Exhibit 99.1
| | |
| CONTACTS: | | |
| |
| Investor Relations: | | Media Relations: |
Carole Curtin | | Bob Meldrum |
carole.curtin@twtelecom.com | | bob.meldrum@twtelecom.com |
303-566-1000 | | 303-566-1354 |
Time Warner Telecom Announces
Strong Fourth Quarter 2004 Results
—Revenue increases 5%, Modified EBITDA increases 6% —
—Surpasses 10,000 customers and 5,000 on net buildings —
LITTLETON, Colo. – February 1, 2005 – Time Warner Telecom Inc. (NASDAQ: TWTC), a leading provider of managed voice and data networking solutions for business customers, today announced its fourth quarter 2004 financial results, including $168.0 million in revenue, $54.6 million in Modified EBITDA1 (“M-EBITDA”) and a net loss of $36.1 million. The Company has revised the title of EBITDA, however the calculation remains the same. See page 5 for more details. For the year ended December 31, 2004, the Company reported revenue of $653.1 million, M-EBITDA of $213.5 million, and a net loss of $133.0 million.
“We closed out 2004 with a strong quarter,” said Larissa Herda, Time Warner Telecom’s Chairman, CEO and President. “Our fourth quarter carrier and enterprise revenue and our gross and M-EBITDA margins were up sequentially. Our results reflect our focus on leveraging our network, expanding our product line, particularly our Ethernet-based offerings, and increasing our penetration of the enterprise market. We have been steadfastly focused on rational long-term growth and the results are clearly beginning to show.”
Highlights for the Quarter
For the quarter ending December 31, 2004, the Company –
| | • | | Sequentially grew enterprise revenue $5.0 million over the third quarter |
| | • | | Sequentially grew carrier revenue $2.2 million over the third quarter |
| | • | | Grew enterprise quarterly revenue $12.7 million, or 17%, year over year |
| | • | | Produced M-EBITDA of $54.6 million, reflecting sequential growth of $3.0 million, or 6%. Achieved M-EBITDA margin of 33%. |
| | • | | Surpassed 5,000 buildings served directly by the Company’s fiber network, a 22% increase year over year |
| | • | | Surpassed 10,000 customers. Grew customers by 17%, year over year, driven by strong enterprise growth. |
1
Sequential Results - Fourth Quarter 2004 compared to Third Quarter 2004
Revenue
Revenue for the quarter was $168.0 million, as compared to $160.6 million for the third quarter of 2004, an increase of $7.4 million sequentially. The primary components of the change included:
| | • | | $5.0 million increase in revenue from enterprise customers, primarily from the sale of data and Internet services and an increase in favorable resolution of dispute and contract settlements |
| | • | | $2.2 million increase from carriers and ISPs, due to stronger sales and an increase in favorable resolution of dispute and contract settlements |
By product line, the percentage change in revenue for the fourth quarter over the third quarter was as follows:
| | • | | 10% increase for data and Internet services due to success with Ethernet and IP-based product sales |
| | • | | 4% increase in switched services primarily due to growth in bundled voice products |
| | • | | 3% increase for dedicated transport services, primarily due to increased carrier revenue |
M-EBITDA and Gross Margins
M-EBITDA margin was 33% compared to 32%, and gross margin was 60% compared to 59% for the fourth and third quarters of 2004, respectively. The Company utilizes a fully burdened gross margin, including network costs, and personnel costs for customer care, provisioning, network maintenance, technical field and network operations.
Net Loss
The Company reported a net loss of $36.1 million, or $.31 loss per share for the quarter, compared to a net loss of $30.9 million or $.27 loss per share for the third quarter. The increase in the net loss includes higher depreciation reflecting the Company’s increased network investment and the loss on retirement of assets.
2
Year over Year Results — Fourth Quarter 2004 compared to Fourth Quarter 2003
Revenue
Quarterly revenue was $168.0 million for the current quarter as compared to $169.4 million for the fourth quarter of 2003. Excluding the favorable $9.2 million MCI bankruptcy settlement in the fourth quarter of 2003, the current quarter reflected an increase in revenue of $7.8 million which included:
| | • | | $12.7 million increase in revenue from enterprise customers, primarily from the sale of data and Internet services |
| | • | | $.4 million increase from carriers and ISPs |
| | • | | $4.0 million decrease from related parties, primarily due to a decrease in transport services being purchased by their Internet-related businesses |
| | • | | $1.3 million decrease in intercarrier compensation due to reduced minutes of use and mandated rate reductions by the FCC |
By product line, the percentage change in revenue year over year was as follows:
| | • | | 14% increase for data and Internet services due to success with Ethernet and IP-based product sales |
| | • | | 9% increase for switched services, primarily due to growth in bundled voice products |
| | • | | 9% decrease for dedicated transport services, primarily due to disconnects and pricing pressures |
M-EBITDA and Margins
M-EBITDA for the quarter was $54.6 million versus $58.9 million in the same period last year. Included in the change was a favorable $9.2 million MCI bankruptcy settlement recognized in the fourth quarter of 2003, which did not recur in the current quarter. Excluding the settlement, M-EBITDA increased $4.9 million.
