Metro PCS 2009 Annual Report Download - page 89

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77
•Northeast Markets. Northeast Markets cost of equipment were approximately $14.3 million for the year
ended December 31, 2008. This cost is attributable to gross customer additions from the launch of service in
the Philadelphia metropolitan area.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $95.6
million, or 27%, to $447.6 million for the year ended December 31, 2008 from $352.0 million for the year ended
December 31, 2007. 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 $66.3 million, or
approximately 21%, to approximately $389.9 million for the year ended December 31, 2008 from
approximately $323.6 million for the year ended December 31, 2007. Selling expenses increased by
approximately $42.8 million, or 28%, for the year ended December 31, 2008 compared to the year ended
December 31, 2007. The increase in selling expenses is primarily attributable to a $16.6 million increase in
marketing and advertising expenses as well as higher employee related costs of approximately $14.5 million
incurred to support the growth in the Core Markets. General and administrative expenses increased by
approximately $14.1 million, or 9%, for the year ended December 31, 2008 as compared to the year ended
December 31, 2007. This was due primarily to the approximate 33% growth in our Core Markets customer
base. In addition, stock-based compensation expense increased $9.4 million for the year ended December 31,
2008 as compared to the same period in 2007. See – “Stock-Based Compensation Expense.”
•Northeast Markets. Northeast Markets selling, general and administrative expenses increased $29.3 million,
or approximately 103%, to approximately $57.7 million for the year ended December 31, 2008 from
approximately $28.4 million for the year ended December 31, 2007. Selling expenses increased by $16.4
million for the year ended December 31, 2008 compared to the year ended December 31, 2007. This
increase is primarily due to a $7.0 million increase in marketing and advertising expenses incurred to support
the launch of service in the Philadelphia metropolitan area as well as higher employee related costs of
approximately $6.4 million to support the launch of service in the Philadelphia metropolitan area and the
build-out of the New York and Boston metropolitan areas. General and administrative expenses increased by
$10.2 million, or 46%, for the year ended December 31, 2008 compared to the same period in 2007 primarily
due to the construction and launch of service in the Philadelphia market and the build-out of the New York
and Boston metropolitan areas. In addition, an increase of $2.6 million in stock-based compensation expense
contributed to the increase in the Northeast Markets. See – “Stock-Based Compensation Expense.”
Depreciation and Amortization. Depreciation and amortization expense increased $77.1 million, or 43%, to
$255.3 million for the year ended December 31, 2008 from $178.2 million for the year ended December 31, 2007.
The increase is primarily due to increases in Core Markets and Northeast Markets depreciation and amortization
expense as follows:
•Core Markets. Core Markets depreciation and amortization expense increased $59.7 million, or 35%, to
$230.6 million for the year ended December 31, 2008 from approximately $170.9 million for the year ended
December 31, 2007. The increase related primarily to an increase in network infrastructure assets placed into
service during the year ended December 31, 2008 to support the continued growth in the Core Markets.
•Northeast Markets. Northeast Markets depreciation and amortization expense increased approximately $6.2
million to $6.5 million for the year ended December 31, 2008 from $0.3 million for the year ended December
31, 2007. The increase related primarily to an increase in network infrastructure assets placed into service
during the year ended December 31, 2008 driven primarily by the launch of service in the Philadelphia
metropolitan area.
Stock-Based Compensation Expense. Stock-based compensation expense increased $13.1 million, or
approximately 47%, to $41.1 million for the year ended December 31, 2008 from $28.0 million for the year ended
December 31, 2007. The increase is due primarily to increases in Core Markets and Northeast Markets stock-based
compensation expense as follows: