DELAWARE
(State or other jurisdiction of
incorporation or organization)
|
1-33409
(Commission
File Number)
|
20-0836269
(I.R.S. Employer
Identification No.)
|
12920 SE 38th Street
Bellevue, Washington
(Address of principal executive offices)
|
98006-1350
(Zip Code)
|
Title of each class
|
Trading
Symbol
|
Name of each exchange
on which registered
|
||
Common Stock, par value $0.00001 per share
|
TMUS
|
The NASDAQ Stock Market LLC
|
|
• |
the historical unaudited condensed consolidated financial statements of T-Mobile as of and for the three and six months ended June 30, 2020, included in T-Mobile’s
Quarterly Report on Form 10-Q filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 6, 2020, as amended by Amendment No. 1 to such Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020;
|
|
• |
the separate historical unaudited consolidated financial statements of T-Mobile as of and for the three months ended March 31, 2020, included in T-Mobile’s Quarterly
Report on Form 10-Q filed with the SEC on May 6, 2020;
|
|
• |
the separate historical audited consolidated financial statements of T-Mobile as of and for the year ended December 31, 2019, included in T-Mobile’s Annual Report on
Form 10-K filed with the SEC on February 6, 2020;
|
|
• |
the separate historical unaudited consolidated financial statements of Sprint as of and for the nine months ended December 31, 2019, included in Sprint’s Quarterly
Report on Form 10-Q filed with the SEC on January 27, 2020; and
|
|
• |
the separate historical audited consolidated financial statements of Sprint as of and for the year ended March 31, 2020, included in the Current Report on Form 8-K
filed by T-Mobile US with the SEC on May 18, 2020.
|
Exhibit No.
|
Description
|
|
Unaudited pro forma condensed combined statement of operations of T-Mobile for the six months ended June 30, 2020 and the year ended December 31, 2019
and the notes thereto.
|
||
104
|
Cover Page Interactive Data File (the cover page XBRL tags are embedded within the Inline XBRL document)
|
T-MOBILE US, INC.
|
||
September 18, 2020
|
By:
|
/s/ Peter Osvaldik
|
Name:
|
Peter Osvaldik
|
|
Title:
|
Executive Vice President and Chief Financial Officer
|
Historical
|
||||||||||||||||||||||||||||||||||||||||
|
T-Mobile US, Inc.
|
Sprint Corporation
|
New T-Mobile
|
|
Pro forma Combined
|
|||||||||||||||||||||||||||||||||||
Three Months Ended
March 31, 2020
|
Three Months Ended
March 31, 2020
|
Three Months Ended
June 30, 2020
|
Reclassification
Adjustment
|
Financing Adjustments
|
Pro forma
Adjustments
|
Six Months
Ended
June 30, 2020
|
||||||||||||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||||||||||||||||||
Total service revenues
|
8,713
|
5,352
|
13,230 |
(28
|
)
|
3(a)
|
|
-
|
(20
|
)
|
4(a)
|
|
26,421
|
|||||||||||||||||||||||||||
(826 | ) | 4(g) |
|
|||||||||||||||||||||||||||||||||||||
Equipment revenues
|
2,117
|
-
|
4,269 |
2,452
|
3(b)
|
|
-
|
(25 | ) | 4(b) |
|
8,145
|
||||||||||||||||||||||||||||
|
(506
|
)
|
4(g)
|
|
||||||||||||||||||||||||||||||||||||
(160
|
)
|
4(h)
|
|
|||||||||||||||||||||||||||||||||||||
(2
|
)
|
4(a)
|
|
|||||||||||||||||||||||||||||||||||||
Equipment sales
|
-
|
1,215
|
- |
(1,215
|
)
|
3(b)
|
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Equipment rentals
|
-
|
1,237
|
- |
(1,237
|
)
|
3(b)
