Attached files

file filename
8-K - 8-K - SUREWEST COMMUNICATIONSa11-10784_18k.htm

Exhibit 99.1

 

SUREWEST REPORTS FIRST QUARTER 2011 RESULTS

 

Strong Broadband Growth Drives 1% Increase
in Consolidated Revenues and Adjusted EBITDA,
Offsetting Scheduled $1 million Telecom Subsidy Decline in the Quarter

 

·                  Broadband Business revenues increased 19% year-over-year driven by increases in customers and ARPU due to the success of wireless carrier backhaul and continued Kansas City business market growth

 

·                  Broadband Residential revenues increased 3% year-over-year due to 2% subscriber growth and a 5% increase in RGUs from growth in Advanced Digital TV and high-speed Internet

 

·                  Combined costs of $3.5 million from one-time debt refinancing and officer retirement expense impacted net income, which decreased by $2.2 million year-over-year to a net loss of $1.6 million

 

·                  Free cash flow of $2.7 million marks the eighth consecutive quarter of positive free cash flow

 

·                  Debt, net of cash and cash equivalents, was reduced by $11 million year-over-year resulting in a net debt to Adjusted EBITDA ratio of 2.38x

 

ROSEVILLE, CA – April 28, 2011 – SureWest Communications (NASDAQ: SURW) today announced operating results for the first quarter ended March 31, 2011.

 

Steve Oldham, SureWest’s president and chief executive officer, said, “Our momentum continued in the first quarter, supporting the company’s strategy of driving long-term Broadband growth. Revenue growth continues in line with our plan, reflective of excellent residential subscriber and RGU increases combined with business services ARPU growth. These results offset the anticipated Telecom subsidy declines we’ve previously discussed, which included a sequential reduction of $1 million in the first quarter. The planned subsidy reductions will be fully phased out in 2012.

 

“SureWest continues to increase top-line revenues and manage expenses as a result of the efforts of our talented employees. We are still early in the growth cycle for Advanced Digital TV and wireless carrier backhaul services, and our fiber network continues to over-perform to meet increasing bandwidth demands from customers. Adding new fiber homes in Kansas City and expanding Advanced Digital TV in Sacramento, combined with increases in revenue per customer, will drive further growth and long-term sustainable free cash flow. Short-term, network expansion will impact free cash flow; however, this is consistent with our historical trends of building network to drive long-term revenues and is the growth engine behind our success to date.”

 



 

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

 

 

Y-O-Y comparison

 

Q-O-Q comparison

Consolidated

Q1’11

 

Q1’10

 

Change

 

%

 

Q4’10

 

 

Change

 

%

Broadband Revenue

$

45,379

 

 

$

42,577

 

 

$

2,802

 

 

7%

 

$

45,032

 

 

$

347

 

 

1%

Telecom Revenue

15,176

 

 

17,611

 

 

(2,435

)

 

(14%)

 

16,614

 

 

(1,438

)

 

(9%)

Total Revenue

60,555

 

 

60,188

 

 

367

 

 

1%

 

61,646

 

 

(1,091

)

 

(2%)

Adjusted EBITDA

19,721

 

 

19,468

 

 

253

 

 

1%

 

21,780

 

 

(2,059

)

 

(9%)

Net Income (Loss)

(1,644

)

 

527

 

 

(2,171

)

 

(412%)

 

1,951

 

 

(3,595

)

 

(184%)

Capital Expenditures

11,452

 

 

12,536

 

 

(1,084

)

 

(9%)

 

13,289

 

 

(1,837

)

 

(14%)

Net Cash Provided by Operating Activities

19,372

 

 

16,341

 

 

3,031

 

 

19%

 

17,044

 

 

2,328

 

 

14%

Free Cash Flow

2,679

 

 

3,097

 

 

(418

)

 

(13%)

 

4,439

 

 

(1,760

)

 

(40%)

Net Debt

197,119

 

 

208,063

 

 

(10,944

)

 

(5%)

 

202,472

 

 

(5,353

)

 

(3%)

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

 

First Quarter Financial Results

 

Consolidated revenues increased 1% year-over-year to $60.6 million as Broadband revenues grew by $2.8 million, or 7%, more than offsetting Telecom revenue declines of $2.4 million, or 14%. Adjusted EBITDA increased 1% year-over-year to $19.7 million, with Broadband Adjusted EBITDA increasing 26% to account for 52% of total Adjusted EBITDA. Consolidated Adjusted EBITDA margin was 33% compared to 32% in the same period last year.

 

Operating expenses, exclusive of depreciation and amortization, increased 2% year-over-year to $42.8 million. This was primarily due to increases in residential video license fees and transport charges associated with growth, as well as one-time officer retirement expense of $888 thousand. These expenses were partially offset by reductions in labor and operating costs related to the cost saving initiatives completed in June 2010. Cost reductions were due to a decline in employee counts of 72 to a total of 817, reduced professional fees and office space consolidation, resulting in an estimated annualized savings of over $7 million.

 

Net loss for the quarter was $1.6 million compared to net income of $527 thousand in the same period last year primarily due to one-time debt refinancing and retirement costs of $3.5 million in the quarter. Earnings per share was negative $0.12 compared to $0.14 in the fourth quarter 2010 and $0.04 in the first quarter 2010.

 

Free cash flow, defined as net income (loss) plus depreciation and amortization less capital expenditures, was $2.7 million for the quarter, compared to $3.1 million in the first quarter 2010. The company expects capital expenditures and associated free cash flow to vary quarter to quarter based on fiber-to-the-home (FTTH) expansion in Kansas City and the resulting opportunities for additional residential and business services growth.

 

Cash and cash equivalents increased by $10 million sequentially, from $2.9 million in the fourth quarter 2010 to $12.9 million. During the quarter, SureWest entered into a new credit agreement refinancing $210 million in debt. Quarterly amortization payments of $3.75 million will commence on September 30, 2011. Total debt net of cash and cash equivalents (net debt) was $197.1 million, resulting in a net debt to Adjusted EBITDA ratio of 2.38x.

