x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
DELAWARE
|
|
20-0836269
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
12920 SE 38th Street, Bellevue, Washington
|
|
98006-1350
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
|
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(425) 378-4000
|
||
(Registrant’s telephone number, including area code)
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Class
|
|
Shares Outstanding as of April 19, 2017
|
|
Common Stock, $0.00001 par value per share
|
|
830,835,887
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
(in millions, except share and per share amounts)
|
March 31,
2017 |
|
December 31,
2016 |
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
7,501
|
|
|
$
|
5,500
|
|
Accounts receivable, net of allowances of $100 and $102
|
1,851
|
|
|
1,896
|
|
||
Equipment installment plan receivables, net
|
1,880
|
|
|
1,930
|
|
||
Accounts receivable from affiliates
|
37
|
|
|
40
|
|
||
Inventories
|
1,021
|
|
|
1,111
|
|
||
Asset purchase deposit
|
2,203
|
|
|
2,203
|
|
||
Other current assets
|
1,406
|
|
|
1,537
|
|
||
Total current assets
|
15,899
|
|
|
14,217
|
|
||
Property and equipment, net
|
21,235
|
|
|
20,943
|
|
||
Goodwill
|
1,683
|
|
|
1,683
|
|
||
Spectrum licenses
|
27,150
|
|
|
27,014
|
|
||
Other intangible assets, net
|
338
|
|
|
376
|
|
||
Equipment installment plan receivables due after one year, net
|
975
|
|
|
984
|
|
||
Other assets
|
768
|
|
|
674
|
|
||
Total assets
|
$
|
68,048
|
|
|
$
|
65,891
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
6,160
|
|
|
$
|
7,152
|
|
Payables to affiliates
|
256
|
|
|
125
|
|
||
Short-term debt
|
7,542
|
|
|
354
|
|
||
Deferred revenue
|
934
|
|
|
986
|
|
||
Other current liabilities
|
393
|
|
|
405
|
|
||
Total current liabilities
|
15,285
|
|
|
9,022
|
|
||
Long-term debt
|
13,105
|
|
|
21,832
|
|
||
Long-term debt to affiliates
|
9,600
|
|
|
5,600
|
|
||
Tower obligations
|
2,614
|
|
|
2,621
|
|
||
Deferred tax liabilities
|
4,842
|
|
|
4,938
|
|
||
Deferred rent expense
|
2,635
|
|
|
2,616
|
|
||
Other long-term liabilities
|
1,004
|
|
|
1,026
|
|
||
Total long-term liabilities
|
33,800
|
|
|
38,633
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
||
Stockholders' equity
|
|
|
|
||||
5.50% Mandatory Convertible Preferred Stock Series A, par value $0.00001 per share, 100,000,000 shares authorized; 20,000,000 and 20,000,000 shares issued and outstanding; $1,000 and $1,000 aggregate liquidation value
|
—
|
|
|
—
|
|
||
Common Stock, par value $0.00001 per share, 1,000,000,000 shares authorized; 832,259,647 and 827,768,818 shares issued, 830,804,268 and 826,357,331 shares outstanding
|
—
|
|
|
—
|
|
||
Additional paid-in capital
|
38,877
|
|
|
38,846
|
|
||
Treasury stock, at cost, 1,455,379 and 1,411,487 shares issued
|
(4
|
)
|
|
(1
|
)
|
||
Accumulated other comprehensive income
|
2
|
|
|
1
|
|
||
Accumulated deficit
|
(19,912
|
)
|
|
(20,610
|
)
|
||
Total stockholders' equity
|
18,963
|
|
|
18,236
|
|
||
Total liabilities and stockholders' equity
|
$
|
68,048
|
|
|
$
|
65,891
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
(in millions, except share and per share amounts)
|
|
|
(As Adjusted - See Note 1)
|
||||
Revenues
|
|
|
|
||||
Branded postpaid revenues
|
$
|
4,725
|
|
|
$
|
4,302
|
|
Branded prepaid revenues
|
2,299
|
|
|
2,025
|
|
||
Wholesale revenues
|
270
|
|
|
200
|
|
||
Roaming and other service revenues
|
35
|
|
|
51
|
|
||
Total service revenues
|
7,329
|
|
|
6,578
|
|
||
Equipment revenues
|
2,043
|
|
|
1,851
|
|
||
Other revenues
|
241
|
|
|
235
|
|
||
Total revenues
|
9,613
|
|
|
8,664
|
|
||
Operating expenses
|
|
|
|
||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
1,408
|
|
|
1,421
|
|
||
Cost of equipment sales
|
2,686
|
|
|
2,374
|
|
||
Selling, general and administrative
|
2,955
|
|
|
2,749
|
|
||
Depreciation and amortization
|
1,564
|
|
|
1,552
|
|
||
Cost of MetroPCS business combination
|
—
|
|
|
36
|
|
||
Gains on disposal of spectrum licenses
|
(37
|
)
|
|
(636
|
)
|
||
Total operating expenses
|
8,576
|
|
|
7,496
|
|
||
Operating income
|
1,037
|
|
|
1,168
|
|
||
Other income (expense)
|
|
|
|
||||
Interest expense
|
(339
|
)
|
|
(339
|
)
|
||
Interest expense to affiliates
|
(100
|
)
|
|
(79
|
)
|
||
Interest income
|
7
|
|
|
3
|
|
||
Other income (expense), net
|
2
|
|
|
(2
|
)
|
||
Total other expense, net
|
(430
|
)
|
|
(417
|
)
|
||
Income before income taxes
|
607
|
|
|
751
|
|
||
Income tax benefit (expense)
|
91
|
|
|
(272
|
)
|
||
Net income
|
698
|
|
|
479
|
|
||
Dividends on preferred stock
|
(14
|
)
|
|
(14
|
)
|
||
Net income attributable to common stockholders
|
$
|
684
|
|
|
$
|
465
|
|
|
|
|
|
||||
Net income
|
$
|
698
|
|
|
$
|
479
|
|
Other comprehensive income (loss), net of tax
|
|
|
|
||||
Unrealized gain (loss) on available-for-sale securities, net of tax effect of $1 and $(2)
|
1
|
|
|
(3
|
)
|
||
Other comprehensive income (loss)
|
1
|
|
|
(3
|
)
|
||
Total comprehensive income
|
$
|
699
|
|
|
$
|
476
|
|
Earnings per share
|
|
|
|
||||
Basic
|
$
|
0.83
|
|
|
$
|
0.57
|
|
Diluted
|
$
|
0.80
|
|
|
$
|
0.56
|
|
Weighted average shares outstanding
|
|
|
|
||||
Basic
|
827,723,034
|
|
|
819,431,761
|
|
||
Diluted
|
869,395,250
|
|
|
859,382,827
|
|
|
Three Months Ended March 31,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Operating activities
|
|
|
|
||||
Net income
|
$
|
698
|
|
|
$
|
479
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
|
|
|
||||
Depreciation and amortization
|
1,564
|
|
|
1,552
|
|
||
Stock-based compensation expense
|
67
|
|
|
52
|
|
||
Deferred income tax expense (benefit)
|
(97
|
)
|
|
264
|
|
||
Bad debt expense
|
93
|
|
|
121
|
|
||
Losses from sales of receivables
|
95
|
|
|
52
|
|
||
Deferred rent expense
|
20
|
|
|
32
|
|
||
Gains on disposal of spectrum licenses
|
(37
|
)
|
|
(636
|
)
|
||
Changes in operating assets and liabilities
|
|
|
|
||||
Accounts receivable
|
(68
|
)
|
|
(202
|
)
|
||
Equipment installment plan receivables
|
(13
|
)
|
|
109
|
|
||
Inventories
|
44
|
|
|
(801
|
)
|
||
Deferred purchase price from sales of receivables
|
(19
|
)
|
|
21
|
|
||
Other current and long-term assets
|
(11
|
)
|
|
185
|
|
||
Accounts payable and accrued liabilities
|
(651
|
)
|
|
(492
|
)
|
||
Other current and long-term liabilities
|
45
|
|
|
288
|
|
||
Other, net
|
(17
|
)
|
|
1
|
|
||
Net cash provided by operating activities
|
1,713
|
|
|
1,025
|
|
||
Investing activities
|
|
|
|
||||
Purchases of property and equipment, including capitalized interest of $48 and $36
|
(1,528
|
)
|
|
(1,335
|
)
|
||
Purchases of spectrum licenses and other intangible assets, including deposits
|
(14
|
)
|
|
(594
|
)
|
||
Sales of short-term investments
|
—
|
|
|
75
|
|
||
Other, net
|
(8
|
)
|
|
(6
|
)
|
||
Net cash used in investing activities
|
(1,550
|
)
|
|
(1,860
|
)
|
||
Financing activities
|
|
|
|
||||
Proceeds from issuance of long-term debt
|
5,495
|
|
|
—
|
|
||
Repayments of capital lease obligations
|
(90
|
)
|
|
(36
|
)
|
||
Repayments of long-term debt
|
(3,480
|
)
|
|
(5
|
)
|
||
Tax withholdings on share-based awards
|
(92
|
)
|
|
(46
|
)
|
||
Dividends on preferred stock
|
(14
|
)
|
|
(14
|
)
|
||
Other, net
|
19
|
|
|
1
|
|
||
Net cash provided by (used in) financing activities
|
1,838
|
|
|
(100
|
)
|
||
Change in cash and cash equivalents
|
2,001
|
|
|
(935
|
)
|
||
Cash and cash equivalents
|
|
|
|
||||
Beginning of period
|
5,500
|
|
|
4,582
|
|
||
End of period
|
$
|
7,501
|
|
|
$
|
3,647
|
|
Supplemental disclosure of cash flow information
|
|
|
|
||||
Interest payments, net of amounts capitalized
|
$
|
495
|
|
|
$
|
415
|
|
Income tax payments
|
15
|
|
|
2
|
|
||
Noncash investing and financing activities
|
|
|
|
||||
Decrease in accounts payable for purchases of property and equipment
|
(325
|
)
|
|
(127
|
)
|
||
Leased devices transferred from inventory to property and equipment
|
243
|
|
|
784
|
|
||
Returned leased devices transferred from property and equipment to inventory
|
(197
|
)
|
|
(131
|
)
|
||
Issuance of short-term debt for financing of property and equipment
|
288
|
|
|
150
|
|
||
Assets acquired under capital lease obligations
|
284
|
|
|
124
|
|
|
Three Months Ended March 31, 2017
|
|
Three Months Ended March 31, 2016
|
||||||||||||||||||||
(in millions)
|
Unadjusted
|
|
Change in accounting principle
|
|
As adjusted
|
|
As filed
|
|
Change in accounting principle
|
|
As adjusted
|
||||||||||||
Other revenues
|
$
|
179
|
|
|
$
|
62
|
|
|
$
|
241
|
|
|
$
|
170
|
|
|
$
|
65
|
|
|
$
|
235
|
|
Total revenues
|
9,551
|
|
|
62
|
|
|
9,613
|
|
|
8,599
|
|
|
65
|
|
|
8,664
|
|
||||||
Operating income
|
975
|
|
|
62
|
|
|
1,037
|
|
|
1,103
|
|
|
65
|
|
|
1,168
|
|
||||||
Interest income
|
69
|
|
|
(62
|
)
|
|
7
|
|
|
68
|
|
|
(65
|
)
|
|
3
|
|
||||||
Total other expense, net
|
(368
|
)
|
|
(62
|
)
|
|
(430
|
)
|
|
(352
|
)
|
|
(65
|
)
|
|
(417
|
)
|
||||||
Net income
|
698
|
|
|
—
|
|
|
698
|
|
|
479
|
|
|
—
|
|
|
479
|
|
•
|
Whether our EIP contracts contain a significant financing component, which is similar to our current practice of imputing interest, and would similarly impact the amount of revenue recognized at the time of an EIP sale and whether or not a portion of the revenue is recognized as interest and included in other revenues, rather than equipment revenues.
|
•
|
As we currently expense contract acquisition costs, we believe that the requirement to defer incremental contract acquisition costs and recognize them over the term of the initial contract and anticipated renewal contracts to which the costs relate will have a significant impact to our consolidated financial statements.
|
•
|
Whether bill credits earned over time result in extended service contracts, which would impact the allocation and timing of revenue recognition between service revenue and equipment revenue.
|
•
|
Overall, with the exception of the aforementioned impacts, we do not expect that the new standard will result in a substantive change to the method of allocation of contract revenues between various services and equipment, nor to the timing of when revenues are recognized for most of our service contracts.
|
(in millions)
|
March 31,
2017 |
|
December 31,
2016 |
||||
EIP receivables, gross
|
$
|
3,159
|
|
|
$
|
3,230
|
|
Unamortized imputed discount
|
(202
|
)
|
|
(195
|
)
|
||
EIP receivables, net of unamortized imputed discount
|
2,957
|
|
|
3,035
|
|
||
Allowance for credit losses
|
(102
|
)
|
|
(121
|
)
|
||
EIP receivables, net
|
$
|
2,855
|
|
|
$
|
2,914
|
|
|
|
|
|
||||
Classified on the balance sheet as:
|
|
|
|
||||
Equipment installment plan receivables, net
|
$
|
1,880
|
|
|
$
|
1,930
|
|
Equipment installment plan receivables due after one year, net
|
975
|
|
|
984
|
|
||
EIP receivables, net
|
$
|
2,855
|
|
|
$
|
2,914
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(in millions)
|
Prime
|
|
Subprime
|
|
Total
|
|
Prime
|
|
Subprime
|
|
Total
|
||||||||||||
Unbilled
|
$
|
1,274
|
|
|
$
|
1,694
|
|
|
$
|
2,968
|
|
|
$
|
1,343
|
|
|
$
|
1,686
|
|
|
$
|
3,029
|
|
Billed – Current
|
49
|
|
|
76
|
|
|
125
|
|
|
51
|
|
|
77
|
|
|
128
|
|
||||||
Billed – Past Due
|
24
|
|
|
42
|
|
|
66
|
|
|
25
|
|
|
48
|
|
|
73
|
|
||||||
EIP receivables, gross
|
$
|
1,347
|
|
|
$
|
1,812
|
|
|
$
|
3,159
|
|
|
$
|
1,419
|
|
|
$
|
1,811
|
|
|
$
|
3,230
|
|
(in millions)
|
March 31,
2017 |
|
March 31,
2016 |
||||
Imputed discount and allowance for credit losses, beginning of period
|
$
|
316
|
|
|
$
|
333
|
|
Bad debt expense
|
56
|
|
|
62
|
|
||
Write-offs, net of recoveries
|
(75
|
)
|
|
(81
|
)
|
||
Change in imputed discount on short-term and long-term EIP receivables
|
48
|
|
|
28
|
|
||
Impacts from sales of EIP receivables
|
(41
|
)
|
|
(19
|
)
|
||
Imputed discount and allowance for credit losses, end of period
|
$
|
304
|
|
|
$
|
323
|
|
(in millions)
|
March 31,
2017 |
|
December 31,
2016 |
||||
Other current assets
|
$
|
227
|
|
|
$
|
207
|
|
Accounts payable and accrued liabilities
|
38
|
|
|
17
|
|
||
Other current liabilities
|
127
|
|
|
129
|
|
(in millions)
|
March 31,
2017 |
|
December 31,
2016 |
||||
Other current assets
|
$
|
348
|
|
|
$
|
371
|
|
Other assets
|
104
|
|
|
83
|
|
||
Other long-term liabilities
|
3
|
|
|
4
|
|
(in millions)
|
March 31,
2017 |
|
December 31,
2016 |
||||
Derecognized net service receivables and EIP receivables
|
$
|
2,354
|
|
|
$
|
2,502
|
|
Other current assets
|
575
|
|
|
578
|
|
||
of which, deferred purchase price
|
574
|
|
|
576
|
|
||
Other long-term assets
|
104
|
|
|
83
|
|
||
of which, deferred purchase price
|
104
|
|
|
83
|
|
||
Accounts payable and accrued liabilities
|
38
|
|
|
17
|
|
||
Other current liabilities
|
127
|
|
|
129
|
|
||
Other long-term liabilities
|
3
|
|
|
4
|
|
||
Net cash proceeds since inception
|
1,886
|
|
|
2,030
|
|
||
Of which:
|
|
|
|
||||
Change in net cash proceeds during the year-to-date period
|
(144
|
)
|
|
536
|
|
||
Net cash proceeds funded by reinvested collections
|
2,030
|
|
|
1,494
|
|
(in millions)
|
Spectrum Licenses
|
||
Balance at December 31, 2016
|
$
|
27,014
|
|
Spectrum license acquisitions
|
134
|
|
|
Spectrum licenses transferred to held for sale
|
(1
|
)
|
|
Costs to clear spectrum
|
3
|
|
|
Balance at March 31, 2017
|
$
|
27,150
|
|
|
Level within the Fair Value Hierarchy
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||
(in millions)
|
|
Carrying Amount
|
|
Fair Value
|
|
Carrying Amount
|
|
Fair Value
|
|||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Deferred purchase price assets
|
3
|
|
$
|
678
|
|
|
$
|
678
|
|
|
$
|
659
|
|
|
$
|
659
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
||||||||
Senior Notes to third parties
|
1
|
|
$
|
18,600
|
|
|
$
|
19,674
|
|
|
$
|
18,600
|
|
|
$
|
19,584
|
|
Senior Reset Notes to affiliates
|
2
|
|
5,600
|
|
|
5,903
|
|
|
5,600
|
|
|
5,955
|
|
||||
Incremental Term Loan Facility to affiliates
|
2
|
|
4,000
|
|
|
4,002
|
|
|
—
|
|
|
—
|
|
||||
Senior Secured Term Loans
|
2
|
|
—
|
|
|
—
|
|
|
1,980
|
|
|
2,005
|
|
||||
Guarantee liabilities
|
3
|
|
132
|
|
|
132
|
|
|
135
|
|
|
135
|
|
(in millions)
|
December 31,
2016 |
|
Issuances and Borrowings
|
|
Note Redemptions
|
|
Extinguishments
|
|
Principal Reclassifications
|
|
Other
(1)
|
|
March 31,
2017 |
||||||||||||||
Short-term debt
|
$
|
354
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
6,750
|
|
|
$
|
458
|
|
|
$
|
7,542
|
|
Long-term debt
|
21,832
|
|
|
1,495
|
|
|
(1,500
|
)
|
|
(1,960
|
)
|
|
(6,750
|
)
|
|
(12
|
)
|
|
$
|
13,105
|
|
||||||
Long-term debt to affiliates
|
5,600
|
|
|
4,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,600
|
|
|||||||
Total debt
|
$
|
27,786
|
|
|
$
|
5,495
|
|
|
$
|
(1,500
|
)
|
|
$
|
(1,980
|
)
|
|
$
|
—
|
|
|
$
|
446
|
|
|
$
|
30,247
|
|
(1)
|
Other includes:
$296 million
issuances of short-term debt related to vendor financing arrangements, of which
$288 million
is related to financing of property and equipment; as well as activity associated with capital leases, and the amortization of premiums.
