Free cash flow, EBITDA and revenue growth driven by advanced broadband network and cost-saving initiatives
- 47% increase in Broadband EBITDA and 14% increase in Broadband revenue year-over-year
- Free cash flow increased by $13.5 million to positive $4 million year-over-year
- Repurchased 107,600 shares during the quarter at an average of $8.57
- Debt net of cash and cash equivalents reduced by $12 million from year-end 2008, and cash and cash equivalents increased to $10 million
- Operating expenses decreased 2% sequentially
- Net income of $959 thousand compared to $20.9 million year-over-year due to second quarter 2008 gain of $19 million from sale of wireless assets
ROSEVILLE, Calif., Aug. 6 /PRNewswire-FirstCall/ -- Leading independent communications holding company SureWest Communications (Nasdaq: SURW) today announced operating results for the second quarter ended June 30, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050908/SFSUREWESTLOGO)
Steve Oldham, SureWest's president and chief executive officer, said, "We are pleased to report solid revenue and EBITDA results. Strong free cash flow allowed us to pay down debt and increase cash reserves, enhancing our financial flexibility. Significant growth in average revenue per customer highlights our strategy of offering superior services to high-value customers. We also experienced a considerable increase in business services revenue, particularly in the Kansas City market.
"In recent years, SureWest has committed significant new capital to expand our state-of-the-art fiber network with the long-term goal of growing our subscriber base. Having completed our 2009 network build, we maintain our ability to grow through a number of avenues; most impressive of which is the planned integration of Microsoft Mediaroom into our Sacramento IPTV product this December. We are convinced that Mediaroom will further increase our customer satisfaction, which already stands at the highest levels delivered in our markets today. Mediaroom augments our offensive strategy of growing penetration on our existing network and it provides a significant defensive tool in reducing churn. The technology also allows us to offer a superior video service as part of a triple-play to an additional 25,000 homes in our ILEC territory.
"Close attention to cost savings, delivering new and superior products over our advanced network, and focusing on outstanding customer service continue to drive EBITDA, free cash flow and revenue growth. Moving forward through the balance of the year, we remain mindful of the challenges presented by the current economic environment, particularly in California, as we grow the business."
The following table highlights financial results for continuing operations on a consolidated basis (dollars are in thousands):
Y-O-Y Comparison Q-O-Q Comparison
Consolidated Q2 '09 Q2 '08 Change % Q1 '09 Change %
------ ------ ------ --- ------ ------ ---
Broadband
Revenue $40,259 $35,301 $4,958 14% $39,222 $1,037 3%
Telecom
Revenue $20,671 $24,551 ($3,880) (16%) $21,720 ($1,049) (5%)
Total
Revenue $60,930 $59,852 $1,078 2% $60,942 ($12) 0%
EBITDA
(adjusted) $19,859 $19,770 $89 0% $19,493 $366 2%
Income from
continuing
operations $899 $1,729 ($830) (48%) $79 $820 nm
Capital
Expenditures $11,170 $25,365 ($14,195) (56%) $18,352 ($7,182) (39%)
Free Cash
Flow $3,957 ($9,561) $13,518 nm ($3,463) $7,420 nm
Net Debt $226,806 $219,992 $6,814 3% $238,509 ($11,703) (5%)
-------- -------- -------- ------ --- -------- -------- ---
See Non-GAAP measure notes near end of release and EBITDA and Free Cash
Flow reconciliations for detailed adjustments.
Financial Results
Revenue increased 2% year-over-year to $60.9 million resulting from 14% Broadband revenue growth partially offset by Telecom revenue declines of 16%. EBITDA, which is adjusted for non-cash pension ($552 thousand) and stock compensation ($464 thousand), remained even at $19.9 million year-over-year and increased 2% sequentially as the company continues to recognize cost savings from initiatives such as reduced occupied office space and employee counts, which decreased 5% from the prior year and 3% sequentially to 897 employees.
Operating expenses, exclusive of depreciation and amortization, increased 5% year-over-year and declined 2% sequentially to $42.1 million. Cost of services increased 13% year-over-year to $25.1 million and remained even sequentially due to the yearly increase of video programming fees and the growth of commercial business revenues increasing access and long distance services. Customer operations and selling expenses decreased 3% year-over-year due to reduced marketing spend of roughly $450 thousand from the prior year and increased 1% sequentially due to an increase in marketing spend of $380 thousand from the prior quarter. General and administrative expenses declined 4% year-over-year due to reduced consulting and advisory fees related to strategic initiatives and declined 10% sequentially due to reduced labor expenses, including pension and stock compensation.
Income from continuing operations decreased 48% year-over-year and increased by $820 thousand sequentially to $899 thousand as explained above in revenue and operating expense results. Net income decreased to $959 thousand from $20.9 million in the second quarter of 2008 due to a gain from the sale of SureWest's Wireless assets in May 2008, and declined $1.6 million sequentially due to the gain on the sale of the Wireless Tower assets in February 2009.
Free cash flow, defined as income from continuing operations plus depreciation and amortization less capital expenditures, increased to positive $4 million - a $13.5 million increase year-over-year and $7.5 million increase sequentially. The increase is due to lower capital expenditures as the company has completed its 2009 network expansion plan. SureWest continues to focus on increasing free cash flow by increasing penetration on its existing inventory of homes passed and growing business revenues. Cash and cash equivalents increased to $10 million from $1.7 million last quarter. Also, during the quarter, SureWest repurchased 107,600 shares at an average price of $8.57 and paid down $3.5 million in debt resulting in $226.8 million in remaining total debt net of cash and cash equivalents (net debt) and a net debt to adjusted EBITDA ratio of 3.1x.
