SureWest Reports Fourth Quarter and Full Year 2009 Results
Broadband-focused strategy continues to drive long-term revenue, adjusted EBITDA and free cash flow growth
-- Full year revenues increased 5% and adjusted EBITDA grew 13%
-- Full year Broadband revenues grew 19% from a 20% increase in residential revenues and 20% business services growth
-- Free cash flow increased by $33 million to positive $2 million for the full year
-- Debt, net of cash and cash equivalents, reduced by $23 million from year-end 2008, resulting in a net debt to adjusted EBITDA ratio of 2.77x
-- Net income decreased to $3.2 million compared to $18.9 million in 2008 as a result of the $18.8 million gain on the sale of SureWest's wireless assets in 2008
-- Average monthly revenue per customer (ARPU) in triple-play markets increased by 8% to $115
ROSEVILLE, Calif., Feb. 25 /PRNewswire-FirstCall/ -- SureWest Communications (Nasdaq: SURW) today announced operating results for the fourth quarter and full year ended December 31, 2009.
(Logo: http://www.newscom.com/cgi-bin/prnh/20050908/SFSUREWESTLOGO)
Steve Oldham, SureWest's president and chief executive officer, said, "Our results for the year were driven by top-line revenue growth, increased adjusted EBITDA and three consecutive quarters of positive free cash flow as we continued to drive down net debt. Among our peers, we stood out with 5% revenue growth and 13% adjusted EBITDA growth. Our commercial service sales efforts are showing great results, particularly in the Kansas City market where our business customer count grew 27% from 2008 and pro forma revenues increased by 29%. We also increased residential revenues and ARPU by targeting high-value subscribers looking for the exceptional performance our superior networks deliver.
"Our ability to react quickly to market dynamics and to be flexible with our marketing strategies allowed us to grow the company during 2009's difficult economic and fiercely competitive climate. Having markets in both California and Kansas provides geographic and economic diversity in addition to cost-saving opportunities across the organization that allow for significant benefits.
"Looking ahead, we expect to continue growing our Broadband segment, focusing resources on expanding our business services customer base and increasing residential ARPU and the number of products our customers subscribe to (RGUs). Our competition is not standing still and we are seeing a significant response; however, they can only compete with us on price. We have the ability to cost effectively grow the company today largely because of investments we made over the last several years to extend our superior fiber networks, something our competitors have yet to even begin. Our new video service, Advanced Digital TV, has created an exciting buzz among both fiber and copper network customers in the Sacramento region due to its compelling features, such as Whole Home DVR, lightning-fast channel change times and an intuitive program guide. In Kansas City, improvements to the network in 2010 will allow us to add more HD channels and deliver faster Internet speeds. We are confident our superior networks will drive future growth, and we will continue to execute on the challenges and opportunities ahead in order to drive shareholder value."
The following table highlights financial results for continuing operations on a consolidated basis (dollars are in thousands):
4th Quarter
Consolidated 2009 2008 Change %
---- ---- ------ ---
Broadband Revenue $41,566 $36,929 $4,637 13%
Telecom Revenue 18,733 22,009 (3,276) (15%)
Total Revenue 60,299 58,938 1,361 2%
Adjusted EBITDA 19,585 17,015 2,570 15%
Income (loss) from
Continuing Ops (100) (1,547) 1,447 94%
Capital Expenditure 14,967 21,922 (6,955) (32%)
Free Cash Flow 359 (8,803) 9,162 104%
Net Debt 215,556 238,848 (23,292) (10%)
Full Year
Consolidated 2009 2008 Change %
---- ---- ------ ---
Broadband Revenue $161,222 $135,341 25,881 19%
Telecom Revenue 80,478 95,032 (14,554) (15%)
Total Revenue 241,700 230,373 11,327 5%
Adjusted EBITDA 77,898 69,239 8,659 13%
Income (loss) from
Continuing Ops 667 826 (159) (19%)
Capital Expenditure 58,330 86,489 (28,159) (33%)
Free Cash Flow 2,061 (30,636) 32,697 107%
Net Debt 215,556 238,848 (23,292) (10%)
See Non-GAAP measure notes near end of release, and EBITDA, Free
Cash Flow and Net Debt reconciliations for detailed adjustments.
Fourth Quarter Financial Results
Consolidated revenues increased 2% year-over-year to $60.3 million resulting from 13% Broadband revenue growth offset by Telecom revenue declines of 15%. Adjusted EBITDA, which is adjusted for non-cash pension expense of $642 thousand and non-cash stock compensation expense of $495 thousand, increased 15% year-over-year to $19.6 million as the company continued to recognize cost savings from initiatives such as consolidation of office space and employee attrition. Employee counts decreased 3% from the prior year to 893 employees.
Operating expenses, exclusive of depreciation and amortization, remained flat year-over-year at $41.9 million due to reductions in labor expense, and sales and advertising costs offset by increases in video license fees and transport charges related to commercial business revenue growth.
Net loss was $100 thousand compared to a loss of $2.1 million in the fourth quarter of 2008 due primarily to an increase in adjusted EBITDA and a decrease in interest expense. Earnings per share from continuing operations was zero compared to negative $.15 in the fourth quarter of 2008.
Capital expenditures totaled $15 million for the fourth quarter and $58.3 million for the full year compared to $86.5 million in 2008. The company passed 8,800 additional advanced fiber homes in 2009.
As previously announced, SureWest's video service is expanding to reach over 25,000 existing voice and data marketable ILEC homes on the Sacramento copper network, creating the ability to deliver a new IP-based triple-play option to these potential customers. The first 15,000 homes receiving SureWest's extended video became available in January 2010 and the second phase of over 10,000 homes will become available throughout the second quarter of 2010. These 25,000-plus homes will be served with video for a cost of just over $3 million, which is roughly 10% of the average cost to pass a home with fiber. SureWest's projected 2010 capital expenditure remains at $55-60 million, of which approximately two-thirds is scheduled for residential and business success-based investment.
Free cash flow, defined as income from continuing operations plus depreciation and amortization less capital expenditures, increased to positive $359 thousand – a $9.2 million increase year-over-year. The increase is due to adjusted EBITDA growth and lower capital expenditures related to the third quarter 2009 completion of the fiber network expansion. The company continues to focus on increasing revenues and free cash flow by growing residential ARPU and RGUs, and increasing business services revenues.