|
•
|
On January 25, 2017, T-Mobile USA, Inc. (“T-Mobile USA”), and certain of its affiliates, as guarantors, entered into an agreement to borrow
$4.0 billion
under a secured term loan facility (“Incremental Term Loan Facility”) with DT, our majority stockholder, to refinance
$1.98 billion
of outstanding secured term loans under its Term Loan Credit Agreement dated November 9, 2015, with the remaining net proceeds from the transaction intended to be used to redeem callable high yield debt. The Incremental Term Loan Facility increased DT’s incremental term loan commitment provided to T-Mobile USA under that certain First Incremental Facility Amendment dated as of
|
•
|
On March 16, 2017, T-Mobile USA and certain of its affiliates, as guarantors, (i) issued
$500 million
of public
4.000% Senior Notes due 2022
, (ii) issued
$500 million
of public
5.125% Senior Notes due 2025
and (iii) issued
$500 million
of public
5.375% Senior Notes due 2027
. We intend to use the net proceeds of
$1.495 billion
from the transaction to redeem callable high yield debt. Issuance costs related to the public debt issuance totaled
$5 million
for the
three months ended
March 31, 2017
.
|
(in millions)
|
Principal Amount
|
|
Redemption
Date
|
|
Redemption Price
(1)
|
|||
6.625% Senior Notes due 2020
|
$
|
1,000
|
|
|
February 10, 2017
|
|
102.208
|
%
|
5.250% Senior Notes due 2018
|
500
|
|
|
March 6, 2017
|
|
101.313
|
%
|
|
Total note redemptions
|
$
|
1,500
|
|
|
|
|
|
(1)
|
The Redemption price is equal to redemption percentage of the principal amount of the notes (plus accrued and unpaid interest thereon).
|
(in millions)
|
Principal Amount
|
|
Redemption
Date
|
|
Redemption Price
(1)
|
|||
6.464% Senior Notes due 2019
|
$
|
1,250
|
|
|
April 28, 2017
|
|
100.000
|
%
|
6.542% Senior Notes due 2020
|
1,250
|
|
|
April 28, 2017
|
|
101.636
|
%
|
|
6.633% Senior Notes due 2021
|
1,250
|
|
|
April 28, 2017
|
|
103.317
|
%
|
|
6.731% Senior Notes due 2022
|
1,250
|
|
|
April 28, 2017
|
|
103.366
|
%
|
|
Total redemptions delivered and not yet redeemed
|
$
|
5,000
|
|
|
|
|
|
(1)
|
The Redemption price is equal to redemption percentage of the principal amount of the notes (plus accrued and unpaid interest thereon).
|
•
|
On March 13, 2017, DT agreed to purchase
$1.0 billion
in aggregate principal amount of
4.000% Senior Notes due 2022
,
$1.25 billion
in aggregate principal amount of
5.125% Senior Notes due 2025
and
$1.25 billion
in aggregate principal amount of
5.375% Senior Notes due 2027
(the “new DT notes”) directly from T-Mobile USA and certain of its affiliates, as guarantors, with no underwriting discount.
|
(in millions)
|
Principal Amount
|
|
Purchase
Price
|
|||
5.300% Senior Notes due 2021
|
$
|
2,000
|
|
|
100.000
|
%
|
6.000% Senior Notes due 2024
|
1,350
|
|
|
103.016
|
%
|
|
6.000% Senior Notes due 2024
|
650
|
|
|
103.678
|
%
|
|
Total
|
$
|
4,000
|
|
|
|
|
Three Months Ended March 31,
|
||||||
(in millions, except shares and per share amounts)
|
2017
|
|
2016
|
||||
Net income
|
$
|
698
|
|
|
$
|
479
|
|
Less: Dividends on mandatory convertible preferred stock
|
(14
|
)
|
|
(14
|
)
|
||
Net income attributable to common stockholders - basic
|
684
|
|
|
465
|
|
||
Add: Dividends related to mandatory convertible preferred stock
|
14
|
|
|
14
|
|
||
Net income attributable to common stockholders - diluted
|
$
|
698
|
|
|
$
|
479
|
|
|
|
|
|
||||
Weighted average shares outstanding - basic
|
827,723,034
|
|
|
819,431,761
|
|
||
Effect of dilutive securities:
|
|
|
|
||||
Outstanding stock options and unvested stock awards
|
9,434,950
|
|
|
7,713,800
|
|
||
Mandatory convertible preferred stock
|
32,237,266
|
|
|
32,237,266
|
|
||
Weighted average shares outstanding - diluted
|
869,395,250
|
|
|
859,382,827
|
|
||
|
|
|
|
||||
Earnings per share - basic
|
$
|
0.83
|
|
|
$
|
0.57
|
|
Earnings per share - diluted
|
$
|
0.80
|
|
|
$
|
0.56
|
|
|
|
|
|
||||
Potentially dilutive securities:
|
|
|
|
||||
Outstanding stock options and unvested stock awards
|
9,993
|
|
|
967,839
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
360
|
|
|
$
|
3,138
|
|
|
$
|
3,937
|
|
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
7,501
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,618
|
|
|
233
|
|
|
—
|
|
|
1,851
|
|
||||||
Equipment installment plan receivables, net
|
—
|
|
|
—
|
|
|
1,880
|
|
|
—
|
|
|
—
|
|
|
1,880
|
|
||||||
Accounts receivable from affiliates
|
—
|
|
|
6
|
|
|
37
|
|
|
—
|
|
|
(6
|
)
|
|
37
|
|
||||||
Inventories
|
—
|
|
|
—
|
|
|
1,021
|
|
|
—
|
|
|
—
|
|
|
1,021
|
|
||||||
Asset purchase deposit
|
—
|
|
|
—
|
|
|
2,203
|
|
|
—
|
|
|
—
|
|
|
2,203
|
|
||||||
Other current assets
|
—
|
|
|
—
|
|
|
831
|
|
|
575
|
|
|
—
|
|
|
1,406
|
|
||||||
Total current assets
|
360
|
|
|
3,144
|
|
|
11,527
|
|
|
874
|
|
|
(6
|
)
|
|
15,899
|
|
||||||
Property and equipment, net
(1)
|
—
|
|
|
—
|
|
|
20,878
|
|
|
357
|
|
|
—
|
|
|
21,235
|
|
||||||
Goodwill
|
—
|
|
|
—
|
|
|
1,683
|
|
|
—
|
|
|
—
|
|
|
1,683
|
|
||||||
Spectrum licenses
|
—
|
|
|
—
|
|
|
27,150
|
|
|
—
|
|
|
—
|
|
|
27,150
|
|
||||||
Other intangible assets, net
|
—
|
|
|
—
|
|
|
338
|
|
|
—
|
|
|
—
|
|
|
338
|
|
||||||
Investments in subsidiaries, net
|
18,381
|
|
|
36,147
|
|
|
—
|
|
|
—
|
|
|
(54,528
|
)
|
|
—
|
|
||||||
Intercompany receivables
|
222
|
|
|
8,302
|
|
|
—
|
|
|
—
|
|
|
(8,524
|
)
|
|
—
|
|
||||||
Equipment installment plan receivables due after one year, net
|
—
|
|
|
—
|
|
|
975
|
|
|
—
|
|
|
—
|
|
|
975
|
|
||||||
Other assets
|
—
|
|
|
7
|
|
|
464
|
|
|
297
|
|
|
—
|
|
|
768
|
|
||||||
Total assets
|
$
|
18,963
|
|
|
$
|
47,600
|
|
|
$
|
63,015
|
|
|
$
|
1,528
|
|
|
$
|
(63,058
|
)
|
|
$
|
68,048
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable and accrued liabilities
|
$
|
—
|
|
|
$
|
279
|
|
|
$
|
5,596
|
|
|
$
|
285
|
|
|
$
|
—
|
|
|
$
|
6,160
|
|
Payables to affiliates
|
—
|
|
|
198
|
|
|
64
|
|
|
—
|
|
|
(6
|
)
|
|
256
|
|
||||||
Short-term debt
|
—
|
|
|
7,116
|
|
|
426
|
|
|
—
|
|
|
—
|
|
|
7,542
|
|
||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
934
|
|
|
—
|
|
|
—
|
|
|
934
|
|
||||||
Other current liabilities
|
—
|
|
|
—
|
|
|
247
|
|
|
146
|
|
|
—
|
|
|
393
|
|
||||||
Total current liabilities
|
—
|
|
|
7,593
|
|
|
7,267
|
|
|
431
|
|
|
(6
|
)
|
|
15,285
|
|
||||||
Long-term debt
|
—
|
|
|
11,918
|
|
|
1,187
|
|
|
—
|
|
|
—
|
|
|
13,105
|
|
||||||
Long-term debt to affiliates
|
—
|
|
|
9,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,600
|
|
||||||
Tower obligations
(1)
|
—
|
|
|
—
|
|
|
399
|
|
|
2,215
|
|
|
—
|
|
|
2,614
|
|
||||||
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
4,842
|
|
|
—
|
|
|
—
|
|
|
4,842
|
|
||||||
Deferred rent expense
|
—
|
|
|
—
|
|
|
2,635
|
|
|
—
|
|
|
—
|
|
|
2,635
|
|
||||||
Negative carrying value of subsidiaries, net
|
—
|
|
|
—
|
|
|
582
|
|
|
—
|
|
|
(582
|
)
|
|
—
|
|
||||||
Intercompany payables
|
—
|
|
|
—
|
|
|
8,298
|
|
|
226
|
|
|
(8,524
|
)
|
|
—
|
|
||||||
Other long-term liabilities
|
—
|
|
|
108
|
|
|
893
|
|
|
3
|
|
|
—
|
|
|
1,004
|
|
||||||
Total long-term liabilities
|
—
|
|
|
21,626
|
|
|
18,836
|
|
|
2,444
|
|
|
(9,106
|
)
|
|
33,800
|
|
||||||
Total stockholders' equity (deficit)
|
18,963
|
|
|
18,381
|
|
|
36,912
|
|
|
(1,347
|
)
|
|
(53,946
|
)
|
|
18,963
|
|
||||||
Total liabilities and stockholders' equity
|
$
|
18,963
|
|
|
$
|
47,600
|
|
|
$
|
63,015
|
|
|
$
|
1,528
|
|
|
$
|
(63,058
|
)
|
|
$
|
68,048
|
|
(1)
|
Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 8 – Tower Obligations included in the Annual Report on Form 10-K for the year ended December 31, 2016.
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cash and cash equivalents
|
$
|
358
|
|
|
$
|
2,733
|
|
|
$
|
2,342
|
|
|
$
|
67
|
|
|
$
|
—
|
|
|
$
|
5,500
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,675
|
|
|
221
|
|
|
—
|
|
|
1,896
|
|
||||||
Equipment installment plan receivables, net
|
—
|
|
|
—
|
|
|
1,930
|
|
|
—
|
|
|
—
|
|
|
1,930
|
|
||||||
Accounts receivable from affiliates
|
—
|
|
|
—
|
|
|
40
|
|
|
—
|
|
|
—
|
|
|
40
|
|
||||||
Inventories
|
—
|
|
|
—
|
|
|
1,111
|
|
|
—
|
|
|
—
|
|
|
1,111
|
|
||||||
Asset purchase deposit
|
—
|
|
|
—
|
|
|
2,203
|
|
|
—
|
|
|
—
|
|
|
2,203
|
|
||||||
Other current assets
|
—
|
|
|
—
|
|
|
972
|
|
|
565
|
|
|
—
|
|
|
1,537
|
|
||||||
Total current assets
|
358
|
|
|
2,733
|
|
|
10,273
|
|
|
853
|
|
|
—
|
|
|
14,217
|
|
||||||
Property and equipment, net
(1)
|
—
|
|
|
—
|
|
|
20,568
|
|
|
375
|
|
|
—
|
|
|
20,943
|
|
||||||
Goodwill
|
—
|
|
|
—
|
|
|
1,683
|
|
|
—
|
|
|
—
|
|
|
1,683
|
|
||||||
Spectrum licenses
|
—
|
|
|
—
|
|
|
27,014
|
|
|
—
|
|
|
—
|
|
|
27,014
|
|
||||||
Other intangible assets, net
|
—
|
|
|
—
|
|
|
376
|
|
|
—
|
|
|
—
|
|
|
376
|
|
||||||
Investments in subsidiaries, net
|
17,682
|
|
|
35,095
|
|
|
—
|
|
|
—
|
|
|
(52,777
|
)
|
|
—
|
|
||||||
Intercompany receivables
|
196
|
|
|
6,826
|
|
|
—
|
|
|
—
|
|
|
(7,022
|
)
|
|
—
|
|
||||||
Equipment installment plan receivables due after one year, net
|
—
|
|
|
—
|
|
|
984
|
|
|
—
|
|
|
—
|
|
|
984
|
|
||||||
Other assets
|
—
|
|
|
7
|
|
|
600
|
|
|
262
|
|
|
(195
|
)
|
|
674
|
|
||||||
Total assets
|
$
|
18,236
|
|
|
$
|
44,661
|
|
|
$
|
61,498
|
|
|
$
|
1,490
|
|
|
$
|
(59,994
|
)
|
|
$
|
65,891
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts payable and accrued liabilities
|
$
|
—
|
|
|
$
|
423
|
|
|
$
|
6,474
|
|
|
$
|
255
|
|
|
$
|
—
|
|
|
$
|
7,152
|
|
Payables to affiliates
|
—
|
|
|
79
|
|
|
46
|
|
|
—
|
|
|
—
|
|
|
125
|
|
||||||
Short-term debt
|
—
|
|
|
20
|
|
|
334
|
|
|
—
|
|
|
—
|
|
|
354
|
|
||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
986
|
|
|
—
|
|
|
—
|
|
|
986
|
|
||||||
Other current liabilities
|
—
|
|
|
—
|
|
|
258
|
|
|
147
|
|
|
—
|
|
|
405
|
|
||||||
Total current liabilities
|
—
|
|
|
522
|
|
|
8,098
|
|
|
402
|
|
|
—
|
|
|
9,022
|
|
||||||
Long-term debt
|
—
|
|
|
20,741
|
|
|
1,091
|
|
|
—
|
|
|
—
|
|
|
21,832
|
|
||||||
Long-term debt to affiliates
|
—
|
|
|
5,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,600
|
|
||||||
Tower obligations
(1)
|
—
|
|
|
—
|
|
|
400
|
|
|
2,221
|
|
|
—
|
|
|
2,621
|
|
||||||
Deferred tax liabilities
|
—
|
|
|
—
|
|
|
5,133
|
|
|
—
|
|
|
(195
|
)
|
|
4,938
|
|
||||||
Deferred rent expense
|
—
|
|
|
—
|
|
|
2,616
|
|
|
—
|
|
|
—
|
|
|
2,616
|
|
||||||
Negative carrying value of subsidiaries, net
|
—
|
|
|
—
|
|
|
568
|
|
|
—
|
|
|
(568
|
)
|
|
—
|
|
||||||
Intercompany payables
|
—
|
|
|
—
|
|
|
6,785
|
|
|
237
|
|
|
(7,022
|
)
|
|
—
|
|
||||||
Other long-term liabilities
|
—
|
|
|
116
|
|
|
906
|
|
|
4
|
|
|
—
|
|
|
1,026
|
|
||||||
Total long-term liabilities
|
—
|
|
|
26,457
|
|
|
17,499
|
|
|
2,462
|
|
|
(7,785
|
)
|
|
38,633
|
|
||||||
Total stockholders' equity (deficit)
|
18,236
|
|
|
17,682
|
|
|
35,901
|
|
|
(1,374
|
)
|
|
(52,209
|
)
|
|
18,236
|
|
||||||
Total liabilities and stockholders' equity
|
$
|
18,236
|
|
|
$
|
44,661
|
|
|
$
|
61,498
|
|
|
$
|
1,490
|
|
|
$
|
(59,994
|
)
|
|
$
|
65,891
|
|
(1)
|
Assets and liabilities for Non-Guarantor Subsidiaries are primarily included in VIEs related to the 2012 Tower Transaction. See Note 8 – Tower Obligations included in the Annual Report on Form 10-K for the year ended December 31, 2016.
