Press Release

EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

LOGO

Investor Relations Contacts:

Keith Terreri, Vice President – Finance & Treasurer

Jim Mathias, Director – Investor Relations

214-570-4641

investor_relations@metropcs.com

MetroPCS Reports Second Quarter 2011 Results

Highest Adjusted EBITDA in Company History

Second Quarter 2011 Highlights Include:

•

Quarterly net subscriber additions of approximately 200 thousand, resulting in an approximate 19% increase in total subscribers over the prior twelve month period

•

Quarterly ARPU of $40.49, an increase of $0.65 over second quarter of 2010 and $0.07 sequential increase

•

Record Adjusted EBITDA of $357 million, an increase of approximately 11% over second quarter of 2010

•

Quarterly consolidated total revenues of $1.2 billion, an increase of 19% over second quarter of 2010

•

Quarterly net income of $84 million, an increase of approximately 6% over second quarter of 2010, and EPS of $0.23 compared to EPS of $0.22 in the second quarter of 2010

DALLAS (August 2, 2011) – MetroPCS Communications, Inc. (NYSE: PCS), the nation’s leading provider of no annual contract, unlimited, flat-rate wireless communications service, today announced financial and operational results for the quarter ended June 30, 2011. MetroPCS reported growth in quarterly Adjusted EBITDA of approximately 11% over the second quarter 2010 and finished the second quarter 2011 with approximately 9.1 million subscribers.

“We are pleased with our solid second quarter results in this seasonally slow quarter and with our continued strong sales of Android Smartphones. Momentum for no annual contract mobile broadband wireless service continues to be strong and has resulted in 19% year over year subscriber growth. Financially, we reported the highest Adjusted EBITDA in company history of $357 million, up approximately 11% from last year’s second quarter. The demand for no annual contract, affordable, predictable and flexible wireless service and Android Smartphones is accelerating and we are well-positioned to continue to capture our share as the Android platform provides our subscribers with access to thousands of applications and greater access to multimedia and video,” said Roger D. Linquist, Chairman and Chief Executive Officer of MetroPCS.

“The first half of 2011 was exceptionally strong with nearly 1 million net subscriber additions and record Adjusted EBITDA of approximately $643 million. We anticipate introducing additional Android Smartphones later this year and we look forward to updating you on our continued progress,” Linquist concluded.

Key Consolidated Financial and Operating Metrics

(in millions, except percentages, per share, per subscriber and subscriber amounts)


	Three Months Ended									Six Months Ended
	June 30,									June 30,
	2011			2010			Change			2011			2010			Change
Service revenues	$	1,113		$	922			21	%	$	2,164		$	1,775			22	%
Total revenues	$	1,209		$	1,013			19	%	$	2,404		$	1,983			21	%
Income from operations	$	210		$	198			6	%	$	356		$	304			17	%
Net income	$	84		$	80			6	%	$	141		$	103			37	%
Diluted net income per common share	$	0.23		$	0.22		$	0.01		$	0.38		$	0.29		$	0.09
Adjusted EBITDA⁽¹⁾	$	357		$	322			11	%	$	643		$	546			18	%
Adjusted EBITDA as a percentage of service revenues		32.1	%		35.0	%		-290	bps		29.7	%		30.8	%		-110	bps

ARPU⁽¹⁾	$	40.49		$	39.84		$	0.65		$	40.46		$	39.83		$	0.63
CPGA⁽¹⁾	$	177.88		$	164.29		$	13.59		$	166.60		$	153.72		$	12.88
CPU⁽¹⁾	$	18.94		$	17.90		$	1.04		$	19.35		$	18.33		$	1.02
Churn-Average Monthly Rate		3.9	%		3.3	%		60	bps		3.6	%		3.5	%		10	bps

Consolidated Subscribers
End of Period		9,079,865			7,634,135			19	%		9,079,865			7,634,135			19	%
Net Additions		198,810			303,009			-34	%		924,755			994,611			-7	%
Penetration of Covered POPs⁽²⁾		9.1	%		8.0	%		110	bps		9.1	%		8.0	%		110	bps

(1)

For a reconciliation of non-GAAP financial measures, please refer to the section entitled “Definition of Terms and Reconciliation of non-GAAP Financial Measures” included at the end of this release.

