[January 28, 2016] |
|
Time Warner Cable Reports 2015 Fourth-Quarter and Full-Year Results
Time Warner Cable Inc. (NYSE:TWC) today reported financial results for
its fourth quarter and full year ended December 31, 2015.
Time Warner Cable Chairman and CEO Rob Marcus said: "I'm incredibly
proud of everything we achieved this quarter and in 2015. We made our
network more reliable, our products more compelling and our customer
service better. And, importantly, our subscriber improvement over the
last eight quarters, including our record subscriber performance in
2015, has begun to show up in our financial results. As we begin 2016,
we intend to continue to improve the customer experience and build value
for our shareholders."
SELECTED CONSOLIDATED FINANCIAL RESULTS
|
|
|
(in millions, except per share data;
unaudited)
|
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
Change
|
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
|
%
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
|
%
|
|
Revenue
|
|
|
|
$
|
|
6,072
|
|
|
$
|
|
5,790
|
|
|
$
|
|
282
|
|
|
|
4.9
|
%
|
|
|
$
|
|
23,697
|
|
|
$
|
|
22,812
|
|
|
$
|
|
885
|
|
|
|
3.9
|
%
|
Adjusted OIBDA(a)
|
|
|
|
$
|
|
2,132
|
|
|
$
|
|
2,140
|
|
|
$
|
|
(8
|
)
|
|
|
(0.4
|
%)
|
|
|
$
|
|
8,138
|
|
|
$
|
|
8,228
|
|
|
$
|
|
(90
|
)
|
|
|
(1.1
|
%)
|
Operating Income(b)
|
|
|
|
$
|
|
1,125
|
|
|
$
|
|
1,226
|
|
|
$
|
|
(101
|
)
|
|
|
(8.2
|
%)
|
|
|
$
|
|
4,239
|
|
|
$
|
|
4,632
|
|
|
$
|
|
(393
|
)
|
|
|
(8.5
|
%)
|
Diluted EPS(c)
|
|
|
|
$
|
|
1.70
|
|
|
$
|
|
1.95
|
|
|
$
|
|
(0.25
|
)
|
|
|
(12.8
|
%)
|
|
|
$
|
|
6.44
|
|
|
$
|
|
7.17
|
|
|
$
|
|
(0.73
|
)
|
|
|
(10.2
|
%)
|
Adjusted Diluted EPS(a)
|
|
|
|
$
|
|
1.80
|
|
|
$
|
|
2.03
|
|
|
$
|
|
(0.23
|
)
|
|
|
(11.3
|
%)
|
|
|
$
|
|
6.62
|
|
|
$
|
|
7.56
|
|
|
$
|
|
(0.94
|
)
|
|
|
(12.4
|
%)
|
Cash provided by operating activities(b)
|
|
|
|
$
|
|
1,833
|
|
|
$
|
|
1,810
|
|
|
$
|
|
23
|
|
|
|
1.3
|
%
|
|
|
$
|
|
6,539
|
|
|
$
|
|
6,350
|
|
|
$
|
|
189
|
|
|
|
3.0
|
%
|
Capital expenditures
|
|
|
|
$
|
|
946
|
|
|
$
|
|
918
|
|
|
$
|
|
28
|
|
|
|
3.1
|
%
|
|
|
$
|
|
4,446
|
|
|
$
|
|
4,097
|
|
|
$
|
|
349
|
|
|
|
8.5
|
%
|
Free Cash Flow(a)(b)
|
|
|
|
$
|
|
883
|
|
|
$
|
|
891
|
|
|
$
|
|
(8
|
)
|
|
|
(0.9
|
%)
|
|
|
$
|
|
2,171
|
|
|
$
|
|
2,347
|
|
|
$
|
|
(176
|
)
|
|
|
(7.5
|
%)
|
|
(a)
|
|
Refer to Note 5 to the accompanying consolidated financial
statements for definitions of Adjusted OIBDA, Adjusted Diluted EPS
and Free Cash Flow and below for reconciliations.
|
(b)
|
|
Operating Income is reduced by merger-related and restructuring
costs of $51 million and $38 million for the fourth quarters of 2015
and 2014, respectively, and $203 million and $225 million for the
year ended December 31, 2015 and 2014, respectively. Cash provided
by operating activities and Free Cash Flow are reduced by
merger-related and restructuring payments of $26 million and $19
million for the fourth quarters of 2015 and 2014, respectively, and
$181 million and $128 million for the year ended December 31, 2015
and 2014, respectively.
|
(c)
|
|
Diluted EPS represents net income per diluted common share
attributable to TWC common shareholders.
|
|
|
|
HIGHLIGHTS
Financial Highlights
-
Revenue grew 4.9% for the fourth quarter and 3.9% for the full year -
the highest fourth-quarter and full-year organic revenue growth in the
last five years - driven by accelerated growth in Residential Services
and strong growth in Business Services.
-
Adjusted OIBDA excluding pension expense was up slightly for the
fourth quarter and full year.
-
Operating Income declined to $1.1 billion and $4.2 billion for the
fourth quarter and full year, respectively, due to higher depreciation
expense from "TWC Maxx" and other capital investments.
Operational Highlights
-
Strong fourth-quarter residential subscriber performance capped the
best full-year residential subscriber performance ever
-
Customer relationship net additions of 200,000 for the fourth
quarter and 618,000 for the full year
-
Video net additions of 54,000 for the fourth quarter and 32,000
for the full year
-
High-speed data net additions of 281,000 for the fourth quarter
and 1,000,000 for the full year
-
Voice net additions of 227,000 for the fourth quarter and
1,036,000 for the full year
-
Significant investment during 2015 to improve customer experience and
expand network
-
TWC Maxx, including "all digital" conversion and Internet speed
increases (up to 300 Mbps), was completed in Austin, Kansas City,
Dallas, Raleigh, Charlotte and San Antonio and was begun in
Hawaii, Wilmington, Greensboro and San Diego
-
10.5 million new set-top boxes, digital adapters and advanced
modems deployed
-
66,000 commercial buildings added to network
-
Impressive year-over-year improvements in key residential customer
service metrics continued in the fourth quarter
-
13% decrease in care calls per customer relationship
-
19% reduction in repair-related truck rolls per customer
relationship
-
98% on-time percentage for customer appointments within
industry-leading one-hour appointment arrival windows
-
15% improvement in first-visit resolution
CONSOLIDATED REVENUE AND PROFITABILITY RESULTS
Revenue for the fourth quarter and full year of 2015 increased
4.9% and 3.9%, respectively, year over year as a result of revenue
growth at the Residential Services and Business Services segments,
partially offset by a decline in revenue at the Other Operations segment.
