Grew revenue 7.7%, Net Income 35.0% and Modified EBITDA(1) 8.8% year over year
Delivered 36.8% Modified EBITDA margin(1) for the quarter
Launched Enhanced Management & Dynamic Capacity Intelligent Network capabilities
LITTLETON, Colo., Aug. 6, 2012 /PRNewswire/ — tw telecom inc. (NASDAQ:TWTC, news, filings), 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 second quarter 2012 financial results, including $364.5 million of revenue, net income of $19.3 million, $134.0 million of Modified EBITDA (“M-EBITDA”), $114.2 million of net cash provided by operating activities and $37.7 million of levered free cash flow3.
“Our performance this quarter reflects both consistency and innovation,” said Larissa Herda, tw telecom’s Chairman, CEO and President. “We achieved solid comprehensive financial results, including our 31st consecutive quarter of revenue growth, as well as strong margins and cash flow. We also delivered game changing new Intelligent Network services and further advanced new Ethernet capabilities. We’re focused on delivering advanced networking services for customers’ growing complex needs, including enabling cloud applications, to continue our track record of strong revenue growth.”
Highlights for the Second Quarter 2012
- Grew total revenue 1.6% sequentially and 7.7% year over year
- Grew enterprise revenue 2.1% sequentially and 10.9% year over year
- Grew data and Internet revenue 3.2% sequentially and 15.4% year over year
- Data & Internet now represents 50% of revenue, driven primarily by strategic Ethernet and VPN-based product revenue
- Grew pre-tax income 41.1% and net income 35.0% year over year
- Grew M-EBITDA 1.7% sequentially and 8.8% year over year
- Delivered 36.8% M-EBITDA margin
- Grew cash, equivalents and short term investments to $531.7 million
- Delivered $114.2 million in net cash provided by operating activities and $37.7 million of levered free cash flow, representing 10.3% of revenue
Business Trends
“We achieved solid comprehensive financial results as our sales trends strengthened,” said Mark Peters, tw telecom’s Executive Vice President and Chief Financial Officer. “Our bookings7, or sales, gained momentum during the first quarter, which continued into the second quarter as we steadily progressed to achieve our strongest sales quarter on record. This sales momentum contributed to our sequential data and Internet revenue growth, which grew at a higher rate this quarter than last quarter, as we continued to take market share and further expand our existing customers’ services.”
New Products
“We achieved significant progress on our new product capabilities,” said John Blount, tw telecom’s Chief Operating Officer, “including the launch today of our Dynamic Capacity service, which is the second phase of our Intelligent Network capabilities. We also successfully rolled out the first phase of our Intelligent Network capabilities with the launch of our Enhanced Management services at the end of June. Additionally, we continued to further advance our new Ethernet capabilities that will enable national coverage from a single connection point, which we expect to introduce in the fourth quarter. Our new capabilities represent thoughtful and strategic innovation, including unique foundational design and scalability, that we believe will continue to distance us from the competition.”
Operational Metrics
Revenue churn4 was 0.9% both for the current quarter and the same period last year, which decreased from 1.1% for the prior quarter, primarily reflecting churn from one large carrier customer that did not recur. As this large disconnect occurred late in the prior quarter, the majority of the financial impact to revenue was realized in the current quarter, which negatively impacted network services. 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 both the prior quarter and the same quarter last year, indicative of a loyal customer base, strong customer experience strategy and competitive product portfolio.
The Company had approximately 27,600 customers as of June 30, 2012. Customer churn4 was 1.0% for the current quarter that is consistent with both the prior quarter and the same quarter last year. The Company ended the second quarter with over 28,000 fiber route miles (of which approximately 21,000 were metro miles).
Capital Expenditures
Capital expenditures of $80.8 million for the quarter were up slightly compared to the prior quarter of $79.1 million and decreased from $90.9 million for the same period last year, with the majority of the investments in each period related to success-based initiatives.
Year-to-date capital investments of $159.9 million decreased 6.0% for the same period last year and declined to 22.1% of revenue for the first 6 months of this year compared to 25.4% for the same period last year. This reflected an increase in certain success-based investments such as building additions and collocation investments for ongoing customer demand, offset by technology and infrastructure investments in the prior year that did not recur, timing of projects and gains from capital efficiency initiatives.
