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tw telecom Reports Fourth Quarter and Full Year 2012 Results

For 2012 grew revenue 7.6%, Net Income 32.8% and Modified EBITDA1 8.6% compared to 2011 and achieved 36.8% Modified EBITDA margin1 for the year

LITTLETON, Colo., Feb. 11, 2013 /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 fourth quarter 2012 financial results, including $377.9 million of revenue, $17.3 million of net income, $138.3 million of Modified EBITDA ("M-EBITDA"), $143.9 million of net cash provided by operating activities and $17.5 million of levered free cash flow3.  For the year, the Company reported $1.47 billion in revenue, $76.9 million of net income, $540.6 million of M-EBITDA, $463.7 million of net cash provided by operating activities and $129.7 million of levered free cash flow.

(Logo: http://photos.prnewswire.com/prnh/20080626/LATH527LOGO)

"In 2012, we achieved strong comprehensive financial results while rapidly deploying industry-leading Intelligent Network and advanced Ethernet capabilities," said Larissa Herda, tw telecom's Chairman, CEO and President. "In 2013, we're further advancing our long-term strategic vision which includes providing customers with unprecedented control and visibility of their network that we believe will accelerate the momentum in our business.  We're implementing several growth initiatives including investing in new technologies to drive ongoing innovative capabilities, expanding our sales resources for greater distribution and further automating network functionality for more dynamic customer connectivity.  These initiatives are all focused on further driving our revenue growth."

Highlights for the Year – 2012 compared to 2011

  • Grew total revenue 7.6% year over year compared to 7.4% for 2011
  • Grew enterprise revenue 10.5% year over year compared to 9.4% for 2011
  • Grew data and Internet revenue 15.4% year over year compared to 18.2% for 2011, driven primarily by a 22.4% increase in strategic Ethernet and VPN-based product revenue
  • Grew Net Income 32.8% to $76.9 million in 2012 vs. $57.9 million in 2011, and grew basic earnings per share to $0.51 in 2012 from $0.39 in 2011
  • Grew M-EBITDA 8.6% to $540.6 million representing a 36.8% M-EBITDA margin for 2012 compared to 36.4% in 2011
  • Delivered $129.7 million of levered free cash flow, or 8.8% of revenue in 2012 compared to 6.7% in 2011

Business Trends

"In 2012, we achieved substantial expansion of our cash flow and net income, and strong revenue and M-EBITDA growth coupled with efficient capital investment," said Mark Peters, tw telecom's Executive Vice President and Chief Financial Officer.  "Our bookings7, or sales, for the quarter grew over both the prior quarter and the same period last year.  Sales also grew for the full year over the prior year, although at a lower pace than our 2012 total revenue growth rate.  Our focus going into 2013 is to make investments designed to increase our sales growth rate over time," said Peters.  

"Consistent with our comments last quarter, we began increasing the number of sales employees in the quarter to capture growing market demand and greater share.  A component of our growth initiatives in 2013 is to further expand our direct and indirect sales force and support resources, which naturally will dampen our M-EBITDA in the near-term as we position ourselves for these growing opportunities."

Product Innovation and Differentiation

"Our plans for 2013 include further differentiation of our product portfolio," said John Blount, tw telecom's Chief Operating Officer.  "After successfully launching two phases of our Intelligent Network in 2012, we started 2013 with the launch of a unique new Intelligent Network feature.  This feature provides proactive notification of network information based on parameters set by customers, which enables greater flexibility and unprecedented visibility to manage their networks.  For 2013 we expect to add additional industry-leading capabilities that will allow us to continue to better serve customers and help win market share."

Operational Metrics

Revenue churn4 was 0.9% for the current quarter, up from 0.8% in both the prior quarter and the same period last year.  Full year 2012 revenue churn was 0.9%, consistent with 2011.  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 and indicative of a loyal customer base, strong customer experience strategy and competitive product portfolio.

The Company had nearly 28,000 customers as of December 31, 2012.  Customer churn4 was 0.9% for both the current quarter and prior quarter, down from 1.0% in the same quarter last year.  The Company ended the year with approximately 29,000 fiber route miles (of which over 22,000 were metro miles).  

