TIME WARNER TELECOM - 2nd Quarter Result!!!! - 500 Beiträge pro Seite

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Thursday August 1, 7:46 am Eastern Time
Press Release
SOURCE: Time Warner Telecom Inc.
Time Warner Telecom Announces Second Quarter 2002 Results
- 13th Consecutive Quarter of Positive EBITDA(1) -
- Company Provides Guidance on 2002 Capital Expenditures -
LITTLETON, Colo., Aug. 1 /PRNewswire-FirstCall/ -- Time Warner Telecom Inc. (Nasdaq: TWTC - News), a leading provider of metro and regional optical broadband networks and services to business customers, today announced its second quarter financial results, including $184.6 million in revenue, $53.1 million in EBITDA(1) and a net loss of $(30.8) million. The Company`s capital expenditures for the quarter were $30.1 million.

These financial results reflect Time Warner Telecom`s ability to leverage its metro and regional fiber networks to provide high-margin products and services while executing a controllable success-based capital spending plan, which is responsive to this economic climate.

"Time Warner Telecom continues to perform well despite the telecom storm that surrounds our industry," said Larissa Herda, Time Warner Telecom`s Chairman, CEO and President. "While we are not immune to its effects, we are focusing on what we can control, which is running our business wisely. This includes building on the excellent relationships we have with our current customers while we expand the same quality of these relationships to new customers. I am pleased with our ability to control costs and manage our liquidity while advancing our strategy of serving carrier and end-user customers with our metro and regional networks."

Revenue

Revenue for the quarter was $184.6 million, a 15% decrease from the same period last year, primarily attributable to a reduction in recurring and non-recurring intercarrier compensation. Revenue in the current quarter includes favorable non-recurring reciprocal compensation of $13.9 million, which compared with favorable non-recurring reciprocal compensation and acquisition related revenue totaling $38.8 million for the same period in 2001. Total revenue, excluding the non-recurring revenue, decreased 5% to $170.6 million in the current quarter from $179.1 million for the same period last year. This reflects a $9.6 million, or 34%, reduction in intercarrier compensation, a $5.5 million, or 4%, reduction in combined dedicated transport and switched services revenue and an increase of $6.7 million, or 44%, in data and Internet services revenue from the second quarter 2001.

Intercarrier compensation revenue includes reciprocal compensation and switched access. The overall downward trend in intercarrier compensation reflects the impacts of mandated rate reductions by the FCC and other regulatory rulings, as well as negotiated customer contracts. The Company expects intercarrier compensation to diminish as a percent of total revenue in the future, primarily as a result of further rate reductions, including a switched access rate reduction which went into effect in June.

As a result of a settlement of a dispute regarding reciprocal compensation, the Company recognized $13.9 million of previously deferred revenue that compared to $37.0 million for similar settlements in the same quarter last year. The $13.9 million represents cash received in a prior period but recognized in the current period.

Gross Margin

Gross margin was 61% versus 63% in the same period last year, reflecting the reduction in favorable non-recurring revenue. Gross margin, excluding favorable non-recurring reciprocal compensation, for the second quarter was 57% versus 55% for the same period in 2001, reflecting improvement of 250 basis points from the second quarter last year and 80 basis points from the previous quarter. The Company utilizes a fully burdened gross margin, including network costs, long haul capacity costs and personnel costs for customer care, provisioning, network maintenance, technical field and network operations.

EBITDA

EBITDA(1) was $53.1 million or 29% less than the same period last year, primarily reflecting the reduction in favorable non-recurring revenue.

Excluding favorable non-recurring reciprocal compensation, EBITDA increased to $39.1 million, or 3% from $37.8 million for the same period last year and EBITDA margin was 23%, compared to 21% for the same period in 2001. The EBITDA margin reflects an improvement of 200 basis points from the same period last year and was consistent with the previous quarter.

Net Income (Loss)

The Company reported a net loss of $(30.8) million, or $(.27) per share for the second quarter of 2002, as compared to net income of $4.4 million, or $.04 per share, for same period last year, primarily reflecting the decrease in favorable non-recurring revenue, decreased intercarrier compensation revenue and increased depreciation and amortization expense related to market expansion throughout 2001.

Capital Expenditures

Capital expenditures for the quarter were $30.1 million as compared to $147.1 million for second quarter of 2001, reflecting the Company`s controllable success-based capital spending plan as well as its ability to redeploy network capacity. The Company expects capital expenditures to be $150 to $200 million for the full year 2002.

Financing and other Operating Highlights

As of June 30, 2002, the Company had $324 million in cash and equivalents, $750 million in undrawn financing and a ratio of long-term debt to equity of approximately 1.2-to-1. As of June 30, 2002, the Company was in compliance with all its debt covenants. The $324 million in cash and equivalents reflects an increase of $9 million from the first quarter. EBITDA(1) for the second quarter, excluding the favorable non-recurring reciprocal compensation, covered interest expense by 1.5 times.

"Uncertainty in the telecom sector continues to increase, as evidenced by recent events and the Chapter 11 bankruptcy filing of WorldCom Inc., our largest customer," said David Rayner, Time Warner Telecom`s Senior Vice President and Chief Financial Officer. The Company reported that WorldCom Inc. and its affiliates represented 12% of recurring revenue for the second quarter and year to date as of June 30, 2002. The Company had $14.7 million in receivables from WorldCom and its affiliates as of June 30, 2002.

As of June 30, the Company reported $101.8 million in total gross Company receivables with an allowance for doubtful accounts of $31.1 million, or 31%. "We believe we are adequately reserved for all doubtful accounts including WorldCom as of June 30," said Rayner. "We do not anticipate any significant additional charge for the pre-bankruptcy receivables from WorldCom."

The overall economic environment continues to result in customer disconnects and bankruptcies, representing a loss of approximately $4.0 million of monthly recurring revenue for the second quarter of 2002, which is an increase from the $3.0 million in the first quarter, but similar to amounts experienced in 2001. The Company reported that approximately 5% of monthly recurring revenue was from companies in bankruptcy as of June 30, prior to the impact of the bankruptcy filing in July by WorldCom.

Summary

"Time Warner Telecom continues to perform well, despite this economic climate," said Herda. "While the economy has not yet improved, we are pursuing our strategy of driving new sales growth and deeper penetration in our existing markets. Against the backdrop of a challenging economy, volatility in the telecom industry and diminishing intercarrier compensation rates, we are pleased with our steady performance."

"This is a difficult time for believing in telecom; however, we believe that with our strong brand name, quality customer base, dedicated team of people and fiber networks that extend all the way to the customers` premises, we will be one of the strong survivors of this industry," concluded Herda.

Time Warner Telecom Inc. plans to conduct a webcast conference call to discuss its earnings results on August 1, 2002 at 9:00 a.m. MDT (11:00 a.m. EDT). To access the webcast, visit www.twtelecom.com .

(1) EBITDA is defined as operating income or loss before depreciation and amortization expense. Accordingly, 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 U.S. generally accepted accounting principles.
About Time Warner Telecom Inc.

Time Warner Telecom Inc., headquartered in Littleton, Colo., delivers "last-mile" broadband data, dedicated Internet access and voice services for businesses in 44 U.S. metropolitan areas. Time Warner Telecom Inc., one of the country`s premier competitive telecom carriers, delivers fast, powerful and flexible facilities-based metro and regional optical networks to large and medium customers. Please visit www.twtelecom.com for more information.

The statements in this press release concerning the outlook for 2002, the funding of the Company`s business plan 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. These risks include the risks summarized in the Company`s filings with the SEC, especially the section entitled "Risk Factors" in its Annual Report on Form 10-K for the fiscal year ended December 31, 2001. 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.


Time Warner Telecom Inc. (1)
Consolidated Operations Highlights
(Dollars in thousands)
Unaudited

Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 Growth % 2002 2001 Growth %

Revenue
Dedicated
transport
services $92,828 $97,076 -4% $187,614 $190,312 -1%
Switched services 37,184 38,480 -3% 73,929 74,456 -1%
Data and Internet
services 21,924 15,259 44% 42,348 30,530 39%
151,936 150,815 1% 303,891 295,298 3%
Intercarrier
Compensation (2) 18,698 28,267 -34% 35,462 52,289 -32%
Total
Recurring
Revenue 170,634 179,082 -5% 339,353 347,587 -2%
Non-recurring
reciprocal
compensation (3) 13,942 37,040 -62% 13,942 37,040 -62%
Non-recurring
acquisition
related revenue
(4) 0 1,775 -100% 0 6,397 -100%
Total Revenue 184,576 217,897 -15% 353,295 391,024 -10%