(2)

Number of covered POPs covered by MetroPCS Communications, Inc. network increased approximately 4.6 million from 6/30/10 to 6/30/11.

Quarterly Consolidated Results

•

Consolidated service revenues of $1.1 billion for the second quarter of 2011, an increase of $191 million, or 21%, when compared to the prior year’s second quarter.

•

Income from operations increased approximately $12 million, or approximately 6%, for the second quarter of 2011 when compared to the prior year’s second quarter.

•

Net income for the quarter was $84 million and includes approximately $6 million in charges related to the extinguishment of the Tranche B-1 Term Loans under the Company’s Senior Secured Credit Facility during the quarter. On a non-GAAP basis excluding the loss on extinguishment of debt, net income would have been $90 million, or $0.24 per common share, an increase of 13% and $0.02 per share respectively, when compared to the prior year’s second quarter.

•

Adjusted EBITDA of $357 million increased by approximately $35 million for the second quarter of 2011, or approximately 11%, when compared to the same period in the previous year.

•

Average revenue per user (ARPU) of $40.49 for the second quarter of 2011 represents an increase of $0.65 when compared to the second quarter of 2010 and an increase of $0.07 when compared to the first quarter of 2011. The increase in ARPU was primarily attributable to continued demand for our Wireless for All and 4G LTE rate plans.

•

The Company’s cost per gross addition (CPGA) of $177.88 for the second quarter of 2011 represents an increase of $13.59 when compared to the prior year’s second quarter. The increase was primarily driven by increased promotional activities.

•

Cost per user (CPU) increased to $18.94 in the second quarter of 2011, or 6%, when compared to the second quarter of 2010. The increase in CPU is primarily driven by the increase in retention expense on existing customers, costs associated with our 4G LTE network upgrade, and roaming expenses associated with Metro USA, offset by the continued scaling of our business.

•

Churn increased 60 basis points from 3.3% to 3.9%, when compared to the second quarter of 2010. The increase in churn was primarily driven by an increase in gross additions, adjusted for false churn, in the first quarter 2011 over the first quarter 2010, and we believe continued economic pressures on our subscribers.

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Updated Operational and Financial Guidance for 2011

MetroPCS currently expects to incur capital expenditures in the range of $0.9 billion to $1.0 billion on a consolidated basis for the full year ending December 31, 2011.

MetroPCS Conference Call Information

MetroPCS Communications, Inc. will host a conference call to discuss its Second Quarter 2011 Earnings Results at 9:00 a.m. Eastern Time (ET) on Tuesday, August 2, 2011.

Date:

Time:

Call-in Numbers:

International:

Participant Passcode:

Tuesday, August 2, 2011

9:00 a.m. ET

Toll free: 800-432-9830

719-234-7318

1101105

Please plan on accessing the conference call ten minutes prior to the scheduled start time.

The conference call will be broadcast live via the Company’s Investor Relations website at investor.metropcs.com. A replay of the webcast will be available on the website beginning at approximately 12:30 p.m. ET on August 2, 2011.

A replay of the conference call will be available for one week starting shortly after the call concludes and can be accessed by dialing 888-203-1112 (toll free) or 719-457-0820 (international). The passcode required to listen to the replay is 1101105.

To automatically receive MetroPCS financial news by e-mail, please visit the Investor Relations portion of the MetroPCS website, investor.metropcs.com, and subscribe to E-mail Alerts.

All registered marks, including but not limited to, Wireless for All, are registered service marks of MetroPCS Wireless, Inc. All rights reserved. All other company and product names mentioned may be trademarks or registered marks of the respective companies with which they are associated.

About MetroPCS Communications, Inc.

Dallas-based MetroPCS Communications, Inc. (NYSE: PCS) is a provider of no annual contract, unlimited wireless communications service for a flat-rate. MetroPCS is the fifth largest facilities-based wireless carrier in the United States based on number of subscribers served. With Metro USA(SM), MetroPCS customers can use their service in areas throughout the United States covering a population of over 280 million people. As of June 30, 2011, MetroPCS had approximately 9.1 million subscribers. For more information please visit www.metropcs.com.

