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This excerpt taken from the LEAP 10-Q filed May 11, 2009. Performance
Measures
In managing our business and assessing our financial
performance, management supplements the information provided by
financial statement measures with several customer-focused
performance metrics that are widely used in the
telecommunications industry. These metrics include average
revenue per user per month, or ARPU, which measures service
revenue per customer; cost per gross customer addition, or CPGA,
which measures the average cost of acquiring a new customer;
cash costs per user per month, or CCU, which measures the
non-selling cash cost of operating our business on a per
customer basis; and churn, which measures turnover in our
customer base. CPGA and CCU are non-GAAP financial measures. A
non-GAAP financial measure, within the meaning of Item 10
of
Regulation S-K
promulgated by the SEC, is a numerical measure of a
company’s financial performance or cash flows that
(a) excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, which are included in the
most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles in the
consolidated balance sheets, consolidated statements of
operations or consolidated statements of cash flows; or
(b) includes amounts, or is subject to adjustments that
have the effect of including amounts, which are excluded from
the most directly comparable measure so calculated and
presented. See “Reconciliation of Non-GAAP Financial
Measures” below for a reconciliation of CPGA and CCU to the
most directly comparable GAAP financial measures.
ARPU is service revenue divided by the weighted-average number
of customers, divided by the number of months during the period
being measured. Management uses ARPU to identify average revenue
per customer, to track changes in average customer revenues over
time, to help evaluate how changes in our business, including
changes in our service offerings and fees, affect average
revenue per customer, and to forecast future service revenue. In
addition, ARPU provides management with a useful measure to
compare our subscriber revenue to that of other wireless
communications providers. We do not recognize service revenue
until payment has been received and services have been provided
to the customer. In addition, customers of our Cricket Wireless
and Cricket Broadband service are generally disconnected from
service approximately 30 days after failing to pay a
monthly bill, and customers of our Cricket PAYGo service are
generally disconnected from service if they have not replenished
or “topped up” their account within 60 days after the
end of their current term of service. Therefore, because our
calculation of weighted-average number of customers includes
customers who have not paid their last bill and have yet to
disconnect service, ARPU may appear lower during periods in
which we have significant disconnect activity. We believe
investors use ARPU primarily as a tool to track changes in our
average revenue per customer and to compare our per customer
service revenues to those of other wireless communications
providers. Other companies may calculate this measure
differently.
CPGA is selling and marketing costs (excluding applicable
share-based compensation expense included in selling and
marketing expense), and equipment subsidy (generally defined as
cost of equipment less equipment revenue), less the net loss on
equipment transactions unrelated to initial customer
acquisition, divided by the total number of gross new customer
additions during the period being measured. The net loss on
equipment transactions unrelated to initial customer acquisition
includes the revenues and costs associated with the sale of
handsets to existing customers as well as costs associated with
handset replacements and repairs (other than warranty costs
Table of Contents
which are the responsibility of the handset manufacturers). We
deduct customers who do not pay their first monthly bill from
our gross customer additions, which tends to increase CPGA
because we incur the costs associated with this customer without
receiving the benefit of a gross customer addition. Management
uses CPGA to measure the efficiency of our customer acquisition
efforts, to track changes in our average cost of acquiring new
subscribers over time, and to help evaluate how changes in our
sales and distribution strategies affect the cost-efficiency of
our customer acquisition efforts. In addition, CPGA provides
management with a useful measure to compare our per customer
acquisition costs with those of other wireless communications
providers. We believe investors use CPGA primarily as a tool to
track changes in our average cost of acquiring new customers and
to compare our per customer acquisition costs to those of other
wireless communications providers. Other companies may calculate
this measure differently.
CCU is cost of service and general and administrative costs
(excluding applicable share-based compensation expense included
in cost of service and general and administrative expense) plus
net loss on equipment transactions unrelated to initial customer
acquisition (which includes the gain or loss on the sale of
handsets to existing customers and costs associated with handset
replacements and repairs (other than warranty costs which are
the responsibility of the handset manufacturers)), divided by
the weighted-average number of customers, divided by the number
of months during the period being measured. CCU does not include
any depreciation and amortization expense. Management uses CCU
as a tool to evaluate the non-selling cash expenses associated
with ongoing business operations on a per customer basis, to
track changes in these non-selling cash costs over time, and to
help evaluate how changes in our business operations affect
non-selling cash costs per customer. In addition, CCU provides
management with a useful measure to compare our non-selling cash
costs per customer with those of other wireless communications
providers. We believe investors use CCU primarily as a tool to
track changes in our non-selling cash costs over time and to
compare our non-selling cash costs to those of other wireless
communications providers. Other companies may calculate this
measure differently.
