Grew revenue 7.1%, Net Income 43.7% and Modified EBITDA1 9.2% year over year
Delivered 37.0% Modified EBITDA margin1 for the quarter
Launched Ethernet Capabilities enabling Nationwide Coverage from a Single Connection Point
LITTLETON, Colo., Nov. 5, 2012 /PRNewswire/ — tw telecom inc. (NASDAQ: TWTC), a leading national provider of managed services, including Business Ethernet, converged and IP VPN solutions to enterprises across the U.S. and to their global locations, today announced its third quarter 2012 financial results, including $368.9 million of revenue, net income of $21.0 million, $136.5 million of Modified EBITDA (“M-EBITDA”), $111.2 million of net cash provided by operating activities and $37.2 million of levered free cash flow3.
(Logo: http://photos.prnewswire.com/prnh/20080626/LATH527LOGO)
“We delivered ongoing revenue growth and strong Modified EBITDA margin as we generated substantial levered free cash flow this quarter,” said Larissa Herda, tw telecom’s Chairman, CEO and President. “We’ve deployed many new products and features this year to meet our customers’ rapidly changing requirements, including recently introducing new Ethernet capabilities and advancing our Intelligent Network. Our product investments are differentiating us in the marketplace as we continue to innovate to deliver faster, better and easier network solutions to serve our customers.”
Highlights for the Third Quarter 2012
- Grew total revenue 1.2% sequentially and 7.1% year over year
- Grew enterprise revenue 2.0% sequentially and 9.8% year over year
- Grew data and Internet revenue 3.7% sequentially and 14.9% year over year, now representing 51% of total revenue, driven primarily by strategic Ethernet & VPN solutions
- Grew net income 8.5% sequentially and 43.7% year over year
- Grew M-EBITDA 1.9% sequentially and 9.2% year over year
- Delivered 37.0% M-EBITDA margin
- Prepaid $101.5 million of the January 2013 tranche of Term Loan B
- Launched a successful offering of $480 million principal amount 5.375% Senior Notes due 2022, which closed October 2, 2012
- Delivered $111.2 million in net cash provided by operating activities and $37.2 million of levered free cash flow, representing 10.1% of revenue
Business Trends
“We achieved another quarter of solid comprehensive financial results,” said Mark Peters, tw telecom’s Executive Vice President and Chief Financial Officer, “as we absorbed the impact of some expected regulatory and tax rate decreases. Our data and Internet revenue, which now represents over half of our total revenue stream, grew at an increased sequential rate this quarter than the past two quarters as we continue to differentiate ourselves with powerful customer solutions.”
“Our bookings7, or sales, were lower this quarter, primarily in September, coming off a very strong second quarter and strengthened as we started the fourth quarter with strong October sales, a solid sales funnel and a lot of customer interest in our new products,” said Peters. “Throughout the past year we’ve transitioned more of our sales force to focus on larger enterprise opportunities, contributing to a slight contraction in our sales headcount year over year. We expect to grow our sales force over the course of the next year to leverage our new product offerings as well as market opportunities across our national footprint.”
New Products
“We continue to deliver new product innovation,” said John Blount, tw telecom’s Chief Operating Officer, “including the launch in October of a new Ethernet service that enables national Ethernet coverage from a single connection – our “One-to-Many” offering – as well as further advancing our Intelligent Network. We anticipate launching a new Enhanced Management feature near year end, which will further enable efficiencies for enterprise businesses. We believe our strategic innovation, including our unique foundational design and scalability, will continue to distance us from the competition.”
Operational Metrics
Revenue churn4 was 0.8% for the current quarter, down from 0.9% in the prior quarter and 1.0% in the same period last year. The improvement in revenue churn for the quarter was reduced by an increase in repricing upon contract renewal. As a component of revenue churn, revenue lost from customers fully disconnecting service remained low at 0.2% for the current quarter, which is consistent with the prior quarter and down from 0.3% for the same quarter last year, indicative of a loyal customer base, strong customer experience strategy and competitive product portfolio.
The Company had approximately 27,700 customers as of September 30, 2012. Customer churn4 was 0.9% for the current quarter, down from 1.0% in both the prior quarter and the same quarter last year. The Company ended the third quarter with over 28,000 fiber route miles (of which approximately 22,000 were metro miles).
Capital Expenditures
Capital expenditures were $83.9 million for the quarter as compared to the prior quarter of $80.8 million and for the same period last year of $86.0 million, with the majority of the investments in each period related to success-based initiatives.