|
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Other revenues
|
283 |
-
|
172 |
28
|
3(a)
|
|
-
|
24
|
4(b)
|
|
507
|
|||||||||||||||||||||||||||||
Total revenues
|
11,113 |
7,804
|
17,671 |
-
|
-
|
(1,515
|
)
|
35,073 | ||||||||||||||||||||||||||||||||
Operating Expenses
|
-
|
-
|
- |
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||||
Cost of services (exclusive of depreciation and amortization shown separately below)
|
1,639
|
1,649
|
3,098
|
46 |
3(d)
|
|
-
|
(31
|
)
|
4(g)
|
|
6,298 | ||||||||||||||||||||||||||||
29
|
3(f)
|
|
(54
|
)
|
4(k)
|
|
||||||||||||||||||||||||||||||||||
(78
|
)
|
4(m)
|
|
|||||||||||||||||||||||||||||||||||||
Cost of equipment rentals (exclusive of depreciation below)
|
-
|
150 | - |
(150
|
)
|
3(c)
|
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Cost of equipment sales (exclusive of depreciation and amortization shown separately below)
|
2,529
|
1,418
|
3,667
|
-
|
-
|
(519
|
)
|
4(g) |
|
6,945
|
||||||||||||||||||||||||||||||
(160
|
)
|
4(h)
|
|
|||||||||||||||||||||||||||||||||||||
10 | 4(l) |
|
||||||||||||||||||||||||||||||||||||||
Selling, general and administrative
|
3,688
|
2,021
|
5,604
|
4
|
3(d)
|
|
-
|
(257
|
)
|
4(c)
|
|
10,708
|
||||||||||||||||||||||||||||
3
|
3(f) |
|
(54
|
)
|
4(b)
|
|
||||||||||||||||||||||||||||||||||
(300
|
)
|
4(g)
|
|
|||||||||||||||||||||||||||||||||||||
(1
|
)
|
4(m)
|
|
|||||||||||||||||||||||||||||||||||||
Depreciation and amortization
|
1,718 |
-
|
4,064 |
2,493
|
3(c)
|
|
-
|
(342
|
)
|
4(d)
|
|
7,931
|
||||||||||||||||||||||||||||
(32
|
)
|
3(f)
|
|
45 |
4(k)
|
|
||||||||||||||||||||||||||||||||||
(15
|
)
|
4(l)
|
|
|||||||||||||||||||||||||||||||||||||
Depreciation - network and other
|
-
|
1,160
|
- |
(1,160
|
)
|
3(c)
|
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Depreciation - equipment rentals
|
-
|
1,070
|
- |
(1,070
|
)
|
3(c)
|
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Amortization
|
-
|
113
|
- |
(113
|
)
|
3(c)
|
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Goodwill impairment
|
-
|
-
|
418 |
-
|
-
|
-
|
418 | |||||||||||||||||||||||||||||||||
Other, net
|
-
|
50
|
- |
(50
|
)
|
3(d)
|
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Total operating expense
|
9,574 |
7,631
|
16,851 |
-
|
-
|
(1,756
|
)
|
32,300
|
||||||||||||||||||||||||||||||||
Operating income
|
1,539 |
173
|
820 | - |
-
|
241 |
2,773
|
|||||||||||||||||||||||||||||||||
Other income (expense)
|
-
|
-
|
- |
-
|
-
|
-
|
- | |||||||||||||||||||||||||||||||||
Interest expense
|
(185
|
)
|
(590
|
)
|
(776 | ) |
-
|
(202
|
)
|
4(f)
|
|
122 |
4(e)
|
|
(1,646
|
)
|
||||||||||||||||||||||||
(15
|
)
|
4(k)
|
|
|||||||||||||||||||||||||||||||||||||
Interest expense to affiliates
|
(99
|
)
|
-
|
(63 | ) |
-
|
102
|
4(f)
|
|
-
|
(60
|
)
|
||||||||||||||||||||||||||||
Interest income
|
12
|
-
|
6 |
14
|
3(e)
|
|
-
|
-
|
32 | |||||||||||||||||||||||||||||||
Other expense, net
|
(10
|
)
|
5
|
(195 | ) |
(14
|
)
|
3(e)
|
|
-
|
-
|
(214 | ) | |||||||||||||||||||||||||||
Total other expense, net
|
(282
|
)
|
(585
|
)
|
(1,028 | ) |
-
|
(100
|
)
|
107
|
(1,888
|
)
|
||||||||||||||||||||||||||||
Income (loss) before income taxes
|
1,257
|
(412
|
)
|
(208 | ) |
-
|
(100
|
)
|
348
|
885
|
||||||||||||||||||||||||||||||
Income tax benefit (expense)
|
(306
|
)