The Company expects capital investments to grow in the last half of the year over the first six months, and anticipates investments for the full year may be at the lower end of a range of $345 to $355 million, given its capital efficiencies and timing of projects. 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 seasonal nature of sales and installations5, usage, rate changes, disputes, repricing for contract renewals and fluctuations in revenue churn, expenses, capital expenditures and taxes and fees.
As part of taxes and fees, the Company expects a third quarter rate decrease that will negatively impact its revenue growth rate for voice services.
Intercarrier compensation revenue represented 2% of total revenue for the second quarter. Due to a November 2011 FCC order, the Company expects about half of this revenue will be eliminated over a six-year period ending July 2018, with approximately $2 million of this reduction occurring in the last half of 2012.
Year over Year Results – Second Quarter 2012 compared to Second Quarter 2011
Revenue
Revenue for the quarter was $364.5 million compared to $338.4 million for the second quarter last year, representing a year over year increase of $26.1 million, or 7.7%. Revenue grew primarily due to ongoing strong enterprise revenue growth. Key changes in revenue included:
- $28.2 million increase in revenue from enterprise customers, or 10.9% year over year, driven primarily by data and Internet services and an increase in certain taxes and fees
- $2.4 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:
- 15.4% 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. Data and Internet revenue represents 50% of total revenue for the quarter compared to 47% a year ago
- 8.8% 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
- 6.6% decrease in network services, primarily reflecting churn and repricing for contract renewals largely in transport services, which outpaced growth in high capacity and colocation services
Operating Costs
Operating costs for the quarter grew year over year, primarily as a result of revenue growth, and included increases in network access costs and certain taxes and fees. Operating costs as a percentage of revenue were 42.0% for the quarter and 41.7% for the same period last year. Modified gross margin6 as a percentage of revenue was 58.2% in the current quarter compared to 58.4% in 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, 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 reflecting an increase in employee-related costs, property taxes and regulatory fees, partially offset by a decrease in bad debt expense. SG&A costs as a percentage of revenue decreased to 23.2% for the quarter from 23.9% for the same period last year.
Net Income
Net income grew 35.0% to $19.3 million for the quarter from $14.3 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 $0.13 for the quarter compared to $0.09 in the same period last year.
M-EBITDA and Margins
M-EBITDA grew to $134.0 million for the quarter, an increase of 8.8%, from the same period last year. M-EBITDA margin for the quarter was 36.8% as compared to 36.4% for the same period last year.
Sequential Results – Second Quarter 2012 compared to First Quarter 2012
Revenue
Revenue for the quarter was $364.5 million, as compared to $358.9 million for the first quarter of 2012, an increase of $5.6 million, or 1.6%, representing the 31st consecutive quarter of sequential growth. Revenue grew due to ongoing strong enterprise growth. Key changes in revenue included:
- $6.0 million increase in enterprise revenue, representing 2.1% sequential growth driven primarily by data and Internet services
- $0.8 million decrease in revenue from carrier customers, primarily reflecting churn and repricing for contract renewals largely in network services, 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:
- 3.2% 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
- 1.5% increase in voice services, primarily reflecting an increase in sales of converged solutions and certain taxes and fees resulting from revenue growth, partially offset by churn
- 2.1% decrease in network services, primarily reflecting the full quarter impact of one large carrier customer disconnecting two high capacity circuits toward the end of the prior quarter, as well as repricing for contract renewals largely in transport services
Operating Costs
Operating costs increased primarily as a result of revenue growth and included increased network access costs, seasonally higher maintenance and utility costs and annual merit increases. Operating costs were 42.0% of revenue for the quarter and 41.6% for the prior quarter. Modified gross margin for the quarter as a percentage of revenue was 58.2% compared to 58.6% in the prior quarter.
Selling, General and Administrative Costs
SG&A costs decreased reflecting a reduction in bad debt expense, lower payroll taxes and stock-based compensation expense, partially offset by annual merit increases and higher sales commissions and other employee-related costs. SG&A was 23.2% of revenue for the quarter and 24.0% for the prior quarter.
Net Income
Net income was flat from the prior quarter at $19.3 million, primarily reflecting M-EBITDA growth which was offset by an increase in depreciation expense due to a gain on disposal of assets in the prior quarter that did not recur. Earnings per share was $0.13 for both the current and the prior quarter.
M-EBITDA and Margins
M-EBITDA was $134.0 million for the quarter, an increase of 1.7% from the prior quarter. M-EBITDA margin was 36.8% for the quarter compared to 36.7% for the prior quarter.
tw telecom plans to conduct a webcast conference call to discuss its earnings results on August 7, 2012 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.”
(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 momentum, 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 June 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., provides managed network services, specializing in converged services, Ethernet and data networking, Internet access, 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 | Six Months Ended | |||||||||||||
| June 30, | June 30, | |||||||||||||
| 2012 | 2011 | Growth % | 2012 | 2011 | Growth % | |||||||||
| Revenue | ||||||||||||||
| Data and Internet services | $182,480 | $158,168 | 15.4% | $359,331 | $310,355 | 15.8% | ||||||||
| Voice services | 91,008 | 83,636 | 8.8% | 180,629 | 166,660 | 8.4% | ||||||||
| Network services | 83,009 | 88,898 | -6.6% | 167,813 | 178,409 | -5.9% | ||||||||
| Service Revenue | 356,497 | 330,702 | 7.8% | 707,773 | 655,424 | 8.0% | ||||||||
| Intercarrier compensation | 8,006 | 7,684 | 4.2% | 15,655 | 15,504 | 1.0% | ||||||||
| Total Revenue | 364,503 | 338,386 | 7.7% | 723,428 | 670,928 | 7.8% | ||||||||
| Expenses | ||||||||||||||
| Operating costs | 152,986 | 141,251 | 302,179 | 280,980 | ||||||||||
| Gross Margin | 211,517 | 197,135 | 421,249 | 389,948 | ||||||||||
| Selling, general and administrative costs | 84,580 | 80,784 | 170,670 | 159,599 | ||||||||||
| Depreciation, amortization and accretion | 70,469 | 70,081 | 138,863 | 139,817 | ||||||||||
| Operating Income | 56,468 | 46,270 | 22.0% | 111,716 | 90,532 | 23.4% | ||||||||
| Interest expense | (15,612) | (16,030) | (31,056) | (32,290) | ||||||||||
| Non-cash interest expense and deferred debt costs | (6,248) | (5,815) | (12,385) | (11,527) | ||||||||||
| Interest income | 93 | 174 | 197 | 317 | ||||||||||
| Income before income taxes | 34,701 | 24,599 | 41.1% | 68,472 | 47,032 | 45.6% | ||||||||
| Income tax expense | 15,382 | 10,292 | 29,821 | 20,106 | ||||||||||
| Net Income | $19,319 | $14,307 | 35.0% | $38,651 | $26,926 | 43.5% | ||||||||
| SUPPLEMENTAL INFORMATION TO RECONCILE MODIFIED GROSS MARGIN AND MODIFIED EBITDA | ||||||||||||||
| Gross Margin | $211,517 | $197,135 | $421,249 | $389,948 | ||||||||||
| Add back non-cash stock-based compensation expense | 455 | 584 | 955 | 1,172 | ||||||||||
| Modified Gross Margin | 211,972 | 197,719 | 7.2% | 422,204 | 391,120 | 7.9% | ||||||||
| Selling, general and administrative costs | 84,580 | 80,784 | 170,670 | 159,599 | ||||||||||
| Add back non-cash stock-based compensation expense | 6,594 | 6,249 | 14,222 | 13,109 | ||||||||||
| Modified EBITDA | 133,986 | 123,184 | 8.8% | 265,756 | 244,630 | 8.6% | ||||||||
| Non-cash stock-based compensation expense | 7,049 | 6,833 | 15,177 | 14,281 | ||||||||||
| Depreciation, amortization and accretion | 70,469 | 70,081 | 138,863 | 139,817 | ||||||||||
| Net Interest expense | 15,519 | 15,856 | 30,859 | 31,973 | ||||||||||
| Non-cash interest expense and deferred debt costs | 6,248 | 5,815 | 12,385 | 11,527 | ||||||||||
| Income tax expense | 15,382 | 10,292 | 29,821 | 20,106 | ||||||||||
| Net Income | $19,319 | $14,307 | $38,651 | $26,926 | ||||||||||
| Modified Gross Margin % | 58.2% | 58.4% | 58.4% | 58.3% | ||||||||||
| Modified EBITDA Margin % | 36.8% | 36.4% | 36.7% | 36.5% | ||||||||||