The Company expects capital spending to increase in the fourth quarter with much of the increase related to the timing of both success-based and strategic initiatives including network expansion and other infrastructure projects. Capital investments for the year are expected to be at the lower end of the original guidance of $345 to $355 million. The Company also expects the majority of these investments to be tied to new success-based opportunities.
Other
The Company continues to expect business fluctuations to impact sequential trends in revenue, margins and cash flow. This includes the timing, as well as any seasonality of sales and installations5, usage, rate changes, disputes, repricing for contract renewals and fluctuations in revenue churn, expenses, capital expenditures and taxes and fees.
Intercarrier compensation revenue represented 2% of total revenue for the third quarter. Due to a November 2011 FCC order, intercarrier compensation revenue will decline over a six-year period beginning July 2012. The Company lowered rates in July to comply with the order with an approximate $1 million impact to revenue in the third quarter for the mandated rate step down, with the next rate step down to occur in the third quarter of next year.
On October 2, 2012, the Company completed a private offering of $480 million principal amount 5.375% Senior Notes due 2022 at an offering price of 100% of the principal amount. The Company plans to use the net proceeds of this offering to settle the conversion obligations for the Convertible Debentures to the extent holders elect to convert their Convertible Debentures and the Company elects to settle the conversion obligations in whole or in part in cash, or if the Company otherwise redeems the Convertible Debentures. Any net proceeds not used for these purposes would be used for general corporate purposes.
Year over Year Results – Third Quarter 2012 compared to Third Quarter 2011
Revenue
Revenue for the quarter was $368.9 million compared to $344.5 million for the third quarter last year, representing a year over year increase of $24.4 million or 7.1%. Revenue grew primarily due to ongoing enterprise revenue growth. Key changes in revenue included:
- $26.2 million increase in revenue from enterprise customers, or 9.8% year over year, driven primarily by data and Internet services
- $1.5 million decrease in revenue from carriers, primarily due to churn and repricing for contract renewals, partially offset by Ethernet services provided to wireline and wireless carriers to serve their end users
By product line, the percentage change in revenue year over year was as follows:
- 14.9% increase for data and Internet services, primarily driven by an increase in strategic Ethernet and VPN-based products and other services, partially offset by churn and repricing. Data and Internet revenue represents 51% of total revenue for the quarter compared to 48% a year ago
- 6.8% increase in voice services, primarily reflecting sales of converged and other voice solutions as well as an increase in certain taxes and fees, partially offset by churn
- 6.5% decrease in network services, primarily reflecting churn and repricing for contract renewals largely in transport services and a decrease in certain taxes and fees, which outpaced growth in high capacity and colocation services
Operating Costs
Operating costs for the quarter increased year over year, primarily as a result of revenue growth, which included increases in network access costs and certain taxes and fees, as well as fluctuations in franchise fees. As a result of these increases, somewhat offset by efficiency gains, operating costs as a percentage of revenue were 42.3% for the quarter and 41.9% for the same period last year. Modified gross margin6 as a percentage of revenue was 57.8% in the current quarter compared to 58.3% in the same period last year due to an increase in operating costs discussed above.
The Company utilizes a fully burdened modified gross margin, including network costs, and personnel costs for customer care, provisioning, network maintenance, technical field and network operations, excluding non-cash, stock-based compensation expense, net of costs capitalized for labor and overhead on capital projects.
Selling, General and Administrative Costs (“SG&A”)
SG&A costs increased year over year, primarily as a result of an increase in employee-related costs, property and other taxes and regulatory fees. SG&A costs as a percentage of revenue decreased to 22.6% for the quarter from 23.8% for the same period last year, reflecting scaling of employee costs which declined as a percentage of revenue year over year.
Net Income
Net income grew 43.7% to $21.0 million for the quarter from $14.6 million for the same period last year. The increase was primarily driven by M-EBITDA growth, partially offset by an increase in income tax expense. Earnings per share grew to $0.14 for the quarter compared to $0.10 in the same period last year.
M-EBITDA and Margins
M-EBITDA grew to $136.5 million for the quarter, an increase of 9.2% from the same period last year primarily as a result of revenue growth. M-EBITDA margin for the quarter was 37.0% as compared to 36.3% for the same period last year, as employee costs as a percentage of revenue declined year over year somewhat offset by the dilutive impact of the growth in certain taxes and fees.
