
 


 
63,023


 
40,559


 
(38,079
)
 
65,503


Non-operating expenses
 
(367
)
 
(37,591
)
 
(34
)
 
38,079


 
87


Earnings from consolidated subsidiaries
 
(79,548
)
 
(157,921
)
 


 
237,469


 


Total other (income) expense
 
(79,915
)
 
(132,489
)
 
40,525


 
237,469


 
65,590


Income (loss) before provision for
income taxes
 
79,915


 
132,455


 
157,921


 
(237,469
)
 
132,822


Provision for income taxes
 


 
(52,907
)
 


 


 
(52,907
)
Net income (loss)
 
 $
79,915


 
 $
79,548


 
 $
157,921


 
 $
(237,469
)
 
 $
79,915


Condensed Consolidated Statement of Income
Six Months Ended June 30, 2011
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
REVENUES:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 $


 
 $
10,924


 
 $
2,408,295


 
 $
(15,390
)
 
 $
2,403,829


OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Cost of revenues
 


 
10,209


 
1,464,424


 
(15,390
)
 
1,459,243


Selling, general and administrative expenses
 


 
715


 
323,612


 


 
324,327


Other operating expenses
 


 
154


 
264,513


 


 
264,667


Total operating expenses
 


 
11,078


 
2,052,549


 
(15,390
)
 
2,048,237


(Loss) income from operations
 


 
(154
)
 
355,746


 


 
355,592


OTHER EXPENSE (INCOME):
 
 
 
 
 
 
 
 
 
 
Interest expense
 


 
115,294


 
8,247


 


 
123,541


Non-operating expenses
 
(986
)
 
9,509


 
(455
)
 


 
8,068


Earnings from consolidated subsidiaries
 
(139,728
)
 
(349,870
)
 


 
489,598


 


Total other (income) expense
 
(140,714
)
 
(225,067
)
 
7,792


 
489,598


 
131,609


Income (loss) before provision for income taxes
 
140,714


 
224,913


 
347,954


 
(489,598
)
 
223,983


Provision for income taxes
 


 
(85,185
)
 
1,916


 


 
(83,269
)
Net income (loss)
 
 $
140,714


 
 $
139,728


 
 $
349,870


 
 $
(489,598
)
 
 $
140,714


Condensed Consolidated Statement of Income
Six Months Ended June 30, 2010
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
REVENUES:
 
 
 
 
 
 
 
 
 
 
Total Revenues
 
 $


 
 $
9,471


 
 $
2,076,237


 
 $
(102,669
)
 
 $
1,983,039


OPERATING EXPENSES:
 
 
 
 
 
 
 
 
 
 
Cost of revenues
 


 
9,035


 
1,235,546


 
(102,669
)
 
1,141,912


Selling, general and administrative expenses
 


 
436


 
318,074


 


 
318,510


Other operating expenses
 


 
66


 
218,908


 


 
218,974


Total operating expenses
 


 
9,537


 
1,772,528


 
(102,669
)
 
1,679,396


(Loss) income from operations
 


 
(66
)
 
303,709


 


 
303,643


OTHER EXPENSE (INCOME):
 
 
 
 
 
 
 
 
 
 
Interest expense
 


 
128,202


 
80,902


 
(76,119
)
 
132,985


Non-operating expenses
 
(823
)
 
(75,180
)
 
(38
)
 
76,119


 
78


Earnings from consolidated subsidiaries
 
(101,753
)
 
(222,845
)
 


 
324,598


 


Total other (income) expense
 
(102,576
)
 
(169,823
)
 
80,864


 
324,598


 
133,063


Income (loss) before provision for
income taxes
 
102,576


 
169,757


 
222,845


 
(324,598
)
 
170,580


Provision for income taxes
 


 
(68,004
)
 


 


 
(68,004
)
Net income (loss)
 
 $
102,576


 
 $
101,753


 
 $
222,845


 
 $
(324,598
)
 
 $
102,576


Schedule of Condensed Consolidated Statements of Cash Flows
Condensed Consolidated Statement of Cash Flows
Six Months Ended June 30, 2011
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
 
 $
497


 
 $
(126,873
)
 
 $
608,476


 
 $


 
 $
482,100


CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
 


 
(6,950
)
 
(444,623
)
 


 
(451,573
)
Purchase of investments
 
(299,826
)
 


 


 


 
(299,826
)
Proceeds from maturity of investments
 
375,000


 


 


 


 
375,000


Change in advances – affiliates
 
671,631


 
(820,250
)
 


 
148,619


 


Other investing activities, net
 


 
(17,691
)
 
(10,175
)
 


 
(27,866
)
Net cash provided by (used in) investing activities
 
746,805


 
(844,891
)
 
(454,798
)
 
148,619


 
(404,265
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Change in advances – affiliates
 
297,941


 


 
(149,322
)
 
(148,619
)
 


Change in book overfraft
 


 
1,263


 


 


 
1,263


Proceeds from debt issuance, net of discount
 


 
1,497,500


 


 


 
1,497,500


Retirement of senior secured credit facility debt
 


 
(535,792
)
 


 


 
(535,792
)
Proceeds from exercise of stock options
 
53,671


 