Forward-Looking Statements

This release includes “forward-looking statements” for the purpose of the “safe harbor” provisions within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, and rule 3(b)-6 under the Securities Exchange Act of 1934, as amended. Any statements made in this release that are not statements of historical fact, including statements about our beliefs, opinions and expectations, are forward-looking statements and should be evaluated as such. Forward-looking statements include information concerning planned additions to our handset line-up, the demand for Android Smartphones, our positioning with regard to market and competitive challenges, our guidance on capital expenditures for 2011, our views on the causes of increased churn, and possible or assumed future results of operations, and statements that may relate to our plans, objectives, strategies, goals, future events, future revenues or performance, capital expenditures, financing needs, and other information that is not historical information. These forward-looking statements often include words such as “anticipate,” “expect,” “suggests,” “plan,” “believe,” “intend,” “estimates,” “targets,” “views,” “projects,” “should,” “would,” “could,” “may,” “become,” “will,” “forecast,” and other similar expressions.

These forward-looking statements are based on reasonable assumptions at the time they are made, including our current expectations, plans, beliefs, opinions and assumptions in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate under the circumstances and at such times. Forward-looking statements are not guarantees of future performance or results. Actual financial results, performance or results of operations may differ materially from those expressed in the forward-looking statements. Factors that may materially affect such forward-looking statements include, but are not limited to:

•

the highly competitive nature of our industry and changes in the competitive landscape;

Page 3 of 10

•

the current economic environment in the United States; disruptions to the credit and financial markets in the United States; the impact of a failure to increase the United States debt ceiling and possible credit downgrade of the United States credit rating; and contractions or limited growth on consumer spending as a result of the uncertainty in the United States economy;

•

our ability to manage our rapid growth, achieve planned growth, manage churn rates, and maintain our cost structure;

•

our and our competitors’ current and planned promotions, marketing and sales initiatives and our ability to respond and support them;

•

our ability to negotiate and maintain acceptable agreements with our suppliers and vendors, including roaming arrangements;

•

the seasonality of our business and any failure to have strong customer growth in the first and fourth quarters;

•

increases or changes in taxes and regulatory fees;

•

the rapid technological changes in our industry, our ability to adapt and respond to such technological changes, our ability to deploy new technologies, such as long term evolution, or 4G LTE, in our networks and successfully offer new services using such new technology;

•

our ability to meet the demands and expectations of our customers, secure the products, services, applications, content and network infrastructure equipment we need, or which our customers or potential customers demand, and to maintain adequate customer care;

•

our ability to secure spectrum, or secure it at acceptable prices, when we need it;

•

our ability to manage our networks to deliver the services our customers expect and to maintain and increase capacity of our networks and business systems to satisfy the demands of our customers;

•

our ability to adequately enforce or protect our intellectual property rights and defend against suits filed by others;

•

our capital structure, including our indebtedness amounts and the limitations imposed by the covenants in our indebtedness and maintain our financial and disclosure controls and procedures;

•

our inability to attract and retain key members of management and train personnel;

•

our reliance on third parties to provide distribution, products, software and services that are integral to our business and the ability of our suppliers to perform, develop and timely provide us with technological developments, products and services we need to remain competitive;

•

governmental regulation affecting our services and changes in government regulation, and the costs of compliance and our failure to comply with such regulations; and

•

other factors described or referenced from time to time in our annual report on Form 10-K, for the year ended December 31, 2010 and our quarterly report on Form 10-Q, for the quarter ended March 31, 2011, as well as subsequent quarterly reports on Form 10-Q, or current reports on Form 8-K, all of which are on file with the SEC and may be obtained free of charge through the SEC’s website http://www.sec.gov, from the Company’s website at www.metropcs.com under the investor relations tab, or from the Company by contacting the Investor Relations department.

The forward-looking statements speak only as to the date made, are based on current assumptions and expectations, and are subject to the factors above, among others, and involve risks, uncertainties and assumptions, many of which are beyond our ability to control or ability to predict. You should not place undue reliance on these forward-looking statements, which are based on current assumptions and expectations and speak only as of the date of this release. MetroPCS Communications, Inc. is not obligated to, and does not undertake a duty to, update any forward-looking statement to reflect events after the date of this release, except as required by law. The results for the second quarter of 2011 may not be reflective of results for the year or any subsequent period. MetroPCS does not plan to update nor reaffirm guidance except through formal public disclosure pursuant to Regulation FD.

