Time Warner Cable Reports 2012 Fourth-Quarter and Full-Year Results

  Time Warner Cable Reports 2012 Fourth-Quarter and Full-Year Results

Business Wire

NEW YORK -- January 31, 2013

Time Warner Cable Inc. (NYSE: TWC) today reported financial results for its
fourth quarter and full year ended December 31, 2012.

Time Warner Cable Chief Executive Officer Glenn Britt said: “We delivered
revenue growth of almost 9% in 2012 – powered by our acquisition and
successful integration of Insight Communications, continued success in
residential high-speed data and business services, and a best-ever year in
advertising. In the year ahead, we plan to focus on operational excellence as
we invest to capture long-term opportunities and drive profitable growth.”

FINANCIAL RESULTS

Revenue for the fourth quarter of 2012 increased 9.9% from the fourth quarter
of 2011 to $5.5 billion. Residential services revenue increased 6.8%
year-over-year to $4.6 billion, business services revenue grew 25.9% to $515
million, advertising revenue increased 29.3% to $313 million and other revenue
grew 37.9% to $80 million.

Full-year 2012 revenue increased 8.7% year-over-year to $21.4 billion.
Residential services revenue grew 6.3% year-over-year to $18.2 billion,
business services revenue increased 29.4% to $1.9 billion, advertising revenue
increased 19.7% to $1.1 billion and other revenue increased 10.3% to $257
million.

                
               
(in
millions;           4th Quarter                                Full Year
unaudited)
                                          Change                                       Change
                    2012      2011        $       %          2012       2011         $         %
Residential
services                                              
revenue:
Video               $ 2,687     $ 2,628     $ 59      2.2  %     $ 10,917     $ 10,589     $ 328       3.1  %
High-speed            1,346       1,148       198     17.2 %       5,090        4,476        614       13.7 %
data
Voice                 527         495         32      6.5  %       2,104        1,979        125       6.3  %
Other                17         13         4       30.8 %      64          49          15        30.6 %
Total
residential           4,577       4,284       293     6.8  %       18,175       17,093       1,082     6.3  %
services
revenue
                      
Business
services
revenue:
Video                 83          74          9       12.2 %       323          286          37        12.9 %
High-speed            245         196         49      25.0 %       912          727          185       25.4 %
data
Voice                 87          57          30      52.6 %       306          197          109       55.3 %
Wholesale             52          44          8       18.2 %       184          154          30        19.5 %
transport
Other                48         38         10      26.3 %      176         105         71        67.6 %
Total
business              515         409         106     25.9 %       1,901        1,469        432       29.4 %
services
revenue
                      
Advertising           313         242         71      29.3 %       1,053        880          173       19.7 %
revenue^(a)
                      
Other                80         58         22      37.9 %      257         233         24        10.3 %
revenue
                      
Total               $ 5,485     $ 4,993     $ 492     9.9  %     $ 21,386     $ 19,675     $ 1,711     8.7  %
revenue


       Advertising revenue includes revenue from political advertising of $60
       million and $5 million for the fourth quarter of 2012 and 2011,
^(a)  respectively, and
       $114 million and $15 million for the full year of 2012 and 2011,
       respectively.


Revenue for the fourth quarter and full year of 2012 benefited from acquisitions, as
detailed below.


(in
millions;   4th Quarter 2012
unaudited)
            Historical   Organic      Acquisitions                        Total
            TWC^(a)        %              Insight   NewWave^(c)   Total     TWC
                           Change^(b)
Residential
services                   
revenue:
Video       $   2,546         (3.1 %)     $  137      $     4         $ 141     $ 2,687
High-speed      1,279         11.4 %         66             1           67        1,346
data
Voice           488           (1.4 %)        38             1           39        527
Other          16            23.1 %        1             —          1        17
Total
residential     4,329         1.1  %         242            6           248       4,577
services
revenue
Business
services        498           21.8 %         17             —           17        515
revenue
Advertising     299           23.6 %         14             —           14        313
revenue
Other          77            32.8 %        2             1          3        80
revenue
Total       $   5,203         4.2  %      $  275      $     7         $ 282     $ 5,485
revenue


      Historical TWC amounts include the results of the cable systems acquired
      from NewWave Communications (acquired on November 1, 2011) from
(a)  November 1 through December 31, 2012 and exclude the results of (i)
      Insight Communications Company, Inc. and (ii) the NewWave cable systems
      from
      October 1 through October 31, 2012.
      Organic % Change represents the change between the Historical TWC
(b)   amounts for the fourth quarter of 2012 and TWC’s results for the fourth
      quarter
      of 2011 included in the table above.
(c)   NewWave amounts represent the NewWave cable systems’ results for the
      period from October 1 through October 31, 2012.




(in
millions;       Full Year 2012
unaudited)
                    Historical   Organic         Acquisitions                                               Total
                    TWC^(a)        %                Insight^(c)   NewWave^(d)   NaviSite^(e)   Total       TWC
                                   Change^(b)
Residential
services                           
revenue:
Video               $  10,418          (1.6   %)     $    462        $     37        $     —          $ 499       $ 10,917
High-speed             4,856           8.5    %           220              14              —            234         5,090
data
Voice                  1,968           (0.6   %)          127              9               —            136         2,104
Other                 61              24.5   %          3               —              —           3          64
Total
residential            17,303          1.2    %           812              60              —            872         18,175
services
revenue
Business
services               1,792           22.0   %           55               5               49           109         1,901
revenue
Advertising            1,013           15.1   %           40               —               —            40          1,053
revenue
Other                 252             8.2    %          4               1              —           5          257
revenue
Total               $  20,360          3.5    %      $    911        $     66        $     49         $ 1,026     $ 21,386
revenue