Adjusted Operating Income before Depreciation and Amortization
("Adjusted OIBDA") for the fourth quarter and full year of
2015 decreased 0.4% and 1.1%, respectively, driven by
year-over-year increases in operating expenses of 7.9% and 6.7%,
respectively, partially offset by revenue growth.
|
|
|
|
|
|
|
|
(in millions; unaudited)
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
%
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
%
|
|
Operating costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Programming and content
|
|
|
$
|
|
1,446
|
|
|
$
|
|
1,318
|
|
|
$
|
|
128
|
|
|
9.7
|
%
|
|
|
$
|
|
5,815
|
|
|
$
|
|
5,294
|
|
|
$
|
|
521
|
|
|
9.8
|
%
|
Sales and marketing
|
|
|
|
|
616
|
|
|
|
|
537
|
|
|
|
|
79
|
|
|
14.7
|
%
|
|
|
|
|
2,379
|
|
|
|
|
2,192
|
|
|
|
|
187
|
|
|
8.5
|
%
|
Technical operations
|
|
|
|
|
427
|
|
|
|
|
387
|
|
|
|
|
40
|
|
|
10.3
|
%
|
|
|
|
|
1,669
|
|
|
|
|
1,530
|
|
|
|
|
139
|
|
|
9.1
|
%
|
Customer care
|
|
|
|
|
226
|
|
|
|
|
217
|
|
|
|
|
9
|
|
|
4.1
|
%
|
|
|
|
|
900
|
|
|
|
|
839
|
|
|
|
|
61
|
|
|
7.3
|
%
|
Other operating
|
|
|
|
|
1,225
|
|
|
|
|
1,191
|
|
|
|
|
34
|
|
|
2.9
|
%
|
|
|
|
|
4,796
|
|
|
|
|
4,729
|
|
|
|
|
67
|
|
|
1.4
|
%
|
Total operating costs and expenses
|
|
|
$
|
|
3,940
|
|
|
$
|
|
3,650
|
|
|
$
|
|
290
|
|
|
7.9
|
%
|
|
|
$
|
|
15,559
|
|
|
$
|
|
14,584
|
|
|
$
|
|
975
|
|
|
6.7
|
%
|
|
For the fourth quarter, the growth in operating expenses was primarily
due to increases in programming, employee, marketing and insurance
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.
For the full year, the growth in operating expenses was primarily due to
increases in programming, employee and maintenance costs, as well as
higher content costs at SportsNet LA, a regional sports network carrying
the Los Angeles Dodgers' baseball games and other sports programming,
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 $108
million increase in pension expense.
Operating expenses by segment are discussed further below under
"Detailed Segment Results."
Operating Income for the fourth quarter and full year of 2015
decreased 8.2% and 8.5%, respectively. For the fourth quarter, the
decrease was primarily due to higher depreciation expense and
merger-related costs and lower Adjusted OIBDA. For the full year, the
decrease was primarily due to higher depreciation expense and lower
Adjusted OIBDA.
Merger-related costs for the fourth quarters of 2015 and 2014 were $49
million and $35 million, respectively, and restructuring costs were $2
million and $3 million, respectively. Merger-related costs for the full
years of 2015 and 2014 were $183 million and $198 million, respectively,
and restructuring costs were $20 million and $27 million, respectively.
DETAILED SEGMENT RESULTS
Residential Services
|
Selected Residential Services Financial Results
|
|
|
|
|
|
|
|
|
(in millions; unaudited)
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
%
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
|
%
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
|
|
$
|
|
2,471
|
|
|
$
|
|
2,464
|
|
|
$
|
|
7
|
|
|
0.3
|
%
|
|
|
$
|
9,907
|
|
|
$
|
|
10,002
|
|
|
$
|
|
(95
|
)
|
|
|
(0.9
|
%)
|
High-speed data
|
|
|
|
|
1,819
|
|
|
|
|
1,644
|
|
|
|
|
175
|
|
|
10.6
|
%
|
|
|
|
7,029
|
|
|
|
|
6,428
|
|
|
|
|
601
|
|
|
|
9.3
|
%
|
Voice
|
|
|
|
|
497
|
|
|
|
|
470
|
|
|
|
|
27
|
|
|
5.7
|
%
|
|
|
|
1,931
|
|
|
|
|
1,932
|
|
|
|
|
(1
|
)
|
|
|
(0.1
|
%)
|
Other
|
|
|
|
|
24
|
|
|
|
|
23
|
|
|
|
|
1
|
|
|
4.3
|
%
|
|
|
|
99
|
|
|
|
|
84
|
|
|
|
|
15
|
|
|
|
17.9
|
%
|
Total revenue
|
|
|
$
|
|
4,811
|
|
|
$
|
|
4,601
|
|
|
$
|
|
210
|
|
|
4.6
|
%
|
|
|
$
|
18,966
|
|
|
$
|
|
18,446
|
|
|
$
|
|
520
|
|
|
|
2.8
|
%
|
|
|
|
|
|
|
Adjusted OIBDA(a)
|
|
|
$
|
|
2,174
|
|
|
$
|
|
2,173
|
|
|
$
|
|
1
|
|
|
-
|
|
|
$
|
8,489
|
|
|
$
|
|
8,623
|
|
|
$
|
|
(134
|
)
|
|
|
(1.6
|
%)
|
|
(a) Refer to Note 5 to the accompanying consolidated financial
statements for a definition of Adjusted OIBDA.
|
|
Fourth-quarter 2015 Residential Services revenue increased primarily as
a result of increases in high-speed data and voice revenue.
-
The increase 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 voice revenue increased due to growth in voice subscribers
offset, in part, by lower average revenue per subscriber.
-
Residential video revenue increased slightly due to an increase in
average revenue per subscriber primarily the result of growth in video
equipment rental and premium network revenue, partially offset by
lower programming tier revenue.
Full-year 2015 Residential Services revenue increased primarily as a
result of an increase in high-speed data revenue, partially offset by a
decrease in video revenue.
-
The increase 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 voice revenue was essentially flat as lower average
revenue per subscriber was offset by growth in voice subscribers.
-
Residential video revenue decreased due to a decline in average video
subscribers, partially offset by an increase in average revenue per
subscriber primarily the result of growth in video equipment rental
and premium network revenue and higher transactional video-on-demand
revenue (including the May 2015 Mayweather vs. Pacquiao fight),
partially offset by lower programming tier revenue.
Fourth-quarter 2015 Adjusted OIBDA was essentially flat, driven
by the increase in revenue discussed above, partially offset by an 8.6%
increase in operating costs. The increase in operating costs was the
result of higher programming, sales and marketing and technical
operations costs. Employee costs (which are included in each category,
as applicable) were impacted by a $15 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 9.7% to $1.4 billion
primarily due to an increase in average monthly programming costs per
video subscriber. Average monthly programming costs per residential
video subscriber grew 9.9% year over year to $42.89 for the fourth
quarter of 2015, primarily driven by contractual rate increases.
-
Sales and marketing costs increased 13.4% to $405 million primarily
due to higher marketing costs and increased sales-related employee
costs as a result of increased headcount and higher compensation costs
per employee related to the Company's subscriber growth initiatives,
as well as higher pension expense.
-
Technical operations costs were up 7.7% to $376 million primarily due
to increased maintenance and installation-related activities
(reflecting subscriber growth and the Company's continued investments
to improve the customer experience), as well as higher pension expense.
-
Other operating costs increased 3.7% to $167 million due to increases
in a number of other categories, including voice costs, partially
offset by lower bad debt expense.
Full-year 2015 Adjusted OIBDA decreased, driven by a 6.7%
increase in operating costs, partially offset by the increase in revenue
discussed above. The increase in operating costs was the result of
higher programming, sales and marketing, technical operations and
customer care costs, partially offset by a decrease in other operating
costs. Employee costs (which are included in each category, as
applicable) were impacted by a $58 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 8.6% to $5.5 billion
primarily due to an increase in average monthly programming costs per
video subscriber, partially offset by a decline in average video
subscribers. Average monthly programming costs per residential video
subscriber grew 10.6% year over year to $42.58 for the full year of
2015, primarily driven by contractual rate increases and carriage of
new networks (including SportsNet LA).