Churn, which measures customer turnover, is calculated as the
net number of customers that disconnect from our service divided
by the weighted-average number of customers divided by the
number of months during the period being measured. Customers who
do not pay their first monthly bill are deducted from our gross
customer additions in the month in which they are disconnected;
as a result, these customers are not included in churn.
Customers of our Cricket Wireless and Cricket Broadband service
are generally disconnected from service approximately
30 days after failing to pay a monthly bill, and
pay-in-advance
customers who ask to terminate their service are disconnected
when their paid service period ends. Customers for our Cricket
PAYGo service are generally disconnected from service if they
have not replenished or “topped up” their account
within 60 days after the end of their current term of
service. Management uses churn to measure our retention of
customers, to measure changes in customer retention over time,
and to help evaluate how changes in our business affect customer
retention. In addition, churn provides management with a useful
measure to compare our customer turnover activity to that of
other wireless communications providers. We believe investors
use churn primarily as a tool to track changes in our customer
retention over time and to compare our customer retention to
that of other wireless communications providers. Other companies
may calculate this measure differently.
The following table shows metric information for the three
months ended March 31, 2009 and 2008:
This excerpt taken from the LEAP 10-Q filed Nov 7, 2008. Performance Measures In managing our business and assessing our financial performance, management supplements the information provided by financial statement measures with several customer-focused performance metrics that are widely used in the telecommunications industry. These metrics include average revenue per user per month, or ARPU, which measures service revenue per customer; cost per gross customer addition, or CPGA, which measures the average cost of acquiring a new customer; cash costs per user per month, or CCU, which measures the non-selling cash cost of operating our business on a per customer basis; and churn, which measures turnover in our customer base. CPGA and CCU are non-GAAP financial measures. A non-GAAP financial measure, within the meaning of Item 10 of Regulation S-K promulgated by the SEC, is a numerical measure of a company’s financial performance or cash flows that (a) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, which are included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles in the condensed consolidated balance sheets, condensed consolidated statements of operations or condensed consolidated statements of cash flows; or (b) includes amounts, or is subject to adjustments that have the effect of including amounts, which are excluded from the most directly comparable measure so calculated and presented. See “Reconciliation of Non-GAAP Financial Measures” below for a reconciliation of CPGA and CCU to the most directly comparable GAAP financial measures. ARPU is service revenue divided by the weighted-average number of customers, divided by the number of months during the period being measured. Management uses ARPU to identify average revenue per customer, to track changes in average customer revenues over time, to help evaluate how changes in our business, including changes in our service offerings and fees, affect average revenue per customer, and to forecast future service revenue. In addition, ARPU provides management with a useful measure to compare our subscriber revenue to that of other wireless communications providers. We do not recognize service revenue until payment has been received and services have been provided to the customer. In addition, customers are generally disconnected from service approximately 30 days after failing to pay a monthly bill. Therefore, because our calculation of weighted-average number of customers includes customers who have not paid their last bill and have yet to disconnect service, ARPU may appear lower during periods in which we have significant disconnect activity. We believe investors use ARPU primarily as a tool to track changes in our average revenue per customer and to compare our per customer service revenues to those of other wireless communications providers. Other companies may calculate this measure differently. CPGA is selling and marketing costs (excluding applicable share-based compensation expense included in selling and marketing expense), and equipment subsidy (generally defined as cost of equipment less equipment revenue), less the net loss on equipment transactions unrelated to initial customer acquisition, divided by the total number of gross new customer additions during the period being measured. The net loss on equipment transactions unrelated to initial customer acquisition includes the revenues and costs associated with the sale of handsets to existing customers as well as costs associated with handset replacements and repairs (other than
47
Table of Contentswarranty costs which are the responsibility of the handset manufacturers). We deduct customers who do not pay their first monthly bill from our gross customer additions, which tends to increase CPGA because we incur the costs associated with this customer without receiving the benefit of a gross customer addition. Management uses CPGA to measure the efficiency of our customer acquisition efforts, to track changes in our average cost of acquiring new subscribers over time, and to help evaluate how changes in our sales and distribution strategies affect the cost-efficiency of our customer acquisition efforts. In addition, CPGA provides management with a useful measure to compare our per customer acquisition costs with those of other wireless communications providers. We believe investors use CPGA primarily as a tool to track changes in our average cost of acquiring new customers and to compare our per customer acquisition costs to those of other wireless communications providers. Other companies may calculate this measure differently. CCU is cost of service and general and administrative costs (excluding applicable share-based compensation expense included in cost of service and general and administrative expense) plus net loss on equipment transactions unrelated to initial customer acquisition (which includes the gain or loss on the sale of handsets to existing customers and costs associated with handset replacements and repairs (other than warranty costs which are the responsibility of the handset manufacturers)), divided by the weighted-average number of customers, divided by the number of months during the