 

Capital expenditures totaled $11.5 million for the first quarter, a decrease from $12.5 million in the same period last year. The company expects to continue taking advantage of growth opportunities, as well as favorable tax treatment, and is targeting its 2011 capital spending on business sales opportunities and increases in residential RGUs. Beginning in the second quarter 2011, the company began to construct and pass 10,000 additional fiber homes that will be released throughout 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. Additionally, with minimal capital spend, the company is reaching 6,800 new homes in its ILEC territory with Advanced Digital TV service, increasing the percentage of triple-play marketable homes in the ILEC to 65%, up from 24% at the beginning of 2010. 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, which will also impact short-term free cash flow.

 

Broadband Segment Results

 

Broadband revenues increased 7% year-over-year and accounted for 75% of the company’s total revenues in the quarter, compared to 71% in the first quarter 2010. Broadband Adjusted EBITDA increased 26% year-over-year and now represents 52% of the company’s total Adjusted EBITDA. SureWest expects to continue increasing its Broadband revenues and Adjusted EBITDA through aggressive marketing to both residential and business customers. 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 3% year-over-year to $31.8 million as a result of 5% growth in RGUs and a 1% increase in overall ARPU, primarily driven by new triple-play Advanced Digital TV customers in the ILEC. ARPU for the company’s FTTH and HFC networks decreased 1% year-over-year to $114 due to promotional discounts implemented in the second quarter of 2010 related to the launch of Advanced Digital TV.

 

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 and some pricing power. Competitors in the company’s markets are returning to more conservative promotional tactics, allowing SureWest to scale back its discounting programs. This should have a positive impact on ARPU moving forward.

 

In Sacramento, Advanced Digital TV continued to drive growth, increasing total net video RGUs by 8% year-over-year and 2% sequentially. SureWest served 15,800 Advanced Digital TV subscribers through the first quarter, representing 60% of the company’s video RGUs in Sacramento. Advanced Digital TV subscribers have an ARPU of $135, with approximately 98% bundling Internet and 85% subscribing to a triple-play.

 

Residential customer churn improved year-over-year and sequentially from 1.6% to 1.4% in the first quarter as a result of customer retention programs, value-added features and ongoing superior service levels.

 

To illustrate growth trends, Broadband RGUs and subscriber counts are detailed both year-over-year and sequentially in the table below:

 

 

 

Q1 ‘11 vs. Q1 ‘10 Change

 

Q1 ‘11 vs. Q4 ‘10 Change

 

 

Sacramento
Market

 

Kansas City
Market

 

Total

 

Sacramento
Market

 

Kansas City
Market

 

Total

Broadband Residential RGUs

 

7%

 

2%

 

5%

 

1%

 

1%

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

Data RGUs

 

2%

 

4%

 

3%

 

0%

 

2%

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

Video RGUs

 

15%

 

3%

 

8%

 

3%

 

1%

 

2%

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice RGUs

 

11%

 

(1%)

 

5%

 

2%

 

0%

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Residential Subscribers

 

2%

 

3%

 

2%

 

0%

 

1%

 

1%

 

 

Broadband Business:
Broadband Business revenues increased by $2 million, or 19%, year-over-year to $12.6 million. Business customers increased 5% year-over-year to 7,800 and ARPU grew 13% from the prior year to $539. Broadband Business growth expectations remain high in both Sacramento and Kansas City. The Kansas City market grew ARPU by 8% year-over-year while increasing customer counts by 8%. The Sacramento market grew customer counts by 3% and ARPU grew by 17% driven by wireless backhaul and existing customers taking additional products such as data center services.

 

As of March 31, 2011, SureWest was billing for 198 wireless backhaul access points at annualized revenues of $2.5 million. Due to increased customer demand, the company beat expectations and is scheduled to be billing for over 360 connections currently under contract by the end of 2011; pulling

 



 

forward an additional 60 access points that were previously scheduled for 2012. Opportunities exist and are currently being pursued to serve additional connections in each region.

 

Telecom Segment Results

 

Telecom revenues declined 14% year-over-year to $15.2 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 greater than 40%, 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.

 

First quarter 2011 year-over-year consolidated ILEC voice RGU loss was 4,200, compared to a loss of 6,400 in the first quarter 2010. Also, the migration of existing Telecom ILEC access lines to Broadband Voice over IP (VoIP) enables the continued preservation of voice revenues on a consolidated basis. First quarter 2011 consolidated year-over-year loss in ILEC and CLEC voice RGUs combined was 4,400, compared to a loss of 8,200 in the first quarter 2010.

 

As the company focuses on growing its Broadband segment, the Telecom segment is expected to continue accounting for a smaller percentage of total revenues. For the first quarter 2011, Telecom revenues accounted for 25% of total company revenues compared to 29% in the first quarter 2010.

 

Telecom Residential:
Telecom Residential revenues declined 26% year-over-year to $3.6 million resulting from a 23% decline in Telecom voice RGUs. However, of the 8,200 year-over-year Telecom Residential voice RGU losses, 3,200, or 39%, migrated to the SureWest Broadband VoIP service.

 

Telecom Business:
Telecom Business revenues remained steady year-over-year at $8.4 million due to a data price increase in September 2010 offsetting a 6% decline in customers due to the impact on small businesses from competitive pressures and strained economic conditions causing some to go out of business. Telecom Business services revenues now represent 55% of the total segment revenues. The economic impact on businesses has been stabilizing over the last four quarters and the company expects to see growth through new commercial opportunities as the California economy recovers and vacancy rates improve.

 

Telecom Access:
Telecom Access revenues decreased by $1.1 million year-over-year to $3.1 million primarily due to the scheduled reduction in the California High Cost Fund (CHCF) subsidy, the elimination of transport interconnection charges as of January 1, 2011 and the decline in switched access revenues related to access line loss. The annual CHCF subsidies are scheduled to be $2 million in 2011, a decrease from $4.1 million in 2010, and will be zero in 2012. Additionally, the elimination of transport interconnection charges will result in an estimated reduction of $2 million in full year 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) 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) 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 5 p.m. Eastern Time on Thursday, April 28. 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 May 5, 2011 by calling 888.286.8010 and entering pass code 87034497. Visit www.surw.com for updates prior to the call. To receive SureWest financial news by email, please visit www.surw.com and subscribe to “Email Alerts.”