The Company also ended the year with 17,948 buildings directly served by its fiber network, reflecting an increase of 497 from ongoing success-based investments as well as an increase of 532 previously connected buildings that were identified during an alignment of key operating systems in 2012.

Capital Investments

Capital investments were $99.6 million for the quarter as compared to the prior quarter of $83.9 million and for the same period last year of $86.6 million.  The increase in the fourth quarter over the other two periods primarily reflects timing of projects, including capacity-driven IP Backbone network upgrades to support data product demand, strategic fiber purchases to extend the Company's network reach and technology investments to enable future capabilities. 

For the year, the Company invested $343.4 million in 2012 compared to $342.7 million in 2011, or 23.4% and 25.1% of revenue for each period respectively, with success-based initiatives reflecting the majority of these investments.  The Company expects capital investments for 2013 to be approximately $360 to $370 million with the majority tied to new sales opportunities.

Trends and 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, settlements, repricing for contract renewals and fluctuations in revenue churn, expenses, capital expenditures and taxes and fees. 

The Company expects low first quarter sequential revenue growth due to a $2.2 million fourth quarter customer revenue settlement that will not recur, the negative impact of a first quarter rate decrease for certain taxes and fees billed to customers, and the timing of installations, seasonality, and other items referenced above.  The Company also expects M-EBITDA margin to temporarily decline due to the anticipated lower revenue growth rate combined with the impact from its growth initiatives and seasonal cost increases, which includes an estimated $4.0 million sequential cost increase due primarily to the annual resetting of payroll taxes. 

Intercarrier compensation revenue represented 2% of total revenue in 2012.  Under a November 2011 FCC Order, intercarrier compensation rates are declining over a six-year period that began in July 2012, with the next rate step down to occur in the third quarter of 2013.

On October 2, 2012, the Company completed a private offering of $480 million of 5.375% Senior Notes due 2022, priced at par.  The Company may use the net proceeds to settle any Convertible Debentures obligation or for general corporate purposes.

Year over Year Results – Fourth Quarter 2012 compared to Fourth Quarter 2011

Revenue for the quarter was $377.9 million compared to $351.5 million for the fourth quarter last year, representing a year over year increase of $26.4 million or 7.5%.  Revenue grew primarily due to ongoing enterprise revenue growth.  Key changes in revenue included:

  • $28.4 million increase in revenue from enterprise customers, or 10.4% year over year, driven primarily by data and Internet services
  • $1.3 million decrease in revenue from carriers, primarily due to churn and repricing for contract renewals, partially offset by growth in Ethernet services

By product line, the percentage change in revenue year over year was as follows:

  • 15.2% 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 52% of total revenue for the quarter compared to 49% a year ago
  • 6.1% increase in voice services, primarily reflecting sales of converged and other voice solutions, and an increase in certain taxes and fees, partially offset by churn
  • 5.2% decrease in network services, primarily reflecting churn and repricing for contract renewals largely in transport services which outpaced growth in 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 higher employee-related costs.  Operating costs as a percentage of revenue were 42.1% for the quarter compared to 41.6% for the same period last year.  Modified gross margin6 as a percentage of revenue was 58.0% in the current quarter compared to 58.5% in the same period last year due to an increase in operating costs discussed above as well as the dilutive impact of growth in certain taxes and fees.

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 and regulatory costs, somewhat offset by a reduction in bad debt expense.  SG&A costs as a percentage of revenue decreased to 23.1% for the quarter from 23.9% for the same period last year.  This primarily reflects lower employee costs and bad debt expense, which declined as a percentage of revenue year over year.

Net Income

Net income was $17.3 million for the quarter compared to $16.4 million from the same period last year, reflecting M-EBITDA growth, offset by an increase in interest expense related to the October financing, and higher depreciation expense.  The Company delivered basic earnings per share of $0.11 for both the current quarter and the same period last year.

M-EBITDA and Margins 

M-EBITDA grew to $138.3 million for the quarter, an increase of 8.0% from the same period last year primarily as a result of revenue growth.  M-EBITDA margin for the quarter was 36.6% as compared to 36.4% for the same period last year, as employee costs and bad debt expense 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 – Fourth Quarter 2012 compared to Third Quarter 2012

Revenue for the quarter was $377.9 million, as compared to $368.9 million for the third quarter of 2012, an increase of $9.0 million, or 2.4%, representing the 33rd consecutive quarter of sequential growth.   Revenue grew due to ongoing enterprise growth.  Key changes in revenue included:

  • $9.0 million increase in enterprise revenue, representing 3.1% sequential growth driven primarily by data and Internet services, a $2.2 million customer settlement and an increase in certain taxes and fees
  • $0.4 million increase in revenue from carrier customers, primarily reflecting growth in Ethernet services, offset by churn and repricing for contract renewals

By product line, the percentage change in revenue sequentially was as follows:

  • 4.6% increase for data and Internet services, primarily driven by an increase in strategic Ethernet and VPN-based product sales and other services, a $2.2 million customer settlement, partially offset by churn and repricing
  • 1.1% increase in voice services, primarily reflecting an increase in sales of converged solutions and an increase in certain taxes and fees, offset by churn and a reduction in usage
  • Network services were largely unchanged, primarily reflecting churn and repricing for contract renewals mostly in transport services, which outpaced growth in colocation services and an increase in settlements

Operating Costs

Operating costs increased primarily as a result of revenue growth and included higher network access costs and an increase in certain taxes and fees as well as increased employee-related costs, somewhat offset by seasonally lower utility costs.  Operating costs were 42.1% of revenue for the quarter and 42.3% for the prior quarter.  Modified gross margin for the quarter as a percentage of revenue was 58.0% compared to 57.8% in the prior quarter.

Selling, General and Administrative Costs

SG&A costs increased primarily reflecting an increase in employee-related costs, including commissions and benefits expense, partially offset by a decrease in bad debt expense.  SG&A was 23.1% of revenue for the quarter and 22.6% for the prior quarter.  

Net Income

Net income was $17.3 million for the quarter, down from $21.0 million in the prior quarter, primarily reflecting an increase in interest expense related to the October financing, and higher depreciation expense primarily resulting from new asset additions, partially offset by a decrease in income tax expense and M-EBITDA growth.  The Company delivered basic earnings per share of $0.11 for the quarter compared to $0.14 in the prior quarter.

M-EBITDA and Margins 

M-EBITDA was $138.3 million for the quarter, an increase of 1.3% from the prior quarter primarily as a result of revenue growth.   M-EBITDA margin was 36.6% for the quarter compared to 37.0% for the prior quarter, reflecting an increase primarily in commissions and other benefits expense as well as the dilutive impact of certain taxes and fees.

tw telecom plans to conduct a webcast conference call to discuss its earnings results on February 12, 2013 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 2013 and beyond, including statements regarding product and platform plans, growth prospects, market opportunities, sales growth, cash flow, growth initiatives, 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 subsequent 2012 Annual Report on Form 10-K and quarterly reports on Form 10-Q.  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




Twelve Months Ended






Dec 31,




Dec 31,






2012

2011


Growth %




2012

2011


Growth %

















Revenue














Data and Internet services 


$197,802

$171,657


15.2%




$746,297

$646,682


15.4%


Voice services 


92,062

86,775


6.1%




363,743

338,655


7.4%


Network services


81,014

85,422


-5.2%




330,088

350,709


-5.9%



Service Revenue


370,878

343,854


7.9%




1,440,128

1,336,046


7.8%


Intercarrier compensation 


7,015

7,653


-8.3%




30,127

30,845


-2.3%




Total Revenue


377,893

351,507


7.5%




1,470,255

1,366,891


7.6%

















Expenses














Operating costs 


159,179

146,320






617,553

571,461






Gross Margin


218,714

205,187






852,702

795,430




Selling, general and administrative costs 


87,412

83,854






341,423

325,538




Depreciation, amortization and accretion


74,703

72,572






284,292

283,329






Operating Income 


56,599

48,761


16.1%




226,987

186,563


21.7%


Interest expense 


(21,720)

(15,944)






(68,271)

(64,246)




Debt extinguishment costs


-

-






(77)

-




Non-cash interest expense and deferred debt costs 


(6,771)

(6,027)






(25,486)

(23,472)