| Free Cash Flow: | ||||||||||||||
| Modified EBITDA | $133,986 | $123,184 | 8.8% | $265,756 | $244,630 | 8.6% | ||||||||
| Less: Capital Expenditures | 80,792 | 90,861 | -11.1% | 159,901 | 170,137 | -6.0% | ||||||||
| Unlevered Free Cash Flow | 53,194 | 32,323 | 64.6% | 105,855 | 74,493 | 42.1% | ||||||||
| Less: Net interest expense | 15,519 | 15,856 | -2.1% | 30,859 | 31,973 | -3.5% | ||||||||
| Levered Free Cash Flow | $37,675 | $16,467 | 128.8% | $74,996 | $42,520 | 76.4% | ||||||||
| (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 | |||||||||
| June 30, | Mar 31, | ||||||||
| 2012 | 2012 | Growth % | |||||||
| Revenue | |||||||||
| Data and Internet services | $182,480 | $176,851 | 3.2% | ||||||
| Voice services | 91,008 | 89,621 | 1.5% | ||||||
| Network services | 83,009 | 84,804 | -2.1% | ||||||
| Service Revenue | 356,497 | 351,276 | 1.5% | ||||||
| Intercarrier compensation | 8,006 | 7,649 | 4.7% | ||||||
| Total Revenue | 364,503 | 358,925 | 1.6% | ||||||
| Expenses | |||||||||
| Operating costs | 152,986 | 149,193 | |||||||
| Gross Margin | 211,517 | 209,732 | |||||||
| Selling, general and administrative costs | 84,580 | 86,090 | |||||||
| Depreciation, amortization and accretion | 70,469 | 68,394 | |||||||
| Operating Income | 56,468 | 55,248 | 2.2% | ||||||
| Interest expense | (15,612) | (15,444) | |||||||
| Non-cash interest expense and deferred debt costs | (6,248) | (6,137) | |||||||
| Interest income | 93 | 104 | |||||||
| Income before income taxes | 34,701 | 33,771 | 2.8% | ||||||
| Income tax expense | 15,382 | 14,439 | |||||||
| Net Income | $19,319 | $19,332 | -0.1% | ||||||
| SUPPLEMENTAL INFORMATION TO RECONCILE MODIFIED GROSS MARGIN AND MODIFIED EBITDA | |||||||||
| Gross Margin | $211,517 | $209,732 | |||||||
| Add back non-cash stock-based compensation expense | 455 | 500 | |||||||
| Modified Gross Margin | 211,972 | 210,232 | 0.8% | ||||||
| Selling, general and administrative costs | 84,580 | 86,090 | |||||||
| Add back non-cash stock-based compensation expense | 6,594 | 7,628 | |||||||
| Modified EBITDA | 133,986 | 131,770 | 1.7% | ||||||
| Non-cash stock-based compensation expense | 7,049 | 8,128 | |||||||
| Depreciation, amortization and accretion | 70,469 | 68,394 | |||||||
| Net Interest expense | 15,519 | 15,340 | |||||||
| Non-cash interest expense and deferred debt costs | 6,248 | 6,137 | |||||||
| Income tax expense | 15,382 | 14,439 | |||||||
| Net Income | $19,319 | $19,332 | |||||||
| Modified Gross Margin % | 58.2% | 58.6% | |||||||
| Modified EBITDA Margin % | 36.8% | 36.7% | |||||||
| Free Cash Flow | |||||||||
| Modified EBITDA | $133,986 | $131,770 | 1.7% | ||||||
| Less: Capital Expenditures | 80,792 | 79,109 | 2.1% | ||||||
| Unlevered Free Cash Flow | 53,194 | 52,661 | 1.0% | ||||||
| Less: Net interest expense | 15,519 | 15,340 | 1.2% | ||||||
| Levered Free Cash Flow | $37,675 | $37,321 | 0.9% | ||||||
| (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 | |||||||||||
| Jun. 30 | Mar. 31 | Jun. 30 | |||||||||
| 2012 | 2012 | 2011 | |||||||||
| Weighted Average Shares Outstanding (thousands) | |||||||||||
| Basic | 147,497 | 146,967 | 147,939 | ||||||||
| Diluted (2) | 149,532 | 149,090 | 150,395 | ||||||||
| Basic & Diluted Income per Common Share | $0.13 | $0.13 | $0.09 | ||||||||
| As of | |||||||||||
| Jun. 30 | Mar. 31 | Jun. 30 | |||||||||
| 2012 | 2012 | 2011 | |||||||||
| Common shares (thousands) | |||||||||||
| Actual Shares Outstanding | 150,966 | 150,374 | 150,930 | ||||||||
| Unvested Restricted Stock Units | |||||||||||