period being measured. CCU does not include any depreciation and amortization expense. Management uses CCU as a tool to evaluate the non-selling cash expenses associated with ongoing business operations on a per customer basis, to track changes in these non-selling cash costs over time, and to help evaluate how changes in our business operations affect non-selling cash costs per customer. In addition, CCU provides management with a useful measure to compare our non-selling cash costs per customer with those of other wireless communications providers. We believe investors use CCU primarily as a tool to track changes in our non-selling cash costs over time and to compare our non-selling cash costs to those of other wireless communications providers. Other companies may calculate this measure differently. Churn, which measures customer turnover, is calculated as the net number of customers that disconnect from our service divided by the weighted-average number of customers divided by the number of months during the period being measured. Customers who do not pay their first monthly bill are deducted from our gross customer additions in the month in which they are disconnected; as a result, these customers are not included in churn. In addition, customers are generally disconnected from service approximately 30 days after failing to pay a monthly bill, and pay-in-advance customers who ask to terminate their service are disconnected when their paid service period ends. Management uses churn to measure our retention of customers, to measure changes in customer retention over time, and to help evaluate how changes in our business affect customer retention. In addition, churn provides management with a useful measure to compare our customer turnover activity to that of other wireless communications providers. We believe investors use churn primarily as a tool to track changes in our customer retention over time and to compare our customer retention to that of other wireless communications providers. Other companies may calculate this measure differently. The following table shows metric information for the three months ended September 30, 2008 and 2007:
48
Table of ContentsThis excerpt taken from the LEAP 10-Q filed Aug 7, 2008. Performance
Measures
In managing our business and assessing our financial
performance, management supplements the information provided by
financial statement measures with several customer-focused
performance metrics that are widely used in the
telecommunications industry. These metrics include average
revenue per user per month, or ARPU, which measures service
revenue per customer; cost per gross customer addition, or CPGA,
which measures the average cost of acquiring a new customer;
cash costs per user per month, or CCU, which measures the
non-selling cash cost of operating our business on a per
customer basis; and churn, which measures turnover in our
customer base. CPGA and CCU are non-GAAP financial measures. A
non-GAAP financial measure, within the meaning of Item 10
of
Regulation S-K
promulgated by the SEC, is a numerical measure of a
company’s financial performance or cash flows that
(a) excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, which are included in the
most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles in the
condensed consolidated balance sheets, condensed consolidated
statements of operations or condensed consolidated statements of
cash flows; or (b) includes amounts, or is subject to
adjustments that have the effect of including amounts, which are
excluded from the most directly comparable measure so calculated
and presented. See “Reconciliation of
Non-GAAP Financial Measures” below for a
reconciliation of CPGA and CCU to the most directly comparable
GAAP financial measures.
ARPU is service revenue divided by the weighted-average number
of customers, divided by the number of months during the period
being measured. Management uses ARPU to identify average revenue
per customer, to track changes in average customer revenues over
time, to help evaluate how changes in our business, including
changes in our service offerings and fees, affect average
revenue per customer, and to forecast future service revenue. In
addition, ARPU provides management with a useful measure to
compare our subscriber revenue to that of other wireless
communications providers. We do not recognize service revenue
until payment has been received and services have been provided
to the customer. In addition, customers are generally
disconnected from service approximately 30 days after
failing to pay a monthly bill. Therefore, because our
calculation of weighted-average number of customers includes
customers who have not paid their last bill and have yet to
disconnect service, ARPU may appear lower during periods in
which we have significant disconnect activity. We believe
investors use ARPU primarily as a tool to track changes in our
average revenue per customer and to compare our per customer
service revenues to those of other wireless communications
providers. Other companies may calculate this measure
differently.
CPGA is selling and marketing costs (excluding applicable
share-based compensation expense included in selling and
marketing expense), and equipment subsidy (generally defined as
cost of equipment less equipment revenue), less the net loss on
equipment transactions unrelated to initial customer
acquisition, divided by the total number of gross new customer
additions during the period being measured. The net loss on
equipment transactions unrelated to initial customer acquisition
includes the revenues and costs associated with the sale of
handsets to existing customers as well as costs associated with
handset replacements and repairs (other than warranty costs
which are the responsibility of the handset manufacturers). We
deduct customers who do not pay their first monthly bill from
our gross customer additions, which tends to increase CPGA
because we incur the costs associated with this customer without
receiving the benefit of a gross customer addition. Management
uses CPGA to measure the efficiency of our customer acquisition
efforts, to track changes in our average cost of acquiring new
subscribers over time, and to help evaluate how changes in our
sales and distribution strategies affect the cost-efficiency of
our customer acquisition efforts. In addition, CPGA provides
management with a useful measure to compare our per customer
acquisition costs with those of other wireless communications
providers. We believe investors use CPGA primarily as a tool to
track changes in our average cost of acquiring new customers and
to compare our per customer acquisition costs to those of other
wireless communications providers. Other companies may calculate
this measure differently.
