[July 30, 2015] |
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Time Warner Cable Reports 2015 Second-Quarter Results
Time Warner Cable Inc. (NYSE:TWC) today reported financial results for
its second quarter ended June 30, 2015.
Time Warner Cable Chairman and CEO Rob Marcus said: "We delivered very
strong operational results in the second quarter, providing yet another
clear indication that our plan is working. We achieved record Q2
subscriber results across nearly every category, setting us up for
accelerating financial performance as we look forward to the next phase
of our plan. We intend to use the time between the signing and closing
of the Charter deal to further strengthen our operations."
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SELECTED CONSOLIDATED FINANCIAL RESULTS
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(in millions, except per share data;
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2nd Quarter
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Year-to-Date 6/30
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unaudited)
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Change
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Change
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2015
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2014
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$
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%
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2015
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2014
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$
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%
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Revenue
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$
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5,926
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$
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5,726
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$
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200
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3.5
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%
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$
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11,703
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$
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11,308
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$
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395
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3.5
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%
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Adjusted OIBDA(a)
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$
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2,030
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$
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2,054
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$
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(24
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(1.2
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%)
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$
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4,026
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$
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4,034
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$
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(8
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(0.2
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%)
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Operating Income(b)
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$
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1,029
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$
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1,163
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$
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(134
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(11.5
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%)
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$
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2,113
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$
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2,255
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$
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(142
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(6.3
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%)
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Diluted EPS(c)
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$
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1.62
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$
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1.76
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$
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(0.14
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(8.0
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%)
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$
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3.21
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$
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3.46
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$
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(0.25
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(7.2
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%)
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Adjusted Diluted EPS(a)
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$
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1.54
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$
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1.89
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$
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(0.35
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(18.5
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%)
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$
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3.19
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$
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3.68
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$
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(0.49
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(13.3
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%)
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Cash provided by operating activities(b)
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$
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1,698
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$
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1,695
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$
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3
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0.2
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%
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$
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3,206
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$
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3,092
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$
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114
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3.7
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%
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Capital expenditures
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$
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1,263
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$
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1,240
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$
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23
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1.9
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%
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$
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2,397
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$
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2,074
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$
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323
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15.6
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%
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Free Cash Flow(a)(b)
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$
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440
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$
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459
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$
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(19
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(4.1
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%)
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$
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847
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$
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1,088
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$
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(241
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(22.2
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%)
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(a)
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Refer to Note 4 to the accompanying consolidated financial
statements for definitions of Adjusted OIBDA, Adjusted Diluted EPS
and Free Cash Flow and below for reconciliations.
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(b)
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Operating Income is reduced by merger-related and restructuring
costs of $82 million and $61 million for the second quarters of 2015
and 2014, respectively, and $108 million and $141 million for the
six months ended June 30, 2015 and 2014, respectively. Cash provided
by operating activities and Free Cash Flow are reduced by
merger-related and restructuring payments of $105 million and $29
million for the second quarters of 2015 and 2014, respectively, and
$131 million and $87 million for the six months ended June 30, 2015
and 2014, respectively.
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(c)
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Diluted EPS represents net income per diluted common share
attributable to TWC common shareholders.
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HIGHLIGHTS
Financial Highlights
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Second-quarter 2015 revenue grew 3.5% year over year with Business
Services revenue up 16.2% and Residential Services revenue up 2.1%.
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Second-quarter Adjusted OIBDA was $2.0 billion - a 1.2% decrease year
over year as a result of continued aggressive investments, as well as
higher programming costs and pension expense. Excluding the $27
million increase in pension expense, Adjusted OIBDA would have been
flat.
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Higher depreciation expense from "TWC Maxx" and other investments also
reduced second-quarter Operating Income to $1.0 billion.
Operational Highlights
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Record second-quarter residential subscriber performance:
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Residential video net declines of 45,000 - best second quarter
since 2008
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Residential high-speed data net additions of 172,000 - best second
quarter since 2008
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Residential voice net additions of 252,000 - best second quarter
ever
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Residential triple play net additions of 233,000 - best second
quarter ever
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Residential customer relationship net additions of 66,000 - best
second quarter ever and first positive second quarter net
additions since 2008
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First-half capital expenditures of $2.4 billion reflect the Company's
continued accelerated investment in "TWC Maxx," improved customer
experience and network expansion.
-
TWC Maxx, including "all digital" conversion and Internet speeds
of up to 300 Mbps, was completed in Austin in mid-April, is well
underway in Kansas City, Dallas, Raleigh, San Antonio, Charlotte
and Hawaii and will begin in San Diego in 2015.
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Also, the Company has accelerated the deployment of TWC Maxx in
Wilmington and Greensboro in 2015.
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TWC continued to upgrade customer premise equipment to improve its
customers' experience. In the first six months of 2015, TWC
deployed nearly 5.6 million new set-top boxes, digital adapters
and advanced modems in customers' homes.
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During the first six months of 2015, TWC further grew its
serviceable Business Services opportunity by adding nearly 32,000
commercial buildings to its network.
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Investments in network reliability and customer care continued to
contribute to meaningful year-over-year operational improvements in
the second quarter.
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530,000 fewer repair calls to TWC call centers year over year.
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15% reduction in repair-related truck rolls per customer
relationship.
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98% on-time percentage for customer appointments within the
Company's industry-leading one-hour appointment window.
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First-visit problem resolution improved by 10%.
CONSOLIDATED REVENUE AND PROFITABILITY RESULTS
Revenue for the second quarter of 2015 increased 3.5% year over
year as a result of revenue growth at the Business Services and
Residential Services segments.
Adjusted Operating Income before Depreciation and Amortization
("Adjusted OIBDA") for the second quarter of 2015 decreased
1.2% driven by a 6.1% year-over-year increase in operating expenses,
partially offset by revenue growth.
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(in millions; unaudited)
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2nd Quarter
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Year-to-Date 6/30
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Change
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Change
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2015
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2014
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$
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%
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2015
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2014
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$
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%
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Operating costs and expenses:
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Programming and content
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$
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1,489
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$
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1,341
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$
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148
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11.0
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%
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$
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2,908
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$
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2,650
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$
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258
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9.7
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%
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Sales and marketing
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596
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544
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52
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9.6
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%
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1,155
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1,099
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56
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5.1
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%
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Technical operations
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406
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371
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35
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9.4
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%
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805
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742
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63
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8.5
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%
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Customer care
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224
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207
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17
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8.2
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%
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450
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412
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38
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9.2
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%
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Other operating
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1,181
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1,209
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(28
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(2.3
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%)
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2,359
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2,371
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(12
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(0.5
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%)
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Total operating costs and expenses
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$
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3,896
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$
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3,672
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$
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224
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6.1
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%
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$
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7,677
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$
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7,274
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$
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403
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5.5
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%
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The increase in operating expenses was primarily due to higher
programming, employee, content and maintenance costs, partially offset
by a decline in bad debt expense. The increase in employee costs
reflects the Company's continued investments in sales and marketing,
technical operations and customer care initiatives and a $27 million
increase in pension expense. The increase in content costs was driven by
higher content costs at SportsNet LA, a regional sports network carrying
the Los Angeles Dodgers' baseball games and other sports programming.