-
Sales and marketing costs increased 7.0% to $1.6 billion primarily due
to increased sales-related employee costs as a result of increased
headcount and higher compensation costs per employee related to the
Company's subscriber growth initiatives, as well as higher pension
expense.
-
Technical operations costs were up 7.5% to $1.5 billion primarily due
to increased headcount and maintenance and installation-related
activities (reflecting subscriber growth and the Company's continued
investments to improve the customer experience), as well as higher
pension expense.
-
Customer care costs increased 6.2% to $749 million primarily due to
increased headcount and higher compensation costs per employee
(reflecting subscriber growth and the Company's continued investments
to improve the customer experience).
-
Other operating costs decreased 3.6% to $704 million primarily due to
lower bad debt expense, partially offset by increases in a number of
other categories.
|
|
|
Residential Services Subscriber Metrics
|
|
|
|
|
|
|
|
(in thousands)
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
Net Additions (Declines)
|
|
|
|
|
|
|
|
|
|
Net Additions (Declines)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/2015
|
|
|
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
12/31/2015
|
Video
|
|
|
10,767
|
|
|
|
54
|
|
|
|
10,821
|
|
|
|
10,789
|
|
|
|
32
|
|
|
|
10,821
|
High-speed data
|
|
|
12,394
|
|
|
|
281
|
|
|
|
12,675
|
|
|
|
11,675
|
|
|
|
1,000
|
|
|
|
12,675
|
Voice
|
|
|
6,093
|
|
|
|
227
|
|
|
|
6,320
|
|
|
|
5,284
|
|
|
|
1,036
|
|
|
|
6,320
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single play
|
|
|
5,709
|
|
|
|
43
|
|
|
|
5,752
|
|
|
|
5,630
|
|
|
|
122
|
|
|
|
5,752
|
Double play
|
|
|
4,115
|
|
|
|
(48
|
)
|
|
|
4,067
|
|
|
|
4,525
|
|
|
|
(458
|
)
|
|
|
4,067
|
Triple play
|
|
|
5,105
|
|
|
|
205
|
|
|
|
5,310
|
|
|
|
4,356
|
|
|
|
954
|
|
|
|
5,310
|
Customer relationships
|
|
|
14,929
|
|
|
|
200
|
|
|
|
15,129
|
|
|
|
14,511
|
|
|
|
618
|
|
|
|
15,129
|
|
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
|
|
|
|
|
|
|
|
|
(in millions; unaudited)
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
%
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video
|
|
|
$
|
|
99
|
|
|
$
|
|
93
|
|
|
$
|
|
6
|
|
|
|
6.5
|
%
|
|
|
$
|
|
385
|
|
|
$
|
|
365
|
|
|
$
|
|
20
|
|
|
|
5.5
|
%
|
High-speed data
|
|
|
|
|
430
|
|
|
|
|
361
|
|
|
|
|
69
|
|
|
|
19.1
|
%
|
|
|
|
|
1,609
|
|
|
|
|
1,341
|
|
|
|
|
268
|
|
|
|
20.0
|
%
|
Voice
|
|
|
|
|
157
|
|
|
|
|
138
|
|
|
|
|
19
|
|
|
|
13.8
|
%
|
|
|
|
|
599
|
|
|
|
|
511
|
|
|
|
|
88
|
|
|
|
17.2
|
%
|
Wholesale transport
|
|
|
|
|
128
|
|
|
|
|
112
|
|
|
|
|
16
|
|
|
|
14.3
|
%
|
|
|
|
|
491
|
|
|
|
|
415
|
|
|
|
|
76
|
|
|
|
18.3
|
%
|
Other
|
|
|
|
|
50
|
|
|
|
|
51
|
|
|
|
|
(1
|
)
|
|
|
(2.0
|
%)
|
|
|
|
|
200
|
|
|
|
|
206
|
|
|
|
|
(6
|
)
|
|
|
(2.9
|
%)
|
Total revenue
|
|
|
$
|
|
864
|
|
|
$
|
|
755
|
|
|
$
|
|
109
|
|
|
|
14.4
|
%
|
|
|
$
|
|
3,284
|
|
|
$
|
|
2,838
|
|
|
$
|
|
446
|
|
|
|
15.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA(a)
|
|
|
$
|
|
522
|
|
|
$
|
|
466
|
|
|
$
|
|
56
|
|
|
|
12.0
|
%
|
|
|
$
|
|
1,987
|
|
|
$
|
|
1,719
|
|
|
$
|
|
268
|
|
|
|
15.6
|
%
|
|
(a) Refer to Note 5 to the accompanying consolidated financial
statements for a definition of Adjusted OIBDA.
|
|
Business Services revenue growth for both the fourth quarter and full
year was primarily due to increases in high-speed data and voice
subscribers and growth in wholesale transport revenue (including cell
tower backhaul revenue).
For both the fourth quarter and full year, the increase in Adjusted
OIBDA was driven by growth in revenue, partially offset by an increase
in operating costs of 18.3% and 15.9%, respectively. The growth in
operating costs was primarily due to increased headcount and higher
compensation costs per employee, as well as growth in programming and
marketing costs.
|
Business Services Subscriber Metrics
|
|
|
|
|
|
|
|
(in thousands)
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
Net Additions
|
|
|
|
|
|
|
|
|
|
Net Additions
|
|
|
|
|
|
|
9/30/2015
|
|
|
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
12/31/2015
|
Video
|
|
|
210
|
|
|
|
4
|
|
|
|
214
|
|
|
|
203
|
|
|
|
11
|
|
|
|
214
|
High-speed data
|
|
|
622
|
|
|
|
16
|
|
|
|
638
|
|
|
|
578
|
|
|
|
60
|
|
|
|
638
|
Voice
|
|
|
363
|
|
|
|
12
|
|
|
|
375
|
|
|
|
323
|
|
|
|
52
|
|
|
|
375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Single play
|
|
|
356
|
|
|
|
6
|
|
|
|
362
|
|
|
|
346
|
|
|
|
16
|
|
|
|
362
|
Double play
|
|
|
295
|
|
|
|
10
|
|
|
|
305
|
|
|
|
265
|
|
|
|
40
|
|
|
|
305
|
Triple play
|
|
|
83
|
|
|
|
2
|
|
|
|
85
|
|
|
|
76
|
|
|
|
9
|
|
|
|
85
|
Customer relationships
|
|
|
734
|
|
|
|
18
|
|
|
|
752
|
|
|
|
687
|
|
|
|
65
|
|
|
|
752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
%
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
%
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising
|
|
|
$
|
|
284
|
|
|
$
|
|
332
|
|
|
$
|
|
(48
|
)
|
|
(14.5
|
%)
|
|
|
$
|
|
1,028
|
|
|
$
|
|
1,127
|
|
|
$
|
|
(99
|
)
|
|
(8.8
|
%)
|
Other
|
|
|
|
|
180
|
|
|
|
|
166
|
|
|
|
|
14
|
|
|
8.4
|
%
|
|
|
|
|
682
|
|
|
|
|
645
|
|
|
|
|
37
|
|
|
5.7
|
%
|
Total revenue
|
|
|
$
|
|
464
|
|
|
$
|
|
498
|
|
|
$
|
|
(34
|
)
|
|
(6.8
|
%)
|
|
|
$
|
|
1,710
|
|
|
$
|
|
1,772
|
|
|
$
|
|
(62
|
)
|
|
(3.5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted OIBDA(a)
|
|
|
$
|
|
210
|
|
|
$
|
|
243
|
|
|
$
|
|
(33
|
)
|
|
(13.6
|
%)
|
|
|
$
|
|
665
|
|
|
$
|
|
787
|
|
|
$
|
|
(122
|
)
|
|
(15.5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Refer to Note 5 to the accompanying consolidated financial
statements for a definition of Adjusted OIBDA.
|
|
For both the fourth quarter and full year, advertising revenue decreased
primarily due to lower political advertising revenue, which was $8
million and $18 million in the fourth quarter and full year of 2015,
respectively, compared to $61 million and $113 million in the fourth
quarter and full year of 2014, respectively.