      Historical TWC amounts include the results of (i) NaviSite, Inc.
      (acquired on April 21, 2011) from April 21 through December 31, 2012 and
      (ii) the
(a)  NewWave cable systems from November 1 through December 31, 2012 and
      exclude the results of (i) NaviSite from January 1 through April 20,
      2012,
      (ii) Insight and (iii) the NewWave cable systems from January 1 through
      October 31, 2012.
      Organic % Change represents the change between the Historical TWC
(b)   amounts for the year ended December 31, 2012 and TWC’s results for the
      year
      ended December 31, 2011 included in the table on page 2.
(c)   Insight amounts represent the financial results of Insight from the date
      of acquisition (February 29, 2012) through December 31, 2012.
(d)   NewWave amounts represent the NewWave cable systems’ results for the
      period from January 1 through October 31, 2012.
(e)   NaviSite amounts represent NaviSite’s results for the period from
      January 1 through April 20, 2012.


Excluding the impact from acquisitions:

Residential services revenue

Residential services revenue growth for the fourth quarter and full year of
2012 was primarily driven by an increase in high-speed data revenue, partially
offset by declines in video and voice revenue.

  *The growth in residential high-speed data revenue was the result of growth
    in high-speed data subscribers and an increase in average revenue per
    subscriber, primarily due to price increases (including equipment rental
    charges) and a greater percentage of subscribers purchasing higher-priced
    tiers of service.
  *Residential video revenue decreased driven by declines in video
    subscribers and transactional video-on-demand and premium network revenue,
    partially offset by price increases, a greater percentage of subscribers
    purchasing higher-priced tiers of service and increased revenue from
    equipment rentals.
  *Residential voice revenue decreased slightly due to a decrease in average
    revenue per subscriber, partially offset by growth in voice subscribers.

Business services revenue

Business services revenue growth for the fourth quarter and full year of 2012
was primarily due to increases in high-speed data and voice subscribers and
growth in Metro Ethernet revenue.

Advertising revenue

Advertising revenue increased for the fourth quarter and full year of 2012
primarily as a result of increases in political advertising, revenue from
advertising inventory sold on behalf of other video distributors and the
advertising sold on the Company’s two Los Angeles regional sports networks,
which were launched on October 1, 2012 and carry Los Angeles Lakers’
basketball games and other sports programming.

Other revenue

Other revenue increased for the fourth quarter and full year of 2012 primarily
as a result of fees from distributors of the Los Angeles regional sports
networks.

Fourth-quarter 2012 Adjusted Operating Income before Depreciation and
Amortization (“Adjusted OIBDA”) increased 5.6% from the fourth quarter of 2011
to $2.0 billion driven by revenue growth, partially offset by a 12.5% increase
in operating expenses. In particular, employee costs were up 11.4% to $1.2
billion, video programming expenses grew 7.0% to $1.2 billion, marketing costs
increased 18.3% to $181 million, voice costs were up 10.6% to $156 million and
other operating costs increased 27.0% to $649 million.

Full-year 2012 Adjusted OIBDA increased 8.3% from 2011 to $7.8 billion. The
year-over-year increase in Adjusted OIBDA was driven by revenue growth,
partially offset by an 8.9% increase in operating expenses. For the full year,
employee costs were up 10.7% to $4.5 billion, video programming expenses grew
6.4% to $4.6 billion, voice costs were up 3.2% to $614 million and other
operating costs increased 15.6% to $2.3 billion.

In both the fourth-quarter and full-year 2012:

  *Employee costs were up primarily due to higher headcount (primarily driven
    by acquisitions and organic growth in business services, partially offset
    by an organic decline in residential services) and higher compensation
    costs per employee. Pension costs increased $15 million and $60 million
    for the fourth quarter and full year of 2012, respectively, primarily due
    to the decline in interest rates to historically low levels.
  *Video programming expenses grew due to an increase in average monthly
    video programming costs per video subscriber and a net increase in video
    subscribers (primarily due to the acquisition of Insight offset, in part,
    by an organic decline in video subscribers). Average monthly video
    programming costs per video subscriber increased 5.1% year-over-year to
    $31.28 for the fourth quarter of 2012 and 5.2% year-over-year to $31.12
    for the full year of 2012, primarily driven by contractual rate increases
    and the carriage of new networks, partially offset by a decline in
    transactional video-on-demand costs. For the fourth quarter and full year
    of 2012, video programming costs were reduced by approximately $20 million
    and $40 million, respectively, and, for the full year of 2011, video
    programming costs were reduced by approximately $25 million due to changes
    in cost estimates for programming services carried during contract
    negotiations, changes in programming audit reserves and certain contract
    settlements.
  *Voice costs were up primarily as a result of an increase in voice
    subscribers due to both organic growth and the Insight acquisition,
    partially offset by a decrease in delivery costs per subscriber related to
    the in-sourcing of voice transport, switching and interconnection
    services.
  *Other operating costs increased as a result of costs associated with
    Insight and the Los Angeles regional sports networks, as well as increases
    in a number of categories.

Fourth-quarter 2012 Operating Income increased 13.6% from the fourth quarter
of 2011 to $1.2 billion and full-year 2012 Operating Income  increased 9.2%
from 2011 to $4.4 billion, both driven by higher Adjusted OIBDA and the
fourth-quarter 2011 wireless-related asset impairments, partially offset by
higher depreciation and amortization expenses primarily as a result of the
Company’s recent acquisitions (largely Insight). The increase in depreciation
expense was partially offset by certain assets acquired in the 2006
transactions with Adelphia Communications Corporation and Comcast Corporation
that were fully depreciated as of July 31, 2012. Operating Income growth was
also impacted by merger-related and restructuring costs, which, on a
year-over-year basis, decreased $17 million for the fourth quarter of 2012 and
increased $45 million for the full year of 2012.

