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Time Warner Cable Reports 2012 Third-Quarter Results

Stocks in this article: TWC

About Time Warner Cable

Time Warner Cable Inc. (NYSE:TWC) is among the largest providers of video, high-speed data and voice services in the United States, connecting more than 15 million customers to entertainment, information and each other. Time Warner Cable Business Class offers data, video and voice services to businesses of all sizes, cell tower backhaul services to wireless carriers and, through its NaviSite subsidiary, managed and outsourced information technology solutions and cloud services. Time Warner Cable Media, the advertising arm of Time Warner Cable, offers national, regional and local companies innovative advertising solutions. More information about the services of Time Warner Cable is available at www.twc.com, www.twcbc.com, www.navisite.com, and www.twcmedia.com.

Additional details on financial and subscriber metrics are included in the Trending Schedules and Presentation Slides posted on the Company’s Investor Relations website at www.twc.com/investors.

Information on Conference Call

Time Warner Cable’s earnings conference call can be heard live at 8:30 am ET on Monday, November 5, 2012. To listen to the call, visit www.twc.com/investors .

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations or beliefs, and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological, strategic and/or regulatory factors, and other factors affecting the operations of Time Warner Cable Inc. More detailed information about these factors may be found in filings by Time Warner Cable Inc. with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Time Warner Cable is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.

TIME WARNER CABLE INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
                         
September 30, December 31,
    2012 2011
    (in millions)
ASSETS
Current assets:
Cash and equivalents $ 3,853 $ 5,177

Receivables, less allowances of $82 million and $62 million as of September 30, 2012 and December 31, 2011, respectively

899 767
Deferred income tax assets 372 267
Other current assets   238     187  
Total current assets 5,362 6,398
Investments 88 774
Property, plant and equipment, net 14,510 13,905
Intangible assets subject to amortization, net 666 228
Intangible assets not subject to amortization 26,011 24,272
Goodwill 2,893 2,247
Other assets   555     452  
Total assets $ 50,085   $ 48,276  
 
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable $ 458 $ 545
Deferred revenue and subscriber-related liabilities 191 169
Accrued programming expense 875 807
Current maturities of long-term debt 1,876 2,122
Mandatorily redeemable preferred equity issued by a subsidiary 300
Other current liabilities   1,834     1,727  
Total current liabilities 5,534 5,370
Long-term debt 25,187 24,320
Mandatorily redeemable preferred equity issued by a subsidiary 300
Deferred income tax liabilities, net 11,262 10,198
Other liabilities 485 551
TWC shareholders’ equity:

Common stock, $0.01 par value, 303.3 million and 315.0 million shares issued and outstanding as of September 30, 2012 and December 31, 2011, respectively

3 3
Additional paid-in capital 7,707 8,018
Retained earnings 440 68
Accumulated other comprehensive loss, net   (541 )   (559 )
Total TWC shareholders’ equity 7,609 7,530
Noncontrolling interests   8     7  
Total equity   7,617     7,537  
Total liabilities and equity $ 50,085   $ 48,276  

See accompanying notes.

TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
                       
Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
(in millions, except per share data)
Revenues $ 5,363 $ 4,911 $ 15,901 $ 14,682
Costs and expenses:
Costs of revenues (a) 2,499 2,286 7,377 6,855
Selling, general and administrative (a) 918 843 2,694 2,490
Depreciation 789 750 2,377 2,238
Amortization 31 9 79 23
Merger-related and restructuring costs   32     21     98     36  
Total costs and expenses   4,269     3,909     12,625     11,642  
Operating Income 1,094 1,002 3,276 3,040
Interest expense, net (402 ) (383 ) (1,204 ) (1,112 )
Other income (expense), net   496     (22 )   493     (84 )
Income before income taxes 1,188 597 2,565 1,844
Income tax provision   (379 )   (241 )   (920 )   (741 )
Net income 809 356 1,645 1,103
Less: Net income attributable to noncontrolling interests   (1 )       (3 )   (2 )
Net income attributable to TWC shareholders $ 808   $ 356   $ 1,642   $ 1,101  
 

Net income per common share attributable to TWC common shareholders:

Basic $ 2.64   $ 1.09   $ 5.27   $ 3.28  
Diluted $ 2.60   $ 1.08   $ 5.22   $ 3.24  
Average common shares outstanding:
Basic   305.7     323.8     310.2     333.7  
Diluted   310.2     329.1     314.8     339.4  
 
Cash dividends declared per share of common stock $ 0.56   $ 0.48   $ 1.68   $ 1.44  
 

(a)  Costs of revenues and selling, general and administrative expenses exclude depreciation.

See accompanying notes.

TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
                         
Nine Months Ended
September 30,
    2012   2011
(in millions)
OPERATING ACTIVITIES
Net income $ 1,645 $ 1,103
Adjustments for noncash and nonoperating items:
Depreciation 2,377 2,238
Amortization 79 23
Pretax gain on sale of investment in Clearwire (64 )
(Income) loss from equity-method investments, net of cash distributions (433 ) 98
Deferred income taxes 409 575
Equity-based compensation expense 104 88
Excess tax benefit from equity-based compensation (73 ) (46 )
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Receivables (31 ) 34
Accounts payable and other liabilities 105 8
Other changes   (3 )   223  
Cash provided by operating activities   4,115     4,344  
   
INVESTING ACTIVITIES
Acquisitions and investments, net of cash acquired and distributions received (1,426 ) (333 )
Proceeds from SpectrumCo’s sale of spectrum licenses 1,112
Capital expenditures (2,191 ) (1,995 )
Other investing activities   23     21  
Cash used by investing activities   (2,482 )   (2,307 )
 
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt 2,258 3,227
Repayments of long-term debt (1,750 )
Repayments of long-term debt assumed in acquisitions (1,730 ) (44 )
Debt issuance costs (25 ) (24 )
Proceeds from exercise of stock options 124 109
Taxes paid in cash in lieu of shares issued for equity-based compensation (43 ) (29 )
Excess tax benefit from equity-based compensation 73 46
Dividends paid (529 ) (488 )
Repurchases of common stock (1,287 ) (2,291 )
Other financing activities   (48 )   (17 )
Cash provided (used) by financing activities   (2,957 )   489  
 
Increase (decrease) in cash and equivalents (1,324 ) 2,526
Cash and equivalents at beginning of period   5,177     3,047  
Cash and equivalents at end of period $ 3,853   $ 5,573  

See accompanying notes.

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