For both the fourth quarter and full year, other revenue increased
primarily due to affiliate fees from the Residential Services segment as
well as other distributors of the Los Angeles Lakers' regional sports
networks and SportsNet LA.
For the fourth quarter, the decrease in Adjusted OIBDA was driven by a
decrease in revenue.
For the full year, the decrease in Adjusted OIBDA was driven by a
decrease in revenue and an increase in operating costs of 6.1%,
primarily related to higher content costs associated with SportsNet LA.
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 4.3% year over
year to $774 million for the fourth quarter of 2015 and 3.5% to $3.0
billion for the full year of 2015.
For the fourth quarter, this increase was driven by higher compensation
costs per employee and increased insurance expense. For the full year,
this increase was driven by increased maintenance expense, higher
compensation costs per employee and an increase in insurance expense.
Additionally, pension costs increased $6 million and $27 million for the
fourth quarter and full year of 2015, respectively. For both the fourth
quarter and full year, these increases were partially offset by lower
costs as a result of operating efficiencies.
CONSOLIDATED NET INCOME
Fourth-quarter 2015 Net Income Attributable to TWC Shareholders
was $486 million, or $1.70 per basic and diluted common share, compared
to $554 million, or $1.96 per basic common share and $1.95 per diluted
common share, in the prior year quarter. Full-year 2015 net income
attributable to TWC shareholders was $1.8 billion, or $6.46 per basic
common share and $6.44 per diluted common share, compared to $2.0
billion, or $7.21 per basic common share and $7.17 per diluted common
share, in the prior year.
For the fourth quarter, net income attributable to TWC shareholders
decreased primarily due to a decrease in Operating Income, partially
offset by a decrease in income tax provision. For the full year, net
income attributable to TWC shareholders decreased primarily due to a
decrease in Operating Income, 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 in the second
quarter of 2015, as well as a decrease in income tax provision.
Fourth-quarter Adjusted Net Income Attributable to TWC Shareholders
and Adjusted Diluted EPS, which exclude certain items affecting
the comparability of TWC's results for 2015 and 2014 detailed in Note 3
to the accompanying consolidated financial statements, were $517 million
and $1.80, respectively, for the fourth quarter of 2015 compared to $577
million and $2.03, respectively, for the fourth quarter of 2014.
Full-year Adjusted net income attributable to TWC shareholders and
Adjusted Diluted EPS, which exclude certain items affecting the
comparability of TWC's results for 2015 and 2014 detailed in Note 3 to
the accompanying consolidated financial statements, were $1.9 billion
and $6.62, respectively, for 2015 compared to $2.1 billion and $7.56,
respectively, for 2014.
|
|
|
|
|
|
|
|
(in millions, except per share data; unaudited)
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
%
|
|
|
2015
|
|
|
2014
|
|
|
$
|
|
|
%
|
Net income attributable to TWC
|
|
shareholders
|
|
|
$
|
|
486
|
|
|
$
|
|
554
|
|
|
$
|
|
(68
|
)
|
|
(12.3
|
%)
|
|
|
$
|
|
1,844
|
|
|
$
|
|
2,031
|
|
|
$
|
|
(187
|
)
|
|
|
(9.2
|
%)
|
Adjusted net income attributable to TWC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
shareholders(a)
|
|
|
$
|
|
517
|
|
|
$
|
|
577
|
|
|
$
|
|
(60
|
)
|
|
(10.4
|
%)
|
|
|
$
|
|
1,895
|
|
|
$
|
|
2,143
|
|
|
$
|
|
(248
|
)
|
|
|
(11.6
|
%)
|
|
Net income per common share attributable to TWC common
shareholders:
|
|
Basic
|
|
|
$
|
|
1.70
|
|
|
$
|
|
1.96
|
|
|
$
|
|
(0.26
|
)
|
|
(13.3
|
%)
|
|
|
$
|
|
6.46
|
|
|
$
|
|
7.21
|
|
|
$
|
|
(0.75
|
)
|
|
|
(10.4
|
%)
|
Diluted
|
|
|
$
|
|
1.70
|
|
|
$
|
|
1.95
|
|
|
$
|
|
(0.25
|
)
|
|
(12.8
|
%)
|
|
|
$
|
|
6.44
|
|
|
$
|
|
7.17
|
|
|
$
|
|
(0.73
|
)
|
|
|
(10.2
|
%)
|
Adjusted Diluted EPS(a)
|
|
|
$
|
|
1.80
|
|
|
$
|
|
2.03
|
|
|
$
|
|
(0.23
|
)
|
|
(11.3
|
%)
|
|
|
$
|
|
6.62
|
|
|
$
|
|
7.56
|
|
|
$
|
|
(0.94
|
)
|
|
|
(12.4
|
%)
|
|
(a)
|
|
Refer to Note 5 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 full year of 2015 decreased 7.5% to $2.2
billion from $2.3 billion in 2014, due mainly to an increase in capital
expenditures, partially offset by an increase in cash provided by
operating activities. Capital Expenditures, which totaled
$4.4 billion in 2015, increased due to customer relationship growth, as
well as 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 full year
of 2015 was $6.5 billion, a 3.0% increase from 2014. This increase was
primarily driven by a change in working capital and lower net interest
payments, partially offset by higher net income tax payments and a
decrease in Adjusted OIBDA.