                         
                          
(in millions;       4th Quarter                                        Full Year
unaudited)
                                                Change                                           Change
                        2012          2011          $        %            2012          2011          $          %
Adjusted                $ 1,994       $ 1,889       $ 105       5.6   %      $ 7,824       $ 7,226       $ 598        8.3   %
OIBDA^(a)
Adjusted OIBDA          36.4    %     37.8    %                              36.6    %     36.7    %
margin^(b)
Merger-related
and                       (17   )       (34   )       17        (50.0 %)       (115  )       (70   )       (45  )     64.3  %
restructuring
costs
Asset                    —           (60   )      60     (100.0  %)      —           (60   )      60      (100.0  %)
impairments^(c)
OIBDA^(a)                 1,977         1,795         182       10.1  %      7,709         7,096           613        8.6   %
Depreciation              (777  )       (756  )       (21 )     2.8   %      (3,154  )     (2,994  )       (160 )     5.3   %
Amortization             (31   )      (10   )      (21 )     210.0 %      (110    )     (33     )      (77  )     233.3 %
Operating               $ 1,169       $ 1,029       $ 140       13.6  %      $ 4,445       $ 4,069       $ 376        9.2   %
Income
                         

(a)  Refer to Note 2 to the accompanying consolidated financial statements
      for a definition of OIBDA and Adjusted OIBDA.
(b)   Adjusted OIBDA margin is defined as Adjusted OIBDA as a percentage of
      total revenue.
(c)   Refer to Note 1 to the accompanying consolidated financial statements
      for additional information.


Adjusted OIBDA less Capital Expenditures for the full year of 2012 totaled
$4.7 billion, a 10.3% increase over the full year of 2011, primarily due to
higher Adjusted OIBDA, partially offset by higher capital expenditures.
Capital Expenditures, which include Insight-related capital spending of
approximately $100 million,  were $3.1 billion in 2012.



(in millions;        4th Quarter                                     Full Year
unaudited)
                                                 Change                                        Change
                         2012          2011          $       %           2012          2011          $          %
Adjusted                 $ 1,994       $ 1,889       $ 105     5.6  %      $ 7,824       $ 7,226       $ 598        8.3  %
OIBDA^(a)
Capital                   (904  )      (942  )      38      (4.0 %)     (3,095  )     (2,937  )      (158 )     5.4  %
expenditures
Adjusted OIBDA
less capital             $ 1,090       $ 947         $ 143     15.1 %      $ 4,729       $ 4,289       $ 440        10.3 %
expenditures^(a)


      Refer to Note 2 to the accompanying consolidated financial statements
(a)  for a definition of Adjusted OIBDA and Adjusted OIBDA less capital
      expenditures.


Fourth-quarter 2012 Net Income Attributable to TWC Shareholders was $513
million, or $1.70 per basic common share and $1.68 per diluted common share,
compared to $564 million, or $1.76 per basic common share and $1.75 per
diluted common share, in the prior year quarter. Full-year 2012 net income
attributable to TWC shareholders was $2.2 billion, or $6.97 per basic common
share and $6.90 per diluted common share, compared to $1.7 billion, or $5.02
per basic common share and $4.97 per diluted common share, in the prior year.

Fourth-quarter Adjusted Net Income Attributable to TWC Shareholders and
Adjusted Diluted EPS, which exclude certain tax matters, a 2011 asset
impairment and other items affecting the comparability of TWC’s results for
2012 and 2011 (detailed in Note 1 to the accompanying consolidated financial
statements), were $479 million and $1.57, respectively, for the fourth quarter
of 2012 compared to $447 million and $1.38, respectively, for the fourth
quarter of 2011. These increases were primarily due to higher Operating
Income, partially offset by higher income tax provision.

Full-year Adjusted net income attributable to TWC shareholders and Adjusted
Diluted EPS, which exclude the 2012 investment-related gains (SpectrumCo, LLC
and Clearwire Corporation), certain tax matters and other items detailed in
Note 1, were $1.8 billion and $5.75, respectively, for 2012 compared to $1.6
billion and $4.69, respectively, for 2011. These increases were primarily due
to higher Operating Income and a change in other income (expense), net,
partially offset by higher income tax provision and interest expense, net. The
change in other income (expense), net, was primarily due to a decline in
losses from Clearwire Communications LLC as the Company’s investment was
reduced to $0 during the third quarter of 2011.

Additionally, Adjusted Diluted EPS for the fourth quarter and full year of
2012 benefited from lower average common shares outstanding as a result of
share repurchases under the Company’s stock repurchase program.

                           
                            
(in millions, except per         4th Quarter                                  Full Year
share data; unaudited)
                                                     Change                                        Change
                              2012     2011      $           %           2012        2011        $        %
Net income attributable                                              
to TWC
shareholders                      $ 513      $ 564     $ (51   )     (9.0 %)     $ 2,155     $ 1,665     $ 490      29.4 %
Adjusted net income
attributable to TWC
shareholders^(a)                 $ 479      $ 447     $ 32          7.2  %      $ 1,797     $ 1,573     $ 224      14.2 %
                                
Net income per common
share attributable
to TWC common
shareholders:
Basic                             $ 1.70     $ 1.76    $ (0.06 )     (3.4 %)     $ 6.97      $ 5.02      $ 1.95     38.8 %
Diluted                           $ 1.68     $ 1.75    $ (0.07 )     (4.0 %)     $ 6.90      $ 4.97      $ 1.93     38.8 %
Adjusted Diluted EPS^(a)          $ 1.57     $ 1.38    $ 0.19        13.8 %      $ 5.75      $ 4.69      $ 1.06     22.6 %
                           

      Refer to Note 2 to the accompanying consolidated financial statements
(a)  for a definition of Adjusted net income attributable to TWC shareholders
      and
      Adjusted Diluted EPS.