Cash and cash equivalents increased to $7.5 million from $2.8 million at December 31, 2008. During the year, SureWest paid down $18.6 million in debt resulting in $215.6 million in remaining total debt net of cash and cash equivalents (net debt), and a net debt to adjusted EBITDA ratio of 2.77x.
Broadband Segment Results
Broadband revenues increased 13% year-over-year and accounted for 69% of the company's total revenues, compared to 63% in the fourth quarter of 2008. This growth is due to the company's successful long-term strategy of growing its Broadband operations to counteract the industry-wide trend of declining Telecom segment revenues.
Broadband Residential:
Broadband Residential revenues increased 13% year-over-year to $30.5 million due to 12% growth in ARPU and a 4% increase in RGUs. To illustrate growth trends, Broadband RGUs, subscriber counts and ARPU are detailed both year-over-year and sequentially in the table and text below:
Q4 '09 vs. Q4 '08 change Q4 '09 vs. Q3 '09 change
------------------------ ------------------------
Kansas Kansas
Sacramento City Sacramento City
Market Market Total Market Market Total
---------- ------ ----- ---------- ------ -----
Broadband
Residential
RGUs 6% 1% 4% 2% 0% 1%
Data RGUs 0% 3% 1% 1% 1% 1%
Video RGUs -
Fiber & HFC -4% 1% -1% 0% 0% 0%
Voice RGUs 30% -1% 13% 4% -1% 2%
Total
Residential
Subscribers -1% 1% 0% 0% -1% 0%
ARPU for triple-play marketable homes, consisting of the company's fiber-to-the-home (FTTH) and hybrid fiber coaxial (HFC) networks, increased 8% year-over-year to $115 from $107. This was due to a fourth quarter 2009 video and data price increase that reinforced the company's ability to maintain growth while targeting customers who value superior service offerings. Additionally, continued customer demand for higher data speeds, HDTV and DVR impacted ARPU growth.
Broadband Business:
Broadband Business revenues increased by $1.3 million, or 14%, year-over-year to $10.3 million. Customer counts increased 9% year-over-year to 7,100 and ARPU grew 5% from the prior year to $492.
Broadband Business growth expectations remain high in both Sacramento and Kansas City due to several operational and sales factors. The company has the competitive advantage of being able to add business customers at lower initial investment costs where service is provided over its extensive fiber network. Aggressive sales and renewal tactics, superior customer satisfaction levels and catered packages coupled with a host of product solutions including wireless backhaul, data center services and the upcoming launches of Hosted IP PBX and SIP Trunking will drive future growth. And as the economy begins to turn and businesses return, SureWest anticipates it will capture additional business customers.
Telecom Segment Results
The Telecom segment, which only services the Sacramento market, experienced revenue declines of 15% year-over-year to $18.7 million from the industry-wide trend of residential access line attrition and associated access revenue declines. The Telecom segment accounted for just 31% of total revenues compared to 37% in the fourth quarter of 2008 as the company continues to successfully grow its Broadband segment and perform as a Broadband-driven company. Forecasts anticipate Telecom segment declines will begin to slow over the next several years.
Telecom Residential:
Telecom Residential revenues declined 26% year-over-year to $5.4 million resulting from losses in Telecom voice RGUs of 29% year-over-year. The company continues to mitigate Telecom voice line losses as customers elect to move to its Broadband Voice over IP (VoIP) product. Though 15,500 Telecom Residential voice RGUs were lost on a year-over-year basis, 7,100, or 46%, of that number was reclaimed through new growth in SureWest's Broadband VoIP service.
Telecom Business:
Telecom Business revenues declined 5% year-over-year to $8.6 million due to a decline in small- and medium-sized business customers, particularly those impacted by California's depressed real estate industry. In addition, some carrier consolidation activity took place during the year. Growth opportunities are expected once the Sacramento office market recovers and businesses begin to return.
Telecom Access:
Telecom Access revenues decreased $950 thousand year-over-year to $4.5 million due to scheduled reductions in the California High Cost Fund (CHCF) subsidies and a decline in switched access revenues. As previously announced, CHCF subsidies are scheduled to decline by $2 million per year through 2011, in line with a negotiated transition.
Non-GAAP Measures
In addition to the results presented in accordance with generally accepted accounting principles (GAAP) throughout this press release; the company has presented non-GAAP financial measures such as adjusted EBITDA, free cash flow and net debt. Adjusted EBITDA represents net income (loss) from continuing operations excluding amounts for income taxes, depreciation and amortization, non-cash pension and certain post-retirement benefits, non-cash stock compensation, and all other non-operating income/expenses. Free cash flow represents net income (loss) from continuing operations plus depreciation and amortization less capital expenditures. Net debt is a measure of total debt (current, plus long-term) less cash and cash equivalents. 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. 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 of its results and business strategy at 5 p.m. Eastern Time on Thursday, February 25, 2010. 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, March 4 by dialing 888.286.8010 and entering pass code 36995627. Visit www.surw.com for updates prior to the call.
About SureWest
SureWest Communications (www.surewest.com) is a leading integrated communications provider and the bandwidth leader in the markets it serves. Headquartered in Northern California for more than 95 years, 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 |
|
Misty Wells |
|
Investor Relations |
|
916-786-1799 |
|
SUREWEST COMMUNICATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Amounts in thousands, except per share amounts)
Quarter Quarter
Ended Ended
December December $ %
31, 2009 31, 2008 Change Change
--------- --------- ------ ------
Operating revenues:
Broadband $41,566 $36,929 $4,637 13%
Telecom 18,733 22,009 (3,276) -15%
------ ------ ------ ---
Total operating revenues 60,299 58,938 1,361 2%
Operating expenses:
Cost of services and products
(exclusive of depreciation
and amortization) 24,929 23,875 1,054 4%
Customer operations and
selling 8,173 9,260 (1,087) -12%
General and administrative 8,749 8,578 171 2%
Depreciation and amortization 15,426 14,666 760 5%
------ ------ --- --
Total operating expenses 57,277 56,379 898 2%
------ ------ --- --
Income from operations 3,022 2,559 463 18%
Other income (expense):
Investment income 22 83 (61) -73%
Interest expense (2,916) (3,281) 365 11%
Other, net 264 261 3 1%
--- --- -- --
Total other income
(expense), net (2,630) (2,937) 307 10%
------ ------ --- --
Income (loss) from continuing
operations before income taxes 392 (378) 770 204%
Income tax expense 492 1,169 (677) -58%
--- ----- ---- ---
Loss from continuing operations (100) (1,547) 1,447 94%
Discontinued operations, net of tax:
Loss from discontinued
operations $- (229) 229 100%
Loss on sale of discontinued
operations - (358) 358 100%
-- ---- --- ---
Total discontinued
operations $- (587) 587 100%
== ---- --- ---
Net loss $(100) $(2,134) $2,034 95%
===== ======= ====== ==
Basic and diluted earnings
per common share:
Loss from continuing
operations $- $(0.11) $0.11
Discontinued operations, net
of tax - (0.04) 0.04
--- ----- ----
Net loss per basic common
share $- $(0.15) $0.15
=== ====== =====
Shares of common stock used to
calculate earnings per share:
Basic and diluted 13,956 13,976 (20)
====== ====== ===
SUREWEST COMMUNICATIONS
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited; Amounts in thousands, except per share amounts)
Quarter Quarter
Ended Ended
December September $ %
31, 2009 30, 2009 Change Change
--------- --------- ------ ------
Operating revenues:
Broadband $41,566 $40,175 $1,391 3%
Telecom 18,733 19,354 (621) -3%
------ ------ ---- --
Total operating revenues 60,299 59,529 770 1%
Operating expenses:
Cost of services and products
(exclusive of depreciation and
amortization) 24,929 24,563 366 1%
Customer operations and selling 8,173 9,017 (844) -9%
General and administrative 8,749 8,073 676 8%
Depreciation and amortization 15,426 15,260 166 1%
------ ------ --- --
Total operating expenses 57,277 56,913 364 1%
------ ------ --- --
Income from operations 3,022 2,616 406 16%
Other income (expense):
Investment income 22 28 (6) -21%
Interest expense (2,916) (3,046) 130 4%
Other, net 264 205 59 29%
--- --- -- --
Total other income (expense),
net (2,630) (2,813) 183 7%
------ ------ --- --
Income (loss) from continuing
operations before income taxes 392 (197) 589 299%
Income tax expense 492 14 478 nm
--- -- --- --
Loss from continuing operations (100) (211) 111 53%
Discontinued operations, net of tax:
Loss from discontinued
operations - - - -
Loss on sale of discontinued
operations - - - -
-- -- -- --
Total discontinued operations - - - -
== == == ==
Net loss $(100) $(211) $111 53%
===== ===== ==== ==
Basic and diluted earnings per
common share:
Loss from continuing operations $- $(0.02) $0.02
Discontinued operations, net of
tax - - -
-- -- --
Net loss per basic common share $- $(0.02) $0.02
== ====== =====
Shares of common stock used to
calculate earnings per share:
Basic and diluted 13,956 13,936 20
====== ====== ==
SUREWEST COMMUNICATIONS
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited; Amounts in thousands, except per share amounts)
Twelve Twelve
Months Months
Ended Ended
December December $ %
31, 2009 31, 2008 Change Change
--------- --------- ------ ------
Operating revenues:
Broadband $161,222 $135,341 $25,881 19%
Telecom 80,478 95,032 (14,554) -15%
------ ------ ------- ---
Total operating revenues 241,700 230,373 11,327 5%
Operating expenses:
Cost of services and
products (exclusive of
depreciation and
amortization) 99,624 89,684 9,940 11%
Customer operations and
selling 33,770 32,933 837 3%
General and administrative 35,009 37,588 (2,579) -7%
Depreciation and amortization 59,724 55,027 4,697 9%
------ ------ ----- --
Total operating expenses 228,127 215,232 12,895 6%
------- ------- ------ --
Income from operations 13,573 15,141 (1,568) -10%
Other income (expense):
Investment income 121 676 (555) -82%
Interest expense (11,318) (12,126) 808 7%
Other, net 297 274 23 8%
--- --- -- --
Total other income
(expense), net (10,900) (11,176) 276 2%
------- ------- --- --
Income from continuing
operations before income taxes 2,673 3,965 (1,292) -33%
Income tax expense 2,006 3,139 (1,133) -36%
----- ----- ------ ---
Income from continuing
operations 667 826 (159) -19%
Discontinued operations, net of tax:
Income (loss) from
discontinued operations (69) 103 (172) -167%
Gain on sale of discontinued
operations 2,568 18,004 (15,436) -86%
----- ------ ------- ---
Total discontinued
operations 2,499 18,107 (15,608) -86%
----- ------ ------- ---
