Metro PCS 2009 Annual Report Download - page 86

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74
Interest and Other Income. Interest and other income decreased approximately $20.6 million, or approximately
89%, to $2.6 million for the year ended December 31, 2009 from approximately $23.2 million for the year ended
December 31, 2008. The decrease in interest and other income was primarily due to a decrease on the return on our
cash balances as a result of a decrease in interest rates.
Impairment Loss on Investment Securities. We can and have historically invested our substantial cash balances
in, among other things, securities issued and fully guaranteed by the United States or the states, highly rated
commercial paper and auction rate securities, money market funds meeting certain criteria, and demand deposits.
These investments are subject to credit, liquidity, market and interest rate risk. During the year ended December 31,
2007, we made an original investment of $133.9 million in principal in certain auction rate securities that were rated
AAA/Aaa at the time of purchase, substantially all of which are secured by collateralized debt obligations with a
portion of the underlying collateral being mortgage securities or related to mortgage securities. With the continued
liquidity issues experienced in global credit and capital markets, the auction rate securities held by us at December
31, 2009 continue to experience failed auctions as the amount of securities submitted for sale in the auctions exceeds
the amount of purchase orders. We recognized an additional other-than-temporary impairment loss on investment
securities in the amount of approximately $2.4 million during the year ended December 31, 2009.
Provision for Income Taxes. Income tax expense was approximately $86.8 million and approximately $130.0
million for the year ended December 31, 2009 and 2008, respectively. The effective tax rate was 32.9% and 46.5%
for the year ended December 31, 2009 and 2008, respectively. Our effective rates differ from the statutory federal
rate of 35.0% due to state and local taxes of $11.5 million, non-deductible expenses of $0.6 million, renewable
energy investment tax credits of $2.1 million, an increase in the valuation allowance related to the impairment loss
recognized on investment securities of $0.8 million and a net change in uncertain tax positions of $16.3 million.
Provision for income taxes for the year ended December 31, 2009 includes a net decrease in a state unrecognized tax
benefit of $18.1 million due to the expiration of a statute of limitations.
Net Income. Net income increased $27.4 million, or 18%, to $176.8 million for the year ended December 31,
2009 compared to $149.4 million for the year ended December 31, 2008. The increase was primarily attributable to
a 14% increase in income from operations, a 33% decrease in provision for income taxes and a 92% decrease in the
impairment loss on investment securities, partially offset by an approximate 51% increase in interest expense and an
approximate 89% decrease in interest and other income.