— Delivered strong Enterprise and Total Revenue growth —
— Completed launch of 2010 new product portfolio enhancements —
— Continued to deliver strong Levered Free Cash Flow and Margins —
LITTLETON, Colo. – August 9, 2010 – tw telecom inc. (NASDAQ:TWTC, news, filings), a leading provider of managed voice, Internet and data networking solutions for business customers, today announced its second quarter 2010 financial results, including $316.8 million of revenue, $114.4 million in Modified EBITDA1 (“M-EBITDA”), $15.2 million in levered free cash flow3 and net income of $242.3 million, which included the impact of a non-cash income tax benefit of $227.3 million in the quarter.
“We delivered accelerated revenue growth this quarter, as we achieved strength across many aspects of our business,” said Larissa Herda, tw telecom’s Chairman, CEO and President. “Our performance was balanced and comprehensive with strong margins and solid cash flow. Operationally, we continued to distance ourselves from the competition by investing in unique products and evolving network capabilities, while achieving ongoing scale and efficiency in the business. Collectively, these efforts, and our overall Ethernet and advanced services strategy, put us in a position to capture some of the most exciting demand drivers in the economy.”
Highlights for the Quarter
| • | Grew total revenue 5% year over year and 2% sequentially, reflecting the highest sequential growth in two years |
| • | Grew enterprise revenue 6% year over year and 2% sequentially, reflecting the highest sequential growth in two years |
| • | Grew data and Internet revenue 16% year over year and 4% sequentially |
| • | Grew M-EBITDA 5% year over year |
| • | Achieved a 36.1% M-EBITDA margin |
| • | Delivered $15.2 million of levered free cash flow, representing 5% of revenue |
| • | Recognized a $227.3 million non-cash income tax benefit |
| • | Ended the quarter with $486.9 million in cash, equivalents and short term investments |
1
Business Trends
“We executed well both financially and operationally,” said Mark Peters, tw telecom’s Executive Vice President and Chief Financial Officer. “We achieved strong revenue and margins while launching new product portfolio enhancements to help fuel future growth. Contributing to our revenue results was another quarter of very low churn, and the impact of growing customer installations. Our ‘bookings,4’ or sales, for the first half of this year outpaced the same period last year by nearly 25%, demonstrating the momentum in the business and included some large customer wins. We expect the majority of the revenue associated with these large deals late this year and into the first half of next year.”
Operational Metrics
Revenue churn5 was 1.0% for the current quarter, 0.9% for the prior quarter, and 1.3% for the same quarter last year. As a component of revenue churn, revenue lost from customers fully disconnecting service remained low at 0.2% for both the current quarter and prior quarter and down from 0.4% the same quarter last year, reflecting a strong and stable customer base. While the Company may experience quarterly fluctuations in revenue churn, it believes that its favorable low churn is indicative of its sticky customer base, customer experience strategy and strong product portfolio.
The Company had nearly 27,500 customers as of June 30, 2010. Customer churn5 was 1.1% for both the current and prior quarter and down from 1.4% for the same period last year.
The Company ended the second quarter with approximately 27,500 route miles (including nearly 21,000 metro miles), 10,967 fiber connected on-net6 buildings and 2,901 employees, including 528 sales associates.
Other Trends
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 seasonal nature of sales and installations, usage, disputes, repricing for contract renewals, and fluctuations in revenue churn, expenses and capital expenditures.
Capital Expenditures
Capital expenditures were $85.0 million for the quarter compared to $80.9 million for the prior quarter and $69.2 million for the same period last year. The sequential and year over year increase primarily reflects investing in ongoing success-based opportunities. Additionally, investing in 2010 new product portfolio enhancements contributed to the increased investing year over year and has been substantially completed.
Due to strong customer demand the Company raised its annual capital guidance and expects $300 to $325 million of capital investments for the year. The Company expects both the majority of its annual capital investments as well as its expanded guidance of $25 million, to be tied to new sales opportunities.
Year over Year Results – Second Quarter 2010 compared to Second Quarter 2009
Revenue
Revenue for the quarter was $316.8 million compared to $301.1 million for the second quarter last year, representing a year over year increase of $15.8 million, or 5%. Key changes in revenue included:
| • | $14.0 million increase in revenue from enterprise customers, or 6% year over year, representing 32 consecutive quarters of enterprise growth |
| • | $1.5 million increase in revenue from carriers, primarily from sales to wireless providers, which outpaced churn |
By product line, the percentage change in revenue year over year was as follows:
| • | 16% increase for data and Internet services, primarily due to continued success with Ethernet and IP-based product sales |
| • | 1% increase in voice services, primarily reflecting local product sales and an increase in certain taxes and fees, partially offset by churn |
| • | 4% decrease for network services primarily reflecting growth in high capacity and collocation services, outpaced by churn |
M-EBITDA and Margins
M-EBITDA grew to $114.4 million for the quarter, an increase of 5%, or $5.5 million from the same period last year. The growth in M-EBITDA represents the contribution from revenue growth and network cost efficiencies, partially offset by an increase in employee expenses and field related costs, which included higher lease, maintenance and utility expenses.
Operating costs for the quarter increased year over year, primarily due to increased network access costs associated with higher revenue, increased field related costs, taxes and fees, partially offset by network cost efficiencies. Operating costs as a percent of revenue were 42% for the current period compared to 41% for the same period last year.
Selling, general and administrative costs (“SG&A”) increased year over year, primarily reflecting an increase in employee costs. SG&A costs as a percent of revenue were 24% for the current quarter and 25% for the same period last year.
Modified gross margin7 was 58.5% for the quarter compared to 59.3% for the same period last year, a change of 80 basis points primarily reflecting higher field related costs. M-EBITDA margin for the quarter was 36.1% as compared to 36.2% for the same period last year.
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.
Reversal of Tax Valuation Allowance
The Company had previously established a valuation allowance that reduced most of its deferred tax assets. In the current quarter, the Company reversed the majority of that allowance due to the achievement of cumulative earnings, among other factors, pursuant to accounting guidance, which resulted in a $227.3 million non-cash income tax benefit that substantially increased net income and earnings per share.
Net Income
For the quarter, net income was $242.3 million compared to net income of $5.9 million for the same period last year. The increase in net income reflected the impact of a $227.3 million non-cash income tax benefit as well as strong M-EBITDA growth and a reduction in depreciation.
Sequential Results – Second Quarter 2010 compared to First Quarter 2010
Revenue
Revenue for the quarter was $316.8 million, as compared to $311.2 million for the first quarter of 2010, an increase of $5.6 million, or 2%, the highest sequential growth in eight quarters. Key changes in revenue included:
| • | $4.6 million increase in enterprise revenue, representing 2% sequential growth, the highest growth in eight quarters |
| • | $0.8 million increase in revenue from carrier customers, primarily from sales to wireless providers, which outpaced churn |
By product line, the percentage change in revenue sequentially was as follows:
| • | 4% increase for data and Internet services, primarily due to continued success with Ethernet and IP-based product sales |
| • | Voice services were relatively flat, primarily reflecting local product sales and an increase in certain taxes and fees, offset by churn |
| • | 1% increase in network services, primarily reflecting growth in high capacity and collocation services, which outpaced churn |
M-EBITDA and Margins
M-EBITDA was $114.4 million for the quarter, compared to $114.2 million for the prior quarter. The growth in M-EBITDA represents contribution from revenue growth and network cost efficiencies partially offset by an increase in employee expenses and field related costs, which included higher maintenance and utility expenses.
Operating costs increased primarily reflecting increased access costs associated with the growth in revenue, and higher employee costs, taxes and fees, and field related costs, offset by network cost efficiencies. Operating costs were 42% of revenue for the current quarter and 41% for the prior quarter.
SG&A costs increased primarily reflecting an increase in employee costs including the impact of higher sales commissions and annual merit increases, somewhat offset by lower payroll taxes. SG&A was 24% of revenue for both the current and prior quarter.
Modified gross margin was 58.5% for the quarter compared to 58.8% for the prior quarter, a change of 30 basis points. M-EBITDA margin was 36.1% for the quarter, compared to 36.7% for the prior quarter, a change of 60 basis points. Sequentially, margins were primarily impacted by increased field costs, higher sales commissions, and annual merit increases.
Net Income
For the quarter, the Company reported net income of $242.3 million compared to a net loss of $4.5 million for the prior quarter. The sequential increase in net income reflected the impact of a $227.3 million non-cash income tax benefit, debt extinguishment costs in the prior quarter which did not recur, and lower depreciation.
Summary
“Our operations are in a terrific position to continue to grow revenue, as we focus on our product innovation, network capabilities and an exceptional customer experience,” said Herda.
tw telecom plans to conduct a webcast conference call to discuss its earnings results on August 10, 2010 at 9:00 a.m. MDT (11:00 a.m. EDT). To access the webcast and the financial and other information to be discussed in the webcast, visit www.twtelecom.com under “Investor Relations.”
| Investor Relations: | Media Relations: | |
| Carole Curtin 303 566-1000 | Bob Meldrum 303 566-1354 | |
| carole.curtin@twtelecom.com | bob.meldrum@twtelecom.com | |
| (1) | The Company uses a modified definition of EBITDA to eliminate certain non-cash and non-operating income or charges to earnings to enhance the comparability of its financial performance from period to period. Modified EBITDA (or “M-EBITDA”) is defined as net income or loss before depreciation, amortization, accretion, impairment charges and other gains 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. |
| (2) | The Company defines unlevered free cash flow as Modified EBITDA less capital expenditures. Unlevered free cash flow is reconciled to Net Cash provided by (used in) operating activities in the supplemental information posted on the Company’s website. |
| (3) | The Company defines levered free cash flow as Modified EBITDA less capital expenditures and net interest expense from operations (but excludes debt extinguishment costs, non-cash interest expense and deferred debt costs). Levered free cash flow is reconciled to Net Cash provided by (used in) operating activities in the supplemental information posted on the Company’s website. |
| (4) | Bookings reflect signed customer sales. The timing of when these sales are installed and recognized as revenue varies based on the underlying contract. |
| (5) | The Company defines revenue churn as the lost recurring monthly billing for the quarter from a customer’s partial or complete disconnection of services (excluding repricing impacts and usage) compared to reported revenue for the quarter. Customer churn is defined as the average monthly customer turnover for the quarter compared to the average monthly customer count for the quarter. |
| (6) | Fiber connected buildings on-net represent locations to which the Company’s fiber is directly connected with lit electronics. This does not include buildings which are exclusively Local Serving Office locations or buildings with fiber but no lit electronics. |
| (7) | The Company defines modified gross margin as total revenue less operating costs excluding non-cash stock-based compensation expense. Modified gross margin is reconciled to gross margin in the financial tables. |
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 2010 and beyond, including product plans, growth prospects, market opportunities, bookings, sales momentum, operational improvements, sales and installations timing, revenue growth, churn, business trends and fluctuations, seasonality, 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 2009 Annual Report on Form 10-K and in its quarterly report on Form 10-Q for the quarter ended June 30, 2010. 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., provides managed network services, specializing in converged services, Ethernet and data networking, Internet access, local and long distance voice, VPN, VoIP and network security, to enterprise organizations and communications services companies throughout the U.S. including their global locations. As a leading provider of integrated and converged network solutions, tw telecom delivers customers overall economic value, quality service, and improved business productivity. For more information please visit www.twtelecom.com.
tw telecom inc.
Consolidated Operations Highlights
(Dollars in thousands)
Unaudited (1)
| Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||
| 2010 | 2009 | Growth % | 2010 | 2009 | Growth % | |||||||||||||||||
| Revenue | ||||||||||||||||||||||
| Data and Internet services | $ | 134,152 | $ | 115,829 | 16 | % | $ | 263,273 | $ | 227,871 | 16 | % | ||||||||||
| Network services | 90,000 | 93,297 | -4 | % | 179,548 | 187,163 | -4 | % | ||||||||||||||
| Voice services | 83,963 | 83,538 | 1 | % | 168,035 | 166,615 | 1 | % | ||||||||||||||
| Service Revenue | 308,115 | 292,664 | 5 | % | 610,856 | 581,649 | 5 | % | ||||||||||||||
| Intercarrier compensation | 8,734 | 8,395 | 4 | % | 17,204 | 17,041 | 1 | % | ||||||||||||||
| Total Revenue | 316,849 | 301,059 | 5 | % | 628,060 | 598,690 | 5 | % | ||||||||||||||
| Expenses | ||||||||||||||||||||||
| Operating costs | 132,319 | 123,219 | 261,174 | 246,950 | ||||||||||||||||||
| Gross Margin | 184,530 | 177,840 | 366,886 | 351,740 | ||||||||||||||||||
| Selling, general and administrative costs | 76,810 | 75,504 | 151,912 | 151,324 | ||||||||||||||||||
| Depreciation, amortization, and accretion | 72,031 | 74,406 | 145,418 | 147,597 | ||||||||||||||||||
| Operating Income | 35,689 | 27,930 | 69,556 | 52,819 | ||||||||||||||||||
| Interest expense | (14,392 | ) | (16,235 | ) | (30,298 | ) | (32,916 | ) | ||||||||||||||
| Debt extinguishment costs | — | — | (17,070 | ) | — | |||||||||||||||||
| Non cash interest expense and deferred debt costs | (5,357 | ) | (4,792 | ) | (10,392 | ) | (9,569 | ) | ||||||||||||||
| Interest income | 172 | 81 | 229 | 211 | ||||||||||||||||||
| Income before income taxes | 16,112 | 6,984 | 12,025 | 10,545 | ||||||||||||||||||
| Income tax (benefit) expense (2) | (226,211 | ) | 1,072 | (225,836 | ) | 1,753 | ||||||||||||||||
| Net Income | $ | 242,323 | $ | 5,912 | $ | 237,861 | $ | 8,792 | ||||||||||||||
| SUPPLEMENTAL INFORMATION TO RECONCILE MODIFIED GROSS MARGIN AND MODIFIED EBITDA | ||||||||||||||||||||||
| Gross Margin | $ | 184,530 | $ | 177,840 | $ | 366,886 | $ | 351,740 | ||||||||||||||
| Add back non-cash stock-based compensation expense | 749 | 778 | 1,507 | 1,503 | ||||||||||||||||||
| Modified Gross Margin | 185,279 | 178,618 | 4 | % | 368,393 | 353,243 | 4 | % | ||||||||||||||
| Selling, general and administrative costs | 76,810 | 75,504 | 151,912 | 151,324 | ||||||||||||||||||
| Add back non-cash stock-based compensation expense | 5,980 | 5,809 | 12,199 | 11,446 | ||||||||||||||||||
| Modified EBITDA | 114,449 | 108,923 | 5 | % | 228,680 | 213,365 | 7 | % | ||||||||||||||
| Non-cash stock-based compensation expense | 6,729 | 6,587 | 13,706 | 12,949 | ||||||||||||||||||
| Depreciation, amortization, and accretion | 72,031 | 74,406 | 145,418 | 147,597 | ||||||||||||||||||
| Net Interest expense | 14,220 | 16,154 | 30,069 | 32,705 | ||||||||||||||||||
| Debt extinguishment costs | — | — | 17,070 | — | ||||||||||||||||||
| Non cash interest expense and deferred debt costs | 5,357 | 4,792 | 10,392 | 9,569 | ||||||||||||||||||
| Income tax (benefit) expense | (226,211 | ) | 1,072 | (225,836 | ) | 1,753 | ||||||||||||||||
| Net Income | $ | 242,323 | $ | 5,912 | $ | 237,861 | $ | 8,792 | ||||||||||||||
| Modified Gross Margin % | 58.5 | % | 59.3 | % | 58.7 | % | 59.0 | % | ||||||||||||||
| Modified EBITDA Margin % | 36.1 | % | 36.2 | % | 36.4 | % | 35.6 | % | ||||||||||||||
| Free Cash Flow: | ||||||||||||||||||||||
| Modified EBITDA | $ | 114,449 | $ | 108,923 | 5 | % | $ | 228,680 | $ | 213,365 | 7 | % | ||||||||||
| Less: Capital Expenditures | 84,988 | 69,187 | 23 | % | 165,917 | 142,612 | 16 | % | ||||||||||||||
| Unlevered Free Cash Flow | 29,461 | 39,736 | -26 | % | 62,763 | 70,753 | -11 | % | ||||||||||||||
| Less: Net interest expense | 14,220 | 16,154 | -12 | % | 30,069 | 32,705 | -8 | % | ||||||||||||||
| Levered Free Cash Flow | $ | 15,241 | $ | 23,582 | -35 | % | $ | 32,694 | $ | 38,048 | -14 | % | ||||||||||
| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| (2) | Includes a non-cash income tax benefit of $227.3 million in the three and six months ended June 30, 2010 to recognize the value of tax assets. |
tw telecom inc.
