tmus-20200930

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

☐ 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: 1-33409

(Exact name of registrant as specified in its charter)


Delaware						20-0836269
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

12920 SE 38th Street

Bellevue, Washington

(Address of principal executive offices)



(425)			378-4000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, par value $0.00001 per share

TMUS

The NASDAQ Stock Market LLC

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.


Class			Shares Outstanding as of October 30, 2020
Common Stock, par value $0.00001 per share			1,241,186,776

For the Quarter Ended September 30, 2020

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Balance Sheets


(in millions, except share and per share amounts)	September 30, 2020		December 31, 2019
Assets
Current assets

Cash and cash equivalents	$	6,571	$	1,528
Accounts receivable, net of allowance for credit losses of $208 and $61	4,313		1,888
Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $450 and $333	3,083		2,600
Accounts receivable from affiliates	19		20
Inventory	1,931		964
Prepaid expenses	659		333

Other current assets	2,889		1,972

Total current assets	19,465		9,305
Property and equipment, net	38,567		21,984
Operating lease right-of-use assets	27,999		10,933
Financing lease right-of-use assets	3,038		2,715
Goodwill	10,906		1,930
Spectrum licenses	82,891		36,465
Other intangible assets, net	5,660		115
Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $87 and $66	1,398		1,583

Other assets	2,519		1,891

Total assets	$	192,443	$	86,921
Liabilities and Stockholders' Equity
Current liabilities

Accounts payable and accrued liabilities	$	8,389	$	6,746
Payables to affiliates	135		187
Short-term debt	3,713		25

Deferred revenue	1,078		631
Short-term operating lease liabilities	3,658		2,287
Short-term financing lease liabilities	1,050		957

Other current liabilities	1,817		1,673

Total current liabilities	19,840		12,506

Long-term debt	58,345		10,958
Long-term debt to affiliates	4,711		13,986
Tower obligations	3,079		2,236
Deferred tax liabilities	10,373		5,607
Operating lease liabilities	26,658		10,539
Financing lease liabilities	1,373		1,346


Other long-term liabilities	3,577		954

Total long-term liabilities	108,116		45,626
Commitments and contingencies (Note 17)
Stockholders' equity


Common Stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,242,003,310 and 858,418,615 shares issued, 1,240,458,618 and 856,905,400 shares outstanding	—		—
Additional paid-in capital	72,705		38,498
Treasury stock, at cost, 1,544,692 and 1,513,215 shares issued	(11)		(8)
Accumulated other comprehensive loss	(1,621)		(868)
Accumulated deficit	(6,586)		(8,833)

Total stockholders' equity	64,487		28,789
Total liabilities and stockholders' equity	$	192,443	$	86,921

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Comprehensive Income


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions, except share and per share amounts)	2020		2019		2020		2019
Revenues

Postpaid revenues	$	10,209	$	5,746	$	26,055	$	16,852
Prepaid revenues	2,383		2,385		7,067		7,150
Wholesale revenues	930		321		1,663		938
Roaming and other service revenues	617		261		1,430		710

Total service revenues	14,139		8,713		36,215		25,650
Equipment revenues	4,953		2,186		11,339		6,965
Other revenues	180		162		502		505

Total revenues	19,272		11,061		48,056		33,120
Operating expenses

Cost of services, exclusive of depreciation and amortization shown separately below	3,314		1,733		8,051		4,928
Cost of equipment sales, exclusive of depreciation and amortization shown separately below	4,367		2,704		10,563		8,381
Selling, general and administrative	4,876		3,498		14,168		10,483
Impairment expense	—		—		418		—
Depreciation and amortization	4,150		1,655		9,932		4,840


Total operating expenses	16,707		9,590		43,132		28,632
Operating income	2,565		1,471		4,924		4,488
Other income (expense)

Interest expense	(765)		(184)		(1,726)		(545)
Interest expense to affiliates	(44)		(100)		(206)		(310)
Interest income	3		5		21		17
Other (expense) income, net	(99)		3		(304)		(12)

Total other expense, net	(905)		(276)		(2,215)		(850)