 

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

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

Quarters Ended

 

 

 

 

 

 

March 31,

 

December 31,

 

$

 

%

 

 

2011

 

2010

 

Change

 

Change

Operating revenues:

 

 

 

 

 

 

 

 

Broadband

 

45,379

 

45,032

 

347

 

1%

Telecom

 

15,176

 

16,614

 

(1,438)

 

(9%)

Total operating revenues

 

60,555

 

61,646

 

(1,091)

 

(2%)

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

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

 

27,261

 

26,948

 

313

 

1%

Customer operations and selling

 

6,983

 

7,095

 

(112)

 

(2%)

General and administrative

 

8,548

 

6,828

 

1,720

 

25%

Depreciation and amortization

 

15,775

 

15,777

 

(2)

 

(0%)

Total operating expenses

 

58,567

 

56,648

 

1,919

 

3%

 

 

 

 

 

 

 

 

 

Income from operations

 

1,988

 

4,998

 

(3,010)

 

(60%)

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

15

 

15

 

-

 

-

Interest expense

 

(4,416)

 

(2,157)

 

(2,259)

 

(105%)

Other, net

 

207

 

107

 

100

 

93%

Total other income (expense), net

 

(4,194)

 

(2,035)

 

(2,159)

 

(106%)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(2,206)

 

2,963

 

(5,169)

 

(174%)

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

(562)

 

1,012

 

(1,574)

 

(156%)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

(1,644)

 

1,951

 

(3,595)

 

(184%)

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per common share

 

(0.12)

 

0.14

 

(0.26)

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock used to calculate earnings per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

13,784

 

13,694

 

90

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

0.08

 

-

 

0.08

 

 

 



 

SUREWEST COMMUNICATIONS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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

 

 

 

Quarters Ended March 31,

 

$

 

%

 

 

2011

 

2010

 

Change

 

Change

Operating revenues:

 

 

 

 

 

 

 

 

Broadband

 

$ 

45,379

 

$ 

42,577

 

$ 

2,802

 

7%

Telecom

 

15,176

 

17,611

 

(2,435)

 

(14%)

Total operating revenues

 

60,555

 

60,188

 

367

 

1%

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

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

 

27,261

 

25,617

 

1,644

 

6%

Customer operations and selling

 

6,983

 

7,510

 

(527)

 

(7%)

General and administrative

 

8,548

 

8,813

 

(265)

 

(3%)

Depreciation and amortization

 

15,775

 

15,106

 

669

 

4%

Total operating expenses

 

58,567

 

57,046

 

1,521

 

3%

 

 

 

 

 

 

 

 

 

Income from operations

 

1,988

 

3,142

 

(1,154)

 

(37%)

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

15

 

18

 

(3)

 

(17%)

Interest expense

 

(4,416)

 

(1,643)

 

(2,773)

 

(169%)

Other, net

 

207

 

(166)

 

373

 

225%

Total other income (expense), net

 

(4,194)

 

(1,791)

 

(2,403)

 

(134%)

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

(2,206)

 

1,351

 

(3,557)

 

(263%)

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

(562)

 

824

 

(1,386)

 

(168%)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$ 

(1,644)

 

$ 

527

 

$ 

(2,171)

 

(412%)

 

 

 

 

 

 

 

 

 

Basic and diluted earnings (loss) per common share

 

$ 

(0.12)

 

$ 

0.04

 

$ 

(0.16)

 

 

 

 

 

 

 

 

 

 

 

Shares of common stock used to calculate earnings per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

13,784

 

14,002

 

(218)

 

 

 

 

 

 

 

 

 

 

 

Dividends declared per common share

 

0.08

 

-

 

0.08

 

 

 



 

SUREWEST COMMUNICATIONS

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited; Amounts in thousands)

 

 

 

March 31,

 

December 31,

 

$

 

%

 

 

 

2011

 

2010

 

Change

 

Change

 

ASSETS

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$ 

12,881

 

$ 

2,937

 

$ 

9,944

 

339%

 

Short-term investments

 

 

771

 

(771)

 

(100%)

 

Accounts receivable, net

 

19,865

 

20,298

 

(433)

 

(2%)

 

Income tax receivable

 

412

 

1,782

 

(1,370)

 

(77%)

 

Prepaid expenses

 

2,749

 

3,792

 

(1,043)

 

(28%)

 

Deferred income taxes

 

2,043

 

2,284

 

(241)

 

(11%)

 

Assets held for sale

 

6,009

 

6,009

 

-

 

-

 

Total current assets

 

43,959

 

37,873

 

6,086

 

16%

 

 

 

 

 

 

 

 

 

 

 

Property, plant and equipment, net

 

 

 

 

 

 

 

 

 

 

 

510,523

 

514,639

 

(4,116)

 

(1%)

 

Intangible and other assets:

 

 

 

 

 

 

 

 

 

Customer relationships, net

 

2,329

 

2,632

 

(303)

 

(12%)

 

Goodwill

 

45,814

 

45,814

 

-

 

-

 

Deferred charges and other assets

 

5,386

 

2,223

 

3,163

 

142%

 

 

 

53,529

 

50,669

 

2,860

 

6%

 

 

 

$ 

608,011

 

$ 

603,181

 

$ 

4,830

 

1%

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

$ 

11,250

 

$ 

15,636

 

$ 

(4,386)

 

(28)%

 

Accounts payable

 

1,963

 

2,885

 

(922)

 

(32)%

 

Other accrued liabilities

 

15,534

 

12,847

 

2,687

 

21%

 

Advance billings and deferred revenues

 

8,225

 

8,035

 

190

 

2%

 

Accrued compensation

 

7,186

 

6,998

 

188

 

3%

 

Total current liabilities

 

44,158

 

46,401

 