Net income $3,166 $18,933 $(15,767) -83%
====== ======= ======== ===
Basic and diluted earnings per
common share:
Income from continuing
operations $0.05 $0.06 $(0.01)
Discontinued operations, net
of tax 0.18 1.28 (1.10)
---- ---- -----
Net income per basic common
share $0.23 $1.34 $(1.11)
===== ===== ======
Shares of common stock used to
calculate earnings per share:
Basic 13,996 14,096 (100)
====== ====== ====
Diluted 13,996 14,099 (103)
====== ====== ====
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 Twelve
Quarters Ended: Months
---------------- Ended
March June September December December
Consolidated 31 30 30 31 31, 2008
----- ---- --------- -------- --------
Operating
revenues (1)
Residential $34,647 $34,621 $33,959 $34,180 $137,407
Business 16,946 18,188 19,342 18,218 72,694
Access 6,647 6,393 6,308 5,922 25,270
Other 630 650 661 618 2,559
--- --- --- --- -----
Total operating
revenues from
external customers 58,870 59,852 60,270 58,938 237,930
------ ------ ------ ------ -------
Operating expenses
(1) 41,274 39,903 42,034 41,713 164,924
Depreciation and
amortization 13,259 14,075 14,219 14,666 56,219
------ ------ ------ ------ ------
Income from
operations $4,337 $5,874 $4,017 $2,559 $16,787
====== ====== ====== ====== =======
For 2009 Twelve
Quarters Ended: Months
----------------- Ended
March June September December December
Consolidated 31 30 30 31 31, 2009
----- ---- --------- -------- --------
Operating revenues (1)
Residential $35,713 $36,180 $35,246 $35,845 $142,984
Business 18,633 18,704 18,705 18,969 75,011
Access 6,031 5,351 5,031 4,942 21,355
Other 565 695 547 543 2,350
--- --- --- --- -----
Total operating
revenues from
external customers 60,942 60,930 59,529 60,299 241,700
------ ------ ------ ------ -------
Operating expenses
(1) 42,812 42,087 41,653 41,851 168,403
Depreciation and
amortization 14,810 14,228 15,260 15,426 59,724
------ ------ ------ ------ ------
Income from
operations $3,320 $4,615 $2,616 $3,022 $13,573
====== ====== ====== ====== =======
Consolidated Reconciliation of Adjusted
EBITDA to Net Income (Loss) from Continuing Operations
For 2008 Twelve
Quarters Ended: Months
---------------- Ended
March June September December December
31 30 30 31 31, 2008
----- ---- --------- -------- --------
Net income (loss)
from continuing
operations $376 $1,729 $622 $(1,547) $1,180
Add back: income
tax expense 489 1,139 582 1,169 3,379
Less: other
(income)/expense 3,472 3,006 2,813 2,937 12,228
----- ----- ----- ----- ------
Income from
operations 4,337 5,874 4,017 2,559 16,787
Add (subtract):
Depreciation and
amortization 13,259 14,075 14,219 14,666 56,219
Non-cash pension
(income)/expense (393) (524) (458) (433) (1,808)
Non-cash stock
compensation
expense 141 345 170 223 879
--- --- --- --- ---
Adjusted EBITDA (2) $17,344 $19,770 $17,948 $17,015 $72,077
======= ======= ======= ======= =======
Other data:
Total debt $277,830 $231,828 $233,827 $241,688 n/a
For 2009 Twelve
Quarters Ended: Months
----------------- Ended
March June September December December
31 30 30 31 31, 2009
----- ---- --------- -------- --------
Net income (loss)
from continuing
operations $79 $899 $(211) $(100) $667
Add back: income
tax expense 884 616 14 492 2,006
Less: other
(income)/expense 2,357 3,100 2,813 2,630 10,900
----- ----- ----- ----- ------
Income from
operations 3,320 4,615 2,616 3,022 13,573
Add (subtract):
Depreciation and
amortization 14,810 14,228 15,260 15,426 59,724
Non-cash pension
(income)/expense 755 552 642 642 2,591
Non-cash stock
compensation
expense 608 464 443 495 2,010
--- --- --- --- -----
Adjusted EBITDA (2) $19,493 $19,859 $18,961 $19,585 $77,898
======= ======= ======= ======= =======
Other data:
Total debt $240,187 $236,685 $226,683 $223,045 n/a
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: Twelve
---------------- Months Ended
March June September December December 31,
Broadband 31 30 30 31 2008
----- ---- --------- -------- -------
Data $10,128 $10,338 $10,348 10,491 $41,305
Video 10,359 10,365 10,264 10,522 41,510
Voice 5,258 5,395 5,542 5,933 22,128
----- ----- ----- ----- ------
Total residential
revenues 25,745 26,098 26,154 26,946 104,943
Business 7,899 8,374 9,271 9,084 34,628
Access 305 370 414 449 1,538
Other 439 459 441 450 1,789
--- --- --- --- -----
Total operating
revenues from
external customers 34,388 35,301 36,280 36,929 142,898
Intersegment
revenues 140 141 138 120 539
--- --- --- --- ---
Total operating
revenues 34,528 35,442 36,418 37,049 143,437
------ ------ ------ ------ -------
Operating expenses
without
depreciation 30,742 31,085 32,844 32,698 127,369
Depreciation and
amortization 9,597 10,335 10,700 11,051 41,683
----- ------ ------ ------ ------
Loss from
operations $(5,811) $(5,978) $(7,126) $(6,700) $(25,615)
======= ======= ======= ======= ========
For 2009
Quarters Ended: Twelve
----------------- Months Ended
March June September December December 31,
Broadband 31 30 30 31 2009
----- ---- --------- -------- -------
Data $10,763 $11,184 $11,236 $11,878 $45,061
Video 11,689 11,995 11,711 12,127 47,522
Voice 6,399 6,594 6,442 6,462 25,897
----- ----- ----- ----- ------
Total residential
revenues 28,851 29,773 29,389 30,467 118,480
Business 9,585 9,615 10,018 10,336 39,554
Access 384 398 427 419 1,628
Other 402 473 341 344 1,560
--- --- --- --- -----
Total operating
revenues from
external customers 39,222 40,259 40,175 41,566 161,222
Intersegment
revenues 91 94 93 160 438
-- -- -- --- ---
Total operating
revenues 39,313 40,353 40,268 41,726 161,660