Income from continuing operations before income taxes	1,660		1,195		2,709		3,638
Income tax expense	(407)		(325)		(715)		(921)

Income from continuing operations	1,253		870		1,994		2,717
Income from discontinued operations, net of tax	—		—		320		—
Net income	$	1,253	$	870	$	2,314	$	2,717





Net income	$	1,253	$	870	$	2,314	$	2,717
Other comprehensive loss, net of tax


Unrealized gain (loss) on cash flow hedges, net of tax effect of $12, $(88) , $(261) and $(256)	33		(257)		(757)		(738)

Unrealized gain on foreign currency translation adjustment, net of tax effect of $1, $0, $1, and $0	4		—		4		—


Other comprehensive income (loss)	37		(257)		(753)		(738)
Total comprehensive income	$	1,290	$	613	$	1,561	$	1,979
Earnings per share
Basic earnings per share:
Continuing operations	$	1.01	$	1.02	$	1.79	$	3.18
Discontinued operations	—		—		0.29		—
Basic	$	1.01	$	1.02	$	2.08	$	3.18
Diluted earnings per share:
Continuing operations	$	1.00	$	1.01	$	1.78	$	3.15
Discontinued operations	—		—		0.28		—
Diluted	$	1.00	$	1.01	$	2.06	$	3.15
Weighted average shares outstanding
Basic	1,238,450,665		854,578,241		1,111,511,964		853,391,370
Diluted	1,249,798,740		862,690,751		1,122,040,528		862,854,654

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statements of Cash Flows


	Three Months Ended September 30,				Nine Months Ended September 30,
(in millions)	2020		2019		2020		2019
Operating activities

Net income	$	1,253	$	870	$	2,314	$	2,717
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	4,150		1,655		9,932		4,840
Stock-based compensation expense	161		126		558		366
Deferred income tax expense	335		294		743		849
Bad debt expense	143		74		489		218
(Gains) losses from sales of receivables	(18)		28		37		91

Losses on redemption of debt	108		—		271		19



Impairment expense	—		—		418		—
Changes in operating assets and liabilities
Accounts receivable	(1,538)		(745)		(2,784)		(2,693)
Equipment installment plan receivables	(306)		(78)		(110)		(478)
Inventories	(549)		(36)		(1,613)		(139)
Operating lease right-of-use assets	1,062		491		2,526		1,395
Other current and long-term assets	(8)		(118)		(106)		(288)
Accounts payable and accrued liabilities	(964)		(395)		(2,630)		(339)
Short and long-term operating lease liabilities	(1,145)		(549)		(2,947)		(1,592)
Other current and long-term liabilities	(51)		42		(2,162)		136
Other, net	139		89		230		185

Net cash provided by operating activities	2,772		1,748		5,166		5,287
Investing activities

Purchases of property and equipment, including capitalized interest of $108, $118, $339 and $361	(3,217)		(1,514)		(7,227)		(5,234)
Refunds (purchases) of spectrum licenses and other intangible assets, including deposits	17		(13)		(827)		(863)

Proceeds related to beneficial interests in securitization transactions	855		900		2,325		2,896
Net cash related to derivative contracts under collateral exchange arrangements	—		—		632		—
Acquisition of companies, net of cash and restricted cash acquired	—		(31)		(5,000)		(31)
Proceeds from the divestiture of prepaid business	1,238		—		1,238		—


Other, net	(25)		1		(209)		(6)

Net cash used in investing activities	(1,132)		(657)		(9,068)		(3,238)
Financing activities

Proceeds from issuance of long-term debt	—		—		26,694		—
Payments of consent fees related to long-term debt	—		—		(109)		—
Proceeds from borrowing on revolving credit facility	—		575		—		2,340
Repayments of revolving credit facility	—		(575)		—		(2,340)
Repayments of financing lease obligations	(246)		(235)		(764)		(550)
Repayments of short-term debt for purchases of inventory, property and equipment and other financial liabilities	(231)		(300)		(407)		(300)
Repayments of long-term debt	(5,678)		—		(16,207)		(600)
Issuance of common stock	2,550		—		19,840		—
Repurchases of common stock	(2,546)		—		(19,536)		—
Proceeds from issuance of short-term debt	—		—		18,743		—
Repayments of short-term debt	—		—		(18,929)		—
Tax withholdings on share-based awards	(72)		(4)		(351)		(108)