(2,243)

 

(5%)

 

 

 

 

 

 

 

 

 

 

 

Long-term debt

 

198,750

 

189,773

 

8,977

 

5%

 

Deferred income taxes

 

55,641

 

56,661

 

(1,020)

 

(2%)

 

Accrued pension and other post-retirement benefits

 

34,150

 

33,815

 

335

 

1%

 

Other liabilities and deferred revenues

 

4,455

 

4,473

 

(18)

 

(0%)

 

 

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

 

 

Common stock, without par value; 100,000 shares authorized, 14,091 and 13,866 shares issued and outstanding at March 31, 2011 and December 31, 2010, respectively

 

144,953

 

143,309

 

1,644

 

1%

 

Accumulated other comprehensive loss

 

(15,141)

 

(15,081)

 

(60)

 

(0%)

 

Retained earnings

 

141,045

 

143,830

 

(2,785)

 

(2%)

 

Total shareholders’ equity

 

270,857

 

272,058

 

(1,201)

 

(0)%

 

 

 

$ 

608,011

 

$ 

603,181

 

$ 

4,830

 

1%

 

 


 


 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December

31, 2010

 

Quarter Ended
March 31, 2011

 

Quarter
Year-over-Year

 

Sequential
Qtr-over-Qtr

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

$ chg

 

%

 

$ chg

 

%

Operating revenues (1) 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband

 

  $

42,577

 

 

 

 $

43,076

 

 

 

 $

43,861

 

 

 

 $

45,032

 

 

 

 $

174,546

 

 

 $

45,379

 

 

 $

2,802

 

 

7%

 

 

 $

347

 

 

1%

Telecom

 

17,611

 

 

 

17,472

 

 

 

17,256

 

 

 

16,614

 

 

 

68,953

 

 

15,176

 

 

(2,435

)

 

(14%)

 

 

(1,438

)

 

(9%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total operating revenues

 

60,188

 

 

 

60,548

 

 

 

61,117

 

 

 

61,646

 

 

 

243,499

 

 

60,555

 

 

367

 

 

1%

 

 

(1,091

)

 

(2%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses (1) 

 

41,940

 

 

 

43,249

 

 

 

40,420

 

 

 

40,871

 

 

 

166,480

 

 

42,792

 

 

852

 

 

2%

 

 

1,921

 

 

5%

Depreciation and amortization

 

15,106

 

 

 

15,262

 

 

 

15,680

 

 

 

15,777

 

 

 

61,825

 

 

15,775

 

 

669

 

 

4%

 

 

(2

)

 

(0%)

Income from operations

 

 $

3,142

 

 

 

 $

2,037

 

 

 

 $

5,017

 

 

 

 $

4,998

 

 

 

 $

15,194

 

 

 $

1,988

 

 

 $

(1,154

)

 

(37%)

 

 

 $

(3,010

)

 

(60%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Consolidated Reconciliation of Adjusted EBITDA to Net Income (Loss)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December
31, 2010

 

Quarter Ended
March 31, 2011

 

Quarter
Year-over-Year

 

Sequential
Qtr-over-Qtr

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

$ chg

 

%

 

$ chg

 

%

Net income (loss)

 

 $

527

 

 

 

 $

(527

)

 

 

 $

1,404

 

 

 

 $

1,951

 

 

 

 $

3,355

 

 

 $

(1,644)

 

 

 $

(2,171

)

 

(412%)

 

 

 $

(3,595

)

 

(184%)

Add: income tax expense

 

824

 

 

 

190

 

 

 

1,328

 

 

 

1,012

 

 

 

3,354

 

 

(562)

 

 

(1,386

)

 

(168%)

 

 

(1,574

)

 

(156%)

Less: other (income)/expense

 

1,791

 

 

 

2,374

 

 

 

2,285

 

 

 

2,035

 

 

 

8,485

 

 

4,194

 

 

2,403

 

 

134%

 

 

2,159

 

 

106%

Income from operations

 

3,142

 

 

 

2,037

 

 

 

5,017

 

 

 

4,998

 

 

 

15,194

 

 

1,988

 

 

(1,154

)

 

(37%)

 

 

(3,010

)

 

(60%)

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

15,106

 

 

 

15,262

 

 

 

15,680

 

 

 

15,777

 

 

 

61,825

 

 

15,775

 

 

669

 

 

4%

 

 

(2

)

 

(0%)

Non-cash pension expense

 

420

 

 

 

341

 

 

 

371

 

 

 

371

 

 

 

1,503

 

 

313

 

 

(107

)

 

(25%)

 

 

(58

)

 

(16%)

Non-cash stock compensation expense

 

800

 

 

 

1,144

 

 

 

267

 

 

 

634

 

 

 

2,845

 

 

1,645

 

 

845

 

 

106%

 

 

1,011

 

 

159%

Severance and other related costs (3)

 

-

 

 

 

1,144

 

 

 

-

 

 

 

-

 

 

 

1,144

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

Adjusted EBITDA (2)

 

 $

19,468

 

 

 

 $

19,928

 

 

 

 $

21,335

 

 

 

 $

21,780

 

 

 

 $

82,511

 

 

 $

19,721

 

 

 $

253

 

 

1%

 

 

 $

(2,059

)

 

(9%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

32

%

 

 

33

%

 

 

35

%

 

 

35

%

 

 

34%

 

 

33%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Consolidated Free Cash Flow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December
31, 2010

 

Quarter Ended
March 31, 2011

 

Quarter
Year-over-Year

 

Sequential
Qtr-over-Qtr

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

$ chg

 

%

 

$ chg

 

%

Net income (loss)

 

 $

527

 

 

 

 $

(527

)

 

 

 $

1,404

 

 

 

 $

1,951

 

 

 

 $

3,355

 

 

 $

(1,644)

 

 

 $

(2,171

)

 

(412%)

 

 

 $

(3,595

)

 

(184%)

Add: Depreciation and amortization

 

15,106

 

 

 

15,262

 

 

 

15,680

 

 

 

15,777

 

 

 

61,825

 