Consolidated capital expenditures totaled $11.1 million for the second quarter and $29.5 million year-to-date; a decrease of 56% year-over-year and 39% sequentially as a result of reduced expenditures for network expansion. For the six months ended June 30, 2009, the company passed 8,100 additional advanced fiber homes which completed the planned 2009 network build. The company recently announced it will be able to provide 25,000 existing ILEC copper homes with a full triple-play of video, voice and data over its advanced IP-based network for just over $3 million. The first 15,000 homes receiving SureWest's extended video service will be delivered in December 2009 and the second phase of homes will become available by the second quarter of 2010. SureWest's projected 2009 capital expenditure remains $55-60 million.
Earnings per share from continuing operations was $.06 compared to $.12 in the second quarter of 2008 and $.01 in the first quarter of 2009.
Broadband Segment Results
Broadband revenues increased 14% year-over-year and 3% sequentially, and accounted for 66% of the company's total revenues for the second quarter of 2009, compared to 59% in the second quarter of 2008.
Broadband Residential:
Broadband Residential revenues increased 14% year-over-year to $29.8 million due to 9% average revenue per user (ARPU) growth and an 8% increase in revenue generating units (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:
Q2 '09 vs. Q2 '08 change Q2 '09 vs. Q1 '09 change
------------------------ ------------------------
Kansas Kansas
Sacramento City Sacramento City
Market Market Total Market Market Total
------ ------ ----- ------ ------ -----
Broadband
Residential
RGUs 12% 5% 8% 1% 0% 0%
Data RGUs 2% 6% 4% -1% 0% 0%
Video RGUs -
Fiber & HFC 3% 5% 4% -3% 0% -1%
Voice RGUs 46% 2% 20% 6% -1% 3%
Total
Residential
Subscribers 2% 5% 3% -1% -1% -1%
ARPU for triple-play marketable homes, consisting of the company's fiber-to-the-home (FTTH) and hybrid fiber coaxial (HFC) networks, increased 5% year-over-year to $115 from $109 and 2% sequentially from $112. This was primarily due to significant additions of Voice over Internet Protocol (VoIP) subscribers as well as a result of a first quarter video price increase.
"SureWest is well-positioned for continued revenue growth due to our focus on high-end packages of superior services that drive increased ARPU," said Oldham. "We have demonstrated that we can perform well in a difficult sales environment, particularly influenced by California's weak housing market. Sequential subscriber growth rates were impacted by aggressive promotions by competitors. We have reacted to the marketplace with a higher-end product promotion to maintain revenue and ARPU growth. This is showing early success in the third quarter as we work hard to increase penetration on our existing networks."
Residential marketable homes increased by 17,100, or 6%, to 309,300 year-over-year and by 1,100 sequentially.
Broadband Business:
Broadband Business, which is 24% of the Broadband segment, increased revenues by 15% year-over-year to $9.6 million and increased 3% sequentially excluding the first quarter inclusion of $247 thousand in non-recurring revenue from the sale of business equipment. Customer counts increased 10% year-over-year and 1% sequentially to 6,800 and total Business ARPU grew 4% year-over-year and declined 2% sequentially to $475.
Commercial sales in the Kansas City service territory remained strong and ARPU in that market is expected to sustain positive growth due to the company's successful efforts in acquiring new business clients. A new data center service was launched in the Kansas City market with expectations of additional growth among new and existing customers. The Sacramento business market grew Ethernet and data center services, while Carrier and large customer revenue growth opportunities remain prevalent in both markets.
Telecom Segment Results
Operating only in the Sacramento market, Telecom segment revenues declined 16% year-over-year and 5% sequentially to $20.7 million due to the industry-wide trend of revenue loss in Telecom Residential access lines and associated access revenues.
Telecom Residential:
Telecom Residential revenue declined 25% year-over-year and 7% sequentially to $6.4 million resulting from losses in Telecom voice RGUs of 28% year-over-year and 9% sequentially. The company continues to mitigate Telecom voice line losses through its Broadband VoIP product with a year-over-year total residential voice loss of 6,400 (5%) compared to the second quarter of 2008 year-over-year loss of 7,800 (6%). Of the 4,400 sequential Telecom Residential voice RGU losses, 2,100 migrated to the VoIP service during the second quarter.
Telecom Business:
Telecom Business revenues declined 3% year-over-year excluding the second quarter 2008 inclusion of $450 thousand of non-recurring long distance transitional services provided to Verizon upon the sale of the wireless assets in May 2008. Revenue remained relatively level sequentially at $9.1 million due to a decline in small-to-medium size customers and some downsizing by larger customers. ARPU increased 2% to $339.
Telecom Access:
Telecom Access consists of the company's switched access revenues, interstate common line revenues and California High Cost Fund (CHCF) subsidies. Revenue decreased 18% year-over-year to $5 million due to scheduled reductions in the CHCF subsidies and a decline in switched access revenues. Excluding the first quarter 2009 inclusion of a non-recurring $224 thousand settlement from a prior year CHCF claim, sequential revenue decreased 9% due to a decline in switched 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 EBITDA and free cash flow. 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, and all other non-operating income/expenses. Free cash flow represents net income (loss) from continuing operations plus depreciation and amortization less capital expenditures. 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 because they are an integral part of its internal evaluation of operating performance. In addition, they are measures that the company uses to evaluate management's effectiveness. A reconciliation to the comparable GAAP measures is 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 about its results and business strategy at 5:00 p.m. Eastern Time on Thursday, August 6, 2009. Open to the public, a simultaneous live webcast of the call will be available from the company's investor relations Web site at www.surw.com. A telephone replay of the call will be available shortly after completion through Thursday, August 13 by dialing 888.286.8010 and entering passcode 27094391. Visit www.surw.com for updates prior to the call.