|
|
|
|
|
|
|
|
|
|
|
|
(in millions; unaudited)
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
$
|
|
|
|
%
|
|
|
2015
|
|
|
|
2014
|
|
|
$
|
|
|
%
|
|
|
Adjusted OIBDA(a)
|
|
|
$
|
|
2,132
|
|
|
|
$
|
|
2,140
|
|
|
|
$
|
|
(8
|
)
|
|
|
(0.4
|
%)
|
|
|
$
|
|
8,138
|
|
|
|
$
|
|
8,228
|
|
|
|
$
|
|
(90
|
)
|
|
|
(1.1
|
%)
|
|
|
Interest payments, net
|
|
|
|
|
(245
|
)
|
|
|
|
|
(248
|
)
|
|
|
|
|
3
|
|
|
|
(1.2
|
%)
|
|
|
(1,382
|
)
|
|
|
(1,435
|
)
|
|
|
|
|
53
|
|
|
|
(3.7
|
%)
|
|
|
Income tax payments, net
|
|
|
|
|
(189
|
)
|
|
|
|
|
(66
|
)
|
|
|
|
|
(123
|
)
|
|
|
186.4
|
%
|
|
|
(453
|
)
|
|
|
(352
|
)
|
|
|
|
|
(101
|
)
|
28.7
|
%
|
|
|
All other, net, including working capital
|
|
changes(b)
|
|
|
|
|
135
|
|
|
|
|
|
(16
|
)
|
|
|
|
|
151
|
|
NM
|
|
|
|
|
236
|
|
|
|
|
|
(91
|
)
|
|
|
|
|
327
|
|
|
|
NM
|
|
Cash provided by operating activities(b)
|
|
|
|
|
1,833
|
|
|
|
|
|
1,810
|
|
|
|
|
|
23
|
|
|
|
1.3
|
%
|
|
|
|
|
6,539
|
|
|
|
|
|
6,350
|
|
|
|
|
|
189
|
|
|
|
3.0
|
%
|
|
|
Add:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax payment on gain on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
settlement of Verizon Wireless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency agreement
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
NM
|
|
|
|
|
|
45
|
|
|
|
|
|
-
|
|
|
|
|
|
45
|
|
|
|
NM
|
|
Excess tax benefit from
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
equity-based compensation
|
|
|
|
|
7
|
|
|
|
|
|
10
|
|
|
|
|
|
(3
|
)
|
|
|
(30.0
|
%)
|
|
|
|
|
92
|
|
|
|
|
|
141
|
|
|
|
|
|
(49
|
)
|
|
|
(34.8
|
%)
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(946
|
)
|
|
|
|
|
(918
|
)
|
|
|
|
|
(28
|
)
|
|
|
3.1
|
%
|
|
|
(4,446
|
)
|
|
|
(4,097
|
)
|
|
|
|
|
(349
|
)
|
|
|
8.5
|
%
|
|
|
Cash paid for other intangible assets
|
|
|
|
|
(10
|
)
|
|
|
|
|
(8
|
)
|
|
|
|
|
(2
|
)
|
|
|
25.0
|
%
|
|
|
|
|
(51
|
)
|
|
|
|
|
(39
|
)
|
|
|
|
|
(12
|
)
|
|
|
30.8
|
%
|
|
|
Other
|
|
|
|
|
(1
|
)
|
|
|
|
|
(3
|
)
|
|
|
|
|
2
|
|
|
|
(66.7
|
%)
|
|
|
|
|
(8
|
)
|
|
|
|
|
(8
|
)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
Free Cash Flow(a)(b)
|
|
|
$
|
|
883
|
|
|
|
$
|
|
891
|
|
|
|
$
|
|
(8
|
)
|
|
|
(0.9
|
%)
|
|
|
$
|
|
2,171
|
|
|
|
$
|
|
2,347
|
|
|
|
$
|
|
(176
|
)
|
|
|
(7.5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NM-Not meaningful.
|
(a)
|
|
Refer to Note 5 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 $26 million and $19
million for the fourth quarters of 2015 and 2014, respectively, and
$181 million and $128 million for the year ended December 31, 2015
and 2014, respectively.
|
|
|
|
Net Debt, which totaled $21.3 billion as of December 31, 2015,
decreased from December 31, 2014 as Free Cash Flow more than offset the
cash used for dividends.
|
(in millions; unaudited)
|
|
|
12/31/2015
|
|
|
12/31/2014
|
|
|
|
|
|
|
|
|
(recast)
|
Long-term debt
|
|
|
$
|
|
22,497
|
|
|
$
|
|
22,604
|
Debt due within one year
|
|
|
|
|
5
|
|
|
|
|
1,017
|
Total debt
|
|
|
|
|
22,502
|
|
|
|
|
23,621
|
Cash and equivalents
|
|
|
|
|
(1,170)
|
|
|
|
|
(707)
|
Net debt(a)
|
|
|
$
|
|
21,332
|
|
|
$
|
|
22,914
|
|
(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 5 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 16 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, January 28, 2016. 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)
|
|
|
|
|
|
December 31,
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
(recast)
|
|
|
(in millions)
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
|
1,170
|
|
|
|
$
|
|
707
|
|
Receivables, less allowances of $94 million and $109 million
|
|
|
|
|
|
|
|
|
|
as of December 31, 2015 and 2014, respectively
|
|
|
|
916
|
|
|
|
|
|
949
|
|
Other current assets
|
|
|
|
373
|
|
|
|
|
|
383
|
|
Total current assets
|
|
|
|
2,459
|
|
|
|
|
|
2,039
|
|
Investments
|
|
|
|
65
|
|
|
|
|
|
64
|
|
Property, plant and equipment, net
|
|
|
|
16,945
|
|
|
|
|
|
15,990
|
|
Intangible assets subject to amortization, net
|
|
|
|
437
|
|
|
|
|
|
523
|
|
Intangible assets not subject to amortization
|
|
|
|
26,014
|
|
|
|
|
|
26,012
|
|
Goodwill
|
|
|
|
3,139
|
|
|
|
|
|
3,137
|
|
Other assets
|
|
|
|
218
|
|
|
|
|
|
370
|
|
Total assets
|
|
$
|
|
49,277
|
|
|
|
$
|
|
48,135
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
|
656
|
|
|
|
$
|
|
567
|
|
Deferred revenue and subscriber-related liabilities
|
|
|
|
224
|
|
|
|
|
|
198
|
|
Accrued programming and content expense
|
|
|
|
985
|
|
|
|
|
|
902
|
|
Current maturities of long-term debt
|
|
|
|
5
|
|
|
|
|
|
1,017
|
|
Other current liabilities
|
|
|
|
2,079
|
|
|
|
|
|
1,813
|
|
Total current liabilities
|
|
|
|
3,949
|
|
|
|
|
|
4,497
|
|
Long-term debt
|
|
|
|
22,497
|
|
|
|
|
|
22,604
|
|
Deferred income tax liabilities, net
|
|
|
|
12,830
|
|
|
|
|
|
12,291
|
|
Other liabilities
|
|
|
|
1,002
|
|
|
|
|
|
726
|
|
TWC shareholders' equity:
|
|
|
|
|
|
|
|
|
|
Common stock, $0.01 par value, 283.3 million and 280.8 million
shares issued and
|
|
|
|
|
|
|
|
|
|
outstanding as of December 31, 2015 and 2014, respectively
|
|
|
|
3
|
|
|
|
|
|
3
|
|
Additional paid-in capital
|
|
|
|
7,481
|
|
|
|
|
|
7,172
|
|
Retained earnings
|
|
|
|
1,925
|
|
|
|
|
|
1,162
|
|
Accumulated other comprehensive loss, net
|
|
|
|
(414
|
)
|
|
|
|
|
(324
|
)
|
Total TWC shareholders' equity
|
|
|
|
8,995
|
|
|
|
|
|
8,013
|
|
Noncontrolling interests
|
|
|
|
4
|
|
|
|
|
|
4
|
|
Total equity
|
|
|
|
8,999
|
|
|
|
|
|
8,017
|
|
Total liabilities and equity
|
|
$
|
|
49,277
|
|
|
|
$
|
|
48,135
|
|
|
|
See accompanying notes.