|
579
|
(2 | ) |
-
|
27
|
4(i)
|
|
(87
|
)
|
4(i)
|
|
211
|
||||||||||||||||||||||||||
Net Income (loss)
|
951
|
167
|
(210 | ) |
-
|
(73
|
)
|
261
|
1,096
|
|||||||||||||||||||||||||||||||
Less: Net loss (income) attributable to noncontrolling interest
|
-
|
-
|
- |
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||||
Net income (loss)
|
951
|
167
|
(210 | ) |
-
|
(73
|
)
|
261
|
1,096
|
|||||||||||||||||||||||||||||||
Earnings per share
|
||||||||||||||||||||||||||||||||||||||||
Basic
|
1.11
|
0.04
|
(0.17 | ) |
0.89
|
|||||||||||||||||||||||||||||||||||
Diluted
|
1.10
|
0.04
|
(0.17 | ) |
0.88
|
|||||||||||||||||||||||||||||||||||
Weighted-average shares outstanding
|
||||||||||||||||||||||||||||||||||||||||
Basic
|
858,148,284
|
4,102,000,000
|
1,236,528,444 |
1,234,036,519
|
||||||||||||||||||||||||||||||||||||
Diluted
|
865,998,532
|
4,102,000,000
|
1,236,528,444 |
1,246,623,544
|
Historical
|
||||||||||||||||||||||||||||||||||||
|
T-Mobile US, Inc.
|
Sprint Corporation
|
|
Pro forma Combined
|
||||||||||||||||||||||||||||||||
Year Ended December 31, 2019
|
Year Ended
March 31, 2020
|
Reclassification
Adjustment
|
Financing
Adjustments
|
Pro forma
Adjustments
|
Year Ended
December 31, 2019
|
|||||||||||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||||||||||||||||
Total service revenues
|
33,994
|
21,604
|
(162
|
)
|
3(a)
|
|
-
|
(71
|
)
|
4(a)
|
|
51,887
|
||||||||||||||||||||||||
2 | 4(b) |
|
||||||||||||||||||||||||||||||||||
(3,480 | ) | 4(g) |
|
|||||||||||||||||||||||||||||||||
Equipment revenues
|
9,840
|
-
|
10,217
|
3(b)
|
|
-
|
(135
|
)
|
4(b)
|
|
17,052
|
|||||||||||||||||||||||||
(1,802
|
)
|
4(g)
|
|
|||||||||||||||||||||||||||||||||
(1,054
|
)
|
4(h)
|
|
|||||||||||||||||||||||||||||||||
(14
|
)
|
4(a)
|
|
|||||||||||||||||||||||||||||||||
Equipment sales
|
-
|
4,999
|
(4,999
|
)
|
3(b)
|
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Equipment rentals
|
-
|
5,218
|
(5,218
|
)
|
3(b)
|
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Other revenues
|
1,164
|
-
|
162
|
3(a)
|
|
-
|
98
|
4(b)
|
|
1,424
|
||||||||||||||||||||||||||
Total revenues
|
44,998
|
31,821
|
-
|
-
|
(6,456
|
)
|
70,363 | |||||||||||||||||||||||||||||
Operating Expenses
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||
Cost of services (exclusive of depreciation and amortization shown separately below)
|
6,622
|
6,852
|
72
|
3(d)
|
|
-
|
(127
|
)
|
4(g)
|
|
12,989
|
|||||||||||||||||||||||||
98
|
3(f)
|
|
(216
|
)
|
4(k)
|
|
||||||||||||||||||||||||||||||
(312
|
)
|
4(m)
|
|
|||||||||||||||||||||||||||||||||
Cost of equipment rentals (exclusive of depreciation below)
|
-
|
816
|
(816
|
)
|
3(c)
|
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Cost of equipment sales (exclusive of depreciation and amortization shown separately below)
|
11,899
|
5,764
|
-
|
-
|
(1,876
|
)
|
4(g) |
|
14,706
|
|||||||||||||||||||||||||||
(1,081
|
)
|
4(h)
|
|
|||||||||||||||||||||||||||||||||
Selling, general and administrative
|
14,139
|
7,909
|
84
|
3(d)
|
|
-
|
(315
|
)
|
4(c)
|
|
20,257
|
|||||||||||||||||||||||||
3
|
3(f) |
|
(345
|
)
|
4(b)
|
|
||||||||||||||||||||||||||||||
(1,214
|
)
|
4(g)
|
|
|||||||||||||||||||||||||||||||||
(4
|
)
|
4(m)
|
|
|||||||||||||||||||||||||||||||||
Depreciation and amortization
|
6,616
|
-
|
10,209
|