Free Cash Flow for the full-year 2012 decreased 7.1%, or $194 million, to $2.6
billion due mainly to lower cash provided by operating activities and an
increase in capital expenditures. Cash Provided by Operating Activities for
the full-year 2012 was $5.5 billion, a 2.9% decrease from $5.7 billion in
2011. This decrease was driven by an increase in income tax payments, a
significant income tax refund (received in the first quarter of 2011) and
higher net interest payments, partially offset by higher Adjusted OIBDA and
lower pension plan contributions.



(in millions;     4th Quarter                                         Full Year
unaudited)
                                              Change                                            Change
                      2012          2011          $          %            2012          2011          $          %
Adjusted              $ 1,994       $ 1,889       $ 105        5.6   %      $ 7,824       $ 7,226       $ 598        8.3   %
OIBDA^(a)
Net interest            (300  )       (306  )       6          (2.0  %)     (1,602  )     (1,434  )       (168 )     11.7  %
payments
Net income
tax refunds             (253  )       (5    )       (248 )     NM           (544    )     162             (706 ) (435.8    %)
(payments)
Pension plan            (137  )       (326  )       189        (58.0 %)       (289  )       (405  )       116        (28.6 %)
contributions
All other,
net,
including
working
capital
changes                106         92          14      15.2    %       136         139         (3   ) (2.2      %)
Cash provided
by operating            1,410         1,344         66         4.9   %        5,525         5,688         (163 )     (2.9  %)
activities
Add:                                                           
Income taxes
paid on                 84            —             84         NM             84            —             84         NM
investment
sales
Excess tax
benefit from
exercise of
stock options           8             2             6          300.0 %        81            48            33         68.8  %
Less:
Capital                 (904  )       (942  )       38         (4.0  %)     (3,095  )     (2,937  )       (158 )     5.4   %
expenditures
Cash paid for
other                   (10   )       (11   )       1          (9.1  %)       (37   )       (47   )       10         (21.3 %)
intangible
assets
Other                  (1    )      (2    )      1         (50.0 %)      (6    )      (6    )      —         —
Free Cash               587           391           196        50.1  %        2,552         2,746         (194 )     (7.1  %)
Flow^(a)
Economic
Stimulus Act           26          (83   )      109     (131.3  %)      102         (619  )      721   (116.5    %)
impacts^(b)
Free Cash
Flow
excluding
Economic
Stimulus Act          $ 613         $ 308         $ 305        99.0  %      $ 2,654       $ 2,127       $ 527        24.8  %
impacts



NM—Not meaningful.
(a)  Refer to Note 2 to the accompanying consolidated financial statements
      for a definition of Adjusted OIBDA and Free Cash Flow.
      Additional information on the Economic Stimulus Acts is available in the
(b)   Trending Schedules posted on the Company’s website at
      www.twc.com/investors.
      

Net Debt and Mandatorily Redeemable Preferred Equity totaled $23.5 billion as
of December 31, 2012 compared to $21.6 billion as of December 31, 2011, as the
cash used for the acquisition of Insight, share repurchases and dividend
payments was greater than Free Cash Flow and the proceeds from the sale of
SpectrumCo’s advanced wireless spectrum licenses.



(in millions; unaudited)                       12/31/2012   12/31/2011
Long-term debt                                       $  25,171      $  24,320
Debt due within one year                               1,518         2,122
Total debt                                              26,689         26,442
Cash and equivalents                                    (3,304)        (5,177)
Short-term investments in U.S. Treasury                (150)         —
securities
Net debt^(a)                                            23,235         21,265
Mandatorily redeemable preferred equity                300           300
Net debt and mandatorily redeemable                  $  23,535      $  21,565
preferred equity


(a)  Net debt is defined as total debt less cash and equivalents and
      short-term investments in U.S. Treasury securities.


RETURN OF CAPITAL

Time Warner Cable returned $742 million and $2.6 billion to shareholders
during the fourth quarter and full year of 2012, respectively. Share
repurchases totaled $571 million, or 6.0 million shares of common stock,
during the fourth quarter of 2012 and totaled $1.9 billion, or 22.1 million
shares of common stock, during the full year of 2012. As of December 31, 2012,
$2.2 billion remained under the Company’s share repurchase authorization. Time
Warner Cable also paid regular dividends of $171 million and $700 million
during the fourth quarter and full year of 2012, respectively.

SUBSCRIBER METRICS


(in thousands)
                                                     Net
                                   9/30/2012   Additions    12/31/2012

                                                     (Declines)
Residential services                                              
subscribers:
Video                                     12,159         (129)         12,030
High-speed data                           10,860         75            10,935
Voice                                     4,990          34            5,024
Business services subscribers:
Video                                     185            3             188
High-speed data                           446            14            460
Voice                                     212            12            224
                                                                       
Single play subscribers                   5,936          (29)          5,907
Double play subscribers                   5,070          (34)          5,036
Triple play subscribers                  4,258         36           4,294
Customer relationships                    15,264         (27)          15,237


For definitions related to the Company’s subscriber metrics, refer to the
Trending Schedules posted on the Company’s website at www.twc.com/investors.

Non-GAAP Financial Measures

The Company refers to certain financial measures that are not presented in
accordance with U.S. generally accepted accounting principles (“GAAP”),
including OIBDA, Adjusted OIBDA, Adjusted OIBDA less capital expenditures,
Adjusted net income attributable to TWC shareholders, Adjusted Diluted EPS and
Free Cash Flow. Refer to Note 2 to the accompanying consolidated financial
statements for a discussion of the Company’s use of non-GAAP financial
measures.

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 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 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 Thursday, January 31, 2013. 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)

                                                 December 31,
                                                     2012         2011
                                                     (in millions)
ASSETS
Current assets:
Cash and equivalents                                 $ 3,304        $ 5,177
Short-term investments in U.S. Treasury                150            —
securities
Receivables, less allowances of $65 million
and $62 million
as of December 31, 2012 and 2011,                      883            767
respectively
Deferred income tax assets                             317            267
Other current assets                                  223          187    
Total current assets                                   4,877          6,398
Investments                                            87             774
Property, plant and equipment, net                     14,742         13,905
Intangible assets subject to amortization,             641            228
net
Intangible assets not subject to                       26,011         24,272
amortization
Goodwill                                               2,889          2,247
Other assets                                          562          452    
Total assets                                         $ 49,809      $ 48,276 
                                                                      
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable                                     $ 653          $ 545
Deferred revenue and subscriber-related                183            169
liabilities
Accrued programming expense                            872            807
Current maturities of long-term debt                   1,518          2,122
Mandatorily redeemable preferred equity                300            —
issued by a subsidiary
Other current liabilities                             1,799        1,727  
Total current liabilities                              5,325          5,370
Long-term debt                                         25,171         24,320
Mandatorily redeemable preferred equity                —              300
issued by a subsidiary
Deferred income tax liabilities, net                   11,280         10,198
Other liabilities                                      750            551
TWC shareholders’ equity:
Common stock, $0.01 par value, 297.7 million
and 315.0 million shares issued and
outstanding as of December 31, 2012 and                3              3
2011, respectively
Additional paid-in capital                             7,576          8,018
Retained earnings                                      363            68
Accumulated other comprehensive loss, net             (663   )      (559   )
Total TWC shareholders’ equity                         7,279          7,530
Noncontrolling interests                              4            7      
Total equity                                          7,283        7,537  
Total liabilities and equity                         $ 49,809      $ 48,276 
                                                                      
See accompanying notes.



TIME WARNER CABLE INC.

CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

               Three Months Ended        Year Ended
                             December 31,                December 31,
                             2012        2011          2012         2011
                             (in millions, except per share data)
Revenue                      $ 5,485       $ 4,993       $ 21,386       $ 19,675
Costs and expenses:
Cost of revenue^(a)            2,565         2,283         9,942          9,138
Selling, general and           926           821           3,620          3,311
administrative^(a)
Depreciation                   777           756           3,154          2,994
Amortization                   31            10            110            33
Merger-related and             17            34            115            70
restructuring costs
Asset impairments             —           60          —            60     
Total costs and               4,316       3,964       16,941       15,606 
expenses
Operating Income               1,169         1,029         4,445          4,069
Interest expense,              (402  )       (406  )       (1,606 )       (1,518 )
net
Other income                  4           (5    )      497          (89    )
(expense), net
Income before income           771           618           3,336          2,462
taxes
Income tax provision          (257  )      (54   )      (1,177 )      (795   )
Net income                     514           564           2,159          1,667
Less: Net income
attributable to               (1    )      —           (4     )      (2     )
noncontrolling
interests
Net income
attributable to TWC          $ 513        $ 564        $ 2,155       $ 1,665  
shareholders
                                                                          
Net income per
common share
attributable to
TWC common
shareholders:
Basic                        $ 1.70       $ 1.76       $ 6.97        $ 5.02   
Diluted                      $ 1.68       $ 1.75       $ 6.90        $ 4.97   
Average common
shares outstanding:
Basic                         300.7       317.8       307.8        329.7  
Diluted                       305.6       323.1       312.4        335.3  
                                                                          
Cash dividends               $ 0.56       $ 0.48       $ 2.24        $ 1.92   
declared per share

——————————

^(a) Cost of revenue and selling, general and administrative expenses exclude
depreciation.



See accompanying notes.



TIME WARNER CABLE INC.

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

                                                 Year Ended
                                                     December 31,
                                       2012         2011
                                                     (in millions)
OPERATING ACTIVITIES
Net income                                           $ 2,159        $ 1,667
Adjustments for noncash and nonoperating
items:
Depreciation                                           3,154          2,994
Amortization                                           110            33
Asset impairments                                      —              60
(Income) loss from equity-method                       (426   )       109
investments, net of cash distributions
Pretax gain on sale of investment in                   (64    )       —
Clearwire
Deferred income taxes                                  562            638
Equity-based compensation                              130            112
Excess tax benefit from equity-based                   (81    )       (48    )
compensation
Changes in operating assets and liabilities,
net of acquisitions and dispositions:
Receivables                                            (63    )       (25    )
Accounts payable and other liabilities                 (26    )       202
Other changes                                         70           (54    )
Cash provided by operating activities                 5,525        5,688  
                                        