 


 


 
53,671


Other financing activities, net
 
(3,591
)
 
(26,949
)
 
(4,474
)
 


 
(35,014
)
Net cash provided by (used in) financing activities
 
348,021


 
936,022


 
(153,796
)
 
(148,619
)
 
981,628


INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS
 
1,095,323


 
(35,742
)
 
(118
)
 


 
1,059,463


CASH AND CASH EQUIVALENTS, beginning of period
 
507,849


 
287,942


 
740


 


 
796,531


CASH AND CASH EQUIVALENTS, end of period
 
 $
1,603,172


 
 $
252,200


 
 $
622


 
 $


 
 $
1,855,994


Condensed Consolidated Statement of Cash Flows
Six Months Ended June 30, 2010
 
 
 
Parent
 
Issuer
 
Guarantor
Subsidiaries
 
Eliminations
 
Consolidated
 
 
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Net cash provided by (used in) operating activities
 
 $
677


 
 $
(110,982
)
 
 $
447,756


 
 $


 
 $
337,451


CASH FLOWS FROM INVESTING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Purchases of property and equipment
 


 
(49,899
)
 
(265,438
)
 


 
(315,337
)
Purchase of investments
 
(312,225
)
 


 


 


 
(312,225
)
Proceeds from maturity of investments
 
237,500


 


 


 


 
237,500


Change in advances - affiliates
 
1,638


 
285,848


 


 
(287,486
)
 


Proceeds from affiliate debt
 


 
233,152


 


 
(233,152
)
 


Issuance of affiliate debt
 


 
(333,000
)
 


 
333,000


 


Other investing activities, net
 


 
(16,789
)
 
4,380


 


 
(12,409
)
Net cash (used in) provided by investing activities
 
(73,087
)
 
119,312


 
(261,058
)
 
(187,638
)
 
(402,471
)
CASH FLOWS FROM FINANCING ACTIVITIES:
 
 
 
 
 
 
 
 
 
 
Change in book overdraft
 


 
(80,394
)
 
57


 


 
(80,337
)
Proceeds from long-term loan
 


 


 
333,000


 
(333,000
)
 


Change in advances - affiliates
 


 


 
(287,486
)
 
287,486


 


Repayment of debt
 


 
(8,000
)
 
(233,152
)
 
233,152


 
(8,000
)
Proceeds from exercise of stock options
 
2,592


 


 


 


 
2,592


Other financing activities, net
 
(852
)
 


 
(1,224
)
 


 
(2,076
)
Net cash provided by (used in) financing activities
 
1,740


 
(88,394
)
 
(188,805
)
 
187,638


 
(87,821
)
DECREASE IN CASH AND CASH EQUIVALENTS
 
(70,670
)
 
(80,064
)
 
(2,107
)
 


 
(152,841
)
CASH AND CASH EQUIVALENTS,
beginning of period
 
642,089


 
269,836


 
17,456


 


