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8-K - 8-K - SUREWEST COMMUNICATIONSa11-6378_18k.htm

Exhibit 99.1

 

SUREWEST REPORTS FOURTH QUARTER
AND FULL YEAR 2010 RESULTS

 

Strong Broadband Growth Drives Year-over-Year Increases
in Revenues and Adjusted EBITDA

 

·                  2010 consolidated revenues increased 1% year-over-year and Adjusted EBITDA increased 6%

 

·                  2010 Broadband revenues grew 8% year-over-year with a 17% increase in business services revenues and a 5% increase in residential revenues

 

·                  2010 free cash flow of $12.6 million was an increase of $10.6 million year-over-year and the fourth quarter marked the seventh consecutive quarter of positive free cash flow

 

·                  2010 net income increased 6% year-over-year to $3.4 million, resulting in earnings per share of $0.24

 

·                  Debt, net of cash and cash equivalents, was reduced by $13.1 million from year-end 2009, resulting in a net debt to Adjusted EBITDA ratio of 2.45x

 

·                  The company repurchased 430 thousand shares at an average price of $7.07 in 2010 for $3 million

 

ROSEVILLE, CA — February 24, 2011 — SureWest Communications (NASDAQ: SURW) today announced operating results for the fourth quarter and full year ended December 31, 2010.

 

Steve Oldham, SureWest’s president and chief executive officer, said, “Our strong 2010 results were driven by top-line business and residential services revenue growth and increased Adjusted EBITDA. We are pleased to report our seventh consecutive quarter of positive free cash flow as we continue to drive down net debt. Our core Broadband segment continues to create growth and now accounts for 73% of the company’s total revenues and 50% of total Adjusted EBITDA. We expect Telecom revenue declines to begin flattening out over the next two years, as access line declines soften and our regulatory subsidies become immaterial. As anticipated, our scheduled subsidies will become fully phased out in 2011 with declines of $4 million, including a sequential reduction of $1 million in the first quarter.

 

“Broadband Business revenues grew 17% year-over-year. Our business services revenues continue to be an important part of SureWest’s strategy to deliver long-term, sustainable growth. In addition to positive trends in Kansas City business services, revenue growth in Sacramento was supported by increased bandwidth demands for backhaul services to wireless carriers. Our Broadband Residential success was highlighted by the continued sucess of our superior high-speed data packages and increased take rates for our Advanced Digital TV and Broadband Voice over IP products in the Sacramento market.

 

“The investments we’ve made over the last several years to expand our extensive fiber-to-the-home network and enhance our suite of services have delivered excellent returns and offer many opportunities for additional value creation. Our 2011 plan includes ongoing capital investment to take advantage of residential and business opportunities, with the goal of maintaining long-term sustainable free cash flow and creating shareholder value.”

 



 

The following table highlights financial results for continuing operations on a consolidated basis (dollars are in thousands):

 

 

 

Quarters Ended December 31,

 

Years Ended December 31,

 

Consolidated

 

2010

 

2009

 

Change

 

%

 

2010

 

2009

 

Change

 

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband Revenue

 

$  45,032

 

$  41,566

 

$   3,466

 

8%

 

$  174,546

 

$  161,222

 

$  13,324

 

8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecom Revenue

 

16,614

 

18,733

 

(2,119)

 

(11%)

 

68,953

 

80,478

 

(11,525)

 

(14%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Revenue

 

61,646

 

60,299

 

1,347

 

2%

 

243,499

 

241,700

 

1,799

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

21,780

 

19,585

 

2,195

 

11%

 

82,511

 

77,898

 

4,613

 

6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from Continuing Ops

 

1,951

 

(100)

 

2,051

 

2051%

 

3,355

 

667

 

2,688

 

403%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital Expenditures

 

13,289

 

14,967

 

(1,678)

 

(11%)

 

52,560

 

58,330

 

(5,770)

 

(10%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Cash Provided by Operating Activities from Continuing Ops

 

17,044

 

19,271

 

(2,227)

 

(12%)

 

63,553

 

71,842

 

(8,289)

 

(12%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

4,439

 

359

 

4,080

 

1136%

 

12,620

 

2,061

 

10,559

 

512%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Debt

 

202,472

 

215,556

 

(13,084)

 

(6%)

 

202,472

 

215,556

 

(13,084)

 

(6%)

 

 

See Non-GAAP measure notes near end of release, and Adjusted EBITDA, Free Cash Flow and Net Debt reconciliations for adjustments.

 

Fourth Quarter Financial Results

 

Consolidated revenues increased 2% year-over-year to $61.6 million as Broadband revenues grew by $3.5 million, or 8%, more than offsetting Telecom revenue declines of $2.1 million, or 11%. Adjusted EBITDA increased 11% year-over-year to $21.8 million, with Broadband Adjusted EBITDA increasing 37% to account for 50% of total Adjusted EBITDA. Consolidated Adjusted EBITDA margin was 35% compared to 32% in the same period last year.

 

Operating expenses, exclusive of depreciation and amortization, decreased 2% year-over-year to $40.9 million due primarily to reductions in labor and advertising expense offsetting increases in residential video license fees and transport charges associated with commercial services growth. During the year, the company reduced its employee count by 75 to 818 and reduced professional fees, resulting in an estimated annualized savings of over $6 million. Additional cost-saving initiatives included the consolidation of office space, which is expected to save the company $1.3 million annually beginning in the first quarter of 2011.

 

Net income for the quarter was $1.95 million as a result of revenue and Adjusted EBITDA growth, compared to a net loss of $100 thousand in the same period last year. Earnings per share from continuing operations were $0.14 compared to zero in the fourth quarter 2009 and $0.10 in the third quarter 2010.

 

Free cash flow, defined as income from continuing operations plus depreciation and amortization less capital expenditures, was $4.4 million for the quarter and $12.6 million for the full year 2010, compared to $2.1 million in 2009. SureWest expects that capital expenditures and associated free cash flow results will vary quarter-to-quarter based on fiber network expansion in Kansas City and developing business services opportunities such as wireless carrier backhaul, near-net fiber connections and possible data center expansion.

 

Cash and cash equivalents decreased year-over-year to $2.9 million from $7.5 million. During the year, SureWest paid down $17.6 million in debt and repurchased 430 thousand shares of outstanding stock at an average price of $7.07 for $3 million. Total debt net of cash and cash equivalents (net debt) was $202.5 million, resulting in a net debt to Adjusted EBITDA ratio of 2.45x.

 

Capital expenditures totaled $13.3 million for the fourth quarter and $52.6 million for the full year 2010, a decrease from $58.3 million in 2009. The company expects to continue taking advantage of high margin growth opportunities, as well as favorable tax treatment, and is targeting its 2011 capital plan at prioritizing spending where it has experienced the greatest return on investment. This includes continued business sales growth opportunities, residential RGU growth and increased residential penetration on current networks. Beginning in the second quarter 2011, the company plans to construct and pass 10,000 additional fiber homes during the year in Kansas City where it has experienced superior penetration levels. The existing Kansas City hybrid fiber coaxial (HFC) network has 40% penetration and the 11,600 new fiber homes passed in 2009 have already reached 34% penetration. SureWest is reiterating projected 2011 capital expenditures of $60-70 million and anticipates long-term growth opportunities for this level of capital spend through mid-2013.

 



 

Broadband Segment Results

 

Broadband revenues increased 8% year-over-year and accounted for 73% of the company’s total revenues, compared to 69% in the fourth quarter 2009. Broadband Adjusted EBITDA increased 37% year-over-year and now represents 50% of the company’s total Adjusted EBITDA. SureWest expects to continue increasing its Broadband revenues and Adjusted EBITDA through expansion of both residential and business product offerings. The long-term strategy remains growing the Broadband segment while continuing to successfully offset industry-wide structural declines in the traditional Telecom segment. SureWest’s capital plan is focused on its core Broadband growth strategy, with approximately 25% of 2011 expenditures planned for network expansion and over 55% scheduled for success-based investment.

 

Broadband Residential:

Broadband Residential revenues increased 4% year-over-year to $31.6 million as a result of 3% growth in ARPU and a 3% increase in RGUs. To illustrate growth trends, Broadband RGUs, subscriber counts and ARPU are detailed both year-over-year and sequentially in the table and text below:

 

 

 

Q4 ‘10 vs. Q4 ‘09 Change

 

Q4 ‘10 vs. Q3 ‘10 Change

 

 

 

Sacramento
Market

 

Kansas City
Market

 

Total

 

Sacramento
Market

 

Kansas City
Market

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband Residential RGUs

 

7%

 

0%

 

3%

 

1%

 

0%

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data RGUs

 

1%

 

1%

 

1%

 

0%

 

1%

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video RGUs

 

11%

 

1%

 

5%

 

2%

 

0%

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice RGUs

 

12%

 

(3%)

 

5%

 

1%

 

(1%)

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Residential Subscribers

 

1%

 

1%

 

1%

 

0%

 

0%

 

0%

 

 

 

The Sacramento region’s Advanced Digital TV product continued to drive growth, increasing net video RGUs by 2,900 year-over-year and 600 sequentially. SureWest had 13,186 Advanced Digital TV subscribers through the fourth quarter, representing 52% of the company’s overall video RGUs in the Sacramento market. Approximately 98% of the Advanced Digital TV subscribers bundle Internet and 85% subscribe to a triple-play.