INVESTING ACTIVITIES
Capital expenditures                                   (3,095 )       (2,937 )
Acquisitions and investments, net of cash              (1,308 )       (630   )
acquired and distributions received
Proceeds from SpectrumCo’s sale of spectrum            1,112          —
licenses
Proceeds from sale of investment in                    64             —
Clearwire
Short-term investments in U.S. Treasury                (150   )       —
securities
Other investing activities                            32           37     
Cash used by investing activities                     (3,345 )      (3,530 )
                                                                      
FINANCING ACTIVITIES
Proceeds from issuance of long-term debt               2,258          3,227
Repayments of long-term debt                           (2,100 )       —
Repayments of long-term debt assumed in                (1,730 )       (44    )
acquisitions
Debt issuance costs                                    (26    )       (25    )
Proceeds from exercise of stock options                140            114
Taxes paid in cash in lieu of shares issued            (45    )       (29    )
for equity-based compensation
Excess tax benefit from equity-based                   81             48
compensation
Dividends paid                                         (700   )       (642   )
Repurchases of common stock                            (1,850 )       (2,657 )
Acquisition of noncontrolling interest                 (32    )       —
Other financing activities                            (49    )      (20    )
Cash used by financing activities                     (4,053 )      (28    )
                                                                      
Increase (decrease) in cash and equivalents            (1,873 )       2,130
Cash and equivalents at beginning of year             5,177        3,047  
Cash and equivalents at end of year                  $ 3,304       $ 5,177  
                                                                      
See accompanying notes.


                            TIME WARNER CABLE INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)

1. ITEMS AFFECTING COMPARABILITY

The following items affected the comparability of Time Warner Cable Inc.’s
(“TWC” or the “Company”) results for the three months and year ended December
31, 2012 and 2011:


(in millions, except per share data)                                             
                                        Operating               Income      TWC Net      Diluted
                 OIBDA^(a)  D&A^(a)   Income      Other^(a)   Tax
                                                                Provision   Income^(a)   EPS^(a)
4th Quarter                                                            
2012:
As reported       $  1,977    $ (808)   $  1,169    $  (399)    $  (257)    $   513      $ 1.68
Year-over-year
change, as
reported:
$                 $  182      $ (42)    $  140      $  12       $  (203)    $   (51)     $ (0.07)
%                  10.1%    5.5%     13.6%     (2.9%)    375.9%     (9.0%)   (4.0%)
                                                                                   
Items affecting
comparability:
Merger-related
and                  17         —          17          —           (6)          11         0.03
restructuring
costs
Loss on equity
award
reimbursement        —          —          —           4           (2)          2          0.01
obligation to
Time Warner^(b)
Impact of
certain state       —        —        —         —         (47)       (47)     (0.15)
tax matters^(c)
                                                                                   

As adjusted       $  1,994    $ (808)   $  1,186    $  (395)    $  (312)    $   479      $ 1.57
Year-over-year
change, as
adjusted:
$                 $  105      $ (42)    $  63       $  8        $  (39)     $   32       $ 0.19
%                  5.6%     5.5%     5.6%      (2.0%)    14.3%      7.2%     13.8%
                                                                                    
4th Quarter                                                            
2011:
As reported      $  1,795   $ (766)  $  1,029   $  (411)   $  (54)    $   564     $ 1.75

Items affecting
comparability:
Merger-related
and                  34         —          34          —           (14)         20         0.06
restructuring
costs
Asset                60         —          60          —           (24)         36         0.11
impairments^(d)
Loss on equity
award
reimbursement        —          —          —           8           (3)          5          0.01
obligation to
Time Warner^(b)
Change in net
deferred income
tax liability
     effective
    tax           —        —        —         —         (178)      (178)    (0.55)
     rate^(e)

As adjusted      $  1,889   $ (766)  $  1,123   $  (403)   $  (273)   $   447     $ 1.38
                                                                                           


——————————
      OIBDA represents Operating Income before Depreciation and Amortization.
      D&A represents depreciation and amortization. Other consists of interest
(a)  expense, net, other income (expense), net, and net income attributable
      to noncontrolling interests. TWC net income represents net income
      attributable to TWC shareholders. Diluted EPS represents net income per
      diluted common share attributable to TWC common shareholders.
      Pursuant to an agreement with Time Warner Inc. (“Time Warner”), TWC is
      obligated to reimburse Time Warner for the cost of certain Time Warner
      equity awards held by TWC employees upon exercise of such awards.
(b)   Amounts represent the change in the reimbursement obligation, which
      fluctuates primarily with the fair value and expected volatility of Time
      Warner common stock, and changes in fair value are recorded in other
      income
      (expense), net, in the period of change.
(c)   Amount primarily represents a benefit recorded as a result of a
      California state tax law change.
      In early 2012, TWC ceased making its existing wireless service available
      to new wireless customers. As a result, during the fourth quarter of
(d)   2011, the
      Company impaired $60 million of assets related to the provision of
      wireless service that would no longer be utilized.
      During the fourth quarter of 2011, TWC completed its income tax returns
      for the 2010 taxable year, its first full-year income tax returns
      subsequent
      to TWC’s separation from Time Warner on March 12, 2009 (the
      “Separation”), reflecting the income tax positions and state income tax
(e)   apportionments of TWC as a standalone taxpayer. Based on these returns,
      the Company concluded that an approximate 65 basis point change in the
      estimate of the effective tax rate applied to calculate its net deferred
      income tax liability was required. As a result, TWC recorded a noncash
      income
      tax benefit of $178 million.