Consolidated Operations Highlights
(Dollars in thousands)
Unaudited (1)
| Three Months Ended | |||||||||||
| June 30, 2010 |
Mar 31, 2010 |
Growth % | |||||||||
| Revenue | |||||||||||
| Data and Internet services | $ | 134,152 | $ | 129,121 | 4 | % | |||||
| Network services | 90,000 | 89,548 | 1 | % | |||||||
| Voice services | 83,963 | 84,072 | 0 | % | |||||||
| Service Revenue | 308,115 | 302,741 | 2 | % | |||||||
| Intercarrier compensation | 8,734 | 8,470 | 3 | % | |||||||
| Total Revenue | 316,849 | 311,211 | 2 | % | |||||||
| Expenses | |||||||||||
| Operating costs | 132,319 | 128,855 | |||||||||
| Gross Margin | 184,530 | 182,356 | |||||||||
| Selling, general and administrative costs | 76,810 | 75,102 | |||||||||
| Depreciation, amortization, and accretion | 72,031 | 73,387 | |||||||||
| Operating Income | 35,689 | 33,867 | |||||||||
| Interest expense | (14,392 | ) | (15,906 | ) | |||||||
| Debt extinguishment costs | — | (17,070 | ) | ||||||||
| Non cash interest expense and deferred debt costs | (5,357 | ) | (5,035 | ) | |||||||
| Interest income | 172 | 57 | |||||||||
| Income (Loss) before income taxes | 16,112 | (4,087 | ) | ||||||||
| Income tax (benefit) expense (2) | (226,211 | ) | 375 | ||||||||
| Net Income (Loss) | $ | 242,323 | ($ | 4,462 | ) | ||||||
| SUPPLEMENTAL INFORMATION TO RECONCILE MODIFIED GROSS MARGIN AND MODIFIED EBITDA | |||||||||||
| Gross Margin | $ | 184,530 | $ | 182,356 | |||||||
| Add back non-cash stock-based compensation expense | 749 | 758 | |||||||||
| Modified Gross Margin | 185,279 | 183,114 | 1 | % | |||||||
| Selling, general and administrative costs | 76,810 | 75,102 | |||||||||
| Add back non-cash stock-based compensation expense | 5,980 | 6,219 | |||||||||
| Modified EBITDA | 114,449 | 114,231 | 0 | % | |||||||
| Non-cash stock-based compensation expense | 6,729 | 6,977 | |||||||||
| Depreciation, amortization, and accretion | 72,031 | 73,387 | |||||||||
| Net Interest expense | 14,220 | 15,849 | |||||||||
| Debt extinguishment costs | — | 17,070 | |||||||||
| Non cash interest expense and deferred debt costs | 5,357 | 5,035 | |||||||||
| Income tax (benefit) expense | (226,211 | ) | 375 | ||||||||
| Net Income | $ | 242,323 | ($ | 4,462 | ) | ||||||
| Modified Gross Margin % | 58.5 | % | 58.8 | % | |||||||
| Modified EBITDA Margin % | 36.1 | % | 36.7 | % | |||||||
| Free Cash Flow | |||||||||||
| Modified EBITDA | $ | 114,449 | $ | 114,231 | 0 | % | |||||
| Less: Capital Expenditures | 84,988 | 80,929 | 5 | % | |||||||
| Unlevered Free Cash Flow | 29,461 | 33,302 | -12 | % | |||||||
| Less: Net interest expense | 14,220 | 15,849 | -10 | % | |||||||
| Levered Free Cash Flow | $ | 15,241 | $ | 17,453 | -13 | % | |||||
| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| (2) | Includes a non-cash income tax benefit of $227.3 million in the three months ended June 30, 2010 to recognize the value of tax assets. |
tw telecom inc.