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,018
|
|
|
$
|
525
|
|
|
$
|
(214
|
)
|
|
$
|
7,329
|
|
Equipment revenues
|
—
|
|
|
—
|
|
|
2,143
|
|
|
—
|
|
|
(100
|
)
|
|
2,043
|
|
||||||
Other revenues
|
—
|
|
|
—
|
|
|
194
|
|
|
52
|
|
|
(5
|
)
|
|
241
|
|
||||||
Total revenues
|
—
|
|
|
—
|
|
|
9,355
|
|
|
577
|
|
|
(319
|
)
|
|
9,613
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
1,402
|
|
|
6
|
|
|
—
|
|
|
1,408
|
|
||||||
Cost of equipment sales
|
—
|
|
|
—
|
|
|
2,540
|
|
|
246
|
|
|
(100
|
)
|
|
2,686
|
|
||||||
Selling, general and administrative
|
—
|
|
|
—
|
|
|
2,928
|
|
|
246
|
|
|
(219
|
)
|
|
2,955
|
|
||||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
1,546
|
|
|
18
|
|
|
—
|
|
|
1,564
|
|
||||||
Cost of MetroPCS business combination
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Gains on disposal of spectrum licenses
|
—
|
|
|
—
|
|
|
(37
|
)
|
|
—
|
|
|
—
|
|
|
(37
|
)
|
||||||
Total operating expenses
|
—
|
|
|
—
|
|
|
8,379
|
|
|
516
|
|
|
(319
|
)
|
|
8,576
|
|
||||||
Operating income
|
—
|
|
|
—
|
|
|
976
|
|
|
61
|
|
|
—
|
|
|
1,037
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
—
|
|
|
(264
|
)
|
|
(27
|
)
|
|
(48
|
)
|
|
—
|
|
|
(339
|
)
|
||||||
Interest expense to affiliates
|
—
|
|
|
(99
|
)
|
|
(7
|
)
|
|
—
|
|
|
6
|
|
|
(100
|
)
|
||||||
Interest income
|
—
|
|
|
9
|
|
|
4
|
|
|
—
|
|
|
(6
|
)
|
|
7
|
|
||||||
Other income (expense), net
|
—
|
|
|
3
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Total other expense, net
|
—
|
|
|
(351
|
)
|
|
(31
|
)
|
|
(48
|
)
|
|
—
|
|
|
(430
|
)
|
||||||
Income (loss) before income taxes
|
—
|
|
|
(351
|
)
|
|
945
|
|
|
13
|
|
|
—
|
|
|
607
|
|
||||||
Income tax benefit (expense)
|
—
|
|
|
—
|
|
|
96
|
|
|
(5
|
)
|
|
—
|
|
|
91
|
|
||||||
Earnings (loss) of subsidiaries
|
698
|
|
|
1,049
|
|
|
(31
|
)
|
|
—
|
|
|
(1,716
|
)
|
|
—
|
|
||||||
Net income
|
698
|
|
|
698
|
|
|
1,010
|
|
|
8
|
|
|
(1,716
|
)
|
|
698
|
|
||||||
Dividends on preferred stock
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||
Net income attributable to common stockholders
|
$
|
684
|
|
|
$
|
698
|
|
|
$
|
1,010
|
|
|
$
|
8
|
|
|
$
|
(1,716
|
)
|
|
$
|
684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net Income
|
$
|
698
|
|
|
$
|
698
|
|
|
$
|
1,010
|
|
|
$
|
8
|
|
|
$
|
(1,716
|
)
|
|
$
|
698
|
|
Other comprehensive income, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive income, net of tax
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
|
(3
|
)
|
|
1
|
|
||||||
Total comprehensive income
|
$
|
699
|
|
|
$
|
699
|
|
|
$
|
1,011
|
|
|
$
|
9
|
|
|
$
|
(1,719
|
)
|
|
$
|
699
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries (As adjusted - See Note 1)
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated (As adjusted - See Note 1)
|
||||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Service revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,287
|
|
|
$
|
463
|
|
|
$
|
(172
|
)
|
|
$
|
6,578
|
|
Equipment revenues
|
—
|
|
|
—
|
|
|
1,981
|
|
|
—
|
|
|
(130
|
)
|
|
1,851
|
|
||||||
Other revenues
|
—
|
|
|
—
|
|
|
191
|
|
(1)
|
48
|
|
|
(4
|
)
|
|
235
|
|
||||||
Total revenues
|
—
|
|
|
—
|
|
|
8,459
|
|
(1)
|
511
|
|
|
(306
|
)
|
|
8,664
|
|
||||||
Operating expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
—
|
|
|
—
|
|
|
1,415
|
|
|
6
|
|
|
—
|
|
|
1,421
|
|
||||||
Cost of equipment sales
|
—
|
|
|
—
|
|
|
2,287
|
|
|
217
|
|
|
(130
|
)
|
|
2,374
|
|
||||||
Selling, general and administrative
|
—
|
|
|
—
|
|
|
2,724
|
|
|
201
|
|
|
(176
|
)
|
|
2,749
|
|
||||||
Depreciation and amortization
|
—
|
|
|
—
|
|
|
1,532
|
|
|
20
|
|
|
—
|
|
|
1,552
|
|
||||||
Cost of MetroPCS business combination
|
—
|
|
|
—
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
||||||
Gains on disposal of spectrum licenses
|
—
|
|
|
—
|
|
|
(636
|
)
|
|
—
|
|
|
—
|
|
|
(636
|
)
|
||||||
Total operating expenses
|
—
|
|
|
—
|
|
|
7,358
|
|
|
444
|
|
|
(306
|
)
|
|
7,496
|
|
||||||
Operating income
|
—
|
|
|
—
|
|
|
1,101
|
|
(1)
|
67
|
|
|
—
|
|
|
1,168
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest expense
|
—
|
|
|
(274
|
)
|
|
(17
|
)
|
|
(48
|
)
|
|
—
|
|
|
(339
|
)
|
||||||
Interest expense to affiliates
|
—
|
|
|
(79
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(79
|
)
|
||||||
Interest income (expense)
|
—
|
|
|
8
|
|
|
(5
|
)
|
(1)
|
—
|
|
|
—
|
|
|
3
|
|
||||||
Other expense, net
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Total other expense, net
|
—
|
|
|
(345
|
)
|
|
(24
|
)
|
(1)
|
(48
|
)
|
|
—
|
|
|
(417
|
)
|
||||||
Income (loss) before income taxes
|
—
|
|
|
(345
|
)
|
|
1,077
|
|
|
19
|
|
|
—
|
|
|
751
|
|
||||||
Income tax expense
|
—
|
|
|
—
|
|
|
(263
|
)
|
|
(9
|
)
|
|
—
|
|
|
(272
|
)
|
||||||
Earnings (loss) of subsidiaries
|
479
|
|
|
824
|
|
|
(10
|
)
|
|
—
|
|
|
(1,293
|
)
|
|
—
|
|
||||||
Net income
|
479
|
|
|
479
|
|
|
804
|
|
|
10
|
|
|
(1,293
|
)
|
|
479
|
|
||||||
Dividends on preferred stock
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||
Net income attributable to common stockholders
|
$
|
465
|
|
|
$
|
479
|
|
|
$
|
804
|
|
|
$
|
10
|
|
|
$
|
(1,293
|
)
|
|
$
|
465
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income
|
$
|
479
|
|
|
$
|
479
|
|
|
$
|
804
|
|
|
$
|
10
|
|
|
$
|
(1,293
|
)
|
|
$
|
479
|
|
Other comprehensive loss, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other comprehensive loss, net of tax
|
(3
|
)
|
|
(3
|
)
|
|
(3
|
)
|
|
—
|
|
|
6
|
|
|
(3
|
)
|
||||||
Total comprehensive income
|
$
|
476
|
|
|
$
|
476
|
|
|
$
|
801
|
|
|
$
|
10
|
|
|
$
|
(1,287
|
)
|
|
$
|
476
|
|
(1)
|
The amortized imputed discount on EIP receivables previously recognized as Interest income has been retrospectively reclassified as Other revenues. See
Note 1 Basis of Presentation
for further detail.
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash provided by (used in) operating activities
|
$
|
1
|
|
|
$
|
(5,090
|
)
|
|
$
|
6,803
|
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
1,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
—
|
|
|
—
|
|
|
(1,528
|
)
|
|
—
|
|
|
—
|
|
|
(1,528
|
)
|
||||||
Purchases of spectrum licenses and other intangible assets, including deposits
|
—
|
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||
Other, net
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
||||||
Net cash used in investing activities
|
—
|
|
|
—
|
|
|
(1,550
|
)
|
|
—
|
|
|
—
|
|
|
(1,550
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
5,495
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,495
|
|
||||||
Repayments of capital lease obligations
|
—
|
|
|
—
|
|
|
(90
|
)
|
|
—
|
|
|
—
|
|
|
(90
|
)
|
||||||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(3,480
|
)
|
|
—
|
|
|
—
|
|
|
(3,480
|
)
|
||||||
Tax withholdings on share-based awards
|
—
|
|
|
—
|
|
|
(92
|
)
|
|
—
|
|
|
—
|
|
|
(92
|
)
|
||||||
Dividends on preferred stock
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||
Other, net
|
15
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
19
|
|
||||||
Net cash (used in) provided by financing activities
|
1
|
|
|
5,495
|
|
|
(3,658
|
)
|
|
—
|
|
|
—
|
|
|
1,838
|
|
||||||
Change in cash and cash equivalents
|
2
|
|
|
405
|
|
|
1,595
|
|
|
(1
|
)
|
|
—
|
|
|
2,001
|
|
||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning of period
|
358
|
|
|
2,733
|
|
|
2,342
|
|
|
67
|
|
|
—
|
|
|
5,500
|
|
||||||
End of period
|
$
|
360
|
|
|
$
|
3,138
|
|
|
$
|
3,937
|
|
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
7,501
|
|
(in millions)
|
Parent
|
|
Issuer
|
|
Guarantor Subsidiaries
|
|
Non-Guarantor Subsidiaries
|
|
Consolidating and Eliminating Adjustments
|
|
Consolidated
|
||||||||||||
Operating activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(298
|
)
|
|
$
|
1,283
|
|
|
$
|
40
|
|
|
$
|
—
|
|
|
$
|
1,025
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Investing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Purchases of property and equipment
|
—
|
|
|
—
|
|
|
(1,335
|
)
|
|
—
|
|
|
—
|
|
|
(1,335
|
)
|
||||||
Purchases of spectrum licenses and other intangible assets, including deposits
|
—
|
|
|
—
|
|
|
(594
|
)
|
|
—
|
|
|
—
|
|
|
(594
|
)
|
||||||
Sales of short-term investments
|
—
|
|
|
—
|
|
|
75
|
|
|
—
|
|
|
—
|
|
|
75
|
|
||||||
Other, net
|
—
|
|
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
||||||
Net cash used in investing activities
|
—
|
|
|
—
|
|
|
(1,860
|
)
|
|
—
|
|
|
—
|
|
|
(1,860
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Financing activities
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Repayments of capital lease obligations
|
—
|
|
|
—
|
|
|
(36
|
)
|
|
—
|
|
|
—
|
|
|
(36
|
)
|
||||||
Repayments of long-term debt
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
||||||
Tax withholdings on share-based awards
|
—
|
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
||||||
Dividends on preferred stock
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
||||||
Other, net
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Net cash used in financing activities
|
(13
|
)
|
|
—
|
|
|
(87
|
)
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
||||||
Change in cash and cash equivalents
|
(13
|
)
|
|
(298
|
)
|
|
(664
|
)
|
|
40
|
|
|
—
|
|
|
(935
|
)
|
||||||
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning of period
|
378
|
|
|
1,767
|
|
|
2,364
|
|
|
73
|
|
|
—
|
|
|
4,582
|
|
||||||
End of period
|
$
|
365
|
|
|
$
|
1,469
|
|
|
$
|
1,700
|
|
|
$
|
113
|
|
|
$
|
—
|
|
|
$
|
3,647
|
|
•
|
adverse economic or political conditions in the U.S. and international markets;
|
•
|
competition in the wireless services market, including new competitors entering the industry as technologies converge;
|
•
|
the effects any future merger or acquisition involving us, as well as the effects of mergers or acquisitions in the technology, media and telecommunications industry;
|
•
|
challenges in implementing our business strategies or funding our wireless operations, including payment for additional spectrum or network upgrades;
|
•
|
the possibility that we may be unable to renew our spectrum licenses on attractive terms or acquire new spectrum licenses at reasonable costs and terms;
|
•
|
difficulties in managing growth in wireless data services, including network quality;
|
•
|
material changes in available technology;
|
•
|
the timing, scope and financial impact of our deployment of advanced network and business technologies;
|
•
|
the impact on our networks and business from major technology equipment failures;
|
•
|
breaches of our and/or our third party vendors’ networks, information technology (“IT”) and data security;
|
•
|
natural disasters, terrorist attacks or similar incidents;
|
•
|
existing or future litigation;
|
•
|
any changes in the regulatory environments in which we operate, including any increase in restrictions on the ability to operate our networks;
|
•
|
any disruption or failure of our third parties’ or key suppliers’ provisioning of products or services;
|
•
|
material adverse changes in labor matters, including labor campaigns, negotiations or additional organizing activity, and any resulting financial, operational and/or reputational impact;
|
•
|
the ability to make payments on our debt or to repay our existing indebtedness when due;
|
•
|
adverse change in the ratings of our debt securities or adverse conditions in the credit markets;
|
•
|
changes in accounting assumptions that regulatory agencies, including the Securities and Exchange Commission (“SEC”), may require, which could result in an impact on earnings; and
|
•
|
changes in tax laws, regulations and existing standards and the resolution of disputes with any taxing jurisdictions.
|
•
|
A narrative explanation from the perspective of management of our financial condition, results of operations, cash flows, liquidity and certain other factors that may affect future results;
|
•
|
Context to the financial statements; and
|
•
|
Information that allows assessment of the likelihood that past performance is indicative of future performance.
