T-Mobile USA Reports Fourth Quarter and Full Year 2004 Results.BELLEVUE Bellevue (bĕl`vy  ).1 City (1990 pop. 30,982), Sarpy co., E Nebr., a suburb of Omaha, on the Missouri River; inc. 1855. , Wash. -- T-Mobile USA, Inc. (NYSE NYSE See: New York Stock Exchange :DT): --More than 1 million net new customers added in Q4 --Net new customers totaled nearly 4.2 million in 2004, compared to 3.2 million in 2003 --ARPU of $55 in Q4, consistent with Q3; data ARPU (Average Revenue Per User) A calculation often used to determine the overall value of an application. It is also used to rate particular customers, especially in the wireless space, by comparing someone's account to the overall average. at 6.6% of postpaid post·paid adj. With the postage having been paid in advance. postpaid Adverb, adj with the postage prepaid Adj. 1. ARPU in Q4 --$2.5 billion in Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. Before Depreciation and Amortization (OIBDA OIBDA Operating Income Before Depreciation & Amortization ) in 2004 --Cumulative impact of lease accounting corrections reduced 2004 net income by $143 million and OIBDA by $200 million, of which $71 million and $107 million, respectively, relate to prior years --Q4 net loss of $329 million also includes a $792 million loss provision offset by a $448 million tax benefit related to dissolution Act or process of dissolving; termination; winding up. In this sense it is frequently used in the phrase dissolution of a partnership. The dissolution of a contract is its Rescission by the parties themselves or by a court that nullifies its binding force and reinstates each of network sharing venture with Cingular T-Mobile USA, Inc. ("T-Mobile USA") (NYSE:DT) , the U.S. operation of T-Mobile International AG & Co. KG ("T-Mobile International"), the mobile communications subsidiary of Deutsche Telekom Deutsche Telekom AG (ISIN: DE0005557508, FWB: DTE, NYSE: DT, LSE: DEU, TYO: 9496 ) (abbreviated DTAG) is a telecommunications company headquartered in Bonn, Germany. It is the largest telecommunications company in Germany and in the EU. AG ("Deutsche Telekom") (NYSE: DT), today announced fourth quarter and full year 2004 results. All financial amounts are in USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. and are based on accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ") in order to provide comparability with the results of other U.S. wireless carriers. T-Mobile USA results are included in the consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: results of Deutsche Telekom, but differ from the information contained herein as Deutsche Telekom reports its financial results in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with German generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting . In the fourth quarter of 2004, T-Mobile USA added 1,019,000 net new customers, compared with 901,000 added in the third quarter of 2004 and 1,015,000 in the fourth quarter of 2003. About 80% of the growth in the fourth quarter of 2004 came from new postpay customers, which currently comprise To embrace, cover, or include; to confine within; to consist of. In the law governing patents—grants of an exclusive right or privilege to make, use, or sell an invention or product for a term of years—the term comprise 89% of the total customer base. "This has been a highly successful, award winning year for T-Mobile USA," said Robert Robert, Henry Martyn 1837-1923. American army engineer and parliamentary authority. He designed the defenses for Washington, D.C., during the Civil War and later wrote Robert's Rules of Order (1876). Noun 1. Dotson, President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of T-Mobile USA. "Our ongoing commitment to quality and value was the key to attracting the 4.2 million net new customers we added in 2004 and in increasing our customer base by 32% since the end of 2003. Combining this growth with consistently strong ARPU -- including strong data ARPU -- demonstrates the quality of our subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. base, and our commitment to the Get More promise. Furthermore, the superiority of the customer experience we deliver was recognized by J. D. Power and Associates J.D. Power and Associates is a global marketing information services firm founded in 1968 by James David Power III. The firm conducts independent and unbiased surveys of customer satisfaction, product quality, and buyer behavior for industries ranging from cars to restaurants. in several 2004 regional and national studies, where they ranked T-Mobile highest in Customer Care Performance, Wireless Call Quality, Wireless Retail Satisfaction, and overall Customer Satisfaction for Wireless Telephone Users." As a result of recent financial statement restatements by numerous U.S. public companies and publication of a letter by the Chief Accountant A person who has the requisite skill and experience in establishing and maintaining accurate financial records for an individual or a