Highlights of Results Per Share
Unaudited (1) (2)
| Three Months Ended | ||||||||||
| 6/30/10 | 3/31/10 | 6/30/09 | ||||||||
| Weighted Average Shares Outstanding (thousands) | ||||||||||
| Basic | 149,698 | 149,296 | 147,970 | |||||||
| Diluted (2) | 171,884 | 149,296 | 149,557 | |||||||
| Basic Income (Loss) per Common Share | ||||||||||
| Prior to impacts of debt extinguishment & recognition of the value of tax assets | $ | 0.10 | $ | 0.08 | $ | 0.04 | ||||
| Debt Extinguishment costs | — | ($ | 0.11 | ) | — | |||||
| Recognition of the value of tax assets | $ | 1.50 | — | — | ||||||
| Total | $ | 1.60 | ($ | 0.03 | ) | $ | 0.04 | |||
| Diluted Income (Loss) per Common Share | $ | 1.43 | ($ | 0.03 | ) | $ | 0.04 | |||
| As Of | ||||||||||
| 6/30/10 | 3/31/10 | 6/30/09 | ||||||||
| Common shares (thousands) | ||||||||||
| Actual Shares Outstanding | 151,584 | 151,666 | 149,224 | |||||||
| Unvested Restricted Stock Units and Restricted Stock Awards (thousands) | 3,459 | 3,496 | 2,912 | |||||||
| Options (thousands) | ||||||||||
| Options Outstanding | 10,887 | 11,152 | 13,293 | |||||||
| Options Exercisable | 7,331 | 7,518 | 8,291 | |||||||
| Options Exercisable and In-the-Money | 2,605 | 3,658 | 1,808 | |||||||
| (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)
| June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
||||||||||
| ASSETS | ||||||||||||
| Cash, equivalents, and short term investments | $ | 486,922 | $ | 486,469 | $ | 391,801 | ||||||
| Receivables | 88,250 | 85,394 | 86,013 | |||||||||
| Less: allowance | (8,821 | ) | (9,146 | ) | (11,214 | ) | ||||||
| Net receivables | 79,429 | 76,248 | 74,799 | |||||||||
| Other current assets | 104,577 | 42,032 | 23,196 | |||||||||
| Property, plant and equipment | 3,640,018 | 3,559,212 | 3,389,653 | |||||||||
| Less: accumulated depreciation | (2,315,477 | ) | (2,252,570 | ) | (2,084,625 | ) | ||||||
| Net property, plant and equipment | 1,324,541 | 1,306,642 | 1,305,028 | |||||||||
| Other Assets | 655,809 | 491,092 | 513,320 | |||||||||
| Total | $ | 2,651,278 | $ | 2,402,483 | $ | 2,308,144 | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
| Current Liabilities | ||||||||||||
| Accounts payable | $ | 54,556 | $ | 61,506 | $ | 41,997 | ||||||
| Deferred revenue | 35,806 | 34,644 | 32,359 | |||||||||
| Accrued taxes, franchise and other fees | 65,764 | 68,010 | 65,337 | |||||||||
| Accrued interest | 12,377 | 5,949 | 16,577 | |||||||||
| Accrued payroll and benefits | 36,657 | 37,150 | 33,072 | |||||||||
| Accrued carrier costs | 35,834 | 31,917 | 34,321 | |||||||||
| Current portion of debt and lease obligations | 7,290 | 7,147 | 8,114 | |||||||||
| Other current liabilities | 41,029 | 43,815 | 36,935 | |||||||||
| Total current liabilities | 289,313 | 290,138 | 268,712 | |||||||||
| Long-Term Debt and Capital Lease Obligations | ||||||||||||
| 2 3/8 % convertible senior debentures, due 4/1/2026 | 373,744 | 373,744 | 373,750 | |||||||||
| Unamortized Discount | (55,961 | ) | (60,432 | ) | (73,289 | ) | ||||||
| Net | 317,783 | 313,312 | 300,461 | |||||||||
| Floating rate senior secured debt – Term Loan B, due 1/7/2013 | 579,000 | 580,500 | 585,000 | |||||||||
| 9 1/4 % senior unsecured notes, due 2/15/2014 | — | — | 400,257 | |||||||||
| 8% senior unsecured notes, due 2018 | 427,034 | 426,937 | — | |||||||||
| Capital lease obligations | 16,019 | 16,084 | 17,857 | |||||||||
| Less: current portion | (7,290 | ) | (7,147 | ) | (8,114 | ) | ||||||
| Total long-term debt and capital lease obligations | 1,332,546 | 1,329,686 | 1,295,461 | |||||||||
| Long-Term Deferred Revenue | 15,884 | 16,398 | 16,908 | |||||||||
| Other Long-Term Liabilities | 31,050 | 31,067 | 29,514 | |||||||||
| Stockholders’ Equity | 982,485 | 735,194 | 697,549 | |||||||||
| Total | $ | 2,651,278 | $ | 2,402,483 | $ | 2,308,144 | ||||||
| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
tw telecom inc.