Interest income


512

102






793

545






Income before income taxes


28,620

26,892


6.4%




133,946

99,390


34.8%


Income tax expense


11,352

10,500






57,058

41,479






Net Income


$17,268

$16,392


5.3%




$76,888

$57,911


32.8%

































SUPPLEMENTAL INFORMATION TO RECONCILE MODIFIED GROSS MARGIN AND MODIFIED EBITDA




















Gross Margin


$218,714

$205,187






$852,702

$795,430




Add back non-cash stock-based compensation expense


476

590






1,904

2,327






Modified Gross Margin


219,190

205,777


6.5%




854,606

797,757


7.1%


















Selling, general and administrative costs


87,412

83,854






341,423

325,538




Add back non-cash stock-based compensation expense


6,507

6,133






27,396

25,490






Modified EBITDA


138,285

128,056


8.0%




540,579

497,709


8.6%


















Non-cash stock-based compensation expense


6,983

6,723






29,300

27,817




Depreciation, amortization and accretion


74,703

72,572






284,292

283,329




Net Interest expense 


21,208

15,842






67,478

63,701




Debt extinguishment costs


-

-






77

-




Non-cash interest expense and deferred debt costs


6,771

6,027






25,486

23,472




Income tax expense


11,352

10,500






57,058

41,479






Net Income


$17,268

$16,392






$76,888

$57,911




















Modified Gross Margin %


58.0%

58.5%






58.1%

58.4%




















Modified EBITDA Margin %


36.6%

36.4%






36.8%

36.4%



































Free Cash Flow:














Modified EBITDA


$138,285

$128,056


8.0%




$540,579

$497,709


8.6%


Less: Capital Expenditures


99,624

86,637


15.0%




343,425

342,731


0.2%


Unlevered Free Cash Flow


38,661

41,419


-6.7%




197,154

154,978


27.2%


Less: Net interest expense 


21,208

15,842


33.9%




67,478

63,701


5.9%


Levered Free Cash Flow 


$17,453

$25,577


-31.8%




$129,676

$91,277


42.1%

































(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


Dec 31,

Sept 30,




2012

2012


Growth %






Revenue






Data and Internet services

$197,802

$189,164


4.6%


Voice services 

92,062

91,052


1.1%


Network services

81,014

81,261


-0.3%


          Service Revenue


370,878

361,477


2.6%


Intercarrier compensation 

7,015

7,457


-5.9%



Total Revenue


377,893

368,934


2.4%







Expenses






Operating costs 

159,179

156,195





Gross Margin


218,714

212,739




Selling, general and administrative costs 

87,412

83,341




Depreciation, amortization and accretion

74,703

70,726





Operating Income 


56,599

58,672


-3.5%


Interest expense

(21,720)

(15,495)




Debt extinguishment costs

-

(77)




Non-cash interest expense and deferred debt costs 

(6,771)

(6,330)




Interest income

512

84





Income before income taxes


28,620

36,854


-22.3%


Income tax expense

11,352

15,885





Net Income 


$17,268

$20,969


-17.6%












SUPPLEMENTAL INFORMATION TO RECONCILE MODIFIED GROSS MARGIN AND MODIFIED EBITDA











Gross Margin

$218,714

$212,739




Add back non-cash stock-based compensation expense

476

473





Modified Gross Margin


219,190

213,212


2.8%








Selling, general and administrative costs

87,412

83,341




Add back non-cash stock-based compensation expense

6,507

6,667





Modified EBITDA


138,285

136,538


1.3%








Non-cash stock-based compensation expense

6,983

7,140




Depreciation, amortization and accretion

74,703

70,726




Net Interest expense

21,208

15,411




Debt extinguishment costs

-

77




Non-cash interest expense and deferred debt costs 

6,771

6,330




Income tax expense

11,352

15,885





Net Income


$17,268

$20,969










Modified Gross Margin %


58.0%

57.8%










Modified EBITDA Margin %


36.6%

37.0%















Free Cash Flow






Modified EBITDA

$138,285

$136,538


1.3%


Less: Capital Expenditures

99,624

83,900


18.7%


Unlevered Free Cash Flow

38,661

52,638


-26.6%


Less: Net interest expense

21,208

15,411


37.6%


Levered Free Cash Flow

$17,453

$37,227


-53.1%



(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


Twelve Months Ended







Dec. 31


Sept. 30


Dec. 31


Dec. 31


Dec. 31







2012


2012


2011


2012


2011
















Weighted Average Shares Outstanding (thousands)



