 
929,381


CASH AND CASH EQUIVALENTS, end of period
 
 $
571,419


 
 $
189,772


 
 $
15,349


 
 $


 
 $
776,540


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Basis of Presentation (Details) (USD  $)
In Millions
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
FUSF, E-911, and other fees included in gross revenue  $ 17.4  $ 21.5  $ 35.5  $ 44.6
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Asset Acquisition (Details) (USD  $)
In Millions
1 Months Ended
Jun. 30, 2011
Feb. 28, 2011
Nov. 30, 2010
Oct. 31, 2010
Significant Acquisitions
Asset Acquisition, Purchase Price  $ 49.2
Asset Acquisition, Cash Payments 8 41.1
Asset Acquisition, Purchase Price Adjustment 0.5
Asset Acquisition, Acquired Property and Equipment, Amount 35.6
Asset Acquisition, Acquired Intangible Assets, Amount  $ 13.6
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Short-term Investments (Details) (USD  $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Schedule of Available-for-sale Securities
Amortized Cost  $ 299,833  $ 374,688
Unrealized Gain in Accumulated OCI 126 180
Unrealized Loss in Accumulated OCI (5) (6)
Aggregate Fair Value 299,954 374,862
Equity securities
Schedule of Available-for-sale Securities
Amortized Cost 7 7
Unrealized Gain in Accumulated OCI 0 0
Unrealized Loss in Accumulated OCI (5) (6)
Aggregate Fair Value 2 1
U.S. Treasury securities
Schedule of Available-for-sale Securities
Amortized Cost 299,826 374,681
Unrealized Gain in Accumulated OCI 126 180
Unrealized Loss in Accumulated OCI 0 0
Aggregate Fair Value  $ 299,952  $ 374,861
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Derivative Instruments and Hedging Activities (Details) (Interest Rate Swap, USD  $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 30, 2011
Derivative
Derivatives, Expected net loss to be transferred from accumulated OCI to earnings within 12 months  $ 18.5
Designated as Hedging Instrument
Derivative
Derivative, Net Liability Position, Aggregate Fair Value 18.2
Swaps Effective February 2010
Derivative
Notional Amount of Interest Rate Derivatives 1,000
Derivative, Weighted Average Fixed Interest Rate 5.93%
Derivative, Maturity Date Feb 1, 2012
Swaps Effective February 2012
Derivative
Notional Amount of Interest Rate Derivatives 950
Derivative, Weighted Average Fixed Interest Rate 4.93%
Derivative, Maturity Date Feb 1, 2014
Swaps Effective April 2011
Derivative
Notional Amount of Interest Rate Derivatives  $ 450
Derivative, Weighted Average Fixed Interest Rate 5.24%
Derivative, Maturity Date Apr 15, 2014
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Derivative Instruments and Hedging Activities Schedule of Derivative Instruments in Statement of Financial Position (Details) (Designated as Hedging Instrument, Interest Rate Swap, USD  $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Derivatives, Fair Value
Derivatives, net fair value  $ (18,249)  $ (8,309)
Long-term investments
Derivatives, Fair Value
Derivative asset, fair value 1,716 10,381
Other current liabilities
Derivatives, Fair Value
Derivative liability, fair value (18,508) (17,508)
Other long-term liabilities
Derivatives, Fair Value
Derivative liability, fair value  $ (1,457)  $ (1,182)
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Derivative Instruments and Hedging Activities Effect of Derivative Instruments on Statement of Income and Comprehenive Income (Details) (Interest Rate Swap, Cash Flow Hedging Relationships, USD  $)
In Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Interest Rate Swap | Cash Flow Hedging Relationships
Derivative Instruments, Gain (Loss)
Amount of Gain (Loss) Recognized in OCI on Derivative (Effective Portion)  $ (21,673)  $ (6,849)  $ (20,697)  $ (16,655)
Amount of Gain (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)  $ (6,081)  $ (8,285)  $ (10,757)  $ (19,241)
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Intangible Assets (Details) (USD  $)
In Thousands
12 Months Ended 6 Months Ended
Dec. 31, 2010
Jun. 30, 2011
FCC Licenses
Jun. 30, 2011
Microwave Relocation Costs
Indefinite-lived Intangible Assets Rollforward
Indefinite-lived intangible assets, beginning balance  $ 2,500,192  $ 22,049
Additions 13,579 2,540
Disposals 0 0
Indefinite-lived intangible assets, ending balance 2,513,771 24,589
Impairment of indefinite-lived intangible assets  $ 0
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Long-term Debt (Details) (USD  $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Debt Instrument
Total long-term debt  $ 4,756,052  $ 3,786,336
Unamortized discount on debt (9,124) (7,053)
Total debt 4,746,928 3,779,283
Current maturities of long-term debt (32,416) (21,996)
Long-term debt, net 4,714,512 3,757,287
Senior Secured Credit Facility
Debt Instrument
Total long-term debt 2,484,610 1,532,000
7 7/8% Senior Notes
Debt Instrument
Total long-term debt 1,000,000 1,000,000
6 5/8% Senior Notes
Debt Instrument
Total long-term debt 1,000,000 1,000,000
Capital lease obligations
Debt Instrument
Total long-term debt  $ 271,442  $ 254,336
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Long-term Debt Instruments (Details) (USD  $)