business. The duties of an accountant may include designing and controlling systems of records, auditing books, and preparing financial statements. of the SEC regarding the interpretation of longstanding Adj. 1. longstanding - having existed for a long time; "a longstanding friendship"; "the longstanding conflict" long - primarily temporal sense; being or indicating a relatively great or greater than average duration or passage of time or a duration as specified; lease accounting principles, T-Mobile USA has corrected its lease accounting practices in the fourth quarter of 2004. These corrections resulted in a cumulative, net charge to net income of $143 million in the fourth quarter of 2004, of which $71 million relates to the years 2001 through 2003. The net cumulative charge is comprised of a $200 million increase in rent expense based primarily on rent escalation clauses escalation clause n → cláusula de reajuste de los precios escalation clause n → clause f d'indexation escalation clause n related to future renewal periods of cell site leases; an increase of $33 million in the equity loss from the network sharing venture with Cingular Wireless LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("Cingular") also related to cell site leases; a reduction of $53 million in depreciation expense to adjust the depreciable depreciable Of, relating to, or being a long-term tangible asset that is subject to depreciation. life of leasehold improvements Leasehold Improvement Improvements on a leased asset that increase the value of the asset. Notes: A leasehold improvement is classified as an asset that must be depreciated over time. ; and a reduction of $36 million in the loss provision related to dissolution of the network sharing joint venture with Cingular, described further below. All components of the net charge are non-cash and do not impact historical or future cash flows or the timing of payments under the related leases. Additional information is provided in Note 1 of the footnotes to Selected Data below. T-Mobile USA reported OIBDA of $515 million in the fourth quarter of 2004 compared to $788 million in the third quarter of 2004 and $327 million in the fourth quarter of 2003. OIBDA for the fourth quarter of 2004 includes the $200 million cumulative charge related to lease accounting described above, of which $176 million relates to prior quarters of 2004 and earlier years. T-Mobile USA's net loss for the fourth quarter of 2004 was $329 million. The fourth quarter net loss includes a $792 million loss provision, partially offset by a $448 million deferred tax benefit, related to the dissolution of our network sharing joint venture with Cingular, completed on January January: see month. 5, 2005, as described further below.The net loss also includes the $143 million cumulative net charge from the lease accounting correction CORRECTION,punishment. Chastisement by one having authority of a person who has committed some offence, for the purpose of bringing him to legal subjection. 2. It is chiefly exercised in a parental manner, by parents, or those who are placed in loco parentis. described above, virtually all of which relates to prior quarters of 2004 and earlier years. Additional information is provided in Note 1 of the footnotes to Selected Data below. "T-Mobile USA had a strong 2004, continuing to effectively balance strong customer growth with solid financial results," said Rene RENE Recycling Network Europe RENE Rocket Engine Nozzle Ejector Obermann Obermann was a rank of the German Schutzstaffel which was used between the years 1942 and 1945. Translated as “Senior Member”, the rank of Obermann was exclusive to the Allgemeine-SS and was created as an equivalent to the Waffen-SS , CEO of T-Mobile International and Member of the Board of Management, Deutsche Telekom. "2004 OIBDA of $2.5 billion represents a 57% increase over 2003. This continued OIBDA improvement was achieved even with a 32% increase in the T-Mobile USA customer base over the past 12 months." T-Mobile USA service revenues, which consist of postpay, prepaid pre·pay tr.v. pre·paid, pre·pay·ing, pre·pays To pay or pay for beforehand. pre·pay  ment n. ,
and roaming The ability to use a communications device such as a cellphone or PDA and be able to move from one cell or access point to another without losing the connection. and other service revenues, were $2.75 billion in the fourth
quarter of 2004, up from $2.61 billion in the third quarter of 2004 and
$1.98 billion in the fourth quarter of 2003. In addition to high
customer growth, revenue increases in 2004 reflect inclusion of two new