|
•
|
Total revenues
increased
$949 million
, or
11%
, to
$9.6 billion
for the
three months ended
March 31, 2017
, primarily driven by growth in service and equipment revenues as further discussed below. On September 1, 2016, we sold our marketing and distribution rights to certain existing T-Mobile co-branded customers to a current Mobile Virtual Network Operators (“MVNO”) partner for nominal consideration (the “MVNO Transaction”). The MVNO Transaction shifted Branded postpaid revenues to Wholesale revenues, but did not materially impact total revenues.
|
•
|
Service revenues
increased
$751 million
, or
11%
, to
$7.3 billion
for the
three months ended
March 31, 2017
, primarily due to growth in our average branded customer base as a result of strong customer response to our Un-carrier initiatives, the success of our MetroPCS brand, continued growth in new markets and growth in Branded postpaid phone average revenue per user (“ARPU”) and Branded prepaid ARPU.
|
•
|
Equipment revenues
increased
$192 million
, or
10%
, to
$2.0 billion
for the
three months ended
March 31, 2017
, primarily due to an
increase
in the number of devices sold and a higher average revenue per device sold.
|
•
|
Operating income
decreased
$131 million
, or
11%
, to
$1.0 billion
for the
three months ended
March 31, 2017
, primarily due to a decrease in
Gains on disposal of spectrum licenses
, an increased loss on equipment, and higher
Selling, general and administrative
expenses to support employee costs, promotions and customer growth, partially offset by higher service revenues and a decrease in
Cost of MetroPCS business combination
.
|
•
|
Net income
increased
$219 million
, or
46%
, to
$698 million
for the
three months ended
March 31, 2017
, primarily due a tax benefit related to a reduction in the valuation allowance against deferred tax assets, partially offset by the impacts of lower operating income driven by the factors described above and higher
Interest expense to affiliates
related to a secured term loan facility with Deutsche Telekom AG (“DT”). Additionally, the
three months ended
March 31, 2017
included
$23 million
of net, after-tax gains on disposal of spectrum licenses compared to
$406 million
for the
three months ended
March 31, 2016
.
|
•
|
Adjusted EBITDA (see “Performance Measures”), a non-GAAP financial measure,
decreased
$146 million
, or
5%
, to
$2.7 billion
for the
three months ended
March 31, 2017
, primarily from lower gains on disposal of spectrum licenses
|
•
|
Net cash provided by operating activities
increased
$688 million
, or
67%
, to
$1.7 billion
for the
three months ended
March 31, 2017
. The
increase
was primarily due to a decrease in net cash outflows from changes in working capital, including changes in
Inventories
, partially offset by
Other current and long-term liabilities
,
Other current and long-term assets
, and an increased pay-down of
Accounts payable and accrued liabilities
.
|
•
|
Free Cash Flow (see “Performance Measure”), a non-GAAP financial measure,
increased
$495 million
, or
160%
, to
$185 million
for the
three months ended
March 31, 2017
. The increase was due to higher net cash provided by operating activities, as discussed above, partially offset by higher purchases of property and equipment.
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
(in millions)
|
|
|
(As Adjusted - See Note 1)
|
|
|
|
|
|||||||
Revenues
|
|
|
|
|
|
|
|
|||||||
Branded postpaid revenues
|
$
|
4,725
|
|
|
$
|
4,302
|
|
|
$
|
423
|
|
|
10
|
%
|
Branded prepaid revenues
|
2,299
|
|
|
2,025
|
|
|
274
|
|
|
14
|
%
|
|||
Wholesale revenues
|
270
|
|
|
200
|
|
|
70
|
|
|
35
|
%
|
|||
Roaming and other service revenues
|
35
|
|
|
51
|
|
|
(16
|
)
|
|
(31
|
)%
|
|||
Total service revenues
|
7,329
|
|
|
6,578
|
|
|
751
|
|
|
11
|
%
|
|||
Equipment revenues
|
2,043
|
|
|
1,851
|
|
|
192
|
|
|
10
|
%
|
|||
Other revenues
|
241
|
|
|
235
|
|
|
6
|
|
|
3
|
%
|
|||
Total revenues
|
9,613
|
|
|
8,664
|
|
|
949
|
|
|
11
|
%
|
|||
Operating expenses
|
|
|
|
|
|
|
|
|||||||
Cost of services, exclusive of depreciation and amortization shown separately below
|
1,408
|
|
|
1,421
|
|
|
(13
|
)
|
|
(1
|
)%
|
|||
Cost of equipment sales
|
2,686
|
|
|
2,374
|
|
|
312
|
|
|
13
|
%
|
|||
Selling, general and administrative
|
2,955
|
|
|
2,749
|
|
|
206
|
|
|
7
|
%
|
|||
Depreciation and amortization
|
1,564
|
|
|
1,552
|
|
|
12
|
|
|
1
|
%
|
|||
Cost of MetroPCS business combination
|
—
|
|
|
36
|
|
|
(36
|
)
|
|
NM
|
|
|||
Gains on disposal of spectrum licenses
|
(37
|
)
|
|
(636
|
)
|
|
599
|
|
|
(94
|
)%
|
|||
Total operating expenses
|
8,576
|
|
|
7,496
|
|
|
1,080
|
|
|
14
|
%
|
|||
Operating income
|
1,037
|
|
|
1,168
|
|
|
(131
|
)
|
|
(11
|
)%
|
|||
Other income (expense)
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
(339
|
)
|
|
(339
|
)
|
|
—
|
|
|
—
|
%
|
|||
Interest expense to affiliates
|
(100
|
)
|
|
(79
|
)
|
|
(21
|
)
|
|
27
|
%
|
|||
Interest income
|
7
|
|
|
3
|
|
|
4
|
|
|
133
|
%
|
|||
Other income (expense), net
|
2
|
|
|
(2
|
)
|
|
4
|
|
|
200
|
%
|
|||
Total other expense, net
|
(430
|
)
|
|
(417
|
)
|
|
(13
|
)
|
|
3
|
%
|
|||
Income before income taxes
|
607
|
|
|
751
|
|
|
(144
|
)
|
|
(19
|
)%
|
|||
Income tax benefit (expense)
|
91
|
|
|
(272
|
)
|
|
363
|
|
|
133
|
%
|
|||
Net income
|
$
|
698
|
|
|
$
|
479
|
|
|
$
|
219
|
|
|
46
|
%
|
|
|
|
|
|
|
|
|
|||||||
Net cash provided by operating activities
|
$
|
1,713
|
|
|
$
|
1,025
|
|
|
$
|
688
|
|
|
67
|
%
|
Net cash used in investing activities
|
(1,550
|
)
|
|
(1,860
|
)
|
|
310
|
|
|
(17
|
)%
|
|||
Net cash provided by (used in) financing activities
|
1,838
|
|
|
(100
|
)
|
|
1,938
|
|
|
NM
|
|
|||
|
|
|
|
|
|
|
|
|||||||
Non-GAAP Financial Measures
|
|
|
|
|
|
|
|
|||||||
Adjusted EBITDA
|
$
|
2,668
|
|
|
$
|
2,814
|
|
|
$
|
(146
|
)
|
|
(5
|
)%
|
Free Cash Flow
|
185
|
|
|
(310
|
)
|
|
495
|
|
|
160
|
%
|
•
|
A
6%
increase
in the number of average branded postpaid phone customers, driven by strong customer response to our Un-carrier initiatives and promotions for services and devices; and
|
•
|
Higher branded postpaid phone ARPU, including the impact of a decrease in the non-cash net revenue deferral for Data Stash; partially offset by
|
•
|
The impact of reduced Branded postpaid revenues resulting from the MVNO Transaction.
|
•
|
An
11%
increase
in the number of average branded prepaid customers driven by the expansion into new markets and success of our MetroPCS brand;
|
•
|
Higher branded prepaid ARPU; partially offset by
|
•
|
The impact from the optimization of T-Mobile’s third-party distribution channels including de-emphasis of T-Mobile legacy prepaid products.
|
•
|
The impact of increased Wholesale revenues resulting from the MVNO Transaction; and
|
•
|
Growth in customers of certain MVNO partners; partially offset by
|
•
|
A decrease in data usage per customer.
|
•
|
An
increase
of
$123 million
in device sales revenues, primarily due to:
|
•
|
A
7%
increase
in the number of devices sold. Device sales revenue is recognized at the time of sale;
|
•
|
Higher average revenue per device sold due to our continued focus on EIP sales;
|
•
|
An increase of
$47 million
from purchased leased devices; and
|
•
|
An increase of
$31 million
in SIM and accessory revenue.
|
•
|
Lower regulatory program and long distance and toll costs;
|
•
|
Lower lease expense associated with reciprocal spectrum license lease agreements; partially offset by
|
•
|
Expenses associated with network expansion and the build-out of our network to utilize our 700 MHz A-Block spectrum licenses, including higher employee-related costs.
|
•
|
An increase of
$301 million
in device cost of equipment sales, primarily due to:
|
•
|
A
7%
increase
in the number of devices sold;
|
•
|
A higher average cost per device sold due to our continued focus on EIP sales; and
|
•
|
An increase of
$70 million
from purchased leased devices; partially offset by
|
•
|
A decrease in the impact of returned leased devices.
|
•
|
Employee-related costs;
|
•
|
Commissions; and
|
•
|
Promotional costs.
|
•
|
Lower network decommissioning costs. On July 1, 2015, we officially completed the shutdown of the MetroPCS CDMA network. Network decommissioning costs, which are excluded from Adjusted EBITDA, primarily relate to the acceleration of lease costs for cell sites that would have otherwise been recognized as cost of services over the remaining lease term had we not decommissioned the cell sites. We do not expect to incur significant additional network decommissioning costs in 2017.
|
•
|
Operating income
, the components of which are discussed above,
decreased
$131 million
, or
11%
, and
|
•
|
Income tax benefit
increased
$363 million
, or
133%
, primarily from:
|
•
|
Lower income before income taxes; and
|
•
|
A lower effective tax rate. The effective tax rate was a benefit of
(15.0)%
for the
three months ended
March 31, 2017
, compared to an expense of
36.2%
for the same period in
2016
. The change in the effective income tax rate was primarily due to the recognition of a
$270 million
tax benefit related to a reduction in the valuation allowance against deferred tax assets in certain state jurisdictions. The effective tax rate was further decreased by the recognition of
$56 million
of excess tax benefits related to share-based payments for the
three months ended
March 31, 2017
, compared to
$19 million
for the same period in
2016
. See
Note 7 – Income Taxes
of the
Notes to the Condensed Consolidated Financial Statements
.
|
•
|
Other income, net
increased
$4 million
, or
200%
, primarily from:
|
•
|
A
$16 million
net gain recognized from the early redemption of certain Senior Notes; partially offset by
|
•
|
A
$13 million
net loss recognized from the refinancing of our outstanding Senior Secured Term Loans and the early redemption of certain Senior Notes. See
Note 6 – Debt
of the
Notes to the Condensed Consolidated Financial Statements
.
|
•
|
Interest expense
was flat
,
primarily due to:
|
•
|
A decrease from the early redemption of our Senior Secured Term Loans and a total of
$1.5 billion
of Senior Notes; offset by
|
•
|
An increase from the issuance of the
$1.0 billion
of Senior Notes in April 2016; and
|
•
|
An increase from the issuance of a total of
$1.5 billion
of Senior Notes in March 2017. See
Note 6 – Debt
of the
Notes to the Condensed Consolidated Financial Statements
.
|
•
|
Interest expense to affiliates
increased
$21 million
, or
27%
, primarily from:
|
•
|
An increase in interest associated with a secured term loan facility with DT entered into in January 2017. See
Note 6 – Debt
of the
Notes to the Condensed Consolidated Financial Statements
.
|
|
March 31,
2017 |
|
December 31,
2016 |
|
Change
|
|||||||||
(in millions)
|
|
|
$
|
|
%
|
|||||||||
Other current assets
|
$
|
575
|
|
|
$
|
565
|
|
|
$
|
10
|
|
|
2
|
%
|
Property and equipment, net
|
357
|
|
|
375
|
|
|
(18
|
)
|
|
(5
|
)%
|
|||
Tower obligations
|
2,215
|
|
|
2,221
|
|
|
(6
|
)
|
|
—
|
%
|
|||
Total stockholders' deficit
|
(1,347
|
)
|
|
(1,374
|
)
|
|
27
|
|
|
2
|
%
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(in millions)
|
2017
|
|
2016
|
$
|
|
%
|
||||||||
Service revenues
|
$
|
525
|
|
|
$
|
463
|
|
|
$
|
62
|
|
|
13
|
%
|
Cost of equipment sales
|
246
|
|
|
217
|
|
|
29
|
|
|
13
|
%
|
|||
Selling, general and administrative
|
246
|
|
|
201
|
|
|
45
|
|
|
22
|
%
|
|||
Total comprehensive income
|
9
|
|
|
10
|
|
|
(1
|
)
|
|
(10
|
)%
|
|
March 31,
2017 |
|
March 31,
2016 |
|
Change
|
||||||
(in thousands)
|
#
|
|
%
|
||||||||
Customers, end of period
|
|
|
|
|
|
|
|
||||
Branded postpaid phone customers
|
32,095
|
|
|
30,232
|
|
|
1,863
|
|
|
6
|
%
|
Branded postpaid mobile broadband customers
|
3,246
|
|
|
2,504
|
|
|
742
|
|
|
30
|
%
|
Total branded postpaid customers
|
35,341
|
|
|
32,736
|
|
|
2,605
|
|
|
8
|
%
|
Branded prepaid customers
|
20,199
|
|
|
18,438
|
|
|
1,761
|
|
|
10
|
%
|
Total branded customers
|
55,540
|
|
|
51,174
|
|
|
4,366
|
|
|
9
|
%
|
Wholesale customers
|
17,057
|
|
|
14,329
|
|
|
2,728
|
|
|
19
|
%
|
Total customers, end of period
|
72,597
|
|
|
65,503
|
|
|
7,094
|
|
|
11
|
%
|
•
|
Higher branded postpaid phone customers driven by strong customer response to our Un-carrier initiatives, partially offset by the MVNO Transaction;
|
•
|
Higher branded prepaid customers driven by the continued success of our Metro PCS brand, continued growth in new markets and distribution expansion; and
|
•
|
Higher branded postpaid mobile broadband customers primarily due to continued promotional activity.
|
|
Three Months Ended March 31,
|
|
Change
|
||||||||
(in thousands)
|
2017
|
|
2016
|
#
|
|
%
|
|||||
Net customer additions (losses)
|
|
|
|
|
|
|
|
||||
Branded postpaid phone customers
|
798
|
|
|
877
|
|
|
(79
|
)
|
|
(9
|
)%
|
Branded postpaid mobile broadband customers
|
116
|
|
|
164
|
|
|
(48
|
)
|
|
(29
|
)%
|
Total branded postpaid customers
|
914
|
|
|
1,041
|
|
|
(127
|
)
|
|
(12
|
)%
|
Branded prepaid customers
|
386
|
|
|
807
|
|
|
(421
|
)
|
|
(52
|
)%
|
Total branded customers
|
1,300
|
|
|
1,848
|
|
|
(548
|
)
|
|
(30
|
)%
|
Wholesale customers
|
(158
|
)
|
|
373
|
|
|
(531
|
)
|
|
(142
|
)%
|
Total net customer additions
|
1,142
|
|
|
2,221
|
|
|
(1,079
|
)
|
|
(49
|
)%
|
•
|
Lower branded prepaid net customer additions primarily due to the optimization of our third-party distribution channels including de-emphasis of T-Mobile legacy prepaid products, a delayed tax refund season, and higher MetroPCS deactivations resulting from churn on a growing customer base and increased competitive activity. The decrease was partially offset by higher MetroPCS gross customer additions;
|
•
|
Lower branded postpaid phone net customer additions primarily due to increased competitive activity, the absence of iconic device launches, and a delayed tax refund season, partially offset by decreased churn; and
|
•
|
Lower branded postpaid mobile broadband net customer additions primarily due to higher deactivations resulting from churn on a growing customer base, partially offset by higher gross customer additions from the launch of SyncUP DRIVE
TM
.
|
|
March 31,
2017 |
|
March 31,
2016 |
|
Change
|
||||||
|
|
#
|
|
%
|
|||||||
Branded postpaid customers per account
|
2.88
|
|
|
2.59
|
|
|
0.29
|
|
|
11
|
%
|
|
Three Months Ended March 31,
|
|
Bps Change
|
||||
2017
|
|
2016
|
|||||
Branded postpaid phone churn
|
1.18
|
%
|
|
1.33
|
%
|
|
-15 bps
|
Branded prepaid churn
|
4.01
|
%
|
|
3.84
|
%
|
|
17 bps
|
•
|
The MVNO Transaction as the customers transferred had a higher rate of churn.