 

ARPU for the company’s fiber-to-the-home (FTTH) and HFC networks increased 1% year-over-year and 2% sequentially to $115 due to a video price increase of $3 and a data price increase of $1 on September 1, 2010. New products and features like Advanced Digital TV, increased Internet speeds, additional HD channels, home networking and Internet security software have continued to create enhanced subscriber value.

 

Residential customer churn improved sequentially to 1.6% in the fourth quarter as a result of churn reduction programs, value-added features and ongoing superior service levels. Churn increased slightly from 1.5% in the same period last year.

 

Broadband Business:

Broadband Business revenues increased by $2.1 million, or 20%, year-over-year to $12.4 million. Business customers increased 7% year-over-year to 7,800 and ARPU grew 12% from the prior year to $535. Broadband Business growth expectations remain high in both Sacramento and Kansas City. The Kansas City market grew ARPU by 7% year-over-year while increasing customer counts by 11%. The Sacramento market grew customer counts by 4%, while ARPU grew by 16% driven by wireless carrier backhaul and existing customers taking additional products such as data center services.

 

SureWest’s extensive fiber network provides the capacity to capture new sales without significant additional capital expenditures, as evidenced by contracts to serve over 350 wireless carrier backhaul sites in Sacramento and Kansas City. Opportunities exist and are currently being pursued to serve several hundred additional sites in each region. As of December 31, 2010, SureWest was billing for 169 sites at annualized revenues of $2 million and expects to be billing for over 300 sites by the end of 2011.

 

Telecom Segment Results

 

Telecom revenues declined 11% year-over-year to $16.6 million due to the industry-wide trend of declines in access lines and access revenues. However, the Telecom segment has consistently generated Adjusted EBITDA margins of approximately 50% or higher, and continues to generate significant free cash flow, which is utilized to reduce debt and fund Broadband segment expansion. The

 



 

company expects declines in Telecom revenues to flatten over the next two years, due to the phasing out of Telecom support mechanisms and the slowing of access line losses. Fourth quarter 2010 year-over-year consolidated ILEC voice RGU loss was 4,800, compared to loss of 6,400 in the fourth quarter 2009. In addition, fourth quarter 2010 consolidated year-over-year loss in ILEC and CLEC voice RGUs combined was 6,000, compared to a loss of 7,400 in the fourth quarter 2009. Also, the migration of existing Telecom ILEC access lines to Broadband VoIP enables the continued preservation of voice revenues on a consolidated basis.

 

As the company focuses on growing its Broadband segment, the Telecom segment continues to account for a smaller percentage of total revenues at 27%, compared to 31% in the fourth quarter 2009.

 

Telecom Residential:

Telecom Residential revenues declined 29% year-over-year to $3.8 million resulting from a 25% decline in Telecom voice RGUs. However, of the 9,600 year-over-year Telecom Residential voice RGU losses, 3,600, or 38%, migrated to the SureWest Broadband Voice over IP service.

 

Telecom Business:

Telecom Business revenues remained steady year-over-year at $8.6 million as the climate for small- and medium-sized businesses in the Sacramento region, particularly those impacted by California’s real estate market, began to stabilize. Customer counts declined 7% to 7,900 due to small companies going out of business for economic reasons, which is reflected in the 8% increase in ARPU from the prior year to $359 as the company retained existing customers with higher ARPU.

 

Telecom Access:

Telecom Access revenues decreased $470 thousand year-over-year to $4.1 million primarily due to the scheduled reduction in the California High Cost Fund (CHCF) subsidy and the decline in switched access revenues related to access line loss. The annual CHCF subsidies were $4.1 million in 2010, a decrease from $6.1 million in 2009, and will be $2 million in 2011 and zero in 2012. Additionally, the transport interconnection charges have been eliminated effective January 1, 2011 resulting in an estimated reduction of $2 million in 2011 intrastate access revenues.

 

Non-GAAP Measures

 

In addition to the results presented in accordance with generally accepted accounting principles (GAAP) throughout this press release, the company has presented non-GAAP financial measures such as Adjusted EBITDA, free cash flow and net debt. Adjusted EBITDA represents net income (loss) from continuing operations excluding amounts for income taxes, depreciation and amortization, non-cash pension and certain post-retirement benefits, non-cash stock compensation, severance and other related termination costs, and all other non-operating income/expenses. Free cash flow represents net income (loss) from continuing operations plus depreciation and amortization less capital expenditures. Free cash flow is a measure of operating cash flows available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity. Net debt represents total long-term debt (including current maturities) less cash and cash equivalents. Net debt can be used as a component in measuring leverage. The company believes these non-GAAP measures, viewed in addition to but not in lieu of its reported GAAP results, provide useful information to investors as they are an integral part of the internal evaluation of operating performance. In addition, they are measures that the company uses to evaluate management’s effectiveness. Reconciliations to the comparable GAAP measures are provided in the accompanying financial and operating summaries. SureWest’s non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies.

 

Conference Call and Webcast

 

SureWest will host a conference call providing details of its results and business strategy at 11 a.m. Eastern Time on Thursday, February 24. Open to the public, a simultaneous live webcast of the call will be available from the company’s investor relations website at www.surw.com. A telephone replay of the call will be available shortly after completion through March 3, 2011 by calling 888.286.8010 and entering pass code 56637457. Visit www.surw.com for updates prior to the call.

 



 

About SureWest

SureWest Communications (www.surewest.com) is a leading integrated communications provider and the bandwidth leader in the markets it serves. Headquartered in Northern California for more than 95 years, SureWest offers bundled residential and commercial services in the greater Sacramento and Kansas City regions that include IP-based digital and high-definition television, high-speed Internet, Voice over IP, and local and long distance telephone. SureWest was the nation’s first provider to launch residential HDTV over an IP network and offers one of the nation’s fastest symmetrical Internet services with speeds of up to 50 Mbps in each direction on its fiber-to-the-home network.

 

Safe Harbor Statement

Statements made in this news release that are not historical facts are forward-looking statements and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. In some cases, these forward-looking statements may be identified by the use of words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate” or “project,” or the negative of those words or other comparable words. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Such forward-looking statements are subject to a number of risks, assumptions and uncertainties that could cause the company’s actual results to differ from those projected in such forward-looking statements.

 

Important factors that could cause actual results to differ from those set forth in the forward-looking statements include, but are not limited to, advances in telecommunications technology, changes in the telecommunications regulatory environment, changes in the financial stability of other telecommunications providers who are customers of the company, changes in competition in markets in which the company operates, adverse circumstances affecting the economy in California, Kansas and Missouri in general, and in the greater Sacramento, California and greater Kansas City, Kansas and Missouri areas in particular, the availability of future financing, changes in the demand for services and products, new product and service development and introductions, and pending and future litigation.

 

###

 

 

Contacts:

Ron Rogers

Corporate Communications

916-746-3123

r.rogers@surewest.com

 

Misty Wells

Investor Relations

916-786-1799

m.wells@surewest.com

 


 


 

SUREWEST COMMUNICATIONS

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; Amounts in thousands, except per share amounts)

 

 

 

Quarters Ended

 

 

 

 

 

 

 

December 31,
2010

 

September 30,
2010

 

$
Change

 

%
Change

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Broadband

 

$

45,032

 

$

43,861

 

$

1,171

 

3%

 

Telecom

 

16,614

 

17,256

 

(642)

 

(4%)

 

Total operating revenues

 

61,646

 

61,117

 

529

 

1%

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of services and products (exclusive of depreciation and amortization)

 

26,948

 

26,672

 

276

 

1%

 

Customer operations and selling

 

7,095

 

7,028

 

67

 

1%

 

General and administrative

 

6,828

 

6,720

 

108

 

2%

 

Depreciation and amortization

 

15,777

 

15,680

 

97

 

1%

 

Total operating expenses

 

56,648

 

56,100

 

548

 

1%

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

4,998

 

5,017

 

(19)

 

(0%)

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Investment income

 

15

 

16

 

(1)

 

(6%)

 

Interest expense

 

(2,157)

 

(2,311)

 

154

 

7%

 

Other, net

 

107

 

10

 

97

 

970%

 

Total other income (expense), net

 

(2,035)

 

(2,285)

 

250

 

11%

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

2,963

 

2,732

 

231

 

8%

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

1,012

 

1,328

 