Operating Income for the second quarter of 2015 decreased 11.5%
primarily due to higher depreciation expense and merger-related and
restructuring costs and lower Adjusted OIBDA. Merger-related and
restructuring costs for the second quarter of 2015 included $56 million
of Charter merger-related costs, $13 million of Comcast merger-related
costs and $13 million of restructuring costs primarily associated with
employee terminations. Merger-related and restructuring costs for the
second quarter of 2014 included $49 million of Comcast merger-related
costs, $3 million of DukeNet merger-related costs and $9 million of
restructuring costs primarily associated with employee terminations and
other exit costs.
DETAILED SEGMENT RESULTS
Residential Services
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Selected Residential Services Financial Results
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(in millions; unaudited)
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2nd Quarter
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Year-to-Date 6/30
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Change
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Change
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|
|
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2015
|
|
2014
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|
$
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%
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2015
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|
2014
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|
$
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|
%
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Revenue:
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|
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Video
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$
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2,514
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$
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2,546
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$
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(32
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)
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(1.3
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%)
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|
$
|
4,983
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$
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5,041
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$
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(58
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)
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(1.2
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%)
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High-speed data
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1,742
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|
1,606
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|
|
136
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8.5
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%
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3,438
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|
3,164
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|
274
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8.7
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%
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Voice
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478
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|
490
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(12
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)
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(2.4
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%)
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|
951
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986
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(35
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)
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(3.5
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%)
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Other
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24
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20
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4
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20.0
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%
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48
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39
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9
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23.1
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%
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Total revenue
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$
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4,758
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$
|
4,662
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$
|
96
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|
2.1
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%
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|
$
|
9,420
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$
|
9,230
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$
|
190
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2.1
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%
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Adjusted OIBDA(a)
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$
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2,147
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$
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2,192
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$
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(45
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)
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(2.1
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%)
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|
$
|
4,228
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|
$
|
4,324
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$
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(96
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)
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(2.2
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%)
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(a)
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Refer to Note 4 to the accompanying consolidated financial
statements for a definition of Adjusted OIBDA.
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|
Residential Services revenue increased as a result of an increase in
high-speed data revenue, partially offset by decreases in video and
voice revenue.
-
The growth in residential high-speed data revenue was the result of
growth in high-speed data subscribers, as well as an increase in
average revenue per subscriber primarily due to increases in prices
and equipment rental charges and a greater percentage of subscribers
purchasing higher-priced tiers of service.
-
Residential video revenue decreased due to a year-over-year decline in
video subscribers, partially offset by an increase in average revenue
per subscriber primarily as a result of price increases, higher
transactional video-on-demand revenue (due to the May 2015 Mayweather
vs. Pacquiao fight) and growth in premium network revenue.
-
Residential voice revenue decreased due to lower average revenue per
subscriber offset, in part, by growth in voice subscribers.
Residential Services Adjusted OIBDA decreased driven by a 5.7% increase
in operating costs, partially offset by the increase in revenue
discussed above. The increase in operating costs resulted from higher
programming, sales and marketing, technical operations and customer care
costs, partially offset by lower other operating costs. Employee costs
(which are included in each category, as applicable) were impacted by a
$14 million increase in pension expense.
-
Programming costs (which include intercompany expense from the Other
Operations segment for programming costs associated with the Company's
Los Angeles Lakers' regional sports networks, local sports, news and
lifestyle channels and SportsNet LA) grew 8.7% to $1.4 billion
primarily due to an increase in average monthly programming costs per
video subscriber, partially offset by a year-over-year decline in
video subscribers. Average monthly programming costs per residential
video subscriber grew 11.6% year over year to $42.73 for the second
quarter of 2015, primarily driven by contractual rate increases, the
carriage of new networks and higher transactional video-on-demand
costs.
-
Sales and marketing costs increased 10.2% to $389 million primarily
due to increased sales-related employee costs as a result of higher
compensation costs per employee and headcount growth.
-
Technical operations costs were up 8.4% to $361 million primarily due
to headcount growth and increased maintenance costs, reflecting the
Company's continued investments to improve the customer experience.
-
Customer care costs increased 6.9% to $186 million primarily due to
headcount growth, reflecting the Company's continued investments to
improve the customer experience.
-
Other operating costs decreased 20.3% to $173 million primarily due to
lower bad debt expense.
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|
|
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|
|
|
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|
|
Residential Services Subscriber Metrics
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
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|
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(in thousands)
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|
|
|
|
|
Net
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|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
Additions
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2015
|
|
(Declines)
|
|
6/30/2015
|
Video
|
|
|
|
|
10,819
|
|
|
(45)
|
|
|
10,774
|
High-speed data
|
|
|
|
|
11,990
|
|
|
172
|
|
|
12,162
|
Voice
|
|
|
|
|
5,604
|
|
|
252
|
|
|
5,856
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single play
|
|
|
|
|
5,673
|
|
|
(14)
|
|
|
5,659
|
Double play
|
|
|
|
|
4,389
|
|
|
(153)
|
|
|
4,236
|
Triple play
|
|
|
|
|
4,654
|
|
|
233
|
|
|
4,887
|
Customer relationships
|
|
|
|
|
14,716
|
|
|
66
|
|
|
14,782
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
Business Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Business Services Financial Results
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions; unaudited)
|
|
|
|
2nd Quarter
|
|
Year-to-Date 6/30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
|
|
|
$
|
95
|
|
$
|
90
|
|
$
|
5
|
|
5.6
|
%
|
|
$
|
189
|
|
$
|
179
|
|
$
|
10
|
|
|
5.6
|
%
|
High-speed data
|
|
|
|
|
391
|
|
|
331
|
|
|
60
|
|
18.1
|
%
|
|
|
767
|
|
|
637
|
|
|
130
|
|
|
20.4
|
%
|
Voice
|
|
|
|
|
147
|
|
|
123
|
|
|
24
|
|
19.5
|
%
|
|
|
289
|
|
|
241
|
|
|
48
|
|
|
19.9
|
%
|
Wholesale transport
|
|
|
|
|
120
|
|
|
97
|
|
|
23
|
|
23.7
|
%
|
|
|
241
|
|
|
198
|
|
|
43
|
|
|
21.7
|
%
|
Other
|
|
|
|
|
50
|
|
|
50
|
|
|
-
|
|
-
|
|
|
|
98
|
|
|
104
|
|
|
(6
|
)
|
|
(5.8
|
%)
|
Total revenue
|
|
|
|
$
|
803
|
|
$
|
691
|
|
$
|
112
|
|
16.2
|
%
|
|
$
|
1,584
|
|
$
|
1,359
|
|
$
|
225
|
|
|
16.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA(a)
|
|
|
|
$
|
480
|
|
$
|
409
|
|
$
|
71
|
|
17.4
|
%
|
|
$
|
959
|
|
$
|
811
|
|
$
|
148
|
|
|
18.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Refer to Note 4 to the accompanying consolidated financial
statements for a definition of Adjusted OIBDA.
|
|
|
|
Business Services revenue growth was primarily due to increases in
high-speed data and voice subscribers and growth in wholesale transport
revenue (including cell tower backhaul revenue).