|
|
|
TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share data)
|
Revenue
|
|
|
$
|
|
6,072
|
|
|
|
$
|
|
5,790
|
|
|
|
$
|
|
23,697
|
|
|
|
$
|
|
22,812
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Programming and content
|
|
|
|
|
1,446
|
|
|
|
|
|
1,318
|
|
|
|
|
|
5,815
|
|
|
|
|
|
5,294
|
|
Sales and marketing
|
|
|
|
|
616
|
|
|
|
|
|
537
|
|
|
|
|
|
2,379
|
|
|
|
|
|
2,192
|
|
Technical operations
|
|
|
|
|
427
|
|
|
|
|
|
387
|
|
|
|
|
|
1,669
|
|
|
|
|
|
1,530
|
|
Customer care
|
|
|
|
|
226
|
|
|
|
|
|
217
|
|
|
|
|
|
900
|
|
|
|
|
|
839
|
|
Other operating
|
|
|
|
|
1,225
|
|
|
|
|
|
1,191
|
|
|
|
|
|
4,796
|
|
|
|
|
|
4,729
|
|
Depreciation
|
|
|
|
|
922
|
|
|
|
|
|
842
|
|
|
|
|
|
3,560
|
|
|
|
|
|
3,236
|
|
Amortization
|
|
|
|
|
34
|
|
|
|
|
|
34
|
|
|
|
|
|
136
|
|
|
|
|
|
135
|
|
Merger-related and restructuring costs
|
|
|
|
|
51
|
|
|
|
|
|
38
|
|
|
|
|
|
203
|
|
|
|
|
|
225
|
|
Total costs and expenses
|
|
|
|
|
4,947
|
|
|
|
|
|
4,564
|
|
|
|
|
|
19,458
|
|
|
|
|
|
18,180
|
|
Operating Income
|
|
|
|
|
1,125
|
|
|
|
|
|
1,226
|
|
|
|
|
|
4,239
|
|
|
|
|
|
4,632
|
|
Interest expense, net
|
|
|
|
|
(352
|
)
|
|
|
|
|
(353
|
)
|
|
|
|
|
(1,401
|
)
|
|
|
|
|
(1,419
|
)
|
Other income, net
|
|
|
|
|
3
|
|
|
|
|
|
7
|
|
|
|
|
|
150
|
|
|
|
|
|
35
|
|
Income before income taxes
|
|
|
|
|
776
|
|
|
|
|
|
880
|
|
|
|
|
|
2,988
|
|
|
|
|
|
3,248
|
|
Income tax provision
|
|
|
|
|
(290
|
)
|
|
|
|
|
(326
|
)
|
|
|
|
|
(1,144
|
)
|
|
|
|
|
(1,217
|
)
|
Net income
|
|
|
|
|
486
|
|
|
|
|
|
554
|
|
|
|
|
|
1,844
|
|
|
|
|
|
2,031
|
|
Less: Net income attributable to noncontrolling interests
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
Net income attributable to TWC shareholders
|
|
|
$
|
|
486
|
|
|
|
$
|
|
554
|
|
|
|
$
|
|
1,844
|
|
|
|
$
|
|
2,031
|
|
|
Net income per common share attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TWC common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
|
1.70
|
|
|
|
$
|
|
1.96
|
|
|
|
$
|
|
6.46
|
|
|
|
$
|
|
7.21
|
|
Diluted
|
|
|
$
|
|
1.70
|
|
|
|
$
|
|
1.95
|
|
|
|
$
|
|
6.44
|
|
|
|
$
|
|
7.17
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
283.2
|
|
|
|
|
|
280.6
|
|
|
|
|
|
282.6
|
|
|
|
|
|
279.3
|
|
Diluted
|
|
|
|
|
286.5
|
|
|
|
|
|
284.2
|
|
|
|
|
|
285.9
|
|
|
|
|
|
283.0
|
|
|
Cash dividends declared per share of common stock
|
|
|
$
|
|
0.75
|
|
|
|
$
|
|
0.75
|
|
|
|
$
|
|
3.75
|
|
|
|
$
|
|
3.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(recast)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions)
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
|
1,844
|
|
|
|
$
|
|
2,031
|
|
Adjustments for noncash and nonoperating items:
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
|
|
3,560
|
|
|
|
|
|
3,236
|
|
Amortization
|
|
|
|
|
136
|
|
|
|
|
|
135
|
|
Pretax gain on settlement of Verizon Wireless agency agreement
|
|
|
|
|
(120
|
)
|
|
|
|
|
-
|
|
Deferred income taxes
|
|
|
|
|
593
|
|
|
|
|
|
756
|
|
Equity-based compensation expense
|
|
|
|
|
161
|
|
|
|
|
|
182
|
|
Excess tax benefit from equity-based compensation
|
|
|
|
|
(92
|
)
|
|
|
|
|
(141
|
)
|
Changes in operating assets and liabilities, net of acquisitions and
dispositions:
|
|
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
|
|
53
|
|
|
|
|
|
11
|
|
Accounts payable and other liabilities
|
|
|
|
|
360
|
|
|
|
|
|
91
|
|
Other changes
|
|
|
|
|
44
|
|
|
|
|
|
49
|
|
Cash provided by operating activities
|
|
|
|
|
6,539
|
|
|
|
|
|
6,350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(4,446
|
)
|
|
|
|
|
(4,097
|
)
|
Purchases of investments
|
|
|
|
|
(4
|
)
|
|
|
|
|
(2
|
)
|
Proceeds from sale, maturity and collection of investments
|
|
|
|
|
3
|
|
|
|
|
|
19
|
|
Acquisition of intangible assets
|
|
|
|
|
(51
|
)
|
|
|
|
|
(39
|
)
|
Other investing activities
|
|
|
|
|
153
|
|
|
|
|
|
27
|
|
Cash used by investing activities
|
|
|
|
|
(4,345
|
)
|
|
|
|
|
(4,092
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
|
|
|
Short-term borrowings (repayments), net
|
|
|
|
|
(507
|
)
|
|
|
|
|
507
|
|
Repayments of long-term debt
|
|
|
|
|
(500
|
)
|
|
|
|
|
(1,750
|
)
|
Dividends paid
|
|
|
|
|
(865
|
)
|
|
|
|
|
(857
|
)
|
Repurchases of common stock
|
|
|
|
|
-
|
|
|
|
|
|
(259
|
)
|
Proceeds from exercise of stock options
|
|
|
|
|
129
|
|
|
|
|
|
226
|
|
Excess tax benefit from equity-based compensation
|
|
|
|
|
92
|
|
|
|
|
|
141
|
|
Taxes paid in cash in lieu of shares issued for equity-based
compensation
|
|
|
|
|
(72
|
)
|
|
|
|
|
(76
|
)
|
Other financing activities
|
|
|
|
|
(8
|
)
|
|
|
|
|
(8
|
)
|
Cash used by financing activities
|
|
|
|
|
(1,731
|
)
|
|
|
|
|
(2,076
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Increase in cash and equivalents
|
|
|
|
|
463
|
|
|
|
|
|
182
|
|
Cash and equivalents at beginning of year
|
|
|
|
|
707
|
|
|
|
|
|
525
|
|
Cash and equivalents at end of year
|
|
|
$
|
|
1,170
|
|
|
|
$
|
|
707
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
On September 21, 2015, the Company's stockholders approved the adoption
of the Charter Merger Agreement, and Charter's stockholders approved,
among other things, the adoption of the Charter Merger Agreement and the
issuance of New Charter Class A common stock to TWC stockholders in the
Charter merger. The Charter merger is subject to 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
On April 24, 2015, Comcast Corporation ("Comcast") and the Company
terminated their February 12, 2014 Agreement and Plan of Merger, 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.
2. RECLASSIFICATIONS
Certain reclassifications have been made to the prior year financial
information to conform to the current year presentation, including
adoption of the following two recent accounting standards.