(316)

 

(24%)

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

1,951

 

1,404

 

547 

 

39%

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations, net of tax:

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

 

 

 

 

Gain on sale of discontinued operations

 

 

 

 

 

Total discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

1,951

 

$

1,404

 

$

547

 

39%

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per common share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.14

 

$

0.10

 

$

0.04

 

 

 

Discontinued operations, net of tax

 

 

 

 

 

 

Net income per basic and diluted common share

 

$

0.14

 

$

0.10

 

$

0.04

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock used to calculate earnings per share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

13,694

 

13,736

 

(42)

 

 

 

 



 

SUREWEST COMMUNICATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited; Amounts in thousands, except per share amounts)

 

 

 

Quarters Ended December 31,

 

$

 

%

 

 

 

2010

 

2009

 

Change

 

Change

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Broadband

 

$

 

45,032

 

$

 

41,566

 

$

 3,466

 

8%

 

Telecom

 

16,614

 

18,733

 

(2,119)

 

(11%)

 

Total operating revenues

 

61,646

 

60,299

 

1,347

 

2%

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of services and products (exclusive of depreciation and amortization)

 

26,948

 

25,813

 

1,135

 

4%

 

Customer operations and selling

 

7,095

 

7,289

 

(194)

 

(3%)

 

General and administrative

 

6,828

 

8,749

 

(1,921)

 

(22%)

 

Depreciation and amortization

 

15,777

 

15,426

 

351

 

2%

 

Total operating expenses

 

56,648

 

57,277

 

(629)

 

(1%)

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

4,998

 

3,022

 

1,976

 

65%

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Investment income

 

15

 

22

 

(7)

 

(32%)

 

Interest expense

 

(2,157)

 

(2,916)

 

759

 

26%

 

Other, net

 

107

 

264

 

(157)

 

(59%)

 

Total other income (expense), net

 

(2,035)

 

(2,630)

 

595

 

23%

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

2,963

 

392

 

2,571 

 

656%

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

1,012

 

492

 

520 

 

106%

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

1,951

 

(100)

 

2,051 

 

2051%

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations, net of tax:

 

 

 

 

 

 

 

 

 

Income (loss) from discontinued operations

 

 

 

 

 

Gain on sale of discontinued operations

 

 

 

 

 

Total discontinued operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

 

1,951

 

$

 

(100)

 

$

 2,051

 

2051%

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per common share:

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations

 

$

 

0.14

 

$

 

 

$

 0.14

 

 

 

Discontinued operations, net of tax

 

 

 

 

 

 

Net income (loss) per basic and diluted common share

 

$

 

0.14

 

$

 

 

$

 0.14

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock used to calculate earnings per share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

13,694

 

13,956

 

(262)

 

 

 

 



 

SUREWEST COMMUNICATIONS

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited; Amounts in thousands, except per share amounts)

 

 

 

Years Ended December 31,

 

$

 

%

 

 

 

2010

 

2009

 

Change

 

Change

 

Operating revenues:

 

 

 

 

 

 

 

 

 

Broadband

 

$

174,546

 

$

161,222

 

$

 13,324

 

8%

 

Telecom

 

68,953

 

80,478

 

(11,525)

 

(14%)

 

Total operating revenues

 

243,499

 

241,700

 

1,799

 

1%

 

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Cost of services and products (exclusive of depreciation and amortization)

 

105,719

 

103,077

 

2,642

 

3%

 

Customer operations and selling

 

29,637

 

30,317

 

(680)

 

(2%)

 

General and administrative

 

31,124

 

35,009

 

(3,885)

 

(11%)

 

Depreciation and amortization

 

61,825

 

59,724

 

2,101

 

4%

 

Total operating expenses

 

228,305

 

228,127

 

178

 

0%

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

15,194

 

13,573

 

1,621

 

12%

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Investment income

 

77

 

121

 

(44)

 

(36%)

 

Interest expense

 

(8,346)

 

(11,318)

 

2,972

 

26%

 

Other, net

 

(216)

 

297

 

(513)

 

(173%)

 

Total other income (expense), net

 

(8,485)

 

(10,900)

 

2,415

 

22%

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations before income taxes

 

6,709

 

2,673

 

4,036

 

151%

 

 

 

 

 

 

 

 

 

 

 

Income tax expense

 

3,354

 

2,006

 

1,348

 

67%

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

3,355

 

667

 

2,688

 

403%

 

 

 

 

 

 

 

 

 

 

 

Discontinued operations, net of tax:

 

 

 

 

 

 

 

 

 

Loss from discontinued operations

 

 

(69)

 

69

 

100%

 

Gain on sale of discontinued operations

 

 

2,568

 

(2,568)

 

(100%)

 

Total discontinued operations

 

 

2,499

 

(2,499)

 

(100%)

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

3,355

 

$

3,166

 

$

189

 

6%

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted earnings per common share:

 

 

 

 

 

 

 

 

 

Income from continuing operations

 

$

0.24

 

$

0.05

 

$

0.19

 

 

 

Discontinued operations, net of tax

 

 

0.18

 

(0.18)

 

 

 

Net income per basic and diluted common share

 

$

0.24

 

$

0.23

 

$

0.01

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock used to calculate earnings per share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

13,836

 

13,996

 

(160)

 

 

 

 



 

SUREWEST COMMUNICATIONS

CONSOLIDATED BALANCE SHEETS

(Unaudited; Amounts in thousands)

 

 

 

December 31,
2010

 

December 31,
2009

 

$
Change

 

%
Change

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,937

 

$

7,489

 

$

(4,552)

 

(61%)

 

Short-term investments

 

771

 

4,306

 

(3,535)

 

(82%)

 

Accounts receivable, net

 

20,298

 

19,734

 

564

 

3%

 

Income tax receivable

 

1,782

 

2,221

 

(439)

 

(20%)

 

Prepaid expenses

 

3,792

 

3,704

 

88

 

2%

 

Deferred income taxes

 

2,284

 

3,373

 

(1,089)

 

(32%)

 

Other current assets

 

-

 

1,760

 

(1,760)

 

(100%)

 

Assets held for sale

 

6,009

 

6,009

 

-

 

-

 

Total current assets

 

37,873

 

48,596

 

(10,723)

 

(22%)

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

 

 

 

 

 

 

 

 

 

514,639

 

522,493

 

(7,854)

 

(2%)

 

Intangible and other assets:

 

 

 

 

 

 

 

 

 

Customer relationships, net

 

2,632

 

3,847

 

(1,215)

 

(32%)

 

Goodwill

 

45,814

 

45,814

 

-

 

-

 

Deferred charges and other assets

 

2,223

 

2,113

 

110

 

5%

 

 

 

50,669

 

51,774

 

(1,105)

 

(2%)

 

 

 

$

603,181

 

$

622,863

 

$

(19,682)

 

(3%)

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$

15,636

 

$

15,636

 

$

-

 

-

 

Accounts payable

 

2,885

 

2,547

 

338

 

13%

 

Other accrued liabilities

 

12,847

 

18,315

 

(5,468)

 

(30%)

 

Advance billings and deferred revenues

 

8,035

 

8,580

 

(545)

 

(6%)

 

Accrued compensation

 

6,998

 

9,172

 

(2,174)

 

(24%)

 

Total current liabilities

 

46,401

 

54,250

 

(7,849)

 

(14%)

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

189,773

 

207,409

 

(17,636)

 

(9%)

 

Deferred income taxes

 

56,661

 

54,856

 

1,805

 

3%

 

Accrued pension and other post-retirement benefits

 

33,815

 

32,451

 

1,364

 

4%

 

Other liabilities and deferred revenues

 

4,473

 

4,714

 

(241)

 

(5%)

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock, without par value; 100,000 shares authorized, 13,866 and 14,148 shares issued and outstanding at December 31, 2010 and December 31, 2009, respectively

 

143,309

 

146,844

 

(3,535)

 

(2%)

 

Accumulated other comprehensive loss

 

(15,081)

 

(15,280)

 

199

 

1%

 

Retained earnings

 

143,830

 

137,619

 

6,211

 

5%

 

Total shareholders’ equity

 

272,058

 

269,183

 

2,875

 

1%

 

 

 

$

603,181

 

$

622,863

 

$

(19,682)

 

(3%)

 

 



 

SureWest Communications

Quarterly Selected Financial Results & Reconciliations of Non-GAAP Measures

(on a consolidated and a segment basis)

(Unaudited; Amounts in thousands)

 

Consolidated Results of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended 

 

Twelve Months

 

Quarter 

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

 2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Operating revenues (1) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband

 

$

39,222

 

$

40,259

 

$

 40,175

 

$

 41,566

 

$

 161,222

 

$

42,577

 

$

43,076

 

$

 43,861

 

$

 45,032

 

$

 174,546

 

$

 13,324 

 