Sequential Results – Third Quarter 2012 compared to Second Quarter 2012
Revenue
Revenue for the quarter was $368.9 million, as compared to $364.5 million for the second quarter of 2012, an increase of $4.4 million, or 1.2%, representing the 32nd consecutive quarter of sequential growth. Revenue grew due to ongoing enterprise growth. Key changes in revenue included:
- $5.7 million increase in enterprise revenue, representing 2.0% sequential growth driven primarily by data and Internet services, partially offset by a decrease in certain taxes and fees
- $0.8 million decrease in revenue from carrier customers, primarily reflecting churn and repricing for contract renewals, offset by growth in Ethernet services provided to wireline and wireless carriers to serve their end users
By product line, the percentage change in revenue sequentially was as follows:
- 3.7% increase for data and Internet services, primarily driven by an increase in strategic Ethernet and VPN-based product sales and other services, partially offset by churn and repricing
- Voice services were unchanged, primarily reflecting an increase in sales of converged solutions offset by churn and decreases in certain taxes and fees as a result of rate reductions
- 2.1% decrease in network services, primarily reflecting churn and repricing for contract renewals largely in transport services, which outpaced growth in high capacity and collocation services
Operating Costs
Operating costs increased primarily as a result of revenue growth and included increased network access costs and seasonally higher maintenance and utility costs, somewhat offset by a reduction in certain taxes and fees. Operating costs were 42.3% of revenue for the quarter and 42.0% for the prior quarter. Modified gross margin for the quarter as a percentage of revenue was 57.8% compared to 58.2% in the prior quarter due to an increase in operating costs discussed above.
Selling, General and Administrative Costs
SG&A costs decreased reflecting a decrease in employee and other costs, partially offset by an increase in bad debt expense. SG&A was 22.6% of revenue for the quarter and 23.2% for the prior quarter.
Net Income
Net income grew to $21.0 million for the quarter from $19.3 million in the prior quarter, primarily reflecting M-EBITDA growth, partially offset by an increase in income tax expense. Earnings per share was $0.14 for the quarter compared to $0.13 in the prior quarter.
M-EBITDA and Margins
M-EBITDA was $136.5 million for the quarter, an increase of 1.9% from the prior quarter primarily as a result of revenue growth. M-EBITDA margin was 37.0% for the quarter compared to 36.8% for the prior quarter.
tw telecom plans to conduct a webcast conference call to discuss its earnings results on November 6, 2012 at 9:00 a.m. MST (11:00 a.m. EST). To access the webcast and the financial and other information to be discussed in the webcast, visit www.twtelecom.com under “Investor Relations.”
(1) Modified EBITDA (or “M-EBITDA”) is defined as net income or loss before depreciation, amortization, accretion, impairment charges and other income and losses, interest expense, debt extinguishment costs, interest income, income tax expense or benefit, cumulative effect of change in accounting principle, and non-cash stock-based compensation expense. The Company defines Modified EBITDA margin as M-EBITDA divided by total revenue.
(2) Unlevered free cash flow is defined as Modified EBITDA less capital expenditures, which is reconciled to Net Cash provided by (used in) operating activities in the supplemental information posted on the Company’s website.
(3) Levered free cash flow is defined as Modified EBITDA less capital expenditures and net interest expense from operations (excluding debt extinguishment costs, non-cash interest expense and deferred debt costs), which is reconciled to Net Cash provided by (used in) operating activities in the supplemental information posted on the Company’s website.
(4) Revenue churn is defined as the average lost recurring monthly billing for the period from a customer’s partial or complete disconnection of services (excluding repricing impacts and usage) compared to reported revenue for the period. Customer churn is defined as the average monthly customer turnover for the period compared to the average monthly customer count for the period.
(5) Installations reflect services from signed customer sales that are installed and recognized as revenue from the date of installation.
(6) The Company defines modified gross margin as total revenue less operating costs excluding non-cash stock-based compensation expense.
(7) Bookings are defined as signed customer contracts. The timing of when these sales are installed and recognized into revenue varies based on the underlying contract.
Financial Measures
The Company provides financial measures using U.S. generally accepted accounting principles (“GAAP”) as well as adjustments to GAAP measures to describe its business trends, including Modified EBITDA. Management believes that its definition of Modified EBITDA (see above) is a standard measure of operating performance and liquidity that is commonly reported and widely used by analysts, investors, and other interested parties in the telecommunications industry because it eliminates many differences in financial, capitalization, and tax structures, as well as non-cash and non-operating income or charges to earnings. Modified EBITDA is not intended to replace operating income (loss), net income (loss), cash flow, and other measures of financial performance and liquidity reported in accordance with GAAP. Management uses Modified EBITDA internally to assess on-going operations and it is the basis for various financial covenants contained in the Company’s debt agreements and for operating performance and liquidity. Modified EBITDA is reconciled to Net Income (Loss), the most comparable GAAP measure for operating performance within the Consolidated Operations Highlights and in the supplemental information posted on the Company’s website. Modified EBITDA, as a measure of liquidity, is also reconciled to Net Cash provided by operating activities on the Company’s website.
In addition, management uses unlevered and levered free cash flow, which measure the ability of M-EBITDA to cover capital expenditures. The Company uses these cash flow definitions to eliminate certain non-cash costs. Levered and unlevered free cash flow are reconciled to Net Cash provided by operating activities and also to Modified EBITDA in the supplemental information posted on the Company’s website. The Company also provides an adjustment to the measure gross margin by eliminating the impact of non-cash stock-based compensation expense. Management uses modified gross margin internally to assess on-going operations. Modified gross margin is reconciled to gross margin in the financial tables.
Forward Looking Statements
The statements in this press release and related conference call concerning the outlook for 2012 and beyond, including statements regarding product and platform plans, growth prospects, market opportunities, sales funnel, sales force, customer opportunities, network capabilities, sales and installations timing, demand, revenue growth, margins, the impact of regulatory changes, churn, business trends and fluctuations, taxes and expected capital expenditures are forward-looking statements that reflect management’s views with respect to future events and financial performance. These statements are based on management’s current expectations and are subject to risks and uncertainties. Important factors that could cause actual results to differ materially from those in the forward looking statements include the risks disclosed in the Company’s SEC filings, especially the section entitled “Risk Factors” in its 2011 Annual Report on Form 10-K and in its quarterly report on Form 10-Q for the quarter ended September 30, 2012 to be filed shortly hereafter. tw telecom undertakes no obligations to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About tw telecom
tw telecom, headquartered in Littleton, Colo., is a leading national provider of managed services, including Business Ethernet, converged and IP VPN solutions for enterprises throughout the U.S. and globally. tw telecom also delivers secure, scalable private connections for transport data networking, Internet access, voice, VPN, VoIP and security to large organizations and communications services companies. Employing a resilient fiber network infrastructure, robust product portfolio and its own Intelligent Network capabilities, tw telecom delivers customers overall economic value, an industry-leading quality service experience, and improved business productivity. Please visit www.twtelecom.com for more information.
