HomeMy WebLinkAbout18.Email from Nicholas Ford to Tracfone 08-26-2016EXHIBIT C-18
Thanks Nicholas.
Mike
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Nicholas Ford <nford@tracfone.com>
To:crisp@trs-integrity.com
Fri, Aug 26, 2016 at 10:35 AM
Hi Mike – in regard to your remaining questions, please see responses below. As far as I can tell, in providing the information below
there are no outstanding questions and/or requests for other information. Assuming that’s the case, we are asking once again for an
opportunity to meet with you—as we also requested in December 2014 to meet in January 2015—and discuss your WA local/city
[audit] with the aim of bringing [it] to a resolution. If you would, please provide some timeframes in the near future that would be
convenient for you for purposes of sitting down with us to discuss your [audit]. For example, October 2016 would work for us, with
the exception of October 6th.
1) Your Question: If all of the Direct Sales Amount is "retail," and all of the Airtime Revenue is "wholesale," then, to find what
percentage of total sales are Direct Sales, it looks like to me that we should add Direct and Airtime and divide Direct by the sum.
Using this method, we arrive at 23.6% and 25.9%.
Response: The roughly 30% (retail-direct) sales compared to the roughly 70% wholesale
was just that—an estimate. It was also based on the whole company as opposed to a
particular state or city. The net airtime revenue (per financial statements) denominator
includes not only retail sales, but also wholesale sales.
2) Your Question: You are dividing two numbers, one is the Direct Sales Amount, and the other is the Airtime Revenue. We were
wondering: are you dividing two things that are similar enough to compare? It seems that Direct Sales would include more than just
airtime revenue, probably including handset sales and internet? So could you give a definition of each one, including what
components they contain?
Response: In addition to the net airtime revenue (per financial statements) denominator,
the grid below now shows a separate break-out of sales of phones & accessories sales. The
retail sales amounts (numerator) that were provided to you also include both phones &
accessories sales and internet.
3) Your Question: We were looking at the monthly reports you sent a while back, and the amounts from earlier years were so very
much smaller than the amounts for more current years, yet company profits appeared high. Has the percentage of sales (comparing
ones made without using another retailer to ones being done directly by TracFone) changed significantly over the years? At this
point, it looks like we will need to see the figures used for calculating the percentages for each year, rather than just for a few recent
years. Could you send us this information?
Response: See information in schedule grid below, which serves as a basis for the
estimated wholesale percentages shown.
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2010
(1) Retail (Direct) Sales Amounts (Airtime & Phones)
Company-Wide
486,626,850
17% Retail Sales
(2) Net Airtime Revenue (Per Financial Statements) 2,457,761,508
(3) Net Phones & Accessories Revenue (Per Financial
Statements) 341,243,351
Total (2) + (3): 2,799,004,859
Company-Wide 1 minus Retail Percentage = 83% Wholesa
Perce
2011
(1) Retail (Direct) Sales Amounts (Airtime & Phones)
Company-Wide
793,674,906
21% Retail Sales
(2) Net Airtime Revenue (Per Financial Statements) 3,433,624,000
(3) Net Phones & Accessories Revenue (Per Financial
Statements) 380,952,000
Total (2) + (3): 3,814,576,000
Company-Wide 1 - Retail Percentage = 79% Wholesa
Perce
2012
(1) Retail (Direct) Sales Amounts (Airtime & Phones)
Company-Wide
1,164,915,001
24% Retail Sales
(2) Net Airtime Revenue (Per Financial Statements) 4,291,440,000
(3) Net Phones & Accessories Revenue (Per Financial
Statements) 502,534,000
Total (2) + (3): 4,793,974,000
Company-Wide 1 - Retail Percentage = 76% Wholesa
Perce
2013
(1) Retail (Direct) Sales Amounts (Airtime & Phones)
Company-Wide
1,658,066,825
27% Retail Sales (2) Net Airtime Revenue (Per Financial Statements) 5,358,599,000
(3) Net Phones & Accessories Revenue (Per Financial
Statements) 676,091,000
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Total (2) + (3): 6,034,690,000
Company-Wide 1 - Retail Percentage = 73% Wholesa
Perce
2014
(1) Retail (Direct) Sales Amounts (Airtime & Phones)
Company-Wide
2,144,494,356
31% Retail Sales
(2) Net Airtime Revenue (Per Financial Statements) 6,126,893,000
(3) Net Phones & Accessories Revenue (Per Financial
Statements) 694,099,000
Total (2) + (3): 6,820,992,000
Company-Wide 1 - Retail Percentage = 69% Wholesa
Perce
2015
(1) Retail (Direct) Sales Amounts (Airtime & Phones)
Company-Wide
2,330,936,554
33% Retail Sales
(2) Net Airtime Revenue (Per Financial Statements) 6,279,204,000
(3) Net Phones & Accessories Revenue (Per Financial
Statements) 699,462,000
Total (2) + (3): 6,978,666,000
Company-Wide 1 - Retail Percentage = 67% Wholesa
Perce
4) Your Question: We need to know if you would be able to break out the interstate amounts for the long-distance charges.
Response: we have the ability to identify interstate amounts for total calling activity.
Thanks,
Nicholas E. Ford | Corporate Tax | TracFone Wireless, Inc. | O: 305.715.6500 extn. 3217 |
nford@TracFone.com
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