M-EBITDA margin was 33% for the quarter. This compared to 35% for the same period last year, or 31% excluding the settlement described above. Gross margin was 60% for the current quarter. This compared to 61% for the same period last year, or 59% excluding the settlement described above.
Net Loss
The Company reported a net loss of $36.1 million, or $.31 loss per share, for the current quarter. This compares to a net loss of $21.3 million or $.19 loss per share for the same period last year, which included a favorable impact for an MCI bankruptcy settlement of $.08 per share.
The full year net loss for 2004 was $133.0 million or $1.15 loss per share, as compared to a net loss of $89.3 million or $.78 loss per share for 2003. Included in the net loss was a favorable impact for MCI bankruptcy settlements of $.02 and $.26 per share, for 2004 and 2003, respectively. The increase in the net loss reflects increased interest costs, including a retirement of $8.9 million of deferred loan costs in conjunction with a refinancing during 2004, and higher depreciation reflecting the Company’s increased network investment in 2004.
3
Other Operating Highlights
Capital Expenditures
Capital expenditures were $49.4 million for the quarter, compared to $44.9 million in the fourth quarter of 2003. For the year expenditures totaled $171.8 million. For 2005, the Company expects capital expenditures of $160 to $175 million, which includes the capital cost for continued expansion of its network and product offerings.
Other Revenue Items
The Company continues to experience service disconnects, however they decreased in the current quarter. Service disconnects resulted in the loss of $2.1 million of monthly revenue for the current quarter, as compared to $2.7 million in the third quarter of 2004 and $2.9 million for the fourth quarter last year.
“We are pleased with our overall revenue results this quarter,” said Mark Peters, Time Warner Telecom’s Senior Vice President and Acting Chief Financial Officer. “Our sales growth was strong, and revenue was enhanced by favorable resolution of disputes and contract settlements as well as lower disconnects. Carrier revenue continues to experience fluctuations from quarter to quarter, however the volatility has greatly diminished. We expect some disconnects from carriers in 2005 related to wireless industry consolidation. However, we still continue to expect carrier revenue to remain relatively stable.”
New Products
The Company is building on the growing value of its networks, products and service. This includes an Ethernet foundation as a point of convergence. The Company plans to layer on VoIP applications to its network and expects to release these products in the first half of 2005.
Summary
“We have spent several years setting the right foundation for growth, and we are pleased with our results for the quarter,” said Herda. “The current business trends point to overall revenue growth for the Company in 2005. However, the nature of our business includes fluctuations related to sales cycles, timing of installations, disconnects and dispute and contract settlements. Therefore we expect some fluctuations in revenue on a quarter by quarter basis. We continue to position the business for long-term growth by focusing on product innovation and leveraging our networks including our Ethernet platform,” concluded Herda.
Time Warner Telecom Inc. plans to conduct a webcast conference call to discuss its earnings results on February 2 at 8:00 a.m. MST (10:00 a.m. EST). To access the webcast and the financial and statistical information to be discussed in the webcast, visit www.twtelecom.com under “Investor Relations.”
4
| (1) | The Company uses a modified definition of EBITDA to eliminate certain non-cash and non-operating income or charges to earnings to enhance the comparability of its financial performance from period to period. Therefore we have revised the title of this measure to “Modified EBITDA” to reflect the exclusion of these items. This reflects only a change in the title of this measure. It does not represent a change in our historical definition or calculation. Modified EBITDA (or “M-EBITDA) is defined as net income or loss before depreciation, amortization, accretion, asset impairment charge, interest expense, interest income, investment gains and losses, income tax expense and cumulative effect of change in accounting principle. (See a discussion below of Modified EBITDA under “Financial Measures”.) |
Financial Measures
The Company provides financial measures using 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. Modified EBITDA is reconciled to Net Loss, the most comparable GAAP measure to Modified EBITDA, within the Consolidated Operating Highlights.
The Company uses recurring revenue to enhance the comparability of its revenue performance between periods (see page 11 and 12 for reconciliation to GAAP Revenue). The Company presented Modified EBITDA, gross margins, Modified EBITDA margins and recurring revenue without the impact of reciprocal compensation settlements to enhance comparability of those measures between periods. Due to the significant positive impact of the Company’s settlement with WorldCom, Inc. (now MCI Inc.), the Company has presented its selected operating statistics both as reported and net of the settlements as well as a reconciliation between the two, in order to assist in understanding the impact of the settlement and the Company’s performance during the quarter net of the impact of that event.
Forward Looking Statements
The statements in this press release concerning the outlook for 2005 and beyond, including expansion plans, revenue trends, growth prospects, service disconnects, new product releases, pricing pressures 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 summarized in the Company’s filings with the SEC, especially the section entitled “Risk Factors” in its 2003 Annual Report on Form 10-K and the risks set forth in the material posted atwww.twtelecom.com under “Investor Relations” for the Company’s February 2, 2005 webcast. Time Warner 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 Time Warner Telecom Inc.