The increase in Adjusted OIBDA was driven by growth in revenue,
partially offset by a 14.5% increase in operating costs and expenses,
primarily due to increased headcount and higher compensation costs per
employee, including a $5 million increase in pension expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Business Services Subscriber Metrics
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands)
|
|
|
|
|
|
Net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/31/2015
|
|
Additions
|
|
6/30/2015
|
Video
|
|
|
|
|
206
|
|
|
2
|
|
|
208
|
High-speed data
|
|
|
|
|
591
|
|
|
17
|
|
|
608
|
Voice
|
|
|
|
|
334
|
|
|
15
|
|
|
349
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single play
|
|
|
|
|
349
|
|
|
3
|
|
|
352
|
Double play
|
|
|
|
|
274
|
|
|
11
|
|
|
285
|
Triple play
|
|
|
|
|
78
|
|
|
3
|
|
|
81
|
Customer relationships
|
|
|
|
|
701
|
|
|
17
|
|
|
718
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
Other Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selected Other Operations Financial Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions; unaudited)
|
|
|
|
2nd Quarter
|
|
Year-to-Date 6/30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
|
|
$
|
263
|
|
$
|
272
|
|
$
|
(9
|
)
|
|
(3.3
|
%)
|
|
$
|
493
|
|
$
|
519
|
|
$
|
(26
|
)
|
|
(5.0
|
%)
|
Other
|
|
|
|
|
168
|
|
|
164
|
|
|
4
|
|
|
2.4
|
%
|
|
|
336
|
|
|
317
|
|
|
19
|
|
|
6.0
|
%
|
Total revenue
|
|
|
|
$
|
431
|
|
$
|
436
|
|
$
|
(5
|
)
|
|
(1.1
|
%)
|
|
$
|
829
|
|
$
|
836
|
|
$
|
(7
|
)
|
|
(0.8
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA(a)
|
|
|
|
$
|
142
|
|
$
|
173
|
|
$
|
(31
|
)
|
|
(17.9
|
%)
|
|
$
|
305
|
|
$
|
346
|
|
$
|
(41
|
)
|
|
(11.8
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Refer to Note 4 to the accompanying consolidated financial
statements for a definition of Adjusted OIBDA.
|
|
|
|
Advertising revenue decreased primarily due to lower political
advertising revenue, which was $3 million in the second quarter of 2015
compared to $15 million in the second quarter of 2014.
Other revenue increased primarily due to affiliate fees from the
Residential Services segment.
The decrease in Adjusted OIBDA was driven by a 9.9% increase in
operating costs and expenses, primarily related to higher content costs
associated with SportsNet LA. Employee costs were impacted by a $1
million increase in pension expense.
Shared Functions
Operating costs associated with broad "corporate" functions (e.g.,
accounting and finance, information technology, executive management,
legal and human resources) or functions supporting more than one
reportable segment that are centrally managed (e.g., facilities, network
operations, vehicles and procurement) as well as other activities not
directly attributable to a reportable segment increased 2.6% to $739
million for the second quarter of 2015, primarily driven by increased
maintenance expense, partially offset by lower costs as a result of
operating efficiencies. Employee costs were impacted by a $7 million
increase in pension expense.
CONSOLIDATED NET INCOME
Net Income Attributable to TWC Shareholders was $463 million, or
$1.62 per basic and diluted common share, for the second quarter of 2015
compared to $499 million, or $1.77 per basic common share and $1.76 per
diluted common share, for the second quarter of 2014.
Net income attributable to TWC shareholders decreased primarily due to a
decrease in Operating Income and an increase in income tax provision,
partially offset by an increase in other income, net, which included a
$120 million gain from the settlement of certain terms of an agency
agreement with Verizon Wireless.
Adjusted Net Income Attributable to TWC Shareholders and Adjusted
Diluted EPS, which exclude the Verizon Wireless gain discussed
above, merger-related and restructuring costs and certain other items
affecting the comparability of TWC's results for 2015 and 2014 detailed
in Note 2 to the accompanying consolidated financial statements, were
$440 million and $1.54, respectively, for the second quarter of 2015
compared to $536 million and $1.89, respectively, for the second quarter
of 2014.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share data;
|
|
|
|
2nd Quarter
|
|
Year-to-Date 6/30
|
unaudited)
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Net income attributable to TWC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders
|
|
|
|
$
|
463
|
|
$
|
499
|
|
$
|
(36
|
)
|
|
(7.2
|
%)
|
|
$
|
921
|
|
$
|
978
|
|
$
|
(57
|
)
|
|
(5.8
|
%)
|
Adjusted net income attributable to TWC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders(a)
|
|
|
|
$
|
440
|
|
$
|
536
|
|
$
|
(96
|
)
|
|
(17.9
|
%)
|
|
$
|
914
|
|
$
|
1,039
|
|
$
|
(125
|
)
|
|
(12.0
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
to TWC common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
1.62
|
|
$
|
1.77
|
|
$
|
(0.15
|
)
|
|
(8.5
|
%)
|
|
$
|
3.22
|
|
$
|
3.48
|
|
$
|
(0.26
|
)
|
|
(7.5
|
%)
|
Diluted
|
|
|
|
$
|
1.62
|
|
$
|
1.76
|
|
$
|
(0.14
|
)
|
|
(8.0
|
%)
|
|
$
|
3.21
|
|
$
|
3.46
|
|
$
|
(0.25
|
)
|
|
(7.2
|
%)
|
Adjusted Diluted EPS(a)
|
|
|
|
$
|
1.54
|
|
$
|
1.89
|
|
$
|
(0.35
|
)
|
|
(18.5
|
%)
|
|
$
|
3.19
|
|
$
|
3.68
|
|
$
|
(0.49
|
)
|
|
(13.3
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Refer to Note 4 to the accompanying consolidated financial
statements for definitions of Adjusted net income attributable to
TWC shareholders and Adjusted Diluted EPS.