 

8%

 

$

 3,466 

 

 

8%

 

$

 1,171 

 

 

3%

 

Telecom

 

21,720

 

20,671

 

19,354

 

18,733

 

80,478

 

17,611

 

17,472

 

17,256

 

16,614

 

68,953

 

(11,525)

 

(14%)

 

(2,119)

 

(11%)

 

(642)

 

(4%)

 

Total operating revenues

 

60,942

 

60,930

 

59,529

 

60,299

 

241,700

 

60,188

 

60,548

 

61,117

 

61,646

 

243,499

 

1,799 

 

1%

 

1,347 

 

2%

 

529 

 

1 %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (1)

 

42,812

 

42,087

 

41,653

 

41,851

 

168,403

 

41,940

 

43,249

 

40,420

 

40,871

 

166,480

 

(1,923)

 

(1%)

 

(980)

 

(2%)

 

451 

 

1 %

 

Depreciation and amortization

 

14,810

 

14,228

 

15,260

 

15,426

 

59,724

 

15,106

 

15,262

 

15,680

 

15,777

 

61,825

 

2,101 

 

4%

 

351 

 

2%

 

97 

 

1 %

 

Income from operations

 

$

3,320

 

$

4,615

 

$

 2,616

 

$

 3,022

 

$

 13,573

 

$

3,142

 

$

2,037

 

$

 5,017

 

$

 4,998

 

$

 15,194

 

$

 1,621 

 

12%

 

$

 1,976 

 

65%

 

$

 (19)

 

(0%)

 

 

Consolidated Reconciliation of Adjusted EBITDA to Net Income (Loss) from Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended 

 

Twelve Months

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

 2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Net income (loss) from continuing operations

 

$

 79

 

$

 899

 

$

 (211)

 

$

 (100)

 

$

667

 

$

 527

 

$

 (527)

 

$

 1,404

 

$

 1,951

 

$

 3,355

 

$

2,688

 

 

403%

 

$

2,051

 

 

2051%

 

$

 547

 

 

39%

 

Add: income tax expense

 

884

 

616

 

14

 

492

 

2,006

 

824

 

190

 

1,328

 

1,012

 

3,354

 

1,348

 

67%

 

520

 

106%

 

(316)

 

(24%)

 

Less: other (income)/expense

 

2,357

 

3,100

 

2,813

 

2,630

 

10,900

 

1,791

 

2,374

 

2,285

 

2,035

 

8,485

 

(2,415)

 

(22%)

 

(595)

 

(23%)

 

(250)

 

(11%)

 

Income from operations

 

3,320

 

4,615

 

2,616

 

3,022

 

13,573

 

3,142

 

2,037

 

5,017

 

4,998

 

15,194

 

1,621

 

12%

 

1,976

 

65%

 

(19)

 

(0%)

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

14,810

 

14,228

 

15,260

 

15,426

 

59,724

 

15,106

 

15,262

 

15,680

 

15,777

 

61,825

 

2,101

 

4%

 

351

 

2%

 

97

 

1%

 

Non-cash pension expense

 

755

 

552

 

642

 

642

 

2,591

 

420

 

341

 

371

 

371

 

1,503

 

(1,088)

 

(42%)

 

(271)

 

(42%)

 

-

 

0%

 

Non-cash stock compensation expense

 

608

 

464

 

443

 

495

 

2,010

 

800

 

1,144

 

267

 

634

 

2,845

 

835

 

42%

 

139

 

28%

 

367

 

137%

 

Severance and other related costs (3)

 

-

 

-

 

-

 

-

 

-

 

-

 

1,144

 

-

 

-

 

1,144

 

1,144

 

0%

 

-

 

-

 

-

 

-

 

Adjusted EBITDA (2)

 

$

19,493

 

$

19,859

 

$

 18,961

 

$

 19,585

 

$

 77,898

 

$

19,468

 

$

19,928

 

$

 21,335

 

$

 21,780

 

$

 82,511

 

$

4,613

 

6%

 

$

2,195

 

11%

 

$

 445

 

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

32%

 

33%

 

32%

 

32%

 

32%

 

32%

 

33%

 

35%

 

35%

 

34%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Free Cash Flow from Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended 

 

Twelve Months

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

 2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Net income (loss) from continuing operations

 

$

   79

 

$

 899

 

$

(211)

 

$

(100)

 

$

  667

 

$

 527

 

$

(527)

 

$

1,404

 

$

1,951

 

$

3,355

 

$

2,688

 

 

403%

 

$

 2,051

 

 

2051%

 

$

 547

 

 

39%

 

Add: Depreciation and amortization

 

14,810

 

14,228

 

15,260

 

15,426

 

59,724

 

15,106

 

15,262

 

15,680

 

15,777

 

61,825

 

2,101

 

4%

 

351

 

2%

 

97

 

1%

 

Less: Capital expenditures

 

(18,352)

 

(11,170)

 

(13,841)

 

(14,967)

 

(58,330)

 

(12,536)

 

(13,878)

 

(12,857)

 

(13,289)

 

(52,560)

 

5,770

 

10%

 

1,678

 

11%

 

(432)

 

(3%)

 

Free cash flow (4)

 

$

 (3,463)

 

$

3,957

 

$

1,208

 

$

359

 

$

2,061

 

$

3,097

 

$

 857

 

$

4,227

 

$

4,439

 

$

 12,620

 

$

 10,559

 

512%

 

$

4,080

 

1136%

 

$

 212

 

5%

 

 

Consolidated Net Debt Ratio from Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

 

 

For 2010 Quarters Ended:

 

 

 

 

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

 

 

 

 

$ chg

 

%

 

$ chg

 

%

 

Net Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, including current maturities

 

$

240,187

 

$

236,685

 

$

226,683

 

$

223,045

 

 

 

$

215,045

 

$

219,045

 

$

209,045

 

$

205,409

 

 

 

 

 

 

 

 

 

 

$

(17,636)

 

 

(8%)

 

 (3,636)

 

 

(2%)

 

Less: Cash and cash equivalents

 

(1,678)

 

(9,879)

 

(7,138)

 

(7,489)

 

 

 

(6,982)

 

(6,154)

 

(3,215)

 

(2,937)

 

 

 

 

 

 

 

4,552

 

61%

 

278

 

9%

 

Net Debt (5)

 

$

238,509

 

$

226,806

 

$

219,545

 

$

 215,556

 

 

 

$

208,063

 

$

212,891

 

$

205,830

 

$

202,472

 

 

 

 

 

 

 

$

(13,084)

 

(6%)

 

$

(3,358)

 

(2%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of Net Debt to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Debt

 

$

238,509

 

$

226,806

 

$

219,545

 

$

 215,556

 

 

 

$

208,063

 

$

212,891

 

$

205,830

 

$

202,472

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Divided by: Adjusted EBITDA (TTM)

 

$

 74,226

 

$

 74,315

 

$

 75,328

 

$

 77,898

 

 

 

$

 77,873

 

$

 77,942

 

$

 80,316

 

$

 82,511

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net debt to Adjusted EBITDA (6)

 

3.21

 

3.05

 

2.91

 

2.77

 

 

 

2.67

 

2.73

 

2.56

 

2.45

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

SureWest Communications

Quarterly Selected Financial Results & Reconciliations of Non-GAAP Measures

(on a consolidated and a segment basis)

(Unaudited; Amounts in thousands)

 

Broadband Results of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended 

 

Twelve Months

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Data

 

$

10,763

 

$

11,184

 

$

11,236

 

$

11,878

 

$

45,061

 

$

12,248

 

$

12,145

 

$

12,100

 

$

12,385

 

$

48,878

 

$

3,817

 

 

8%

 

$

507

 

 

4%

 

$

285

 

 

2%

 

Video

 

11,689

 

11,995

 

11,711

 

12,127

 

47,522

 

12,219

 

12,166

 

12,151

 

12,603

 

49,139

 

1,617

 

3%

 

476

 

4%

 

452

 

4%

 

Voice

 

6,399

 

6,594

 

6,442

 

6,462

 

25,897

 

6,507

 

6,600

 

6,704

 

6,650

 

26,461

 

564

 

2%

 

188

 

3%

 

(54)

 

(1%)

 

Total residential revenues

 

28,851

 

29,773

 

29,389

 

30,467

 

118,480

 

30,974

 

30,911

 

30,955

 

31,638

 

124,478

 

5,998

 

5%

 

1,171

 

4%

 

683

 

2%

 

Business

 

9,585

 

9,615

 

10,018

 

10,336

 

39,554

 

10,570

 

11,253

 

11,979

 

12,407

 

46,209

 

6,655

 

17%

 

2,071

 

20%

 

428

 

4%

 

Access

 

384

 

398

 

427

 

419

 

1,628

 

727

 

541

 

481

 

486

 

2,235

 

607

 

37%

 

67

 

16%

 