------ ------ ------ ------ -------
Operating expenses
without
depreciation 34,695 34,294 34,615 34,247 137,851
Depreciation and
amortization 11,620 11,283 12,199 12,257 47,359
------ ------ ------ ------ ------
Loss from
operations $(7,002) $(5,224) $(6,546) $(4,778) $(23,550)
======= ======= ======= ======= ========
Broadband Reconciliation of Adjusted EBITDA to Net Loss
from Continuing Operations
For 2008
Quarters Ended: Twelve
---------------- Months Ended
March June September December December 31,
31 30 30 31 2008
----- ---- --------- -------- --------
Loss from
continuing
operations $(5,416) $(5,391) $(5,856) $(6,667) $(23,330)
Add back: income
tax benefits (4,054) (3,690) (3,994) (3,179) (14,917)
Less: other
(income)/expense 3,659 3,103 2,724 3,146 12,632
----- ----- ----- ----- ------
Loss from operations (5,811) (5,978) (7,126) (6,700) (25,615)
Add (subtract):
Depreciation and
amortization 9,597 10,335 10,700 11,051 41,683
Non-cash pension
(income)/expense (162) (212) (186) (178) (738)
Non-cash stock
compensation
expense 54 173 77 103 407
-- --- -- --- ---
Adjusted EBITDA (2) $3,678 $4,318 $3,465 $4,276 $15,737
====== ====== ====== ====== =======
For 2009
Quarters Ended: Twelve
----------------- Months Ended
March June September December December 31,
31 30 30 31 2009
----- ---- --------- -------- --------
Loss from
continuing
operations $(5,398) $(4,884) $(5,619) $(4,881) $(20,782)
Add back: income
tax benefits (3,656) (3,312) (3,810) (2,675) (13,453)
Less: other
(income)/expense 2,052 2,972 2,883 2,778 10,685
----- ----- ----- ----- ------
Loss from operations (7,002) (5,224) (6,546) (4,778) (23,550)
Add (subtract):
Depreciation and
amortization 11,620 11,283 12,199 12,257 47,359
Non-cash pension
(income)/expense 327 56 197 199 779
Non-cash stock
compensation
expense 304 231 221 246 1,002
--- --- --- --- -----
Adjusted EBITDA (2) $5,249 $6,346 $6,071 $7,924 $25,590
====== ====== ====== ====== =======
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: Twelve
---------------- Months Ended
March June September December December 31,
Telecom 31 30 30 31 2008
----- ---- --------- -------- -------
Residential $8,902 $8,523 $7,805 $7,234 $32,464
Business 9,047 9,814 10,071 9,134 38,066
Access 6,342 6,023 5,894 5,473 23,732
Other 191 191 220 168 770
--- --- --- --- ---
Total operating
revenues from
external customers 24,482 24,551 23,990 22,009 95,032
Intersegment
revenues 4,343 4,560 4,706 4,846 18,455
----- ----- ----- ----- ------
Total operating
revenues 28,825 29,111 28,696 26,855 113,487
------ ------ ------ ------ -------
Operating expenses
without
depreciation 15,015 13,519 14,034 13,981 56,549
Depreciation and
amortization 3,662 3,740 3,519 3,615 14,536
----- ----- ----- ----- ------
Income from
operations $10,148 $11,852 $11,143 $9,259 $42,402
======= ======= ======= ====== =======
For 2009
Quarters Ended: Twelve
----------------- Months Ended
March June September December December 31,
Telecom 31 30 30 31 2009
----- ---- --------- -------- -------
Residential $6,862 $6,407 $5,857 $5,378 $24,504
Business 9,048 9,089 8,687 8,633 35,457
Access 5,647 4,953 4,604 4,523 19,727
Other 163 222 206 199 790
--- --- --- --- ---
Total operating
revenues from
external customers 21,720 20,671 19,354 18,733 80,478
Intersegment
revenues 4,874 4,981 5,043 4,999 19,897
----- ----- ----- ----- ------
Total operating
revenues 26,594 25,652 24,397 23,732 100,375
------ ------ ------ ------ -------
Operating expenses
without
depreciation 13,082 12,868 12,174 12,763 50,887
Depreciation and
amortization 3,190 2,945 3,061 3,169 12,365
----- ----- ----- ----- ------
Income from
operations $10,322 $9,839 $9,162 $7,800 $37,123
======= ====== ====== ====== =======
Telecom Reconciliation of Adjusted EBITDA to Net Income
from Continuing Operations
For 2008
Quarters Ended: Twelve
---------------- Months Ended
March June September December December 31,
31 30 30 31 2008
----- ---- --------- -------- -------
Net income from
continuing
operations $5,792 $7,120 $6,478 $5,120 $24,510
Add back: income
tax expense 4,543 4,829 4,576 4,348 18,296
Less: other
(income)/expense (187) (97) 89 (209) (404)
---- --- -- ---- ----
Income from
operations 10,148 11,852 11,143 9,259 42,402
Add (subtract):
Depreciation and
amortization 3,662 3,740 3,519 3,615 14,536
Non-cash pension
(income) /
expense (231) (312) (272) (255) (1,070)
Non-cash stock
compensation
expense 87 172 93 120 472
-- --- -- --- ---
Adjusted EBITDA (2) $13,666 $15,452 $14,483 $12,739 $56,340
======= ======= ======= ======= =======
For 2009 Quarters Ended: Twelve
------------------------- Months Ended
March June September December December 31,
31 30 30 31 2009
----- ---- --------- -------- -------
Net income from
continuing
operations $5,477 $5,783 $5,408 $4,781 $21,449
Add back: income
tax expense 4,540 3,928 3,824 3,167 15,459
Less: other
(income)/expense 305 128 (70) (148) 215
--- --- --- ---- ---
Income from
operations 10,322 9,839 9,162 7,800 37,123
Add (subtract):
Depreciation and
amortization 3,190 2,945 3,061 3,169 12,365
Non-cash pension
(income) /
expense 428 496 445 443 1,812
Non-cash stock
compensation
expense 304 233 222 249 1,008
--- --- --- --- -----
Adjusted EBITDA (2) $14,244 $13,513 $12,890 $11,661 $52,308
======= ======= ======= ======= =======
(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
CONSOLIDATED BALANCE SHEETS
(Unaudited; Amounts in thousands)
December 31, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash and cash
equivalents $7,489 $2,840