Time Warner Telecom Inc., headquartered in Littleton, Colo., is a leading provider of managed network solutions to a wide array of businesses and organizations in 44 U.S. metropolitan areas that require telecommunications intensive services. One of the country’s premier competitive telecom carriers, Time Warner Telecom integrates data, dedicated Internet access, and local and long distance voice services for long distance carriers, wireless communications companies, incumbent local exchange carriers, and such enterprise organizations as healthcare, finance, higher education, manufacturing, hospitality, state and local government, and military. Please visitwww.twtelecom.com for more information.
5
Time Warner Telecom Inc.
Consolidated Operations Highlights
(Dollars in thousands)
Unaudited (1)
| | | | | | | | | | | |
| | | Three Months Ended
| |
| | | 12/31/04
| | | 9/30/04
| | | Growth %
| |
| Revenue | | | | | | | | | | | |
Dedicated transport services | | $ | 83,690 | | | $ | 81,175 | | | 3 | % |
Switched services | | | 41,053 | | | | 39,418 | | | 4 | % |
Data and Internet services | | | 34,765 | | | | 31,708 | | | 10 | % |
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|
|
| |
|
|
| |
|
|
| | | | 159,508 | | | | 152,301 | | | 5 | % |
Intercarrier compensation (2) | | | 8,516 | | | | 8,287 | | | 3 | % |
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|
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|
Total Revenue | | | 168,024 | | | | 160,588 | | | 5 | % |
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|
| Expenses | | | | | | | | | | | |
Operating costs | | | 67,197 | | | | 65,550 | | | 3 | % |
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|
|
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|
|
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|
|
Gross Margin | | | 100,827 | | | | 95,038 | | | 6 | % |
Selling, general and administrative | | | 46,192 | | | | 43,432 | | | 6 | % |
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Modified EBITDA | | | 54,635 | | | | 51,606 | | | 6 | % |
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|
Depreciation, amortization and accretion | | | 64,531 | | | | 54,754 | | | | |
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|
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| | | |
Operating Loss | | | (9,896 | ) | | | (3,148 | ) | | | |
Interest expense | | | (28,728 | ) | | | (29,030 | ) | | | |
Interest income | | | 2,590 | | | | 1,350 | | | | |
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|
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| | | |
Net loss before income taxes | | | (36,034 | ) | | | (30,828 | ) | | | |
Income tax expense | | | 111 | | | | 75 | | | | |
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Net Loss | | $ | (36,145 | ) | | $ | (30,903 | ) | | | |
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Capital Expenditures | | $ | 49,382 | | | $ | 46,880 | | | 5 | % |
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Gross Margin | | | 60 | % | | | 59 | % | | | |
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Modified EBITDA Margin | | | 33 | % | | | 32 | % | | | |
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| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| (2) | Intercarrier Compensation includes switched access and reciprocal compensation. |
6
Time Warner Telecom Inc.
Consolidated Operations Highlights
(Dollars in thousands)
Unaudited (1)
| | | | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended December 31,
| | | Twelve Months Ended December 31,
| |
| | | 2004
| | | 2003
| | | Growth %
| | | 2004
| | | 2003
| | | Growth %
| |
| | | | | | (Note 4) | | | | | | | | | (Note 4) | | | | |
| Revenue | | | | | | | | | | | | | | | | | | | | | | |
Dedicated transport services | | $ | 83,690 | | | $ | 91,618 | | | -9 | % | | $ | 332,577 | | | $ | 361,038 | | | -8 | % |
Switched services | | | 41,053 | | | | 37,508 | | | 9 | % | | | 157,905 | | | | 152,789 | | | 3 | % |
Data and Internet services | | | 34,765 | | | | 30,441 | | | 14 | % | | | 124,805 | | | | 104,576 | | | 19 | % |
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|
| | | | 159,508 | | | | 159,567 | | | 0 | % | | | 615,287 | | | | 618,403 | | | -1 | % |
Intercarrier compensation (2) | | | 8,516 | | | | 9,811 | | | -13 | % | | | 37,800 | | | | 47,325 | | | -20 | % |
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| | | | 168,024 | | | | 169,378 | | | -1 | % | | | 653,087 | | | | 665,728 | | | -2 | % |
Reciprocal Compensation Settlements | | | — | | | | — | | | — | | | | — | | | | 3,863 | | | -100 | % |