5

 

1%

 

Other

 

402

 

473

 

341

 

344

 

1,560

 

306

 

371

 

446

 

501

 

1,624

 

64

 

4%

 

157

 

46%

 

55

 

12%

 

Total operating revenues from external customers

 

39,222

 

40,259

 

40,175

 

41,566

 

161,222

 

42,577

 

43,076

 

43,861

 

45,032

 

174,546

 

13,324

 

8%

 

3,466

 

8%

 

1,171

 

3%

 

Intersegment revenues

 

91

 

94

 

93

 

160

 

438

 

168

 

145

 

110

 

141

 

564

 

126

 

29%

 

(19)

 

(12%)

 

31

 

28%

 

Total operating revenues

 

39,313

 

40,353

 

40,268

 

41,726

 

161,660

 

42,745

 

43,221

 

43,971

 

45,173

 

175,110

 

13,450

 

8%

 

3,447

 

8%

 

1,202

 

3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses without depreciation

 

34,695

 

34,294

 

34,615

 

34,247

 

137,851

 

35,137

 

36,003

 

34,304

 

34,838

 

140,282

 

2,431

 

2%

 

591

 

2%

 

534

 

2%

 

Depreciation and amortization

 

11,620

 

11,283

 

12,199

 

12,257

 

47,359

 

12,180

 

12,140

 

12,609

 

12,692

 

49,621

 

2,262

 

5%

 

435

 

4%

 

83

 

1%

 

Loss from operations

 

$

(7,002)

 

$

(5,224)

 

$

(6,546)

 

$

(4,778)

 

$

(23,550)

 

$

(4,572)

 

$

(4,922)

 

$

(2,942)

 

$

(2,357)

 

$

(14,793)

 

$

8,757

 

37%

 

$

2,421

 

51%

 

$

585

 

20%

 

 

Broadband Reconciliation of Adjusted EBITDA to Net Loss from Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

Twelve Months

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Net loss from continuing operations

 

$

(5,398)

 

$

(4,884)

 

$

(5,619)

 

$

(4,881)

 

$

(20,782)

 

$

(3,720)

 

$

(4,269)

 

$

(3,082)

 

$

(1,802)

 

$

(12,873)

 

$

7,909

 

 

38%

 

$

3,079

 

 

63%

 

$

1,280

 

 

42%

 

Add: income tax benefits

 

(3,656)

 

(3,312)

 

(3,810)

 

(2,675)

 

(13,453)

 

(2,504)

 

(2,867)

 

(2,066)

 

(2,456)

 

(9,893)

 

3,560

 

26%

 

219

 

8%

 

(390)

 

(19%)

 

Less: other (income)/expense

 

2,052

 

2,972

 

2,883

 

2,778

 

10,685

 

1,652

 

2,214

 

2,206

 

1,901

 

7,973

 

(2,712)

 

(25%)

 

(877)

 

(32%)

 

(305)

 

(14%)

 

Loss from operations

 

(7,002)

 

(5,224)

 

(6,546)

 

(4,778)

 

(23,550)

 

(4,572)

 

(4,922)

 

(2,942)

 

(2,357)

 

(14,793)

 

8,757

 

37%

 

2,421

 

51%

 

585

 

20%

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

11,620

 

11,283

 

12,199

 

12,257

 

47,359

 

12,180

 

12,140

 

12,609

 

12,692

 

49,621

 

2,262

 

5%

 

435

 

4%

 

83

 

1%

 

Non-cash pension expense

 

327

 

56

 

197

 

199

 

779

 

205

 

162

 

181

 

179

 

727

 

(52)

 

(7%)

 

(20)

 

(10%)

 

(2)

 

(1%)

 

Non-cash stock compensation expense

 

304

 

231

 

221

 

246

 

1,002

 

386

 

560

 

160

 

343

 

1,449

 

447

 

45%

 

97

 

39%

 

183

 

114%

 

Severance and other related costs (3)

 

-

 

-

 

-

 

-

 

-

 

-

 

469

 

-

 

-

 

469

 

469

 

0%

 

-

 

-

 

-

 

-

 

Adjusted EBITDA (2)

 

$

5,249

 

$

6,346

 

$

6,071

 

$

7,924

 

$

25,590

 

$

8,199

 

$

8,409

 

$

10,008

 

$

10,857

 

$

37,473

 

$

11,883

 

46%

 

$

2,933

 

37%

 

$

849

 

8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

13%

 

16%

 

15%

 

19%

 

16%

 

19%

 

19%

 

23%

 

24%

 

21%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband Free Cash Flow from Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended 

 

Twelve Months

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Net loss from continuing operations

 

$

(5,398)

 

$

(4,884)

 

$

(5,619)

 

$

(4,881)

 

$

(20,782)

 

$

(3,720)

 

$

(4,269)

 

$

(3,082)

 

$

(1,802)

 

$

(12,873)

 

$

7,909

 

 

38%

 

$

3,079

 

 

63%

 

$

1,280

 

 

42%

 

Add: Depreciation and amortization

 

11,620

 

11,283

 

12,199

 

12,257

 

47,359

 

12,180

 

12,140

 

12,609

 

12,692

 

49,621

 

2,262

 

5%

 

435

 

4%

 

83

 

1%

 

Less: Capital expenditures

 

(14,637)

 

(9,555)

 

(11,828)

 

(11,955)

 

(47,975)

 

(8,723)

 

(11,805)

 

(11,370)

 

(12,046)

 

(43,944)

 

4,031

 

8%

 

(91)

 

(1%)

 

(676)

 

(6%)

 

Free cash flow (4)

 

$

(8,415)

 

$

(3,156)

 

$

(5,248)

 

$

(4,579)

 

$

(21,398)

 

$

(263)

 

$

(3,934)

 

$

(1,843)

 

$

(1,156)

 

$

(7,196)

 

$

14,202

 

66%

 

$

3,423

 

75%

 

$

687

 

37%

 

 



 

SureWest Communications

Quarterly Selected Financial Results & Reconciliations of Non-GAAP Measures

(on a consolidated and a segment basis)

(Unaudited; Amounts in thousands)

 

Telecom Results of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended 

 

Twelve Months

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Residential

 

$

 6,862

 

$

 6,407

 

$

5,857

 

$

5,378

 

$

24,504

 

$

 4,868

 

$

4,479

 

$

  4,086

 

$

  3,843

 

$

17,276

 

$

(7,228)

 

 

(29%)

 

$

(1,535)

 

 

(29%)

 

$

(243)

 

 

(6%)

 

Business

 

9,048

 

9,089

 

8,687

 

8,633

 

35,457

 

8,418

 

8,400

 

8,750

 

8,592

 

34,160

 

(1,297)

 

(4%)

 

(41)

 

(0%)

 

(158)

 

(2%)

 

Access

 

5,647

 

4,953

 

4,604

 

4,523

 

19,727

 

4,160

 

4,408

 

4,274

 

4,053

 

16,895

 

(2,832)

 

(14%)

 

(470)

 

(10%)

 

(221)

 

(5%)

 

Other

 

163

 

222

 

206

 

199

 

790

 

165

 

185

 

146

 

126

 

622

 

(168)

 

(21%)

 

(73)

 

(37%)

 

(20)

 

(14%)

 

Total operating revenues from external customers

 

21,720

 

20,671

 

19,354

 

18,733

 

80,478

 

17,611

 

17,472

 

17,256

 

16,614

 

68,953

 

(11,525)

 

(14%)

 

(2,119)

 

(11%)

 

(642)

 

(4%)

 

Intersegment revenues

 

4,874

 

4,981

 

5,043

 

4,999

 

19,897

 

4,919

 

5,091

 

5,275

 

5,352

 

20,637

 

740

 

4%

 

353

 

7%

 

77

 

1%

 

Total operating revenues

 

26,594

 

25,652

 

24,397

 

23,732

 

100,375

 

22,530

 

22,563

 

22,531

 

21,966

 

89,590

 

(10,785)

 

(11%)

 

(1,766)

 

(7%)

 

(565)

 

(3%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses without depreciation

 

13,082

 

12,868

 

12,174

 

12,763

 

50,887

 

11,890

 

12,482

 

11,501

 

11,526

 

47,399

 

(3,488)

 

(7%)

 

(1,237)

 

(10%)

 

25

 

0%

 

Depreciation and amortization

 

3,190

 

2,945

 

3,061

 

3,169

 

12,365

 

2,926

 

3,122

 

3,071

 

3,085

 

12,204

 

(161)

 

(1%)

 

(84)

 

(3%)

 

14

 

0%

 

Income from operations

 

$

  10,322

 

$

 9,839

 

$

9,162

 

$

7,800

 

$

37,123

 

$

 7,714

 

$

6,959

 

$

  7,959

 

$

  7,355

 

$

29,987

 

$

(7,136)

 

(19%)

 