CCU is cost of service and general and administrative costs
(excluding applicable share-based compensation expense included
in cost of service and general and administrative expense) plus
net loss on equipment transactions unrelated to initial customer
acquisition (which includes the gain or loss on the sale of
handsets to existing customers and costs associated with handset
replacements and repairs (other than warranty costs which are
the responsibility of the handset manufacturers)), divided by
the weighted-average number of customers, divided by the number
of months during the period being measured. CCU does not include
any depreciation and amortization
Table of Contents
expense. Management uses CCU as a tool to evaluate the
non-selling cash expenses associated with ongoing business
operations on a per customer basis, to track changes in these
non-selling cash costs over time, and to help evaluate how
changes in our business operations affect non-selling cash costs
per customer. In addition, CCU provides management with a useful
measure to compare our non-selling cash costs per customer with
those of other wireless communications providers. We believe
investors use CCU primarily as a tool to track changes in our
non-selling cash costs over time and to compare our non-selling
cash costs to those of other wireless communications providers.
Other companies may calculate this measure differently.
Churn, which measures customer turnover, is calculated as the
net number of customers that disconnect from our service divided
by the weighted-average number of customers divided by the
number of months during the period being measured. Customers who
do not pay their first monthly bill are deducted from our gross
customer additions in the month in which they are disconnected;
as a result, these customers are not included in churn. In
addition, customers are generally disconnected from service
approximately 30 days after failing to pay a monthly bill.
Beginning during the quarter ended June 30, 2007,
pay-in-advance
customers who ask to terminate their service are disconnected
when their paid service period ends, whereas previously these
customers were generally disconnected on the date of their
request to terminate service. Management uses churn to measure
our retention of customers, to measure changes in customer
retention over time, and to help evaluate how changes in our
business affect customer retention. In addition, churn provides
management with a useful measure to compare our customer
turnover activity to that of other wireless communications
providers. We believe investors use churn primarily as a tool to
track changes in our customer retention over time and to compare
our customer retention to that of other wireless communications
providers. Other companies may calculate this measure
differently.
The following table shows metric information for the three
months ended June 30, 2008 and 2007:
This excerpt taken from the LEAP 10-Q filed May 12, 2008. Performance
Measures
In managing our business and assessing our financial
performance, management supplements the information provided by
financial statement measures with several customer-focused
performance metrics that are widely used in the
telecommunications industry. These metrics include average
revenue per user per month, or ARPU, which measures service
revenue per customer; cost per gross customer addition, or CPGA,
which measures the average cost of acquiring a new customer;
cash costs per user per month, or CCU, which measures the
non-selling cash cost of operating our business on a per
customer basis; and churn, which measures turnover in our
customer base. CPGA and CCU are non-GAAP financial measures. A
non-GAAP financial measure, within the meaning of Item 10
of
Regulation S-K
promulgated by the SEC, is a numerical measure of a
company’s financial performance or cash flows that
(a) excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, which are included in the
most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles in the
condensed consolidated balance sheets, condensed consolidated
statements of operations or condensed consolidated statements of
cash flows; or (b) includes amounts, or is subject to
adjustments that have the effect of including amounts, which are
excluded from the most directly comparable measure so calculated
and presented. See “Reconciliation of
Non-GAAP Financial Measures” below for a
reconciliation of CPGA and CCU to the most directly comparable
GAAP financial measures.
ARPU is service revenue divided by the weighted-average number
of customers, divided by the number of months during the period
being measured. Management uses ARPU to identify average revenue
per customer, to track changes in average customer revenues over
time, to help evaluate how changes in our business, including
changes in our service offerings and fees, affect average
revenue per customer, and to forecast future service revenue. In
addition, ARPU provides management with a useful measure to
compare our subscriber revenue to that of other wireless
communications providers. We do not recognize service revenue
until payment has been received and services have been provided
to the customer. In addition, customers are generally
disconnected from service approximately 30 days after
failing to pay a monthly bill. Therefore, because our
calculation of weighted-average number of customers includes
customers who have not paid their last bill and have yet to
disconnect service, ARPU may appear lower during periods in
which we have significant disconnect activity. We believe
investors use ARPU primarily as a tool to track changes in our
average revenue per customer and to compare our per customer
service revenues to those of other wireless communications
providers. Other companies may calculate this measure
differently.