Page 4 of 10

MetroPCS Communications, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(in thousands, except share and per share information)

(Unaudited)


	June 30, 2011			December 31, 2010
CURRENT ASSETS:
Cash and cash equivalents	$	1,855,994		$	796,531
Short-term investments		299,954			374,862
Inventories		140,048			161,049
Accounts receivable (net of allowance for uncollectible accounts of $494 and $2,494 at June 30, 2011 and December 31, 2010, respectively)		62,506			58,056
Prepaid expenses		64,982			50,477
Deferred charges		88,641			83,485
Deferred tax assets		6,290			6,290
Other current assets		49,887			63,135

Total current assets		2,568,302			1,593,885
Property and equipment, net		3,856,869			3,659,445
Restricted cash and investments		2,876			2,876
Long-term investments		8,035			16,700
FCC licenses		2,538,360			2,522,241
Other assets		126,585			123,433

Total assets	$	9,101,027		$	7,918,580

CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	427,922		$	521,788
Current maturities of long-term debt		32,416			21,996
Deferred revenue		235,461			224,471
Other current liabilities		29,874			34,165

Total current liabilities		725,673			802,420
Long-term debt, net		4,714,512			3,757,287
Deferred tax liabilities		721,143			643,058
Deferred rents		109,237			101,411
Other long-term liabilities		80,744			72,828

Total liabilities		6,351,309			5,377,004
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Preferred stock, par value $0.0001 per share, 100,000,000 shares authorized; no shares of preferred stock issued and outstanding at June 30, 2011 and December 31, 2010		—			—
Common stock, par value $0.0001 per share, 1,000,000,000 shares authorized, 361,574,806 and 355,318,666 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively		36			36
Additional paid-in capital		1,763,946			1,686,761
Retained earnings		998,822			858,108
Accumulated other comprehensive loss		(7,582	)		(1,415	)
Less treasury stock, at cost, 469,152 and 237,818 treasury shares at June 30, 2011 and December 31, 2010, respectively		(5,504	)		(1,914	)

Total stockholders’ equity		2,749,718			2,541,576

Total liabilities and stockholders’ equity	$	9,101,027		$	7,918,580

Page 5 of 10

MetroPCS Communications, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income

(in thousands, except share and per share information)

(Unaudited)


	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2011			2010			2011			2010
REVENUES:
Service revenues	$	1,113,292		$	922,137		$	2,163,509		$	1,775,420
Equipment revenues		96,161			90,399			240,320			207,619

Total revenues		1,209,453			1,012,536			2,403,829			1,983,039
OPERATING EXPENSES:
Cost of service (excluding depreciation and amortization expense of $115,455, $95,883, $227,282 and $190,826 shown separately below)		366,030			308,168			707,447			592,820
Cost of equipment		342,534			235,354			751,796			549,092
Selling, general and administrative expenses (excluding depreciation and amortization expense of $19,070, $13,419, $35,937 and $26,276 shown separately below)		154,556			158,600			324,327			318,510
Depreciation and amortization		134,525			109,302			263,219			217,102
Loss on disposal of assets		1,553			2,700			1,448			1,872

Total operating expenses		999,198			814,124			2,048,237			1,679,396

Income from operations		210,255			198,412			355,592			303,643
OTHER EXPENSE (INCOME):
Interest expense		66,980			65,503			123,541			132,985
Interest income		(511	)		(392	)		(1,026	)		(856	)
Other (income) expense, net		(186	)		479			(442	)		934
Loss on extinguishment of debt		9,536			—			9,536			—

Total other expense		75,819			65,590			131,609			133,063
Income before provision for income taxes		134,436			132,822			223,983			170,580
Provision for income taxes		(50,101	)		(52,907	)		(83,269	)		(68,004	)

Net income	$	84,335		$	79,915		$	140,714		$	102,576

Other comprehensive income (loss):
Unrealized gains on available-for-sale securities, net of tax of $40, $58, $102 and $78, respectively		66			91			165			124
Unrealized losses on cash flow hedging derivatives, net of tax benefit of $8,299, $2,658, $7,923 and $6,437, respectively		(13,374	)		(4,191	)		(12,774	)		(10,218	)
Reclassification adjustment for gains on available-for-sale securities included in net income, net of tax of $57, $34, $122 and $83, respectively		(93	)		(53	)		(197	)		(133	)
Reclassification adjustment for losses on cash flow hedging derivatives included in net income, net of tax benefit of $2,319, $3,214, $4,118 and $7,436, respectively		3,762			5,071			6,639			11,805

Total other comprehensive (loss) income		(9,639	)		918			(6,167	)		1,578

Comprehensive income	$	74,696		$	80,833		$	134,547		$	104,154

Net income per common share:
Basic	$	0.23		$	0.22		$	0.39		$	0.29

Diluted	$	0.23		$	0.22		$	0.38		$	0.29

Weighted average shares:
Basic		360,226,487			353,278,423			358,616,324			353,032,030

Diluted		365,390,280			355,685,446			363,153,234			355,151,112

Page 6 of 10

MetroPCS Communications, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)


	For the Six Months Ended June 30,
	2011			2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	140,714		$	102,576
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		263,219			217,102
Provision for uncollectible accounts receivable		261			58
Deferred rent expense		7,832			10,915
Cost of abandoned cell sites		380			903
Stock-based compensation expense		22,244			23,333
Non-cash interest expense		4,015			6,412
Loss on disposal of assets		1,448			1,872
Loss on extinguishment of debt		9,536			—
Gain on sale of investments		(319	)		(217	)
Accretion of asset retirement obligations		2,762			1,285
Other non-cash expense		—			963
Deferred income taxes		81,395			65,700
Changes in assets and liabilities:
Inventories		21,001			(47,962	)
Accounts receivable, net		(4,710	)		3,692
Prepaid expenses		(14,512	)		(17,243	)
Deferred charges		(5,157	)		(5,374	)
Other assets		20,081			11,082
Accounts payable and accrued expenses		(85,346	)		(51,936	)
Deferred revenue		10,990			9,211
Other liabilities		6,266			5,079

Net cash provided by operating activities		482,100			337,451
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(451,573	)		(315,337	)
Change in prepaid purchases of property and equipment		(17,691	)		(18,551	)
Proceeds from sale of property and equipment		603			6,356
Purchase of investments		(299,826	)		(312,225	)
Proceeds from maturity of investments		375,000			237,500
Change in restricted cash and investments		—			1,762
Acquisitions of FCC licenses and microwave clearing costs		(3,283	)		(1,976	)
Cash used in asset acquisitions		(7,495	)		—

Net cash used in investing activities		(404,265	)		(402,471	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in book overdraft		1,263			(80,337	)
Proceeds from debt issuance, net of discount		1,497,500			—
Debt issuance costs		(15,351	)		—
Repayment of debt		(11,598	)		(8,000	)
Retirement of senior secured credit facility debt		(535,792	)		—
Payments on capital lease obligations		(4,474	)		(1,224	)
Purchase of treasury stock		(3,591	)		(852	)
Proceeds from exercise of stock options		53,671			2,592

Net cash provided by (used in) financing activities		981,628			(87,821	)

INCREASE (DECREASE) CASH AND CASH EQUIVALENTS		1,059,463			(152,841	)
CASH AND CASH EQUIVALENTS, beginning of period		796,531			929,381

CASH AND CASH EQUIVALENTS, end of period	$	1,855,994		$	776,540

Page 7 of 10

Definition of Terms and Reconciliation of Non-GAAP Financial Measures

The Company utilizes certain financial measures and key performance indicators that are not calculated in accordance with GAAP to assess our financial and operating performance. A non-GAAP financial measure is defined as a numerical measure of a company’s financial performance that (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the comparable measure calculated and presented in accordance with GAAP in the statement of income or statement of cash flows, or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the comparable measure so calculated and presented.