|
•
|
Higher MetroPCS churn from increased competitive activity; partially offset by
|
•
|
De-emphasis of T-Mobile legacy prepaid products and a decrease in certain customers, which have a higher rate of branded prepaid churn.
|
(in millions, except average number of customers, ARPU and ABPU)
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
2017
|
|
2016
|
|
#
|
|
%
|
||||||||
Calculation of Branded Postpaid Phone ARPU
|
|
|
|
|
|
|
|
|||||||
Branded postpaid service revenues
|
$
|
4,725
|
|
|
$
|
4,302
|
|
|
$
|
423
|
|
|
10
|
%
|
Less: Branded postpaid mobile broadband revenues
|
(225
|
)
|
|
(182
|
)
|
|
(43
|
)
|
|
24
|
%
|
|||
Branded postpaid phone service revenues
|
$
|
4,500
|
|
|
$
|
4,120
|
|
|
$
|
380
|
|
|
9
|
%
|
Divided by: Average number of branded postpaid phone customers (in thousands) and number of months in period
|
31,564
|
|
|
29,720
|
|
|
1,844
|
|
|
6
|
%
|
|||
Branded postpaid phone ARPU
|
$
|
47.53
|
|
|
$
|
46.21
|
|
|
$
|
1.32
|
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|||||||
Calculation of Branded Postpaid ABPU
|
|
|
|
|
|
|
|
|||||||
Branded postpaid service revenues
|
$
|
4,725
|
|
|
$
|
4,302
|
|
|
$
|
423
|
|
|
10
|
%
|
EIP billings
|
1,402
|
|
|
1,324
|
|
|
78
|
|
|
6
|
%
|
|||
Lease revenues
|
324
|
|
|
342
|
|
|
(18
|
)
|
|
(5
|
)%
|
|||
Total billings for branded postpaid customers
|
$
|
6,451
|
|
|
$
|
5,968
|
|
|
$
|
483
|
|
|
8
|
%
|
Divided by: Average number of branded postpaid customers (in thousands) and number of months in period
|
34,740
|
|
|
32,140
|
|
|
2,600
|
|
|
8
|
%
|
|||
Branded postpaid ABPU
|
$
|
61.89
|
|
|
$
|
61.90
|
|
|
$
|
(0.01
|
)
|
|
NM
|
|
|
|
|
|
|
|
|
|
|||||||
Calculation of Branded Prepaid ARPU
|
|
|
|
|
|
|
|
|||||||
Branded prepaid service revenues
|
$
|
2,299
|
|
|
$
|
2,025
|
|
|
$
|
274
|
|
|
14
|
%
|
Divided by: Average number of branded prepaid customers (in thousands) and number of months in period
|
19,889
|
|
|
17,962
|
|
|
1,927
|
|
|
11
|
%
|
|||
Branded prepaid ARPU
|
$
|
38.53
|
|
|
$
|
37.58
|
|
|
$
|
0.95
|
|
|
3
|
%
|
•
|
A decrease in the non-cash net revenue deferral for Data Stash;
|
•
|
A net positive impact from our T-Mobile ONE rate plans, inclusive of Un-carrier Next; and
|
•
|
The transfer of customers as part of the MVNO transaction as those customers had lower ARPU; partially offset by
|
•
|
Dilution from promotional activities.
|
•
|
A
decrease
in lease revenues; partially offset by
|
•
|
Higher branded postpaid service revenues.
|
•
|
Continued growth of MetroPCS customers, which generate higher ARPU; and
|
•
|
De-emphasis of T-Mobile legacy prepaid products and a decrease in certain other customers that had lower average branded prepaid ARPU
.
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
Net income
|
$
|
698
|
|
|
$
|
479
|
|
|
$
|
219
|
|
|
46
|
%
|
Adjustments:
|
|
|
|
|
|
|
|
|||||||
Interest expense
|
339
|
|
|
339
|
|
|
—
|
|
|
—
|
%
|
|||
Interest expense to affiliates
|
100
|
|
|
79
|
|
|
21
|
|
|
27
|
%
|
|||
Interest income
(1)
|
(7
|
)
|
|
(3
|
)
|
|
(4
|
)
|
|
133
|
%
|
|||
Other expense, net
|
(2
|
)
|
|
2
|
|
|
(4
|
)
|
|
(200
|
)%
|
|||
Income tax (benefit) expense
|
(91
|
)
|
|
272
|
|
|
(363
|
)
|
|
(133
|
)%
|
|||
Operating income
(1)
|
1,037
|
|
|
1,168
|
|
|
(131
|
)
|
|
(11
|
)%
|
|||
Depreciation and amortization
|
1,564
|
|
|
1,552
|
|
|
12
|
|
|
1
|
%
|
|||
Cost of MetroPCS business combination
(2)
|
—
|
|
|
36
|
|
|
(36
|
)
|
|
NM
|
|
|||
Stock-based compensation
(3)
|
67
|
|
|
53
|
|
|
14
|
|
|
26
|
%
|
|||
Other, net
(3)
|
—
|
|
|
5
|
|
|
(5
|
)
|
|
NM
|
|
|||
Adjusted EBITDA
(1)
|
$
|
2,668
|
|
|
$
|
2,814
|
|
|
$
|
(146
|
)
|
|
(5
|
)%
|
Net income margin (Net income divided by service revenues)
|
10
|
%
|
|
7
|
%
|
|
|
|
300 bps
|
|
||||
Adjusted EBITDA margin (Adjusted EBITDA divided by service revenues)
(1)
|
36
|
%
|
|
43
|
%
|
|
|
|
-700 bps
|
|
(1)
|
The amortized imputed discount on EIP receivables previously recognized as Interest income has been retrospectively re-classified as Other revenues. See
Note 1 - Basis of Presentation
of the
Notes to the Condensed Consolidated Financial Statements
and table below for further detail.
|
(2)
|
The Company will no longer separately present Cost of MetroPCS business combination as it is insignificant.
|
(3)
|
Stock-based compensation includes payroll tax impacts and may not agree to stock-based compensation expense in the consolidated financial statements. Other, net may not agree to the
Condensed Consolidated Statements of Comprehensive Income
primarily due to certain non-routine operating activities, such as other special items that would not be expected to reoccur, and are therefore excluded in Adjusted EBITDA.
|
•
|
Lower gains on disposal of spectrum licenses of
$599 million
; gains on disposal were
$37 million
for the
three months ended March 31,
2017
, compared to
$636 million
in the same period in
2016
;
|
•
|
Higher selling, general and administrative expenses;
|
•
|
Higher losses on equipment; partially offset by
|
•
|
An
increase
in branded postpaid and prepaid service revenues primarily due to strong customer response to our Un-carrier initiatives, the ongoing success of our promotional activities, and the success of our MetroPCS brand.
|
|
Three Months Ended March 31, 2016
|
||||||||||
(in millions)
|
As filed
|
|
Change in accounting principle
|
|
As adjusted
|
||||||
Operating income
|
$
|
1,103
|
|
|
$
|
65
|
|
|
$
|
1,168
|
|
Interest income
|
68
|
|
|
(65
|
)
|
|
3
|
|
|||
Adjusted EBITDA
|
2,749
|
|
|
65
|
|
|
2,814
|
|
|||
Adjusted EBITDA margin (Adjusted EBITDA divided by service revenues)
|
42
|
%
|
|
1
|
%
|
|
43
|
%
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
Net cash provided by operating activities
|
$
|
1,713
|
|
|
$
|
1,025
|
|
|
$
|
688
|
|
|
67
|
%
|
Net cash used in investing activities
|
(1,550
|
)
|
|
(1,860
|
)
|
|
310
|
|
|
(17
|
)%
|
|||
Net cash provided by (used in) financing activities
|
1,838
|
|
|
(100
|
)
|
|
1,938
|
|
|
NM
|
|
•
|
$219 million
decrease in net cash outflows from changes in working capital primarily due to changes in
Inventories
partially offset by changes in
Other current and long-term liabilities
,
Other current and long-term assets
and an increased pay-down of
Accounts payable and accrued liabilities
.
|
•
|
$580 million
decrease
in
Purchases of spectrum licenses and other intangible assets, including deposits
; partially offset by
|
•
|
$193 million
increase
in Purchases of property and equipment, including capitalized interest of
$48 million
, primarily related to the build out of our 4G LTE network.
|
•
|
$5.5 billion
Proceeds from issuance of long-term debt
; partially offset by
|
•
|
$3.5 billion
Repayments of long-term debt
,
|
•
|
$92 million
for
Tax withholdings on share-based awards
; and
|
•
|
$90 million
for
Repayments of capital lease obligations
.
|
|
Three Months Ended March 31,
|
|
Change
|
|||||||||||
(in millions)
|
2017
|
|
2016
|
|
$
|
|
%
|
|||||||
Net cash provided by operating activities
|
$
|
1,713
|
|
|
$
|
1,025
|
|
|
$
|
688
|
|
|
67
|
%
|
Cash purchases of property and equipment
|
(1,528
|
)
|
|
(1,335
|
)
|
|
(193
|
)
|
|
(14
|
)%
|
|||
Free Cash Flow
|
$
|
185
|
|
|
$
|
(310
|
)
|
|
$
|
495
|
|
|
160
|
%
|
•
|
Higher net cash provided by operating activities, as described above; partially offset by
|
•
|
Higher purchases of property and equipment from the build-out of our 4G LTE network.
|
(in millions)
|
December 31,
2016 |
|
Issuances and Borrowings
|
|
Note Redemptions
|
|
Extinguishments
|
|
Principal Reclassifications
|
|
Other
(1)
|
|
March 31,
2017 |
||||||||||||||
Short-term debt
|
$
|
354
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(20
|
)
|
|
$
|
6,750
|
|
|
$
|
458
|
|
|
$
|
7,542
|
|
Long-term debt
|
21,832
|
|
|
1,495
|
|
|
(1,500
|
)
|
|
(1,960
|
)
|
|
(6,750
|
)
|
|
(12
|
)
|
|
$
|
13,105
|
|
||||||
Long-term debt to affiliates
|
5,600
|
|
|
4,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,600
|
|
|||||||
Total debt
|
$
|
27,786
|
|
|
$
|
5,495
|
|
|
$
|
(1,500
|
)
|
|
$
|
(1,980
|
)
|
|
$
|
—
|
|
|
$
|
446
|
|
|
$
|
30,247
|
|
(1)
|
Other includes:
$296 million
issuances of short-term debt related to vendor financing arrangements, of which
$288 million
is related to financing of property and equipment, activity associated with capital leases, and the unamortized premium from purchase price allocation fair value adjustment.
|
•
|
On January 25, 2017, T-Mobile USA, and certain of its affiliates, as guarantors, entered into an agreement of
$4.0 billion
under a secured term loan facility (“Incremental Term Loan Facility”) with DT, our majority stockholder, to refinance
$1.98 billion
of outstanding secured term loans under its Term Loan Credit Agreement dated November 9, 2015, with the remaining net proceeds from the transaction intended to be used to redeem callable high yield debt. The Incremental Term Loan Facility increased DT’s incremental term loan commitment provided to T-Mobile USA under that certain First Incremental Facility Amendment dated as of December 29, 2016, from
$660 million
to
$2.0 billion
and provided T-Mobile USA with an additional
$2.0 billion
incremental term loan commitment.
|
•
|
On March 16, 2017, T-Mobile USA and certain of its affiliates, as guarantors, (i) issued
$500 million
of public
4.000% Senior Notes due 2022
, (ii) issued
$500 million
of public
5.125% Senior Notes due 2025
and (iii) issued
$500 million
of public
5.375% Senior Notes due 2027
. We intend to use the net proceeds of
$1.495 billion
from the transaction to redeem callable high yield debt. Issuance costs related to the public debt issuance totaled
$5 million
for the
three months ended
March 31, 2017
.
|
(in millions)
|
Principal Amount
|
|
Redemption
Date
|
|
Redemption Price
(1)
|
|||
6.625% Senior Notes due 2020
|
$
|
1,000
|
|
|
February 10, 2017
|
|
102.208
|
%
|
5.250% Senior Notes due 2018
|
500
|
|
|
March 6, 2017
|
|
101.313
|
%
|
|
Total note redemptions
|
$
|
1,500
|
|
|
|
|
|
(1)
|
The Redemption price is equal to redemption percentage of the principal amount of the notes (plus accrued and unpaid interest thereon).
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
Date of First Filing
|
|
Exhibit Number
|
|
Filed Herein
|
3.1
|
|
Fourth Amended and Restated Certificate of Incorporation.
|
|
8-K
|
|
5/2/2013
|
|
3.1
|
|
|
3.2
|
|
Fifth Amended and Restated Bylaws.
|
|
8-K
|
|
5/2/2013
|
|
3.2
|
|
|
4.1
|
|
Twenty-Third Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.000% Senior Note due 2022.
|
|
8-K
|
|
3/16/2017
|
|
4.1
|
|
|
4.2
|
|
Twenty-Fourth Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 4.000% Senior Note due 2025.
|
|
8-K
|
|
3/16/2017
|
|
4.2
|
|
|
4.3
|
|
Twenty-Fifth Supplemental Indenture, dated as of March 16, 2017, by and among T-Mobile USA, Inc., T-Mobile US, Inc., the other guarantors party thereto and Deutsche Bank Trust Company Americas, as trustee, including the Form of 5.375% Senior Note due 2027.
|
|
8-K
|
|
3/16/2017
|
|
4.3
|
|
|
10.1
|
|
Second Incremental Facility Amendment, dated as of January 25, 2017, to the Term Loan Credit Agreement, dated as of November 9, 2015, as amended by that certain First Incremental Facility Amendment dated as of December 29, 2016, by and among T-Mobile USA, Inc., the several banks and other financial institutions or entities from time to time parties thereto as lenders, and Deutsche Bank AG New York Branch, as administrative agent.
|
|
8-K
|
|
1/25/2017
|
|
10.1
|
|
|
10.2
|
|
Purchase Agreement, dated as of March 13, 2017, among T-Mobile USA, Inc., the guarantors party thereto and Deutsche Telekom AG.
|
|
8-K
|
|
3/13/2017
|
|
10.1
|
|
|
10.3
|
|
First Amendment to Term Loan Credit Agreement, dated as of January 25, 2017, among T-Mobile USA, Inc., the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent.
|
|
|
|
|
|
|
|
X
|
10.4
|
|
Second Amendment to Term Loan Credit Agreement, dated as of January 25, 2017, among T-Mobile USA, Inc., the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent.
|
|
|
|
|
|
|
|
X
|
10.5
|
|
Third Amendment to Term Loan Credit Agreement, dated as of March 28, 2017, among T-Mobile USA, Inc., the lenders party thereto and Deutsche Bank AG New York Branch, as administrative agent and collateral agent.
|
|
|
|
|
|
|
|
X
|
10.6*
|
|
T-Mobile US, Inc. Amended and Restated Compensation Term Sheet for Michael Sievert Effective as of January 1, 2017.
|
|
|
|
|
|
|
|
X
|
10.7*
|
|
Amended and Restated Employment Agreement of John J. Legere dated as of March 28, 2017.
|
|
|
|
|
|
|
|
X
|
18.1
|
|
Preferability Letter regarding Change in Accounting Principle from Independent Registered Public Accounting Firm.
|
|
|
|
|
|
|
|
X
|
31.1
|
|
Certifications of Chief Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
X
|
31.2
|
|
Certifications of Chief Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
X
|
32.1**
|
|
Certification of Chief Executive Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
|
32.2**
|
|
Certification of Chief Financial Officer Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002. |
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by Reference
|
|
|
||||
Exhibit No.
|
|
Exhibit Description
|
|
Form
|
|
Date of First Filing
|
|
Exhibit Number
|
|
Filed Herein
|
101.INS
|
|
XBRL Instance Document.
|
|
|
|
|
|
|
|
X
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document.
|
|
|
|
|
|
|
|
X
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
|
|
|
|
X
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
|
|
|
|
|
X
|
*
|
|
Indicates a management contract or compensatory plan or arrangement.
|
**
|
|
Furnished herein.
|
|
|
T-MOBILE US, INC.
