Metro PCS 2011 Annual Report Download - page 81

Download and view the complete annual report

Please find page 81 of the 2011 Metro PCS annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 148

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148

70
Results of Operations
Year Ended December 31, 2011 Compared to Year Ended December 31, 2010
Operating Items
Set forth below is a summary of certain financial information for the periods indicated:
Year Ended December 31,
2011 2010 Change
(in thousands)
REVENUES:
Service revenues $ 4,428,208 $ 3,689,695 20%
Equipment revenues 419,174 379,658 10%
Total revenues 4,847,382 4,069,353 19%
OPERATING EXPENSES:
Cost of service (excluding depreciation and amortization disclosed
separately below)(1) 1,473,836 1,223,931 20%
Cost of equipment 1,439,595 1,093,944 32%
Selling, general and administrative expenses (excluding depreciation and
amortization disclosed separately below)(1) 643,959 621,660 4%
Depreciation and amortization 538,835 449,732 20%
Loss (gain) on disposal of assets 3,619 (38,812) (109%)
Total operating expenses 4,099,844 3,350,455 22%
Income from operations $ 747,538 $ 718,898 4%
————————————
(1) Cost of service and selling, general and administrative expenses include stock-based compensation expense. For the year ended December 31,
2011, cost of service includes $3.5 million and selling, general and administrative expenses includes $38.3 million of stock-based compensation
expense. For the year ended December 31, 2010, cost of service includes $3.5 million and selling, general and administrative expenses includes
$43.0 million of stock-based compensation expense.
Service Revenues. Service revenues increased $738.5 million, or 20%, to approximately $4.4 billion for the year ended
December 31, 2011 from approximately $3.7 billion for the year ended December 31, 2010. The increase in service revenues is
primarily attributable to net customer additions of approximately 1.2 million customers for the twelve months ended December
31, 2011 as well as a $0.78 increase in average revenue per customer compared to the year ended December 31, 2010.
Equipment Revenues. Equipment revenues increased $39.5 million, or 10%, to $419.2 million for the year ended
December 31, 2011 from $379.7 million for the year ended December 31, 2010. The increase is primarily attributable to an
increase in upgrade handset sales to existing customers as well as an increase in gross customer additions which led to a $90.2
million increase. This increase was partially offset by a lower average price of handsets sold accounting for $50.5 million.
Cost of Service. Cost of service increased $249.9 million, or 20%, to approximately $1.5 billion for the year ended
December 31, 2011 from approximately $1.2 billion for the year ended December 31, 2010. The increase in cost of service is
primarily attributable to a 15% growth in our customer base and the deployment of additional network infrastructure, including
network infrastructure for 4G LTE, during the twelve months ended December 31, 2011 as well as additional roaming expenses
associated with Metro USA.
Cost of Equipment. Cost of equipment increased $345.7 million, or 32%, to approximately $1.4 billion for the year ended
December 31, 2011 from approximately $1.1 billion for the year ended December 31, 2010. The increase is primarily
attributable to an increase in handset upgrades by existing customers and an increase in gross customer additions which led to a
$192.0 million increase, as well as a higher average cost of handsets accounting for a $151.6 million increase.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $22.3 million, or
4%, to $644.0 million for the year ended December 31, 2011 from $621.7 million for the year ended December 31, 2010.
Selling expenses increased by $11.4 million, or 3%, for the year ended December 31, 2011 compared to the year ended
December 31, 2010. The increase in selling expenses is primarily attributable to a $6.9 million increase in employee related
costs and a $5.2 million increase in marketing and advertising expenses. General and administrative expenses increased $15.5
million, or 6%, for the year ended December 31, 2011 as compared to the year ended December 31, 2010, primarily due to the
growth in our business.