UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(MARK ONE)
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2002 |
OR
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
FOR THE TRANSITION PERIOD FROM ____________ TO ____________.
COMMISSION FILE NUMBER 000-29667
T-MOBILE USA, INC.
| DELAWARE | 91-1983600 | |
|
|
||
| (State or other jurisdiction of incorporation or organization) |
(IRS Employer Identification No.) | |
| 12920 - 38 TH STREET S.E. BELLEVUE, WASHINGTON |
98006 | |
|
|
||
| (Address of principal executive offices) | (Zip Code) |
(425) 378-4000
VOICESTREAM WIRELESS CORPORATION
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
| Title | Shares Outstanding as of November 14, 2002 | |||
| Common Stock, par value $.000001 per share | 269,738,185 | |||
This registrant meets the conditions set forth in General Instruction H (1) (a) and (b) of Form 10-Q and is therefore filing this Form with the reduced disclosure format.
T-MOBILE USA, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
TABLE OF CONTENTS
| Page | ||||||
PART I — FINANCIAL INFORMATION |
||||||
ITEM 1. FINANCIAL STATEMENTS |
||||||
Condensed Consolidated Balance Sheets |
3 | |||||
Condensed Consolidated Statements of Operations and Comprehensive Loss |
4 | |||||
Condensed Consolidated Statements of Cash Flows |
5 | |||||
Notes to Condensed Consolidated Financial Statements |
6 | |||||
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Abbreviated pursuant to General Instruction H.) |
14 | |||||
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK (Omitted under the provisions of
General Instruction H.) |
24 | |||||
ITEM 4. CONTROLS AND PROCEDURES |
24 | |||||
PART II — OTHER INFORMATION |
||||||
ITEM 1. LEGAL PROCEEDINGS |
25 | |||||
ITEM
2. CHANGES IN SECURITIES AND USE OF PROCEEDS (Omitted under the
provisions of General Instruction H.) |
25 | |||||
ITEM 3. DEFAULTS UPON SENIOR SECURITIES (Omitted under the
provisions of General Instruction H.) |
25 | |||||
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (Omitted under the
provisions of General Instruction H.) |
25 | |||||
ITEM 5. OTHER INFORMATION |
25 | |||||
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K |
25 | |||||
SIGNATURES |
26 | |||||
CERTIFICATION
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 |
27 | |||||
2
T-MOBILE USA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share and per share amounts)
| September 30, | December 31, | ||||||||||
| 2002 | 2001 | ||||||||||
| (unaudited) | |||||||||||
ASSETS |
|||||||||||
Current assets: |
|||||||||||
Cash and cash equivalents |
$ | 80,095 | $ | — | |||||||
Accounts receivable, net of allowance for doubtful accounts
of $122,719 and $119,794, respectively |
730,959 | 602,767 | |||||||||
Inventory |
156,200 | 153,432 | |||||||||
Other current assets |
207,217 | 308,528 | |||||||||
Total current assets |
1,174,471 | 1,064,727 | |||||||||
Property and equipment, net of accumulated depreciation of
$970,315 and $384,372, respectively |
4,046,210 | 3,390,103 | |||||||||
Goodwill |
9,865,755 | 16,265,790 | |||||||||
Spectrum licenses |
9,948,377 | 18,791,696 | |||||||||
Other intangible assets, net of accumulated amortization
of $316,281 and $184,057, respectively |
439,349 | 695,573 | |||||||||
Investments in and advances to unconsolidated affiliates |
760,778 | 994,976 | |||||||||
Other assets and investments |
122,708 | 37,055 | |||||||||
| $ | 26,357,648 | $ | 41,239,920 | ||||||||
LIABILITIES AND SHAREHOLDER’S EQUITY |
|||||||||||
Current liabilities: |
|||||||||||
Accounts payable |
$ | 285,854 | $ | 198,530 | |||||||
Accrued liabilities |
822,478 | 633,069 | |||||||||
Deferred revenue |
141,610 | 75,996 | |||||||||
Construction accounts payable |
300,173 | 348,600 | |||||||||
Total current liabilities |
1,550,115 | 1,256,195 | |||||||||
Long-term debt |
1,276,963 | 1,861,518 | |||||||||
Long-term notes payable to affiliates |
6,135,411 | 4,115,433 | |||||||||
Deferred tax liabilities |
3,219,878 | 3,565,286 | |||||||||
Other long-term liabilities |
65,126 | 33,817 | |||||||||
Total long-term liabilities |
10,697,378 | 9,576,054 | |||||||||
Minority interest in equity of consolidated subsidiaries |
8,590 | 51,287 | |||||||||
Voting preferred stock; $0.001 par value;
100,000,000 shares authorized; 3,906,250 shares issued and
outstanding |
5,000,000 | 5,000,000 | |||||||||
Commitments and contingencies (see Note 6) |
|||||||||||
Shareholder’s equity: |
|||||||||||
Common stock, $0.000001 par value, and paid-in capital; 1.0
billion shares authorized, 269,738,185 shares issued
and outstanding |
26,851,821 | 26,851,821 | |||||||||
Deferred stock compensation |
(24,752 | ) | (35,891 | ) | |||||||
Accumulated other comprehensive income (loss) |
(336 | ) | 655 | ||||||||
Accumulated deficit |
(17,725,168 | ) | (1,460,201 | ) | |||||||
Total shareholder’s equity |
9,101,565 | 25,356,384 | |||||||||
| $ | 26,357,648 | $ | 41,239,920 | ||||||||
See accompanying notes to condensed consolidated financial statements.
