Time Warner Telecom Announces Strong Fourth Quarter 2004 Results

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., Feb. 1 /PRNewswire-FirstCall/ -- 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 EBITDA(1) ("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 Footnote 1 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.


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.

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.

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, capital expenditures totaled $171.8 million. For 2005, the Company expects capital expenditures of $160 to $175 million, which includes the cost of 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."

(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 Selected Operating Statistics tables 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 at www.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 visit www.twtelecom.com for more information.

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%
159,508 152,301 5%
Intercarrier compensation (2) 8,516 8,287 3%
Total Revenue 168,024 160,588 5%

Expenses
Operating costs 67,197 65,550 3%
Gross Margin 100,827 95,038 6%
Selling, general and administrative 46,192 43,432 6%
Modified EBITDA 54,635 51,606 6%
Depreciation, amortization
and accretion 64,531 54,754
Operating Loss (9,896) (3,148)
Interest expense (28,728) (29,030)
Interest income 2,590 1,350
Net loss before income taxes (36,034) (30,828)
Income tax expense 111 75
Net Loss ($36,145) ($30,903)

Capital Expenditures $49,382 $46,880 5%

Gross Margin 60% 59%

Modified EBITDA Margin 33% 32%


(1) For complete financials and related footnotes, please refer to the
Company's SEC filings.
(2) Intercarrier Compensation includes switched access and reciprocal
compensation.



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

Three Months Ended Twelve Months Ended
December 31, 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%
159,508 159,567 0% 615,287 618,403 -1%
Intercarrier
compensation (2) 8,516 9,811 -13% 37,800 47,325 -20%
168,024 169,378 -1% 653,087 665,728 -2%
Reciprocal
Compensation
Settlements -- -- -- -- 3,863 -100%
Total Revenue 168,024 169,378 -1% 653,087 669,591 -2%

Expenses
Operating costs 67,197 65,861 2% 261,285 264,322 -1%
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%
Modified EBITDA 54,635 58,886 -7% 213,485 232,344 -8%
Depreciation,
amortization and
accretion 64,531 59,028 230,688 223,904
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
Net loss before
income taxes (36,034) (20,982) (132,401) (85,350)
Income tax expense 111 346 636 1,021
Loss before
cumulative
effect of
change in
accounting
principle (36,145) (21,328) (133,037) (86,371)
Cumulative
effect of
change in
accounting
principle (3) -- -- -- 2,965
Net Loss ($36,145) ($21,328) ($133,037) ($89,336)


Capital Expenditures $49,382 $44,910 10% $171,833 $129,697 32%

Gross Margin 60% 61% 60% 61%

Modified EBITDA
Margin 33% 35% 33% 35%


(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 Highlights of Results Per Share and Selected Operating Statistics
tables for impact of receipt of MCI bankruptcy settlements in 2003 and
2004.



Time Warner Telecom Inc.
Highlights of Results Per Share
Unaudited (1)

Twelve Months
Ended
Three 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

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
As Reported ($0.31) ($0.27) ($0.19) ($1.15) ($0.78)



As of
12/31/04 9/30/04 12/31/03
Common shares (thousands)

Actual Shares Outstanding 115,806 115,785 115,292

Options (thousands)

Options Outstanding 19,224 19,619 18,635

Options Exercisable 12,871 12,236 10,463

Options Exercisable and
In-the-Money 2,120 1,856 1,583


(1) For complete financials and related footnotes, please refer to the
Company's SEC filings.



Time Warner Telecom Inc.
Condensed Consolidated Balance Sheet Highlights
(Dollars in thousands)
Unaudited (1)



Dec. 31, Sept. 30, Dec. 31,
2004 2004 2003

Summary of Cash & Investments
Cash and equivalents, and short-term
investments $432,506 $434,042 $478,593
Long-term Investments -- 1,615 --
$432,506 $435,657 $478,593

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)
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)
Net property, plant and
equipment 1,303,092 1,318,051 1,363,247

Other Assets 98,835 94,344 88,149

Total $1,905,588 $1,924,656 $2,005,883


LIABILITIES AND STOCKHOLDERS' EQUITY

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.



Time Warner Telecom Inc.
Selected Operating Statistics
Unaudited (1)

Quarter Ended
2003
Mar. 31 Jun. 30 Sept. 30 Dec. 31

Operating Metrics:
Route Miles
Metro 11,075 11,170 11,345 11,582
Regional 6,694 6,694 6,694 6,694
Total 17,769 17,864 18,039 18,276

Fiber Miles
Metro 602,988 604,668 614,942 624,034
Regional 237,277 269,759 274,459 274,459
Total 840,265 874,427 889,401 898,493

Buildings (2)
On-net 3,616 3,677 3,854 4,152
Type II 9,173 10,087 10,662 11,934
Total 12,789 13,764 14,516 16,086

Networks
Class 5 Switches 41 41 41 41
Soft Switches 12 12 12 12

Headcount
Total employees 1,916 1,932 2,010 2,009
Sales
Sales Account
Executives 259 275 289 300
Customer Care
Specialists (3) -- -- -- 2
259 275 289 302