 

15,775

 

 

669

 

 

4%

 

 

(2

)

 

(0%)

Less: Capital expenditures

 

(12,536

)

 

 

(13,878

)

 

 

(12,857

)

 

 

(13,289

)

 

 

(52,560)

 

 

(11,452)

 

 

1,084

 

 

9%

 

 

1,837

 

 

14%

Free cash flow (4)

 

 $

3,097

 

 

 

 $

857

 

 

 

 $

4,227

 

 

 

 $

4,439

 

 

 

 $

12,620

 

 

 $

2,679

 

 

 $

(418

)

 

(13%)

 

 

 $

(1,760

)

 

(40%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Consolidated Net Debt Ratio

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

 

 

Quarter Ended
March 31, 2011

 

Quarter
Year-over-Year

 

Sequential
Qtr-over-Qtr

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

 

 

 

$ chg

 

%

 

 

$ chg

 

 

%

Net Debt:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Long-term debt, including current maturities

 

 $

215,045

 

 

 

 $

219,045

 

 

 

 $

209,045

 

 

 

 $

205,409

 

 

 

 

 

 

 

 $

210,000

 

 

 $

(5,045

)

 

(2%)

 

 

 $

4,591

 

 

2%

Less: Cash and cash equivalents

 

(6,982

)

 

 

(6,154

)

 

 

(3,215

)

 

 

(2,937

)

 

 

 

 

 

 

(12,881)

 

 

(5,899

)

 

(84%)

 

 

(9,944

)

 

(339%)

Net Debt (5)

 

 $

208,063

 

 

 

 $

212,891

 

 

 

 $

205,830

 

 

 

 $

202,472

 

 

 

 

 

 

 

 $

197,119

 

 

 $

(10,944

)

 

(5%)

 

 

 $

(5,353

)

 

(3%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of Net Debt to Adjusted EBITDA:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Debt

 

 $

208,063

 

 

 

 $

212,891

 

 

 

 $

205,830

 

 

 

 $

202,472

 

 

 

 

 

 

 

 $

197,119

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Divided by: Adjusted EBITDA (TTM)

 

 $

77,873

 

 

 

 $

77,942

 

 

 

 $

80,316

 

 

 

 $

82,511

 

 

 

 

 

 

 

 $

82,764

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ratio of net debt to Adjusted EBITDA (6)

 

2.67

 

 

 

2.73

 

 

 

2.56

 

 

 

2.45

 

 

 

 

 

 

 

2.38

 

 

 

 

 

 

 

 

 

 

 

 

 



 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December
31, 2010

 

Quarter Ended
March 31, 2011

 

Quarter
Year-over-Year

 

Sequential
Qtr-over-Qtr

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

$ chg

 

%

 

$ chg

 

%

Data

 

 $

12,248 

 

 

 $

12,145

 

 

 $

12,100 

 

 

 $

12,385 

 

 

 $

48,878 

 

 

 $

12,516 

 

 

 $

268

 

 

2%

 

 

 $

131

 

 

1%

Video

 

12,219 

 

 

12,166 

 

 

12,151 

 

 

12,603 

 

 

49,139 

 

 

12,789 

 

 

570

 

 

5%

 

 

186

 

 

1%

Voice

 

6,507 

 

 

6,600

 

 

6,704 

 

 

6,650 

 

 

26,461 

 

 

6,526 

 

 

19

 

 

0%

 

 

(124

)

 

(2%)

Total residential revenues

 

30,974 

 

 

30,911

 

 

30,955 

 

 

31,638 

 

 

124,478 

 

 

31,831 

 

 

857

 

 

3%

 

 

193

 

 

1%

Business

 

10,570 

 

 

11,253

 

 

11,979 

 

 

12,407 

 

 

46,209 

 

 

12,614 

 

 

2,044

 

 

19%

 

 

207

 

 

2%

Access

 

727 

 

 

541 

 

 

481 

 

 

486 

 

 

2,235 

 

 

556 

 

 

(171

)

 

(24%)

 

 

70

 

 

14%

Other

 

306 

 

 

371 

 

 

446 

 

 

501 

 

 

1,624 

 

 

378 

 

 

72

 

 

24%

 

 

(123

)

 

(25%)

Total operating revenues from external customers

 

42,577 

 

 

43,076 

 

 

43,861 

 

 

45,032 

 

 

174,546 

 

 

45,379 

 

 

2,802

 

 

7%

 

 

347

 

 

1%

Intersegment revenues

 

168 

 

 

145 

 

 

110 

 

 

141 

 

 

564 

 

 

160 

 

 

(8

)

 

(5%)

 

 

19

 

 

13%

Total operating revenues

 

42,745 

 

 

43,221 

 

 

43,971 

 

 

45,173 

 

 

175,110 

 

 

45,539 

 

 

2,794

 

 

7%

 

 

366

 

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses without depreciation

 

35,137 

 

 

36,003 

 

 

34,304 

 

 

34,838 

 

 

140,282 

 

 

36,337 

 

 

1,200

 

 

3%

 

 

1,499

 

 

4%

Depreciation and amortization

 

12,180 

 

 

12,140 

 

 

12,609 

 

 

12,692 

 

 

49,621 

 

 

12,688 

 

 

508

 

 

4%

 

 

(4

)

 

(0%)

Loss from operations

 

 $

(4,572)

 

 

 $

(4,922)

 

 

 $

(2,942)

 

 

 $

(2,357)

 

 

 $

(14,793)

 

 

 $

(3,486)

 

 

 $

1,086

 

 

24%

 

 

 $

(1,129

)

 

(48%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Broadband Reconciliation of Adjusted EBITDA to Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December
31, 2010

 

Quarter Ended
March 31, 2011

 

Quarter
Year-over-Year

 

Sequential
Qtr-over-Qtr

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

$ chg

 

%

 

$ chg

 

%

Net loss

 

 $

(3,720)

 

 

 $

(4,269)

 

 

 $

(3,082)

 

 

 $

(1,802)

 

 

 $

(12,873)

 

 

 $

(4,405)