|
|
|
|
April 24, 2017
|
|
/s/ J. Braxton Carter
|
|
|
J. Braxton Carter
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
|
|
BORROWER:
|
|
|
|
|
|
T-MOBILE USA, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dirk Wehrse
|
|
Name:
|
Dirk Wehrse
|
|
Title:
|
Senior Vice-President, Treasury and Treasurer
|
|
GUARANTORS:
|
|
|
|
IBSV LLC
|
|
METROPCS CALIFORNIA, LLC
|
|
METROPCS FLORIDA, LLC
|
|
METROPCS GEORGIA, LLC
|
|
METROPCS MASSACHUSETTS, LLC
|
|
METROPCS MICHIGAN, LLC
|
|
METROPCS NETWORKS CALIFORNIA, LLC
|
|
METROPCS NETWORKS FLORIDA, LLC
|
|
METROPCS NEW YORK, LLC
|
|
METROPCS TEXAS, LLC
|
|
METROPCS NEVADA, LLC
|
|
METROPCS PENNSYLVANIA, LLC
|
|
POWERTEL MEMPHIS LICENSES, INC.
|
|
POWERTEL/MEMPHIS, INC.
|
|
SUNCOM WIRELESS HOLDINGS, INC.
|
|
SUNCOM WIRELESS INVESTMENT COMPANY, LLC
|
|
SUNCOM WIRELESS LICENSE COMPANY, LLC
|
|
SUNCOM WIRELESS MANAGEMENT COMPANY, INC.
|
|
SUNCOM WIRELESS OPERATING COMPANY, L.L.C.
|
|
SUNCOM WIRELESS PROPERTY COMPANY, L.L.C.
|
|
SUNCOM WIRELESS, INC.
|
|
T-MOBILE CENTRAL LLC
|
|
T-MOBILE FINANCIAL LLC
|
|
T-MOBILE LEASING LLC
|
|
T-MOBILE LICENSE LLC
|
|
T-MOBILE NORTHEAST LLC
|
|
T-MOBILE PCS HOLDINGS LLC
|
|
T-MOBILE PUERTO RICO HOLDINGS LLC
|
|
T-MOBILE PUERTO RICO LLC
|
|
T-MOBILE RESOURCES CORPORATION
|
|
T-MOBILE SOUTH LLC
|
|
T-MOBILE SUBSIDIARY IV CORPORATION
|
|
T-MOBILE US, INC.
|
|
T-MOBILE WEST LLC
|
|
TRITON PCS FINANCE COMPANY, INC.
|
|
TRITON PCS HOLDINGS COMPANY L.L.C.
|
|
VOICESTREAM PCS I IOWA CORPORATION
|
|
VOICESTREAM PITTSBURGH GENERAL PARTNER, INC.
|
|
VOICESTREAM PITTSBURGH L.P.
|
|
By:
|
/s/ Dirk Wehrse
|
|
Name:
|
Dirk Wehrse
|
|
Title:
|
Authorized Person
|
|
DEUTSCHE BANK AG NEW YORK BRANCH,
as Administrative Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dusan Lazarov
|
|
Name:
|
Dusan Lazarov
|
|
Title:
|
Director
|
|
|
|
|
|
|
|
By:
|
/s/ Peter Cucchiara
|
|
Name:
|
Peter Cucchiara
|
|
Title:
|
Vice President
|
|
|
|
|
DEUTSCHE TELEKOM AG,
|
|
|
|
|
|
|
|
|
By:
|
/s/ Igor Soczynski
|
|
Name:
|
Igor Soczynski
|
|
Title:
|
Vice-President Treasury
|
|
|
|
|
|
|
|
By:
|
/s/ Markus Schafer
|
|
Name:
|
Markus Schafer
|
|
Title:
|
Vice-President Treasury
|
|
|
|
|
BORROWER:
|
|
|
|
|
|
T-MOBILE USA, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dirk Wehrse
|
|
Name:
|
Dirk Wehrse
|
|
Title:
|
Senior Vice-President, Treasury and Treasurer
|
|
GUARANTORS:
|
|
|
|
IBSV LLC
|
|
METROPCS CALIFORNIA, LLC
|
|
METROPCS FLORIDA, LLC
|
|
METROPCS GEORGIA, LLC
|
|
METROPCS MASSACHUSETTS, LLC
|
|
METROPCS MICHIGAN, LLC
|
|
METROPCS NETWORKS CALIFORNIA, LLC
|
|
METROPCS NETWORKS FLORIDA, LLC
|
|
METROPCS NEW YORK, LLC
|
|
METROPCS TEXAS, LLC
|
|
METROPCS NEVADA, LLC
|
|
METROPCS PENNSYLVANIA, LLC
|
|
POWERTEL MEMPHIS LICENSES, INC.
|
|
POWERTEL/MEMPHIS, INC.
|
|
SUNCOM WIRELESS HOLDINGS, INC.
|
|
SUNCOM WIRELESS INVESTMENT COMPANY, LLC
|
|
SUNCOM WIRELESS LICENSE COMPANY, LLC
|
|
SUNCOM WIRELESS MANAGEMENT COMPANY, INC.
|
|
SUNCOM WIRELESS OPERATING COMPANY, L.L.C.
|
|
SUNCOM WIRELESS PROPERTY COMPANY, L.L.C.
|
|
SUNCOM WIRELESS, INC.
|
|
T-MOBILE CENTRAL LLC
|
|
T-MOBILE FINANCIAL LLC
|
|
T-MOBILE LEASING LLC
|
|
T-MOBILE LICENSE LLC
|
|
T-MOBILE NORTHEAST LLC
|
|
T-MOBILE PCS HOLDINGS LLC
|
|
T-MOBILE PUERTO RICO HOLDINGS LLC
|
|
T-MOBILE PUERTO RICO LLC
|
|
T-MOBILE RESOURCES CORPORATION
|
|
T-MOBILE SOUTH LLC
|
|
T-MOBILE SUBSIDIARY IV CORPORATION
|
|
T-MOBILE US, INC.
|
|
T-MOBILE WEST LLC
|
|
TRITON PCS FINANCE COMPANY, INC.
|
|
TRITON PCS HOLDINGS COMPANY L.L.C.
|
|
VOICESTREAM PCS I IOWA CORPORATION
|
|
VOICESTREAM PITTSBURGH GENERAL PARTNER, INC.
|
|
VOICESTREAM PITTSBURGH L.P.
|
|
By:
|
/s/ Dirk Wehrse
|
|
Name:
|
Dirk Wehrse
|
|
Title:
|
Authorized Person
|
|
DEUTSCHE BANK AG NEW YORK BRANCH,
as Administrative Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dusan Lazarov
|
|
Name:
|
Dusan Lazarov
|
|
Title:
|
Director
|
|
|
|
|
|
|
|
By:
|
/s/ Peter Cucchiara
|
|
Name:
|
Peter Cucchiara
|
|
Title:
|
Vice President
|
|
|
|
|
DEUTSCHE TELEKOM AG,
|
|
|
|
|
|
|
|
|
By:
|
/s/ Igor Soczynski
|
|
Name:
|
Igor Soczynski
|
|
Title:
|
Vice-President Treasury
|
|
|
|
|
|
|
|
By:
|
/s/ Markus Schafer
|
|
Name:
|
Markus Schafer
|
|
Title:
|
Vice-President Treasury
|
|
|
|
|
BORROWER:
|
|
|
|
|
|
T-MOBILE USA, INC.
|
|
|
|
|
|
|
|
|
By:
|
/s/ Dirk Wehrse
|
|
Name:
|
Dirk Wehrse
|
|
Title:
|
Senior Vice-President, Treasury and Treasurer
|
|
GUARANTORS:
|
|
|
|
IBSV LLC
|
|
METROPCS CALIFORNIA, LLC
|
|
METROPCS FLORIDA, LLC
|
|
METROPCS GEORGIA, LLC
|
|
METROPCS MASSACHUSETTS, LLC
|
|
METROPCS MICHIGAN, LLC
|
|
METROPCS NETWORKS CALIFORNIA, LLC
|
|
METROPCS NETWORKS FLORIDA, LLC
|
|
METROPCS NEW YORK, LLC
|
|
METROPCS TEXAS, LLC
|
|
METROPCS NEVADA, LLC
|
|
METROPCS PENNSYLVANIA, LLC
|
|
POWERTEL MEMPHIS LICENSES, INC.
|
|
POWERTEL/MEMPHIS, INC.
|
|
SUNCOM WIRELESS HOLDINGS, INC.
|
|
SUNCOM WIRELESS INVESTMENT COMPANY, LLC
|
|
SUNCOM WIRELESS LICENSE COMPANY, LLC
|
|
SUNCOM WIRELESS MANAGEMENT COMPANY, INC.
|
|
SUNCOM WIRELESS OPERATING COMPANY, L.L.C.
|
|
SUNCOM WIRELESS PROPERTY COMPANY, L.L.C.
|
|
SUNCOM WIRELESS, INC.
|
|
T-MOBILE CENTRAL LLC
|
|
T-MOBILE FINANCIAL LLC
|
|
T-MOBILE LEASING LLC
|
|
T-MOBILE LICENSE LLC
|
|
T-MOBILE NORTHEAST LLC
|
|
T-MOBILE PCS HOLDINGS LLC
|
|
T-MOBILE PUERTO RICO HOLDINGS LLC
|
|
T-MOBILE PUERTO RICO LLC
|
|
T-MOBILE RESOURCES CORPORATION
|
|
T-MOBILE SOUTH LLC
|
|
T-MOBILE SUBSIDIARY IV CORPORATION
|
|
T-MOBILE US, INC.
|
|
T-MOBILE WEST LLC
|
|
TRITON PCS FINANCE COMPANY, INC.
|
|
TRITON PCS HOLDINGS COMPANY L.L.C.
|
|
VOICESTREAM PCS I IOWA CORPORATION
|
|
VOICESTREAM PITTSBURGH GENERAL PARTNER, INC.
|
|
VOICESTREAM PITTSBURGH LLC
|
|
By:
|
/s/ Dirk Wehrse
|
|
Name:
|
Dirk Wehrse
|
|
Title:
|
Senior Vice-President, Treasury and Treasurer, Assistant Treasurer or Authorized Person, as applicable
|
|
DEUTSCHE BANK AG NEW YORK BRANCH,
as Administrative Agent
|
|
|
|
|
|
|
|
|
By:
|
/s/ Anca Trifan
|
|
Name:
|
Anca Trifan
|
|
Title:
|
Managing Director
|
|
|
|
|
|
|
|
By:
|
/s/ Marcus Tarkington
|
|
Name:
|
Marcus Tarkington
|
|
Title:
|
Director
|
|
|
|
|
DEUTSCHE TELEKOM AG,
|
|
|
|
|
|
|
|
|
By:
|
/s/ Igor Soczynski
|
|
Name:
|
Igor Soczynski
|
|
Title:
|
Vice-President Treasury
|
|
|
|
|
|
|
|
By:
|
/s/ Markus Schafer
|
|
Name:
|
Markus Schafer
|
|
Title:
|
Vice-President Treasury
|
|
|
|
GENERAL
|
In connection with your ongoing role and responsibilities as Chief Operating Officer (“COO”) of the Company, this Term Sheet (i) updates your compensation opportunities described in the Original Term Sheet consistent with market competitive practices, (ii) provides for a special, one-time equity award to further encourage your retention with the Company and align your interests with the long-term interests of the Company’s shareholders, and (iii) updates the severance benefits payable to you in case of a qualifying termination.
|
POSITION
|
You will continue to serve as the COO of the Company reporting to the Chief Executive Officer (“CEO”). You will have such duties and authority commensurate with the position of COO of the Company and you will perform such other duties commensurate with such position as the CEO may from time-to-time assign. You will continue to devote your full professional time, attention and energies to the business of the Company. Your position will continue to be based in Bellevue, WA.
|
COMPENSATION
|
Your compensation will be adjusted as follows:
|
•
|
Effective as of January 1, 2017, an annual rate equal to $950,000, payable in accordance with the Company’s standard payroll practices.
|
•
|
Effective as of January 1, 2017 an annual target amount (“Target STI”) equal to 200% of salary.
|
•
|
STI awards will continue be based on the achievement of Company goals (and, as applicable, individual performance) as determined by the Compensation Committee or Section 16 Subcommittee of the Company’s Board of Directors.
|
•
|
For your annual LTI awards beginning with grants made in 2017, an annual target LTI amount (as determined by the Compensation Committee or the Section 16 Subcommittee of the Company’s Board of Directors) equal to $7,125,000.
|
•
|
LTI awards will continue to be made in such form and on such terms as the Compensation Committee or Section 16 Subcommittee of the Company’s Board of Directors may determine.
|
•
|
In addition to the anticipated 2017 equity grants for executive officers, at the same time as your 2017 LTI award is made, you will be granted a special equity award (the “Special Award”) as follows:
|
o
|
Grant date value of $7,125,000
|
o
|
50% of the Special Award will be comprised of time-vesting RSUs and 50% of the Special Award will be comprised of PRSUs (based on relative TSR)
|
o
|
Cliff vesting for both on second anniversary of the applicable grant date (subject to continued service through the applicable vesting date and, for the PRSUs, subject to the attainment of the applicable performance objectives set forth in the related award agreement)
|
•
|
The Special Award will be governed by the terms of the Company’s 2013 Omnibus Incentive Plan and related award agreements
|
SEVERANCE
|
If you are terminated by the Company other than for cause or are constructively discharged (each a “qualifying termination”), you will be eligible to receive the following, conditioned on the release requirement provided below:
|
•
|
Any STI for the last completed fiscal year of the Company preceding the termination date that is unpaid as of the termination date, irrespective of whether you are employed on the normal payment date, payable in a single cash payment (less required tax withholdings) no later than 74 days following such qualifying termination; plus
|
•
|
a pro rata STI award for the fiscal year of the Company in which the qualifying termination occurs, based on the number of days in the fiscal year through the date of the qualifying termination divided by 365 and based on actual performance results for the fiscal year, payable no later than March 15 following the end of the fiscal year; plus
|
•
|
for any then-outstanding LTI awards, unless the applicable award agreement provides for better treatment for you:
|
o
|
For any outstanding award that is not subject to any performance vesting condition as of the date of the qualifying termination (each, a “Time-Based Award”), upon your qualifying termination, you will vest in that number of shares or units (as applicable) subject to such Time-Based Award that would otherwise vest on the next scheduled vesting date to occur following such qualifying termination. Any portion of a Time-Based Award that is unvested as of your qualifying termination (after taking into account the accelerated vesting in the preceding sentence) shall be immediately canceled as of your qualifying termination; and
|
o
|
For any outstanding award that is subject to any performance vesting condition as of the date of the qualifying termination (each, a
|
o
|
In the event that you fail to execute the release described below in a timely fashion, any portion of a Time-Based Award or Performance Award that has been earned or paid to you after your qualifying termination but before your failure to timely execute the release, you agree that you will have no right, title or interest in such amount earned or paid and that you will cause such amount to be returned immediately to the Company upon notice.
|
•
|
Any STI for the last completed fiscal year of the Company preceding the termination date that is unpaid as of the termination date; plus
|
•
|
A pro rata STI award for the fiscal year of the Company in which the termination date occurs, based on the number of days in the fiscal year through the date of the qualifying termination divided by 365, and at the greater of target or actual performance results for the fiscal year; plus
|
•
|
For any LTI or other equity awards granted under the Company’s 2013 Omnibus Incentive Plan and related award agreements, vesting of any outstanding awards shall be determined under and in accordance with the terms of such plan and applicable award agreement, which terms shall be no less favorable than applicable to all other executive-level employees of the Company.
|
Legal Fees
|
The Company shall promptly reimburse your legal fees incurred in connection with this Term Sheet, not to exceed $25,000, upon reasonable documentation.
|
Section 409A
|
This Term Sheet is intended to comply with or be exempt from Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”). See Attachment B for additional details.