Expenses
Operating costs 72,812 81,662 -11% 146,167 160,367 -9%
Gross Margin 111,764 136,235 -18% 207,128 230,657 -10%
Selling, general
and administrative 58,686 61,362 -4% 115,417 121,932 -5%
EBITDA 53,078 74,873 -29% 91,711 108,725 -16%
Interest expense 25,920 26,334 51,675 55,256
Interest income 1,323 5,915 2,800 12,575
28,481 54,454 42,836 66,044
One-time charge
for deferred loan
cost impairment 0 0 0 5,814
Investment losses 1,957 0 1,957 0
Depreciation and
amortization 57,172 46,222 114,506 98,897
(30,648) 8,232 (73,627) (38,667)
Income tax expense
(benefit) 150 3,847 300 (14,345)

Net Income (Loss) ($30,798) $4,385 ($73,927) ($24,322)


EBITDA
Total As Reported $53,078 $74,873 -29% $91,711 $108,725 -16%
Without non-
recurring
reciprocal
compensation $39,136 $37,833 3% $77,769 $71,685 8%

Capital Expenditures $30,121 $147,127 $66,991 $242,735

Gross Margin
Total As Reported 61% 63% 59% 59%
Without non-
recurring
reciprocal
compensation 57% 55% 57% 55%

EBITDA Margin
Total As Reported 29% 34% 26% 28%
Without non-
recurring
reciprocal
compensation 23% 21% 23% 20%


(1) For complete financials and related footnotes, please refer to the
Company`s SEC filings.
(2) Intercarrier Compensation includes Switched Access and Recurring
Reciprocal Compensation.
(3) Non-recurring reciprocal compensation represents resolution of a
previously disputed billing.
(4) Represents network services provided to the GST bankruptcy estate and
transitional customers.


Time Warner Telecom Inc.
Earnings Per Share Highlights
Unaudited

Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001

Earnings Per Share - As Reported

Weighted Average Shares
Outstanding (thousands)

Basic 114,753 114,216 114,744 113,021

Diluted 114,753 115,926 114,744 113,021

Basic Earnings (Loss)
per Common Share ($0.27) $0.04 ($0.65) ($0.22)

Diluted Earnings (Loss)
per Common Share ($0.27) $0.04 ($0.65) ($0.22)


Common shares (thousands)

Actual Shares Outstanding 114,827 114,296 114,827 114,296

Options (thousands)

Options Outstanding 14,265 11,101 14,265 11,101

Options Exercisable 5,802 2,304 5,802 2,304

Options Exercisable and
"in the money" 0 0



Time Warner Telecom Inc.
Condensed Consolidated Balance Sheet Highlights
(Dollars in thousands)
Unaudited


June 30, March 31,
2002 2002

Cash and Marketable Debt Securities $323,637 $315,132

Receivables 101,776 111,375
Less: allowance (31,126) (32,555)
Net receivables 70,650 78,820

Other current assets 35,334 39,107

Property, plant and equipment 2,353,202 2,323,115
Less: accumulated depreciation (589,333) (532,348)
Net property, plant and
equipment 1,763,869 1,790,767

Intangibles and Other Assets 90,867 85,641

Total $2,284,357 $2,309,467


Current Liabilities
Accounts payable $53,391 $61,629
Deferred revenue 39,427 52,077
Accrued taxes, franchise and
other fees 68,322 65,447
Accrued interest 38,957 19,963
Other current liabilities 149,967 142,024
Total current liabilities 350,064 341,140

Long-Term Debt and Capital Lease
Obligations
9.75% Senior unsecured notes 400,000 400,000
10.125% Senior unsecured notes 400,000 400,000
Senior secured debt 250,000 250,000
Capital lease obligations 8,256 12,686
Total long-term debt and
capital lease obligations 1,058,256 1,062,686

Stockholders` Equity 876,037 905,641

Total $2,284,357 $2,309,467



Time Warner Telecom Inc.
Financing Highlights
(Dollars in thousands)
Unaudited

Financing Highlights (1)

Drawn as 06/30/2002
Total of Undrawn
Financing Rates Financing 06/30/2002 Financing

Revolver Eurodollar rate plus up
to 2.75% $475,000 $0 $475,000
Delayed Draw Eurodollar rate plus up
to 2.75% $275,000 $0 $275,000
Term Loan B Eurodollar rate plus
4.0% $250,000 $250,000 $0

$1,000,000 $250,000 $750,000

Cash and Marketable Securities at June 30, 2002 $323,637
$1,073,637


Debt Covenants of Senior Secured Debt (2)

