[ www.kiesling.com ]1
[ www.kiesling.com ]
2012 Telergee Conference For CFO’s and Controllers October 17 and 18, 2012
Management Reporting ImprovementsMatt Macdonald, Partner
[ www.kiesling.com ]2
Agenda
• Future – Impact on Financial Reporting
• Wholesale & Retail Centers
• Payroll and Cost Allocations
• Example
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Future – Impact on Reporting
• ARRA• Access Lines Declining• Regulated Revenues and Operating
Margins Declining• USF/ICC Uncertainty
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Retail Profit Segments
• Voice• Data• Video • LD• Other
Customer Revenues- Direct Expenses
Contribution Margin
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Measuring Results
Recurring Monthly
Expenses Nonrecurring Expenses
Depreciation Expense
Customer Revenues
Operating Margin
Cash FlowMargin
Contribution Margin
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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
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Operating Income
• This is the report card
• How do we plan to have operating income
• How do we break operating income into operating decisions?
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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
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Do you prepare a Budget?
1 2 3 4
25% 25%25%25%1. Capital Expenditure Only
2. Capital Expenditures and Income Statement Only
3. Full Budget for Income Statement, Balance Sheet, and Cash Flows
4. We do not prepare a Budget
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How Often Do You Compare the Budget to Actual?
1 2 3 4
0% 0%0%0%
1. Monthly
2. Quarterly
3. Annually
4. Never
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Customer Revenues
Historical
RevenuesSubscribers
ARPU
Direct CostsFixed
Variable
CountACPU
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Payroll
•Labor Distribution by Employee Account
•Separate Labor from other account activity
•Pay rates
•Employees
•Distribution
•Overheads
•Clearing
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Wholesale Cost Centers
• Network per Household
• General Support per Household
• Corporate per Household
• Customer per Household
• Net Cost per Household $30 $50
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Retail Profit Centers
Today
Voice CM per Sub $15 100% $15
Data CM per Sub $35 60% $21
Video CM per Sub $0 40% $0
Other CM per Sub $? ?% $?
$36
Tomorrow
$15 100% $15
$35 90% $31
$4 50% $2
$10 50% $5
$53
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Sum of Amount Column LabelsPS PS Total CS CS Total Grand Total
Row Labels Voice Data Video LD Other Network General Support Customer Corporate IntercompanyRevenue
Internet services 1,300,000.00$ 1,300,000.00$ 1,300,000.00$ Local network services 1,040,000.00$ 1,040,000.00$ 600,000.00$ 600,000.00$ 1,640,000.00$ Long distance services 100,000.00$ 100,000.00$ 100,000.00$ Miscellaneous services 150,000.00$ 150,000.00$ 75,000.00$ 20,000.00$ 95,000.00$ 245,000.00$ Network access services 350,000.00$ 350,000.00$ 1,600,000.00$ 1,600,000.00$ 1,950,000.00$ Video services 1,000,000.00$ 1,000,000.00$ 1,000,000.00$
Revenue Total 1,390,000.00$ 1,300,000.00$ 1,000,000.00$ 100,000.00$ 150,000.00$ 3,940,000.00$ 1,600,000.00$ 75,000.00$ 620,000.00$ 2,295,000.00$ 6,235,000.00$ Expense
Corporate operations (660,000.00)$ (660,000.00)$ (660,000.00)$ Cost of internet services (300,000.00)$ (300,000.00)$ (20,000.00)$ (20,000.00)$ (400,000.00)$ (440,000.00)$ (740,000.00)$ Cost of long distance services (60,000.00)$ (60,000.00)$ (60,000.00)$ Cost of video service (960,000.00)$ (960,000.00)$ (20,000.00)$ (20,000.00)$ (20,000.00)$ (200,000.00)$ (260,000.00)$ (1,220,000.00)$ Customer operations (400,000.00)$ (20,000.00)$ (420,000.00)$ (420,000.00)$ Depreciation (25,000.00)$ (150,000.00)$ (175,000.00)$ (850,000.00)$ (150,000.00)$ (1,000,000.00)$ (1,175,000.00)$ General taxes (175,000.00)$ (175,000.00)$ (175,000.00)$ Plant nonspecific operations (300,000.00)$ (300,000.00)$ (300,000.00)$ Plant specific operations (700,000.00)$ (125,000.00)$ (825,000.00)$ (825,000.00)$
Expense Total (325,000.00)$ (1,110,000.00)$ (60,000.00)$ (1,495,000.00)$ (2,025,000.00)$ (295,000.00)$ (440,000.00)$ (700,000.00)$ (620,000.00)$ (4,080,000.00)$ (5,575,000.00)$ Grand Total 1,390,000.00$ 975,000.00$ (110,000.00)$ 40,000.00$ 150,000.00$ 2,445,000.00$ (425,000.00)$ (295,000.00)$ (365,000.00)$ (700,000.00)$ -$ (1,785,000.00)$ 660,000.00$
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Questions?
Matt Macdonald, [email protected]
608.664.9110Madison, WI 53593
Thank you!
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