$

(445)

 

(6%)

 

$

(604)

 

(8%)

 

 

Telecom Reconciliation of Adjusted EBITDA to Net Income from Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

Twelve Months

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

 2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Net income from continuing operations

 

$

 5,477

 

$

 5,783

 

$

5,408

 

$

4,781

 

$

21,449

 

$

 4,247

 

$

 3,742

 

$

4,486

 

$

3,753

 

$

16,228

 

$

(5,221)

 

 

(24%)

 

$

(1,028)

 

 

(22%)

 

$

(733)

 

 

(16%)

 

Add: income tax expense

 

4,540

 

3,928

 

3,824

 

3,167

 

15,459

 

3,328

 

3,057

 

3,394

 

3,468

 

13,247

 

(2,212)

 

(14%)

 

301

 

10%

 

74

 

2%

 

Less: other (income)/expense

 

305

 

128

 

(70)

 

(148)

 

215

 

139

 

160

 

79

 

134

 

512

 

297

 

138%

 

282

 

191%

 

55

 

70%

 

Income from operations

 

10,322

 

9,839

 

9,162

 

7,800

 

37,123

 

7,714

 

6,959

 

7,959

 

7,355

 

29,987

 

(7,136)

 

(19%)

 

(445)

 

(6%)

 

(604)

 

(8%)

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

3,190

 

2,945

 

3,061

 

3,169

 

12,365

 

2,926

 

3,122

 

3,071

 

3,085

 

12,204

 

(161)

 

(1%)

 

(84)

 

(3%)

 

14

 

0%

 

Non-cash pension expense

 

428

 

496

 

445

 

443

 

1,812

 

215

 

179

 

190

 

192

 

776

 

(1,036)

 

(57%)

 

(251)

 

(57%)

 

2

 

1%

 

Non-cash stock compensation expense

 

304

 

233

 

222

 

249

 

1,008

 

414

 

584

 

107

 

291

 

1,396

 

388

 

38%

 

42

 

17%

 

184

 

172%

 

Severance and other related costs (3)

 

-

 

-

 

-

 

-

 

-

 

-

 

675

 

-

 

-

 

675

 

675

 

0%

 

-

 

-

 

-

 

-

 

Adjusted EBITDA (2)

 

$

  14,244

 

$

  13,513

 

$

 12,890

 

$

 11,661

 

$

52,308

 

$

  11,269

 

$

  11,519

 

$

 11,327

 

$

 10,923

 

$

45,038

 

$

(7,270)

 

(14%)

 

$

(738)

 

(6%)

 

$

(404)

 

(4%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

54%

 

53%

 

53%

 

49%

 

52%

 

50%

 

51%

 

50%

 

50%

 

50%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Telecom Free Cash Flow from Continuing Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

Twelve Months

 

Quarter

 

Sequential

 

 

 

For 2009 Quarters Ended:

 

December 31,

 

For 2010 Quarters Ended:

 

December 31,

 

Year-over-Year

 

Year-over-Year

 

Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

2009

 

March 31

 

June 30

 

September 30

 

December 31

 

2010

 

$ chg

 

%

 

$ chg

 

%

 

$ chg

 

%

 

Net income from continuing operations

 

$

 5,477

 

$

 5,783

 

$

5,408

 

$

4,781

 

$

21,449

 

$

 4,247

 

$

 3,742

 

$

4,486

 

$

3,753

 

$

16,228

 

$

(5,221)

 

 

(24%)

 

$

(1,028)

 

 

(22%)

 

$

(733)

 

 

(16%)

 

Add: Depreciation and amortization

 

3,190

 

2,945

 

3,061

 

3,169

 

12,365

 

2,926

 

3,122

 

3,071

 

3,085

 

12,204

 

(161)

 

(1%)

 

(84)

 

(3%)

 

14

 

0%

 

Less: Capital expenditures

 

(3,081)

 

(1,501)

 

(2,002)

 

(2,771)

 

(9,355)

 

(3,218)

 

(1,729)

 

(1,442)

 

(897)

 

(7,286)

 

2,069

 

22%

 

1,874

 

68%

 

545

 

38%

 

Free cash flow (4)

 

$

 5,586

 

$

 7,227

 

$

6,467

 

$

5,179

 

$

24,459

 

$

 3,955

 

$

 5,135

 

$

6,115

 

$

5,941

 

$

21,146

 

$

(3,313)

 

(14%)

 

$

 762

 

15%

 

$

(174)

 

(3%)

 

 



 

SureWest Communications

Quarterly Selected Financial Results & Reconciliations of Non-GAAP Measures

(on a consolidated and a segment basis)

(Unaudited; Amounts in thousands)

 

 

(1) External customers only.

 

(2) Adjusted EBITDA represents net income (loss) from continuing operations excluding amounts for income taxes; depreciation and amortization; non-cash pension and certain post-retirement benefits; non-cash stock compensation; severance and other related termination costs; and all other non-operating income/expenses.  Adjusted EBITDA is a common measure of operating performance in the telecommunications industry. Adjusted EBITDA is not a measure of financial performance under United States generally accepted accounting principles and should not be considered in isolation or as a substitute for consolidated net income (loss) as a measure of performance.

 

(3) Severance and other related termination costs related to the workforce reduction initiative implemented during the quarter ended June 30, 2010. Amounts exclude the termination costs related to stock compensation expense, which are included in non-cash stock compensation expense of the Adjusted EBITDA reconciliation.

 

(4) Free cash flow is a measure of operating cash flows available for corporate purposes after providing sufficient fixed asset additions to maintain current productive capacity. Consolidated free cash flow includes capital expenditures for our corporate operating unit. Free cash flow is not a measure of financial performance under United States generally accepted accounting principles and should not be considered in isolation or as a substitute for consolidated net income (loss) as a measure of performance and net cash provided by operating activities as a measure of liquidity.

 

(5) Net debt represents total long-term debt (including current maturities) less cash and cash equivalents.  Net debt can be a component in measuring leverage. Net debt is not a measure determined in accordance with United States generally accepted accounting principles and should not be considered as a substitute for total long-term debt.

 

(6) The ratio of net debt to Adjusted EBITDA is calculated as net debt divided by Adjusted EBITDA based on a trailing twelve month (TTM) period.  This measure provides useful information to our investors about our debt level relative to our performance and about our ability to meet our financial obligations.

 

 



 

SUREWEST COMMUNICATIONS

SELECTED OPERATING METRICS

As of and for the Quarter Ended

 

BROADBAND

 

12/31/2010 [1]

 

12/31/2009 [1]

 

Change

 

% Change

 

9/30/2010 [1]

 

Change

 

% Change

 

Residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes [2]

 

271,800

 

240,500

 

31,300

 

13%

 

268,500

 

3,300

 

1%

 

RGUs

 

61,800

 

58,900

 

2,900

 

5%

 

61,200

 

600

 

1%

 

Penetration [2]

 

22.7%

 

23.7%

 

-0.9%

 

(4%)

 

22.8%

 

-0.1%

 

(0%)

 

ARPU

 

$68

 

$68

 

$0

 

0%

 

$67

 

$1

 

3%

 

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

311,300

 

309,700

 

1,600

 

1%

 

311,200

 

100

 

0%

 

RGUs

 

74,900

 

71,300

 

3,600

 

5%

 

74,900

 

0

 

0%

 

Penetration

 

24.1%

 

23.1%

 

0.9%

 

4%

 

24.1%

 

0.0%

 

(0%)

 

ARPU

 

$30

 

$30

 

$0

 

(2%)

 

$30

 

$0

 

(1%)

 

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

311,300

 

309,700

 

1,600

 

1%

 

311,200

 

100

 

0%

 

RGUs

 

99,400

 

98,300

 

1,100

 

1%

 

99,200

 

200

 

0%

 

Penetration

 

31.9%

 

31.8%

 

0.1%

 

0%

 

31.9%

 

0.1%

 

0%

 

ARPU

 

$42

 

$40

 

$2

 

3%

 

$41

 

$1

 

2%

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RGUs

 

236,100

 

228,500

 

7,600

 

3%

 

235,300

 

800

 

0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber totals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscribers [3]

 

104,100

 

103,100

 

1,000

 

1%

 

104,000

 

100

 

0%

 

Penetration

 

33.4%

 

33.3%

 

0.2%

 

0%

 

33.4%

 

0.0%

 

0%

 

ARPU [4]

 

$101

 

$99

 

$2

 

3%

 

$99

 

$2

 

2%

 

Triple Play ARPU [5]

 

$115

 

$114

 

$1

 

1%

 

$113

 

$2

 

2%

 

Triple Play RGUs per Subscriber [5]

 

2.53

 

2.54

 

(0.02)

 

(1%)

 

2.53

 

(0.01)

 

(0%)

 

Churn

 

1.6%

 

1.5%

 

0.1%

 

5%

 