3 Months Ended 6 Months Ended 1 Months Ended 3 Months Ended 1 Months Ended 1 Months Ended 1 Months Ended 1 Months Ended 3 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Sep. 30, 2010
7 7/8% Senior Notes
Nov. 30, 2010
6 5/8% Senior Notes
Dec. 31, 2010
6 5/8% Senior Notes
Jun. 30, 2011
Term Loans - Senior Secured Credit Facility
Nov. 30, 2006
Term Loans - Senior Secured Credit Facility
Senior Secured Credit Facility - November 2006
Jul. 31, 2010
Tranche B-1 [Member]
Senior Secured Credit Facility - November 2006
May 31, 2011
Tranche B-1 [Member]
Incremental Agreement May 2011 - Senior Secured Credit Facility
Jul. 31, 2010
Tranche B-1 [Member]
Jul. 31, 2010
Tranche B-2 [Member]
Amendment July 2010 - Senior Secured Credit Facility
Mar. 31, 2011
Tranche B-2 [Member]
Amendment March 2011 - Senior Secured Credit Facility
Mar. 31, 2011
Tranche B-3 [Member]
Amendment March 2011 - Senior Secured Credit Facility
May 31, 2011
Incremental Tranche B-3 [Member]
Incremental Agreement May 2011 - Senior Secured Credit Facility
Nov. 30, 2006
Revolver - Senior Secured Credit Facility
Senior Secured Credit Facility - November 2006
Jul. 31, 2010
Revolver - Senior Secured Credit Facility
Amendment July 2010 - Senior Secured Credit Facility
Mar. 31, 2011
Revolver - Senior Secured Credit Facility
Amendment March 2011 - Senior Secured Credit Facility
Sep. 30, 2010
Amendment July 2010 - Senior Secured Credit Facility
Debt Instrument
Principal Amount  $ 1,000,000,000  $ 1,000,000,000  $ 1,600,000,000  $ 500,000,000  $ 1,000,000,000
Maturity Date Sep 1, 2018 Nov 15, 2020 Nov 3, 2013 Nov 3, 2013 Nov 3, 2016 Mar 17, 2018 Mar 17, 2018 Nov 3, 2011 Mar 17, 2016
Outstanding Principal Amended 1,000,000,000
Proceeds from Issuance 974,000,000 988,100,000 490,200,000
Debt Issuance Fees 26,000,000 11,900,000 9,800,000 8,300,000
Stated Interest Rate 7.88% 6.63%
Maximum Borrowing Capacity 1,600,000,000 100,000,000 67,500,000 100,000,000
Basis Spread on Variable Rate 2.25% 3.50% 3.82% 3.75% 3.75%
Periodic Payment - Annual Aggregate Percent of Principal 1.00%
Periodic Payment Amount 1,250,000 2,500,000
Extinguishment of Debt, Amount 535,800,000
Loss on extinguishment of debt 9,536,000 0 9,536,000 0 9,500,000 0
Net Proceeds from Issuance and Repayment of Debt 455,900,000
Weighted Average Interest Rate 5.01%
Capital Lease Obligations, Current 7,000,000 7,000,000
Capital Lease Obligations, Noncurrent  $ 264,400,000  $ 264,400,000
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Fair Value Measurements (Details) (USD  $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents  $ 1,853,846  $ 787,829
Short-term investments 299,954 374,862
Restricted cash and investments 2,876 2,876
Long-term investments 6,319 6,319
Derivative assets 1,716 10,381
Total assets measured at fair value 2,164,711 1,182,267
Derivative liabilities 19,965 18,690
Total liabilities measured at fair value 19,965 18,690
Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents 1,853,846 787,829
Short-term investments 299,954 374,862
Restricted cash and investments 2,876 2,876
Long-term investments 0 0
Derivative assets 0 0
Total assets measured at fair value 2,156,676 1,165,567
Derivative liabilities 0 0
Total liabilities measured at fair value 0 0
Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents 0 0
Short-term investments 0 0
Restricted cash and investments 0 0
Long-term investments 0 0
Derivative assets 1,716 10,381
Total assets measured at fair value 1,716 10,381
Derivative liabilities 19,965 18,690
Total liabilities measured at fair value 19,965 18,690
Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Cash equivalents 0 0
Short-term investments 0 0
Restricted cash and investments 0 0
Long-term investments 6,319 6,319
Derivative assets 0 0
Total assets measured at fair value 6,319 6,319
Derivative liabilities 0 0
Total liabilities measured at fair value  $ 0  $ 0
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Fair Value Measurements Derivatives Observable Inputs Reconciliation (Details) (Level 2, USD  $)
In Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Level 2
Derivatives Measured on a Recurring Basis, Observable Input Rollforward
Beginning Balance  $ 2,657  $ 23,709  $ 8,309  $ 24,859
Gain (loss) included in earnings 6,081 8,285 10,757 19,241
Gain (loss) included in other comprehensive income (21,673) (6,849) (20,697) (16,655)
Transfers in and/or out of Level 2 0 0 0 0
Purchases, sales, issuances, settlements 0 0 0 0
Ending Balance  $ 18,249  $ 22,273  $ 18,249  $ 22,273
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Fair Value Measurements Unobservable Inputs Reconciliation (Details) (Level 3, USD  $)
In Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Level 3
Assets Measured on Recurring Basis, Unobservable Input Rollforward
Beginning Balance  $ 6,319  $ 6,319  $ 6,319  $ 6,319
Gain (loss) included in earnings 0 0 0 0
Gain (loss) included in other comprehensive income 0 0 0 0
Transfers in and/or out of Level 3 0 0 0 0
Purchases, sales, issuances, settlements 0 0 0 0
Ending Balance  $ 6,319  $ 6,319  $ 6,319  $ 6,319