Condensed Consolidated Statements of Cash Flows
(Dollars in thousands)
Unaudited (1)
| Three Months Ended | ||||||||||||
| June 30, 2010 |
Mar 31, 2010 |
June 30, 2009 |
||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net Income (loss) | $ | 242,323 | ($ | 4,462 | ) | $ | 5,912 | |||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||
| Depreciation, amortization, and accretion | 72,031 | 73,387 | 74,406 | |||||||||
| Deferred income taxes | (226,297 | ) | — | — | ||||||||
| Stock-based compensation | 6,729 | 6,977 | 6,587 | |||||||||
| Extinguishment costs and amortization of discount on debt and deferred debt costs | 5,358 | 22,146 | 4,944 | |||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Receivables, prepaid expense and other assets | (5,872 | ) | 3,116 | (3,128 | ) | |||||||
| Accounts payable, deferred revenue, and other liabilities | (1,394 | ) | (3,903 | ) | 17,881 | |||||||
| Net cash provided by operating activities | 92,878 | 97,261 | 106,602 | |||||||||
| Cash flows from investing activities: | ||||||||||||
| Capital expenditures | (84,988 | ) | (80,929 | ) | (68,560 | ) | ||||||
| Purchase of investments | (43,390 | ) | (90,025 | ) | — | |||||||
| Proceeds from redemptions of investments | 8,288 | 15,075 | — | |||||||||
| Proceeds from sale of assets and other investing activities | (2,539 | ) | (2,325 | ) | 1,845 | |||||||
| Net cash used in investing activities | (122,629 | ) | (158,204 | ) | (66,715 | ) | ||||||
| Cash flows from financing activities: | ||||||||||||
| Net proceeds (tax withholdings) from issuance of common stock upon exercise of stock options and vesting of restricted stock awards and units | 733 | 167 | 946 | |||||||||
| Purchases of treasury stock | (3,523 | ) | — | — | ||||||||
| Net proceeds from issuance of debt | (52 | ) | 417,477 | — | ||||||||
| Retirement of debt obligations | — | (413,683 | ) | — | ||||||||
| Payment of debt and capital lease obligations | (1,685 | ) | (2,014 | ) | (2,244 | ) | ||||||
| Net cash (used in) provided by financing activities | (4,527 | ) | 1,947 | (1,298 | ) | |||||||
| Increase (decrease) in cash and cash equivalents | (34,278 | ) | (58,996 | ) | 38,589 | |||||||
| Cash and cash equivalents at the beginning of the period | 386,911 | 445,907 | 353,212 | |||||||||
| Cash and cash equivalents at the end of the period | $ | 352,633 | $ | 386,911 | $ | 391,801 | ||||||
| Supplemental disclosures cash, equivalents and short term investments | ||||||||||||
| Cash and cash equivalents at the end of the period | $ | 352,633 | $ | 386,911 | $ | 391,801 | ||||||
| Short term investments | 134,289 | 99,558 | — | |||||||||
| Total of cash, equivalents and short term investments | $ | 486,922 | $ | 486,469 | $ | 391,801 | ||||||
| Supplemental disclosures of cash flow information: | ||||||||||||
| Cash paid for interest | $ | 8,773 | $ | 26,697 | $ | 9,890 | ||||||
| Cash paid for debt extinguishment costs | — | $ | 13,677 | — | ||||||||
| Cash paid for income taxes | $ | 2,955 | $ | 22 | $ | 2,180 | ||||||
| Addition of capital lease obligation | — | — | $ | 627 | ||||||||
| Supplemental information to reconcile capital expenditures: | ||||||||||||
| Capital expenditures per cash flow statement | $ | 84,988 | $ | 80,929 | $ | 68,560 | ||||||
| Addition of capital lease obligation | — | — | 627 | |||||||||
| Total capital expenditures | $ | 84,988 | $ | 80,929 | $ | 69,187 | ||||||
| (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 | ||||||||||||
| 2009 | 2010 | |||||||||||
| Mar. 31 | Jun. 30 | Sept. 30 | Dec. 31 | Mar. 31 | Jun. 30 | |||||||
| Operating Metrics: | ||||||||||||
| Buildings | ||||||||||||
| Fiber connected buildings, on-net | 9,685 | 9,934 | 10,170 | 10,407 | 10,647 | 10,967 | ||||||
| Headcount | ||||||||||||
| Total Headcount | 2,853 | 2,861 | 2,849 | 2,870 | 2,887 | 2,901 | ||||||
| Sales Associates | 486 | 494 | 503 | 522 | 523 | 528 | ||||||
| Customers | ||||||||||||
| Total Customers | 29,256 | 28,676 | 28,347 | 27,989 | 27,685 | 27,460 | ||||||
| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
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