(in millions, except per share data)                                                     
                                             Operating                 Income Tax   TWC Net      Diluted
                   OIBDA^(a)  D&A^(a)      Income      Other^(a)     Provision    Income^(a)
                                                                                                 EPS^(a)
Full Year 2012:                                                                
As reported         $ 7,709     $ (3,264 )   $ 4,445     $ (1,113 )    $ (1,177 )   $  2,155     $ 6.90
Year-over-year
change, as
reported:
 $                 $ 613       $ (237   )   $ 376       $ 496         $ (382   )   $  490       $ 1.93
 %                8.6     %  7.8      %  9.2     %  (30.8    %)  48.1     %  29.4     %   38.8  %

Items affecting
comparability:
  Merger-related
  and                 115         —            115         —             (46    )      69          0.22
  restructuring
  costs
  Asset               —           —            —           12            (5     )      7           0.02
  impairments^(b)
  Gain on
  SpectrumCo’s
  sale of             —           —            —           (430   )      169           (261  )     (0.84 )
  spectrum
  licenses^(c)
  Gain on sale of
  investment in       —           —            —           (64    )      (19    )      (83   )     (0.27 )
  Clearwire^(d)
  Loss on equity
  award
  reimbursement       —           —            —           9             (4     )      5           0.02
  obligation to
  Time Warner^(e)
  Change in net
  deferred income
  tax liability       —           —            —           —             (63    )      (63   )     (0.20 )
  effective tax
  rate^(f)
  Impact of
  certain state       —           —            —           —             (47    )      (47   )     (0.15 )
  tax matters^(g)
  Impact of
  partnership        —         —          —         —           15          15        0.05  
  basis
  difference^(h)

As adjusted         $ 7,824     $ (3,264 )   $ 4,560     $ (1,586 )    $ (1,177 )   $  1,797     $ 5.75
Year-over-year
change, as
adjusted:
  $                 $ 598       $ (237   )   $ 361       $ 18          $ (155   )   $  224       $ 1.06
 %                8.3     %  7.8      %  8.6     %  (1.1     %)  15.2     %  14.2     %   22.6  %

Full Year 2011:                                                                
As reported        $ 7,096   $ (3,027 )  $ 4,069   $ (1,609 )   $ (795   )  $  1,665   $ 4.97  

Items affecting
comparability:
  Merger-related
  and                 70          —            70          —             (28    )      42          0.12
  restructuring
  costs
  Asset               60          —            60          —             (24    )      36          0.11
  impairments^(i)
  Loss on equity
  award
  reimbursement       —           —            —           5             (2     )      3           0.01
  obligation to
  Time Warner^(e)
  Change in net
  deferred income
  tax liability       —           —            —           —             (178   )      (178  )     (0.53 )
  effective tax
  rate^(j)
  Impact of
  domestic
  production          —           —            —           —             (9     )      (9    )     (0.03 )
  activities
  deduction
  Impact of
  expired Time
  Warner stock       —         —          —         —           14          14        0.04  
  options,
  net^(k)

As adjusted        $ 7,226   $ (3,027 )  $ 4,199   $ (1,604 )   $ (1,022 )  $  1,573   $ 4.69  
                                                                                                   

      OIBDA represents Operating Income before Depreciation and Amortization.
      D&A represents depreciation and amortization. Other consists of interest
(a)  expense, net, other income (expense), net, and net income attributable
      to noncontrolling interests. TWC net income represents net income
      attributable to TWC shareholders. Diluted EPS represents net income per
      diluted common share attributable to TWC common shareholders.
(b)   Amount represents an impairment of TWC’s investment in Canoe Ventures
      LLC.
      On August 24, 2012, SpectrumCo, LLC (“SpectrumCo”) of which TWC owns
(c)   31.2%, sold all of its advanced wireless spectrum licenses to Cellco
      Partnership (doing business as Verizon Wireless).
      On September 27, 2012, the Company sold all of its investment in
      Clearwire Corporation (“Clearwire”). Income tax provision amount
(d)   includes a $46
      million benefit related to the reversal of a valuation allowance against
      a deferred income tax asset associated with the Company’s investment in
      Clearwire.
      Pursuant to an agreement with Time Warner, TWC is obligated to reimburse
      Time Warner for the cost of certain Time Warner equity awards held by
      TWC employees upon exercise of such awards. Amounts represent the change
(e)   in the reimbursement obligation, which fluctuates primarily with the
      fair value and expected volatility of Time Warner common stock, and
      changes in fair value are recorded in other income (expense), net, in
      the period
      of change.
      Amount represents a benefit related to a change in the tax rate applied
(f)   to calculate the Company’s net deferred income tax liability as a result
      of an
      internal reorganization effective on September 30, 2012.
(g)   Amount primarily represents a benefit recorded as a result of a
      California state tax law change.
(h)   Amount represents a charge related to the recording of a deferred income
      tax liability associated with a partnership basis difference.
      In early 2012, TWC ceased making its existing wireless service available
      to new wireless customers. As a result, during the fourth quarter of
(i)   2011, the
      Company impaired $60 million of assets related to the provision of
      wireless service that would no longer be utilized.
      During the fourth quarter of 2011, TWC completed its income tax returns
      for the 2010 taxable year, its first full-year income tax returns
      subsequent
      to the Separation, reflecting the income tax positions and state income
(j)   tax apportionments of TWC as a standalone taxpayer. Based on these
      returns, the Company concluded that an approximate 65 basis point change
      in the estimate of the effective tax rate applied to calculate its net
      deferred income tax liability was required. As a result, TWC recorded a
      noncash income tax benefit of $178 million.
      Amount represents the impact of the reversal of deferred income tax
(k)   assets associated with Time Warner stock option awards held by TWC
      employees, net of excess tax benefits realized upon the exercise of TWC
      stock options or vesting of TWC restricted stock units.
      