|
|
|
|
SELECTED BALANCE SHEET AND CASH FLOW INFORMATION
Free Cash Flow for the first six months of 2015 was $847 million
compared to $1.1 billion in the first six months of 2014, due mainly to
an increase in capital expenditures, partially offset by an increase in
cash provided by operating activities. Capital Expenditures, which
totaled $2.4 billion for the first six months of 2015, increased
primarily due to the Company's investments (including TWC Maxx) to
improve network reliability, upgrade older customer premise equipment
and expand its network to additional residences, commercial buildings
and cell towers. Cash Provided by Operating Activities for the
first six months of 2015 was $3.2 billion, a 3.7% increase from the
first six months of 2014. This increase was primarily driven by lower
net income tax and net interest payments.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions; unaudited)
|
|
|
|
2nd Quarter
|
|
Year-to-Date 6/30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Adjusted OIBDA(a)
|
|
|
|
$
|
2,030
|
|
|
$
|
2,054
|
|
|
$
|
(24
|
)
|
|
(1.2
|
%)
|
|
$
|
4,026
|
|
|
$
|
4,034
|
|
|
$
|
(8
|
)
|
|
(0.2
|
%)
|
Net interest payments
|
|
|
|
|
(305
|
)
|
|
|
(330
|
)
|
|
|
25
|
|
|
(7.6
|
%)
|
|
(697
|
)
|
|
(745
|
)
|
|
|
48
|
|
|
(6.4
|
%)
|
Net income tax payments
|
|
|
|
|
(32
|
)
|
|
|
(97
|
)
|
|
|
65
|
|
|
(67.0
|
%)
|
|
(35
|
)
|
|
(95
|
)
|
|
|
60
|
|
(63.2
|
%)
|
All other, net, including working capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
changes(b)
|
|
|
|
|
5
|
|
|
|
68
|
|
|
|
(63
|
)
|
(92.6
|
%)
|
|
|
(88
|
)
|
|
|
(102
|
)
|
|
|
14
|
|
|
(13.7
|
%)
|
Cash provided by operating activities(b)
|
|
|
|
|
1,698
|
|
|
|
1,695
|
|
|
|
3
|
|
|
0.2
|
%
|
|
|
3,206
|
|
|
|
3,092
|
|
|
|
114
|
|
|
3.7
|
%
|
Add: Excess tax benefit from exercise of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock options
|
|
|
|
|
18
|
|
|
|
21
|
|
|
|
(3
|
)
|
|
(14.3
|
%)
|
|
|
74
|
|
|
|
99
|
|
|
|
(25
|
)
|
|
(25.3
|
%)
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
(1,263
|
)
|
|
(1,240
|
)
|
|
|
(23
|
)
|
|
1.9
|
%
|
|
(2,397
|
)
|
|
(2,074
|
)
|
|
|
(323
|
)
|
|
15.6
|
%
|
Cash paid for other intangible assets
|
|
|
|
|
(8
|
)
|
|
|
(12
|
)
|
|
|
4
|
|
|
(33.3
|
%)
|
|
|
(31
|
)
|
|
|
(24
|
)
|
|
|
(7
|
)
|
|
29.2
|
%
|
Other
|
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
-
|
|
|
-
|
|
|
|
(5
|
)
|
|
|
(5
|
)
|
|
|
-
|
|
|
-
|
|
Free Cash Flow(a)(b)
|
|
|
|
$
|
440
|
|
|
$
|
459
|
|
|
$
|
(19
|
)
|
|
(4.1
|
%)
|
|
$
|
847
|
|
|
$
|
1,088
|
|
|
$
|
(241
|
)
|
|
(22.2
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Refer to Note 4 to the accompanying consolidated financial
statements for definitions of Adjusted OIBDA and Free Cash Flow.
|
(b)
|
|
All other, net, including working capital changes includes
merger-related and restructuring payments of $105 million and $29
million for the second quarters of 2015 and 2014, respectively, and
$131 million and $87 million for the six months ended June 30, 2015
and 2014, respectively, which reduced cash provided by operating
activities and Free Cash Flow for the respective periods.
|
|
|
|
Net Debt, which totaled $22.6 billion as of June 30, 2015,
decreased from December 31, 2014 as Free Cash Flow more than offset the
cash used for dividends.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions; unaudited)
|
|
|
|
6/30/2015
|
|
12/31/2014
|
Long-term debt
|
|
|
|
$
|
22,732
|
|
|
$
|
22,701
|
|
Debt due within one year
|
|
|
|
|
320
|
|
|
|
1,017
|
|
Total debt
|
|
|
|
|
23,052
|
|
|
|
23,718
|
|
Cash and equivalents
|
|
|
|
|
(480
|
)
|
|
|
(707
|
)
|
Net debt(a)
|
|
|
|
$
|
22,572
|
|
|
$
|
23,011
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Net debt is defined as total debt less cash and equivalents.
|
|
|
|
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 net income
attributable to TWC shareholders, Adjusted Diluted EPS and Free Cash
Flow. Refer to Note 4 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 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 enterprise-class, cloud-enabled hosting, managed
applications and services. Time Warner Cable Media, the advertising
sales 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 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, July 30, 2015. 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., including its
proposed merger with Charter Communications, 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
|
|
$
|
480
|
|
|
$
|
707
|
|
Receivables, less allowances of $126 million and $109 million
|
|
|
|
|
|
|
|
|
as of June 30, 2015 and December 31, 2014, respectively
|
|
|
|
|
1,029
|
|
|
|
949
|
|
Deferred income tax assets
|
|
|
|
|
235
|
|
|
|
269
|
|
Other current assets
|
|
|
|
|
330
|
|
|
|
391
|
|
Total current assets
|
|
|
|
|
2,074
|
|
|
|
2,316
|
|
Investments
|
|
|
|
|
69
|
|
|
|
64
|
|
Property, plant and equipment, net
|
|
|
|
|
16,604
|
|
|
|
15,990
|
|
Intangible assets subject to amortization, net
|
|
|
|
|
486
|
|
|
|
523
|
|
Intangible assets not subject to amortization
|
|
|
|
|
26,014
|
|
|
|
26,012
|
|
Goodwill
|
|
|
|
|
3,138
|
|
|
|
3,137
|
|
Other assets
|
|
|
|
|
501
|
|
|
|
459
|
|
Total assets
|
|
|
|
$
|
48,886
|
|
|
$
|
48,501
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
|
|
$
|
496
|
|
|
$
|
567
|
|
Deferred revenue and subscriber-related liabilities
|
|
|
|
|
215
|
|
|
|
198
|
|
Accrued programming and content expense
|
|
|
|
|
968
|
|
|
|
902
|
|
Current maturities of long-term debt
|
|
|
|
|
320
|
|
|
|
1,017
|
|
Other current liabilities
|
|
|
|
|
2,156
|
|
|
|
1,813
|
|
Total current liabilities
|
|
|
|
|
4,155
|
|
|
|
4,497
|
|
Long-term debt
|
|
|
|
|
22,732
|
|
|
|
22,701
|
|
Deferred income tax liabilities, net
|
|
|
|
|
12,715
|
|
|
|
12,560
|
|
Other liabilities
|
|
|
|
|
772
|
|
|
|
726
|
|
TWC shareholders' equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 282.9 million and 280.8 million
shares issued and
|
|
|
|
|
|
|
|
|
outstanding as of June 30, 2015 and December 31, 2014, respectively
|
|
|
|
|
3
|
|
|
|
3
|
|
Additional paid-in capital
|
|
|
|
|
7,369
|
|
|
|
7,172
|
|
Retained earnings
|
|
|
|
|
1,436
|
|
|
|
1,162
|
|
Accumulated other comprehensive loss, net
|
|
|
|
|
(300
|
)
|
|
|
(324
|
)
|
Total TWC shareholders' equity
|
|
|
|
|
8,508
|
|
|
|
8,013
|
|
Noncontrolling interests
|
|
|
|
|
4
|
|
|
|
4
|
|
Total equity
|
|
|
|
|
8,512
|
|
|
|
8,017
|
|
Total liabilities and equity
|
|
|
|
$
|
48,886
|
|
|
$
|
48,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIME WARNER CABLE INC.