About SureWest
SureWest Communications (www.surewest.com) is one of the nation's leading integrated communications providers and is the bandwidth leader in the markets it serves. Headquartered in Northern California for more than 90 years, the company expanded into the Kansas City region in February 2008 with the acquisition of Everest Broadband, Inc. and offers bundled residential and commercial services 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 INCOME
(Unaudited: Amounts in thousands, except per share amounts)
Six Months Six Months
Ended Ended
June 30, June 30, $ %
2009 2008 Change Change
---- ---- ------ ------
Operating revenues:
Broadband $79,481 $62,132 $17,349 28%
Telecom 42,391 49,033 (6,642) -14%
------ ------ ------ ---
Total operating revenues 121,872 111,165 10,707 10%
Operating expenses:
Cost of services and products
(exclusive of depreciation
and amortization) 50,132 40,867 9,265 23%
Customer operations
and selling 16,580 16,019 561 4%
General and
administrative 18,187 19,572 (1,385) -7%
Depreciation and
amortization 29,038 26,142 2,896 11%
------ ------ ----- --
Total operating expenses 113,937 102,600 11,337 11%
------- ------- ------ --
Income from operations 7,935 8,565 (630) -7%
Other income (expense):
Interest income 71 558 (487) -87%
Interest expense (5,356) (5,941) 585 10%
Other, net (172) (43) (129) -300%
---- --- ---- ----
Total other income
(expense), net (5,457) (5,426) (31) -1%
------ ------ --- --
Income from continuing
operations before income taxes 2,478 3,139 (661) -21%
Income tax expense 1,500 1,388 112 8%
----- ----- --- ---
Income from continuing operations 978 1,751 (773) -44%
Discontinued operations,
net of tax:
Income (loss) from
discontinued operations (69) 440 (509) -116%
Gain on sale of
discontinued operations 2,568 18,977 (16,409) -86%
----- ------ ------- ---
Total discontinued
operations 2,499 19,417 (16,918) -87%
----- ------ ------- ---
Net income $3,477 $21,168 $(17,691) -84%
====== ======= ======== ===
Basic and diluted earnings
per common share:
Income from continuing
operations $0.07 $0.12 $(0.05)
Discontinued operations,
net of tax 0.18 1.37 (1.19)
---- ---- -----
Net income per basic and
diluted common share $0.25 $1.49 $(1.24)
===== ===== ======
Shares of common stock used to
calculate earnings per share:
Basic 13,992 14,226 (234)
====== ====== ====
Diluted 13,992 14,234 (242)
====== ====== ====
SUREWEST COMMUNICATIONS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Amounts in thousands, except per share amounts)
Quarter Quarter
Ended Ended
June 30, June 30, $ %
2009 2008 Change Change
---- ---- ------ ------
Operating revenues:
Broadband $40,259 $35,301 $4,958 14%
Telecom 20,671 24,551 (3,880) -16%
------ ------ ------ ---
Total operating revenues 60,930 59,852 1,078 2%
Operating expenses:
Cost of services and products
(exclusive of depreciation and
amortization) 25,118 22,314 2,804 13%
Customer operations and selling 8,345 8,575 (230) -3%
General and administrative 8,624 9,014 (390) -4%
Depreciation and amortization 14,228 14,075 153 1%
------ ------ --- ---
Total operating expenses 56,315 53,978 2,337 4%
------ ------ ----- ---
Income from operations 4,615 5,874 (1,259) -21%
Other income (expense):
Interest income 34 224 (190) -85%
Interest expense (3,046) (3,186) 140 4%
Other, net (88) (44) (44) -100%
--- --- --- ----
Total other income (expense),
net (3,100) (3,006) (94) -3%
------ ------ --- ---
Income from continuing operations
before income taxes 1,515 2,868 (1,353) -47%
Income tax expense 616 1,139 (523) -46%
--- ----- ---- ---
Income from continuing operations 899 1,729 (830) -48%
Discontinued operations, net of tax:
Income from discontinued
operations - 179 (179) -100%
Gain on sale of discontinued
operations 60 18,977 (18,917) -100%
--- ------ ------- ----
Total discontinued operations 60 19,156 (19,096) -100%
--- ------ ------- ----
Net income $959 $20,885 $(19,926) -95%
==== ======= ======== ===
Basic and diluted earnings per common
share:
Income from continuing operations $0.06 $0.12 $(0.06)
Discontinued operations, net of
tax 0.01 1.35 (1.34)
---- ---- -----
Net income per basic and diluted
common share $0.07 $1.47 $(1.40)
===== ===== ======
Shares of common stock used to calculate
earnings per share:
Basic 14,020 14,141 (121)
====== ====== ====
Diluted 14,020 14,149 (129)
====== ====== ====
SUREWEST COMMUNICATIONS
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Amounts in thousands, except per share amounts)
Quarter Quarter
Ended Ended
June 30, March 31, $ %
2009 2009 Change Change
---- ---- ------ ------
Operating revenues:
Broadband $40,259 $39,222 $1,037 3%
Telecom 20,671 21,720 (1,049) -5%
------ ------ ------ ---
Total operating revenues 60,930 60,942 (12) 0%
Operating expenses:
Cost of services and products
(exclusive of depreciation and
amortization) 25,118 25,014 104 0%
Customer operations and selling 8,345 8,235 110 1%
General and administrative 8,624 9,563 (939) -10%
Depreciation and amortization 14,228 14,810 (582) -4%
------ ------ ---- ---