Presentation of Deferred Income Taxes
In November 2015, the Financial Accounting Standards Board (the "FASB")
issued authoritative guidance for the purpose of simplifying the
presentation of deferred income taxes. Under this guidance, deferred
income tax assets and liabilities are required to be presented as
noncurrent in the balance sheet. The current requirement that deferred
income tax assets and liabilities be offset and presented as a single
amount is not affected by this guidance. TWC elected to early adopt this
guidance during the fourth quarter of 2015 and has applied a full
retrospective approach to all periods presented. Current deferred income
tax assets of $269 million as of December 31, 2014 have been
reclassified and presented as a reduction to deferred income tax
liabilities, net, in the consolidated balance sheet.
Presentation of Debt Issuance Costs
In April 2015, the FASB issued authoritative guidance for the purpose of
simplifying the presentation of debt issuance costs. Under this
guidance, debt issuance costs related to a recognized debt liability are
required to be presented in the balance sheet as a direct reduction from
the carrying amount of such debt liability, consistent with debt
discounts. The recognition and measurement guidance for debt issuance
costs are not affected by this guidance. TWC elected to early adopt this
guidance during the fourth quarter of 2015 and has applied a full
retrospective approach to all periods presented. Debt issuance costs,
net of accumulated amortization, of $8 million and $89 million
recognized in other current assets and other assets, respectively, as of
December 31, 2014 have been reclassified and presented as a reduction to
long-term debt in the consolidated balance sheet.
3. ITEMS AFFECTING COMPARABILITY
The following items affected the comparability of TWC's results for the
three months and year ended December 31, 2015 and 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share data)
|
|
|
Operating Income
|
|
|
|
|
|
Income Tax Provision
|
|
|
TWC Net Income(a)
|
|
|
Diluted EPS(a)
|
|
|
|
|
|
|
|
|
|
|
OIBDA(a)
|
|
|
D&A(a)
|
|
|
|
|
Other(a)
|
|
|
|
|
|
|
|
4th Quarter 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
$
|
|
2,081
|
|
|
$
|
|
(956)
|
|
|
$
|
|
1,125
|
|
|
$
|
|
(349)
|
|
|
$
|
|
(290)
|
|
|
$
|
|
486
|
|
|
$
|
|
1.70
|
Year-over-year change, as reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
(21)
|
|
|
$
|
|
(80)
|
|
|
$
|
|
(101)
|
|
|
$
|
|
(3)
|
|
|
$
|
|
36
|
|
|
$
|
|
(68)
|
|
|
$
|
|
(0.25)
|
%
|
|
|
(1.0%)
|
|
|
9.1%
|
|
|
(8.2%)
|
|
|
0.9%
|
|
|
(11.0%)
|
|
|
(12.3%)
|
|
|
(12.8%)
|
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
|
|
51
|
|
|
|
|
-
|
|
|
|
|
51
|
|
|
|
|
-
|
|
|
|
|
(20)
|
|
|
|
|
31
|
|
|
|
|
0.10
|
|
As adjusted
|
|
|
$
|
|
2,132
|
|
|
$
|
|
(956)
|
|
|
$
|
|
1,176
|
|
|
$
|
|
(349)
|
|
|
$
|
|
(310)
|
|
|
$
|
|
517
|
|
|
$
|
|
1.80
|
Year-over-year change, as adjusted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
$
|
|
(8)
|
|
|
$
|
|
(80)
|
|
|
$
|
|
(88)
|
|
|
$
|
|
(3)
|
|
|
$
|
|
31
|
|
|
$
|
|
(60)
|
|
|
$
|
|
(0.23)
|
%
|
|
|
(0.4%)
|
|
|
9.1%
|
|
|
(7.0%)
|
|
|
0.9%
|
|
|
(9.1%)
|
|
|
(10.4%)
|
|
|
(11.3%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4th Quarter 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
|
|
$
|
|
2,102
|
|
|
$
|
|
(876)
|
|
|
$
|
|
1,226
|
|
|
$
|
|
(346)
|
|
|
$
|
|
(326)
|
|
|
$
|
|
554
|
|
|
$
|
|
1.95
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
|
|
38
|
|
|
|
|
-
|
|
|
|
|
38
|
|
|
|
|
-
|
|
|
|
|
(15)
|
|
|
|
|
23
|
|
|
|
|
0.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
|
|
|
$
|
|
2,140
|
|
|
$
|
|
(876)
|
|
|
$
|
|
1,264
|
|
|
$
|
|
(346)
|
|
|
$
|
|
(341)
|
|
|
$
|
|
577
|
|
|
$
|
|
2.03
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
OIBDA represents Operating Income before Depreciation and
Amortization. D&A represents depreciation and amortization. Other
consists of interest 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. Diluted EPS reflects the more dilutive earnings
per share amount calculated using the treasury stock method or the
two-class method.
|
|
|
|
|
|
|
|
|
|
|
|
(in millions, except per share data)
|
|
Operating Income
|
|
Other(a)
|
|
Income Tax Provision
|
|
TWC Net Income(a)
|
|
Diluted EPS(a)
|
|
|
|
|
|
|
|
|
OIBDA(a)
|
|
D&A(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
$
|
|
7,935
|
|
$
|
|
(3,696)
|
|
$
|
|
4,239
|
|
$
|
|
(1,251)
|
|
$
|
|
(1,144)
|
|
$
|
|
1,844
|
|
$
|
|
6.44
|
Year-over-year change, as reported:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$
|
|
(68)
|
|
$
|
|
(325)
|
|
$
|
|
(393)
|
|
$
|
|
133
|
|
$
|
|
73
|
|
$
|
|
(187)
|
|
$
|
|
(0.73)
|
%
|
(0.8%)
|
|
9.6%
|
|
(8.5%)
|
|
(9.6%)
|
|
(6.0%)
|
|
(9.2%)
|
|
(10.2%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
203
|
|
|
|
-
|
|
|
|
203
|
|
|
|
-
|
|
|
|
(79)
|
|
|
|
124
|
|
|
|
0.43
|
Gain on settlement of Verizon Wireless
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
agency agreement(b)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(120)
|
|
|
|
47
|
|
|
|
(73)
|
|
|
|
(0.25)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As adjusted
|
$
|
|
8,138
|
|
$
|
|
(3,696)
|
|
$
|
|
4,442
|
|
$
|
|
(1,371)
|
|
$
|
|
(1,176)
|
|
$
|
|
1,895
|
|
$
|
|
6.62
|
Year-over-year change, as adjusted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
$
|
|
(90)
|
|
$
|
|
(325)
|
|
$
|
|
(415)
|
|
$
|
|
14
|
|
$
|
|
153
|
|
$
|
|
(248)
|
|
$
|
|
(0.94)
|
%
|
(1.1%)
|
|
9.6%
|
|
(8.5%)
|
|
(1.0%)
|
|
(11.5%)
|
|
(11.6%)
|
|
(12.4%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Full Year 2014:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported
|
$
|
|
8,003
|
|
$
|
|
(3,371)
|
|
$
|
|
4,632
|
|
$
|
|
(1,384)
|
|
$
|
|
(1,217)
|
|
$
|
|
2,031
|
|
$
|
|
7.17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items affecting comparability:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
225
|
|
|
|
-
|
|
|
|
225
|
|
|
|
-
|
|
|
|
(88)
|
|
|
|
137
|
|
|
|
0.48
|
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
|
$
|
|
8,228
|
|
$
|
|
(3,371)
|
|
$
|
|
4,857
|
|
$
|
|
(1,385)
|
|
$
|
|
(1,329)
|
|
$
|
|
2,143
|
|
$
|
|
7.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
OIBDA represents Operating Income before Depreciation and
Amortization. D&A represents depreciation and amortization. Other
consists of interest 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. Diluted EPS reflects the more dilutive earnings
per share amount calculated using the treasury stock method or the
two-class method.