|
Section 280G
|
In the event any payment, benefit or distribution of any type to or for the benefit of you, whether paid or payable, provided or to be provided, or distributed or distributable pursuant to the terms of this Term Sheet or otherwise to you under this Term Sheet or otherwise constitutes a “parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the amount payable to you shall be either (a) paid in full, or (b) paid after reduction by the smallest amount as would result in no portion thereof being subject to the excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax under Section 4999 of the Code, results in the receipt by you, on an after-tax basis, of the greater net value, notwithstanding that all or some portion of such payment amount may be taxable under Section 4999 of the Code. Unless the Company and you otherwise agree in writing, all determinations required to be made under this paragraph, including the manner and amount of any reduction in your payments hereunder, and the assumptions to be utilized in arriving at such determinations, shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accounting firm immediately prior to the event giving rise to such payment (the “Accounting Firm”); provided, however, that no such reduction or elimination shall apply to any non-qualified deferred compensation amounts (within the meaning of Section 409A of the Code) to the extent such reduction or elimination would accelerate or defer the timing of such payment in manner that does not comply with Section 409A of the Code. For purposes of making the calculations required by this paragraph, the Accounting Firm may make reasonable assumptions and approximations concerning the application of Sections 280G and 4999 of the Code. The Company and you shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request to make a determination under this paragraph. The Accounting Firm shall provide its written report to the Committee and you, which shall include information regarding methodology. The Company shall bear all costs the Accounting Firm
|
At Will
|
Your employment remains “at will,” meaning that it is not for a specific duration and may be terminated by you or the Company, for any reason or for no reason whatsoever, with or without notice and with or without cause.
|
Successors
|
This Term Sheet is personal to you and, without the prior written consent of the Company, shall not be assignable by you other than by will or the laws of descent and distribution. This Term Sheet shall inure to the benefit of and be binding upon the Company and its successors and assigns.
|
Withholding
|
All compensation and other benefits to or on behalf of you pursuant to this Term Sheet shall be subject to such deductions and withholding as may be agreed to by you or required by applicable law, rule or regulation or Company policy.
|
Dispute Resolution
|
Except for any claims arising out of, or relating to, the Restrictive Covenant and Confidentiality Agreement, dated as of November 19, 2012 (the “Restrictive Covenant and Confidentiality Agreement”) (to which you remain bound) and any other written and fully executed agreements to which you and the Company or an affiliate thereof are parties that expressly provide for a different dispute resolution mechanism, any controversy, claim or dispute arising out of or relating to this Term Sheet or your employment with the Company or termination thereof, either during the existence of the employment relationship or afterward, and including, but not limited to, any common law or statutory claims for wrongful discharge, discrimination or unpaid compensation, shall be resolved exclusively by arbitration in King County, Washington, conducted in accordance with the then prevailing commercial arbitration rules of the American Arbitration Association (the “AAA”), with one arbitrator designated in accordance with those rules. The parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive and may be entered in any court having jurisdiction thereof as a basis of judgment and of the issuance of execution for its collection. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this paragraph shall be construed as precluding either party from bringing an action for injunctive relief or other equitable relief. In any such dispute, the prevailing party shall be entitled to its or his attorneys' fees and costs, in addition to any other relief that may be awarded. In accordance with the terms of the Restrictive Covenant and Confidentiality Agreement, the exclusive venue for claims arising out of, or related to, the Restrictive Covenant and Confidentiality Agreement shall be the state and Federal courts of King County, Washington.
|
Entire Agreement
|
This Term Sheet, along with the Restrictive Covenant and Confidentiality Agreement and your STI and LTI award agreements, embody the entire agreement and understanding between the parties with respect to the subject matters hereof (including but not limited to your compensation and severance terms) and supersedes all prior oral and written agreements and understandings between the Company and you with respect to the subject matters hereof, including the Original Term Sheet; and it can only be modified in a fully executed written agreement between you and a duly authorized Company officer. It may be executed by facsimile and in counterparts which, taken together, shall
|
|
Sincerely,
|
|
|
T-MOBILE US, INC.
|
|
|
By:
|
/s/ Elizabeth A. Sullivan
|
|
|
Elizabeth A. Sullivan,
|
|
|
EVP, Human Resources
|
AGREED
as of the date below:
|
|
|
|
|
|
|
|
|
/s/ G. Michael Sievert
|
2/17/2017
|
|
G. Michael Sievert
|
Date
|
|
1.
|
“Cause”
shall be defined as any one of the following: (i) Employee’s gross neglect or willful material breach of Employee’s principal employment responsibilities or duties, (ii) a final judicial adjudication that Employee is guilty of any felony (other than a law, rule or regulation relating to a traffic violation or other similar offense that has no material adverse effect on the Company), (iii) Employee’s breach of any non-competition or confidentiality covenant between Employee and the Company, (iv) fraudulent conduct in the course of Employee’s employment with the Company as determined by a court of competent jurisdiction, (v) the material breach by Employee of any other obligation to the Company or any affiliate thereof which continues uncured for a period of thirty (30) days after notice thereof by the Company. For the purposes of clause (v) above, the term obligation refers to Company policies and directives and is not intended to refer to performance expectations such as goals set forth in bonus plans or performance evaluations.
|
2.
|
“Constructive Discharge”
(or
“Good Reason,”
as applicable) shall be defined as the occurrence of any of the following,
provided that (a) Employee notifies the Company within not more than 90 days after initial occurrence, (b) the Company does not cure such occurrence within 30 days after receipt of such notice (or waives in writing such cure period) and (c) Employee’s employment with the Company terminates within 12 months after the end of the Company’s cure period, or in the case of termination under clause (vi) below, within 30 days after the end of the Company’s cure period: (i) a material reduction of the Employee’s duties, title, authority or responsibilities, relative to the Employee’s duties, title, authority or responsibilities
in effect immediately prior to such reduction, including in the event of a Change in Control (as defined in the Company’s 2013 Omnibus Incentive Plan, or any successor plan), Employee does not become the sole COO of the principal entity resulting from such Change in Control; (ii) a reduction in the Employee’s total target direct compensation (which consists of base salary, long term incentive and short term incentive); (iii) a material reduction in the kind or level of qualified retirement and welfare employee benefits from the like kind benefits in effect immediately prior to such reduction with the result that the Employee’s overall benefits package is materially reduced without similar action occurring to other eligible comparably situated employees; (iv) a change in reporting relationship such that Employee would report to anyone other than the current CEO (John Legere) or the Board of Directors; (v) relocation of Employee’s place of work to a location more than 50 miles from Company’s current headquarters; and (vi) in the event of a Change in Control, Employee does not become CEO of the principal entity resulting from such Change in Control within six (6) months after the Change in Control. Notwithstanding anything to the contrary in this paragraph, for the purposes of subparts 2(iv) and 2(vi) above, Employee shall not have “Good Reason” to resign in the event that Employee is offered, on reasonable terms, the role of CEO of the Company or of the principal entity resulting from a Change in Control and, in either case, after good faith negotiations with the Company or its successor, Employee declines such offer.
|
3.
|
For purposes of this Term Sheet, the Employee shall be deemed to be
disabled
on the earlier of: (1) the date on which it is medically determined by the Company (following review by its third party medical and other advisors as determined appropriate by the Company in its discretion) that the Employee is not capable of performing the services contemplated by this Term Sheet and is not expected to be able to perform such services for an indefinite period or for a period in excess of one hundred twenty (120) days; or (2) if the Employee fails because of illness or other incapacity, to render the services contemplated by this Term Sheet for a period of one hundred twenty (120) consecutive days or any series of shorter periods aggregating to one hundred fifty (150) days in any consecutive period of twelve (12) months, unless in either case under clauses (1) or (2) above, with reasonable accommodation the Employee could continue to perform his duties under this Term Sheet and making these accommodations would not pose an undue burden on the Company as determined by the Board.
|
1.
|
Duties
.
1
|
2.
|
Term
.
|
(a)
|
the end of the Term,
|
(b)
|
the termination date provided in the written notice delivered by the Executive or the Company, as the case may be, pursuant to the provisions of paragraph 4,
|
(c)
|
the date of the Executive’s death or disability pursuant to the provisions of paragraph 4, or
|
(d)
|
the date determined by mutual agreement.
|
3.
|
Compensation and Benefits
.
|
(a)
|
Base Salary
. The Executive shall be paid a base salary at an annual rate of $1,666,667, which salary shall be earned and payable at such intervals in conformity with the Company’s prevailing practice as such practice shall be established or modified from time to time. The compensation committee of the Board or a subcommittee thereof (the “Committee”) shall periodically review the amount of the Executive’s salary and may increase, but not decrease, such salary in its discretion.
|
(b)
|
Annual Performance Bonus
. For each fiscal year of the Company during the Term beginning on or after January 1, 2017, the Executive shall have the opportunity to earn an annual lump sum cash performance bonus targeted at not less than $3,333,333, with a maximum award equal to 200% of the target, to be determined annually by the Committee based on performance goals established by the Committee in accordance with standard Company practices after consultation with the Executive. Such performance goals shall be established by the Committee generally by no later than March 31 of the applicable performance year. Payment of any performance bonus earned for a year shall be subject to the terms and conditions of the applicable bonus plan and made after the Committee determines performance results and at the same time as annual performance bonuses are paid to other senior managers of the Company, generally as soon as practicable following completion of the applicable performance year (but not later than March 15 of the year following the applicable performance year). Except as otherwise expressly provided by paragraph 5 below, the Executive must remain continuously employed with the Company through the applicable bonus payment date in order to earn the right to payment of the bonus, and any termination of employment before such bonus payment date shall result in cancellation of any right or entitlement to any such bonus. Notwithstanding any provision herein to the contrary but subject to the provisions of paragraph 5 below, annual performance bonus awards shall be under, and subject to the terms of, the Incentive Plan, including provisions regarding treatment of any outstanding awards in connection with a Change in Control Event, which terms shall be no less favorable than applicable to all other Executive-Level Employees of the Company.
|
(c)
|
Long-Term Incentive Awards
. Within fifteen (15) days following the execution of this Agreement, the Company shall grant to the Executive, under the Incentive Plan, a one-time award of performance-based restricted stock units (“PRSUs”) with respect to a number of shares of Company common stock equal to the quotient of $3,000,000 divided by the average closing price of the Company’s common stock for the 30 calendar-day period ending five business days prior to February 25, 2017, rounded up to the nearest whole share (such PRSUs, the “True-Up PRSUs”). The True-Up PRSUs shall be subject to the same vesting schedule and other terms and conditions
|
(d)
|
Paid Time Off, and Other Benefits
. During the term of this Agreement, the Executive shall be eligible for Paid Time Off (PTO) according to the terms the Company’s policies. As of the Effective Date, such policies include an entitlement to 4.8 weeks of vacation per year. In addition, except as specifically provided to the contrary in this Agreement, the Executive shall be provided with benefits to the same extent and on the same terms as those benefits are generally provided by the Company to its senior managers. Notwithstanding anything herein to the contrary, the Executive shall not participate in the Company’s Executive Continuity Plan or any other severance plan or program, other than the right to receive severance benefits subject to, and in accordance with, the provisions of paragraph 5 below.
|
(e)
|
Business Expenses
. The Executive shall be reimbursed, in a manner consistent with the policies of the Company, for all reasonable business expenses incurred in the performance of Executive’s duties pursuant to this Agreement, to the extent such expenses are substantiated in writing, and are consistent with the general policies of the Company relating to the reimbursement of expenses of Executive-Level Employees of the Company.
|
(f)
|
Deduction and Withholding
. All compensation and other benefits to or on behalf of the Executive pursuant to this Agreement shall be subject to such deductions and withholding as may be agreed to by the Executive or required by applicable law, rule or regulation or Company policy.
|
(g)
|
No Requirement for Continuation or Establishment of Benefits
. Without intending to limit the Company’s obligations made under this Agreement, nothing herein contained shall be construed as requiring the Company to establish or continue any particular benefit plan in discharge of its obligations under this Agreement.
|
(h)
|
Compensation Recoupment Policy
. The Executive acknowledges and agrees that any incentive compensation provided by the Company to the Executive under this Agreement or otherwise may be subject to recovery by the Company under and in accordance with the Company’s Executive Incentive Compensation Recoupment Policy as adopted October 30, 2014, as amended from time to time.
|
(i)
|
Valuation and Tax Advice
. During the Term and thereafter, whether before or after the Executive’s termination of employment from the Company, in the event that any payments or benefits from the Company to the Executive are or may become subject to excise taxes under Section 4999 of the Code, within 20 days after receiving a request for such assistance from the Executive, the Company’s current independent public accounting firm, or such other nationally recognized public accounting firm as the parties may mutually agree, may be engaged by the Executive to provide valuation and tax advice to the Executive with respect to payments and benefits that are or may become payable under this Agreement in connection with a Change in Control Event. Such advice shall include the provision of a report showing the amount of such excise taxes that may become payable by or on behalf of the Executive, along with detailed supporting calculations. All fees and expenses of such accounting firm shall be borne by the Company.
|
4.
|
Termination
.
|
(a)
|
Termination by Company for Cause
. The Company may terminate the Executive’s employment for “Cause” (as defined below in this paragraph 4(a)) immediately upon written notice to the Executive. Such notice shall specify in reasonable detail the nature of the Cause and the Termination Date. For purposes of this Agreement and all Company plans, arrangements or programs in which the Executive is or becomes a participant, “Cause” shall mean:
|
(i)
|
The Executive’s gross neglect or willful material breach of the Executive’s principal employment responsibilities or duties,
|
(ii)
|
A final judicial adjudication that the Executive is guilty of any felony (other than a law, rule or regulation relating to a traffic violation or other similar offense that has no material adverse effect on the Company, DT or their respective Affiliates),
|
(iii)
|
The Executive’s breach of any non-competition, non-solicitation or confidentiality covenant between the Executive and the Company or any Affiliate of the Company,
|
(iv)
|
Fraudulent conduct as determined by a court of competent jurisdiction in the course of the Executive’s employment with the Company or any of its Affiliates,
|
(v)
|
The Executive’s unlawful discrimination, harassment, or retaliation, assault or other violent act toward any employee or third party, or other act or omission, in each case that in the view of the Board constitutes a material breach of the Company’s written policies or Code of Conduct, or
|
(vi)
|
The material breach by the Executive of any other obligation which continues uncured for a period of thirty (30) days after notice thereof by the Company or any of its Affiliates. Notwithstanding the foregoing, no cure period shall be
|
(b)
|
Termination by Company Other Than For Cause
. The Company shall have the right to terminate the Executive’s employment for any reason or no reason by giving the Executive written notice at least ninety (90) days in advance of the applicable Termination Date, unless the Company and the Executive mutually agree to an earlier or later Termination Date.
|
(c)
|
Termination by Executive Without Good Reason
. The Executive may terminate his employment without Good Reason (as defined in paragraph 4(d) below), upon written notice to the Company at least ninety (90) days in advance of the applicable Termination Date, unless the Company and the Executive mutually agree to an earlier or later Termination Date.
|
(d)
|
Termination by Executive With Good Reason
. The Executive may terminate his employment with Good Reason, effective as of such date specified in the Executive’s written notice to the Company described below, but not earlier than the expiration of the applicable cure period, unless the Company and the Executive mutually agree to an earlier Termination Date. For purposes of this Agreement and all Company plans, arrangements or programs in which the Executive is or becomes a participant, “Good Reason” shall mean any of the events listed in subparagraphs (i) through (v) below, which occurs without the Executive’s express written consent. In order to terminate his employment for Good Reason, the Executive must notify the Company of the occurrence of the applicable event in writing not more than ninety (90) days after the initial existence thereof. If the Company does not cure such event within thirty (30) days after receipt of such notice, the Executive may thereafter terminate his employment for Good Reason within sixty (60) days after expiration of the Company’s cure period upon written notice of such termination to the Company. The events which shall constitute Good Reason are:
|
(i)
|
a material diminution in the Executive’s base compensation, annual performance bonus target, or long-term incentive target or in the maximum potential amount payable with respect to any annual bonus or long-term incentive award provided for under this Agreement;
|
(ii)
|
a material diminution in the Executive’s authority, duties or responsibilities, including, without limitation, any change in title or the appointment of any person as a result of which the Executive ceases to be the Company’s sole CEO, provided that it will not be Good Reason if, in connection with a Change in Control Event, Executive reports to the Board rather than the Chairman of the Board;
|
(iii)
|
a material diminution in the authority, duties or responsibilities of the supervisor to whom the Executive is required to report (including a requirement that the
|
(iv)
|
a change of fifty (50) miles or greater in the principal geographic location at which the Executive must perform services; or
|
(v)
|
any other action or inaction that constitutes a material breach by the Company or its successor company, as applicable, of this Agreement or any other agreement under which the Executive provides services to the Company or the successor company, as applicable.