3(c)
|
|
-
|
(773
|
)
|
4(d)
|
|
16,074
|
|||||||||||||||||||||||||
(101
|
)
|
3(f)
|
|
183 |
4(k)
|
|
||||||||||||||||||||||||||||||
(60
|
)
|
4(l)
|
|
|||||||||||||||||||||||||||||||||
Depreciation - network and other
|
-
|
4,416
|
(4,416
|
)
|
3(c)
|
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Depreciation - equipment rentals
|
-
|
4,166
|
(4,166
|
)
|
3(c)
|
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Amortization
|
-
|
811
|
(811
|
)
|
3(c)
|
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Goodwill impairment
|
-
|
-
|
-
|
-
|
-
|
- | ||||||||||||||||||||||||||||||
Other, net
|
-
|
156
|
(156
|
)
|
3(d)
|
|
-
|
-
|
-
|
|||||||||||||||||||||||||||
Total operating expense
|
39,276
|
30,890
|
-
|
-
|
(6,140
|
)
|
64,026
|
|||||||||||||||||||||||||||||
Operating income
|
5,722
|
931
|
-
|
-
|
(316
|
)
|
6,337
|
|||||||||||||||||||||||||||||
Other income (expense)
|
-
|
-
|
-
|
-
|
-
|
- | ||||||||||||||||||||||||||||||
Interest expense
|
(727
|
)
|
(2,392
|
)
|
-
|
(662
|
)
|
4(f)
|
|
489
|
4(e)
|
|
(3,356
|
)
|
||||||||||||||||||||||
(64
|
)
|
4(k)
|
|
|||||||||||||||||||||||||||||||||
Interest expense to affiliates
|
(408
|
)
|
-
|
-
|
365
|
4(f)
|
|
-
|
(43
|
)
|
||||||||||||||||||||||||||
Interest income
|
24
|
-
|
77
|
3(e)
|
|
-
|
-
|
101 | ||||||||||||||||||||||||||||
Other expense, net
|
(8
|
)
|
41
|
(77
|
)
|
3(e)
|
|
-
|
-
|
(44 | ) | |||||||||||||||||||||||||
Total other expense, net
|
(1,119
|
)
|
(2,351
|
)
|
-
|
(297
|
)
|
425
|
(3,342
|
)
|
||||||||||||||||||||||||||
Income (loss) before income taxes
|
4,603
|
(1,420
|
)
|
-
|
(297
|
)
|
109
|
2,995
|
||||||||||||||||||||||||||||
Income tax benefit (expense)
|
(1,135
|
)
|
1,073
|
-
|
77
|
5(i)
|
|
(19
|
)
|
5(i)
|
|
(4
|
)
|
|||||||||||||||||||||||
Net Income (loss)
|
3,468
|
(347
|
)
|
-
|
(220
|
)
|
90
|
2,991
|
||||||||||||||||||||||||||||
Less: Net loss (income) attributable to noncontrolling interest
|
-
|
9
|
-
|
-
|
-
|
9
|
||||||||||||||||||||||||||||||
Net income (loss)
|
3,468
|
(338
|
)
|
-
|
(220
|
)
|
90
|
3,000
|
||||||||||||||||||||||||||||
Earnings per share
|
||||||||||||||||||||||||||||||||||||
Basic
|
4.06
|
(0.08
|
)
|
2.44
|
||||||||||||||||||||||||||||||||
Diluted
|
4.02
|
(0.08
|
)
|
2.42
|
||||||||||||||||||||||||||||||||
Weighted-average shares outstanding
|
||||||||||||||||||||||||||||||||||||
Basic
|
854,143,751
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4,102,000,000
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1,227,540,061
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Diluted
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863,433,511
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4,102,000,000
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1,241,499,821
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• |
the historical unaudited condensed consolidated financial statements of T-Mobile as of and for the three and six months ended June 30, 2020 included in Parent’s Quarterly Report on Form 10-Q filed with the SEC on August 6, 2020, as amended
by Amendment No. 1 to such Quarterly Report on Form 10-Q filed with the SEC on August 10, 2020;
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the separate historical unaudited consolidated financial statements of T-Mobile as of and for the three months ended March 31, 2020, included in Parent’s Quarterly Report on Form 10-Q filed with the SEC on May 6, 2020;