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Total Revenue | | | 168,024 | | | | 169,378 | | | -1 | % | | | 653,087 | | | | 669,591 | | | -2 | % |
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Expenses | | | | | | | | | | | | | | | | | | | | | | |
Operating costs | | | 67,197 | | | | 65,861 | | | 2 | % | | | 261,285 | | | | 264,322 | | | -1 | % |
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Gross Margin | | | 100,827 | | | | 103,517 | | | -3 | % | | | 391,802 | | | | 405,269 | | | -3 | % |
Selling, general and administrative | | | 46,192 | | | | 44,631 | | | 3 | % | | | 178,317 | | | | 172,925 | | | 3 | % |
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Modified EBITDA | | | 54,635 | | | | 58,886 | | | -7 | % | | | 213,485 | | | | 232,344 | | | -8 | % |
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Depreciation, amortization and accretion | | | 64,531 | | | | 59,028 | | | | | | | 230,688 | | | | 223,904 | | | | |
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Operating Income (Loss) | | | (9,896 | ) | | | (142 | ) | | | | | | (17,203 | ) | | | 8,440 | | | | |
Interest expense | | | (28,728 | ) | | | (25,122 | ) | | | | | | (122,391 | ) | | | (103,642 | ) | | | |
Interest income | | | 2,590 | | | | 1,210 | | | | | | | 6,483 | | | | 5,858 | | | | |
Investment gains | | | — | | | | 3,072 | | | | | | | 710 | | | | 3,994 | | | | |
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Net loss before income taxes | | | (36,034 | ) | | | (20,982 | ) | | | | | | (132,401 | ) | | | (85,350 | ) | | | |
Income tax expense | | | 111 | | | | 346 | | | | | | | 636 | | | | 1,021 | | | | |
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Loss before cumulative effect ofchange in accounting principle | | | (36,145 | ) | | | (21,328 | ) | | | | | | (133,037 | ) | | | (86,371 | ) | | | |
Cumulative effect of change in accounting principle (3) | | | — | | | | — | | | | | | | — | | | | 2,965 | | | | |
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Net Loss | | $ | (36,145 | ) | | $ | (21,328 | ) | | | | | $ | (133,037 | ) | | $ | (89,336 | ) | | | |
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Capital Expenditures | | $ | 49,382 | | | $ | 44,910 | | | 10 | % | | $ | 171,833 | | | $ | 129,697 | | | 32 | % |
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Gross Margin | | | 60 | % | | | 61 | % | | | | | | 60 | % | | | 61 | % | | | |
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Modified EBITDA Margin | | | 33 | % | | | 35 | % | | | | | | 33 | % | | | 35 | % | | | |
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| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| (2) | Intercarrier Compensation includes switched access and reciprocal compensation. |
| (3) | Reflects implementation of Statement of Financial Accounting Standards No. 143 “Asset Retirement Obligations”. |
| (4) | See Pages 8, 11 and 12 for impact of receipt of MCI bankruptcy settlements in 2003 and 2004. |
7
Time Warner Telecom Inc.
Highlights of Results Per Share
Unaudited (1)
| | | | | | | | | | | | | | | | | | | | |
| | | Three Months Ended
| | | Twelve Months Ended December 31,
| |
| | | 12/31/04
| | | 9/30/04
| | | 12/31/03
| | | 2004
| | | 2003
| |
Weighted Average Shares Outstanding (thousands) | | | | | | | | | | | | | | | | | | | | |
| | | | | |
Basic and Diluted | | | 115,797 | | | | 115,679 | | | | 115,198 | | | | 115,665 | | | | 114,998 | |
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Basic and Diluted Loss per Common Share | | | | | | | | | | | | | | | | | | | | |
Before favorable impacts of the MCI settlement | | $ | (0.31 | ) | | $ | (0.27 | ) | | $ | (0.26 | ) | | $ | (1.17 | ) | | $ | (1.04 | ) |
MCI bankruptcy settlement | | | — | | | | — | | | $ | 0.08 | | | $ | 0.02 | | | $ | 0.26 | |
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As Reported | | $ | (0.31 | ) | | $ | (0.27 | ) | | $ | (0.19 | ) | | $ | (1.15 | ) | | $ | (0.78 | ) |
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| | | As of
|
| | | 12/31/04
| | 9/30/04
| | 12/31/03
|
Common shares (thousands) | | | | | | |
Actual Shares Outstanding | | 115,806 | | 115,785 | | 115,292 |
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| | | |
Options (thousands) | | | | | | |
Options Outstanding | | 19,224 | | 19,619 | | 18,635 |
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Options Exercisable | | 12,871 | | 12,236 | | 10,463 |
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| |
| |
|
Options Exercisable and In-the-Money | | 2,120 | | 1,856 | | 1,583 |
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| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
8
Time Warner Telecom Inc.