components compared to 2003: Universal Service Fund ("USF USF University of South FloridaUSF Universal Service Fund (often part of phone bill in US) USF University of San Francisco USF University of Sioux Falls USF University of St. ") recovery fees and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. cost recovery fees. Both items are explained further in the footnotes to Selected Data, below. Average Revenue Per User ("ARPU", as defined in the footnotes to the Selected Data, below) was $55 in the fourth quarter of 2004, consistent with $55 in the third quarter of 2004 and up from $53 in the fourth quarter of 2003. (Total ARPU for the fourth quarter of 2003 would have been $54 after adjusting for USF fees.) Excluding the impact of USF and regulatory fees, postpay ARPU has increased during the past year, due largely to the ongoing growth of data services revenue, which now comprises 6.6% of postpay ARPU, compared to 5.6% in the third quarter of 2004 and 3.5% in the fourth quarter of 2003. A major factor in the data revenue growth in the fourth quarter was a net increase of 112,000 BlackBerry blackberry, name for several species of thorny plants of the genus Rubus of the family Rosaceae (rose family). See bramble. blackberry customers during the quarter, bringing the end of year total to 411,000. Postpay churn churn: see butter. averaged 2.6% per month in the fourth quarter of 2004, consistent with 2.6% in the third quarter of 2004, and down from 2.7% in the fourth quarter of 2003. Blended blend v. blend·ed or blent , blend·ing, blends v.tr. 1. To combine or mix so that the constituent parts are indistinguishable from one another: churn, a mix of postpay and prepaid customers, was 3.1% in the fourth quarter of 2004, up from 3.0% in the third quarter of 2004 and down from 3.2% in the fourth quarter of 2003. The average cost of acquiring a customer, Cost Per Gross Add ("CPGA (Ceramic PGA) See PGA. CPGA - Ceramic Pin Grid Array ", as defined in the footnotes to the Selected Data, below) was $345 in the fourth quarter of 2004, up from $301 in the third quarter of 2004, and consistent with $344 in the fourth quarter of 2003. The sequential One after the other in some consecutive order such as by name or number. increase in CPGA reflects the typical seasonal impact of holiday sales promotions. The average cash cost of serving customers, Cash Cost Per User ("CCPU CCPU Continuous Computing Corporation (stock symbol) CCPU Cash Cost Per User (Sprint) CCPU China Criminal Police University CCPU Cryptographic Central Processing Unit ", as defined in the footnotes to the Selected Data, below), was $28 per customer per month in the fourth quarter of 2004, including the cumulative lease accounting charge taken in the fourth quarter which increased CCPU by $4. CCPU was $24 in the third quarter of 2004 and $25 in the fourth quarter of 2003 after adjustment to include USF fees. Additional information is provided in Note 1 of the footnotes to Selected Data below. Capital expenditures were $422 million in the fourth quarter of 2004, down from $453 million in the third quarter of 2004 and $547 million in the fourth quarter of 2003. These capital expenditure totals do not include our share of investment in the network sharing venture with Cingular in New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of , California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). and Nevada Nevada (nəvăd`ə, –vä–), far western state of the United States. It is bordered by Utah (E), Arizona (SE), California (SW, W), and Oregon and Idaho (N). , which is reported as investments in and advances to unconsolidated affiliates. T-Mobile USA's share of expenditures in the venture, on an incurred basis, was $202 million in the fourth quarter of 2004, up from $124 million in the third quarter. Capital expenditures continue to be focused on quality and capacity improvements in the GSM/GPRS network. T-Mobile USA has added over 2,500 new cell sites in 2004, bringing the number of total cell sites to over 29,400, including the former joint venture sites in New York, California and Nevada. On January 5, 2005, as previously announced, T-Mobile USA and Cingular terminated ter·mi·nate v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates v.tr. 1. To bring to an end or halt: their network sharing venture, and T-Mobile USA acquired 100% ownership of the shared network assets in California and Nevada, plus additional California spectrum for a net cash payment of $2.5 billion. T-Mobile USA recognized a loss of $792 million in the fourth quarter of 2004 related to this transaction. The loss arises from certain contractual obligations, triggered by the dissolution of the venture, including the obligation to give 10 MHz (MegaHertZ) One million cycles per second. It is used to measure the transmission speed of electronic devices, including channels, buses and the computer's internal clock. A one-megahertz clock (1 MHz) means some number of bits (16, 32, 64, etc. of New York spectrum to Cingular by January 2007. In addition to the results prepared in accordance with GAAP provided throughout this press release, non-GAAP financial measures are also included. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliation from the non-GAAP financial measures to the most directly comparable GAAP financial measures is provided below following Selected Data and the financial statements.