3
T-MOBILE USA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(dollars in thousands)
(unaudited)
| Three month periods | Nine month periods | ||||||||||||||||||||||||
| Three months | Three months | Nine months | Four months | Five months | |||||||||||||||||||||
| ended | ended | ended | ended | ended | |||||||||||||||||||||
| September 30, | September 30, | September 30, | September 30, | May 31, | |||||||||||||||||||||
| 2002 | 2001 | 2002 | 2001 | 2001 | |||||||||||||||||||||
Revenues: |
|||||||||||||||||||||||||
Post pay revenues |
$ | 968,928 | $ | 624,832 | $ | 2,547,363 | $ | 808,056 | $ | 868,667 | |||||||||||||||
Prepaid revenues |
88,276 | 100,347 | 292,484 | 135,110 | 158,893 | ||||||||||||||||||||
Roaming revenues |
59,240 | 42,817 | 165,879 | 59,667 | 73,128 | ||||||||||||||||||||
Equipment sales |
206,105 | 82,840 | 432,254 | 116,482 | 150,958 | ||||||||||||||||||||
Affiliate and other revenues |
11,731 | 19,939 | 54,564 | 30,184 | 18,922 | ||||||||||||||||||||
Total revenues |
1,334,280 | 870,775 | 3,492,544 | 1,149,499 | 1,270,568 | ||||||||||||||||||||
Operating expenses: |
|||||||||||||||||||||||||
Cost of service (excludes
stock-based
compensation of $891, $949,
$2,673, $1,188,
and $610, respectively) |
238,286 | 213,002 | 669,797 | 283,552 | 286,897 | ||||||||||||||||||||
Cost of equipment sales |
306,403 | 188,383 | 691,267 | 250,544 | 265,629 | ||||||||||||||||||||
General and administrative
(excludes stock-based
compensation of $2,079,
$2,216, $6,237,
$2,772 and $2,298,
respectively) |
254,423 | 305,306 | 807,701 | 399,981 | 466,641 | ||||||||||||||||||||
Sales and marketing (excludes
stock-based
compensation of $743, $791,
$2,229, $990,
and $508, respectively) |
474,069 | 310,093 | 1,092,887 | 412,264 | 466,513 | ||||||||||||||||||||
Depreciation and amortization |
300,142 | 675,184 | 828,917 | 900,988 | 559,409 | ||||||||||||||||||||
Impairment charges |
15,628,000 | — | 15,628,000 | — | — | ||||||||||||||||||||
Stock-based compensation |
3,713 | 3,956 | 11,139 | 4,950 | 3,416 | ||||||||||||||||||||
Total operating expenses |
17,205,036 | 1,695,924 | 19,729,708 | 2,252,279 | 2,048,505 | ||||||||||||||||||||
Operating loss |
(15,870,756 | ) | (825,149 | ) | (16,237,164 | ) | (1,102,780 | ) | (777,937 | ) | |||||||||||||||
Other income (expense): |
|||||||||||||||||||||||||
Interest and financing expense |
(128,777 | ) | (95,502 | ) | (238,045 | ) | (134,935 | ) | (224,471 | ) | |||||||||||||||
Equity in net losses of
unconsolidated affiliates |
(20,472 | ) | (8,678 | ) | (143,239 | ) | (13,467 | ) | (63,477 | ) | |||||||||||||||
Interest income and other, net |
23,740 | 7,892 | 41,418 | 9,683 | 35,968 | ||||||||||||||||||||
T-Mobile merger related costs |
— | (971 | ) | — | (1,448 | ) | (118,885 | ) | |||||||||||||||||
Accretion of preferred stock
of consolidated
subsidiary |
— | — | — | — | (4,699 | ) | |||||||||||||||||||
Total other income (expense) |
(125,509 | ) | (97,259 | ) | (339,866 | ) | (140,167 | ) | (375,564 | ) | |||||||||||||||
Net loss before income taxes |
(15,996,265 | ) | (922,408 | ) | (16,577,030 | ) | (1,242,947 | ) | (1,153,501 | ) | |||||||||||||||