2. USE OF NON-GAAP FINANCIAL MEASURES

In discussing its performance, the Company may use certain measures that are
not calculated and presented in accordance with U.S. generally accepted
accounting principles (“GAAP”). These measures include OIBDA, Adjusted OIBDA,
Adjusted OIBDA less capital expenditures, Adjusted net income attributable to
TWC shareholders, Adjusted Diluted EPS and Free Cash Flow, which the Company
defines as follows:

  *OIBDA (Operating Income before Depreciation and Amortization)  means
    Operating Income before depreciation of tangible assets and amortization
    of intangible assets.
  *Adjusted OIBDA means OIBDA excluding the impact, if any, of noncash
    impairments of goodwill, intangible and fixed assets; gains and losses on
    asset sales; merger-related and restructuring costs; and costs associated
    with certain equity awards granted to employees to offset value lost as a
    result of the Separation.
  *Adjusted OIBDA less capital expenditures means Adjusted OIBDA minus
    capital expenditures.
  *Adjusted net income attributable to TWC shareholders means net income
    attributable to TWC shareholders (as defined under GAAP) excluding the
    impact, if any, of noncash impairments of goodwill, intangible and fixed
    assets and investments; gains and losses on asset sales; merger-related
    and restructuring costs; changes in the Company’s equity award
    reimbursement obligation to Time Warner; certain changes to income tax
    provision; and costs associated with certain equity awards granted to
    employees to offset value lost as a result of the Separation; as well as
    the impact of taxes and noncontrolling interests on the above items.
    Similarly, Adjusted Diluted EPS means net income per diluted common share
    attributable to TWC common shareholders excluding the above items.
  *Free Cash Flow means cash provided by operating activities (as defined
    under GAAP) excluding the impact, if any, of cash provided or used by
    discontinued operations, plus (i) any income taxes paid on investment
    sales and (ii) any excess tax benefit from equity-based compensation, less
    (i) capital expenditures, (ii) cash paid for other intangible assets
    (excluding those associated with business combinations), (iii) partnership
    distributions to third parties and (iv) principal payments on capital
    leases.

Management uses OIBDA and Adjusted OIBDA, among other measures, in evaluating
the performance of the Company’s business because they eliminate the effects
of (i) considerable amounts of noncash depreciation and amortization and (ii)
items not within the control of the Company’s operations managers (such as net
income attributable to noncontrolling interests, income tax provision, other
income (expense), net, and interest expense, net). Adjusted OIBDA further
eliminates the effects of certain noncash items identified in the definition
of Adjusted OIBDA above. Adjusted OIBDA less capital expenditures also allows
management to evaluate performance including the effect of capital spending
decisions. Adjusted OIBDA and Adjusted OIBDA less capital expenditures are
also significant performance measures used in the Company’s annual incentive
compensation programs. Adjusted net income attributable to TWC shareholders
and Adjusted Diluted EPS are considered important indicators of the
operational strength of the Company as these measures eliminate amounts that
do not reflect the fundamental performance of the Company. The Company
utilizes Adjusted Diluted EPS, among other measures, to evaluate its
performance both on an absolute basis and relative to its peers and the
broader market. Management believes that Free Cash Flow is an important
indicator of the Company’s ability to generate cash, reduce net debt, pay
dividends, repurchase common stock and make strategic investments, after the
payment of cash taxes, interest and other cash items. In addition, all of
these measures are commonly used by analysts, investors and others in
evaluating the Company’s performance and liquidity.

These measures have inherent limitations. For example, OIBDA and Adjusted
OIBDA do not reflect capital expenditures or the periodic costs of certain
capitalized assets used in generating revenue. To compensate for such
limitations, management evaluates performance through Adjusted OIBDA less
capital expenditures and Free Cash Flow, which reflect capital expenditure
decisions, and net income attributable to TWC shareholders, which reflects the
periodic costs of capitalized assets. Adjusted OIBDA and Adjusted OIBDA less
capital expenditures do not reflect any of the items noted as exclusions in
the definition of Adjusted OIBDA above. To compensate for these limitations,
management evaluates performance through OIBDA and net income attributable to
TWC shareholders, which do reflect such items. OIBDA, Adjusted OIBDA and
Adjusted OIBDA less capital expenditures also fail to reflect the significant
costs borne by the Company for income taxes and debt servicing costs, the
share of OIBDA, Adjusted OIBDA and Adjusted OIBDA less capital expenditures
attributable to noncontrolling interests, the results of the Company’s equity
investments and other non-operational income or expense. Additionally,
Adjusted net income attributable to TWC shareholders and Adjusted Diluted EPS
do not reflect certain charges that affect the operating results of the
Company and they involve judgment as to whether items affect fundamental
operating performance. Management compensates for these limitations by using
other analytics such as a review of net income attributable to TWC
shareholders. Free Cash Flow, a liquidity measure, does not reflect payments
made in connection with investments and acquisitions, which reduce liquidity.
To compensate for this limitation, management evaluates such investments and
acquisitions through other measures such as return on investment analyses.

These non-GAAP measures should be considered in addition to, not as
substitutes for, the Company’s Operating Income, net income attributable to
TWC shareholders and various cash flow measures (e.g., cash provided by
operating activities), as well as other measures of financial performance and
liquidity reported in accordance with GAAP, and may not be comparable to
similarly titled measures used by other companies.

Contact:

Time Warner Cable Inc.
Corporate Communications
Alex Dudley, 212-364-8229
or
Justin Venech, 212-364-8242
or
Investor Relations
Tom Robey, 212-364-8218
or
Laraine Mancini, 212-364-8202