SELECTED DATA FOR T-MOBILE USA
(`000) Y/E Q4 Q3 Q2 Q1 Y/E Q4
04 04 04 04 04 03 03
----------------------------------------------------------------------
Covered
population 229,000 229,000 226,000 224,000 224,000 224,000 224,000
----------------------------------------------------------------------
Customers, end
of period 17,314 17,314 16,295 15,394 14,302 13,128 13,128
----------------------------------------------------------------------
thereof
postpay
customers 15,340 15,340 14,528 13,720 12,784 11,696 11,696
----------------------------------------------------------------------
thereof
prepaid
customers 1,974 1,974 1,767 1,674 1,518 1,432 1,432
----------------------------------------------------------------------
Net customer
additions 4,186 1,019 901 1,092 1,174 3,212 1,015
----------------------------------------------------------------------
----------------------------------------------------------------------
Minutes of
use/post pay
customer/month 877 907 908 885 817 751 795
----------------------------------------------------------------------
Postpaid churn 2.6% 2.6% 2.6% 2.4% 2.6% 2.5% 2.7%
----------------------------------------------------------------------
Blended churn 3.0% 3.1% 3.0% 2.8% 3.0% 3.1% 3.2%
----------------------------------------------------------------------
($ / month)
----------------------------------------------------------------------
ARPU (blended)
(2) 55 55 55 55 54 53 53
----------------------------------------------------------------------
ARPU (postpay) 56 56 56 55 54 53 53
----------------------------------------------------------------------
Cost of serving
(CCPU)(1,3) 25 28 24 23 23 23 24
----------------------------------------------------------------------
Cost per gross
add (CPGA)(4) 323 345 301 318 326 329 344
----------------------------------------------------------------------
($ million)
----------------------------------------------------------------------
Total revenues 11,679 3,238 3,035 2,809 2,597 8,358 2,355
----------------------------------------------------------------------
Service
revenues(5) 10,032 2,748 2,612 2,464 2,208 7,219 1,986
----------------------------------------------------------------------
OIBDA(1,6) 2,512 515 788 717 492 1,597 327
----------------------------------------------------------------------
OIBDA margin to
service
revenues 25% 19% 30% 29% 22% 22% 16%
----------------------------------------------------------------------
Capital
expenditures
(7) 2,138 422 453 664 599 1,734 547
----------------------------------------------------------------------
----------------------------------------------------------------------
Cell sites on-air
(8) 29,401 29,401 29,056 28,803 27,857 26,898 26,898
----------------------------------------------------------------------
Because all companies do not calculate these figures in the same
manner, the information contained in this presentation may not be
comparable to other similarly titled measures reported by other
companies.
1 As a result of recent financial statement restatements by
numerous U.S. public companies and publication of a letter by
the Chief Accountant of the SEC to the American Institute of
Certified Public Accountants on February 7, 2005, clarifying
the interpretation of existing US GAAP accounting literature
applicable to certain leases and leasehold improvements,
T-Mobile USA has corrected its lease accounting practices in
the fourth quarter of 2004. These corrections resulted in a
cumulative, net charge to net income of $143 million in the
fourth quarter of 2004, of which $71 million relates to the
years 2001 through 2003. The net cumulative charge is
comprised of a $200 million increase in rent expense based
primarily on rent escalation clauses related to future renewal
periods of cell site leases; an increase of $33 million in the
equity loss from the network sharing venture with Cingular
also related to cell site leases; a reduction of $53 million
in depreciation expense to adjust the depreciable life of
leasehold improvements; and a reduction of $36 million in the
loss provision related to dissolution of the network sharing
joint venture with Cingular.
The following table provides the adjusted impact of the lease
accounting corrections in the periods in which they arose.