|
CONSOLIDATED STATEMENT OF OPERATIONS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share data)
|
Revenue
|
|
|
|
$
|
5,926
|
|
|
$
|
5,726
|
|
|
$
|
11,703
|
|
|
$
|
11,308
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Programming and content
|
|
|
|
|
1,489
|
|
|
|
1,341
|
|
|
|
2,908
|
|
|
|
2,650
|
|
Sales and marketing
|
|
|
|
|
596
|
|
|
|
544
|
|
|
|
1,155
|
|
|
|
1,099
|
|
Technical operations
|
|
|
|
|
406
|
|
|
|
371
|
|
|
|
805
|
|
|
|
742
|
|
Customer care
|
|
|
|
|
224
|
|
|
|
207
|
|
|
|
450
|
|
|
|
412
|
|
Other operating
|
|
|
|
|
1,181
|
|
|
|
1,209
|
|
|
|
2,359
|
|
|
|
2,371
|
|
Depreciation
|
|
|
|
|
885
|
|
|
|
795
|
|
|
|
1,737
|
|
|
|
1,570
|
|
Amortization
|
|
|
|
|
34
|
|
|
|
35
|
|
|
|
68
|
|
|
|
68
|
|
Merger-related and restructuring costs
|
|
|
|
|
82
|
|
|
|
61
|
|
|
|
108
|
|
|
|
141
|
|
Total costs and expenses
|
|
|
|
|
4,897
|
|
|
|
4,563
|
|
|
|
9,590
|
|
|
|
9,053
|
|
Operating Income
|
|
|
|
|
1,029
|
|
|
|
1,163
|
|
|
|
2,113
|
|
|
|
2,255
|
|
Interest expense
|
|
|
|
|
(350
|
)
|
|
|
(349
|
)
|
|
|
(698
|
)
|
|
|
(713
|
)
|
Other income, net
|
|
|
|
|
127
|
|
|
|
8
|
|
|
|
137
|
|
|
|
23
|
|
Income before income taxes
|
|
|
|
|
806
|
|
|
|
822
|
|
|
|
1,552
|
|
|
|
1,565
|
|
Income tax provision
|
|
|
|
|
(343
|
)
|
|
|
(323
|
)
|
|
|
(631
|
)
|
|
|
(587
|
)
|
Net income
|
|
|
|
|
463
|
|
|
|
499
|
|
|
|
921
|
|
|
|
978
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Net income attributable to TWC shareholders
|
|
|
|
$
|
463
|
|
|
$
|
499
|
|
|
$
|
921
|
|
|
$
|
978
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per common share attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TWC common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
1.62
|
|
|
$
|
1.77
|
|
|
$
|
3.22
|
|
|
$
|
3.48
|
|
Diluted
|
|
|
|
$
|
1.62
|
|
|
$
|
1.76
|
|
|
$
|
3.21
|
|
|
$
|
3.46
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
282.7
|
|
|
|
278.8
|
|
|
|
282.1
|
|
|
|
278.3
|
|
Diluted
|
|
|
|
|
285.8
|
|
|
|
282.4
|
|
|
|
285.4
|
|
|
|
282.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per share of common stock
|
|
|
|
$
|
0.75
|
|
|
$
|
0.75
|
|
|
$
|
2.25
|
|
|
$
|
1.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIME WARNER CABLE INC.
|
CONSOLIDATED STATEMENT OF CASH FLOWS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
Net income
|
|
|
|
$
|
921
|
|
|
$
|
978
|
|
Adjustments for noncash and nonoperating items:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
1,737
|
|
|
|
1,570
|
|
Amortization
|
|
|
|
|
68
|
|
|
|
68
|
|
Income from equity-method investments, net of cash distributions
|
|
|
|
|
(8
|
)
|
|
|
(16
|
)
|
Pretax gain on settlement of Verizon Wireless agency agreement
|
|
|
|
|
(120
|
)
|
|
|
-
|
|
Deferred income taxes
|
|
|
|
|
173
|
|
|
|
123
|
|
Equity-based compensation expense
|
|
|
|
|
79
|
|
|
|
93
|
|
Excess tax benefit from equity-based compensation
|
|
|
|
|
(74
|
)
|
|
|
(99
|
)
|
Changes in operating assets and liabilities, net of acquisitions and
dispositions:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
58
|
|
|
|
41
|
|
Accounts payable and other liabilities
|
|
|
|
|
402
|
|
|
|
326
|
|
Other changes
|
|
|
|
|
(30
|
)
|
|
|
8
|
|
Cash provided by operating activities
|
|
|
|
|
3,206
|
|
|
|
3,092
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(2,397
|
)
|
|
|
(2,074
|
)
|
Acquisition of intangible assets
|
|
|
|
|
(31
|
)
|
|
|
(24
|
)
|
Other investing activities
|
|
|
|
|
7
|
|
|
|
31
|
|
Cash used by investing activities
|
|
|
|
|
(2,421
|
)
|
|
|
(2,067
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
Short-term borrowings (repayments), net
|
|
|
|
|
(194
|
)
|
|
|
1,147
|
|
Repayments of long-term debt
|
|
|
|
|
(500
|
)
|
|
|
(1,750
|
)
|
Dividends paid
|
|
|
|
|
(432
|
)
|
|
|
(428
|
)
|
Repurchases of common stock
|
|
|
|
|
-
|
|
|
|
(259
|
)
|
Proceeds from exercise of stock options
|
|
|
|
|
106
|
|
|
|
118
|
|
Excess tax benefit from equity-based compensation
|
|
|
|
|
74
|
|
|
|
99
|
|
Taxes paid in cash in lieu of shares issued for equity-based
compensation
|
|
|
|
|
(61
|
)
|
|
|
(68
|
)
|
Other financing activities
|
|
|
|
|
(5
|
)
|
|
|
(6
|
)
|
Cash used by financing activities
|
|
|
|
|
(1,012
|
)
|
|
|
(1,147
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash and equivalents
|
|
|
|
|
(227
|
)
|
|
|
(122
|
)
|
Cash and equivalents at beginning of period
|
|
|
|
|
707
|
|
|
|
525
|
|
Cash and equivalents at end of period
|
|
|
|
$
|
480
|
|
|
$
|
403
|
|
|
|
|
|
|
|
|
|
|
TIME WARNER CABLE INC. NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Unaudited)
1. MERGER-RELATED TRANSACTIONS
Charter Merger
On May 23, 2015, Time Warner Cable Inc. ("TWC" or the "Company") entered
into an Agreement and Plan of Mergers (the "Charter Merger Agreement")
with Charter Communications, Inc. ("Charter") and certain of its
subsidiaries, pursuant to which the parties will engage in a series of
transactions (the "Charter merger") that will result in the Company and
Charter becoming 100% owned subsidiaries of a new public parent company
("New Charter"), on the terms and subject to the conditions set forth in
the Charter Merger Agreement.
Upon the consummation of the Charter merger, each share of TWC common
stock (other than treasury shares held by the Company and TWC stock held
by the Liberty Parties (as defined below)) will be converted into the
right to receive, at the option of each stockholder, either (i) $100 in
cash and shares of New Charter Class A common stock equivalent to 0.5409
shares of Charter Class A common stock ("Charter common stock") or (ii)
$115 in cash and shares of New Charter Class A common stock equivalent
to 0.4562 shares of Charter common stock. Upon the consummation of the
Charter merger, subject to certain exceptions, each share of TWC common
stock held by Liberty Broadband Corporation or Liberty Interactive
Corporation (together, the "Liberty Parties") will convert only into the
right to receive shares of New Charter Class A common stock.