Condensed Consolidated Balance Sheet Highlights
(Dollars in thousands)
Unaudited (1)
| | | | | | | | | | | | |
| | | December 31,
2004
| | | September 30,
2004
| | | December 31,
2003
| |
Summary of Cash & Investments | | | | | | | | | | | | |
Cash and equivalents, and short-term investments | | $ | 432,506 | | | $ | 434,042 | | | $ | 478,593 | |
Long-term Investments | | | — | | | | 1,615 | | | | — | |
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| | | $ | 432,506 | | | $ | 435,657 | | | $ | 478,593 | |
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| ASSETS | | | | | | | | | | | | |
| | | |
Cash and equivalents, and short-term investments | | $ | 432,506 | | | $ | 434,042 | | | $ | 478,593 | |
| | | |
Receivables | | | 56,972 | | | | 52,169 | | | | 57,980 | |
Less: allowance | | | (11,415 | ) | | | (10,546 | ) | | | (15,011 | ) |
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Net receivables | | | 45,557 | | | | 41,623 | | | | 42,969 | |
Other current assets | | | 25,598 | | | | 34,981 | | | | 32,925 | |
Long-term Investments | | | — | | | | 1,615 | | | | — | |
Property, plant and equipment | | | 2,336,338 | | | | 2,334,006 | | | | 2,215,523 | |
Less: accumulated depreciation | | | (1,033,246 | ) | | | (1,015,955 | ) | | | (852,276 | ) |
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Net property, plant and equipment | | | 1,303,092 | | | | 1,318,051 | | | | 1,363,247 | |
Other Assets | | | 98,835 | | | | 94,344 | | | | 88,149 | |
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Total | | $ | 1,905,588 | | | $ | 1,924,656 | | | $ | 2,005,883 | |
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | |
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Current Liabilities | | | | | | | | | | | | |
Accounts payable | | $ | 42,504 | | | $ | 41,994 | | | $ | 40,096 | |
Deferred revenue | | | 20,229 | | | | 22,042 | | | | 29,053 | |
Accrued taxes, franchise and other fees | | | 69,001 | | | | 75,083 | | | | 72,951 | |
Accrued interest | | | 44,265 | | | | 19,612 | | | | 35,078 | |
Accrued payroll and benefits | | | 23,209 | | | | 24,841 | | | | 28,402 | |
Current portion of debt and lease obligations | | | 1,387 | | | | 1,871 | | | | 525 | |
Other current liabilities | | | 81,145 | | | | 79,794 | | | | 92,109 | |
| | |
|
|
| |
|
|
| |
|
|
|
Total current liabilities | | | 281,740 | | | | 265,237 | | | | 298,214 | |
| | | |
Long-Term Debt and Capital Lease Obligations | | | | | | | | | | | | |
Senior Secured Debt | | | — | | | | — | | | | 396,000 | |
Floating rate Senior secured notes | | | 240,000 | | | | 240,000 | | | | — | |
9.25% Senior unsecured notes | | | 200,000 | | | | 200,000 | | | | — | |
9.75% Senior unsecured notes | | | 400,000 | | | | 400,000 | | | | 400,000 | |
10.125% Senior unsecured notes | | | 400,000 | | | | 400,000 | | | | 400,000 | |
Capital lease obligations | | | 10,584 | | | | 11,365 | | | | 7,908 | |
Less: current portion | | | (1,387 | ) | | | (1,871 | ) | | | (525 | ) |
| | |
|
|
| |
|
|
| |
|
|
|
Total long-term debt and capital lease obligations | | | 1,249,197 | | | | 1,249,494 | | | | 1,203,383 | |
Other Long-Term Liabilities | | | 7,493 | | | | 6,949 | | | | 6,487 | |
Stockholders’ Equity | | | 367,158 | | | | 402,976 | | | | 497,799 | |
| | |
|
|
| |
|
|
| |
|
|
|
Total | | $ | 1,905,588 | | | $ | 1,924,656 | | | $ | 2,005,883 | |
| | |
|
|
| |
|
|
| |
|
|
|
| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
9
Time Warner Telecom Inc.