Total operating expenses 56,315 57,622 (1,307) -2%
------ ------ ------ ---
Income from operations 4,615 3,320 1,295 39%
Other income (expense):
Interest income 34 37 (3) -8%
Interest expense (3,046) (2,310) (736) -32%
Other, net (88) (84) (4) -5%
--- --- --- ---
Total other income (expense),
net (3,100) (2,357) (743) -32%
------ ------ ---- ---
Income from continuing operations
before income taxes 1,515 963 552 57%
Income tax expense 616 884 (268) -30%
--- --- ---- ---
Income from continuing operations 899 79 820 nm
Discontinued operations, net of tax:
Loss from discontinued
operations - (69) 69 100%
Gain on sale of discontinued
operations 60 2,508 (2,448) -98%
--- ----- ------ ---
Total discontinued operations 60 2,439 (2,379) -98%
--- ----- ------ ---
Net income $959 $2,518 $(1,559) -62%
==== ====== ======= ===
Basic and diluted earnings per common
share:
Income from continuing
operations $0.06 $0.01 $0.05
Discontinued operations, net of
tax 0.01 0.17 (0.16)
---- ---- -----
Net income per basic and
diluted common share $0.07 $0.18 $(0.11)
===== ===== ======
Shares of common stock used to
calculate earnings per share:
Basic 14,020 14,008 12
====== ====== ===
Diluted 14,020 14,008 12
====== ====== ===
SureWest Communications
Unaudited Pro Forma Selected Financial Results (3)
(on a pro forma consolidated and a pro forma segment basis)
(Amounts in thousands)
For 2008 Quarters Ended:
------------------------
Consolidated March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Operating revenues (1)
Residential $34,647 $34,621 $33,959 $34,180
Business 16,946 18,188 19,342 18,218
Access 6,647 6,393 6,308 5,922
Other 630 650 661 618
--- --- --- ---
Total operating revenues
from external customers 58,870 59,852 60,270 58,938
------ ------ ------ ------
Operating expenses (1) 41,274 39,903 42,034 41,713
Depreciation and
amortization 13,259 14,075 14,219 14,666
------ ------ ------ ------
Income from operations $4,337 $5,874 $4,017 $2,559
====== ====== ====== ======
For 2009 Quarters
Twelve Months Ended: Six Months
Ended ----------------- Ended
Consolidated December 31, 2008 March 31 June 30 June 30, 2009
----------------- -------- ------- -------------
Operating revenues (1)
Residential $137,407 $35,713 $36,180 $71,893
Business 72,694 18,633 18,704 37,337
Access 25,270 6,031 5,351 11,382
Other 2,559 565 695 1,260
----- --- --- -----
Total operating revenues
from external customers 237,930 60,942 60,930 121,872
------- ------ ------ -------
Operating expenses (1) 164,924 42,812 42,087 84,899
Depreciation and
amortization 56,219 14,810 14,228 29,038
------ ------ ------ ------
Income from operations $16,787 $3,320 $4,615 $7,935
======= ====== ====== ======
Year-over-Year Qtr-over-Qtr
-------------- ------------
Consolidated $ chg % $ chg %
----- --- ----- ---
Operating revenues (1)
Residential $1,559 4.5% $467 1.3%
Business 516 2.8% 71 0.4%
Access (1,042) -16.3% (680) -11.3%
Other 45 6.9% 130 23.0%
--- --- --- ----
Total operating revenues
from external customers 1,078 1.8% (12) 0.0%
----- --- --- ---
Operating expenses (1) 2,184 5.5% (725) -1.7%
Depreciation and
amortization 153 1.1% (582) -3.9%
--- --- ---- ----
Income from operations $(1,259) -21.4% $1,295 39.0%
======= ===== ====== ====
Consolidated Reconciliation of Adjusted EBITDA to Net Income (Loss) from
Continuing Operations
For 2008 Quarters Ended:
------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Net income (loss) from
continuing operations $376 $1,729 $622 $(1,547)
Add back: income tax
expense 489 1,139 582 1,169
Less: other (income)/
expense 3,472 3,006 2,813 2,937
----- ----- ----- -----
Income from operations 4,337 5,874 4,017 2,559
Add (subtract):
Depreciation and
amortization 13,259 14,075 14,219 14,666
Non-cash pension
(income)/expense (393) (524) (458) (433)
Non-cash stock
compensation expense 141 345 169 223
--- --- --- ---
Adjusted EBITDA (2) $17,344 $19,770 $17,947 $17,015
======= ======= ======= =======
Other data:
Total debt $277,830 $231,828 $233,827 $241,688
For 2009 Quarters
Twelve Months Ended: Six Months
Ended ----------------- Ended
December 31, 2008 March 31 June 30 June 30, 2009
----------------- -------- ------- -------------
Net income (loss) from
continuing operations $1,180 $79 $899 $978
Add back: income tax
expense 3,379 884 616 1,500
Less: other (income)/
expense 12,228 2,357 3,100 5,457
------ ----- ----- -----
Income from operations 16,787 3,320 4,615 7,935
Add (subtract):
Depreciation and
amortization 56,219 14,810 14,228 29,038
Non-cash pension
(income)/expense (1,808) 755 552 1,307
Non-cash stock
compensation expense 878 608 464 1,072
--- --- --- -----
Adjusted EBITDA (2) $72,076 $19,493 $19,859 $39,352
======= ======= ======= =======
Other data:
Total debt n/a $240,187 $236,685 n/a
Year-over-Year Qtr-over-Qtr
-------------- ------------
$ chg % $ chg %
----- --- ----- ---
Net income (loss) from
continuing operations $(830) -48.0% $820 1038.0%
Add back: income tax
expense (523) -45.9% (268) -30.3%
Less: other (income)/
expense 94 3.1% 743 31.5%
--- --- --- ----