CPGA is selling and marketing costs (excluding applicable
share-based compensation expense included in selling and
marketing expense), and equipment subsidy (generally defined as
cost of equipment less equipment revenue), less the net loss on
equipment transactions unrelated to initial customer
acquisition, divided by the total number of gross new customer
additions during the period being measured. The net loss on
equipment transactions unrelated to initial customer acquisition
includes the revenues and costs associated with the sale of
handsets to existing customers as well as costs associated with
handset replacements and repairs (other than warranty costs
which are the responsibility of the handset manufacturers). We
deduct customers who do not pay their first monthly bill from
our gross customer additions, which tends to increase CPGA
because we incur the costs associated with this customer without
receiving the benefit of a gross customer addition. Management
uses CPGA to measure the efficiency of our customer acquisition
efforts, to track changes in our average cost of acquiring new
subscribers over time, and to help evaluate how changes in our
sales and distribution strategies affect the cost-efficiency of
our customer acquisition efforts. In addition, CPGA provides
management with a useful measure to compare our per customer
acquisition costs with those of other wireless communications
providers. We believe investors use CPGA primarily as a tool to
track changes in our average cost of acquiring new customers and
to compare our per customer acquisition costs to those of other
wireless communications providers. Other companies may calculate
this measure differently.
Table of Contents
CCU is cost of service and general and administrative costs
(excluding applicable share-based compensation expense included
in cost of service and general and administrative expense) plus
net loss on equipment transactions unrelated to initial customer
acquisition (which includes the gain or loss on the sale of
handsets to existing customers and costs associated with handset
replacements and repairs (other than warranty costs which are
the responsibility of the handset manufacturers)), divided by
the weighted-average number of customers, divided by the number
of months during the period being measured. CCU does not include
any depreciation and amortization expense. Management uses CCU
as a tool to evaluate the non-selling cash expenses associated
with ongoing business operations on a per customer basis, to
track changes in these non-selling cash costs over time, and to
help evaluate how changes in our business operations affect
non-selling cash costs per customer. In addition, CCU provides
management with a useful measure to compare our non-selling cash
costs per customer with those of other wireless communications
providers. We believe investors use CCU primarily as a tool to
track changes in our non-selling cash costs over time and to
compare our non-selling cash costs to those of other wireless
communications providers. Other companies may calculate this
measure differently.
Churn, which measures customer turnover, is calculated as the
net number of customers that disconnect from our service divided
by the weighted-average number of customers divided by the
number of months during the period being measured. Customers who
do not pay their first monthly bill are deducted from our gross
customer additions in the month that they are disconnected; as a
result, these customers are not included in churn. In addition,
customers are generally disconnected from service approximately
30 days after failing to pay a monthly bill. Beginning
during the quarter ended June 30, 2007,
pay-in-advance
customers who ask to terminate their service are disconnected
when their paid service period ends, whereas previously these
customers were generally disconnected on the date of their
request to terminate service. Management uses churn to measure
our retention of customers, to measure changes in customer
retention over time, and to help evaluate how changes in our
business affect customer retention. In addition, churn provides
management with a useful measure to compare our customer
turnover activity to that of other wireless communications
providers. We believe investors use churn primarily as a tool to
track changes in our customer retention over time and to compare
our customer retention to that of other wireless communications
providers. Other companies may calculate this measure
differently.
The following table shows metric information for the three
months ended March 31, 2008 and 2007:
This excerpt taken from the LEAP DEF 14A filed Apr 23, 2008. Performance
Measures
In managing our business and assessing our financial
performance, management supplements the information provided by
financial statement measures with several customer-focused
performance metrics that are widely used in the
telecommunications industry. These metrics include average
revenue per user per month, or ARPU, which measures service
revenue per customer; CPGA, which measures the average cost of
acquiring a new customer; cash costs per user per month, or CCU,
which measures the non-selling cash cost of operating our
business on a per customer basis; and churn, which measures
turnover in our customer base. CPGA and CCU are non-GAAP
financial measures. A non-GAAP financial measure, within the
meaning of Item 10 of
Regulation S-K
promulgated by the SEC, is a numerical measure of a
company’s financial performance or cash flows that
(a) excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, which are included in the
most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles in the
consolidated balance sheets, consolidated statements of
operations or consolidated statements of cash flows; or
(b) includes amounts, or is subject to adjustments that
have the effect of including amounts, which are excluded from
the most directly comparable measure so calculated and
presented. See “Reconciliation of Non-
Table of Contents
GAAP Financial Measures” below for a reconciliation of
CPGA and CCU to the most directly comparable GAAP financial
measures.