1.7%

 

-0.1%

 

(7%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business [6]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customers

 

7,800

 

7,300

 

500

 

7%

 

7,700

 

100

 

1%

 

ARPU

 

$535

 

$476

 

$59

 

12%

 

$526

 

$9

 

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TELECOM

 

12/31/2010

 

12/31/2009

 

Change

 

% Change

 

9/30/2010

 

Change

 

% Change

 

Residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

91,500

 

91,000

 

500

 

1%

 

91,400

 

100

 

0%

 

RGUs [7]

 

28,900

 

38,500

 

(9,600)

 

(25%)

 

30,700

 

(1,800)

 

(6%)

 

Cumulative Migration to Broadband Voice [8]

 

15,400

 

11,800

 

3,600

 

31%

 

14,900

 

500

 

3%

 

Penetration

 

31.6%

 

42.3%

 

-10.7%

 

(25%)

 

33.6%

 

-2.0%

 

(6%)

 

ARPU

 

$43

 

$45

 

($2)

 

(4%)

 

$43

 

$0

 

0%

 

Churn [9]

 

2.0%

 

2.0%

 

0.0%

 

(2%)

 

2.1%

 

-0.1%

 

(5%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business [6]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customers

 

7,900

 

8,500

 

(600)

 

(7%)

 

8,000

 

(100)

 

(1%)

 

ARPU

 

$359

 

$334

 

$25

 

8%

 

$360

 

($1)

 

(0%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED RESIDENTIAL VOICE RGUs

 

12/31/2010 [1]

 

12/31/2009 [1]

 

Change

 

% Change

 

9/30/2010 [1]

 

Change

 

% Change

 

ILEC Voice RGUs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband

 

21,000

 

16,200

 

4,800

 

30%

 

20,400

 

600

 

3%

 

Telecom

 

28,900

 

38,500

 

(9,600)

 

(25%)

 

30,700

 

(1,800)

 

(6%)

 

Total ILEC Voice RGUs [10]

 

49,900

 

54,700

 

(4,800)

 

(9%)

 

51,100

 

(1,200)

 

(2%)

 

CLEC Residential Voice RGUs [11]

 

53,900

 

55,100

 

(1,200)

 

(2%)

 

54,500

 

(600)

 

(1%)

 

TOTAL Residential Voice RGUs [12]

 

103,800

 

109,800

 

(6,000)

 

(5%)

 

105,600

 

(1,800)

 

(2%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NETWORK METRICS

 

12/31/2010

 

12/31/2009

 

Change

 

% Change

 

9/30/2010

 

Change

 

% Change

 

Marketable Homes - Fiber

 

148,500

 

147,600

 

900

 

1%

 

148,300

 

200

 

0%

 

Marketable Homes - HFC

 

93,600

 

92,900

 

700

 

1%

 

93,600

 

0

 

0%

 

Marketable Homes - Copper 2-Play

 

39,600

 

69,200

 

(29,600)

 

(43%)

 

42,700

 

(3,100)

 

(7%)

 

Marketable Homes - Copper 3-Play

 

29,600

 

0

 

29,600

 

n/a

 

26,600

 

3,000

 

11%

 

Total

 

311,300

 

309,700

 

1,600

 

1%

 

311,200

 

100

 

0%

 

 

Note:  The calculation of certain metrics have been revised over time to reflect the current view of our business.  Where necessary prior period metric calculations have been revised to conform with current practice.  All amounts rounded to the nearest 100s, except percentages and dollars.

 

[1] During the third quarter of 2010, we revised our methodology to obtain Broadband residential subscribers, RGUs and business customer counts.  The revised methodology facilitates the consistent application of customer counts within the Broadband segment.  Accordingly, the metrics previously reported for 2010, 2009 & 2008 have been revised to conform to current practice.

 

[2] Marketable Homes - Prior to Q110, video marketable homes and penetration rate included serviceable homes in Sacramento and Kansas City fiber and hybrid fiber coax (HFC) networks only. With launch of ADTV in Q110, certain copper homes became video serviceable and 3-play capable and are included in marketable home counts. Penetration rates prior to Q110 were not adjusted for small number of video customers on copper network prior to ADTV.

 

[3] A residential subscriber is a customer who subscribes to one or more residential RGUs.

 

[4] ARPU is the total residential revenue per average subscriber.

 

[5] Triple play ARPU includes the total residential revenue per average subscriber and Triple play RGUs per Subscriber includes ending RGUs per ending subscriber, for the triple play markets, excluding the ILEC market.

 

[6] A business customer is a customer who subscribes to business data, voice or video and represents a unique customer account.  ARPU is the total business revenue per average customer.

 

[7] A voice RGU is a residential customer who subscribers to one or more voice access line.

 

[8] Telecom Voice RGU Migration to Broadband Voice are residential Telecom voice RGUs in Line [7] that have ported their Telecom primary access line service to Broadband VoIP.

 

[9] Telecom Churn excludes disconnects in Line [8] that have ported their Telecom primary access line service to Broadband VoIP.

 

[10] ILEC Voice RGUs are the total residential voice RGUs in the ILEC franchise market area that are either a Telecom primary access line or Broadband VoIP subscriber.

 

[11] CLEC Voice RGUs are the total residential voice RGUs in the Kansas City and Sacramento markets, excluding the ILEC market.

 

[12] Total Voice RGUs are the total of ILEC and CLEC residential voice RGUs, and represent the total company residential voice RGUs of both the Broadband and Telecom Segments.

 



 

SUREWEST COMMUNICATIONS

SELECTED OPERATING METRICS (inc KC results from periods prior to acquisition)

As of and for the Quarter Ended

 

BROADBAND

 

3/31/2008 [1]

 

6/30/2008 [1]

 

9/30/2008 [1]

 

12/31/2008 [1]

 

3/31/2009 [1]

 

6/30/2009 [1]

 

9/30/2009 [1]

 

12/31/2009 [1]

 

3/31/2010 [1]

 

6/30/2010 [1]

 

9/30/2010 [1]

 

12/31/2010 [1]

Residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes [2]

 

211,000

 

217,700

 

221,700

 

232,400

 

236,500

 

239,800

 

240,000

 

240,500

 

261,900

 

265,100

 

268,500

 

271,800

RGUs

 

55,100

 

57,000

 

58,400

 

60,000

 

59,900

 

59,000

 

59,000

 

58,900

 

58,500

 

60,200

 

61,200

 

61,800

Quarterly change

 

600

 

1,900

 

1,400

 

1,600

 

(100)

 

(900)

 

0

 

(100)

 

(400)

 

1,700

 

1,000

 

600

Year-over-Year change

 

2,700

 

4,000

 

4,600

 

5,500

 

4,800

 

2,000

 

600

 

(1,100)

 

(1,400)

 

1,200

 

2,200

 

2,900

Penetration [2]

 

24.9%

 

25.0%

 

25.2%

 

24.7%

 

24.4%

 

23.7%

 

23.8%

 

23.7%

 

22.3%

 

22.7%

 

22.8%

 

22.7%

ARPU

 

$64

 

$62

 

$59

 

$59

 

$65

 

$67

 

$66

 

$68

 

$70

 

$68

 

$67

 

$68

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

286,600

 

292,200

 

296,600

 

304,200

 

308,200

 

309,300

 

309,400

 

309,700

 

309,900

 

310,400

 

311,200

 

311,300

RGUs

 

53,500

 

56,300

 

59,700

 

63,200

 

66,000

 

67,700

 

70,000

 

71,300

 

71,800

 

73,900

 

74,900

 

74,900

Quarterly change

 

300

 

2,800

 

3,400

 

3,500

 

2,800

 

1,700

 

2,300

 

1,300

 

500

 

2,100

 

1,000

 

0

Year-over-Year change

 

1,500

 

3,800

 

6,900

 

9,900

 

12,500

 

11,400

 

10,300

 

8,100

 

5,800

 

6,200

 

4,900

 

3,600

Penetration

 

18.8%

 

19.4%

 

20.2%

 

20.9%

 

21.5%

 

22.0%

 

22.7%

 

23.1%

 

23.2%

 

23.8%

 

24.1%

 

24.1%

ARPU

 

$33

 

$33

 

$32

 

$32

 

$33

 

$33

 

$31

 

$30

 

$30

 

$30

 

$30

 

$30

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

286,600

 

292,200

 

296,600

 

304,200

 

308,200

 

309,300

 

309,400

 

309,700

 

309,900

 

310,400

 

311,200

 

311,300

RGUs

 

91,500

 

93,700

 

95,400

 

97,100

 

97,800

 

97,400

 

97,600

 

98,300

 

97,500

 

98,900

 

99,200

 

99,400

Quarterly change

 

1,400

 

2,200

 

1,700

 

1,700

 

700

 

(400)

 

200

 

700

 

(800)

 

1,400

 

300

 