Customers 7,598 7,994 8,420 8,878


Quarter Ended
2004
Mar. 31 Jun. 30 Sept. 30 Dec. 31

Operating Metrics:
Route Miles
Metro 11,998 12,247 12,453 12,375
Regional 6,694 6,694 6,694 6,794
Total 18,692 18,941 19,147 19,169

Fiber Miles
Metro 626,873 637,081 646,849 642,298
Regional 273,963 273,963 273,963 275,163
Total 900,836 911,044 920,812 917,461

Buildings (2)
On-net 4,350 4,576 4,839 5,074
Type II 12,502 13,114 13,895 14,139
Total 16,852 17,690 18,734 19,213

Networks
Class 5 Switches 41 41 40 39
Soft Switches 12 12 12 13

Headcount
Total employees 1,982 1,971 1,990 1,986
Sales
Sales Account Executives 286 290 301 296
Customer Care
Specialists (3) 19 20 22 18
305 310 323 314

Customers 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.



Time Warner Telecom Inc.
Selected Operating Statistics
Unaudited (1)

Quarter Ended
2003

Mar. 31 Jun. 30 Sept. 30 (Note 2)
Financial As As As MCI Net of
Metrics: (1), (2) Reported Reported Reported Settlement Settlement
Revenue ($000)
Dedicated transport
services $86,512 $88,842 $94,066 $2,824 $91,242
Switched services 39,891 36,433 38,957 95 38,862
Data and Internet
services 24,304 24,131 25,700 2,245 23,455
Subtotal 150,707 149,406 158,723 5,164 153,559
Intercarrier
Compensation 14,306 13,366 9,842 -- 9,842
Recurring Revenue 165,013 162,772 168,565 5,164 163,401
Reciprocal
Compensation
settlements -- -- 3,863 -- 3,863
Total Revenue $165,013 $162,772 $172,428 $5,164 $167,264
Operating Costs 66,367 65,463 66,631 -- 66,631
Selling, general and
administrative 49,980 47,152 31,162 (15,128) 46,290
Modified EBITDA $48,666 $50,157 $74,635 $20,292 $54,343

Modified EBITDA
Reconciliation
($000) (2)
As Reported $48,666 $50,157 $74,635 $20,292 $54,343
Less: Reciprocal
compensation
settlements -- -- (3,863) -- (3,863)
Without Reciprocal
Compensation
settlements $48,666 $50,157 $70,772 $20,292 $50,480

Capital Expenditures
($000) $22,373 $27,885 $34,529 -- $34,529

Gross Margin (2) (3)
As Reported 60% 60% 61% n/a 60%
Without Reciprocal
Compensation
settlements 60% 60% 60% n/a 59%

Modified EBITDA Margin (2)
As Reported 29% 31% 43% n/a 32%
Without Reciprocal
Compensation
settlements 29% 31% 42% n/a 31%


Quarter Ended
2003

Dec. 31 (Note 2)

Financial Metrics: (1), (2) As MCI Net of
Reported Settlement Settlement
Revenue ($000)
Dedicated transport services $91,618 $4,125 $87,493
Switched services 37,508 -- 37,508
Data and Internet services 30,441 5,048 25,393
Subtotal 159,567 9,173 150,394
Intercarrier Compensation 9,811 -- 9,811
Recurring Revenue 169,378 9,173 160,205
Reciprocal Compensation settlements -- -- --
Total Revenue $169,378 $9,173 $160,205
Operating Costs 65,861 -- 65,861
Selling, general and administrative 44,631 -- 44,631
Modified EBITDA $58,886 $9,173 $49,713

Modified EBITDA Reconciliation ($000) (2)
As Reported $58,886 $9,173 $49,713
Less: Reciprocal compensation
settlements -- -- --
Without Reciprocal Compensation
settlements $58,886 $9,173 $49,713

Capital Expenditures ($000) $44,910 -- $44,910

Gross Margin (2) (3)
As Reported 61% n/a 59%
Without Reciprocal Compensation
settlements 61% n/a 59%

Modified EBITDA Margin (2)
As Reported 35% n/a 31%
Without Reciprocal Compensation
settlements 35% n/a 31%


Quarter Ended
2004

Mar. 31 (Note 2)

Financial Metrics: (1), (2) As MCI Net of
Reported Settlement Settlement
Revenue ($000)
Dedicated transport services $84,160 $1,661 $82,499
Switched services 38,113 (25) 38,138
Data and Internet services 28,424 675 27,749
Subtotal 150,697 2,311 148,386
Intercarrier Compensation 10,952 -- 10,952
Recurring Revenue 161,649 2,311 159,338
Reciprocal Compensation settlements -- -- --
Total Revenue $161,649 $2,311 $159,338
Operating Costs 64,317 -- 64,317
Selling, general and administrative 45,312 (400) 45,712
Modified EBITDA $52,020 $2,711 $49,309

Modified EBITDA Reconciliation ($000) (2)
As Reported $52,020 $2,711 $49,309
Less: Reciprocal compensation
settlements -- -- --
Without Reciprocal Compensation
settlements $52,020 $2,711 $49,309