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the separate historical audited consolidated financial statements of T-Mobile as of and for the year ended December 31, 2019, included in Parent’s Annual Report on Form 10-K filed with the SEC on February 6, 2020;
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the separate historical unaudited consolidated financial statements of Sprint as of and for the nine months ended December 31, 2019, included in Sprint’s Quarterly Report on Form 10-Q filed with the SEC on January 27, 2020; and
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the separate historical audited consolidated financial statements of Sprint as of and for the year ended March 31, 2020, included in the Current Report on Form 8-K filed with the SEC by Parent on May 18, 2020.
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(a) |
To reclassify $28 million of commissions earned from consigned inventory agreements to other revenues for the six months ended June 30, 2020.
To reclassify $162 million of commissions earned from consigned inventory agreements to other revenues for the year ended December 31, 2019.
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(b) |
To reclassify $1,237 million and $1,215 million of equipment rentals and equipment sales, respectively, to equipment revenues for the six months ended June 30, 2020.
To reclassify $5,218 million and $4,999 million of equipment rentals and equipment sales, respectively, to equipment revenues for the year ended December 31, 2019.
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(c) |
To reclassify $150 million of cost of equipment rentals, $1,160 million of depreciation – network and other, $1,070 million of depreciation – equipment rentals, and $113 million of amortization to depreciation and amortization for the six
months ended June 30, 2020.
To reclassify $816 million of cost of equipment rentals, $4,416 million of depreciation - network and other, $4,166 million of depreciation - equipment rentals, and $811 million of amortization to depreciation and amortization for the year
ended December 31, 2019.
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(d) |
To reclassify $50 million of other, net of which $46 million was reclassified to cost of services and $4 million was reclassified to selling, general and administrative for the six months ended June 30, 2020.
To reclassify $156 million of other, net of which $72 million was reclassified to cost of services and $84 million was reclassified to selling, general and administrative for the year ended December 31, 2019.
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(e) |
To reclassify $14 million of other income to interest income for the six months ended June 30, 2020.
To reclassify $77 million of other income to interest income for the year ended December 31, 2019.
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(f) |
To reclassify $32 million of impairment charges from depreciation and amortization of which $29 million was reclassified to cost of services and $3 million was reclassified to selling, general, and administrative for the six months ended
June 30, 2020.