($ million) Total 2004 2003 2002 2001
-------------------------------------------------------------------
OIBDA (200.03) (93.39) (65.81) (31.85) (8.98)
-------------------------------------------------------------------
Depreciation 53.32 (2.06) (2.06) (2.06) 59.50
-------------------------------------------------------------------
Equity (loss) (33.14) (13.59) (10.48) (9.07) -
-------------------------------------------------------------------
Other expense 36.42 36.42 - - -
-------------------------------------------------------------------
Net income/(loss) (143.43) (72.62) (78.35) (42.98) 50.52
-------------------------------------------------------------------
($ / month)
-------------------------------------------------------------------
CCPU N/A .46 .47 .32 .13
-------------------------------------------------------------------
2 Average Revenue Per User ("ARPU") represents the average
monthly service revenue we earn from our customers. ARPU is
calculated by dividing total service revenues for the
specified period by the average customers during the period
and further dividing by the number of months in the period.
Blended ARPU in the fourth, third, second and first quarters
of 2004 includes $0.87, $0.86, $0.86 and $0.89, respectively,
representing fees charged to our customers each quarter and
remitted under the Universal Services Fund ("USF") provision
of the Telecommunications Act of 1996. We previously netted
these fees in our financial statements. Reporting such amounts
separately as revenues and network operating expenses has no
impact on our operating income, OIBDA or net income. Had we
recorded USF fees separately as revenues and expenses in 2003,
blended ARPU would have been approximately $1 higher per
quarter for the year.
Also, blended ARPU in the fourth, third, second and first
quarters of 2004 includes $0.76, $0.78, $0.81 and $0.54,
respectively, representing regulatory cost recovery fees we
began including on postpay customer bills during the first
quarter. The fee has been fixed at $0.86 per month since it
was implemented in the first quarter.
3 The average cash cost of serving customers, or Cash Cost Per
User ("CCPU") is a non-GAAP financial measure and includes all
network and general and administrative costs as well as the
subsidy loss on equipment (handsets and accessories) sales
unrelated to customer acquisition. This measure is calculated
as a per month average by dividing the total costs for the
specified period by the average total customers during the
period and further dividing by the number of months in the
period. We believe that CCPU, which is a measure of the costs
of serving a customer, provides relevant and useful
information to our investors and is used by our management to
evaluate the operating performance of our consolidated
operations. As noted above, our 2004 revenues and network
operating expenses include USF fees. Inclusion of these fees
in network operating expenses increased CCPU during the
fourth, third, second and first quarters of 2004 by $0.87,
$0.86, $0.86 and $0.89, respectively. Had we reported USF fees
similarly in 2003, CCPU would have been approximately $1
higher each quarter. Refer to footnote 1 for the impact of the
lease accounting corrections.
4 Cost Per Gross Add ("CPGA") is a non-GAAP financial measure
and is calculated by dividing the costs of acquiring a new
customer, consisting of customer acquisition costs plus the
subsidy loss on equipment (handsets and accessories) sales
related to customer acquisition for the specified period,
divided by gross customers added during the period. We believe
that CPGA, which is a measure of the cost of acquiring a
customer, provides relevant and useful information to our
investors and is used by our management to evaluate the
operating performance of our consolidated operations.
5 Service revenues include post pay, prepaid, and roaming and
other service revenues.
6 OIBDA is a non-GAAP financial measure, which we define as
operating income before depreciation and amortization. In a
capital-intensive industry such as wireless
telecommunications, we believe OIBDA, as well as the
associated percentage margin calculations, to be meaningful
measures of our operating performance. OIBDA should not be
construed as an alternative to operating income or net income
as determined in accordance with GAAP, as an alternative to
cash flows from operating activities as determined in
accordance with GAAP or as a measure of liquidity. We use
OIBDA as an integral part of our planning and internal
financial reporting processes, to evaluate the performance of
our senior management and to compare our performance with that
of many of our competitors. We believe that operating income
is the financial measure calculated and presented in
accordance with GAAP that is the most directly comparable to
OIBDA.
7 Excludes our investment to fund capital expenditures in the
network infrastructure venture with Cingular Wireless LLC
("Cingular"). We and Cingular share in the ownership and
operation of the network in the New York City area, most of
California and parts of Nevada. Network capital expenditures
in these areas are shared between the parties. Our share of
these capital expenditures is reflected as part of the
accompanying Condensed Consolidated Balance Sheet and
Condensed Consolidated Statement of Cash Flows in the line
"Investments in and advances to unconsolidated affiliates."
