Metro PCS 2009 Annual Report Download - page 84

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•Northeast Markets. Northeast Markets cost of service increased approximately $137.5 million, or
approximately 192%, to approximately $209.2 million for the year ended December 31, 2009 from $71.7
million for the year ended December 31, 2008. The increase in cost of service is primarily attributable to the
growth in our Northeast Markets customer base, the deployment of additional network infrastructure during
the year ended December 31, 2009 and costs associated with our unlimited international calling product.
Cost of Equipment. Cost of equipment increased $179.6 million, or approximately 26%, to approximately $884.3
million for the year ended December 31, 2009 from approximately $704.7 million for the year ended December 31,
2008. The increase is due to increases in Core Markets and Northeast Markets cost of equipment as follows:
•Core Markets. Core Markets cost of equipment increased approximately $35.3 million, or 5%, to
approximately $725.6 million for the year ended December 31, 2009 from approximately $690.3 million for
the year ended December 31, 2008. The increase in Core Markets cost of equipment is primarily attributable
to an increase in gross customer additions which accounted for approximately $22.3 million, coupled with an
increase in upgrade handset costs to existing customers accounting for an approximate $39.8 million
increase. These increases were partially offset by the sale of lower priced handsets accounting for an
approximate $30.0 million decrease in cost of equipment.
•Northeast Markets. Northeast Markets cost of equipment increased $144.3 million to $158.7 million for the
year ended December 31, 2009 from approximately $14.4 million for the year ended December 31, 2008.
This cost is primarily attributable to an increase in gross customer additions.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $120.1
million, or approximately 27%, to $567.7 million for the year ended December 31, 2009 from approximately $447.6
million for the year ended December 31, 2008. The increase is due to increases in Core Markets and Northeast
Markets selling, general and administrative expenses as follows:
•Core Markets. Core Markets selling, general and administrative expenses increased approximately $45.3
million, or approximately 12%, to approximately $435.2 million for the year ended December 31, 2009 from
approximately $389.9 million for the year ended December 31, 2008. Selling expenses increased by $25.1
million, or approximately 13%, for the year ended December 31, 2009 compared to the year ended December
31, 2008. The increase in selling expenses is primarily attributable to an approximate $9.8 million increase
in marketing and advertising expenses, an approximate $7.3 million increase in employee related costs and a
$6.4 million increase in MetroFLASH™ expense. General and administrative expenses increased $16.1
million, or approximately 10%, for the year ended December 31, 2009 as compared to the year ended
December 31, 2008 primarily due to the growth in the Core Markets. In addition, stock-based compensation
expense included in selling, general and administrative expenses increased approximately $4.1 million for the
year ended December 31, 2009 as compared to the same period in 2008. See – “Stock-Based Compensation
Expense.”
•Northeast Markets. Northeast Markets selling, general and administrative expenses increased approximately
$74.8 million, or approximately 130%, to $132.5 million for the year ended December 31, 2009 from
approximately $57.7 million for the year ended December 31, 2008. Selling expenses increased by $64.8
million for the year ended December 31, 2009 compared to the year ended December 31, 2008. This
increase is primarily due to a $40.3 million increase in marketing and advertising expenses as well as higher
employee related costs of approximately $17.2 million to support the growth in the Northeast Markets.
General and administrative expenses increased by $8.7 million, or 27%, for the year ended December 31,
2009 compared to the same period in 2008 primarily due the growth in the Northeast Markets. In addition,
an increase of approximately $1.3 million in stock-based compensation expense included in selling, general
and administrative expenses contributed to the increase in the Northeast Markets. See – “Stock-Based
Compensation Expense.”
Depreciation and Amortization. Depreciation and amortization expense increased approximately $122.5 million,
or 48%, to $377.8 million for the year ended December 31, 2009 from $255.3 million for the year ended December
31, 2008. The increase is due to increases in Core Markets and Northeast Markets depreciation and amortization
expense as follows:
•Core Markets. Core Markets depreciation and amortization expense increased approximately $28.3 million,
or 12%, to approximately $258.9 million for the year ended December 31, 2009 from $230.6 million for the