| tw telecom inc. | ||||||||||||||||
| Consolidated Operations Highlights | ||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||
| Unaudited (1) | ||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||
| Sept 30, | Sept 30, | |||||||||||||||
| 2012 | 2011 | Growth % | 2012 | 2011 | Growth % | |||||||||||
| Revenue | ||||||||||||||||
| Data and Internet services | $189,164 | $164,670 | 14.9% | $548,495 | $475,025 | 15.5% | ||||||||||
| Voice services | 91,052 | 85,220 | 6.8% | 271,681 | 251,880 | 7.9% | ||||||||||
| Network services | 81,261 | 86,878 | -6.5% | 249,074 | 265,287 | -6.1% | ||||||||||
| Service Revenue | 361,477 | 336,768 | 7.3% | 1,069,250 | 992,192 | 7.8% | ||||||||||
| Intercarrier compensation | 7,457 | 7,688 | -3.0% | 23,112 | 23,192 | -0.3% | ||||||||||
| Total Revenue | 368,934 | 344,456 | 7.1% | 1,092,362 | 1,015,384 | 7.6% | ||||||||||
| Expenses | ||||||||||||||||
| Operating costs | 156,195 | 144,161 | 458,374 | 425,141 | ||||||||||||
| Gross Margin | 212,739 | 200,295 | 633,988 | 590,243 | ||||||||||||
| Selling, general and administrative costs | 83,341 | 82,085 | 254,011 | 241,684 | ||||||||||||
| Depreciation, amortization and accretion | 70,726 | 70,940 | 209,589 | 210,757 | ||||||||||||
| Operating Income | 58,672 | 47,270 | 24.1% | 170,388 | 137,802 | 23.6% | ||||||||||
| Interest expense | (15,495) | (16,012) | (46,551) | (48,302) | ||||||||||||
| Debt extinguishment costs | (77) | – | (77) | – | ||||||||||||
| Non-cash interest expense and deferred debt costs | (6,330) | (5,918) | (18,715) | (17,445) | ||||||||||||
| Interest income | 84 | 126 | 281 | 443 | ||||||||||||
| Income before income taxes | 36,854 | 25,466 | 44.7% | 105,326 | 72,498 | 45.3% | ||||||||||
| Income tax expense | 15,885 | 10,873 | 45,706 | 30,979 | ||||||||||||
| Net Income | $20,969 | $14,593 | 43.7% | $59,620 | $41,519 | 43.6% | ||||||||||
| SUPPLEMENTAL INFORMATION TO RECONCILE MODIFIED GROSS MARGIN AND MODIFIED EBITDA | ||||||||||||||||
| Gross Margin | $212,739 | $200,295 | $633,988 | $590,243 | ||||||||||||
| Add back non-cash stock-based compensation expense | 473 | 565 | 1,428 | 1,737 | ||||||||||||
| Modified Gross Margin | 213,212 | 200,860 | 6.1% | 635,416 | 591,980 | 7.3% | ||||||||||
| Selling, general and administrative costs | 83,341 | 82,085 | 254,011 | 241,684 | ||||||||||||
| Add back non-cash stock-based compensation expense | 6,667 | 6,248 | 20,889 | 19,357 | ||||||||||||
| Modified EBITDA | 136,538 | 125,023 | 9.2% | 402,294 | 369,653 | 8.8% | ||||||||||
| Non-cash stock-based compensation expense | 7,140 | 6,813 | 22,317 | 21,094 | ||||||||||||
| Depreciation, amortization and accretion | 70,726 | 70,940 | 209,589 | 210,757 | ||||||||||||
| Net Interest expense | 15,411 | 15,886 | 46,270 | 47,859 | ||||||||||||
| Debt extinguishment costs | 77 | – | 77 | – | ||||||||||||
| Non-cash interest expense and deferred debt costs | 6,330 | 5,918 | 18,715 | 17,445 | ||||||||||||
| Income tax expense | 15,885 | 10,873 | 45,706 | 30,979 | ||||||||||||
| Net Income | $20,969 | $14,593 | $59,620 | $41,519 | ||||||||||||
| Modified Gross Margin % | 57.8% | 58.3% | 58.2% | 58.3% | ||||||||||||
| Modified EBITDA Margin % | 37.0% | 36.3% | 36.8% | 36.4% | ||||||||||||
| Free Cash Flow: | ||||||||||||||||
| Modified EBITDA | $136,538 | $125,023 | 9.2% | $402,294 | $369,653 | 8.8% | ||||||||||
| Less: Capital Expenditures | 83,900 | 85,957 | -2.4% | 243,801 | 256,094 | -4.8% | ||||||||||
| Unlevered Free Cash Flow | 52,638 | 39,066 | 34.7% | 158,493 | 113,559 | 39.6% | ||||||||||
| Less: Net interest expense | 15,411 | 15,886 | -3.0% | 46,270 | 47,859 | -3.3% | ||||||||||
| Levered Free Cash Flow | $37,227 | $23,180 | 60.6% | $112,223 | $65,700 | 70.8% | ||||||||||
| (1) For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| tw telecom inc. | |||||||||
| Consolidated Operations Highlights | |||||||||
| (Dollars in thousands) | |||||||||
| Unaudited (1) | |||||||||
| Three Months Ended | |||||||||