ARPU is service revenue divided by the weighted-average number
of customers, divided by the number of months during the period
being measured. Management uses ARPU to identify average revenue
per customer, to track changes in average customer revenues over
time, to help evaluate how changes in our business, including
changes in our service offerings and fees, affect average
revenue per customer, and to forecast future service revenue. In
addition, ARPU provides management with a useful measure to
compare our subscriber revenue to that of other wireless
communications providers. We believe investors use ARPU
primarily as a tool to track changes in our average revenue per
customer and to compare our per customer service revenues to
those of other wireless communications providers. Other
companies may calculate this measure differently.
CPGA is selling and marketing costs (excluding applicable
share-based compensation expense included in selling and
marketing expense), and equipment subsidy (generally defined as
cost of equipment less equipment revenue), less the net loss on
equipment transactions unrelated to initial customer
acquisition, divided by the total number of gross new customer
additions during the period being measured. The net loss on
equipment transactions unrelated to initial customer acquisition
includes the revenues and costs associated with the sale of
handsets to existing customers as well as costs associated with
handset replacements and repairs (other than warranty costs
which are the responsibility of the handset manufacturers). We
deduct customers who do not pay their first monthly bill from
our gross customer additions, which tends to increase CPGA
because we incur the costs associated with this customer without
receiving the benefit of a gross customer addition. Management
uses CPGA to measure the efficiency of our customer acquisition
efforts, to track changes in our average cost of acquiring new
subscribers over time, and to help evaluate how changes in our
sales and distribution strategies affect the cost-efficiency of
our customer acquisition efforts. In addition, CPGA provides
management with a useful measure to compare our per customer
acquisition costs with those of other wireless communications
providers. We believe investors use CPGA primarily as a tool to
track changes in our average cost of acquiring new customers and
to compare our per customer acquisition costs to those of other
wireless communications providers. Other companies may calculate
this measure differently.
CCU is cost of service and general and administrative costs
(excluding applicable share-based compensation expense included
in cost of service and general and administrative expense) plus
net loss on equipment transactions unrelated to initial customer
acquisition (which includes the gain or loss on the sale of
handsets to existing customers and costs associated with handset
replacements and repairs (other than warranty costs which are
the responsibility of the handset manufacturers)), divided by
the weighted-average number of customers, divided by the number
of months during the period being measured. CCU does not include
any depreciation and amortization expense. Management uses CCU
as a tool to evaluate the non-selling cash expenses associated
with ongoing business operations on a per customer basis, to
track changes in these non-selling cash costs over time, and to
help evaluate how changes in our business operations affect
non-selling cash costs per customer. In addition, CCU provides
management with a useful measure to compare our non-selling cash
costs per customer with those of other wireless communications
providers. We believe investors use CCU primarily as a tool to
track changes in our non-selling cash costs over time and to
compare our non-selling cash costs to those of other wireless
communications providers. Other companies may calculate this
measure differently.
Churn, which measures customer turnover, is calculated as the
net number of customers that disconnect from our service divided
by the weighted-average number of customers divided by the
number of months during the period being measured. Customers who
do not pay their first monthly bill are deducted from our gross
customer additions in the month that they are disconnected; as a
result, these customers are not included in churn. In addition,
customers are generally disconnected from service approximately
30 days after failing to pay a monthly bill. Beginning
during the quarter ended June 30, 2007,
pay-in-advance
customers who ask to terminate their service are disconnected
when their paid service period ends, whereas previously these
customers were generally disconnected on the date of their
request to terminate service. Management uses churn to measure
our retention of customers, to measure changes in customer
retention over time, and to help evaluate how changes in our
business affect customer retention. In addition, churn provides
management with a useful measure to compare our customer
turnover activity to that of other wireless communications
providers. We believe investors use churn primarily as a tool to
track
Table of Contents
changes in our customer retention over time and to compare our
customer retention to that of other wireless communications
providers. Other companies may calculate this measure
differently.
The following table shows metric information for 2007:
This excerpt taken from the LEAP 10-K filed Feb 29, 2008. Performance
Measures
In managing our business and assessing our financial
performance, management supplements the information provided by
financial statement measures with several customer-focused
performance metrics that are widely used in the
telecommunications industry. These metrics include average
revenue per user per month, or ARPU, which measures service
revenue per customer; CPGA, which measures the average cost of
acquiring a new customer; cash costs per user per month, or CCU,
which measures the non-selling cash cost of operating our
business on a per customer basis; and churn, which measures
turnover in our customer base. CPGA and CCU are non-GAAP
financial measures. A non-GAAP financial measure, within the
meaning of Item 10 of
Regulation S-K
promulgated by the SEC, is a numerical measure of a
company’s financial performance or cash flows that
(a) excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, which are included in the
most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles in the
consolidated balance sheets, consolidated statements of
operations or consolidated statements of cash flows; or
(b) includes amounts, or is subject to adjustments that
have the effect of including amounts, which are excluded
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from the most directly comparable measure so calculated and
presented. See “Reconciliation of Non-GAAP Financial
Measures” below for a reconciliation of CPGA and CCU to the
most directly comparable GAAP financial measures.