Basic 




148,253


147,973


146,416


147,675


147,247

















Diluted (2)




152,311


150,359


148,125


150,059


149,349
















Basic Income per Common Share


$0.11


$0.14


$0.11


$0.51


$0.39
















Diluted Income per Common Share


$0.11


$0.14


$0.11


$0.50


$0.38





































As of











Dec. 31


Sept. 30


Dec. 31











2012


2012


2011





Common shares (thousands)



























Actual Shares Outstanding


151,397


151,271


149,044




















Unvested Restricted Stock Units











and Restricted Stock Awards (thousands)


4,573


4,598


4,182




















Options (thousands)




























Options Outstanding 



4,860


5,065


6,674





















Options Exercisable 



4,169


4,369


4,974





















Options Exercisable and In-the-Money


4,169


4,369


3,114






















(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)





























Dec. 31


Sept. 30


Dec. 31







2012


2012


2011

















ASSETS


















Cash, equivalents, and short term investments

$974,292


$459,397


$484,919













Receivables




106,770


114,407


104,374



Less: allowance


(7,067)


(7,693)


(8,192)




Net receivables

99,703


106,714


96,182













Prepaid expenses and other current assets

19,164


19,475


17,340


Deferred income taxes


76,160


65,008


65,008




Total other current assets

95,324


84,483


82,348













Property, plant and equipment

4,247,868


4,186,321


4,026,134



Less:  accumulated depreciation 

(2,755,622)


(2,721,086)


(2,598,922)




Net property, plant and equipment 

1,492,246


1,465,235


1,427,212













Deferred income taxes


101,885


123,063


162,535


Goodwill



412,694


412,694


412,694


Intangible assets, net of accumulated amortization

17,578


19,362


17,742


Other assets, net 


30,015


22,736


24,594




Total other non-current assets

562,172


577,855


617,565
















Total


$3,223,737


$2,693,684


$2,708,226
























LIABILITIES AND STOCKHOLDERS' EQUITY 


















Current Liabilities









Accounts payable

$55,857


$61,819


$52,739



Deferred revenue

45,471


44,413


42,253



Accrued taxes, franchise and other fees

60,844


65,975


66,880



Accrued interest 


20,343


7,653


13,934



Accrued payroll and benefits

45,727


40,840


44,284



Accrued carrier costs

30,765


23,988


32,760



Current portion of debt and lease obligations

374,969


369,404


7,733



Other current liabilities

29,163


29,227


31,361




Total current liabilities

663,139


643,319


291,944













Long-Term Debt and Capital Lease Obligations 








2 3/8% convertible senior debentures, due 4/1/2026 (2)

373,743


373,743


373,744



Unamortized Discount 

(5,643)


(11,168)


(27,057)




Net

368,100


362,575


346,687



Floating rate senior secured debt - Term Loan B, due 1/7/2013

-


-


102,055



Floating rate senior secured debt - Term Loan B, due 12/30/2016

463,019


464,250


467,946



8% senior unsecured notes, due 3/1/2018, net of unamortized discount

428,001


427,905


427,614



5 3/8% senior unsecured notes, due 10/1/2022

480,000


-


-



Capital lease obligations


20,091


17,917


16,251




Less: current portion

(374,969)


(369,404)


(7,733)




Total long-term debt and capital lease obligations

1,384,242


903,243


1,352,820













Long-Term Deferred Revenue


23,177


24,031


22,296


Other Long-Term Liabilities 


41,240


36,840


35,445













Stockholders' Equity 


1,111,939


1,086,251


1,005,721
















Total


$3,223,737


$2,693,684


$2,708,226























(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


Twelve Months Ended








Dec. 31


Sept. 30


Dec. 31


Dec. 31


Dec. 31








2012


2012


2011


2012


2011

































Cash flows from operating activities:











Net Income 

$17,268


$20,969


$16,392


$76,888


$57,911


Adjustments to reconcile net income to net cash provided by operating activities:












Depreciation, amortization and accretion

74,703


70,726


72,572


284,292


283,329



Deferred income taxes

4,253


15,329


5,973


48,559


35,756



Stock-based compensation expense

6,983


7,140


6,723


29,300


27,817



Amortization of discount on debt and deferred debt costs and other

6,772


6,407


6,014


25,546


23,388


Changes in operating assets and liabilities:












Accounts receivable, net

7,011


(5,806)


(3,928)


(3,521)


(14,584)



Prepaid expenses and other current and noncurrent assets

1,197


1,226


6,307


1,498


(7,627)



Accounts payable

(1,254)


3,172


(7,320)


(429)


(6,338)



Accrued interest

12,680


(6,239)


6,449


6,393


(1,261)



Accrued payroll and benefits

4,914


165


4,483


1,469


2,566



Deferred revenue, current and noncurrent

204


(41)


495


4,099


11,797



Other current and noncurrent liabilities

9,161


(1,863)


(2,355)


(10,418)


(9,166)




















Net cash provided by operating activities

143,892


111,185


111,805


463,676


403,588

















Cash flows from investing activities:











Capital expenditures

(97,069)


(83,474)


(86,637)


(338,118)


(340,731)


Purchase of investments

(103,308)


(19,927)


(28,327)


(243,048)


(223,638)


Proceeds from sale of investments

77,748


20,828


25,615


204,629


208,340


Other investing activities, net

(1,963)


(1,178)


(646)


2,566


3,230




Net cash used in investing activities

(124,592)


(83,751)


(89,995)


(373,971)


(352,799)

















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

3,327


4,307


922


13,462


9,966



Purchases of treasury stock

(1,890)


-


(8,562)


(13,409)


(58,562)


Excess tax (shortfalls) benefits from stock-based compensation

(3)


500


1,385


1,213


1,385


Net proceeds from issuance of debt

470,796


-


-


470,796


-


Retirement of debt obligation

-


(101,518)


-


(101,518)


-


Payment of debt and capital lease obligations

(1,602)


(1,601)


(1,902)


(6,915)


(7,106)




















Net cash provided by (used in) financing activities

470,628


(98,312)


(8,157)


363,629


(54,317)




















Increase (decrease) in cash and cash equivalents

489,928


(70,878)


13,653


453,334


(3,528)




Cash and cash equivalents at the beginning of the period

316,800


387,678


339,741


353,394


356,922




Cash and cash equivalents at the end of the period

$806,728


$316,800


$353,394


$806,728


$353,394

















Supplemental disclosures cash, equivalents and short term investments













Cash and cash equivalents at the end of the period

$806,728


$316,800


$353,394


$806,728


$353,394




Short term investments

167,564


142,597


131,525


167,564


131,525





Total of cash, equivalents and short term investments

$974,292


$459,397


$484,919


$974,292


$484,919

















Supplemental disclosures of cash flow information:











Cash paid for interest


$9,223


$22,009


$9,970


$63,082


$67,566


Cash paid for income taxes, net of refunds

$1,235


$1,508


$218


$7,801


$3,231


Addition of capital lease obligation


$2,555


$426


-


$5,307


$2,000

















Supplemental information to reconcile capital expenditures:











Capital expenditures per cash flow statement

$97,069


$83,474


$86,637


$338,118


$340,731


Addition of capital lease obligation


2,555


426


-


5,307


2,000


Total capital expenditures


$99,624


$83,900


$86,637


$343,425


$342,731

































(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

Dec. 31
















Operating Metrics:



























Buildings  (2) (3)


13,742

14,311

14,872

15,438


15,905

16,367

16,919

17,948

















Headcount 













Total Headcount


2,985

3,071

3,065

3,051


3,059

3,089

3,087

3,147



Sales Associates 


564

553

564

555


551

546

543

574
































Customers 













Total Customers 


27,234

27,322

27,376

27,509


27,495

27,569

27,699

27,966



(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.

(3) Q4 2012 building additions include an increase of 532 previously connected buildings identified during alignment of key operating systems.

 

SOURCE tw telecom

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