200

Year-over-Year change

 

6,000

 

6,500

 

6,600

 

7,000

 

6,300

 

3,700

 

2,200

 

1,200

 

(300)

 

1,500

 

1,600

 

1,100

Penetration

 

32.0%

 

32.2%

 

32.3%

 

32.0%

 

31.8%

 

31.6%

 

31.6%

 

31.8%

 

31.5%

 

31.9%

 

31.9%

 

31.9%

ARPU

 

$39

 

$37

 

$36

 

$36

 

$37

 

$38

 

$38

 

$40

 

$42

 

$41

 

$41

 

$42

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RGUs

 

200,100

 

207,000

 

213,500

 

220,300

 

223,700

 

224,100

 

226,600

 

228,500

 

227,800

 

233,000

 

235,300

 

236,100

Quarterly change

 

2,300

 

6,900

 

6,500

 

6,800

 

3,400

 

400

 

2,500

 

1,900

 

(700)

 

5,200

 

2,300

 

800

Year-over-Year change

 

10,200

 

14,300

 

18,100

 

22,400

 

23,600

 

17,100

 

13,100

 

8,200

 

4,100

 

8,900

 

8,700

 

7,600

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber totals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscribers [3]

 

97,500

 

99,500

 

101,100

 

103,000

 

103,300

 

102,400

 

103,000

 

103,100

 

102,500

 

103,600

 

104,000

 

104,100

Penetration

 

34.0%

 

34.1%

 

34.1%

 

33.9%

 

33.5%

 

33.1%

 

33.3%

 

33.3%

 

33.1%

 

33.4%

 

33.4%

 

33.4%

ARPU [4]

 

$85

 

$88

 

$87

 

$88

 

$93

 

$97

 

$95

 

$99

 

$101

 

$100

 

$99

 

$101

Triple Play ARPU [5]

 

$110

 

$108

 

$105

 

$106

 

$111

 

$114

 

$111

 

$114

 

$116

 

$115

 

$113

 

$115

Triple Play RGUs per Subscriber [5]

 

2.55

 

2.56

 

2.56

 

2.56

 

2.56

 

2.55

 

2.54

 

2.54

 

2.53

 

2.54

 

2.53

 

2.53

Churn

 

1.4%

 

1.4%

 

1.7%

 

1.4%

 

1.4%

 

1.7%

 

1.8%

 

1.5%

 

1.6%

 

1.6%

 

1.7%

 

1.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business [6]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customers

 

6,200

 

6,400

 

6,600

 

6,800

 

6,900

 

7,000

 

7,200

 

7,300

 

7,400

 

7,500

 

7,700

 

7,800

ARPU

 

$403

 

$441

 

$477

 

$451

 

$467

 

$459

 

$467

 

$476

 

$479

 

$502

 

$526

 

$535

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TELECOM

 

3/31/2008

 

6/30/2008

 

9/30/2008

 

12/31/2008

 

3/31/2009

 

6/30/2009

 

9/30/2009

 

12/31/2009

 

3/31/2010

 

6/30/2010

 

9/30/2010

 

12/31/2010

Residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

89,900

 

90,000

 

90,500

 

90,800

 

90,800

 

90,900

 

90,900

 

91,000

 

91,100

 

91,200

 

91,400

 

91,500

RGUs [7]

 

66,800

 

62,900

 

58,500

 

54,000

 

49,500

 

45,100

 

41,300

 

38,500

 

35,500

 

32,800

 

30,700

 

28,900

Cumulative Migration to Broadband Voice [8]

 

0

 

1,400

 

2,900

 

4,700

 

6,900

 

9,000

 

10,700

 

11,800

 

12,900

 

14,000

 

14,900

 

15,400

Penetration

 

74.3%

 

69.9%

 

64.6%

 

59.5%

 

54.5%

 

49.6%

 

45.4%

 

42.3%

 

39.0%

 

36.0%

 

33.6%

 

31.6%

ARPU

 

$44

 

$44

 

$43

 

$43

 

$44

 

$45

 

$45

 

$45

 

$44

 

$44

 

$43

 

$43

Churn [9]

 

2.3%

 

2.1%

 

2.4%

 

2.2%

 

2.1%

 

2.3%

 

2.3%

 

2.0%

 

2.3%

 

2.1%

 

2.1%

 

2.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business [6]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customers

 

9,600

 

9,600

 

9,400

 

9,200

 

9,000

 

8,900

 

8,700

 

8,500

 

8,300

 

8,200

 

8,000

 

7,900

ARPU

 

$311

 

$341

 

$354

 

$327

 

$332

 

$339

 

$329

 

$334

 

$334

 

$340

 

$360

 

$359

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED RESIDENTIAL VOICE RGUs

 

3/31/2008 [1]

 

6/30/2008 [1]

 

9/30/2008 [1]

 

12/31/2008 [1]

 

3/31/2009 [1]

 

6/30/2009 [1]

 

9/30/2009 [1]

 

12/31/2009 [1]

 

3/31/2010 [1]

 

6/30/2010 [1]

 

9/30/2010 [1]

 

12/31/2010 [1]

ILEC Voice RGUs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband

 

100

 

2,000

 

4,400

 

7,100

 

9,900

 

12,400

 

14,700

 

16,200

 

17,500

 

19,000

 

20,400

 

21,000

Telecom

 

66,800

 

62,900

 

58,500

 

54,000

 

49,500

 

45,100

 

41,300

 

38,500

 

35,500

 

32,800

 

30,700

 

28,900

Total ILEC Voice RGUs [10]

 

66,900

 

64,900

 

62,900

 

61,100

 

59,400

 

57,500

 

56,000

 

54,700

 

53,000

 

51,800

 

51,100

 

49,900

Quarterly change

 

(2,300)

 

(2,000)

 

(2,000)

 

(1,800)

 

(1,700)

 

(1,900)

 

(1,500)

 

(1,300)

 

(1,700)

 

(1,200)

 

(700)

 

(1,200)

Year-over-Year change

 

(10,400)

 

(9,600)

 

(8,200)

 

(8,100)

 

(7,500)

 

(7,400)

 

(6,900)

 

(6,400)

 

(6,400)

 

(5,700)

 

(4,900)

 

(4,800)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CLEC Residential Voice RGUs [11]

 

53,400

 

54,300

 

55,300

 

56,100

 

56,100

 

55,300

 

55,300

 

55,100

 

54,300

 

54,900

 

54,500

 

53,900

Quarterly change

 

200

 

900

 

1,000

 

800

 

0

 

(800)

 

0

 

(200)

 

(800)

 

600

 

(400)

 

(600)

Year-over-Year change

 

1,400

 

1,800

 

2,500

 

2,800

 

2,700

 

1,000

 

0

 

(1,000)

 

(1,800)

 

(400)

 

(800)

 

(1,200)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL Residential Voice RGUs [12]

 

120,300

 

119,200

 

118,200

 

117,200

 

115,500

 

112,800

 

111,300

 

109,800

 

107,300

 

106,700

 

105,600

 

103,800

Quarterly change

 

(2,100)

 

(1,100)

 

(1,000)

 

(1,000)

 

(1,700)

 

(2,700)

 

(1,500)

 

(1,500)

 

(2,500)

 

(600)

 

(1,100)

 

(1,800)

Year-over-Year change

 

(9,000)

 

(7,800)

 

(5,700)

 

(5,300)

 

(4,800)

 

(6,400)

 

(6,900)

 

(7,400)

 

(8,200)

 

(6,100)

 

(5,700)

 

(6,000)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NETWORK METRICS

 

3/31/2008

 

6/30/2008

 

9/30/2008

 

12/31/2008

 

3/31/2009

 

6/30/2009

 

9/30/2009

 

12/31/2009

 

3/31/2010

 

6/30/2010

 

9/30/2010

 

12/31/2010

Marketable Homes - Fiber

 

119,900

 

125,700

 

129,000

 

138,800

 

142,900

 

146,900

 

147,100

 

147,600

 

147,700

 

147,900

 

148,300

 

148,500

Marketable Homes - HFC

 

91,100

 

92,000

 

92,700

 

93,600

 

93,600

 

92,900

 

92,900

 

92,900

 

93,000

 

93,200

 

93,600

 

93,600

Marketable Homes - Copper 2-Play

 

75,600

 

74,500

 

74,900

 

71,800

 

71,700

 

69,500

 

69,400

 

69,200

 

47,900

 

45,300

 

42,700

 

39,600

Marketable Homes - Copper 3-Play

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

21,300

 

24,000

 

26,600

 

29,600

Total

 

286,600

 

292,200

 

296,600

 

304,200

 

308,200

 

309,300

 

309,400

 

309,700

 

309,900

 

310,400

 

311,200

 

311,300

 

[1-12]  See all notes on Selected Operating Metrics Actuals Quarterly and Year-over-Year comparison