 

 

 $

(685

)

 

(18%)

 

 

 $

(2,603

)

 

(144%)

Add: income tax benefits

 

(2,504)

 

 

(2,867)

 

 

(2,066)

 

 

(2,456)

 

 

(9,893)

 

 

(2,928)

 

 

(424

)

 

(17%)

 

 

(472

)

 

(19%)

Less: other (income)/expense

 

1,652 

 

 

2,214 

 

 

2,206 

 

 

1,901 

 

 

7,973 

 

 

3,847 

 

 

2,195

 

 

133%

 

 

1,946

 

 

102%

Loss from operations

 

(4,572)

 

 

(4,922)

 

 

(2,942)

 

 

(2,357)

 

 

(14,793)

 

 

(3,486)

 

 

1,086

 

 

24%

 

 

(1,129

)

 

(48%)

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

12,180 

 

 

12,140 

 

 

12,609 

 

 

12,692 

 

 

49,621 

 

 

12,688 

 

 

508

 

 

4%

 

 

(4

)

 

(0%)

Non-cash pension expense

 

205 

 

 

162 

 

 

181 

 

 

179 

 

 

727 

 

 

153 

 

 

(52

)

 

(25%)

 

 

(26

)

 

(15%)

Non-cash stock compensation expense

 

386 

 

 

560 

 

 

160 

 

 

343 

 

 

1,449 

 

 

978 

 

 

592

 

 

153%

 

 

635

 

 

185%

Severance and other related costs (3)

 

-

 

 

469 

 

 

 

 

 

 

469 

 

 

 

 

-

 

 

-

 

 

-

 

 

-

Adjusted EBITDA (2)

 

 $

8,199 

 

 

 $

8,409 

 

 

 $

10,008 

 

 

 $

10,857 

 

 

 $

37,473 

 

 

 $

10,333 

 

 

 $

2,134

 

 

26%

 

 

 $

(524

)

 

(5%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

19%

 

 

19%

 

 

23%

 

 

24%

 

 

21%

 

 

23%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Broadband Free Cash Flow

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December
31, 2010

 

Quarter Ended
March 31, 2011

 

Quarter
Year-over-Year

 

Sequential
Qtr-over-Qtr

 

March 31

 

June 30

 

September 30

 

December 31

 

 

 

$ chg

 

%

 

$ chg

 

%

Net loss

 

 $

(3,720)

 

 

 $

(4,269)

 

 

 $

(3,082)

 

 

 $

(1,802)

 

 

 $

(12,873)

 

 

 $

(4,405)

 

 

 $

(685

)

 

(18%)

 

 

 $

(2,603

)

 

(144%)

Add: Depreciation and amortization

 

12,180 

 

 

12,140 

 

 

12,609 

 

 

12,692 

 

 

49,621 

 

 

12,688 

 

 

508

 

 

4%

 

 

(4

)

 

(0%)

Less: Capital expenditures

 

(8,723)

 

 

(11,805)

 

 

(11,370)

 

 

(12,046)

 

 

(43,944)

 

 

(9,574)

 

 

(851

)

 

(10%)

 

 

2,472

 

 

21%

Free cash flow (4)

 

 $

(263)

 

 

 $

(3,934)

 

 

 $

(1,843)

 

 

 $

(1,156)

 

 

 $

(7,196)

 

 

 $

(1,291)

 

 

 $

(1,028

)

 

(391%)

 

 

 $

(135

)

 

(12%)

 



 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December

 

Quarter Ended

 

Quarter
Year-over-Year

 

 

Sequential
Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

31, 2010

 

March 31, 2011

 

$ chg

 

 

%

 

 

$ chg

 

 

%

 

Residential

 

$

4,868

 

$

4,479

 

$

4,086

 

$

3,843

 

$

17,276

 

$

3,592

 

$

(1,276

)

 

(26%)

 

 

$

(251

)

 

(7%)

 

Business

 

8,418

 

8,400

 

8,750

 

8,592

 

34,160

 

8,394

 

(24

)

 

(0%)

 

 

(198

)

 

(2%)

 

Access

 

4,160

 

4,408

 

4,274

 

4,053

 

16,895

 

3,054

 

(1,106

)

 

(27%)

 

 

(999

)

 

(25%)

 

Other

 

165

 

185

 

146

 

126

 

622

 

136

 

(29

)

 

(18%)

 

 

10

 

 

8%

 

Total operating revenues from external customers

 

17,611

 

17,472

 

17,256

 

16,614

 

68,953

 

15,176

 

(2,435

)

 

(14%)

 

 

(1,438

)

 

(9%)

 

Intersegment revenues

 

4,919

 

5,091

 

5,275

 

5,352

 

20,637

 

5,296

 

377

 

 

8%

 

 

(56

)

 

(1%)

 

Total operating revenues

 

22,530

 

22,563

 

22,531

 

21,966

 

89,590

 

20,472

 

(2,058

)

 

(9%)

 

 

(1,494

)

 

(7%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses without depreciation

 

11,890

 

12,482

 

11,501

 

11,526

 

47,399

 

11,911

 

21

 

 

0%

 

 

385

 

 

3%

 

Depreciation and amortization

 

2,926

 

3,122

 

3,071

 

3,085

 

12,204

 

3,087

 

161

 

 

6%

 

 

2

 

 

0%

 

Income from operations

 

$

7,714

 

$

6,959

 

$

7,959

 

$

7,355

 

$

29,987

 

$

5,474

 

$

(2,240

)

 

(29%)

 

 

$

(1,881

)

 

(26%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Telecom Reconciliation of Adjusted EBITDA to Net Income 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December

 

Quarter Ended

 

Quarter
Year-over-Year

 

 

Sequential
Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

31, 2010

 

March 31, 2011

 

$ chg

 

 

%

 

 

$ chg

 

 

%

 

Net income

 

$

4,247

 

$

3,742

 

$

 4,486

 

$

 3,753

 

$

 16,228

 

$

 2,761

 

$

 (1,486

)

 

(35%)

 

 

$

 (992

)