Average revenue per user, or ARPU, cost per gross addition, or CPGA, cost per user, or CPU, and Adjusted EBITDA are non-GAAP financial measures utilized by the Company’s management to judge the Company’s ability to meet its liquidity requirements and to evaluate its operating performance. Management believes that these measures are important in understanding the performance of the Company’s operations from period to period, and although every company in the wireless industry does not define each of these measures in precisely the same way, management believes that these measures (which are common in the wireless industry) facilitate key liquidity and operating performance comparisons with other companies in the wireless industry. The following tables reconcile the Company’s non-GAAP financial measures with the Company’s financial statements presented in accordance with GAAP.

ARPU - The Company utilizes ARPU to evaluate its per-customer service revenue realization and to assist in forecasting future service revenues. ARPU is calculated exclusive of pass through charges that the Company collects from its customers and remits to the appropriate government agencies.

Average number of customers for any measurement period is determined by dividing (a) the sum of the average monthly number of customers for the measurement period by (b) the number of months in such period. Average monthly number of customers for any month represents the sum of the number of customers on the first day of the month and the last day of the month divided by two. ARPU for the six months ended June 30, 2010 includes approximately $0.8 million that would have been recognized as service revenues but were classified as equipment revenues because the consideration received from customers was less than the fair value of promotionally priced handsets. The following table shows the calculation of ARPU for the periods indicated.


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(in thousands, except average number of customers and ARPU)
Calculation of Average Revenue Per User (ARPU):
Service revenues	$	1,113,292		$	922,137		$	2,163,509		$	1,775,420
Add: Impact to service revenues of promotional activity		—			—			—			778
Less: Pass through charges		(20,735	)		(24,189	)		(42,010	)		(47,934	)

Net service revenues	$	1,092,557		$	897,948		$	2,121,499		$	1,728,264

Divided by: Average number of customers		8,994,405			7,513,202			8,739,720			7,231,177

ARPU	$	40.49		$	39.84		$	40.46		$	39.83

CPGA - The Company utilizes CPGA to assess the efficiency of its distribution strategy, validate the initial capital invested in its customers and determine the number of months to recover its customer acquisition costs. This measure also allows management to compare the Company’s average acquisition costs per new customer to those of other wireless broadband mobile providers. Equipment revenues related to new customers, adjusted for the impact to service revenues of promotional activity, are deducted from selling expenses in this calculation as they represent amounts paid by customers at the time their service is activated that reduce the Company’s acquisition cost of those customers. Additionally, equipment costs associated with existing customers, net of related revenues, are excluded as this measure is intended to reflect only the acquisition costs related to new customers. The following table reconciles total costs used in the calculation of CPGA to selling expenses, which the Company considers to be the most directly comparable GAAP financial measure to CPGA.

Page 8 of 10


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(in thousands, except gross customer additions and CPGA)
Calculation of Cost Per Gross Addition (CPGA):
Selling expenses	$	78,522		$	86,194		$	170,384		$	175,341
Less: Equipment revenues		(96,161	)		(90,399	)		(240,320	)		(207,619	)
Add: Impact to service revenues of promotional activity		—			—			—			778
Add: Equipment revenue not associated with new customers		59,355			54,392			134,589			117,705
Add: Cost of equipment		342,534			235,354			751,796			549,092
Less: Equipment costs not associated with new customers		(159,931	)		(113,377	)		(352,133	)		(248,122	)

Gross addition expenses	$	224,319		$	172,164		$	464,316		$	387,175

Divided by: Gross customer additions		1,261,091			1,047,898			2,786,971			2,518,763

CPGA	$	177.88		$	164.29		$	166.60		$	153.72

CPU - The Company utilizes CPU as a tool to evaluate the non-selling cash expenses associated with ongoing business operations on a per customer basis, to track changes in these non-selling cash costs over time, and to help evaluate how changes in the Company’s business operations affect non-selling cash costs per customer. In addition, CPU provides management with a useful measure to compare our non-selling cash costs per customer with those of other wireless providers. The Company believes investors use CPU primarily as a tool to track changes in the Company’s non-selling cash costs over time and to compare the Company’s non-selling cash costs to those of other wireless providers, although other wireless carriers may calculate this measure differently. The following table reconciles total costs used in the calculation of CPU to cost of service, which we consider to be the most directly comparable GAAP financial measure to CPU.