Selected Operating Statistics
Unaudited (1)
| | | | | | | | | | | | | | | | |
| | | Quarter Ended
|
| | | 2003
| | 2004
|
| | | Mar. 31
| | Jun. 30
| | Sept. 30
| | Dec. 31
| | Mar. 31
| | Jun. 30
| | Sept. 30
| | Dec. 31
|
Operating Metrics: | | | | | | | | | | | | | | | | |
Route Miles | | | | | | | | | | | | | | | | |
Metro | | 11,075 | | 11,170 | | 11,345 | | 11,582 | | 11,998 | | 12,247 | | 12,453 | | 12,375 |
Regional | | 6,694 | | 6,694 | | 6,694 | | 6,694 | | 6,694 | | 6,694 | | 6,694 | | 6,794 |
| | |
| |
| |
| |
| |
| |
| |
| |
|
Total | | 17,769 | | 17,864 | | 18,039 | | 18,276 | | 18,692 | | 18,941 | | 19,147 | | 19,169 |
| | | | | | | | |
Fiber Miles | | | | | | | | | | | | | | | | |
Metro | | 602,988 | | 604,668 | | 614,942 | | 624,034 | | 626,873 | | 637,081 | | 646,849 | | 642,298 |
Regional | | 237,277 | | 269,759 | | 274,459 | | 274,459 | | 273,963 | | 273,963 | | 273,963 | | 275,163 |
| | |
| |
| |
| |
| |
| |
| |
| |
|
Total | | 840,265 | | 874,427 | | 889,401 | | 898,493 | | 900,836 | | 911,044 | | 920,812 | | 917,461 |
| | | | | | | | |
Buildings (2) | | | | | | | | | | | | | | | | |
On-net | | 3,616 | | 3,677 | | 3,854 | | 4,152 | | 4,350 | | 4,576 | | 4,839 | | 5,074 |
Type II | | 9,173 | | 10,087 | | 10,662 | | 11,934 | | 12,502 | | 13,114 | | 13,895 | | 14,139 |
| | |
| |
| |
| |
| |
| |
| |
| |
|
Total | | 12,789 | | 13,764 | | 14,516 | | 16,086 | | 16,852 | | 17,690 | | 18,734 | | 19,213 |
| | | | | | | | |
Networks | | | | | | | | | | | | | | | | |
Class 5 Switches | | 41 | | 41 | | 41 | | 41 | | 41 | | 41 | | 40 | | 39 |
Soft Switches | | 12 | | 12 | | 12 | | 12 | | 12 | | 12 | | 12 | | 13 |
| | | | | | | | |
Headcount | | | | | | | | | | | | | | | | |
Total employees | | 1,916 | | 1,932 | | 2,010 | | 2,009 | | 1,982 | | 1,971 | | 1,990 | | 1,986 |
Sales | | | | | | | | | | | | | | | | |
Sales Account Executives | | 259 | | 275 | | 289 | | 300 | | 286 | | 290 | | 301 | | 296 |
Customer Care Specialists (3) | | — | | — | | — | | 2 | | 19 | | 20 | | 22 | | 18 |
| | |
| |
| |
| |
| |
| |
| |
| |
|
| | | 259 | | 275 | | 289 | | 302 | | 305 | | 310 | | 323 | | 314 |
| | |
| |
| |
| |
| |
| |
| |
| |
|
Customers | | 7,598 | | 7,994 | | 8,420 | | 8,878 | | 9,209 | | 9,632 | | 9,982 | | 10,396 |
| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| (2) | Buildings “On-net” represents customer locations to which the Company’s fiber network is directly connected. Type II buildings are carried on the Company’s fiber network, including the Company’s switch for switched services, with a leased service from the Company’s distribution ring to the customer location. |
| (3) | Customer Care Specialists are responsible for selling to and retaining existing customers. |
10
Time Warner Telecom Inc.
Selected Operating Statistics
Unaudited (1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Quarter Ended
| |
| | | 2003
| | | 2004
| |
| | | Mar. 31
| | | Jun. 30
| | | Sept. 30 (Note 2)
| | | Dec. 31 (Note 2)
| | | Mar. 31 (Note 2)
| | | Jun. 30
| | | Sept. 30
| | | Dec. 31
| |
| | | As Reported
| | | As Reported
| | | As
Reported
| | | MCI
Settlement
| | | Net of
Settlement
| | | As
Reported
| | | MCI
Settlement
| | Net of Settlement
| | | As
Reported
| | | MCI
Settlement
| | | Net of Settlement
| | | As
Reported
| | | As
Reported
| | | As
Reported
| |
Financial Metrics:(1), (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue ($000) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dedicated transport services | | $ | 86,512 | | | $ | 88,842 | | | $ | 94,066 | | | $ | 2,824 | | | $ | 91,242 | | | $ | 91,618 | | | $ | 4,125 | | $ | 87,493 | | | $ | 84,160 | | | $ | 1,661 | | | $ | 82,499 | | | $ | 83,552 | | | $ | 81,175 | | | $ | 83,690 | |
Switched services | | | 39,891 | | | | 36,433 | | | | 38,957 | | | | 95 | | | | 38,862 | | | | 37,508 | | | | — | | | 37,508 | | | | 38,113 | | | | (25 | ) | | | 38,138 | | | | 39,321 | | | | 39,418 | | | | 41,053 | |
Data and Internet services | | | 24,304 | | | | 24,131 | | | | 25,700 | | | | 2,245 | | | | 23,455 | | | | 30,441 | | | | 5,048 | | | 25,393 | | | | 28,424 | | | | 675 | | | | 27,749 | | | | 29,908 | | | | 31,708 | | | | 34,765 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Subtotal | | | 150,707 | | | | 149,406 | | | | 158,723 | | | | 5,164 | | | | 153,559 | | | | 159,567 | | | | 9,173 | | | 150,394 | | | | 150,697 | | | | 2,311 | | | | 148,386 | | | | 152,781 | | | | 152,301 | | | | 159,508 | |