| and Restricted Stock Awards (thousands) | 4,573 | 4,596 | 4,308 | ||||||||
| Options (thousands) | |||||||||||
| Options Outstanding | 5,375 | 5,977 | 7,626 | ||||||||
| Options Exercisable | 4,674 | 5,268 | 5,716 | ||||||||
| Options Exercisable and In-the-Money | 4,674 | 4,564 | 4,365 | ||||||||
| (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) | ||||||||||
| Jun. 30 | Mar. 31 | Jun. 30 | ||||||||
| 2012 | 2012 | 2011 | ||||||||
| ASSETS | ||||||||||
| Cash, equivalents, and short term investments | $531,699 | $486,667 | $509,261 | |||||||
| Receivables | 108,429 | 100,070 | 94,175 | |||||||
| Less: allowance | (7,521) | (8,649) | (7,902) | |||||||
| Net receivables | 100,908 | 91,421 | 86,273 | |||||||
| Prepaid expenses and other current assets | 19,929 | 18,334 | 19,432 | |||||||
| Deferred income taxes | 65,008 | 65,008 | 40,428 | |||||||
| Total other current assets | 84,937 | 83,342 | 59,860 | |||||||
| Property, plant and equipment | 4,116,329 | 4,080,835 | 3,877,286 | |||||||
| Less: accumulated depreciation | (2,662,794) | (2,641,851) | (2,481,951) | |||||||
| Net property, plant and equipment | 1,453,535 | 1,438,984 | 1,395,335 | |||||||
| Deferred income taxes | 136,988 | 148,432 | 205,165 | |||||||
| Goodwill | 412,694 | 412,694 | 412,694 | |||||||
| Intangible assets, net of accumulated amortization | 14,928 | 16,335 | 21,093 | |||||||
| Other assets, net of accumulated amortization | 22,862 | 23,875 | 16,127 | |||||||
| Total other non-current assets | 587,472 | 601,336 | 655,079 | |||||||
| Total | $2,758,551 | $2,701,750 | $2,705,808 | |||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable | $57,433 | $56,142 | $72,377 | |||||||
| Deferred revenue | 43,856 | 42,923 | 41,311 | |||||||
| Accrued taxes, franchise and other fees | 65,274 | 65,840 | 68,828 | |||||||
| Accrued interest | 13,914 | 7,488 | 13,913 | |||||||
| Accrued payroll and benefits | 40,730 | 29,969 | 38,818 | |||||||
| Accrued carrier costs | 24,022 | 25,154 | 26,751 | |||||||
| Current portion debt & lease obligations | 465,398 | 108,482 | 7,140 | |||||||
| Other current liabilities | 29,110 | 31,132 | 39,469 | |||||||
| Total current liabilities | 739,737 | 367,130 | 308,607 | |||||||
| Long-Term Debt and Capital Lease Obligations | ||||||||||
| 2 3/8% convertible senior debentures, due 4/1/2026 (2) | 373,744 | 373,744 | 373,744 | |||||||
| Unamortized Discount | (16,577) | (21,872) | (37,102) | |||||||
| Net | 357,167 | 351,872 | 336,642 | |||||||
| Floating rate senior secured debt – Term Loan B, due 1/7/2013 | 101,518 | 101,787 | 102,593 | |||||||
| Floating rate senior secured debt – Term Loan B, due 12/30/2016 | 465,482 | 466,713 | 470,407 | |||||||
| 8% senior unsecured notes, due 3/1/2018, net of unamortized discount | 427,808 | 427,711 | 427,420 | |||||||
| Capital lease obligations | 17,837 | 18,178 | 15,268 | |||||||
| Less: current portion | (465,398) | (108,482) | (7,140) | |||||||
| Total long-term debt and capital lease obligations | 904,414 | 1,257,779 | 1,345,190 | |||||||
| Long-Term Deferred Revenue | 24,629 | 22,041 | 18,407 | |||||||
| Other Long-Term Liabilities | 36,046 | 35,784 | 32,568 | |||||||
| Stockholders’ Equity | 1,053,725 | 1,019,016 | 1,001,036 | |||||||
| Total | $2,758,551 | $2,701,750 | $2,705,808 | |||||||
| (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 | |||||||||||
| Jun. 30 | Mar. 31 | Jun. 30 | |||||||||
| 2012 | 2012 | 2011 | |||||||||
| Cash flows from operating activities: | |||||||||||