Income tax benefit |
3,633,081 | 289,015 | 312,063 | 390,271 | — | ||||||||||||||||||||
Net loss |
(12,363,184 | ) | (633,393 | ) | (16,264,967 | ) | (852,676 | ) | (1,153,501 | ) | |||||||||||||||
Other comprehensive income (loss) |
(194 | ) | 1,566 | (991 | ) | 1,566 | 29,047 | ||||||||||||||||||
Comprehensive loss |
$ | (12,363,378 | ) | $ | (631,827 | ) | $ | (16,265,958 | ) | $ | (851,110 | ) | $ | (1,124,454 | ) | ||||||||||
T-MOBILE USA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(unaudited)
| Nine months | Four months | Five months | ||||||||||||||||
| ended | ended | ended | ||||||||||||||||
| September 30, | September 30, | May 31, | ||||||||||||||||
| 2002 | 2001 | 2001 | ||||||||||||||||
Operating activities: |
||||||||||||||||||
Net loss |
$ | (16,264,967 | ) | $ | (852,676 | ) | $ | (1,153,501 | ) | |||||||||
Adjustments to reconcile net loss to
net cash provided by (used in) operating activities: |
||||||||||||||||||
Depreciation and amortization |
828,917 | 900,988 | 559,409 | |||||||||||||||
Impairment charges |
15,628,000 | — | — | |||||||||||||||
Income tax benefit |
(312,063 | ) | (390,271 | ) | — | |||||||||||||
Amortization of debt discount and premium, net |
12,858 | 969 | 22,783 | |||||||||||||||
Equity in net losses of unconsolidated affiliates |
143,239 | 13,467 | 63,477 | |||||||||||||||
Stock-based compensation |
11,139 | 4,950 | 3,416 | |||||||||||||||
Allowance for bad debts |
2,925 | (1,809 | ) | 1,776 | ||||||||||||||
Other, net |
(33,976 | ) | 1,576 | (25,119 | ) | |||||||||||||
Changes in operating assets and
liabilities, net of
effects of purchase accounting: |
||||||||||||||||||
Accounts receivable |
(126,881 | ) | (66,558 | ) | (6,264 | ) | ||||||||||||
Inventory |
(1,808 | ) | 103,751 | 107,957 | ||||||||||||||
Other current assets |
(44,553 | ) | 10,361 | 1,766 | ||||||||||||||
Accounts payable |
72,900 | 37,832 | (52,429 | ) | ||||||||||||||
Accrued liabilities |
264,388 | 36,827 | 56,797 | |||||||||||||||
Net cash provided by (used in)
operating activities |
180,118 | (200,593 | ) | (419,932 | ) | |||||||||||||
Investing activities: |
||||||||||||||||||
Purchases of property and equipment |
(1,233,937 | ) | (449,107 | ) | (809,983 | ) | ||||||||||||
Acquisitions of wireless properties,
net of cash acquired |
(77,819 | ) | (253,228 | ) | (299,292 | ) | ||||||||||||
Sales of short-term investments, net |
— | — | 1,175,636 | |||||||||||||||
Investments in and advances to
unconsolidated affiliates, net |
(218,897 | ) | 1,597 | (37,193 | ) | |||||||||||||
Refund of deposits held by FCC |
166,563 | — | 49,589 | |||||||||||||||
Other, net |
532 | 6,139 | 26,863 | |||||||||||||||
Net
cash provided by (used in) investing activities |
(1,363,558 | ) | (694,599 | ) | 105,620 | |||||||||||||
Financing activities: |
||||||||||||||||||
Net proceeds from issuance of common
and preferred stock |
— | — | 43,468 | |||||||||||||||
Long-term debt repayments |
(646,812 | ) | (3,329,582 | ) | (32,113 | ) | ||||||||||||
Long-term debt borrowings from
affiliates, net |
2,001,475 | 3,453,550 | ||||||||||||||||