Short-term
investments 4,306 610
Accounts
receivable,
net 19,734 21,415
Income tax
receivable 2,221 6,391
Inventories 5,263 6,527
Prepaid
expenses 3,704 4,539
Deferred
income taxes 3,373 2,989
Other current
assets 1,760 1,752
Assets held
for sale 6,009 7,388
Assets of
discontinued
operations - 5,002
--- -----
Total current
assets 53,859 59,453
Property, plant
and equipment,
net 517,230 515,843
Intangible and other assets:
Long-term
investments - 3,508
Customer
relationships,
net 3,847 5,062
Goodwill 45,814 45,814
Deferred
charges and
other assets 2,113 4,129
----- -----
51,774 58,513
------ ------
$622,863 $633,809
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current
portion of
long-term debt
and capital
lease
obligations $15,636 $15,643
Accounts
payable 2,547 2,798
Other accrued
liabilities 18,315 19,050
Advance
billings and
deferred
revenues 8,580 8,960
Accrued
compensation
and pension
benefits 9,172 11,292
Liabilities of
discontinued
operations - 453
--- ---
Total current
liabilities 54,250 58,196
Long-term debt 207,409 226,045
Deferred income
taxes 54,856 46,358
Accrued pension
and other post-
retirement
benefits 32,451 36,046
Other
liabilities and
deferred
revenues 4,714 5,819
Commitments and
contingencies – –
Shareholders' equity:
Common stock,
without par
value; 100,000
shares
authorized,
14,148 and
14,082 shares
issued and
outstanding at
December 31,
2009 and
December 31,
2008,
respectively 146,844 146,558
Accumulated
other
comprehensive
loss (15,280) (19,248)
Retained
earnings 137,619 134,035
------- -------
Total
shareholders'
equity 269,183 261,345
------- -------
$622,863 $633,809
======== ========
SUREWEST COMMUNICATIONS
ADJUSTED EBITDA RECONCILIATION TO NET INCOME (LOSS) FROM CONTINUING
OPERATIONS
(Unaudited; Amounts in thousands)
Twelve Months ended December
31, 2009
----------------------------
Broadband Telecom Consolidated
--------- ------- ------------
Income (loss) from continuing
operations $(20,782) $21,449 $667
Add (subtract):
Income taxes (benefit)/expense (13,453) 15,459 2,006
Other (income)/expense 10,685 215 10,900
Depreciation and amortization 47,359 12,365 59,724
Non-cash pension (income)/expense 779 1,812 2,591
Non-cash stock compensation
expense 1,002 1,008 2,010
------- ------- -------
Adjusted EBITDA (1) $25,590 $52,308 $77,898
======= ======= =======
Twelve Months ended December
31, 2008
----------------------------
Broadband Telecom Consolidated
--------- ------- ------------
Income (loss) from continuing
operations $(23,684) $24,510 $826
Add (subtract):
Income taxes (benefit)/expense (15,157) 18,296 3,139
Other (income)/expense 11,580 (404) 11,176
Depreciation and amortization 40,491 14,536 55,027
Non-cash pension (income)/expense (738) (1,070) (1,808)
Non-cash stock compensation
expense 407 472 879
------- ------- -------
Adjusted EBITDA (1) $12,899 $56,340 $69,239
======= ======= =======
(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)
Twelve Months
Ended December
31,
---------------
2009 2008
---- ----
Income from continuing operations $667 $826
Add: Depreciation and
amortization 59,724 55,027
Less: Capital expenditures (58,330) (86,489)
------ --------
Free cash flow (2) $2,061 $(30,636)
====== ========
SUREWEST COMMUNICATIONS
CONSOLIDATED NET DEBT RATIO FROM CONTINUING OPERATIONS
(Unaudited; Amounts in thousands)
Twelve Months
Ended December 31,
-----------------
2009 2008
---- ----
Net Debt:
Long-term debt, including current
maturities $223,045 $241,681
Less: Cash and cash equivalents (7,489) (2,840)
-------- --------
Net debt (3) $215,556 $238,841
======== ========
Ratio of Net Debt to Adjusted
EBITDA:
Net debt $215,556 $238,841
Divided by: Adjusted EBITDA 77,898 69,239
Ratio of net debt to Adjusted
EBITDA (4) 2.77 3.45
(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.
(3) Net debt is a measure of total long-term debt
(including current maturities) less cash and cash
equivalents. Net debt is 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.
(4) The ratio of net debt to Adjusted EBITDA is
calculated as net debt divided by Adjusted EBITDA.
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
ADJUSTED EBITDA RECONCILIATION TO NET INCOME (LOSS) FROM CONTINUING
OPERATIONS
(Unaudited; Amounts in thousands)
Quarter Ended December 31, 2009
-------------------------------
Broadband Telecom Consolidated
--------- ------- ------------
Income (loss) from continuing
operations $(4,881) $4,781 $(100)
Add (subtract):
Income taxes (benefit)/expense (2,675) 3,167 492
Other (income)/expense 2,778 (148) 2,630
Depreciation and amortization 12,257 3,169 15,426
Non-cash pension (income)/expense 199 443 642
Non-cash stock compensation
expense 246 249 495
------ ------- -------
Adjusted EBITDA (1) $7,924 $11,661 $19,585
====== ======= =======
Quarter Ended September 30, 2009
--------------------------------
Broadband Telecom Consolidated
--------- ------- ------------
Income (loss) from continuing
operations $(5,619) $5,408 $(211)
Add (subtract):
Income taxes (benefit)/expense (3,810) 3,824 14
Other (income)/expense 2,883 (70) 2,813
Depreciation and amortization 12,199 3,061 15,260
Non-cash pension (income)/expense 197 445 642
Non-cash stock compensation
expense 221 222 443
------ ------- -------
Adjusted EBITDA (1) $6,071 $12,890 $18,961
====== ======= =======
Quarter Ended December 31, 2008
-------------------------------
Broadband Telecom Consolidated
--------- ------- ------------
Income (loss) from continuing
operations $(6,667) $5,120 $(1,547)
Add (subtract):