| Sept 30, | June 30, | ||||||||
| 2012 | 2012 | Growth % | |||||||
| Revenue | |||||||||
| Data and Internet services | $189,164 | $182,480 | 3.7% | ||||||
| Voice services | 91,052 | 91,008 | 0.0% | ||||||
| Network services | 81,261 | 83,009 | -2.1% | ||||||
| Service Revenue | 361,477 | 356,497 | 1.4% | ||||||
| Intercarrier compensation | 7,457 | 8,006 | -6.9% | ||||||
| Total Revenue | 368,934 | 364,503 | 1.2% | ||||||
| Expenses | |||||||||
| Operating costs | 156,195 | 152,986 | |||||||
| Gross Margin | 212,739 | 211,517 | |||||||
| Selling, general and administrative costs | 83,341 | 84,580 | |||||||
| Depreciation, amortization and accretion | 70,726 | 70,469 | |||||||
| Operating Income | 58,672 | 56,468 | 3.9% | ||||||
| Interest expense | (15,495) | (15,612) | |||||||
| Debt extinguishment costs | (77) | – | |||||||
| Non-cash interest expense and deferred debt costs | (6,330) | (6,248) | |||||||
| Interest income | 84 | 93 | |||||||
| Income before income taxes | 36,854 | 34,701 | 6.2% | ||||||
| Income tax expense | 15,885 | 15,382 | |||||||
| Net Income | $20,969 | $19,319 | 8.5% | ||||||
| SUPPLEMENTAL INFORMATION TO RECONCILE MODIFIED GROSS MARGIN AND MODIFIED EBITDA | |||||||||
| Gross Margin | $212,739 | $211,517 | |||||||
| Add back non-cash stock-based compensation expense | 473 | 455 | |||||||
| Modified Gross Margin | 213,212 | 211,972 | 0.6% | ||||||
| Selling, general and administrative costs | 83,341 | 84,580 | |||||||
| Add back non-cash stock-based compensation expense | 6,667 | 6,594 | |||||||
| Modified EBITDA | 136,538 | 133,986 | 1.9% | ||||||
| Non-cash stock-based compensation expense | 7,140 | 7,049 | |||||||
| Depreciation, amortization and accretion | 70,726 | 70,469 | |||||||
| Net Interest expense | 15,411 | 15,519 | |||||||
| Debt extinguishment costs | 77 | – | |||||||
| Non-cash interest expense and deferred debt costs | 6,330 | 6,248 | |||||||
| Income tax expense | 15,885 | 15,382 | |||||||
| Net Income | $20,969 | $19,319 | |||||||
| Modified Gross Margin % | 57.8% | 58.2% | |||||||
| Modified EBITDA Margin % | 37.0% | 36.8% | |||||||
| Free Cash Flow | |||||||||
| Modified EBITDA | $136,538 | $133,986 | 1.9% | ||||||
| Less: Capital Expenditures | 83,900 | 80,792 | 3.8% | ||||||
| Unlevered Free Cash Flow | 52,638 | 53,194 | -1.0% | ||||||
| Less: Net interest expense | 15,411 | 15,519 | -0.7% | ||||||
| Levered Free Cash Flow | $37,227 | $37,675 | -1.2% | ||||||
| (1) For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| tw telecom inc. | ||||||||||
| Highlights of Results Per Share | ||||||||||
| Unaudited (1) (2) | ||||||||||
| Three Months Ended | ||||||||||
| Sept. 30 | Jun. 30 | Sept. 30 | ||||||||
| 2012 | 2012 | 2011 | ||||||||
| Weighted Average Shares Outstanding (thousands) | ||||||||||
| Basic | 147,973 | 147,497 | 147,084 | |||||||
| Diluted (2) | 150,359 | 149,532 | 148,999 | |||||||
| Basic & Diluted Income per Common Share | $0.14 | $0.13 | $0.10 | |||||||
| As of | ||||||||||
| Sept. 30 | Jun. 30 | Sept. 30 | ||||||||
| 2012 | 2012 | 2011 | ||||||||
| Common shares (thousands) | ||||||||||
| Actual Shares Outstanding | 151,271 | 150,966 | 149,332 | |||||||
| Unvested Restricted Stock Units | ||||||||||
| and Restricted Stock Awards (thousands) | 4,598 | 4,573 | 4,300 | |||||||
| Options (thousands) | ||||||||||
| Options Outstanding | 5,065 | 5,375 | 6,824 | |||||||
| Options Exercisable | 4,369 | 4,674 | 4,950 | |||||||
| Options Exercisable and In-the-Money | 4,369 | 4,674 | 1,533 | |||||||
| (1) For complete financials and related footnotes, please refer to the Company’s SEC filings. | ||||||||||
| (2) Stock options, restricted stock units/awards and convertible debt subject to conversion, are excluded from the computation of diluted weighted average shares outstanding if inclusion would be anti-dilutive. See the Company’s SEC filings for more details. |
| tw telecom inc. | ||||||||||
| Condensed Consolidated Balance Sheet Highlights | ||||||||||