Income from operations (1,259) -21.4% 1,295 39.0%
Add (subtract):
Depreciation and
amortization 153 1.1% (582) -3.9%
Non-cash pension
(income)/expense 1,076 205.3% (203) -26.9%
Non-cash stock
compensation expense 119 34.5% (144) -23.7%
--- ---- ---- -----
Adjusted EBITDA (2) $89 0.5% $366 1.9%
=== === ==== ===
Other data:
Total debt $4,857 2.1% $(3,502) -1.5%
For 2008 Quarters Ended:
------------------------
Broadband March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Data $10,128 $10,338 $10,348 10,491
Video 10,359 10,365 10,264 10,522
Voice 5,258 5,395 5,542 5,933
----- ----- ----- -----
Total residential revenues 25,745 26,098 26,154 26,946
Business 7,899 8,374 9,271 9,084
Access 305 370 414 449
Other 439 459 441 450
--- --- --- ---
Total operating revenues
from external customers 34,388 35,301 36,280 36,929
Intersegment revenues 140 141 138 120
--- --- --- ---
Total operating revenues 34,528 35,442 36,418 37,049
------ ------ ------ ------
Operating expenses without
depreciation 30,742 31,085 32,844 32,698
Depreciation and
amortization 9,597 10,335 10,700 11,051
----- ------ ------ ------
Loss from operations $(5,811) $(5,978) $(7,126) $(6,700)
======= ======= ======= =======
For 2009 Quarters
Twelve Months Ended: Six Months
Ended ----------------- Ended
Broadband December 31, 2008 March 31 June 30 June 30, 2009
----------------- -------- ------- -------------
Data $41,305 $10,763 $11,184 $21,947
Video 41,510 11,689 11,995 23,684
Voice 22,128 6,399 6,594 12,993
------ ----- ----- ------
Total residential revenues 104,943 28,851 29,773 58,624
Business 34,628 9,585 9,615 19,200
Access 1,538 384 398 782
Other 1,789 402 473 875
----- --- --- ---
Total operating revenues
from external customers 142,898 39,222 40,259 79,481
Intersegment revenues 539 91 94 185
--- --- --- ---
Total operating revenues 143,437 39,313 40,353 79,666
------- ------ ------ ------
Operating expenses without
depreciation 127,369 34,695 34,294 68,989
Depreciation and
amortization 41,683 11,620 11,283 22,903
------ ------ ------ ------
Loss from operations $(25,615) $(7,002) $(5,224) $(12,226)
======== ======= ======= ========
Year-over-Year Qtr-over-Qtr
-------------- ------------
Broadband $ chg % $ chg %
----- --- ----- ---
Data $846 8.2% $421 3.9%
Video 1,630 15.7% 306 2.6%
Voice 1,199 22.2% 195 3.0%
----- ---- --- ---
Total residential revenues 3,675 14.1% 922 3.2%
Business 1,241 14.8% 30 0.3%
Access 28 7.6% 14 3.6%
Other 14 3.1% 71 17.7%
--- --- --- ----
Total operating revenues
from external customers 4,958 14.0% 1,037 2.6%
Intersegment revenues (47) -33.3% 3 3.3%
--- ----- --- ---
Total operating revenues 4,911 13.9% 1,040 2.6%
----- ---- ----- ---
Operating expenses without
depreciation 3,209 10.3% (401) -1.2%
Depreciation and
amortization 948 9.2% (337) -2.9%
--- --- ---- ----
Loss from operations $754 12.6% $1,778 25.4%
==== ==== ====== ====
Broadband Reconciliation of Adjusted EBITDA to Net Loss from Continuing
Operations
For 2008 Quarters Ended:
------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Loss from continuing
operations $(5,416) $(5,391) $(5,856) $(6,667)
Add back: income tax
benefits (4,054) (3,690) (3,994) (3,179)
Less: other (income)/
expense 3,659 3,103 2,724 3,146
----- ----- ----- -----
Loss from operations (5,811) (5,978) (7,126) (6,700)
Add (subtract):
Depreciation and
amortization 9,597 10,335 10,700 11,051
Non-cash pension
(income)/expense (162) (212) (187) (178)
Non-cash stock
compensation expense 54 173 77 103
--- --- --- ---
Adjusted EBITDA (2) $3,678 $4,318 $3,464 $4,276
====== ====== ====== ======
For 2009 Quarters
Twelve Months Ended: Six Months
Ended ---------------- Ended
December 31, 2008 March 31 June 30 June 30, 2009
----------------- -------- ------- -------------
Loss from continuing
operations $(23,330) $(5,398) $(4,884) $(10,282)
Add back: income tax
benefits (14,917) (3,656) (3,312) (6,968)
Less: other (income)/
expense 12,632 2,052 2,972 5,024
------ ----- ----- -----
Loss from operations (25,615) (7,002) (5,224) (12,226)
Add (subtract):
Depreciation and
amortization 41,683 11,620 11,283 22,903
Non-cash pension
(income)/expense (739) 327 56 383
Non-cash stock
compensation expense 407 304 231 535
--- --- --- ---
Adjusted EBITDA (2) $15,736 $5,249 $6,346 $11,595
======= ====== ====== =======
Year-over-Year Qtr-over-Qtr
-------------- ------------
$ chg % $ chg %
----- --- ----- ---
Loss from continuing
operations $507 9.4% $514 9.5%
Add back: income tax
benefits 378 10.2% 344 9.4%
Less: other (income)/
expense (131) -4.2% 920 44.8%
---- ---- --- ----
Loss from operations 754 12.6% 1,778 25.4%
Add (subtract):
Depreciation and
amortization 948 9.2% (337) -2.9%
Non-cash pension
(income)/expense 268 126.4% (271) -82.9%
Non-cash stock
compensation expense 58 33.5% (73) -24.0%
--- ---- --- -----
Adjusted EBITDA (2) $2,028 47.0% $1,097 20.9%
====== ==== ====== ====
For 2008 Quarters Ended:
------------------------
Telecom March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Residential $8,902 $8,523 $7,805 $7,234