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Fair Value Measurements Fair Value Disclosure, Fair Value and Carrying Amounts (Details) (USD  $)
In Billions
Jun. 30, 2011
Dec. 31, 2010
Carrying value
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Long-term Debt, Fair Value  $ 4.5  $ 3.5
Estimated fair value
Fair Value, Balance Sheet Grouping, Financial Statement Captions
Long-term Debt, Fair Value  $ 4.5  $ 3.5
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Net Income Per Common Share (Details) (USD  $)
In Thousands, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Basic EPS:
Net income applicable to common stock  $ 84,335  $ 79,915  $ 140,714  $ 102,576
Amount allocable to common shareholders 99.00% 99.20% 99.10% 99.20%
Rights to undistributed earnings 83,496 79,291 139,420 101,775
Weighted average shares outstanding- basic 360,226,487 353,278,423 358,616,324 353,032,030
Net income per common share - basic  $ 0.23  $ 0.22  $ 0.39  $ 0.29
Restricted common shares issued, not vested, excluded from basic net income per common share 3,700,000 2,800,000 3,400,000 2,800,000
Diluted EPS:
Rights to undistribued earnings  $ 83,496  $ 79,291  $ 139,420  $ 101,775
Weighted average shares outstanding- basic 360,226,487 353,278,423 358,616,324 353,032,030
Effect of dilutive securities, stock options 5,163,793 2,407,023 4,536,910 2,119,082
Weighted average shares outstanding - diluted 365,390,280 355,685,446 363,153,234 355,151,112
Net Income Per Common Share, Diluted  $ 0.23  $ 0.22  $ 0.38  $ 0.29
Stock Options [Member]
Diluted EPS:
Antidilutive securities excluded from calculation of diluted net income per common share 10,300,000 25,800,000 14,400,000 25,200,000
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Commitments and Contingencies (Details) (USD  $)
In Millions
Jun. 30, 2011
Commitments and Contingencies Disclosure [Abstract]
Total aggregate commitment, pricing agreement  $ 15.8
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Supplemental Cash Flow Information (Details) (USD  $)
6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Cash paid for interest  $ 113,313,000  $ 134,690,000
Cash paid for income taxes 3,873,000 2,237,000
Non-cash investing and financing activities
Accrued purchases of property and equipment 96,900,000 81,800,000
Assets acquired under capital lease obligations 20,300,000 10,400,000
Equipment returned for credit applicable for additional equipment  $ 17,800,000
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Related-Party Transactions (Details) (USD  $)
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
Dec. 31, 2010
Related Party Transactions
Network Service Fees Included in Prepaid Expense  $ 64,982,000  $ 64,982,000  $ 50,477,000
Related Party Receivables in Other Current Assets 49,887,000 49,887,000 63,135,000
DAS Equipment Included in Property and Equipment 3,856,869,000 3,856,869,000 3,659,445,000
Deferred Network Service Fees Included in Other Noncurrent Assets 126,585,000 126,585,000 123,433,000
Related Party Capital Lease Obligations in Current Maturities of Long-term Debt 32,416,000 32,416,000 21,996,000
Related Party Capital Lease Obligations in Long-term Debt 4,714,512,000 4,714,512,000 3,757,287,000
Deferred DAS Service Fees in Other Long Term Liabilities 80,744,000 80,744,000 72,828,000
Related Party Fees in Service Revenues 1,113,292,000 922,137,000 2,163,509,000 1,775,420,000
Related Party Fees in Equipment Revenue 96,161,000 90,399,000 240,320,000 207,619,000
Related Party Fees Paid in Cost of Service 366,030,000 308,168,000 707,447,000 592,820,000
Related Party Fees Paid in Selling, General, and Administrative Expenses 154,556,000 158,600,000 324,327,000 318,510,000
DAS Equipment Depreciation in Depreciation Expense 134,525,000 109,302,000 263,219,000 217,102,000
Related Party Capital Lease Interest Expense 66,980,000 65,503,000 123,541,000 132,985,000
Related Party Capital Lease Payments Included in Financing Activities 4,474,000 1,224,000
Affiliate
Related Party Transactions
Network Service Fees Included in Prepaid Expense 1,500,000 1,500,000 1,500,000
Related Party Receivables in Other Current Assets 3,000,000 3,000,000 600,000
DAS Equipment Included in Property and Equipment 375,800,000 375,800,000 366,400,000
Deferred Network Service Fees Included in Other Noncurrent Assets 9,100,000 9,100,000 9,900,000
Payments Due to Related Parties in Accounts Payable and Accrued Expenses 9,400,000 9,400,000 7,800,000
Related Party Capital Lease Obligations in Current Maturities of Long-term Debt 6,200,000 6,200,000 5,200,000
Related Party Capital Lease Obligations in Long-term Debt 231,100,000 231,100,000 215,400,000
Deferred DAS Service Fees in Other Long Term Liabilities 1,300,000 1,300,000 1,200,000
Related Party Fees in Service Revenues 3,900,000 2,900,000 7,400,000 5,100,000
Related Party Fees in Equipment Revenue 6,700,000 6,800,000 11,300,000 9,900,000
Related Party Fees Paid in Cost of Service 5,500,000 5,900,000 9,600,000 10,800,000
Related Party Fees Paid in Selling, General, and Administrative Expenses 900,000 1,000,000 2,600,000 2,800,000
DAS Equipment Depreciation in Depreciation Expense 9,700,000 6,300,000 18,500,000 11,700,000