Intercarrier Compensation | | | 14,306 | | | | 13,366 | | | | 9,842 | | | | — | | | | 9,842 | | | | 9,811 | | | | — | | | 9,811 | | | | 10,952 | | | | — | | | | 10,952 | | | | 10,045 | | | | 8,287 | | | | 8,516 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Recurring Revenue | | | 165,013 | | | | 162,772 | | | | 168,565 | | | | 5,164 | | | | 163,401 | | | | 169,378 | | | | 9,173 | | | 160,205 | | | | 161,649 | | | | 2,311 | | | | 159,338 | | | | 162,826 | | | | 160,588 | | | | 168,024 | |
Reciprocal Compensation settlements | | | — | | | | — | | | | 3,863 | | | | — | | | | 3,863 | | | | — | | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Total Revenue | | $ | 165,013 | | | $ | 162,772 | | | $ | 172,428 | | | $ | 5,164 | | | $ | 167,264 | | | $ | 169,378 | | | $ | 9,173 | | $ | 160,205 | | | $ | 161,649 | | | $ | 2,311 | | | $ | 159,338 | | | $ | 162,826 | | | $ | 160,588 | | | $ | 168,024 | |
Operating Costs | | | 66,367 | | | | 65,463 | | | | 66,631 | | | | — | | | | 66,631 | | | | 65,861 | | | | — | | | 65,861 | | | | 64,317 | | | | — | | | | 64,317 | | | | 64,221 | | | | 65,550 | | | | 67,197 | |
Selling, general and administrative | | | 49,980 | | | | 47,152 | | | | 31,162 | | | | (15,128 | ) | | | 46,290 | | | | 44,631 | | | | — | | | 44,631 | | | | 45,312 | | | | (400 | ) | | | 45,712 | | | | 43,381 | | | | 43,432 | | | | 46,192 | |
| | |
|
|
| |
|
|
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|
|
| |
|
|
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|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Modified EBITDA | | $ | 48,666 | | | $ | 50,157 | | | $ | 74,635 | | | $ | 20,292 | | | $ | 54,343 | | | $ | 58,886 | | | $ | 9,173 | | $ | 49,713 | | | $ | 52,020 | | | $ | 2,711 | | | $ | 49,309 | | | $ | 55,224 | | | $ | 51,606 | | | $ | 54,635 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Modified EBITDA Reconciliation ($000) (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As Reported | | $ | 48,666 | | | $ | 50,157 | | | $ | 74,635 | | | $ | 20,292 | | | $ | 54,343 | | | $ | 58,886 | | | $ | 9,173 | | $ | 49,713 | | | $ | 52,020 | | | $ | 2,711 | | | $ | 49,309 | | | $ | 55,224 | | | $ | 51,606 | | | $ | 54,635 | |
Less: Reciprocal compensation settlements | | | — | | | | — | | | | (3,863 | ) | | | — | | | | (3,863 | ) | | | — | | | | — | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Without Reciprocal Compensation settlements | | $ | 48,666 | | | $ | 50,157 | | | $ | 70,772 | | | $ | 20,292 | | | $ | 50,480 | | | $ | 58,886 | | | $ | 9,173 | | $ | 49,713 | | | $ | 52,020 | | | $ | 2,711 | | | $ | 49,309 | | | $ | 55,224 | | | $ | 51,606 | | | $ | 54,635 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Capital Expenditures ($000) | | $ | 22,373 | | | $ | 27,885 | | | $ | 34,529 | | | | — | | | $ | 34,529 | | | $ | 44,910 | | | | — | | $ | 44,910 | | | $ | 31,548 | | | | — | | | $ | 31,548 | | | $ | 44,023 | | | $ | 46,880 | | | $ | 49,382 | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
|
Gross Margin (2) (3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As Reported | | | 60 | % | | | 60 | % | | | 61 | % | | | n/a | | | | 60 | % | | | 61 | % | | | n/a | | | 59 | % | | | 60 | % | | | n/a | | | | 60 | % | | | 61 | % | | | 59 | % | | | 60 | % |
Without Reciprocal Compensation settlements | | | 60 | % | | | 60 | % | | | 60 | % | | | n/a | | | | 59 | % | | | 61 | % | | | n/a | | | 59 | % | | | 60 | % | | | n/a | | | | 60 | % | | | 61 | % | | | 59 | % | | | 60 | % |
| | | | | | | | | | | | | | |
Modified EBITDA Margin (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As Reported | | | 29 | % | | | 31 | % | | | 43 | % | | | n/a | | | | 32 | % | | | 35 | % | | | n/a | | | 31 | % | | | 32 | % | | | n/a | | | | 31 | % | | | 34 | % | | | 32 | % | | | 33 | % |
Without Reciprocal Compensation settlements | | | 29 | % | | | 31 | % | | | 42 | % | | | n/a | | | | 31 | % | | | 35 | % | | | n/a | | | 31 | % | | | 32 | % | | | n/a | | | | 31 | % | | | 34 | % | | | 32 | % | | | 33 | % |
| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| (2) | The Company separately presents Modified EBITDA, gross margin and Modified EBITDA margin and recurring revenue without reciprocal compensation settlements and MCI settlements to help enhance comparability of these measures between periods. Total Revenue represents the revenue reported on a GAAP basis. |
| (3) | The Company utilizes a fully burdened gross margin, including network costs, and personnel costs for customer care, provisioning, network maintenance, technical field and network operations. |
11
Time Warner Telecom Inc.