| Net Income | $19,319 | $19,332 | $14,307 | ||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation, amortization and accretion | 70,469 | 68,394 | 70,081 | ||||||||
| Deferred income taxes | 14,947 | 14,030 | 9,871 | ||||||||
| Stock-based compensation expense | 7,049 | 8,128 | 6,833 | ||||||||
| Amortization of discount on debt and deferred debt costs and other | 6,246 | 6,121 | 5,792 | ||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable, net | (9,487) | 4,761 | (4,454) | ||||||||
| Prepaid expenses and other current and noncurrent assets | (752) | (173) | 744 | ||||||||
| Accounts payable | (6,367) | 4,020 | (1,303) | ||||||||
| Accrued interest | 6,418 | (6,466) | 6,510 | ||||||||
| Accrued payroll and benefits | 10,724 | (14,334) | 1,716 | ||||||||
| Deferred revenue, current and noncurrent | 3,521 | 415 | 6,380 | ||||||||
| Other current and noncurrent liabilities | (7,849) | (9,867) | 331 | ||||||||
| Net cash provided by operating activities | 114,238 | 94,361 | 116,808 | ||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (80,792) | (76,783) | (90,327) | ||||||||
| Purchase of investments | (79,711) | (40,102) | (55,004) | ||||||||
| Proceeds from sale of investments | 69,579 | 36,474 | 41,877 | ||||||||
| Other investing activities, net | 5,406 | 301 | 1,581 | ||||||||
| Net cash used in investing activities | (85,518) | (80,110) | (101,873) | ||||||||
| 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 | 8,393 | (2,565) | 10,246 | ||||||||
| Purchases of treasury stock | – | (11,519) | (6,529) | ||||||||
| Excess tax benefits from stock-based compensation | 268 | 448 | – | ||||||||
| Payment of debt and capital lease obligations | (1,834) | (1,878) | (1,636) | ||||||||
| Net cash provided by (used in) financing activities | 6,827 | (15,514) | 2,081 | ||||||||
| Increase (decrease) in cash and cash equivalents | 35,547 | (1,263) | 17,016 | ||||||||
| Cash and cash equivalents at the beginning of the period | 352,131 | 353,394 | 362,215 | ||||||||
| Cash and cash equivalents at the end of the period | $387,678 | $352,131 | $379,231 | ||||||||
| Supplemental disclosures cash, equivalents and short term investments | |||||||||||
| Cash and cash equivalents at the end of the period | $387,678 | $352,131 | $379,231 | ||||||||
| Short term investments | 144,021 | 134,536 | 130,030 | ||||||||
| Total of cash, equivalents and short term investments | $531,699 | $486,667 | $509,261 | ||||||||
| Supplemental disclosures of cash flow information: | |||||||||||
| Cash paid for interest | $9,489 | $22,361 | $10,172 | ||||||||
| Cash paid for income taxes, net of refunds | $5,082 | ($24) | $2,469 | ||||||||
| Addition of capital lease obligation | – | $2,326 | $534 | ||||||||
| Supplemental information to reconcile capital expenditures: | |||||||||||
| Capital expenditures per cash flow statement | $80,792 | $76,783 | $90,327 | ||||||||
| Addition of capital lease obligation | – | 2,326 | 534 | ||||||||
| Total capital expenditures | $80,792 | $79,109 | $90,861 | ||||||||
| (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 | |||||||||||
| Operating Metrics: | ||||||||||||||||
| Buildings (2) | 13,742 | 14,311 | 14,872 | 15,438 | 15,905 | 16,367 | ||||||||||
| Headcount | ||||||||||||||||
| Total Headcount | 2,985 | 3,071 | 3,065 | 3,051 | 3,059 | 3,089 | ||||||||||
| Sales Associates | 564 | 553 | 564 | 555 | 551 | 546 | ||||||||||
| Customers | ||||||||||||||||
| Total Customers | 27,234 | 27,322 | 27,376 | 27,509 | 27,495 | 27,569 | ||||||||||
| (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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