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 Delivers Ongoing Industry-Leading Innovation Through New Products and Capabilities PR Newswire LITTLETON, Colo., Feb. 11, 2013 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 flow^3. 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 oGrew total revenue 7.6% year over year compared to 7.4% for 2011 oGrew enterprise revenue 10.5% year over year compared to 9.4% for 2011 oGrew 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 oGrew 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 oGrew M-EBITDA 8.6% to $540.6 million representing a 36.8% M-EBITDA margin for 2012 compared to 36.4% in 2011 oDelivered $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 bookings^7, 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 churn^4 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 churn^4 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 installations^5, 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: o$28.4 million increase in revenue from enterprise customers, or 10.4% year over year, driven primarily by data and Internet services o$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: o15.2% 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 o6.1% 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 o5.2% 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 margin^6 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 33^rd consecutive quarter of sequential growth. Revenue grew due to ongoing enterprise growth. Key changes in revenue included: o$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 o$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: o4.6% 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 o1.1% 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 oNetwork 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 at9:00 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 andexpected 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 $197,802 $171,657 15.2% $746,297 $646,682 15.4% services 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 7,015 7,653 -8.3% 30,127 30,845 -2.3% compensation 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 87,412 83,854 341,423 325,538 costs Depreciation, amortization and 74,703 72,572 284,292 283,329 accretion Operating 56,599 48,761 16.1% 226,987 186,563 21.7% Income Interest expense (21,720) (15,944) (68,271) (64,246) Debt extinguishment - - (77) - costs Non-cash interest expense and (6,771) (6,027) (25,486) (23,472) deferred debt costs Interest income 512 102 793 545 Income before 28,620 26,892 6.4% 133,946 99,390 34.8% income taxes 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 476 590 1,904 2,327 compensation expense Modified 219,190 205,777 6.5% 854,606 797,757 7.1% Gross Margin Selling, general and administrative 87,412 83,854 341,423 325,538 costs Add back non-cash stock-based 6,507 6,133 27,396 25,490 compensation expense Modified 138,285 128,056 8.0% 540,579 497,709 8.6% EBITDA Non-cash stock-based 6,983 6,723 29,300 27,817 compensation expense Depreciation, amortization and 74,703 72,572 284,292 283,329 accretion Net Interest 21,208 15,842 67,478 63,701 expense Debt extinguishment - - 77 - costs Non-cash interest expense and 6,771 6,027 25,486 23,472 deferred debt costs Income tax expense 11,352 10,500 57,058 41,479 Net Income $17,268 $16,392 $76,888 $57,911 Modified Gross 58.0% 58.5% 58.1% 58.4% Margin % Modified EBITDA 36.6% 36.4% 36.8% 36.4% Margin % Free Cash Flow: Modified EBITDA $138,285 $128,056 8.0% $540,579 $497,709 8.6% Less: Capital 99,624 86,637 15.0% 343,425 342,731 0.2% Expenditures Unlevered Free Cash 38,661 41,419 -6.7% 197,154 154,978 27.2% Flow Less: Net interest 21,208 15,842 33.9% 67,478 63,701 5.9% expense Levered Free Cash $17,453 $25,577 -31.8% $129,676 $91,277 42.1% Flow (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 (6,771) (6,330) costs 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 476 473 expense 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 6,507 6,667 expense 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 6,771 6,330 costs 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 $0.11 $0.14 $0.11 $0.50 $0.38 Share 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 4,573 4,598 4,182 (thousands) Options (thousands) Options Outstanding 4,860 5,065 6,674 Options Exercisable 4,169 4,369 4,974 Options Exercisable and 4,169 4,369 3,114 In-the-Money (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 $974,292 $459,397 $484,919 investments 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 19,164 19,475 17,340 assets Deferred income taxes 76,160 65,008 65,008 Total other current 95,324 84,483 82,348 assets Property, plant and equipment 4,247,868 4,186,321 4,026,134 Less: accumulated (2,755,622) (2,721,086) (2,598,922) depreciation Net property, plant 1,492,246 1,465,235 1,427,212 and