Cricket Wireless 2012 Annual Report Download - page 29

any materials filed with the SEC may be read and copied by the public at the SEC’s Public Reference Room at
100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The information on our website is not part of this report
or any other report that we furnish to or file with the SEC.
Financial Information Concerning Segments and Geographical Information
Financial information concerning our operating segment and the geographic area in which we operate is
included in “Part II - Item 8. Financial Statements and Supplementary Data” of this report.
Employees
As of December 31, 2012, we had 3,292 employees.
Seasonality
Our customer activity is influenced by seasonal effects related to traditional retail selling periods and other
factors that arise in connection with our target customer base. Based on historical results, we generally expect
new sales activity to be highest in the first and fourth quarters, although during 2012 we experienced our lowest
customer activity during the fourth quarter due, in part, to pricing changes we introduced in the third quarter
which reduced the amount of subsidy we provide on devices. Based on historical results, we also generally
expect churn to be highest in the third quarter and lowest in the first quarter. Sales activity and churn, however,
can be strongly affected by other factors, including changes in service plan pricing, device availability, economic
conditions, high unemployment (particularly in the lower-income segment of our customer base) and competitive
actions, any of which may either offset or magnify certain seasonal effects. Customer activity can also be
strongly affected by promotional and retention efforts that we undertake. For example, from time to time, we
lower the price on select smartphones for customers who activate a new line of service and then transfer phone
numbers previously used with other carriers. This type of promotion is intended to drive significant, new
customer activity for our smartphone handsets and their accompanying higher-priced service plans. We also
frequently offer existing customers the opportunity to activate an additional line of voice service on a previously
activated Cricket device not currently in service. Customers accepting this offer receive a free first month of
service on the additional line of service after paying an activation fee. We also utilize retention programs to
encourage existing customers whose service may have been suspended for failure to timely pay to continue
service with us for a reduced or free amount. The design, size and duration of our promotional and retention
programs vary over time in response to changing market conditions. We believe that our promotional and
retention efforts, including those efforts described above, have generally provided and continue to provide
important long-term benefits to us, including by helping us attract new customers for our wireless services or by
extending the period of time over which customers use our services, thus allowing us to obtain additional revenue
from handsets we have already sold. The success of any of these activities depends upon many factors, including
the cost that we incur to attract or retain customers and the length of time these customers continue to use our
services. Sales activity that would otherwise have been expected based on seasonal trends can also be negatively
impacted by factors such as the billing system disruptions we experienced in 2011, promotional and retention
efforts not performing as expected at various times in 2012, device quality issues, and inventory shortages for or
unavailability of certain of our strongest-selling devices that we have experienced at various times.
Inflation
We believe inflation has not had a material effect on our results of operations.
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