As of June 30, 2002
Actual Ratio Required Ratio

Consolidated Leverage Ratio 3.8 Not to exceed 8.0

Senior Leverage Ratio 0 Not to exceed 4.0

Consolidated Interest Coverage Ratio 1.8 Not applicable
until quarter ended
Sept. 30, 2002


(1) For full terms and conditions of all Company financing agreements
please refer to SEC filings.
(2) EBITDA for purposes of the bank debt covenants allows for adjustments
for extraordinary, unusual and nonrecurring items. For a more
detailed description, see the credit agreement filed with the SEC as
Exhibit 10.16 to the Company`s Annual Report on Form 10-K for the year
ended December 31, 2000.



Time Warner Telecom Inc.
Selected Operating Statistics
Unaudited

2001, Quarter Ended 2002, Quarter Ended
Mar. 31 Jun. 30 Sept. 30 Dec. 31 Mar. 31 Jun. 30

Operating Metrics:
Route Miles
Metro 9,095 9,241 9,493 9,972 10,091 10,433
Regional 5,585 6,008 6,832 6,834 6,835 6,835
Total 14,680 15,249 16,325 16,806 16,926 17,268

Fiber Miles
Metro 418,924 454,715 483,647 528,503 534,974 570,690
Regional 202,039 219,569 229,461 229,557 229,568 229,569
Total 620,963 674,284 713,108 758,060 764,542 800,259

DS-O Equivalents
(000s) (1) 13,831 15,243 16,216 16,736 16,954 16,994

Buildings (2)
On-Fiber 2,907 2,941 3,036 3,146 3,173 3,303
Type II 6,730 6,911 7,045 7,539 7,742 8,187
Total 9,637 9,852 10,081 10,685 10,915 11,490
Networks
Operating
Networks 39 39 42 44 44 44
Markets with
Data Centers 35 35 38 40 40 40
Class 5 Switches 38 38 38 41 41 41
Soft Switches 8 9 9 9 12 12

Headcount
Total employees 2,639 2,666 2,680 2,661 2,376 2,182
Sales Account
Executives 250 296 297 288 275 253

Customers 5,809 5,943 6,242 6,386 6,658 6,809


(1) Each DS-O equivalent provides 64 kilobits per second of bandwidth.
(2) Buildings "On-Fiber" represents buildings carried fully on the
Company`s fiber network. Type II buildings are carried completely
on the Company`s fiber network, including the Company`s switch for
switched services, with a leased T1 service from the Company`s
distribution ring to the building entrance.



Time Warner Telecom Inc.
Selected Operating Statistics
Unaudited

2001, Quarter Ended 2002, Quarter Ended
Mar. 31 Jun. 30 Sept. 30 Dec. 31 Mar. 31 Jun. 30

Financial Metrics: (1)

Revenue ($000)
Dedicated
transport
services $93,236 $97,076 $96,839 $97,215 $94,786 $92,828
Switched
services 35,976 38,480 38,732 37,352 36,745 37,184
Data and
Internet
services 15,271 15,259 15,507 17,402 20,424 21,924
Subtotal 144,483 150,815 151,078 151,969 151,955 151,936
Intercarrier
Compensation 24,022 28,267 20,075 21,378 16,764 18,698
Recurring
Revenue 168,505 179,082 171,153 173,347 168,719 170,634
Non-recurring
reciprocal
compensation 0 37,040 0 0 0 13,942
Non-recurring
acquisition
revenue 4,622 1,775 1,572 611 0 0
Total
Revenue $173,127 $217,897 $172,725 $173,958 $168,719 $184,576

EBITDA ($000)
As Reported $33,852 $74,873 $36,982 $31,782 $38,633 $53,078
Without
non-recurring
reciprocal
compensation or
one-time NOC
Centralization
Charge $33,852 $37,833 $36,982 $38,620 $38,633 $39,136

Gross Margin
As Reported 55% 63% 55% 55% 57% 61%
Without
non-recurring
reciprocal
compensation 55% 55% 55% 55% 57% 57%

EBITDA Margin
As Reported 20% 34% 21% 18% 23% 29%
Without
non-recurring
reciprocal
compensation or
one-time NOC
Centralization
Charge 20% 21% 21% 22% 23% 23%

Capital
Expenditures
($000) $95,608 $147,127 $94,401 $88,316 $36,870 $30,121

SOURCE: Time Warner Telecom Inc.

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