equipment Deferred income taxes 101,885 123,063 162,535 Goodwill 412,694 412,694 412,694 Intangible assets, net of accumulated 17,578 19,362 17,742 amortization Other assets, net 30,015 22,736 24,594 Total other 562,172 577,855 617,565 non-current assets 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 60,844 65,975 66,880 other fees 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 374,969 369,404 7,733 lease obligations Other current liabilities 29,163 29,227 31,361 Total current 663,139 643,319 291,944 liabilities Long-Term Debt and Capital Lease Obligations 2 3/8% convertible senior 373,743 373,743 373,744 debentures, due 4/1/2026 (2) Unamortized Discount (5,643) (11,168) (27,057) Net 368,100 362,575 346,687 Floating rate senior secured debt - Term Loan B, due - - 102,055 1/7/2013 Floating rate senior secured debt - Term Loan B, due 463,019 464,250 467,946 12/30/2016 8% senior unsecured notes, due 3/1/2018, net of 428,001 427,905 427,614 unamortized discount 5 3/8% senior unsecured 480,000 - - notes, due 10/1/2022 Capital lease 20,091 17,917 16,251 obligations Less: current (374,969) (369,404) (7,733) portion Total long-term debt and capital 1,384,242 903,243 1,352,820 lease obligations 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 debenturesin 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 74,703 70,726 72,572 284,292 283,329 accretion Deferred income taxes 4,253 15,329 5,973 48,559 35,756 Stock-based 6,983 7,140 6,723 29,300 27,817 compensation expense Amortization of discount on debt and 6,772 6,407 6,014 25,546 23,388 deferred debt costs and other Changes in operating assets and liabilities: Accounts receivable, 7,011 (5,806) (3,928) (3,521) (14,584) net Prepaid expenses and other current and 1,197 1,226 6,307 1,498 (7,627) noncurrent assets 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 4,914 165 4,483 1,469 2,566 benefits Deferred revenue, current and 204 (41) 495 4,099 11,797 noncurrent Other current and noncurrent 9,161 (1,863) (2,355) (10,418) (9,166) liabilities Net cash provided by operating 143,892 111,185 111,805 463,676 403,588 activities 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 77,748 20,828 25,615 204,629 208,340 investments Other investing (1,963) (1,178) (646) 2,566 3,230 activities, net Net cash used in investing (124,592) (83,751) (89,995) (373,971) (352,799) activities Cash flows from financing activities: Net proceeds from issuance of common stock upon exercise ofstock 3,327 4,307 922 13,462 9,966 options and vesting of restricted stock awards and units Purchases of treasury (1,890) - (8,562) (13,409) (58,562) stock Excess tax (shortfalls) benefits from (3) 500 1,385 1,213 1,385 stock-based compensation Net proceeds from 470,796 - - 470,796 - issuance of debt Retirement of debt - (101,518) - (101,518) - obligation Payment of debt and capital lease (1,602) (1,601) (1,902) (6,915) (7,106) obligations Net cash provided by (used in) 470,628 (98,312) (8,157) 363,629 (54,317) financing activities Increase (decrease) in cash and cash 489,928 (70,878) 13,653 453,334 (3,528) equivalents Cash and cash equivalents at the 316,800 387,678 339,741 353,394 356,922 beginning of the period Cash and cash equivalents at the $806,728 $316,800 $353,394 $806,728 $353,394 end of the period Supplemental disclosures cash, equivalents and short term investments Cash and cash equivalents at the $806,728 $316,800 $353,394 $806,728 $353,394 end of the period Short term 167,564 142,597 131,525 167,564 131,525 investments Total of cash, equivalents and $974,292 $459,397 $484,919 $974,292 $484,919 short term investments Supplemental disclosures of cash flow information: Cash paid for $9,223 $22,009 $9,970 $63,082 $67,566 interest Cash paid for income $1,235 $1,508 $218 $7,801 $3,231 taxes, net of refunds Addition of capital $2,555 $426 - $5,307 $2,000 lease obligation Supplemental information to reconcile capital expenditures: Capital expenditures per $97,069 $83,474 $86,637 $338,118 $340,731 cash flow statement Addition of capital 2,555 426 - 5,307 2,000 lease obligation Total capital $99,624 $83,900 $86,637 $343,425 $342,731 expenditures (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. Jun. Sept. Dec. 31 30 30 31 Operating Metrics: Buildings (2) 13,742 14,311 14,872 15,438 15,905 16,367 16,919 17,948 (3) Headcount Total 2,985 3,071 3,065 3,051 3,059 3,089 3,087 3,147 Headcount Sales 564 553 564 555 551 546 543 574 Associates Customers Total 27,234 27,322 27,376 27,509 27,495 27,569 27,699 27,966 Customers (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 Website: http://www.twtelecom.com Contact: Investor Relations, Carole Curtin, +1-303-566-1000, firstname.lastname@example.org, or Media Relations, Bob Meldrum, +1-303-566-1354, email@example.com
tw telecom Reports Fourth Quarter and Full Year 2012 Results
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