 

(26%)

 

Add: income tax expense

 

3,328

 

3,057

 

3,394

 

3,468

 

13,247

 

2,366

 

(962

)

 

(29%)

 

 

(1,102

)

 

(32%)

 

Less: other (income)/expense

 

139

 

160

 

79

 

134

 

512

 

347

 

208

 

 

150%

 

 

213

 

 

159%

 

Income from operations

 

7,714

 

6,959

 

7,959

 

7,355

 

29,987

 

5,474

 

(2,240

)

 

(29%)

 

 

(1,881

)

 

(26%)

 

Add (subtract):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

2,926

 

3,122

 

3,071

 

3,085

 

12,204

 

3,087

 

161

 

 

6%

 

 

2

 

 

0%

 

Non-cash pension expense

 

215

 

179

 

190

 

192

 

776

 

160

 

(55

)

 

(26%)

 

 

(32

)

 

(17%)

 

Non-cash stock compensation expense

 

414

 

584

 

107

 

291

 

1,396

 

667

 

253

 

 

61%

 

 

376

 

 

129%

 

Severance and other related costs (3)

 

-

 

675

 

-

 

-

 

675

 

-

 

-

 

 

-

 

 

-

 

 

-

 

Adjusted EBITDA (2)

 

$

11,269

 

$

11,519

 

$

 11,327

 

$

 10,923

 

$

 45,038

 

$

 9,388

 

$

 (1,881

)

 

(17%)

 

 

$

 (1,535

)

 

(14%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

50%

 

51%

 

50%

 

50%

 

50%

 

46%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Telecom Free Cash Flow 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For 2010 Quarters Ended:

 

Twelve Months
Ended December

 

Quarter Ended

 

Quarter
Year-over-Year

 

 

Sequential
Qtr-over-Qtr

 

 

 

March 31

 

June 30

 

September 30

 

December 31

 

31, 2010

 

March 31, 2011

 

$ chg

 

 

%

 

 

$ chg

 

 

%

 

Net income

 

$

 4,247

 

$

 3,742

 

$

 4,486

 

$

 3,753

 

$

 16,228

 

$

 2,761

 

$

 (1,486

)

 

(35%)

 

 

$

 (992

)

 

(26%)

 

Add: Depreciation and amortization

 

2,926

 

3,122

 

3,071

 

3,085

 

12,204

 

3,087

 

161

 

 

6%

 

 

2

 

 

0%

 

Less: Capital expenditures

 

(3,218)

 

(1,729)

 

(1,442)

 

(897)

 

(7,286)

 

(1,704)

 

1,514

 

 

47%

 

 

(807

)

 

(90%)

 

Free cash flow (4)

 

$

 3,955

 

$

 5,135

 

$

 6,115

 

$

 5,941

 

$

 21,146

 

$

 4,144

 

$

 189

 

 

5%

 

 

$

 (1,797

)

 

(30%)

 

 



 

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) 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

 

3/31/2011 [1]

 

3/31/2010 [1]

 

Change

 

% Change

 

12/31/2010 [1]

 

Change

 

% Change

Residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes [2]

 

272,600

 

261,900

 

10,700

 

4%

 

271,800

 

800

 

0%

RGUs

 

63,100

 

58,500

 

4,600

 

8%

 

61,800

 

1,300

 

2%

Penetration [2]

 

23.1%

 

22.3%

 

0.8%

 

4%

 

22.7%

 

0.4%

 

2%

ARPU

 

$68

 

$70

 

($2)

 

(2%)

 

$68

 

$0

 

(0%)

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

311,600

 

309,900

 

1,700

 

1%

 

311,300

 

300

 

0%

RGUs

 

75,600

 

71,800

 

3,800

 

5%

 

74,900

 

700

 

1%

Penetration

 

24.3%

 

23.2%

 

1.1%

 

5%

 

24.1%

 

0.2%

 

1%

ARPU

 

$29

 

$30

 

($1)

 

(5%)

 

$30

 

($1)

 

(2%)

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

311,600

 

309,900

 

1,700

 

1%

 

311,300

 

300

 

0%

RGUs

 

100,300

 

97,500

 

2,800

 

3%

 

99,400

 

900

 

1%

Penetration

 

32.2%

 

31.5%

 

0.7%

 

2%

 

31.9%

 

0.3%

 

1%

ARPU

 

$42

 

$42

 

$0

 

(0%)

 

$42

 

$0

 

0%

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RGUs

 

239,000

 

227,800

 

11,200

 

5%

 

236,100

 

2,900

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscriber totals

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Subscribers [3]

 

104,900

 

102,500

 

2,400

 

2%

 

104,100

 

800

 

1%

Penetration

 

33.7%

 

33.1%

 

0.6%

 

2%

 

33.4%

 

0.2%

 

1%

ARPU [4]

 

$102

 

$101

 

$1

 

1%

 

$101

 

$1

 

0%

Triple Play ARPU [5]

 

$114

 

$116

 

($2)

 

(1%)

 

$115

 

($1)

 

(0%)

Triple Play RGUs per Subscriber [5]

 

2.52

 

2.53

 

(0.01)

 

(0%)

 

2.53

 

(0.01)

 

(0%)

Churn

 

1.4%

 

1.6%

 

-0.2%

 

(10%)

 

1.6%

 

-0.2%

 

(10%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business [6]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customers

 

7,800

 

7,400

 

400

 

5%

 

7,800

 

0

 

0%

ARPU

 

$539

 

$479

 

$60

 

13%

 

$535

 

$4

 

1%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TELECOM

 

3/31/2011

 

3/31/2010

 

Change

 

% Change

 

12/31/2010

 

Change

 

% Change

Residential

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Marketable Homes

 

91,700

 

91,100

 

600

 

1%

 

91,500

 

200

 

0%

RGUs [7]

 

27,300

 

35,500

 

(8,200)

 

(23%)

 

28,900

 

(1,600)

 

(6%)

Cumulative Migration to Broadband Voice [8]

 

16,100

 

12,900

 

3,200

 

25%

 