|
(e)
|
Termination due to Death or Disability
. The Executive’s employment pursuant to this Agreement shall terminate automatically on the date of the Executive’s death or disability. The Termination Date shall be, as applicable, the date of the Executive’s death or the date of the Executive’s disability as determined by the method provided below. For purposes of this Agreement, the Executive shall be deemed to be disabled on the earlier of: (1) the date on which it is medically determined by the Company (following review by its third party medical and other advisors as determined appropriate by the Company in its discretion) that the Executive is not capable of performing the services contemplated by this Agreement and is not expected to be able to perform such services for an indefinite period or for a period in excess of one hundred twenty (120) days; or (2) if the Executive fails because of illness or other incapacity, to render the services contemplated by this Agreement for a period of one hundred twenty (120) consecutive days or any series of shorter periods aggregating to one hundred fifty (150) days in any consecutive period of twelve (12) months, unless in either case under clauses (1) or (2) above, with reasonable accommodation the Executive could continue to perform his duties under this Agreement and making these accommodations would not pose an undue burden on the Company as determined by the Board.
|
5.
|
Effect of Termination
.
|
(a)
|
Termination by Company for Cause; Termination by Executive Without Good Reason
. If the Executive’s employment with the Company is terminated (x) by the Company for Cause pursuant to paragraph 4(a) above, (y) by the Executive without Good Reason pursuant to paragraph 4(c) above or (z) as a result of non-renewal of the Agreement by notice given by the Executive under paragraph 2 above, then the Executive shall be entitled to receive:
|
(i)
|
An amount equal to his base salary at the rate then in effect, through the Termination Date; plus
|
(ii)
|
PTO as accrued through the Termination Date; plus
|
(iii)
|
Any vested benefits or entitlements under any employee benefit plans of the Company in which the Executive participates (e.g., vested 401(k) plan balances, rights to COBRA continuation coverage under group medical plans, etc.), subject to the terms and conditions of such plans.
|
(b)
|
Termination by Company Other Than For Cause; Termination by Executive With Good Reason
. If the Executive’s employment with the Company is terminated (x) by the Company other than for Cause pursuant to paragraph 4(b) above, (y) by the Executive with Good Reason pursuant to paragraph 4(d) above or (z) as a result of non-renewal of the Agreement by notice given by the Company under paragraph 2 above (provided that, at the time of such non-renewal, the Executive is willing and able to continue providing services to the Company on terms and conditions substantially similar to those set forth in this Agreement), then the Executive shall be entitled to receive:
|
(i)
|
The Accrued Benefits; plus
|
(ii)
|
A severance payment in an amount equal to two times the sum of (A) the Executive’s annual rate of salary in effect immediately prior to the Termination Date and (B) the Executive’s target annual performance bonus under paragraph 3(b) above for the fiscal year in which the Termination Date occurs; plus
|
(iii)
|
Any annual performance bonus under paragraph 3(b) above for the last fiscal year of the Company preceding the Termination Date that is unpaid as of the Termination Date, irrespective of whether the Executive is employed on the normal payment date; plus
|
(iv)
|
A pro rata annual performance bonus under paragraph 3(b) above for the fiscal year of the Company in which the Termination Date occurs, based on the number of days in the fiscal year through the Termination Date divided by 365 and based on actual performance results for the fiscal year in which the Termination Date occurs (or, if the Termination Date occurs upon or within 24 months following a Change in Control Event, based on target performance for the fiscal year in which the Termination Date occurs); plus
|
(i)
|
For any long term incentive or other equity awards under the Incentive Plan, and notwithstanding anything to the contrary in the applicable award agreement(s):
|
(A)
|
any outstanding award that is not subject to any performance vesting condition as of the Termination Date (including any time-based RSUs) shall vest in full as of the Termination Date, and
|
(B)
|
any outstanding award that is subject to any performance vesting condition as of the Termination Date (including any PRSUs, except as otherwise set forth in clause (C) below) will become earned and vested as of the Termination Date based on the level of actual performance determined as if the applicable performance period had ended as of the last trading day immediately preceding the Termination Date;
provided
,
however
, that if the Termination Date occurs upon or within 12 months following a Change in Control Event, such performance awards (including any PRSUs, except as otherwise set forth in clause (C) below) shall instead become earned and vested as of the Termination Date based on the greater of (i) target or (ii) the actual level of performance determined as if the applicable performance period had ended as of the last trading day immediately preceding the Change in Control Event, in each case, with such vested and earned
|
(C)
|
With respect only to the True-Up PRSUs and the Incremental PRSUs, the accelerated vesting provisions described in clause (B) above shall be subject to the Executive’s satisfactory participation and cooperation in succession planning (including, without limitation, the Executive’s cooperation in an orderly transition of duties and responsibilities to his successor) after the provision of notice of the termination of the Executive’s employment (i) by the Company other than for Cause, (ii) by the Executive with Good Reason or (iii) as a result of non-renewal of the Agreement by the Company (as applicable) and continuing through and including the Termination Date. Whether the Executive has provided such satisfactory participation and cooperation shall be determined by the Committee in its good faith sole discretion.
|
(c)
|
Death or Disability
. If the Executive’s employment with the Company is terminated due to the Executive’s death or disability under paragraph 4(e) above, then the Executive (or, in case of death, the Executive’s beneficiary under the applicable plan, or the Executive’s estate if there is no such beneficiary) shall be entitled to receive:
|
(i)
|
The Accrued Benefits; plus
|
(ii)
|
Any annual performance bonus under paragraph 3(b) above for the last fiscal year of the Company preceding the Termination Date that is unpaid as of the Termination Date; plus
|
(iii)
|
A pro rata annual performance bonus under paragraph 3(b) above for the fiscal year in which the Termination Date occurs, at target and based on the number of days in the fiscal year through the Termination Date divided by 365; plus
|
(iv)
|
For any long-term incentive or other equity awards under the Incentive Plan, vesting of any outstanding awards shall be determined under and in accordance with the terms of the Incentive Plan and applicable award agreement, which terms shall be no less favorable than applicable to all other Executive-Level Employees of the Company.
|
(d)
|
Non-Duplication
. Other than as described above in this paragraph 5, the Executive shall not be entitled to any payment, benefit, damages, award or compensation in connection with the Executive’s termination of employment, by either the Company or the Executive, except as may be expressly provided in another written agreement, if any, approved by the Board and executed by the Executive and the Company. Neither the Executive nor the Company is obligated to enter into any such other written agreement. The Executive shall not be entitled to severance benefits under this Agreement except as provided in paragraphs 5(a) through (c) above, and only to the extent provided in the applicable paragraph (i.e., severance benefits shall not be payable under more than one paragraph above).
|
(e)
|
No Mitigation; No Offset
. In the event of any termination of employment under this Agreement, the Executive shall be under no obligation to seek other employment or to mitigate damages, and there will be no offset against amounts due to the Executive under this Agreement for any reason, including without limitation, on account of any remuneration attributable to any subsequent employment that the Executive may obtain.
|
(f)
|
Certain Definitions
. For purposes of this Agreement, the following terms shall have the following meanings:
|
(i)
|
“Affiliate” means any entity currently existing or subsequently organized or formed that directly or indirectly controls, is controlled by or is under common control with a named organization, or any entity in which the named organization holds a controlling interest, whether through the ownership of voting securities, member interests, by contract or otherwise. For this purpose, “control” shall be deemed to exist when more than 50% of the voting power for the election of the directors (or similar governing body) of the entity or of the capital stock (or other equity interests) of the entity is owned, directly or indirectly, by another person, or other entity.
|
(ii)
|
“Change in Control Event” means the occurrence of a “Change in Control” as defined under the T-Mobile US, Inc. 2013 Omnibus Incentive Plan (or any successor plan thereto).
|
(iii)
|
“Executive-Level Employee” means an “executive officer” of the Company (as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934).
|
(iv)
|
“Incentive Plan” means the T-Mobile US, Inc. 2013 Omnibus Incentive Plan, as in effect from time to time (and any successor plan thereto).
|
(g)
|
Payments in Cash
. Unless otherwise specifically indicated, all payments under paragraph 5 of this Agreement will be made in cash.
|
6.
|
Restrictive Covenant and Confidentiality Agreement
.
|
7.
|
Responsibilities Upon Termination
.
|
8.
|
Tax Matters
.
|
(a)
|
280G
. In the event any payment, benefit or distribution of any type to or for the benefit of the Executive, whether paid or payable, provided or to be provided, or distributed or distributable pursuant to the terms of this Agreement or otherwise to the Executive under this Agreement or otherwise constitutes a “parachute payment” under Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), the amount payable to the Executive shall be either (a) paid in full, or (b) paid after reduction by the smallest amount as would result in no portion thereof being subject to the excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax under Section 4999 of the Code, results in the receipt by the Executive, on an after-tax basis, of the greater net value, notwithstanding that all or some portion of such payment amount may be taxable under Section 4999 of the Code. Unless the Company and the Executive otherwise agree in writing, all determinations required to be made under this paragraph 8(a), including the manner and amount of any reduction in the Participant’s payments hereunder, and the assumptions to be utilized in arriving at such determinations, shall be made in writing in good faith by the accounting firm serving as the Company’s independent public accounting firm immediately prior to the event giving rise to such payment (the “Accounting Firm”); provided, however, that no such reduction or elimination shall apply to any non-qualified deferred compensation amounts (within the meaning of Section 409A of the Code) to the extent such reduction or elimination would accelerate or defer the timing of such payment in manner that does not comply with Section 409A of the Code. For purposes of making the calculations required by this paragraph 8(a), the Accounting Firm may make reasonable assumptions and approximations concerning the application of Sections 280G and 4999 of the Code. The Company and the Executive shall furnish to the Accounting Firm such information and documents as the Accounting Firm may reasonably request to make a determination under this paragraph 8(a). The Accounting Firm shall provide its written report to the Committee and the Executive which shall include information regarding methodology. The Company shall bear all costs the Accounting Firm may reasonably incur in connection with any calculations contemplated by this paragraph 8(a). The Executive and the Company shall cooperate in case of a potential Change in Control Event to consider alternatives to mitigate any Section 280G exposure, although the Company cannot guaranty any such alternatives will be available or approved by the Company and neither the Executive nor the Company shall be obligated to enter into them.
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(b)
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409A
. To the extent that any payment or benefit due to the Executive under this Agreement provides for the payment of non-qualified deferred compensation, the intent of the parties is that payments and benefits under this Agreement comply with Section 409A of the Code (“Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted and be administered to be in compliance therewith. Notwithstanding anything contained herein to the contrary, to the extent required in order to avoid accelerated taxation and/or tax penalties under Section 409A, the Executive shall not be considered to have terminated employment
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9.
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General
.
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(a)
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Survival
. The covenants of the Executive and the Company in this Agreement and in the agreements referenced herein, including but not limited to the covenants imposed upon the Executive in the Restrictive Covenant and Confidentiality Agreement, shall survive the Termination Date.
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(b)
|
Notices
. Unless and until some other address has been designated, all notices, consents, demands and other communications provided for by or relating to this Agreement shall be addressed as follows and shall be in writing and shall be deemed to have been given at the time the same is delivered in person or is mailed by registered or certified mail:
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(c)
|
Dispute Resolution
. Except for any claims arising out of, or relating to, the Restrictive Covenant and Confidentiality Agreement attached hereto, any controversy, claim or dispute arising out of or relating to the Executive’s employment with the Company either during the existence of the employment relationship or afterwards, and including, but not limited to, any common law or statutory claims for wrongful discharge, discrimination or unpaid compensation, shall be resolved exclusively by arbitration in King County, Washington. Arbitration shall be conducted in accordance with the now prevailing commercial arbitration rules of the American Arbitration Association (the “AAA”), with one arbitrator designated in accordance with those rules. The parties agree to abide by all decisions and awards rendered in such proceedings. Such decisions and awards rendered by the arbitrator shall be final and conclusive and may be entered in any court having jurisdiction thereof as a basis of judgment and of the issuance of execution for its collection. All such controversies, claims or disputes shall be settled in this manner in lieu of any action at law or equity; provided, however, that nothing in this paragraph 9(c) shall be construed as precluding the Company from bringing an action for injunctive relief or other equitable relief. In any such dispute, the prevailing party shall be entitled to its or his attorneys’ fees and costs, in addition to any other relief that may be awarded. The exclusive venue for claims arising out of, or related to, the Restrictive Covenant and Confidentiality Agreement, shall be the state and Federal courts of King County, Washington.
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(d)
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Governing Law
. This Agreement shall be exclusively governed by and interpreted under the laws of the State of Washington.
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(e)
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Waiver
. The waiver or failure of either party to insist in any one or more instances upon performance of any term, covenant or condition of this Agreement shall not be construed as a waiver of future performance of any such term, covenant or condition, but the obligations of either party with respect to such term, covenant or condition shall continue in full force and effect. No course of dealing shall be implied or arise from any waiver or series of waivers of any right or remedy hereunder.
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(f)
|
Severability
. Each provision of this Agreement shall be interpreted where possible in a manner necessary to sustain its legality and enforceability. If any provision of this Agreement shall be unenforceable or invalid under applicable law, such provision shall be limited to the minimum extent necessary to render the same enforceable or valid. The unenforceability of any provision of this Agreement in a specific situation, or the unenforceability of any portion of any provision of this Agreement in a specific situation, shall not affect the enforceability of
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(i)
|
that provision or portion of provision in another situation or
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(ii)
|
the other provisions or portions of provisions of this Agreement if such other provisions or the remaining portions could then continue to conform with the purposes of this Agreement and the terms and requirements of applicable law.
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(g)
|
Amendments
. This Agreement shall not be amended orally, but only by a written instrument executed only by the Chairman of the Board or the Chair of the Compensation Committee of the Board, on the one hand, and the Executive, on the other.
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(h)
|
Entire Agreement
. This Agreement, along with any other agreements expressly incorporated by reference herein, embody the entire agreement and understanding between the parties with respect to the subject matter hereof and supersedes all prior oral and written agreements and understandings between the Company and the Executive with respect to the subject matter hereof, including, without limitation, the Original Agreement and the prior related term sheet. To the extent the provisions of this Agreement are inconsistent with the terms of any underlying compensation plan or program, including without limitation any annual performance bonus plan or the Incentive Plan, the terms of this Agreement shall control.
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(i)
|
Free and Voluntary Act
. The Executive agrees that he is entering into this Agreement as a free and voluntary act and that he has been given adequate time to decide whether or not to sign the Agreement and signs it only after full reflection and analysis. The Executive further acknowledges that the Executive has been given an opportunity to obtain an attorney’s independent counsel and advice, and that the Executive has read and understands the complete Agreement. Each party agrees that they have cooperated in the drafting and preparation of this Agreement; any construction of this Agreement shall not be construed against any party as drafter.
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(j)
|
Indemnification
. The Executive shall be covered by the Company’s indemnification provisions and directors and officers insurance policies generally applicable to Company executives and directors. Subject to the terms and conditions of such provisions and policies, these provisions and policies shall continue to apply to the Executive after any termination of employment with respect to his service prior to termination of employment, on the same basis as for other former officers and directors.
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(k)
|
Legal Fees
. The Company shall promptly reimburse the Executive for his legal fees incurred in connection with this Agreement, and any agreement referenced herein, including, without limitation applicable grant agreements, the NDA agreement and the prior related term sheet, not to exceed $25,000, upon reasonable documentation.
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(l)
|
Binding Effect: Successors
. This Agreement shall inure to the benefit of and shall be binding upon the Company and its successors, assigns and legal representatives and the Executive, his heirs and legal representatives. The Company will cause any successor following a Change in Control Event to assume Company’s obligations under this Agreement, and failure to do so shall constitute a material breach of this Agreement unless otherwise agreed to by the Executive and the successor company. The Executive may not assign, transfer, or otherwise dispose of this Agreement, or any of his other rights or obligations hereunder (other than his rights to payments hereunder, which may be transferred only by will or by the laws of descent and distribution), without the prior written consent of the Company, and any such attempted assignment, transfer or other disposition without such consent shall be null and void.
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(m)
|
Counterparts
. This Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together shall constitute one and the same instrument. The execution of this Agreement may be by actual or facsimile signature.
|
(n)
|
Authority and Ratification
. The Company represents that it has obtained all approvals, including Board and Compensation Committee approvals, required to enter
|
1.
|
I have reviewed this
Quarterly Report
on
Form 10-Q
of T-Mobile US, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ John J. Legere
|
John J. Legere
President and Chief Executive Officer
|
1.
|
I have reviewed this
Quarterly Report
on
Form 10-Q
of T-Mobile US, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ J. Braxton Carter
|
J. Braxton Carter
Executive Vice President and Chief Financial Officer
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ John J. Legere
|
John J. Legere
President and Chief Executive Officer
|
1.
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/ J. Braxton Carter
|
J. Braxton Carter
Executive Vice President and Chief Financial Officer
|