| (Dollars in thousands) | ||||||||||
| Unaudited (1) | ||||||||||
| Sept. 30 | Jun. 30 | Sept. 30 | ||||||||
| 2012 | 2012 | 2011 | ||||||||
| ASSETS | ||||||||||
| Cash, equivalents, and short term investments | $459,397 | $531,699 | $469,093 | |||||||
| Receivables | 114,407 | 108,429 | 99,914 | |||||||
| Less: allowance | (7,693) | (7,521) | (7,660) | |||||||
| Net receivables | 106,714 | 100,908 | 92,254 | |||||||
| Prepaid expenses and other current assets | 19,475 | 19,929 | 22,842 | |||||||
| Deferred income taxes | 65,008 | 65,008 | 40,428 | |||||||
| Total other current assets | 84,483 | 84,937 | 63,270 | |||||||
| Property, plant and equipment | 4,186,321 | 4,116,329 | 3,958,489 | |||||||
| Less: accumulated depreciation | (2,721,086) | (2,662,794) | (2,541,885) | |||||||
| Net property, plant and equipment | 1,465,235 | 1,453,535 | 1,416,604 | |||||||
| Deferred income taxes | 123,063 | 136,988 | 194,081 | |||||||
| Goodwill | 412,694 | 412,694 | 412,694 | |||||||
| Intangible assets, net of accumulated amortization | 19,362 | 14,928 | 19,417 | |||||||
| Other assets, net | 22,736 | 22,862 | 25,290 | |||||||
| Total other non-current assets | 577,855 | 587,472 | 651,482 | |||||||
| Total | $2,693,684 | $2,758,551 | $2,692,703 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable | $61,819 | $57,433 | $66,356 | |||||||
| Deferred revenue | 44,413 | 43,856 | 41,724 | |||||||
| Accrued taxes, franchise and other fees | 65,975 | 65,274 | 68,708 | |||||||
| Accrued interest | 7,653 | 13,914 | 7,459 | |||||||
| Accrued payroll and benefits | 40,840 | 40,730 | 39,738 | |||||||
| Accrued carrier costs | 23,988 | 24,022 | 28,816 | |||||||
| Current portion of debt and lease obligations | 369,404 | 465,398 | 7,742 | |||||||
| Other current liabilities | 29,227 | 29,110 | 37,404 | |||||||
| Total current liabilities | 643,319 | 739,737 | 297,947 | |||||||
| Long-Term Debt and Capital Lease Obligations | ||||||||||
| 2 3/8% convertible senior debentures, due 4/1/2026 (2) | 373,743 | 373,744 | 373,744 | |||||||
| Unamortized Discount | (11,168) | (16,577) | (32,133) | |||||||
| Net | 362,575 | 357,167 | 341,611 | |||||||
| Floating rate senior secured debt – Term Loan B, due 1/7/2013 | – | 101,518 | 102,324 | |||||||
| Floating rate senior secured debt – Term Loan B, due 12/30/2016 | 464,250 | 465,482 | 469,176 | |||||||
| 8% senior unsecured notes, due 3/1/2018, net of unamortized discount | 427,905 | 427,808 | 427,518 | |||||||
| Capital lease obligations | 17,917 | 17,837 | 16,594 | |||||||
| Less: current portion | (369,404) | (465,398) | (7,742) | |||||||
| Total long-term debt and capital lease obligations | 903,243 | 904,414 | 1,349,481 | |||||||
| Long-Term Deferred Revenue | 24,031 | 24,629 | 22,330 | |||||||
| Other Long-Term Liabilities | 36,840 | 36,046 | 33,636 | |||||||
| Stockholders’ Equity | 1,086,251 | 1,053,725 | 989,309 | |||||||
| Total | $2,693,684 | $2,758,551 | $2,692,703 | |||||||
| (1) For complete financials and related footnotes, please refer to the Company’s SEC filings. | ||||||||||
| (2) Holders have the option to require the Company to purchase all or part of the debentures on April 1, 2013, April 1, 2016 or April 1, 2021; or at any time prior to April 1, 2026 to convert the debentures into equity. The Company has the right to redeem the debentures in whole or in part at any time on or after April 6, 2013. |
| tw telecom inc. | |||||||||||
| Condensed Consolidated Statements of Cash Flows | |||||||||||
| (Dollars in thousands) | |||||||||||
| Unaudited (1) | |||||||||||
| Three Months Ended | |||||||||||
| Sept. 30 | Jun. 30 | Sept. 30 | |||||||||
| 2012 | 2012 | 2011 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net Income | $20,969 | $19,319 | $14,593 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and accretion | 70,726 | 70,469 | 70,940 | ||||||||
| Deferred income taxes | 15,329 | 14,947 | 10,426 | ||||||||
| Stock-based compensation expense | 7,140 | 7,049 | 6,813 | ||||||||