8 Includes sites in New York, California and Nevada owned and
operated by our network infrastructure venture with Cingular
until January 5, 2005, when the venture was dissolved and the
New York assets were distributed to T-Mobile USA and T-Mobile
USA acquired the California and Nevada assets that were
distributed to Cingular.
T-MOBILE USA
Condensed Consolidated Balance Sheets
(dollars in millions)
(unaudited)
December 31, December 31,
2004 2003
-------------------------
ASSETS
Current assets:
Cash and cash equivalents $182 $148
Accounts receivable, net of allowance for
doubtful accounts of $158 and $151, respectively 1,657 1,268
Inventory 444 291
Other current assets 2,818 421
-------------------------
5,101 2,128
Property and equipment, net of accumulated
depreciation of $3,247 and $2,416, respectively 6,718 6,087
Goodwill 10,704 10,689
Spectrum licenses 11,087 11,039
Other intangible assets, net of accumulated
amortization of $791 and $657, respectively 35 168
Investments in and advances to unconsolidated
affiliates 1,203 758
Other assets and investments 212 195
-------------------------
$35,060 $31,064
=========================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $615 $537
Accrued liabilities 1,002 845
Loss provision on network transaction 792 --
Deferred revenue 335 276
Current portion of capital lease 1 --
Construction accounts payable 438 781
-------------------------
3,183 2,439
Long-term debt -- 17
Long-term notes payable to affiliates 7,632 8,243
Deferred tax liabilities 3,096 3,410
Other long-term liabilities 395 232
-------------------------
Total long-term liabilities
other than shares 11,123 11,902
Voting preferred stock 5,000 5,000
-------------------------
Total long-term liabilities 16,123 16,902
-------------------------
Minority interest in equity of consolidated
subsidiaries 18 --
Commitments and contingencies
Shareholder's equity:
Common Stock 39,433 35,440
Deferred stock compensation (3) (15)
Accumulated deficit (23,694) (23,702)
-------------------------
Total shareholder's equity 15,736 11,723
-------------------------
$35,060 $31,064
=========================
T-MOBILE USA
Condensed Consolidated Statements of Operations
(dollars in millions)
(unaudited)
Quarter Quarter Year Year
Ended Ended Ended Ended
Dec. Dec. Dec. Dec.
31, 31, 31, 31,
2004 2003 2004 2003
------- ------- ------ -------
Revenues:
Post pay $2,484 $1,774 $9,051 $6,367
Prepaid 158 126 573 534
Roaming and other services 105 85 408 318
Equipment sales 452 349 1,519 1,054
Affiliate and other 40 21 129 85
------- ------- ------- -------
Total revenues 3,239 2,355 11,680 8,358
------- ------- ------- -------
Operating expenses:
Network 757 381 2,297 1,427
Cost of equipment sales 719 558 2,313 1,628
General and administrative 511 434 1,883 1,562
Customer acquisition 737 655 2,675 2,144
Depreciation and amortization 265 407 1,273 1,454
------- ------- ------- -------
Total operating expenses 2,989 2,435 10,441 8,215
------- ------- ------- -------
Operating income 250 (80) 1,239 143
Other income (expense):
Interest expense (135) (150) (566) (565)
Equity in net losses of
unconsolidated affiliates (83) (29) (202) (95)
Interest income and other, net (784) - (793) (44)
------- ------- ------- -------
Total other income (expense) (1,002) (179) (1,561) (704)
------- ------- ------- -------
Income (loss) before income taxes (752) (259) (322) (561)
------- ------- ------- -------
Deferred income tax expense 423 (47) 329 (129)
Cumulative effect of change in
accounting principle, net of taxes (1) (1)
------- ------- ------- -------
Net income (loss) $(329) $(307) $7 $(691)
======= ======= ======= =======
T-MOBILE USA
Condensed Consolidated Statements of Cash Flows
(dollars in millions)
(unaudited)
Year Year
Ended Ended
Dec. 31, Dec. 31,
2004 2003
------------------
Operating activities:
Net income (loss) $7 $(691)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 1,273 1,454
Deferred income tax expense (329) 129
Amortization of debt discount and premium,
net (30) (15)
Equity in net losses of unconsolidated
affiliates 202 95
Stock-based compensation 12 20
Allowance for bad debts 7 15
Deferred rent 200 -
Other, net (6) (1)
Changes in operating assets and
liabilities:
Accounts receivable (395) (275)
Inventory (153) 18
Other current assets (2,357) (127)
Accounts payable 20 (18)
Accrued liabilities 139 141
