Tools for Telecom Management Presented by: Vince Wiemer, CPA
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Septre Alexicon s separations software There are two main pages in your cost study that will help make decisions: Rate Base summary by jurisdiction i Operating Expense summary by jurisdiction These pages will show you how much of a given plant or expense account is allocated to interstate and to local We are adding a USF break-out from local to help clarify HCL effects
The Septre Advantage Produces results for all jurisdictions (a) (b) (d) (e) (f) (g) (h) Line Account/Category Company Total Interstate State InterLATA State IntraLATA Local 1 2 Rate Base $ 80,715,061 $ 30,840,689 $ 4,400,481 $ 3,923,170 $ 41,550,723 3 Rate of Return 10.48% 11.25% 10.00% 10.00% 10.00% 4 Return on Rate Base $ 8,457,015 $ 3,469,577 $ 440,048 $ 392,317 $ 4,155,072 5 6 Operating Investment Tax Credits 265,000 93,894 23,277 18,009 129,820 7 Excess Deferred Tax Amortization - - - - - 8 Environmental Tax - - - - - 9 Allowance for Funds Used During Construction - - - - - 10 11 Net Return on Rate Base $ 8,722,015 $ 3,563,472 $ 463,325 $ 410,326 $ 4,284,892 12 13 Return on Rate Base 8,457,015 3,469,577 440,048 392,317 4,155,072 14 Operating Expenses 61,931,707 22,818,823 7,722,354 3,790,564 27,599,966 15 Federal Income Taxes 4,759,396 1,936,221 259,776 228,701 2,334,698 16 State Income Taxes 1,033,545 423,828 54,017 48,131 507,570 17 18 Revenue Requirement $ 76,181,663 $ 28,648,449 $ 8,476,195 $ 4,459,712 $ 34,597,307 19 100.0000% 37.6054% 11.1263% 5.8540% 45.4142%
The Septre Advantage High Cost Loop and Local Switching Support calculations are included Corporate CALCULATION OF Operations PROJECTED USF SETTLEMENTS Expense limit FACTORS: A (COE Category 3) / (COE + CWF + IOT) 0.160439 B (COE Category 3) / (Total TPIS) 0.140981 $ C (COE III. INVESTMENT, Category 3) EXPENSE / (Total & TAX COE) (Regulated) 0.347932 115% TO 1. 150% NET PLANT BRACKET INVESTMENT D LESSER (LS Alloc OF STUDY Big 3 AREA Exp) COST / (Big OR 3150% Expense) OF AVERAGE $ 356.820.180079 E 115% (COE OF NATIONWIDE Category 3) AVERAGE / (COE Switching) $ 327.751.000000 Section Line Acct Description Source Year Ended 12/31/2003 II. W ORKING LOOPS 060 Total Loops (Cat 1.1,1.2 & 1.3) USF (9) $ 81,593 070 Cat.1.3 (Excl. Cat 1.3 TW X USF (10) 79,908 080 Reserved 0 STUDY AREA USF COST PER LOOP 356.82 ESTIMATED NATIONWIDE AVERAGE COST PER LOOP 285.00 160 2001 Total Telecommunications Plant in Svc. B (138) 239,372,615 170 S1220 Material and Supplies for Ratebase B (16) 2,189,517 190 3100 Total Accum. Depr. - TPIS B (148) 148,828,591 195 $ 3410 Accum. Amort. - Tangible Assets B (152:153) 275,864 200 Reserved 0 205 Reserved $18.900 210 4340 Total Net Noncurrent Deferred Operating Taxes B (213) 13,770,133 $ 220 NET PLANT INVESTMENT (SUM 160-210) 78,687,544 BRACKET AMOUNT 29.07 PERCENTAGE OF BRACKET RECOVERABLE 65.00% Current Year Investment (244,726) Prior Year Investment $ 128,839 OVER 150% BRACKET GREATER OF STUDY AREA COST OR 150% OF AVERAGE $ 427.50 150% OF NATIONWIDE AVERAGE 427.50 BRACKET AMOUNT - PERCENTAGE OF BRACKET RECOVERABLE 75.00% 2. SELECTED PLANT ACCOUNTS $ Average Net Investment $ (57,943) 230 2210 Central Office Switching $ B (68) 40,095,996 235 2220 Operator Systems B (70) Return on Investment 1,357,536 $ (6,519) 240 2230 Circuit Equipment B (75) 67,995,128 $ - 245 TOTAL CENTRAL OFFICE EQUIPMENT (SUM 230-240) 109,448,661 Federal Taxable Income $ (53,308) Federal Income Tax Requirement (18,658) Expenses and Other Taxes 969,037 Local Switching Revenue Requirement 943,860 275 Local Switching ACCUM DEPR - Factor CENTRAL OFFICE EQUIPMENT (SUM 260-270) 79,886,8710.478890 2002 Local Switching Support (actual) $ $ 452,005 TOTAL HIGH COST LOOP SUPPORT PER LOOP $ 18.90 TOTAL LOOPS 250 COE 4.13 Circuit Equipment - Category 4.13 B (84) 32,793,512 79,908 $ 255 2410 Total Cable & W ire Facilities B (127) TOTAL GROSS HCL SUPPORT $1,510,021 94,716,535 $ USF PHASE IN PERCENTAGE 260 100.0000% 3100.2 Accum. Depr. - C.O.E. Switching B (143) 40,095,996 ADJUSTMENT PERCENTAGE 265 3100.3 ( Accum. PER Depr. SECTION - C.O.E. 36.631 Operator Systems (e) ) B (144) 99.4330% 344,366 $ TOTAL ANNUAL HCL 270 SUPPORT 3100.4 Accum. Depr. - C.O.E. Transmission B (145) $ 1,501,459 39,446,509 MONTHLY HIGH COST LOOP SUPPORT AMOUNT 125,122 280 3100.6 Accum. Depr. - Cable and W ire Facilities B (147) 45,368,950
The Septre Advantage Performs MAG allocations: Line Port Shift allocation TIC Revenue allocation Schedule: NECA COMMONLINE SWITCHEDACCESS SPECIAL ( a ) ( b ) ( e ) ( f ) ( g ) ( h ) ( i ) ( j ) ( k ) ( l ) ( m ) Line Account/Category Interstate Carrier Common Line Base Factor Portion Eq Acc Local Switching Information Tandem Switching Other Transport Spcl Acc 43 LINEPORTSHIFTCALCULATION: 44 Revenue Requirement (before MAG) $ 2,607,957 $ 66 $ 888,679 $ - $ 640,305 $ 208 $ 359,379 $ - $ 655,291 45 Local Switching Support $ (452,005) 46 Net Local Switching Revenue Reqmt $ 188,300 47 Basis of Adjustment Default 48 LinePort Shift Adjustment $ - $ 56,490 $ (56490) (56,490) 49 Revenue Reqmt after Line Port Shift Adj $ 2,607,957 $ 66 $ 945,169 $ - $ 583,815 $ 208 $ 359,379 $ - $ 655,291 50 51 TIC Revenues (greater of TIC or Rev Reqmt) $ - 52 Revenue Requirement Less TIC Revenues $ 2,543,927 $ 66 $ 888,679 $ - $ 640,305 $ 208 $ 359,379 $ - $ 655,291 53 Percentage Ditib Distribution ti 100.0000% 0000% 0.0026% 0026% 34.9333% 0.0000% 0000% 25.1700% 0.0082% 0082% 14.1269% 1269% 0.0000% 0000% 25.7590% 54 TIC Revenue Allocation $ - $ - $ - $ - $ - $ - $ - $ - $ - 55 Net Allocation of TIC Revenues $ - $ - $ - $ - $ - $ - $ - $ - $ - 56 57 Revenue Requirement $ 2,607,957 $ 66 $ 945,169 $ - $ 583,815 $ 208 $ 359,379 $ - $ 655,291
For more information regarding this subject matter, or to schedule a training session, please contact Alexicon at 918 376 9901. 9901.