Related Party Capital Lease Interest Expense 4,800,000 3,500,000 9,400,000 7,000,000
Related Party Capital Lease Payments Included in Financing Activities  $ 4,000,000  $ 1,000,000
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Guarantor Subsidiaries Schedule of Condensed Consolidated Balance Sheets (Details) (USD  $)
In Thousands
Jun. 30, 2011
Dec. 31, 2010
Jun. 30, 2010
Dec. 31, 2009
CURRENT ASSETS:
Cash and cash equivalents  $ 1,855,994  $ 796,531  $ 776,540  $ 929,381
Short-term investments 299,954 374,862
Inventories 140,048 161,049
Prepaid expenses 64,982 50,477
Deferred charges 94,931 89,775
Advances to subsidiaries 0 0
Other current assets 112,393 121,191
Total current assets 2,568,302 1,593,885
Property and equipment, net 3,856,869 3,659,445
Long-term investments 8,035 16,700
Investment in subsidiaries 0 0
FCC licenses 2,538,360 2,522,241
Other assets 129,461 126,309
Total assets 9,101,027 7,918,580
CURRENT LIABILITIES:
Accounts payable and accrued expenses 427,922 521,788
Advances from subsidiaries 0 0
Other current liabilities 297,751 280,632
Total current liabilities 725,673 802,420
Long-term debt, net 4,714,512 3,757,287
Deferred credits 830,380 744,469
Other long-term liabilities 80,744 72,828
Total liabilities 6,351,309 5,377,004
STOCKHOLDERS' EQUITY:
Common stock 36 36
Other stockholders’ equity 2,749,682 2,541,540
Total stockholders’ equity 2,749,718 2,541,576
Total liabilities and stockholders’ equity 9,101,027 7,918,580
Parent
CURRENT ASSETS:
Cash and cash equivalents 1,603,172 507,849 571,419 642,089
Short-term investments 299,954 374,862
Inventories 0 0
Prepaid expenses 171 0
Deferred charges 0 0
Advances to subsidiaries 0 647,701
Other current assets 94 94
Total current assets 1,903,391 1,530,506
Property and equipment, net 0 0
Long-term investments 6,319 6,319
Investment in subsidiaries 1,139,888 1,006,295
FCC licenses 0 0
Other assets 0 0
Total assets 3,049,598 2,543,120
CURRENT LIABILITIES:
Accounts payable and accrued expenses 0 0
Advances from subsidiaries 297,941 0
Other current liabilities 0 0
Total current liabilities 297,941 0
Long-term debt, net 0 0
Deferred credits 1,939 1,544
Other long-term liabilities 0 0
Total liabilities 299,880 1,544
STOCKHOLDERS' EQUITY:
Common stock 36 36
Other stockholders’ equity 2,749,682 2,541,540
Total stockholders’ equity 2,749,718 2,541,576
Total liabilities and stockholders’ equity 3,049,598 2,543,120
Issuer
CURRENT ASSETS:
Cash and cash equivalents 252,200 287,942 189,772 269,836
Short-term investments 0 0
Inventories 124,947 145,260
Prepaid expenses 487 249
Deferred charges 94,931 89,775
Advances to subsidiaries 1,464,837 462,518
Other current assets 71,812 81,308
Total current assets 2,009,214 1,067,052
Property and equipment, net 31,234 246,249
Long-term investments 1,716 10,381
Investment in subsidiaries 4,344,422 3,994,553
FCC licenses 3,800 3,800
Other assets 96,151 75,085
Total assets 6,486,537 5,397,120
CURRENT LIABILITIES:
Accounts payable and accrued expenses 78,511 150,994
Advances from subsidiaries 0 0
Other current liabilities 90,123 82,684
Total current liabilities 168,634 233,678
Long-term debt, net 4,450,097 3,508,948
Deferred credits 719,011 639,766
Other long-term liabilities 8,907 8,433
Total liabilities 5,346,649 4,390,825
STOCKHOLDERS' EQUITY:
Common stock 0 0
Other stockholders’ equity 1,139,888 1,006,295
Total stockholders’ equity 1,139,888 1,006,295
Total liabilities and stockholders’ equity 6,486,537 5,397,120
Guarantor Subsidiaries
CURRENT ASSETS:
Cash and cash equivalents 622 740 15,349 17,456
Short-term investments 0 0
Inventories 15,101 15,789
Prepaid expenses 64,324 50,228
Deferred charges 0 0
Advances to subsidiaries 0 0
Other current assets 40,487 39,789
Total current assets 120,534 106,546
Property and equipment, net 3,825,635 3,413,196
Long-term investments 0 0
Investment in subsidiaries 0 0
FCC licenses 2,534,560 2,518,441
Other assets 33,310 51,224
Total assets 6,514,039 6,089,407
CURRENT LIABILITIES:
Accounts payable and accrued expenses 349,411 370,794
Advances from subsidiaries 1,166,896 1,110,219
Other current liabilities 207,628 197,948
Total current liabilities 1,723,935 1,678,961
Long-term debt, net 264,415 248,339
Deferred credits 109,430 103,159
Other long-term liabilities 71,837 64,395
Total liabilities 2,169,617 2,094,854
STOCKHOLDERS' EQUITY:
Common stock 0 0
Other stockholders’ equity 4,344,422 3,994,553
Total stockholders’ equity 4,344,422 3,994,553
Total liabilities and stockholders’ equity 6,514,039 6,089,407
Eliminations
CURRENT ASSETS:
Cash and cash equivalents 0 0 0 0
Short-term investments 0 0
Inventories 0 0
Prepaid expenses 0  
Deferred charges 0 0
Advances to subsidiaries (1,464,837) (1,110,219)
Other current assets 0 0
Total current assets (1,464,837) (1,110,219)
Property and equipment, net 0 0
Long-term investments 0 0
Investment in subsidiaries (5,484,310) (5,000,848)
FCC licenses 0 0
Other assets 0 0
Total assets (6,949,147) (6,111,067)
CURRENT LIABILITIES:
Accounts payable and accrued expenses 0 0
Advances from subsidiaries (1,464,837) (1,110,219)
Other current liabilities 0 0