Loss provision on network transaction 792 -
------------------
Net cash provided by operating activities (618) 745
------------------
Investing activities:
Purchases of property and equipment (2,139) (1,734)
Acquisitions of wireless properties, net of cash
acquired (2) (7)
Investments in and advances to unconsolidated
affiliates, net (648) (322)
Other, net - (7)
------------------
Net cash used in investing activities (2,789) (2,070)
------------------
Financing activities:
Long-term debt repayments (15) (4,430)
Long-term debt borrowings from affiliates, net (614) 2,881
Equity increase 4,000 3,000
Book overdraft 70 (27)
Other, net - 12
------------------
Net cash provided by financing activities 3,441 1,436
------------------
Change in cash and cash equivalents 34 111
Cash and cash equivalents, beginning of period 148 37
------------------
Cash and cash equivalents, end of period $182 $148
==================
T-MOBILE USA
Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures
(dollars in millions, except for CPGA and CCPU)
(unaudited)
OIBDA can be reconciled to our operating income as follows (refer to
footnote 1 for the impacts of the lease accounting adjustment):
Y/E Q4 Q3 Q2 Q1 Y/E Q4
2004 2004 2004 2004 2004 2003 2003
------- ----- ----- ----- ----- ------- -----
OIBDA $2,512 $515 $788 $717 $492 $1,597 $327
Depreciation and
amortization (1,273) (265) (295) (333) (380) (1,454) (407)
------- ----- ----- ----- ----- ------- -----
Operating income $1,239 $250 $493 $384 $112 $143 ($80)
======= ===== ===== ===== ===== ======= =====
The following schedule reflects the CPGA calculation and provides a
reconciliation of cost of acquiring customers used for the CPGA
calculation to customer acquisition costs reported on our condensed
consolidated statements of operations:
Y/E Q4 Q3 Q2 Q1 Y/E Q4
2004 2004 2004 2004 2004 2003 2003
------- ----- ----- ----- ----- ------- -----
Customer acquisition
costs $2,675 $737 $622 $643 $673 $2,144 $655
Plus: Subsidy loss
Equipment sales (1,519) (452) (388) (316) (363) (1,054) (349)
Cost of equipment
sales 2,313 719 573 474 547 1,628 558
------- ----- ----- ----- ----- ------- -----
Total subsidy loss 794 267 185 158 184 574 209
------- ----- ----- ----- ----- ------- -----
Less: Subsidy loss
unrelated to customer
acquisition (350) (122) (100) (59) (69) (248) (105)
------- ----- ----- ----- ----- ------- -----
Subsidy loss related
to customer
acquisition 444 145 85 99 115 326 104
------- ----- ----- ----- ----- ------- -----
Cost of acquiring
customers $3,119 $882 $707 $742 $788 $2,470 $759
======= ===== ===== ===== ===== ======= =====
CPGA ($ / new
customer added) $323 $345 $301 $318 $326 $329 $344
T-MOBILE USA
Reconciliation of Non-GAAP Financial Measures to GAAP
Financial Measures
(dollars in millions, except for CPGA and CCPU)
(unaudited)
The following schedule reflects the CCPU calculation and provides a
reconciliation of the cost of serving customers used for the CCPU
calculation to total network costs plus general and administrative
costs reported on our condensed consolidated statements of operations
(refer to footnote 1 for the impacts of the lease accounting
adjustment):
Y/E Q4 Q3 Q2 Q1 Y/E Q4
2004 2004 2004 2004 2004 2003 2003
------- ------- ------- ------- ----- ------- -----
Network costs $2,297 $757 $556 $530 $454 $1,427 $381
General and
administrative 1,883 511 496 445 431 1,562 434
------- ------- ------- ------- ----- ------- -----
Total network
and general
and
administrative
costs 4,180 1,268 1,052 975 885 2,989 815
Plus: Subsidy
loss unrelated
to customer
acquisition 350 122 100 59 69 248 105
------- ------- ------- ------- ----- ------- -----
Total cost of
serving
customers $4,530 $1,390 $1,152 $1,034 $954 $3,237 $920
======= ======= ======= ======= ===== ======= =====
CCPU ($ /
customer per
month) $25 $28 $24 $23 $23 $23 $24