To reclassify $101 million of impairment charges from depreciation and amortization of which $98 million was reclassified to cost of services and $3 million was reclassified to selling, general and administrative for the year ended
December 31, 2019.
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(a) |
Reflects a reduction in revenues and costs due to the fair value adjustment of deferred revenues and costs recognized in the historical financial statements of Sprint. As a result, amortization associated with these items have been
eliminated.
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(b) |
This adjustment represents the elimination of historical amortization related to certain contract assets written off as part of purchase accounting as they had no fair value. This adjustment is partially offset by the capitalization
of incremental costs to acquire a contract upon adoption of ASC 340. As T-Mobile’s amortization period for these capitalized costs is generally shorter than Sprint’s amortization period, this adjustment reflects an acceleration of
expenses associated with costs to acquire a contract.
For certain device sales to dealers, Sprint and T-Mobile provide a payment (reimbursement) for discounts subsequently passed on to an end customer. Sprint records an asset and recognizes these payments as a reduction of service
revenue. T-Mobile views these payments as variable consideration in the sale of a device to its dealers and reduces equipment revenue at the point of sale to the dealer and this adjustment is made to conform with T-Mobile’s accounting
policy.
In addition, Sprint generally does not impute interest on its equipment installment plan receivables in their direct channel under ASC 606, while T-Mobile does, resulting in a difference in application of ASC 606 reflected in this
adjustment.
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(c) |
Reflects the adjustments to (i) reverse non-recurring transaction costs, which were recorded in T-Mobile and Sprint’s selling, general and administrative expenses, and (ii) reflect stock-based compensation expense for the
post-combination portion of Sprint’s equity awards assumed by T-Mobile. The transaction costs reflected in the historical statements of operations and the adjustment to stock-based compensation expense are as follows:
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Pro Forma Year Ended
December 31, 2019
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Pro Forma Six Months
Ended June 30, 2020
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(in millions)
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(in millions)
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Reversal of T-Mobile transaction costs
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$(121)
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$(183)
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Reversal of Sprint transaction costs
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(144)
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(19)
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Adjustment to stock-based compensation expense from equity-based awards
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(45)
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(44)
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Adjustment for T-Mobile performance-based restricted stock unit awards expense
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(5)
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(11)
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Pro forma adjustments to selling, general and administrative expense
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$(315)
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$(257)
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(d) |
Represents the adjustments to record (i) the elimination of historical depreciation expense and recognition of new depreciation expense based on the fair value of property and equipment and (ii) the elimination of historical
amortization expense and recognition of new amortization expense related to the identifiable intangible assets calculated on a straight-line basis, except for customer relationships, which is calculated using the sum-of-the-years’
digits method. The amortization expense for customer relationships, which is not calculated on a straight-line basis, for the 5 years post-merger are $688 million for 2019, $636 million for 2020, $592 million for 2021, $538 million
for 2022, and $485 million for 2023. The depreciation of property and equipment is based on the estimated remaining useful lives of the assets and is calculated on a straight-line basis. The amortization of intangible assets is
based on the periods over which the economic benefits of the intangible assets are expected to be realized.
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Pro Forma Year Ended
December 31, 2019
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Pro Forma Six Months
Ended June 30, 2020
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(in millions)
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(in millions)
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Reversal of Sprint’s historical property and equipment depreciation
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$(8,582)
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$(2,230)
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Depreciation of purchased property and equipment assets
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7,768
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1,966
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Reversal of Sprint’s historical intangible asset amortization
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(810)
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(442)
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Amortization of purchased identifiable intangible assets
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851
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364
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Pro forma adjustments to depreciation and amortization
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$(773)
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$(342)
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(e) |
Reflects the adjustment to interest expense to accrete the interest related to the fair value of Sprint’s debt assumed by T-Mobile.
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(f) |
Reflects the adjustments to (i) reverse interest expense associated with Sprint Debt Repayments, T-Mobile Debt Repayments, and T-Mobile Maturity Amendments, (ii) recognition of new interest expense associated with the new facilities, and
(iii) recognition of new interest expense associated with T-Mobile Maturity Amendments.