Business 9,047 9,814 10,071 9,134
Access 6,342 6,023 5,894 5,473
Other 191 191 220 168
--- --- --- ---
Total operating revenues
from external customers 24,482 24,551 23,990 22,009
Intersegment revenues 4,343 4,560 4,706 4,846
----- ----- ----- -----
Total operating revenues 28,825 29,111 28,696 26,855
------ ------ ------ ------
Operating expenses without
depreciation 15,015 13,519 14,034 13,981
Depreciation and
amortization 3,662 3,740 3,519 3,615
----- ----- ----- -----
Income from operations $10,148 $11,852 $11,143 $9,259
======= ======= ======= ======
For 2009 Quarters
Twelve Months Ended: Six Months
Ended ----------------- Ended
Telecom December 31, 2008 March 31 June 30 June 30, 2009
----------------- -------- ------- -------------
Residential $32,464 $6,862 $6,407 $13,269
Business 38,066 9,048 9,089 18,137
Access 23,732 5,647 4,953 10,600
Other 770 163 222 385
--- --- --- ---
Total operating revenues
from external customers 95,032 21,720 20,671 42,391
Intersegment revenues 18,455 4,874 4,981 9,855
------ ----- ----- -----
Total operating revenues 113,487 26,594 25,652 52,246
------- ------ ------ ------
Operating expenses without
depreciation 56,549 13,082 12,868 25,950
Depreciation and
amortization 14,536 3,190 2,945 6,135
------ ----- ----- -----
Income from operations $42,402 $10,322 $9,839 $20,161
======= ======= ====== =======
Year-over-Year Qtr-over-Qtr
-------------- ------------
Telecom $ chg % $ chg %
----- --- ----- ---
Residential $(2,116) -24.8% $(455) -6.6%
Business (725) -7.4% 41 0.5%
Access (1,070) -17.8% (694) -12.3%
Other 31 16.2% 59 36.2%
--- ---- --- ----
Total operating revenues
from external customers (3,880) -15.8% (1,049) -4.8%
Intersegment revenues 421 9.2% 107 2.2%
--- --- --- ---
Total operating revenues (3,459) -11.9% (942) -3.5%
------ ----- ---- ----
Operating expenses without
depreciation (651) -4.8% (214) -1.6%
Depreciation and
amortization (795) -21.3% (245) -7.7%
---- ----- ---- ----
Income from operations $(2,013) -17.0% $(483) -4.7%
======= ===== ===== ====
Telecom Reconciliation of Adjusted EBITDA to Net Income from Continuing
Operations
For 2008 Quarters Ended:
------------------------
March 31 June 30 September 30 December 31
-------- ------- ------------ -----------
Net income from continuing
operations $5,792 $7,120 $6,478 $5,120
Add back: income tax
expense 4,543 4,829 4,576 4,348
Less: other (income)/
expense (187) (97) 89 (209)
---- --- --- ----
Income from operations 10,148 11,852 11,143 9,259
Add (subtract):
Depreciation and
amortization 3,662 3,740 3,519 3,615
Non-cash pension
(income)/expense (231) (312) (271) (255)
Non-cash stock
compensation expense 87 172 92 120
--- --- --- ---
Adjusted EBITDA (2) $13,666 $15,452 $14,483 $12,739
======= ======= ======= =======
For 2009 Quarters
Twelve Months Ended: Six Months
Ended ----------------- Ended
December 31, 2008 March 31 June 30 June 30, 2009
----------------- -------- ------- -------------
Net income from continuing
operations $24,510 $5,477 $5,783 $11,260
Add back: income tax
expense 18,296 4,540 3,928 8,468
Less: other (income)/
expense (404) 305 128 433
---- --- --- ---
Income from operations 42,402 10,322 9,839 20,161
Add (subtract):
Depreciation and
amortization 14,536 3,190 2,945 6,135
Non-cash pension
(income)/expense (1,069) 428 496 924
Non-cash stock
compensation expense 471 304 233 537
--- --- --- ---
Adjusted EBITDA (2) $56,340 $14,244 $13,513 $27,757
======= ======= ======= =======
Year-over-Year Qtr-over-Qtr
-------------- ------------
$ chg % $ chg %
----- --- ----- ---
Net income from continuing
operations $(1,337) -18.8% $306 5.6%
Add back: income tax
expense (901) -18.7% (612) -13.5%
Less: other (income)/
expense 225 232.0% (177) -58.0%
--- ----- ---- -----
Income from operations (2,013) -17.0% (483) -4.7%
Add (subtract):
Depreciation and
amortization (795) -21.3% (245) -7.7%
Non-cash pension
(income)/expense 808 259.0% 68 15.9%
Non-cash stock
compensation expense 61 35.5% (71) -23.4%
--- ---- --- -----
Adjusted EBITDA (2) $(1,939) -12.5% $(731) -5.1%
======= ===== ===== ====
(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; 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) The pro forma selected financial results are based on the historical
consolidated financial statements of SureWest Communications and Everest
Broadband, Inc. ("Everest") and have been adjusted to reflect the Everest
acquisition, which was consummated on February 13, 2008. The unaudited
condensed combined pro forma financial statements give the effect as if
the acquisition had occurred on January 1, 2008. On May 9, 2008, the sale
of the Wireless assets was completed and the pro forma financial results
reflect for all periods presented the classification of the sold Wireless
operations as discontinued operations. Also, on February 27, 2009,
SureWest Communications completed the sale of its Tower Assets and the pro
forma financial results reflect the classification of the operations for
the Tower Assets sold as discontinued operations for all periods
presented.