Total current liabilities (1,464,837) (1,110,219)
Long-term debt, net 0 0
Deferred credits 0 0
Other long-term liabilities 0 0
Total liabilities (1,464,837) (1,110,219)
STOCKHOLDERS' EQUITY:
Common stock 0 0
Other stockholders’ equity (5,484,310) (5,000,848)
Total stockholders’ equity (5,484,310) (5,000,848)
Total liabilities and stockholders’ equity  $ (6,949,147)  $ (6,111,067)
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Guarantor Subsidiaries Schedule of Condensed Consolidated Statements of Income (Details) (USD  $)
In Thousands
3 Months Ended 6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
Jun. 30, 2011
Jun. 30, 2010
REVENUES:
Total revenues  $ 1,209,453  $ 1,012,536  $ 2,403,829  $ 1,983,039
OPERATING EXPENSES:
Cost of revenues 708,564 543,522 1,459,243 1,141,912
Selling, General and Administrative Expense 154,556 158,600 324,327 318,510
Other operating expenses 136,078 112,002 264,667 218,974
Total operating expenses 999,198 814,124 2,048,237 1,679,396
(Loss) income from operations 210,255 198,412 355,592 303,643
OTHER EXPENSE (INCOME):
Interest expense 66,980 65,503 123,541 132,985
Non-operating expenses 8,839 87 8,068 78
Earnings from consolidated subsidiaries 0 0 0 0
Total other (income) expense 75,819 65,590 131,609 133,063
Income (loss) before provision for income taxes 134,436 132,822 223,983 170,580
Provision for income taxes (50,101) (52,907) (83,269) (68,004)
Net income 84,335 79,915 140,714 102,576
Parent
REVENUES:
Total revenues 0 0 0 0
OPERATING EXPENSES:
Cost of revenues 0 0 0 0
Selling, General and Administrative Expense 0 0 0 0
Other operating expenses 0 0 0 0
Total operating expenses 0 0 0 0
(Loss) income from operations 0 0 0 0
OTHER EXPENSE (INCOME):
Interest expense 0 0 0 0
Non-operating expenses (480) (367) (986) (823)
Earnings from consolidated subsidiaries (83,855) (79,548) (139,728) (101,753)
Total other (income) expense (84,335) (79,915) (140,714) (102,576)
Income (loss) before provision for income taxes 84,335 79,915 140,714 102,576
Provision for income taxes 0 0 0 0
Net income 84,335 79,915 140,714 102,576
Issuer
REVENUES:
Total revenues 6,441 6,336 10,924 9,471
OPERATING EXPENSES:
Cost of revenues 5,907 6,004 10,209 9,035
Selling, General and Administrative Expense 528 331 715 436
Other operating expenses 60 35 154 66
Total operating expenses 6,495 6,370 11,078 9,537
(Loss) income from operations (54) (34) (154) (66)
OTHER EXPENSE (INCOME):
Interest expense 62,918 63,023 115,294 128,202
Non-operating expenses 9,516 (37,591) 9,509 (75,180)
Earnings from consolidated subsidiaries (207,631) (157,921) (349,870) (222,845)
Total other (income) expense (135,197) (132,489) (225,067) (169,823)
Income (loss) before provision for income taxes 135,143 132,455 224,913 169,757
Provision for income taxes (51,288) (52,907) (85,185) (68,004)
Net income 83,855 79,548 139,728 101,753
Guarantor Subsidiaries
REVENUES:
Total revenues 1,210,352 1,060,203 2,408,295 2,076,237
OPERATING EXPENSES:
Cost of revenues 709,997 591,521 1,464,424 1,235,546
Selling, General and Administrative Expense 154,028 158,269 323,612 318,074
Other operating expenses 136,018 111,967 264,513 218,908
Total operating expenses 1,000,043 861,757 2,052,549 1,772,528
(Loss) income from operations 210,309 198,446 355,746 303,709
OTHER EXPENSE (INCOME):
Interest expense 4,062 40,559 8,247 80,902
Non-operating expenses (197) (34) (455) (38)
Earnings from consolidated subsidiaries 0 0 0 0
Total other (income) expense 3,865 40,525 7,792 80,864
Income (loss) before provision for income taxes 206,444 157,921 347,954 222,845
Provision for income taxes 1,187 0 1,916 0
Net income 207,631 157,921 349,870 222,845
Eliminations
REVENUES:
Total revenues (7,340) (54,003) (15,390) (102,669)
OPERATING EXPENSES:
Cost of revenues (7,340) (54,003) (15,390) (102,669)
Selling, General and Administrative Expense 0 0 0 0
Other operating expenses 0 0 0 0
Total operating expenses (7,340) (54,003) (15,390) (102,669)
(Loss) income from operations 0 0 0 0
OTHER EXPENSE (INCOME):
Interest expense 0 (38,079) 0 (76,119)
Non-operating expenses 0 38,079 0 76,119
Earnings from consolidated subsidiaries 291,486 237,469 489,598 324,598
Total other (income) expense 291,486 237,469 489,598 324,598
Income (loss) before provision for income taxes (291,486) (237,469) (489,598) (324,598)
Provision for income taxes 0 0 0 0
Net income  $ (291,486)  $ (237,469)  $ (489,598)  $ (324,598)
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Guarantor Subsidiaries Schedule of Condensed Consolidated Statements of Cash Flows (Details) (USD  $)
In Thousands
6 Months Ended
Jun. 30, 2011
Jun. 30, 2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities  $ 482,100  $ 337,451
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (451,573) (315,337)
Purchases of investments (299,826) (312,225)
Proceeds from maturity of investments 375,000 237,500
Change in advances affiliates 0 0
Proceeds from affiliate debt 0
Issuance of affiliate debt 0
Other investing activities, net (27,866) (12,409)
Net cash provided by (used in) investing activities (404,265) (402,471)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in book overdraft 1,263 (80,337)