Income taxes (benefit)/expense (3,179) 4,348 1,169
Other (income)/expense 3,146 (209) 2,937
Depreciation and amortization 11,051 3,615 14,666
Non-cash pension (income)/expense (178) (255) (433)
Non-cash stock compensation
expense 103 120 223
------ ------- -------
Adjusted EBITDA (1) $4,276 $12,739 $17,015
====== ======= =======
(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
-------------
December September December
31, 2009 30, 2009 31, 2008
--------- --------- ---------
Loss from continuing operations $(100) $(211) $(1,547)
Add: Depreciation and
amortization 15,426 15,260 14,666
Less: Capital expenditures (14,967) (13,841) (21,922)
---- ------ -------
Free cash flow (2) $359 $1,208 $(8,803)
==== ====== =======
(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 (inc KC results from periods prior to
acquisition)
As of and for the quarter ended
3/31/ 6/30/ 9/30/ 12/31/
BROADBAND 2008 (1) 2008 (1) 2008 (1) 2008 (1)
--------- -------- -------- -------- --------
Residential
Video
Marketable Homes - Fiber
& HFC (2) 211,000 217,700 221,700 232,400
RGUs - Fiber & HFC 52,500 54,500 55,900 57,500
Qtrly change 800 2,000 1,400 1,600
YoY (% change) 6% 9% 10% 11%
RGUs - Copper 2,700 2,600 2,600 2,600
Qtrly change (200) (100) 0 0
YoY (% change) -13% -10% -13% -10%
Penetration - Fiber & HFC 24.9% 25.0% 25.2% 24.7%
ARPU $63 $62 $59 $59
Voice
Marketable Homes 286,600 292,200 296,600 304,200
RGUs 53,800 56,600 60,000 63,500
Qtrly change 300 2,800 3,400 3,500
YoY (% change) 3% 7% 13% 19%
Penetration 18.8% 19.4% 20.2% 20.9%
ARPU $32 $33 $32 $32
Data
Marketable Homes 286,600 292,200 296,600 304,200
RGUs 91,800 94,000 95,700 97,400
Qtrly change 1,400 2,200 1,700 1,700
YoY (% change) 7% 7% 7% 8%
Penetration 32.0% 32.2% 32.3% 32.0%
ARPU $37 $37 $36 $36
Total
Marketable Homes - Fiber,
HFC, Copper 286,600 292,200 296,600 304,200
RGUs 200,800 207,700 214,200 221,000
Qtrly change 2,300 6,900 6,500 6,800
YoY (% change) 5% 7% 9% 11%
Subscriber totals
Subscribers (3) 96,900 99,000 100,600 102,400
Qtrly change 1,100 2,100 1,600 1,800
Penetration 33.8% 33.9% 33.9% 33.7%
ARPU (4) $89 $89 $88 $89
Triple Play ARPU (5) $110 $109 $106 $107
Triple Play RGUs per
Subscriber (5) 2.59 2.60 2.60 2.59
Churn 1.4% 1.5% 1.7% 1.4%
Business (6)
Customers 6,000 6,200 6,300 6,500
ARPU $444 $458 $494 $467
3/31/ 6/30/ 9/30/ 12/31/
BROADBAND 2009 (1) 2009 (1) 2009 (1) 2009 (1)
--------- -------- -------- -------- --------
Residential
Video
Marketable Homes - Fiber
& HFC (2) 236,500 239,800 240,000 240,500
RGUs - Fiber & HFC 57,600 56,900 57,000 56,900
Qtrly change 100 (700) 100 (100)
YoY (% change) 10% 4% 2% -1%
RGUs - Copper 2,400 2,200 2,200 2,200
Qtrly change (200) (200) 0 0
YoY (% change) -11% -15% -15% -15%
Penetration - Fiber & HFC 24.4% 23.7% 23.8% 23.7%
ARPU $65 $67 $66 $68
Voice
Marketable Homes 308,200 309,300 309,400 309,700
RGUs 66,300 68,000 70,300 71,600
Qtrly change 2,800 1,700 2,300 1,300
YoY (% change) 23% 20% 17% 13%
Penetration 21.5% 22.0% 22.7% 23.1%
ARPU $33 $33 $31 $30
Data
Marketable Homes 308,200 309,300 309,400 309,700
RGUs 98,100 97,700 97,700 98,500
Qtrly change 700 (400) 0 800
YoY (% change) 7% 4% 2% 1%
Penetration 31.8% 31.6% 31.6% 31.8%
ARPU $37 $38 $38 $40
Total
Marketable Homes - Fiber,
HFC, Copper 308,200 309,300 309,400 309,700
RGUs 224,400 224,800 227,200 229,200
Qtrly change 3,400 400 2,400 2,000
YoY (% change) 12% 8% 6% 4%
Subscriber totals
Subscribers (3) 102,800 101,800 102,500 102,600
Qtrly change 400 (1,000) 700 100
Penetration 33.4% 32.9% 33.1% 33.1%
ARPU (4) $94 $97 $96 $99
Triple Play ARPU (5) $112 $115 $112 $115
Triple Play RGUs per
Subscriber (5) 2.59 2.58 2.57 2.57
Churn 1.4% 1.7% 1.8% 1.5%
Business (6)
Customers 6,700 6,800 7,000 7,100
ARPU $484 $475 $483 $492
SUREWEST COMMUNICATIONS - Consolidated Operations
SELECTED OPERATING METRICS (inc KC results from periods prior to
acquisition)
As of and for the quarter ended
3/31/ 6/30/ 9/30/ 12/31/
TELECOM 2008 (1) 2008 (1) 2008 (1) 2008 (1)
------- -------- -------- -------- --------
Residential
Voice
Marketable Homes 89,900 90,000 90,500 90,800
RGUs (7) 66,800 62,900 58,500 54,000
RGU Migration to
Broadband Voice (8) 0 1,400 2,900 4,700
Penetration 74.3% 69.9% 64.6% 59.5%
ARPU $44 $44 $43 $43
Churn 2.3% 2.1% 2.4% 2.2%
Business (6)
Customers 9,600 9,600 9,400 9,200
ARPU $311 $341 $354 $327
CONSOLIDATED RESIDENTIAL VOICE
RGUs
------------------------------
ILEC Voice RGUs
Broadband 100 2,000 4,400 7,100
Telecom 66,800 62,900 58,500 54,000
------ ------ ------ ------
Total ILEC Voice RGUs (9) 66,900 64,900 62,900 61,100
Qtrly change (2,300) (2,000) (2,000) (1,800)
YoY (% change) -13% -13% -12% -12%
CLEC Residential Voice
RGUs (10) 53,700 54,600 55,600 56,400
------ ------ ------ ------
TOTAL Residential Voice
RGUs (11) 118,300 119,500 118,500 117,500
Qtrly change (4,400) 1,200 (1,000) (1,000)
YoY (% change) -9% -6% -5% -4%
3/31/ 6/30/ 9/30/ 12/31/
NETWORK METRICS 2008 (1) 2008 (1) 2008 (1) 2008 (1)
--------------- -------- -------- -------- --------
Marketable Homes - Fiber 119,900 125,700 129,000 138,800
Marketable Homes - HFC 91,100 92,000 92,700 93,600
Marketable Homes - Copper 75,600 74,500 74,900 71,800
------ ------ ------ ------
Total 286,600 292,200 296,600 304,200
Qtrly change 2,700 5,600 4,400 7,600
3/31/ 6/30/ 9/30/ 12/31/
TELECOM 2009 (1) 2009 (1) 2009 (1) 2009 (1)
------- -------- -------- -------- --------
Residential
Voice
Marketable Homes 90,800 90,900 90,900 91,000
RGUs (7) 49,500 45,100 41,300 38,500
RGU Migration to
Broadband Voice (8) 6,900 9,000 10,700 11,800