ARPU is service revenue divided by the weighted-average number
of customers, divided by the number of months during the period
being measured. Management uses ARPU to identify average revenue
per customer, to track changes in average customer revenues over
time, to help evaluate how changes in our business, including
changes in our service offerings and fees, affect average
revenue per customer, and to forecast future service revenue. In
addition, ARPU provides management with a useful measure to
compare our subscriber revenue to that of other wireless
communications providers. We believe investors use ARPU
primarily as a tool to track changes in our average revenue per
customer and to compare our per customer service revenues to
those of other wireless communications providers. Other
companies may calculate this measure differently.
CPGA is selling and marketing costs (excluding applicable
share-based compensation expense included in selling and
marketing expense), and equipment subsidy (generally defined as
cost of equipment less equipment revenue), less the net loss on
equipment transactions unrelated to initial customer
acquisition, divided by the total number of gross new customer
additions during the period being measured. The net loss on
equipment transactions unrelated to initial customer acquisition
includes the revenues and costs associated with the sale of
handsets to existing customers as well as costs associated with
handset replacements and repairs (other than warranty costs
which are the responsibility of the handset manufacturers). We
deduct customers who do not pay their first monthly bill from
our gross customer additions, which tends to increase CPGA
because we incur the costs associated with this customer without
receiving the benefit of a gross customer addition. Management
uses CPGA to measure the efficiency of our customer acquisition
efforts, to track changes in our average cost of acquiring new
subscribers over time, and to help evaluate how changes in our
sales and distribution strategies affect the cost-efficiency of
our customer acquisition efforts. In addition, CPGA provides
management with a useful measure to compare our per customer
acquisition costs with those of other wireless communications
providers. We believe investors use CPGA primarily as a tool to
track changes in our average cost of acquiring new customers and
to compare our per customer acquisition costs to those of other
wireless communications providers. Other companies may calculate
this measure differently.
CCU is cost of service and general and administrative costs
(excluding applicable share-based compensation expense included
in cost of service and general and administrative expense) plus
net loss on equipment transactions unrelated to initial customer
acquisition (which includes the gain or loss on the sale of
handsets to existing customers and costs associated with handset
replacements and repairs (other than warranty costs which are
the responsibility of the handset manufacturers)), divided by
the weighted-average number of customers, divided by the number
of months during the period being measured. CCU does not include
any depreciation and amortization expense. Management uses CCU
as a tool to evaluate the non-selling cash expenses associated
with ongoing business operations on a per customer basis, to
track changes in these non-selling cash costs over time, and to
help evaluate how changes in our business operations affect
non-selling cash costs per customer. In addition, CCU provides
management with a useful measure to compare our non-selling cash
costs per customer with those of other wireless communications
providers. We believe investors use CCU primarily as a tool to
track changes in our non-selling cash costs over time and to
compare our non-selling cash costs to those of other wireless
communications providers. Other companies may calculate this
measure differently.
Churn, which measures customer turnover, is calculated as the
net number of customers that disconnect from our service divided
by the weighted-average number of customers divided by the
number of months during the period being measured. Customers who
do not pay their first monthly bill are deducted from our gross
customer additions in the month that they are disconnected; as a
result, these customers are not included in churn. In addition,
customers are generally disconnected from service approximately
30 days after failing to pay a monthly bill. Beginning
during the quarter ended June 30, 2007,
pay-in-advance
customers who ask to terminate their service are disconnected
when their paid service period ends, whereas previously these
customers were generally disconnected on the date of their
request to terminate service. Management uses churn to measure
our retention of customers, to measure changes in customer
retention over time, and to help evaluate how changes in our
business affect customer retention. In addition, churn provides
management with a useful measure to compare our customer
turnover activity to that of other wireless communications
providers. We believe investors use churn primarily as a tool to
track
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changes in our customer retention over time and to compare our
customer retention to that of other wireless communications
providers. Other companies may calculate this measure
differently.