15,400

 

700

 

5%

Penetration

 

29.8%

 

39.0%

 

-9.2%

 

(24%)

 

31.6%

 

-1.8%

 

(6%)

ARPU

 

$43

 

$44

 

($1)

 

(3%)

 

$43

 

$0

 

(1%)

Churn [9]

 

1.8%

 

2.3%

 

-0.6%

 

(24%)

 

2.0%

 

-0.2%

 

(10%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business [6]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Customers

 

7,800

 

8,300

 

(500)

 

(6%)

 

7,900

 

(100)

 

(1%)

ARPU

 

$356

 

$334

 

$22

 

7%

 

$359

 

($3)

 

(1%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED RESIDENTIAL VOICE RGUs

 

3/31/2011 [1]

 

3/31/2010 [1]

 

Change

 

% Change

 

12/31/2010 [1]

 

Change

 

% Change

ILEC Voice RGUs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Broadband

 

21,500

 

17,500

 

4,000

 

23%

 

21,000

 

500

 

2%

Telecom

 

27,300

 

35,500

 

(8,200)

 

(23%)

 

28,900

 

(1,600)

 

(6%)

Total ILEC Voice RGUs [10]

 

48,800

 

53,000

 

(4,200)

 

(8%)

 

49,900

 

(1,100)

 

(2%)

CLEC Residential Voice RGUs [11]

 

54,100

 

54,300

 

(200)

 

(0%)

 

53,900

 

200

 

0%

TOTAL Residential Voice RGUs [12]

 

102,900

 

107,300

 

(4,400)

 

(4%)

 

103,800

 

(900)

 

(1%)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NETWORK METRICS

 

3/31/2011

 

3/31/2010

 

Change

 

% Change

 

12/31/2010

 

Change

 

% Change

Marketable Homes - Fiber

 

148,700

 

147,700

 

1,000

 

1%

 

148,500

 

200

 

0%

Marketable Homes - HFC

 

93,700

 

93,000

 

700

 

1%

 

93,600

 

100

 

0%

Marketable Homes - Copper 2-Play

 

39,000

 

47,900

 

(8,900)

 

(19%)

 

39,600

 

(600)

 

(2%)

Marketable Homes - Copper 3-Play

 

30,200

 

21,300

 

8,900

 

42%

 

29,600

 

600

 

2%

Total

 

311,600

 

309,900

 

1,700

 

1%

 

311,300

 

300

 

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 percents 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]

 

3/31/2011 [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

 

272,600

 

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

 

63,100

 

Quarterly change

 

600

 

1,900

 

1,400

 

1,600

 

(100)

 

(900)

 

0

 

(100)

 

(400)

 

1,700

 

1,000

 

600

 

1,300

 

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

 

4,600

 

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%

 

23.1%

 

ARPU

 

$64

 

$62

 

$59

 

$59

 

$65

 

$67

 

$66

 

$68

 

$70

 

$68

 

$67

 

$68

 

$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

 

311,600

 

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

 

75,600

 

Quarterly change

 

300

 

2,800

 

3,400

 

3,500

 

2,800

 

1,700

 

2,300

 

1,300

 

500

 

2,100

 

1,000

 

0

 

700

 

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

 

3,800

 

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%

 

24.3%

 

ARPU

 

$33

 

$33

 

$32

 

$32

 

$33

 

$33

 

$31

 

$30

 

$30

 

$30

 

$30

 

$30

 

$29

 

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

 

311,600

 

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

 

100,300

 

Quarterly change

 

1,400

 

2,200

 

1,700

 

1,700

 

700

 

(400)

 

200

 

700

 

(800)

 

1,400

 

300

 

200

 

900

 

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

 

2,800

 

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%

 

32.2%

 

ARPU

 

$39

 

$37

 

$36

 

$36

 

$37

 

$38

 

$38

 

$40

 

$42

 

$41

 

$41

 

$42

 

$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

 

239,000

 

Quarterly change

 

2,300

 

6,900

 

6,500

 

6,800

 

3,400

 

400

 

2,500

 

1,900

 

(700)

 

5,200

 

2,300

 

800

 

2,900

 

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

 

11,200

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

104,900

 

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%

 

33.7%

 

ARPU [4]

 

$85

 

$88

 

$87

 

$88

 

$93

 

$97

 

$95

 

$99

 

$101

 

$100

 

$99

 

$101

 

$102

 

Triple Play ARPU [5]

 

$110

 

$108

 

$105

 

$106

 

$111

 

$114

 

$111

 

$114

 

$116

 

$115

 

$113

 

$115

 

$114

 

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

 

2.52

 

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%

 

1.4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

7,800

 

ARPU

 

$403

 

$441

 

$477

 

$451

 

$467

 

$459

 

$467

 

$476

 

$479

 

$502

 

$526

 

$535

 

$539

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

3/31/2011

 

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

 

91,700

 

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

 

27,300

 

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

 

16,100

 

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%

 

29.8%

 

ARPU

 

$44

 

$44

 

$43

 

$43

 

$44

 

$45

 

$45

 

$45

 

$44

 

$44

 

$43

 

$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%

 

1.8%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

7,800

 

ARPU

 

$311

 

$341

 

$354

 

$327

 

$332

 

$339

 

$329

 

$334

 

$334

 

$340

 

$360

 

$359

 

$356

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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]

 

3/31/2011 [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

 

21,500

 

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

 

27,300

 

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

 

48,800

 

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)

 

(1,100)

 

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)

 

(4,200)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

54,100

 

Quarterly change

 

200

 

900

 

1,000

 

800

 

0

 

(800)

 

0

 

(200)

 

(800)

 

600

 

(400)

 

(600)

 

200

 

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)

 

(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

 

102,900

 

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)

 

(900)

 

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)

 

(4,400)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

3/31/2011

 

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

 

148,700

 

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

 

93,700

 

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

 

39,000

 

Marketable Homes - Copper 3-Play

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

0

 

21,300

 

24,000

 

26,600

 

29,600

 

30,200

 

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

 

311,600

 

 

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