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(in thousands, except average number of customers and CPU)
Calculation of Cost Per User (CPU):
Cost of service	$	366,030		$	308,168		$	707,447		$	592,820
Add: General and administrative expense		76,034			72,406			153,943			143,169
Add: Net loss on equipment transactions unrelated to initial customer acquisition		100,576			58,985			217,544			130,417
Less: Stock-based compensation expense included in cost of service and general and administrative expense		(10,960	)		(11,918	)		(22,244	)		(23,333	)
Less: Pass through charges		(20,735	)		(24,189	)		(42,010	)		(47,934	)

Total costs used in the calculation of CPU	$	510,945		$	403,452		$	1,014,680		$	795,139

Divided by: Average number of customers		8,994,405			7,513,202			8,739,720			7,231,177

CPU	$	18.94		$	17.90		$	19.35		$	18.33

Adjusted EBITDA - The Company utilizes Adjusted EBITDA to monitor the financial performance of its operations. This measurement, together with GAAP measures such as revenue and income from operations, assists management in its decision-making process related to the operations of the company’s business. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or as a substitute for income from operations, net income, or any other measure of financial performance reported in accordance with GAAP. In addition, other wireless carriers may calculate this measure differently.

The Company believes that analysts and investors use Adjusted EBITDA as a supplemental measure to evaluate its overall operating performance and that this metric facilitates the comparisons with other wireless communications companies. The Company uses Adjusted EBITDA internally as a metric to evaluate and compensate its personnel and management for their performance, and as a benchmark to evaluate its operating performance in comparison to its competitors. Management also uses Adjusted EBITDA to measure, from period-to-period, the company’s ability to provide cash flows to meet future debt services, capital expenditures and working capital requirements and fund future growth.

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The following tables illustrate the calculation of Adjusted EBITDA and reconcile Adjusted EBITDA to net income and cash flows from operating activities, which we consider to be the most directly comparable GAAP financial measures to Adjusted EBITDA.


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(in thousands)
Calculation of Adjusted EBITDA:
Net income	$	84,335		$	79,915		$	140,714		$	102,576
Adjustments:
Depreciation and amortization		134,525			109,302			263,219			217,102
Loss on disposal of assets		1,553			2,700			1,448			1,872
Stock-based compensation expense		10,960			11,918			22,244			23,333
Interest expense		66,980			65,503			123,541			132,985
Interest income		(511	)		(392	)		(1,026	)		(856	)
Other (income) expense, net		(186	)		479			(442	)		934
Loss on extinguishment of debt		9,536			—			9,536			—
Provision for income taxes		50,101			52,907			83,269			68,004

Adjusted EBITDA	$	357,293		$	322,332		$	642,503		$	545,950


	Three Months Ended June 30,						Six Months Ended June 30,
	2011			2010			2011			2010
	(in thousands)
Reconciliation of Net Cash Provided by Operating Activities to Adjusted EBITDA:
Net cash provided by operating activities	$	343,786		$	112,418		$	482,100		$	337,451
Adjustments:
Interest expense		66,980			65,503			123,541			132,985
Non-cash interest expense		(2,022	)		(3,277	)		(4,015	)		(6,412	)
Interest income		(511	)		(392	)		(1,026	)		(856	)
Other (income) expense, net		(186	)		479			(442	)		934
Other non-cash expense		—			(492	)		—			(963	)
Provision for uncollectible accounts receivable		(95	)		(86	)		(261	)		(58	)
Deferred rent expense		(3,738	)		(5,380	)		(7,832	)		(10,915	)
Cost of abandoned cell sites		(323	)		(367	)		(380	)		(903	)
Gain on sale and maturity of investments		151			89			319			217
Accretion of asset retirement obligations		(1,449	)		(1,399	)		(2,762	)		(1,285	)
Provision for income taxes		50,101			52,907			83,269			68,004
Deferred income taxes		(49,138	)		(51,523	)		(81,395	)		(65,700	)
Changes in working capital		(46,263	)		153,852			51,387			93,451

Adjusted EBITDA	$	357,293		$	322,332		$	642,503		$	545,950

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