The following table shows metric information for 2007:
This excerpt taken from the LEAP 10-Q filed Dec 26, 2007. Performance
Measures
In managing our business and assessing our financial
performance, management supplements the information provided by
financial statement measures with several customer-focused
performance metrics that are widely used in the
telecommunications industry. These metrics include average
revenue per user per month (ARPU), which measures service
revenue per customer; cost per gross customer addition (CPGA),
which measures the average cost of acquiring a new customer;
cash costs per user per month (CCU), which measures the
non-selling cash cost of operating our business on a per
customer basis; and churn, which measures turnover in our
customer base. CPGA and CCU are non-GAAP financial measures. A
non-GAAP financial measure, within the meaning of Item 10
of
Regulation S-K
promulgated by the SEC, is a numerical measure of a
company’s financial performance or cash flows that
(a) excludes amounts, or is subject to adjustments that
have the effect of excluding amounts, that are included in the
most directly comparable measure calculated and presented in
accordance with generally accepted accounting principles in the
condensed consolidated balance sheets, condensed consolidated
statements of operations or condensed consolidated statements of
cash flows; or (b) includes amounts, or is subject to
adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so
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calculated and presented. See “Reconciliation of
Non-GAAP Financial Measures” below for a
reconciliation of CPGA and CCU to the most directly comparable
GAAP financial measures.
ARPU is service revenue divided by the weighted-average number
of customers, divided by the number of months during the period
being measured. Management uses ARPU to identify average revenue
per customer, to track changes in average customer revenues over
time, to help evaluate how changes in our business, including
changes in our service offerings and fees, affect average
revenue per customer, and to forecast future service revenue. In
addition, ARPU provides management with a useful measure to
compare our subscriber revenue to that of other wireless
communications providers. We believe investors use ARPU
primarily as a tool to track changes in our average revenue per
customer and to compare our per customer service revenues to
those of other wireless communications providers. Other
companies may calculate this measure differently.
CPGA is selling and marketing costs (excluding applicable
share-based compensation expense included in selling and
marketing expense), and equipment subsidy (generally defined as
cost of equipment less equipment revenue), less the net loss on
equipment transactions unrelated to initial customer
acquisition, divided by the total number of gross new customer
additions during the period being measured. The net loss on
equipment transactions unrelated to initial customer acquisition
includes the revenues and costs associated with the sale of
handsets to existing customers as well as costs associated with
handset replacements and repairs (other than warranty costs
which are the responsibility of the handset manufacturers). We
deduct customers who do not pay their first monthly bill from
our gross customer additions, which tends to increase CPGA
because we incur the costs associated with this customer without
receiving the benefit of a gross customer addition. Management
uses CPGA to measure the efficiency of our customer acquisition
efforts, to track changes in our average cost of acquiring new
subscribers over time, and to help evaluate how changes in our
sales and distribution strategies affect the cost-efficiency of
our customer acquisition efforts. In addition, CPGA provides
management with a useful measure to compare our per customer
acquisition costs with those of other wireless communications
providers. We believe investors use CPGA primarily as a tool to
track changes in our average cost of acquiring new customers and
to compare our per customer acquisition costs to those of other
wireless communications providers. Other companies may calculate
this measure differently.
CCU is cost of service and general and administrative costs
(excluding applicable share-based compensation expense included
in cost of service and general and administrative expense) plus
net loss on equipment transactions unrelated to initial customer
acquisition (which includes the gain or loss on sale of handsets
to existing customers and costs associated with handset
replacements and repairs (other than warranty costs which are
the responsibility of the handset manufacturers)), divided by
the weighted-average number of customers, divided by the number
of months during the period being measured. CCU does not include
any depreciation and amortization expense. Management uses CCU
as a tool to evaluate the non-selling cash expenses associated
with ongoing business operations on a per customer basis, to
track changes in these non-selling cash costs over time, and to
help evaluate how changes in our business operations affect
non-selling cash costs per customer. In addition, CCU provides
management with a useful measure to compare our non-selling cash
costs per customer with those of other wireless communications
providers. We believe investors use CCU primarily as a tool to
track changes in our non-selling cash costs over time and to
compare our non-selling cash costs to those of other wireless
communications providers. Other companies may calculate this
measure differently.
Churn, which measures customer turnover, is calculated as the
net number of customers that disconnect from our service divided
by the weighted-average number of customers divided by the
number of months during the period being measured. Customers who
do not pay their first monthly bill are deducted from our gross
customer additions in the month that they are disconnected; as a
result, these customers are not included in churn. Management
uses churn to measure our retention of customers, to measure
changes in customer retention over time, and to help evaluate
how changes in our business affect customer retention. In
addition, churn provides management with a useful measure to
compare our customer turnover activity to that of other wireless
communications providers. We believe investors use churn
primarily as a tool to track changes in our customer retention
over time and to compare our customer retention to that of other
wireless communications providers. Other companies may calculate
this measure differently.
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The following table shows metric information for the three
months ended March 31, 2007 and 2006:
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