Cash payments for debt prepayment or debt extinguishment costs	(58)		—		(82)		(28)
Other, net	137		(4)		139		(13)

Net cash (used in) provided by financing activities	(6,144)		(543)		9,031		(1,599)
Change in cash and cash equivalents, including restricted cash	(4,504)		548		5,129		450
Cash and cash equivalents, including restricted cash
Beginning of period	11,161		1,105		1,528		1,203
End of period	$	6,657	$	1,653	$	6,657	$	1,653

The accompanying notes are an integral part of these condensed consolidated financial statements.

Condensed Consolidated Statement of Stockholders’ Equity


(in millions, except shares)	Common Stock Outstanding	Treasury Shares at Cost		Par Value and Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders' Equity
Balance as of June 30, 2020	1,237,338,994	$	(12)	$	72,505	$	(1,658)	$	(7,839)	$	62,996
Net income	—	—		—		—		1,253		1,253
Other comprehensive income	—	—		—		37		—		37

Stock-based compensation	—	—		177		—		—		177
Exercise of stock options	483,266	—		27		—		—		27
Stock issued for employee stock purchase plan	897,732	—		65		—		—		65
Issuance of vested restricted stock units	2,383,098	—		—		—		—		—

Shares withheld related to net share settlement of stock awards and stock options	(648,872)	—		(72)		—		—		(72)

Distribution from NQDC plan	4,400	1		(1)		—		—		—

Shares issued in secondary offering (1)	24,750,000	—		2,550		—		—		2,550
Shares repurchased from SoftBank	(24,750,000)	—		(2,546)		—		—		(2,546)




Balance as of September 30, 2020	1,240,458,618	$	(11)	$	72,705	$	(1,621)	$	(6,586)	$	64,487

Balance as of December 31, 2019	856,905,400	$	(8)	$	38,498	$	(868)	$	(8,833)	$	28,789
Net income	—	—		—		—		2,314		2,314
Other comprehensive loss	—	—		—		(753)		—		(753)
Executive put option	(342,000)	—		1		—		—		1
Stock-based compensation	—	—		601		—		—		601
Exercise of stock options	794,853	—		42		—		—		42
Stock issued for employee stock purchase plan	2,144,036	—		148		—		—		148
Issuance of vested restricted stock units	11,295,402	—		—		—		—		—

Shares withheld related to net share settlement of stock awards and stock options	(3,703,906)	—		(351)		—		—		(351)

Distribution from NQDC plan	(31,477)	(3)		3		—		—		—

Shares issued in secondary offering (1)	198,314,426	—		19,766		—		—		19,766
Shares repurchased from SoftBank (2)	(198,314,426)	—		(19,536)		—		—		(19,536)


Merger consideration	373,396,310	—		33,533		—		—		33,533
Prior year Retained Earnings	—	—		—		—		(67)		(67)
Balance as of September 30, 2020	1,240,458,618	$	(11)	$	72,705	$	(1,621)	$	(6,586)	$	64,487


PART I. FINANCIAL INFORMATION
	Item 1.	Financial Statements	3
		Condensed Consolidated Balance Sheets	3
		Condensed Consolidated Statements of Comprehensive Income	4
		Condensed Consolidated Statements of Cash Flows	5
		Condensed Consolidated Statement of Stockholders’ Equity	6
		Notes to the Condensed Consolidated Financial Statements	8
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	57
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	88
	Item 4.	Controls and Procedures	88

PART II. OTHER INFORMATION
	Item 1.	Legal Proceedings	90

	Item 1A.	Risk Factors	90
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	90
	Item 3.	Defaults Upon Senior Securities	90
	Item 4.	Mine Safety Disclosures	91
	Item 5.	Other Information	91
	Item 6.	Exhibits	92


















		Signatures	93