The Charter merger is subject to the approval of the Company's and
Charter's stockholders, regulatory approvals and certain other closing
conditions.
Bright House Networks Transaction
On May 23, 2015, Charter and Advance/Newhouse Partnership ("A/N") and
certain of their affiliates amended an agreement the parties had signed
on March 31, 2015 (the "Bright House Networks Agreement"). Under the
amended Bright House Networks Agreement, Charter will acquire Bright
House Networks, LLC ("Bright House Networks"), subject to, among other
conditions, the closing of the Charter merger. Bright House Networks is
a 100% owned subsidiary of a partnership ("TWE-A/N") between A/N and
Time Warner Cable Enterprises LLC ("TWCE"), a subsidiary of TWC. The
closing of Charter's acquisition of Bright House Networks is expected to
occur concurrently with the closing of the Charter merger. However, the
closing of the Charter merger is not conditioned on the closing of the
Bright House Networks transaction.
In the Charter Merger Agreement, the Company and TWCE agreed to
irrevocably and unconditionally waive their "right of first offer" to
acquire the assets of Bright House Networks during the pendency of the
Charter merger. This waiver will expire if the Charter Merger Agreement
is terminated in accordance with its terms, provided that the Company or
any of its Affiliates (as defined in the Charter Merger Agreement) does
not, within nine months following such a termination, enter into an
agreement or understanding in respect of, or consummate, an alternative
acquisition transaction.
Termination of Comcast Merger and Divestiture Transactions
On April 24, 2015, Comcast Corporation ("Comcast") and the Company
terminated their February 12, 2014 Agreement and Plan of Merger (the
"Comcast Merger Agreement"), under which the Company had agreed, on the
terms and subject to the conditions set forth therein, to merge with and
into a 100% owned subsidiary of Comcast. In a related transaction, on
April 25, 2014, Comcast had entered into a binding agreement with
Charter, which contemplated three transactions to be completed following
the closing of the Comcast Merger Agreement (the "divestiture
transactions"): (1) a contribution, spin-off and merger transaction,
(2) an asset exchange and (3) a sale of assets. The completion of the
divestiture transactions would have resulted in Charter acquiring
certain TWC cable systems primarily in the Midwest. Also, on March 31,
2015, Charter and A/N had entered into the Bright House Networks
Agreement, which was subject to, among other things, the closing of the
divestiture transactions. Upon termination of the Comcast Merger
Agreement, Comcast delivered a notice of termination to Charter with
respect to the divestiture transactions.
2. ITEMS AFFECTING COMPARABILITY
The following items affected the comparability of TWC's results for the
three and six months ended June 30, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
(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)
|
2nd Quarter 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
|
$
|
1,948
|
|
$
|
(919)
|
|
$
|
1,029
|
|
$
|
(223)
|
|
$
|
(343)
|
|
$
|
463
|
|
$
|
1.62
|
Year-over-year change, as reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
(45)
|
|
$
|
(89)
|
|
$
|
(134)
|
|
$
|
118
|
|
$
|
(20)
|
|
$
|
(36)
|
|
$
|
(0.14)
|
%
|
|
|
|
(2.3%)
|
|
10.7%
|
|
(11.5%)
|
|
(34.6%)
|
|
6.2%
|
|
(7.2%)
|
|
(8.0%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
|
|
82
|
|
|
-
|
|
|
82
|
|
|
-
|
|
|
(32)
|
|
|
50
|
|
|
0.17
|
Gain on settlement of Verizon Wireless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency agreement(b)
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(120)
|
|
|
47
|
|
|
(73)
|
|
|
(0.25)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
|
|
|
|
$
|
2,030
|
|
$
|
(919)
|
|
$
|
1,111
|
|
$
|
(343)
|
|
$
|
(328)
|
|
$
|
440
|
|
$
|
1.54
|
Year-over-year change, as adjusted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
(24)
|
|
$
|
(89)
|
|
$
|
(113)
|
|
$
|
(2)
|
|
$
|
19
|
|
$
|
(96)
|
|
$
|
(0.35)
|
%
|
|
|
|
(1.2%)
|
|
10.7%
|
|
(9.2%)
|
|
0.6%
|
|
(5.5%)
|
|
(17.9%)
|
|
(18.5%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2nd Quarter 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
|
$
|
1,993
|
|
$
|
(830)
|
|
$
|
1,163
|
|
$
|
(341)
|
|
$
|
(323)
|
|
$
|
499
|
|
$
|
1.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
|
|
61
|
|
|
-
|
|
|
61
|
|
|
-
|
|
|
(24)
|
|
|
37
|
|
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
|
|
|
|
$
|
2,054
|
|
$
|
(830)
|
|
$
|
1,224
|
|
$
|
(341)
|
|
$
|
(347)
|
|
$
|
536
|
|
$
|
1.89
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
|
(a)
|
|
OIBDA represents Operating Income before Depreciation and
Amortization. D&A represents depreciation and amortization. Other
consists of interest expense, 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. Diluted EPS reflects the more dilutive earnings
per share amount calculated using the treasury stock method or the
two-class method.
|
(b)
|
|
In 2011, TWC and Cellco Partnership (doing business as Verizon
Wireless) entered into agency agreements that allowed TWC to sell
Verizon Wireless-branded wireless service, and Verizon Wireless to
sell TWC services. Amount represents the settlement of certain terms
of the agency agreements.
