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2012 Telergee Conference For CFO’s and Controllers October 17 and 18, 2012. Management Reporting Improvements Matt Macdonald, Partner. [ www.kiesling.com ]. Agenda. Future – Impact on Financial Reporting Wholesale & Retail Centers Payroll and Cost Allocations Example.

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  1. 2012 Telergee Conference For CFO’s and Controllers October 17 and 18, 2012 Management Reporting Improvements Matt Macdonald, Partner [ www.kiesling.com ]

  2. Agenda • Future – Impact on Financial Reporting • Wholesale & Retail Centers • Payroll and Cost Allocations • Example

  3. Future – Impact on Reporting • ARRA • Access Lines Declining • Regulated Revenues and Operating Margins Declining • USF/ICC Uncertainty

  4. Retail Profit Segments • Voice • Data • Video • LD • Other Customer Revenues • Direct Expenses Contribution Margin

  5. Measuring Results Recurring Monthly Expenses Nonrecurring Expenses Depreciation Expense Customer Revenues Operating Margin Cash Flow Margin Contribution Margin

  6. Wholesale Segments Network General Support Corporate Customer

  7. Wholesale Income Expenses Revenues Switched Access/USF Special Access Network Leases • Depreciation 22-2400’s • Plant Specific 62-6400’s • Plant Nonspecific 6530’s • General Taxes 7240’s

  8. Operating Income • This is the report card • How do we plan to have operating income • How do we break operating income into operating decisions?

  9. Tools • ARPU – Average Revenue per user • ACPU – Average Cost per user • Service Users = Subscribers • Network Users = Households • Variable Costs • CM = Contribution Margin • Budget = One Year Locked Down Forecast

  10. Do you prepare a Budget? • Capital Expenditure Only • Capital Expenditures and Income Statement Only • Full Budget for Income Statement, Balance Sheet, and Cash Flows • We do not prepare a Budget

  11. How Often Do You Compare the Budget to Actual? • Monthly • Quarterly • Annually • Never

  12. Customer Revenues Historical Revenues Subscribers ARPU Fixed Direct Costs Variable ACPU Count

  13. Payroll Labor Distribution by Employee Account Separate Labor from other account activity Pay rates Employees Distribution Overheads Clearing

  14. Cost Allocations

  15. Wholesale Cost Centers • Network per Household • General Support per Household • Corporate per Household • Customer per Household • Net Cost per Household $30 $50

  16. Retail Profit Centers

  17. Questions? Matt Macdonald, Partner mmacdonald@kiesling.com 608.664.9110 Madison, WI 53593 Thank you!

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