This press release contains certain statements that are neither reported financial results nor other historical information. These statements are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the safe-harbor provisions of the U.S. federal securities laws. Because these forward-looking statements are subject to risks and uncertainties, actual future results may differ materially from those expressed in or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by the statements. Many of these risks and uncertainties relate to factors that are beyond Deutsche Telekom's ability to control or estimate precisely, such as future market conditions, currency fluctuations, the behavior of other market participants The term market participant is used in United States constitutional law to describe a U.S. State which is acting as a producer or supplier of a marketable good or service. When a state is acting in such a role, it may permissibly discriminate against non-residents. , the actions of governmental regulators and other risk factors detailed in Deutsche Telekom's reports filed with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We do not undertake any obligation to publicly release any revisions ReVisions is a 2004 anthology of alternate history short-stories. It is edited by Julie E. Czerneda and Isaac Szpindel. Contents Title Author The Resonance of Light James Alan Gardner Out of China Julie E. to these forward-looking statements to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date of this press release. About T-Mobile USA: Based in Bellevue, WA, T-Mobile USA, Inc. is a member of the T-Mobile International group, the mobile telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. subsidiary of Deutsche Telekom AG (NYSE:DT). Effective December December: see month. 31, 2003, Powertel Powertel is an Australian telecommunications company that operates urban and inter-city fibre optic networks across Australia. Powertel was launched in August 1998. , Inc. became a wholly-owned subsidiary of T-Mobile USA, thus the consolidated balance sheets consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. and operating results of T-Mobile USA represent all the consolidated U.S. operations of T-Mobile International. All information contained in this press release reflects the combined results of T-Mobile USA and Powertel as if the companies had been combined historically. T-Mobile USA operates the largest GSM/GPRS 1900 voice and data network in the United States, reaching over 254 million people including roaming and other agreements. In addition, T-Mobile USA operates the largest carrier-owned Wi-Fi (WIreless-FIdelity) A logo from the Wi-Fi Alliance that certifies network devices comply with the IEEE 802.11 wireless Ethernet standards. In the early 2000s, Wi-Fi/802.11 became widely used (initially 802.11b, then 802. (802.11b) wireless broadband High-speed wireless transmission of data. What is "high" speed is always a changing number. Wireless systems are typically slower than land-based, wireline networks. In the past, wireless broadband started at 250 Kbps, whereas land-based broadband was generally considered to start at T1 (WLAN See wireless LAN. WLAN - wireless local area network ) network in the United States, available in more than 5,300 public access locations including Starbucks coffeehouses, Kinko's copy shops, Borders Books and Music, Accor hotels, selected airports and American Airlines American Airlines Major U.S. airline. American was created through a merger of several smaller U.S. airlines and incorporated in 1934. It continued to buy the routes of other airlines, becoming an international carrier in the 1970s; its routes include South America, the Admirals Clubs, United Red Carpet carpet or rug, thick fabric, usually woolen (but often synthetic), commonly used today as a floor covering. Carpet Types and Modern Manufactures Clubs and Delta Air Lines Clubs. T-Mobile USA is committed to providing the best value in wireless service through its GET MORE promise to provide customers with more minutes, more features and more service. T-Mobile USA, Inc. and Powertel, Inc. are no longer required to file periodic reports with the SEC. For more information, visit the company website at http://www.t-mobile.com/. About T-Mobile International: T-Mobile International, one of Deutsche Telekom AG's four strategic divisions, is one of the world's leading international mobile communications providers. T-Mobile International's majority-held mobile companies today serve more than 69 million mobile customers in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and the U.S.. For more information about T-Mobile
International, please visit http://www.t-mobile.net/. For further
information on Deutsche Telekom, please visit the company website at
http://www.telekom.de/investor-relations.
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