| Amortization of discount on debt and deferred debt costs and other | 6,407 | 6,246 | 5,887 | ||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable, net | (5,806) | (9,487) | (5,981) | ||||||||
| Prepaid expenses and other current and noncurrent assets | 1,226 | (752) | (12,788) | ||||||||
| Accounts payable | 3,172 | (6,367) | (13,961) | ||||||||
| Accrued interest | (6,239) | 6,418 | (6,381) | ||||||||
| Accrued payroll and benefits | 165 | 10,724 | 1,037 | ||||||||
| Deferred revenue, current and noncurrent | (41) | 3,521 | 4,336 | ||||||||
| Other current and noncurrent liabilities | (1,863) | (7,849) | 1,004 | ||||||||
| Net cash provided by operating activities | 111,185 | 114,238 | 75,925 | ||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (83,474) | (80,792) | (84,491) | ||||||||
| Purchase of investments | (19,927) | (79,711) | (97,572) | ||||||||
| Proceeds from sale of investments | 20,828 | 69,579 | 97,562 | ||||||||
| Other investing activities, net | (1,178) | 5,406 | 3,886 | ||||||||
| Net cash used in investing activities | (83,751) | (85,518) | (80,615) | ||||||||
| Cash flows from financing activities: | |||||||||||
| Net proceeds from issuance of common stock upon exercise of | |||||||||||
| stock options and vesting of restricted stock awards and units | 4,307 | 8,393 | 1,525 | ||||||||
| Purchases of treasury stock | – | – | (34,612) | ||||||||
| Excess tax benefits from stock-based compensation | 500 | 268 | – | ||||||||
| Retirement of debt obligation | (101,518) | – | – | ||||||||
| Payment of debt and capital lease obligations | (1,601) | (1,834) | (1,713) | ||||||||
| Net cash (used in) provided by financing activities | (98,312) | 6,827 | (34,800) | ||||||||
| Increase (decrease) in cash and cash equivalents | (70,878) | 35,547 | (39,490) | ||||||||
| Cash and cash equivalents at the beginning of the period | 387,678 | 352,131 | 379,231 | ||||||||
| Cash and cash equivalents at the end of the period | $316,800 | $387,678 | $339,741 | ||||||||
| Supplemental disclosures cash, equivalents and short term investments | |||||||||||
| Cash and cash equivalents at the end of the period | $316,800 | $387,678 | $339,741 | ||||||||
| Short term investments | 142,597 | 144,021 | 129,352 | ||||||||
| Total of cash, equivalents and short term investments | $459,397 | $531,699 | $469,093 | ||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest | $22,009 | $9,489 | $23,079 | ||||||||
| Cash paid for income taxes, net of refunds | $1,508 | $5,082 | $575 | ||||||||
| Addition of capital lease obligation | $426 | – | $1,466 | ||||||||
| Supplemental information to reconcile capital expenditures: | |||||||||||
| Capital expenditures per cash flow statement | $83,474 | $80,792 | $84,491 | ||||||||
| Addition of capital lease obligation | 426 | – | 1,466 | ||||||||
| Total capital expenditures | $83,900 | $80,792 | $85,957 | ||||||||
| (1) For complete financials and related footnotes, please refer to the Company’s SEC filings. | |||||||||||
| tw telecom inc. | |||||||||||||
| Selected Operating Statistics | |||||||||||||
| Unaudited (1) | |||||||||||||
| Three Months Ended | |||||||||||||
| 2011 | 2012 | ||||||||||||
| Mar. 31 | Jun. 30 | Sept. 30 | Dec. 31 | Mar. 31 | Jun. 30 | Sept. 30 | |||||||
| Operating Metrics: | |||||||||||||
| Buildings (2) | 13,742 | 14,311 | 14,872 | 15,438 | 15,905 | 16,367 | 16,919 | ||||||
| Headcount | |||||||||||||
| Total Headcount | 2,985 | 3,071 | 3,065 | 3,051 | 3,059 | 3,089 | 3,087 | ||||||
| Sales Associates | 564 | 553 | 564 | 555 | 551 | 546 | 543 | ||||||
| Customers | |||||||||||||
| Total Customers | 27,234 | 27,322 | 27,376 | 27,509 | 27,495 | 27,569 | 27,699 | ||||||
| (1) For complete financials and related footnotes, please refer to the Company’s SEC filings. | |||||||||||||||||
| (2) Reflects on-net buildings and ILEC Local Serving Offices (LSOs) directly served by the Company’s fiber network. |
SOURCE tw telecom inc.
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