SUREWEST COMMUNICATIONS
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited; Amounts in thousands)
June 30, December 31, $ %
2009 2008 Change Change
---- ---- ------ ------
ASSETS
Current assets:
Cash and cash equivalents $9,879 $2,840 $7,039 248%
Short-term investments 4,197 610 3,587 588%
Accounts receivable, net 20,903 21,415 (512) -2%
Income tax receivable 3,389 6,391 (3,002) -47%
Inventories 5,468 6,527 (1,059) -16%
Prepaid expenses 4,038 4,539 (501) -11%
Deferred income taxes 3,399 2,989 410 14%
Other current assets 1,921 1,752 169 10%
Assets of discontinued
operations - 5,002 (5,002) -100%
--- ----- ------ ----
Total current assets 53,194 52,065 1,129 2%
Property, plant and equipment, net 525,382 523,231 2,151 0%
Intangible and other assets:
Long-term investments - 3,508 (3,508) -100%
Customer relationships, net 4,454 5,062 (608) -12%
Goodwill 45,814 45,814 - 0%
Deferred charges and other
assets 2,556 4,129 (1,573) -38%
----- ----- ------ ---
52,824 58,513 (5,689) -10%
------ ------ ------ ---
$631,400 $633,809 $(2,409) 0%
======== ======== ======= ===
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term
debt and capital lease
obligations $15,640 $15,643 $(3) 0%
Accounts payable 2,131 2,798 (667) -24%
Other accrued liabilities 17,912 19,050 (1,138) -6%
Advance billings and deferred
revenues 8,568 8,960 (392) -4%
Accrued compensation 8,345 11,292 (2,947) -26%
Liabilities of discontinued
operations - 453 (453) -100%
--- --- ---- ----
Total current liabilities 52,596 58,196 (5,600) -10%
Long-term debt 221,045 226,045 (5,000) -2%
Deferred income taxes 50,173 46,358 3,815 8%
Accrued pension and other post-
retirement benefits 37,573 36,046 1,527 4%
Other liabilities and deferred
revenues 5,252 5,819 (567) -10%
Commitments and contingencies - -
Shareholders' equity:
Common stock, without par
value; 100,000 shares
authorized, 14,166 and 14,082
shares issued and outstanding
at June 30, 2009 and December
31, 2008, respectively 146,158 146,558 (400) 0%
Accumulated other comprehensive
loss (19,266) (19,248) (18) 0%
Retained earnings 137,869 134,035 3,834 3%
------- ------- ----- ---
Total shareholders' equity 264,761 261,345 3,416 1%
------- ------- ----- ---
$631,400 $633,809 $(2,409) 0%
======== ======== ======= ===
SUREWEST COMMUNICATIONS
ADJUSTED EBITDA RECONCILIATION TO NET INCOME (LOSS) FROM CONTINUING
OPERATIONS
(Unaudited; Amounts in thousands)
Six Months ended June 30, Six Months ended June 30,
2009 2008
------------------------- -------------------------
Broad- Consoli- Broad- Consoli-
band Telecom dated band Telecom dated
------ ------- -------- ------ ------- --------
Income (loss)
from continuing
operations $(10,282) $11,260 $978 $(11,161) $12,912 $1,751
Add (subtract):
Income taxes
(benefit)/
expense (6,968) 8,468 1,500 (7,984) 9,372 1,388
Other
(income)/
expense 5,024 433 5,457 5,710 (284) 5,426
Depreciation
and
amortization 22,903 6,135 29,038 18,740 7,402 26,142
Non-cash
pension
(income)/
expense 383 924 1,307 (374) (543) (917)
Non-cash
stock
compensation
expense 535 537 1,072 227 259 486
--- --- ----- --- --- ---
Adjusted
EBITDA (1) $11,595 $27,757 $39,352 $5,158 $29,118 $34,276
======= ======= ======= ====== ======= =======
(1) 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; 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.
SUREWEST COMMUNICATIONS
CONSOLIDATED FREE CASH FLOW FROM CONTINUING OPERATIONS
(Unaudited; Amounts in thousands)
Six Months Ended June 30,
-------------------------
2009 2008
---- ----
Income from continuing operations $978 $1,751
Add: Depreciation and amortization 29,038 26,142
Less: Capital expenditures (29,522) (43,635)
------- -------
Free cash flow (2) $494 $(15,742)
==== ========
(2) 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.
SUREWEST COMMUNICATIONS
ADJUSTED EBITDA RECONCILIATION TO NET INCOME (LOSS) FROM CONTINUING
OPERATIONS
(Unaudited; Amounts in thousands)
Quarter Ended June 30, Quarter Ended March 31,
2009 2009
----------------------- -----------------------
Broad- Consoli- Broad- Consoli-
band Telecom dated band Telecom dated
------ ------- -------- ------ ------- --------
Income (loss) from
continuing
operations $(4,884) $5,783 $899 $(5,398) $5,477 $79
Add (subtract):
Income taxes
(benefit)/expense
(3,312) 3,928 616 (3,656) 4,540 884
Other (income)/
expense 2,972 128 3,100 2,052 305 2,357
Depreciation and
amortization 11,283 2,945 14,228 11,620 3,190 14,810
Non-cash pension
(income)/expense 56 496 552 327 428 755
Non-cash stock
compensation
expense 231 233 464 304 304 608
--- --- --- --- --- ---
Adjusted EBITDA (1) $6,346 $13,513 $19,859 $5,249 $14,244 $19,493
====== ======= ======= ====== ======= =======
Quarter Ended June 30, 2008
---------------------------
Broadband Telecom Consolidated
--------- ------- ------------
Income (loss) from
continuing
operations $(5,391) $7,120 $1,729
Add (subtract):
Income taxes
(benefit)/expense
(3,690) 4,829 1,139
Other (income)/
expense 3,103 (97) 3,006
Depreciation and
amortization 10,335 3,740 14,075
Non-cash pension
(income)/expense (212) (312) (524)
Non-cash stock
compensation
expense 173 172 345
--- --- ---
Adjusted EBITDA (1) $4,318 $15,452 $19,770
====== ======= =======
(1) 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; 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.
SUREWEST COMMUNICATIONS
CONSOLIDATED FREE CASH FLOW FROM CONTINUING OPERATIONS
(Unaudited; Amounts in thousands)
Quarter Ended
-------------
June 30, 2009 March 31, 2009 June 30, 2008
------------- -------------- -------------
Income from continuing
operations $899 $79 $1,729
Add: Depreciation
and amortization 14,228 14,810 14,075
Less: Capital
expenditures (11,170) (18,352) (25,365)
------ ------- -------
Free cash flow (2) $3,957 $(3,463) $(9,561)
====== ======= =======
(2) 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.