Capital Expenditures ($000) $31,548 -- $31,548

Gross Margin (2) (3)
As Reported 60% n/a 60%
Without Reciprocal Compensation
settlements 60% n/a 60%

Modified EBITDA Margin (2)
As Reported 32% n/a 31%
Without Reciprocal Compensation
settlements 32% n/a 31%


Quarter Ended
2004

Jun. 30 Sept. 30 Dec. 31

Financial Metrics: (1), (2) As As As
Reported Reported Reported
Revenue ($000)
Dedicated transport services $83,552 $81,175 $83,690
Switched services 39,321 39,418 41,053
Data and Internet services 29,908 31,708 34,765
Subtotal 152,781 152,301 159,508
Intercarrier Compensation 10,045 8,287 8,516
Recurring Revenue 162,826 160,588 168,024
Reciprocal Compensation
settlements -- -- --
Total Revenue $162,826 $160,588 $168,024
Operating Costs 64,221 65,550 67,197
Selling, general and
administrative 43,381 43,432 46,192
Modified EBITDA $55,224 $51,606 $54,635

Modified EBITDA Reconciliation ($000) (2)
As Reported $55,224 $51,606 $54,635
Less: Reciprocal compensation
settlements -- -- --
Without Reciprocal Compensation
settlements $55,224 $51,606 $54,635

Capital Expenditures ($000) $44,023 $46,880 $49,382

Gross Margin (2) (3)
As Reported 61% 59% 60%
Without Reciprocal Compensation
settlements 61% 59% 60%

Modified EBITDA Margin (2)
As Reported 34% 32% 33%
Without Reciprocal Compensation
settlements 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.



Time Warner Telecom Inc.
Selected Operating Statistics
Unaudited (1)


Twelve Months Ended (Note 2)
2004

Financial Metrics: (1), (2) As MCI Net of
Reported Settlements Settlements
Revenue ($000)
Dedicated transport services $332,577 $1,661 $330,916
Switched services 157,905 (25) 157,930
Data and Internet services 124,805 675 124,130
Subtotal 615,287 2,311 612,976
Intercarrier Compensation 37,800 -- 37,800
Recurring Revenue 653,087 2,311 650,776
Reciprocal Compensation
settlements -- -- --
Total Revenue $653,087 $2,311 $650,776
Operating Costs 261,285 -- 261,285
Selling, general and
administrative 178,317 (400) 178,717
Modified EBITDA $213,485 $2,711 $210,774

Modified EBITDA Reconciliation
($000) (2)
As Reported $213,485 $2,711 $210,774
Less: Reciprocal compensation
settlements -- -- --
Modified EBITDA without Reciprocal
Compensation settlements $213,485 $2,711 $210,774

Capital Expenditures ($000) $171,833 -- $171,833

Gross Margin (2) (3)
As Reported 60% n/a 60%
Without Reciprocal Compensation
settlements 60% n/a 60%

Modified EBITDA Margin (2)
As Reported 33% n/a 32%
Without Reciprocal Compensation
settlements 33% n/a 32%


Twelve Months Ended (Note 2)
2003 Growth %
Financial
Metrics: (1), (2) As MCI Net of As Net of
Reported Settlements Settlements Reported Settlements
Revenue ($000)
Dedicated
transport
services $361,038 $6,949 $354,089 -8% -7%
Switched
services 152,789 95 152,694 3% 3%
Data and
Internet
services 104,576 7,293 97,283 19% 28%
Subtotal 618,403 14,337 604,066 -1% 1%
Intercarrier
Compensation 47,325 -- 47,325 -20% -20%
Recurring
Revenue 665,728 14,337 651,391 -2% 0%
Reciprocal
Compensation
settlements 3,863 -- 3,863 -100% -100%
Total Revenue $669,591 $14,337 $655,254 -2% -1%
Operating Costs 264,322 -- 264,322 -1% -1%
Selling,
general and
administrative 172,925 (15,128) 188,053 3% -5%
Modified
EBITDA $232,344 $29,465 $202,879 -8% 4%

Modified EBITDA
Reconciliation
($000) (2)
As Reported $232,344 $29,465 $202,879 -8% 4%
Less:
Reciprocal
compensation
settlements (3,863) -- (3,863) -100% -100%
Modified EBITDA
without
Reciprocal
Compensation
settlements $228,481 $29,465 $199,016 -7% 6%

Capital
Expenditures
($000) $129,697 -- $129,697

Gross Margin
(2) (3)
As Reported 61% n/a 60%
Without
Reciprocal
Compensation
settlements 60% n/a 59%

Modified
EBITDA
Margin (2)
As Reported 35% n/a 31%
Without
Reciprocal
Compensation
settlements 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.



Source: Time Warner Telecom Inc.

CONTACT: Investor Relations, Carole Curtin, +1-303-566-1000,
carole.curtin@twtelecom.com, or Media Relations, Bob Meldrum, +1-303-566-1354,
bob.meldrum@twtelecom.com, both of Time Warner Telecom Inc.

Web site: http://www.twtelecom.com/


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