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Pro Forma Year Ended
December 31, 2019
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Pro Forma Six Months
Ended June 30, 2020
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(in millions)
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(in millions)
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Elimination of historical interest expense related to repayment of T-Mobile’s debt and T-Mobile’s modified notes
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$521
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$143
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Interest Expense related to T-Mobile’s modified notes
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(156)
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(41)
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Financing adjustments to interest expense to affiliates
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$365
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$102
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Elimination of historical interest expense related to repayment of Sprint’s debt
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$474
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$117
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Interest expense related to new facilities
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(1,136)
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(319)
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Financing adjustments to interest expense
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$(662)
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$(202)
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(g) |
Reflects the elimination of the identified revenues and expenses of the Prepaid business. This adjustment’s precision has been enhanced since previously filed Article 11 pro forma information resulting in an increase to the service revenue
adjustment.
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(h) |
Reflects the adjustment to equipment revenues and cost of equipment sales for device sales to align with T-Mobile’s revenue recognition policy.
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(i) |
A blended federal and state statutory tax rate of 26.0%, net of tax effects on the state valuation allowance, for the six months ended June 30, 2020 and the year ended December 31, 2019, has been assumed for the pro forma adjustments.
Additionally, this adjustment accounts for certain deductible and non-deductible costs associated with the BCA Transactions. The blended tax rate is not necessarily indicative of the effective tax rate of the combined company. The effective
tax rate of the combined company could be significantly different (either higher or lower) depending on post-merger activities, cash needs, the geographical mix of income, and changes in tax law.
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(j) |
Represents the pro forma weighted average shares outstanding that have been calculated using the historical weighted average shares of T-Mobile US common stock outstanding and the additional T-Mobile US equity awards issued in conjunction
with the BCA Transactions, assuming those shares and awards were outstanding for the year ended December 31, 2019. No pro forma adjustment is made to shares and awards outstanding for the six months ending June 30, 2020 as the shares were
issued on April 1, 2020.
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Pro Forma Basic Weighted Average Shares
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Pro Forma Year Ended
December 31, 2019
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Pro Forma Six Months
Ended June 30, 2020
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Historical T-Mobile US weighted average shares outstanding - basic
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854,143,751
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1,047,338,364
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Shares of T-Mobile US common stock issued to Sprint stockholders pursuant to the Business Combination Agreement and Letter Agreement
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373,396,310
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186,698,155
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Pro forma weighted average shares - basic
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1,227,540,061
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1,234,036,519 |
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Pro Forma Diluted Weighted Average Shares
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Pro Forma Year Ended
December 31, 2019
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Pro Forma Six Months
Ended June 30, 2020
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Historical T-Mobile US weighted average shares - diluted
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863,433,511
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1,057,120,389
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Shares of T-Mobile US common stock issued to Sprint stockholders pursuant to the Business Combination Agreement and Letter Agreement
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373,396,310 | 186,698,155 | |
Diluted impact of T-Mobile US’s stock options and awards to replace Sprint’s stock options
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540,000 | 270,000 | |
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Diluted impact of T-Mobile US’s RSUs to replace Sprint’s RSUs and PSUs
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4,130,000
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2,535,000
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Pro Forma weighted average shares - diluted
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1,241,499,821
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1,246,623,544
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(k) |
Reflects the adjustment for the lease-out and leaseback transaction arrangement with a tower operator to reflect the leaseback as a financing obligation with the cell towers included in property, plant and equipment. As a result, a
portion of the payments are recognized as interest expense and the tower assets are depreciated to their residual value.
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(l) |
Reflects the pro forma fair value adjustment to Sprint handset inventory and resulting decrease in cost of services and depreciation expense.
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(m) |
Reflects the fair value adjustment for leased spectrum arrangements that have favorable and unfavorable terms compared to current market rates resulting in a net decrease to cost of services.
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