Selected Operating Statistics
Unaudited (1)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Twelve Months Ended (Note 2)
| | | | | | | |
| | | 2004
| | | 2003
| | | Growth%
| |
| | | As | | | MCI | | | Net of | | | As | | | MCI | | | Net of | | | As | | | Net of | |
| | | Reported
| | | Settlements
| | | Settlements
| | | Reported
| | | Settlements
| | | Settlements
| | | Reported
| | | Settlements
| |
Financial Metrics: (1), (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Revenue ($000) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Dedicated transport services | | $ | 332,577 | | | $ | 1,661 | | | $ | 330,916 | | | $ | 361,038 | | | $ | 6,949 | | | $ | 354,089 | | | -8 | % | | -7 | % |
Switched services | | | 157,905 | | | | (25 | ) | | | 157,930 | | | | 152,789 | | | | 95 | | | | 152,694 | | | 3 | % | | 3 | % |
Data and Internet services | | | 124,805 | | | | 675 | | | | 124,130 | | | | 104,576 | | | | 7,293 | | | | 97,283 | | | 19 | % | | 28 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
Subtotal | | | 615,287 | | | | 2,311 | | | | 612,976 | | | | 618,403 | | | | 14,337 | | | | 604,066 | | | -1 | % | | 1 | % |
Intercarrier Compensation | | | 37,800 | | | | — | | | | 37,800 | | | | 47,325 | | | | — | | | | 47,325 | | | -20 | % | | -20 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
Recurring Revenue | | | 653,087 | | | | 2,311 | | | | 650,776 | | | | 665,728 | | | | 14,337 | | | | 651,391 | | | -2 | % | | 0 | % |
Reciprocal Compensation settlements | | | — | | | | — | | | | — | | | | 3,863 | | | | — | | | | 3,863 | | | -100 | % | | -100 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
Total Revenue | | $ | 653,087 | | | $ | 2,311 | | | $ | 650,776 | | | $ | 669,591 | | | $ | 14,337 | | | $ | 655,254 | | | -2 | % | | -1 | % |
Operating Costs | | | 261,285 | | | | — | | | | 261,285 | | | | 264,322 | | | | — | | | | 264,322 | | | -1 | % | | -1 | % |
Selling, general and administrative | | | 178,317 | | | | (400 | ) | | | 178,717 | | | | 172,925 | | | | (15,128 | ) | | | 188,053 | | | 3 | % | | -5 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
Modified EBITDA | | $ | 213,485 | | | $ | 2,711 | | | $ | 210,774 | | | $ | 232,344 | | | $ | 29,465 | | | $ | 202,879 | | | -8 | % | | 4 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
Modified EBITDA Reconciliation ($000) (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As Reported | | $ | 213,485 | | | $ | 2,711 | | | $ | 210,774 | | | $ | 232,344 | | | $ | 29,465 | | | $ | 202,879 | | | -8 | % | | 4 | % |
Less: Reciprocal compensation settlements | | | — | | | | — | | | | — | | | | (3,863 | ) | | | — | | | | (3,863 | ) | | -100 | % | | -100 | % |
| | |
|
|
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|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
Modified EBITDA without Reciprocal Compensation settlements | | $ | 213,485 | | | $ | 2,711 | | | $ | 210,774 | | | $ | 228,481 | | | $ | 29,465 | | | $ | 199,016 | | | -7 | % | | 6 | % |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
| |
|
|
Capital Expenditures ($000) | | $ | 171,833 | | | | — | | | $ | 171,833 | | | $ | 129,697 | | | | — | | | $ | 129,697 | | | | | | | |
| | |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| |
|
|
| | | | | | |
Gross Margin (2) (3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As Reported | | | 60 | % | | | n/a | | | | 60 | % | | | 61 | % | | | n/a | | | | 60 | % | | | | | | |
Without Reciprocal Compensation settlements | | | 60 | % | | | n/a | | | | 60 | % | | | 60 | % | | | n/a | | | | 59 | % | | | | | | |
Modified EBITDA Margin (2) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
As Reported | | | 33 | % | | | n/a | | | | 32 | % | | | 35 | % | | | n/a | | | | 31 | % | | | | | | |
Without Reciprocal Compensation settlements | | | 33 | % | | | n/a | | | | 32 | % | | | 34 | % | | | n/a | | | | 31 | % | | | | | | |
| (1) | For complete financials and related footnotes, please refer to the Company’s SEC filings. |
| (2) | The Company separately presents Modified EBITDA, gross margin and Modified EBITDA margin and recurring revenue without reciprocal compensation settlements and MCI settlements to help enhance comparability of these measures between periods. Total Revenue represents the revenue reported on a GAAP basis. |
| (3) | The Company utilizes a fully burdened gross margin, including network costs, and personnel costs for customer care, provisioning, network maintenance, technical field and network operations. |
12