|
|
|
|
|
|
|
|
|
|
|
|
(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)
|
Year-to-Date 6/30/2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
|
$
|
3,918
|
|
|
$
|
(1,805
|
)
|
|
$
|
2,113
|
|
|
$
|
(561
|
)
|
|
$
|
(631
|
)
|
|
$
|
921
|
|
|
$
|
3.21
|
|
Year-over-year change, as reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
25
|
|
|
$
|
(167
|
)
|
|
$
|
(142
|
)
|
|
$
|
129
|
|
|
$
|
(44
|
)
|
|
$
|
(57
|
)
|
|
$
|
(0.25
|
)
|
%
|
|
|
|
0.6
|
%
|
|
10.2
|
%
|
|
(6.3
|
%)
|
|
(18.7
|
%)
|
|
7.5
|
%
|
|
(5.8
|
%)
|
|
(7.2
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
|
|
108
|
|
|
|
-
|
|
|
|
108
|
|
|
|
-
|
|
|
|
(42
|
)
|
|
|
66
|
|
|
|
0.23
|
|
Gain on settlement of Verizon Wireless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency agreement(b)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(120
|
)
|
|
|
47
|
|
|
|
(73
|
)
|
|
|
(0.25
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
|
|
|
|
$
|
4,026
|
|
|
$
|
(1,805
|
)
|
|
$
|
2,221
|
|
|
$
|
(681
|
)
|
|
$
|
(626
|
)
|
|
$
|
914
|
|
|
$
|
3.19
|
|
Year-over-year change, as adjusted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
$
|
(8
|
)
|
|
$
|
(167
|
)
|
|
$
|
(175
|
)
|
|
$
|
10
|
|
|
$
|
40
|
|
|
$
|
(125
|
)
|
|
$
|
(0.49
|
)
|
%
|
|
|
|
(0.2
|
%)
|
|
10.2
|
%
|
|
(7.3
|
%)
|
|
(1.4
|
%)
|
|
(6.0
|
%)
|
|
(12.0
|
%)
|
|
(13.3
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year-to-Date 6/30/2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
|
$
|
3,893
|
|
|
$
|
(1,638
|
)
|
|
$
|
2,255
|
|
|
$
|
(690
|
)
|
|
$
|
(587
|
)
|
|
$
|
978
|
|
|
$
|
3.46
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
|
|
141
|
|
|
|
-
|
|
|
|
141
|
|
|
|
-
|
|
|
|
(55
|
)
|
|
|
86
|
|
|
|
0.31
|
|
Gain on equity award reimbursement
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
obligation to Time Warner(c)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
|
|
(1
|
)
|
|
|
-
|
|
Impact of certain state and local tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
matters(d)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(24
|
)
|
|
|
(24
|
)
|
|
|
(0.09
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
|
|
|
|
$
|
4,034
|
|
|
$
|
(1,638
|
)
|
|
$
|
2,396
|
|
|
$
|
(691
|
)
|
|
$
|
(666
|
)
|
|
$
|
1,039
|
|
|
$
|
3.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
|
(a)
|
|
OIBDA represents Operating Income before Depreciation and
Amortization. D&A represents depreciation and amortization. Other
consists of interest expense, 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)
|
|
In 2011, TWC and Verizon Wireless entered into agency agreements
that allowed TWC to sell Verizon Wireless-branded wireless service,
and Verizon Wireless to sell TWC services. Amount represents the
settlement of certain terms of the agency agreements.
|
(c)
|
|
Pursuant to an agreement with Time Warner Inc. ("Time Warner"), TWC
was obligated to reimburse Time Warner for the cost of certain Time
Warner equity awards held by TWC employees upon exercise of such
awards. Amount represents the change in the reimbursement
obligation, which fluctuated primarily with the fair value and
expected volatility of Time Warner common stock, and changes in fair
value were recorded in other income (expense), net, in the period of
change.
|
(d)
|
|
Amount represents the impact of the passage of the New York State
budget during the first quarter of 2014 that, in part, lowers the
New York State business tax rate beginning in 2016.
|
|
|
|
3. RECONCILIATION OF ADJUSTED OIBDA TO OPERATING INCOME AND
OTHER SEGMENT INFORMATION
Consolidated information for the three and six months ended June 30,
2015 and 2014 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
|
|
|
2nd Quarter
|
|
Year-to-Date 6/30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
$
|
|
%
|
|
2015
|
|
2014
|
|
$
|
|
%
|
Adjusted OIBDA(a)
|
|
|
|
$
|
2,030
|
|
|
$
|
2,054
|
|
|
$
|
(24
|
)
|
|
(1.2
|
%)
|
|
$
|
4,026
|
|
|
$
|
4,034
|
|
|
$
|
(8
|
)
|
|
(0.2
|
%)
|
Adjusted OIBDA margin(b)
|
|
|
|
34.3
|
%
|
|
35.9
|
%
|
|
|
|
|
|
34.4
|
%
|
|
35.7
|
%
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
|
|
(82
|
)
|
|
|
(61
|
)
|
|
|
(21
|
)
|
|
34.4
|
%
|
|
|
(108
|
)
|
|
|
(141
|
)
|
|
|
33
|
|
|
(23.4
|
%)
|
OIBDA(a)
|
|
|
|
|
1,948
|
|
|
|
1,993
|
|
|
|
(45
|
)
|
|
(2.3
|
%)
|
|
3,918
|
|
|
3,893
|
|
|
|
25
|
|
|
0.6
|
%
|
Depreciation
|
|
|
|
|
(885
|
)
|
|
|
(795
|
)
|
|
|
(90
|
)
|
|
11.3
|
%
|
|
(1,737
|
)
|
|
(1,570
|
)
|
|
|
(167
|
)
|
|
10.6
|
%
|
Amortization
|
|
|
|
|
(34
|
)
|
|
|
(35
|
)
|
|
|
1
|
|
|
(2.9
|
%)
|
|
(68
|
)
|
|
(68
|
)
|
|
|
-
|
|
|
-
|
|
Operating Income
|
|
|
|
$
|
1,029
|
|
|
$
|
1,163
|
|
|
$
|
(134
|
)
|
|
(11.5
|
%)
|
|
$
|
2,113
|
|
|
$
|
2,255
|
|
|
$
|
(142
|
)
|
|
(6.3
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
|
(a)
|
|
Refer to Note 4 for definitions of OIBDA and Adjusted OIBDA.
|
(b)
|
|
Adjusted OIBDA margin is defined as Adjusted OIBDA as a percentage
of total revenue.
|
|
|
|
The Company classifies its operations into the following reportable
segments:
• Residential Services, which principally consists of video, high-speed
data and voice services provided to residential customers as well as
other residential services, including security and home management
services.
• Business Services, which principally consists of data, video and voice
services provided to business customers as well as other business
services, including enterprise-class, cloud-enabled hosting, managed
applications and services.
• Other Operations, which principally consists of (i) Time Warner Cable
Media ("TWC Media"), the advertising sales arm of TWC, (ii) TWC-owned
and/or operated regional sports networks ("RSNs") and local sports, news
and lifestyle channels (e.g., Time Warner Cable News NY1) and (iii)
other operating revenue and costs, including those derived from A/N and
home shopping network-related services. The business units reflected in
the Other Operations segment individually do not meet the thresholds to
be reported as separate reportable segments.
In addition to the above reportable segments, the Company has shared
functions (referred to as "Shared Functions") that include activities
not attributable to a specific reportable segment. Shared Functions
consists of operating costs and expenses associated with broad
"corporate" functions (e.g., accounting and finance, information
technology, executive management, legal and human resources) or
functions supporting more than one reportable segment that are centrally
managed (e.g., facilities, network operations, vehicles and procurement)
as well as other activities not attributable to a reportable segment. As
such, the reportable segment results reflect how management views such
segments in assessing financial performance and allocating resources and
are not necessarily indicative of the results of operations that each
segment would have achieved had they operated as stand-alone entities
during the periods presented.
In evaluating the profitability of the Company's segments, the
components of net income (loss) below OIBDA, as defined below, are not
separately evaluated by management at the segment level. Due to the
nature of the Company's operations, a majority of its assets, including
its distribution systems, are utilized across the Company's operations
and are not segregated by segment. In addition, segment assets are not
reported to, or used by, management to allocate resources or assess the
performance of the Company's segments. Accordingly, the Company has not
disclosed asset information by segment.