Proceeds from debt issuance, net of discount 1,497,500 0
Change in advances affiliates 0 0
Proceeds from debt issuance, net of discount 1,497,500 0
Retirement of senior secured credit facility debt (535,792) 0
Proceeds from exercise of stock options 53,671 2,592
Repayments of debt (11,598) (8,000)
Other financing activities, net (35,014) (2,076)
Net cash provided by (used in) financing activities 981,628 (87,821)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,059,463 (152,841)
CASH AND CASH EQUIVALENTS, beginning of period 796,531 929,381
CASH AND CASH EQUIVALENTS, end of period 1,855,994 776,540
Parent
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities 497 677
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment 0 0
Purchases of investments (299,826) (312,225)
Proceeds from maturity of investments 375,000 237,500
Change in advances affiliates 671,631 1,638
Proceeds from affiliate debt 0
Issuance of affiliate debt 0
Other investing activities, net 0 0
Net cash provided by (used in) investing activities 746,805 (73,087)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in book overdraft 0 0
Proceeds from debt issuance, net of discount 0 0
Change in advances affiliates 297,941 0
Proceeds from debt issuance, net of discount 0 0
Retirement of senior secured credit facility debt 0
Proceeds from exercise of stock options 53,671 2,592
Repayments of debt 0
Other financing activities, net (3,591) (852)
Net cash provided by (used in) financing activities 348,021 1,740
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,095,323 (70,670)
CASH AND CASH EQUIVALENTS, beginning of period 507,849 642,089
CASH AND CASH EQUIVALENTS, end of period 1,603,172 571,419
Issuer
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities (126,873) (110,982)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (6,950) (49,899)
Purchases of investments 0 0
Proceeds from maturity of investments 0 0
Change in advances affiliates (820,250) 285,848
Proceeds from affiliate debt 233,152
Issuance of affiliate debt (333,000)
Other investing activities, net (17,691) (16,789)
Net cash provided by (used in) investing activities (844,891) 119,312
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in book overdraft 1,263 (80,394)
Proceeds from debt issuance, net of discount 1,497,500 0
Change in advances affiliates 0 0
Proceeds from debt issuance, net of discount 1,497,500 0
Retirement of senior secured credit facility debt (535,792)
Proceeds from exercise of stock options 0 0
Repayments of debt (8,000)
Other financing activities, net (26,949) 0
Net cash provided by (used in) financing activities 936,022 (88,394)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (35,742) (80,064)
CASH AND CASH EQUIVALENTS, beginning of period 287,942 269,836
CASH AND CASH EQUIVALENTS, end of period 252,200 189,772
Guarantor Subsidiaries
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities 608,476 447,756
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (444,623) (265,438)
Purchases of investments 0 0
Proceeds from maturity of investments 0 0
Change in advances affiliates 0 0
Proceeds from affiliate debt 0
Issuance of affiliate debt 0
Other investing activities, net (10,175) 4,380
Net cash provided by (used in) investing activities (454,798) (261,058)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in book overdraft 0 57
Proceeds from debt issuance, net of discount 0 333,000
Change in advances affiliates (149,322) (287,486)
Proceeds from debt issuance, net of discount 0 333,000
Retirement of senior secured credit facility debt 0
Proceeds from exercise of stock options 0 0
Repayments of debt (233,152)
Other financing activities, net (4,474) (1,224)
Net cash provided by (used in) financing activities (153,796) (188,805)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (118) (2,107)
CASH AND CASH EQUIVALENTS, beginning of period 740 17,456
CASH AND CASH EQUIVALENTS, end of period 622 15,349
Eliminations
CASH FLOWS FROM OPERATING ACTIVITIES:
Net cash provided by (used in) operating activities 0 0
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment 0 0
Purchases of investments 0 0
Proceeds from maturity of investments 0 0
Change in advances affiliates 148,619 (287,486)
Proceeds from affiliate debt (233,152)
Issuance of affiliate debt 333,000
Other investing activities, net 0 0
Net cash provided by (used in) investing activities 148,619 (187,638)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in book overdraft 0 0
Proceeds from debt issuance, net of discount 0 (333,000)
Change in advances affiliates (148,619) 287,486
Proceeds from debt issuance, net of discount 0 (333,000)
Retirement of senior secured credit facility debt 0
Proceeds from exercise of stock options 0 0
Repayments of debt 233,152
Other financing activities, net 0 0
Net cash provided by (used in) financing activities (148,619) 187,638
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 0 0
CASH AND CASH EQUIVALENTS, beginning of period 0 0
CASH AND CASH EQUIVALENTS, end of period  $ 0  $ 0
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