Penetration 54.5% 49.6% 45.4% 42.3%
ARPU $44 $45 $45 $44
Churn 2.1% 2.3% 2.3% 2.0%
Business (6)
Customers 9,000 8,900 8,700 8,500
ARPU $332 $339 $329 $334
CONSOLIDATED RESIDENTIAL VOICE
RGUs
------------------------------
ILEC Voice RGUs
Broadband 9,900 12,400 14,700 16,200
Telecom 49,500 45,100 41,300 38,500
------ ------ ------ ------
Total ILEC Voice RGUs (9) 59,400 57,500 56,000 54,700
Qtrly change (1,700) (1,900) (1,500) (1,300)
YoY (% change) -11% -11% -11% -10%
CLEC Residential Voice
RGUs (10) 56,400 55,600 55,600 55,400
------ ------ ------ ------
TOTAL Residential Voice
RGUs (11) 115,800 113,100 111,600 110,100
Qtrly change (1,700) (2,700) (1,500) (1,500)
YoY (% change) -2% -5% -6% -6%
3/31/ 6/30/ 9/30/ 12/31/
NETWORK METRICS 2009 (1) 2009 (1) 2009 (1) 2009 (1)
--------------- -------- -------- -------- --------
Marketable Homes - Fiber 142,900 146,900 147,100 147,600
Marketable Homes - HFC 93,600 92,900 92,900 92,900
Marketable Homes - Copper 71,700 69,500 69,400 69,200
------ ------ ------ ------
Total 308,200 309,300 309,400 309,700
Qtrly change 4,000 1,100 100 300
(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,
(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 and RGU per Subscriber includes the total
residential revenue per average subscriber and 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) For information purposes, sequential Telecom access line counts
(residential and business) were: 110,200 105,900 100,200
94,600 88,400 82,600 77,600 73,200
SUREWEST COMMUNICATIONS - Consolidated Operations
SELECTED OPERATING METRICS
As of and for the quarter ended
12/31/ 12/31/
BROADBAND 2009 (1) 2008 (1) Chg Chg %
--------- -------- -------- --- -----
Residential
Video
Marketable Homes -
Fiber & HFC (2) 240,500 232,400 8,100 3%
RGUs - Fiber & HFC 56,900 57,500 (600) -1%
RGUs - Copper 2,200 2,600 (400) -15%
Penetration - Fiber &
HFC 23.7% 24.7% -1.1% -4%
ARPU $68 $59 $9 15%
Voice
Marketable Homes 309,700 304,200 5,500 2%
RGUs 71,600 63,500 8,100 13%
Penetration 23.1% 20.9% 2.2% 11%
ARPU $30 $32 ($2) -5%
Data
Marketable Homes 309,700 304,200 5,500 2%
RGUs 98,500 97,400 1,100 1%
Penetration 31.8% 32.0% -0.2% -1%
ARPU $40 $36 $4 11%
Total
Marketable Homes -
Fiber, HFC, Copper 309,700 304,200 5,500 2%
RGUs 229,200 221,000 8,200 4%
Subscriber totals
Subscribers (3) 102,600 102,400 200 0%
Penetration 33.1% 33.7% -0.5% -2%
ARPU (4) $99 $89 $10 12%
Triple Play ARPU (5) $115 $107 $8 8%
Triple Play RGUs per
Subscriber (5) 2.57 2.59 (0.01) -1%
Churn 1.5% 1.4% 0.1% 10%
Business (6)
Customers 7,100 6,500 600 9%
ARPU $492 $467 $25 5%
9/30/
BROADBAND 2009 (1) Chg Chg %
--------- -------- --- -----
Residential
Video
Marketable Homes -
Fiber & HFC (2) 240,000 500 0%
RGUs - Fiber & HFC 57,000 (100) 0%
RGUs - Copper 2,200 0 0%
Penetration - Fiber &
HFC 23.8% -0.1% 0%
ARPU $66 $2 3%
Voice
Marketable Homes 309,400 300 0%
RGUs 70,300 1,300 2%
Penetration 22.7% 0.4% 2%
ARPU $31 ($1) -2%
Data
Marketable Homes 309,400 300 0%
RGUs 97,700 800 1%
Penetration 31.6% 0.2% 1%
ARPU $38 $2 5%
Total
Marketable Homes -
Fiber, HFC, Copper 309,400 300 0%
RGUs 227,200 2,000 1%
Subscriber totals
Subscribers (3) 102,500 100 0%
Penetration 33.1% 0.0% 0%
ARPU (4) $96 $3 3%
Triple Play ARPU (5) $112 $3 3%
Triple Play RGUs per
Subscriber (5) 2.57 0.01 0%
Churn 1.8% -0.3% -18%
Business (6)
Customers 7,000 100 1%
ARPU $483 $9 2%
12/31/ 12/31/
TELECOM 2009 (1) 2008 (1) Chg Chg %
------- -------- -------- --- -----
Residential
Voice
Marketable Homes 91,000 90,800 200 0%
RGUs (7) 38,500 54,000 (15,500) -29%
Cumulative
Migration to
Broadband Voice (8)
11,800 4,700 7,100 151%
Penetration 42.3% 59.5% -17.2% -29%
ARPU $44 $43 $1 2%
Churn (9) 2.0% 2.2% -0.2% -9%
Business (6)
Customers 8,500 9,200 (700) -8%
ARPU $334 $327 $7 2%
CONSOLIDATED RESIDENTIAL
VOICE RGUs
------------------------
ILEC Voice RGUs
Broadband 16,200 7,100 9,100 128%
Telecom 38,500 54,000 (15,500) -29%
------ ------ -------
Total ILEC Voice RGUs
(10) 54,700 61,100 (6,400) -10%
CLEC Residential
Voice RGUs (11) 55,400 56,400 (1,000) -2%
------ ------ ------
TOTAL Residential
Voice RGUs (12) 110,100 117,500 (7,400) -6%
9/30/
TELECOM 2009 (1) Chg Chg %
------- -------- --- -----
Residential
Voice
Marketable Homes 90,900 100 0%
RGUs (7) 41,300 (2,800) -7%
Cumulative
Migration to
Broadband Voice (8)
10,700 1,100 10%
Penetration 45.4% -3.1% -7%
ARPU $45 ($1) -2%
Churn (9) 2.3% -0.3% -14%
Business (6)
Customers 8,700 (200) -2%
ARPU $329 $5 2%
CONSOLIDATED RESIDENTIAL
VOICE RGUs
------------------------
ILEC Voice RGUs
Broadband 14,700 1,500 10%
Telecom 41,300 (2,800) -7%
------ ------
Total ILEC Voice RGUs
(10) 56,000 (1,300) -2%
CLEC Residential
Voice RGUs (11) 55,600 (200) 0%
------ ----
TOTAL Residential
Voice RGUs (12) 111,600 (1,500) -1%
12/31/ 12/31/
NETWORK METRICS 2009 (1) 2008 (1) Chg Chg %
--------------- -------- -------- --- -----
Marketable Homes -
Fiber 147,600 138,800 8,800 6%
Marketable Homes - HFC 92,900 93,600 (700) -1%
Marketable Homes -
Copper 69,200 71,800 (2,600) -4%
------ ------ ------
Total 309,700 304,200 5,500 2%
NETWORK METRICS 9/30/2009 (1) Chg Chg %
--------------- ------------- --- -----
Marketable Homes -
Fiber 147,100 500 0%
Marketable Homes - HFC 92,900 0 0%
Marketable Homes -
Copper 69,400 (200) 0%
------ ----
Total 309,400 300 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 94,600 at 12/31/08,
77,600 at 9/30/09, and 73,200 at 12/31/09.
SOURCE SureWest Communications
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