SUREWEST COMMUNICATIONS - Consolidated Operations
SELECTED OPERATING METRICS
As of and for the quarter ended
6/30/2009 6/30/2008
BROADBAND (1) (1) Chg Chg %
--------- --------- ---------- --- -----
Residential
Video
Marketable Homes -
Fiber & HFC (2) 239,800 217,700 22,100 10%
RGUs - Fiber & HFC 56,900 54,500 2,400 4%
RGUs - Copper 2,200 2,600 (400) -15%
Penetration - Fiber & HFC 23.7% 25.0% -1.3% -5%
ARPU $67 $62 $5 9%
Voice
Marketable Homes 309,300 292,200 17,100 6%
RGUs 68,000 56,600 11,400 20%
Penetration 22.0% 19.4% 2.6% 13%
ARPU $33 $33 $0 0%
Data
Marketable Homes 309,300 292,200 17,100 6%
RGUs 97,700 94,000 3,700 4%
Penetration 31.6% 32.2% -0.6% -2%
ARPU $38 $37 $1 3%
Total
Marketable Homes -
Fiber, HFC, Copper 309,300 292,200 17,100 6%
RGUs 224,800 207,700 17,100 8%
Subscriber totals
Subscribers (3) 101,800 99,000 2,800 3%
Penetration 32.9% 33.9% -1.0% -3%
ARPU (4) $97 $89 $8 9%
Triple Play ARPU (5) $115 $109 $6 5%
Triple Play RGUs per
Subscriber (5) 2.58 2.60 (0.01) 0%
Churn 1.7% 1.5% 0.3% 19%
Business (6)
Customers 6,800 6,200 600 10%
ARPU $475 $458 $17 4%
6/30/2009 6/30/2008
TELECOM (1) (1) Chg Chg %
------- ---------- ---------- --- -----
Residential
Voice
Marketable Homes 90,900 90,000 900 1%
RGUs (7) 45,100 62,900 (17,800) -28%
Cumulative Migration
to Broadband Voice (8) 9,000 1,400 7,600 543%
Penetration 49.6% 69.9% -20.3% -29%
ARPU $45 $44 $1 3%
Churn (9) 2.3% 2.1% 0.1% 7%
Business (6)
Customers 8,900 9,600 (700) -7%
ARPU $339 $341 ($2) -1%
CONSOLIDATED RESIDENTIAL VOICE RGUs
-----------------------------------
ILEC Voice RGUs
Broadband 12,400 2,000 10,400 520%
Telecom 45,100 62,900 (17,800) -28%
------ ------ -------
Total ILEC Voice RGUs (10) 57,500 64,900 (7,400) -11%
CLEC Residential Voice
RGUs (11) 55,600 54,600 1,000 2%
------ ------ -----
TOTAL Residential Voice
RGUs (12) 113,100 119,500 (6,400) -5%
6/30/2009 6/30/2008
NETWORK METRICS (1) (1) Chg Chg %
--------------- --------- --------- --- -----
Marketable Homes - Fiber 146,900 125,700 21,200 17%
Marketable Homes - HFC 92,900 92,000 900 1%
Marketable Homes - Copper 69,500 74,500 (5,000) -7%
------ ------ ------
Total 309,300 292,200 17,100 6%
BROADBAND 3/31/2009 (1) Chg Chg %
--------- ------------- --- -----
Residential
Video
Marketable Homes -
Fiber & HFC (2) 236,500 3,300 1%
RGUs - Fiber & HFC 57,600 (700) -1%
RGUs - Copper 2,400 (200) -8%
Penetration - Fiber & HFC 24.4% -0.6% -3%
ARPU $65 $2 4%
Voice
Marketable Homes 308,200 1,100 0%
RGUs 66,300 1,700 3%
Penetration 21.5% 0.5% 2%
ARPU $33 $0 0%
Data
Marketable Homes 308,200 1,100 0%
RGUs 98,100 (400) 0%
Penetration 31.8% -0.2% -1%
ARPU $37 $1 4%
Total
Marketable Homes -
Fiber, HFC, Copper 308,200 1,100 0%
RGUs 224,400 400 0%
Subscriber totals
Subscribers (3) 102,800 (1,000) -1%
Penetration 33.4% -0.4% -1%
ARPU (4) $94 $3 4%
Triple Play ARPU (5) $112 $3 2%
Triple Play RGUs per
Subscriber (5) 2.59 (0.01) 0%
Churn 1.4% 0.3% 21%
Business (6)
Customers 6,700 100 1%
ARPU $484 ($9) -2%
TELECOM 3/31/2009 (1) Chg Chg %
------- ------------- --- -----
Residential
Voice
Marketable Homes 90,800 100 0%
RGUs (7) 49,500 (4,400) -9%
Cumulative Migration
to Broadband Voice (8) 6,900 2,100 30%
Penetration 54.5% -4.9% -9%
ARPU $44 $1 2%
Churn (9) 2.1% 0.2% 10%
Business (6)
Customers 9,000 (100) -1%
ARPU $332 $7 2%
CONSOLIDATED RESIDENTIAL VOICE RGUs
-----------------------------------
ILEC Voice RGUs
Broadband 9,900 2,500 25%
Telecom 49,500 (4,400) -9%
------ ------
Total ILEC Voice RGUs (10) 59,400 (1,900) -3%
CLEC Residential Voice
RGUs (11) 56,400 (800) -1%
------ ----
TOTAL Residential Voice
RGUs (12) 115,800 (2,700) -2%
NETWORK METRICS 3/31/2009 (1) Chg Chg %
--------------- ------------- --- -----
Marketable Homes - Fiber 142,900 4,000 3%
Marketable Homes - HFC 93,600 (700) -1%
Marketable Homes - Copper 71,700 (2,200) -3%
------ ------
Total 308,200 1,100 0%
(1) 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.
(2) Marketable Homes - Fiber & HFC consists of Sacramento fiber homes and
Kansas City hybrid fiber coax (HFC) homes.
(3) A residential subscriber is a customer who subscribers 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.
(13) Telecom access lines include residential and business access lines.
For information purposes, access line counts were 105,900 at 6/30/08,
88,400 at 3/31/09, and 82,600 at 6/30/09.
SOURCE SureWest Communications