Segment information for the three and six months ended June 30, 2015 and
2014 is as follows:
|
|
|
|
|
(in millions)
|
|
|
|
2nd Quarter 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
Business
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
Services
|
|
Operations
|
|
Shared
|
|
Intersegment
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
Segment
|
|
Segment
|
|
Functions
|
|
Eliminations
|
|
Consolidated
|
Revenue(a)
|
|
|
|
$
|
4,758
|
|
|
$
|
803
|
|
|
$
|
431
|
|
|
$
|
-
|
|
|
$
|
(66
|
)
|
|
$
|
5,926
|
|
Operating costs and expenses
|
|
|
|
|
(2,611
|
)
|
|
|
(323
|
)
|
|
|
(289
|
)
|
|
|
(739
|
)
|
|
|
66
|
|
|
|
(3,896
|
)
|
Adjusted OIBDA(b)
|
|
|
|
|
2,147
|
|
|
|
480
|
|
|
|
142
|
|
|
|
(739
|
)
|
|
|
-
|
|
|
|
2,030
|
|
Merger-related and restructuring costs
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(82
|
)
|
|
|
-
|
|
|
|
(82
|
)
|
OIBDA(b)
|
|
|
|
$
|
2,147
|
|
|
$
|
480
|
|
|
$
|
142
|
|
|
$
|
(821
|
)
|
|
$
|
-
|
|
|
|
1,948
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(885
|
)
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34
|
)
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,029
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
|
(a)
|
|
All revenue included in Intersegment Eliminations is associated with
the Other Operations segment.
|
(b)
|
|
Refer to Note 4 for definitions of OIBDA and Adjusted OIBDA.
|
|
|
|
|
|
(in millions)
|
|
|
|
2nd Quarter 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
Business
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
Services
|
|
Operations
|
|
Shared
|
|
Intersegment
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
Segment
|
|
Segment
|
|
Functions
|
|
Eliminations
|
|
Consolidated
|
Revenue(a)
|
|
|
|
$
|
4,662
|
|
|
$
|
691
|
|
|
$
|
436
|
|
|
$
|
-
|
|
|
$
|
(63
|
)
|
|
$
|
5,726
|
|
Operating costs and expenses
|
|
|
|
|
(2,470
|
)
|
|
|
(282
|
)
|
|
|
(263
|
)
|
|
|
(720
|
)
|
|
|
63
|
|
|
|
(3,672
|
)
|
Adjusted OIBDA(b)
|
|
|
|
|
2,192
|
|
|
|
409
|
|
|
|
173
|
|
|
|
(720
|
)
|
|
|
-
|
|
|
|
2,054
|
|
Merger-related and restructuring costs
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(61
|
)
|
|
|
-
|
|
|
|
(61
|
)
|
OIBDA(b)
|
|
|
|
$
|
2,192
|
|
|
$
|
409
|
|
|
$
|
173
|
|
|
$
|
(781
|
)
|
|
$
|
-
|
|
|
|
1,993
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(795
|
)
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(35
|
)
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
|
(a)
|
|
All revenue included in Intersegment Eliminations is associated with
the Other Operations segment.
|
(b)
|
|
Refer to Note 4 for definitions of OIBDA and Adjusted OIBDA.
|
|
|
|
|
|
(in millions)
|
|
|
|
Year-to-Date 6/30/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
Business
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
Services
|
|
Operations
|
|
Shared
|
|
Intersegment
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
Segment
|
|
Segment
|
|
Functions
|
|
Eliminations
|
|
Consolidated
|
Revenue(a)
|
|
|
|
$
|
9,420
|
|
|
$
|
1,584
|
|
|
$
|
829
|
|
|
$
|
-
|
|
|
$
|
(130
|
)
|
|
$
|
11,703
|
|
Operating costs and expenses
|
|
|
|
|
(5,192
|
)
|
|
|
(625
|
)
|
|
|
(524
|
)
|
|
|
(1,466
|
)
|
|
|
130
|
|
|
|
(7,677
|
)
|
Adjusted OIBDA(b)
|
|
|
|
|
4,228
|
|
|
|
959
|
|
|
|
305
|
|
|
|
(1,466
|
)
|
|
|
-
|
|
|
|
4,026
|
|
Merger-related and restructuring costs
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(108
|
)
|
|
|
-
|
|
|
|
(108
|
)
|
OIBDA(b)
|
|
|
|
$
|
4,228
|
|
|
$
|
959
|
|
|
$
|
305
|
|
|
$
|
(1,574
|
)
|
|
$
|
-
|
|
|
|
3,918
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,737
|
)
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(68
|
)
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,113
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
|
(a)
|
|
All revenue included in Intersegment Eliminations is associated with
the Other Operations segment.
|
(b)
|
|
Refer to Note 4 for definitions of OIBDA and Adjusted OIBDA.
|
|
|
|
|
|
(in millions)
|
|
|
|
Year-to-Date 6/30/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential
|
|
Business
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Services
|
|
Services
|
|
Operations
|
|
Shared
|
|
Intersegment
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment
|
|
Segment
|
|
Segment
|
|
Functions
|
|
Eliminations
|
|
Consolidated
|
Revenue(a)
|
|
|
|
$
|
9,230
|
|
|
$
|
1,359
|
|
|
$
|
836
|
|
|
$
|
-
|
|
|
$
|
(117
|
)
|
|
$
|
11,308
|
|
Operating costs and expenses
|
|
|
|
|
(4,906
|
)
|
|
|
(548
|
)
|
|
|
(490
|
)
|
|
|
(1,447
|
)
|
|
|
117
|
|
|
|
(7,274
|
)
|
Adjusted OIBDA(b)
|
|
|
|
|
4,324
|
|
|
|
811
|
|
|
|
346
|
|
|
|
(1,447
|
)
|
|
|
-
|
|
|
|
4,034
|
|
Merger-related and restructuring costs
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(141
|
)
|
|
|
-
|
|
|
|
(141
|
)
|
OIBDA(b)
|
|
|
|
$
|
4,324
|
|
|
$
|
811
|
|
|
$
|
346
|
|
|
$
|
(1,588
|
)
|
|
$
|
-
|
|
|
|
3,893
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,570
|
)
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(68
|
)
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________________
|
(a)
|
|
All revenue included in Intersegment Eliminations is associated with
the Other Operations segment.
|
(b)
|
|
Refer to Note 4 for definitions of OIBDA and Adjusted OIBDA.
|
|
|
|
Intersegment Eliminations relates to the programming provided to the
Residential Services and Business Services segments by the Company's
RSNs and local sports, news and lifestyle channels. These services are
reflected as programming expense for the Residential Services and
Business Services segments and as revenue for the Other Operations
segment.
4. USE OF NON-GAAP FINANCIAL MEASURES
In discussing its consolidated and segment 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 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; and merger-related and restructuring costs.
-
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; and
certain changes to income tax provision; as well as the impact of
taxes 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 Company's consolidated and segment performance 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 income tax provision, other
income (expense), net, and interest expense). Adjusted OIBDA further
eliminates the effects of certain noncash items identified in the
definition of Adjusted OIBDA above. Management also uses these measures
to allocate resources and capital to the segments. Adjusted OIBDA is
also a significant performance measure 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 Free Cash
Flow, which reflects capital expenditure decisions, and net income
attributable to TWC shareholders, which reflects the periodic costs of
capitalized assets. Adjusted OIBDA does 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 and Adjusted OIBDA also fail to reflect the
significant costs borne by the Company for income taxes and debt
servicing costs, 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20150730005280/en/
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