|
(b)
|
|
In 2011, in conjunction with SpectrumCo, LLC's (a joint venture
between TWC, Comcast and Bright House Networks) entry into an
agreement to sell its advanced wireless spectrum licenses to Cellco
Partnership (doing business as Verizon Wireless), 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 in the second quarter of 2015.
|
(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.
|
|
|
|
4. RECONCILIATION OF ADJUSTED OIBDA TO OPERATING INCOME AND
OTHER SEGMENT INFORMATION
Consolidated information for the three months and year ended December
31, 2015 and 2014 is as follows:
|
(in millions)
|
|
4th Quarter
|
|
|
Full Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Change
|
|
|
|
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
$
|
|
|
%
|
|
|
2015
|
|
|
|
2014
|
|
|
|
$
|
|
|
%
|
Adjusted OIBDA(a)
|
|
$
|
|
2,132
|
|
|
|
$
|
|
2,140
|
|
|
|
$
|
|
(8
|
)
|
|
|
(0.4
|
%)
|
|
|
$
|
|
8,138
|
|
|
|
$
|
|
8,228
|
|
|
|
$
|
|
(90
|
)
|
|
|
(1.1
|
%)
|
Adjusted OIBDA margin(b)
|
|
35.1
|
%
|
|
|
37.0
|
%
|
|
|
|
|
|
|
|
|
34.3
|
%
|
|
|
36.1
|
%
|
|
|
|
|
|
|
Merger-related and restructuring costs
|
|
|
|
(51
|
)
|
|
|
|
|
(38
|
)
|
|
|
|
|
(13
|
)
|
|
|
34.2
|
%
|
|
|
|
|
(203
|
)
|
|
|
|
|
(225
|
)
|
|
|
|
|
22
|
|
|
|
(9.8
|
%)
|
OIBDA(a)
|
|
|
|
2,081
|
|
|
|
|
|
2,102
|
|
|
|
|
|
(21
|
)
|
|
|
(1.0
|
%)
|
|
|
7,935
|
|
|
|
8,003
|
|
|
|
|
|
(68
|
)
|
|
|
(0.8
|
%)
|
Depreciation
|
|
|
|
(922
|
)
|
|
|
|
|
(842
|
)
|
|
|
|
|
(80
|
)
|
|
|
9.5
|
%
|
|
|
(3,560
|
)
|
|
|
(3,236
|
)
|
|
|
|
|
(324
|
)
|
|
|
10.0
|
%
|
Amortization
|
|
|
|
(34
|
)
|
|
|
|
|
(34
|
)
|
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(136
|
)
|
|
|
(135
|
)
|
|
|
|
|
(1
|
)
|
|
|
0.7
|
%
|
Operating Income
|
|
$
|
|
1,125
|
|
|
|
$
|
|
1,226
|
|
|
|
$
|
|
(101
|
)
|
|
|
(8.2
|
%)
|
|
|
$
|
|
4,239
|
|
|
|
$
|
|
4,632
|
|
|
|
$
|
|
(393
|
)
|
|
|
(8.5
|
%)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Refer to Note 5 for definitions of OIBDA and Adjusted OIBDA.
|
(b)
|
|
Adjusted OIBDA margin is defined as Adjusted OIBDA as a percentage
of total revenue.
|
|
|
|
Segment information for the three months and year ended December 31,
2015 and 2014 is as follows:
(in millions)
|
|
|
4th Quarter 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Services Segment
|
|
|
Business Services Segment
|
|
|
Other Operations Segment
|
|
|
Shared Functions
|
|
|
Intersegment Eliminations
|
|
|
Total Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(a)
|
|
|
$
|
|
4,811
|
|
|
|
$
|
|
864
|
|
|
|
$
|
|
464
|
|
|
|
$
|
|
-
|
|
|
|
$
|
|
(67
|
)
|
|
|
$
|
|
6,072
|
|
Operating costs and expenses
|
|
|
|
|
(2,637
|
)
|
|
|
|
|
(342
|
)
|
|
|
|
|
(254
|
)
|
|
|
|
|
(774
|
)
|
|
|
|
|
67
|
|
|
|
|
|
(3,940
|
)
|
Adjusted OIBDA(b)
|
|
|
|
|
2,174
|
|
|
|
|
|
522
|
|
|
|
|
|
210
|
|
|
|
|
|
(774
|
)
|
|
|
|
|
-
|
|
|
|
|
|
2,132
|
|
Merger-related and restructuring costs
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(51
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(51
|
)
|
OIBDA(b)
|
|
|
$
|
|
2,174
|
|
|
|
$
|
|
522
|
|
|
|
$
|
|
210
|
|
|
|
$
|
|
(825
|
)
|
|
|
$
|
|
-
|
|
|
|
|
|
2,081
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(922
|
)
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34
|
)
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
1,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
All revenue included in Intersegment Eliminations is associated with
the Other Operations segment.
|
(b)
|
|
Refer to Note 5 for definitions of OIBDA and Adjusted OIBDA.
|
|
|
|
(in millions)
|
4th Quarter 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Services Segment
|
|
|
Business Services Segment
|
|
|
Other Operations Segment
|
|
|
Shared Functions
|
|
|
Intersegment Eliminations
|
|
|
Total Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(a)
|
$
|
|
4,601
|
|
|
|
$
|
|
755
|
|
|
|
$
|
|
498
|
|
|
|
$
|
|
-
|
|
|
|
$
|
(64)
|
|
|
$
|
|
5,790
|
|
Operating costs and expenses
|
|
|
(2,428
|
)
|
|
|
|
|
(289
|
)
|
|
|
|
|
(255
|
)
|
|
|
|
|
(742
|
)
|
|
|
|
64
|
|
|
|
|
(3,650
|
)
|
Adjusted OIBDA(b)
|
|
|
2,173
|
|
|
|
|
|
466
|
|
|
|
|
|
243
|
|
|
|
|
|
(742
|
)
|
|
|
|
-
|
|
|
|
|
2,140
|
|
Merger-related and restructuring costs
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(38
|
)
|
|
|
|
-
|
|
|
|
|
(38
|
)
|
OIBDA(b)
|
$
|
|
2,173
|
|
|
|
$
|
|
466
|
|
|
|
$
|
|
243
|
|
|
|
$
|
|
(780
|
)
|
|
|
$
|
-
|
|
|
|
|
2,102
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(842
|
)
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(34
|
)
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
1,226
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
All revenue included in Intersegment Eliminations is associated with
the Other Operations segment.
|
(b)
|
|
Refer to Note 5 for definitions of OIBDA and Adjusted OIBDA.
|
|
|
|
(in millions)
|
Full Year 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Services Segment
|
|
Business Services Segment
|
|
Other Operations Segment
|
|
Shared Functions
|
|
Intersegment Eliminations
|
|
Total Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(a)
|
$
|
|
18,966
|
|
|
$
|
|
3,284
|
|
|
$
|
|
1,710
|
|
|
$
|
|
-
|
|
|
$
|
|
(263
|
)
|
|
$
|
|
23,697
|
|
Operating costs and expenses
|
|
|
(10,477
|
)
|
|
|
|
(1,297
|
)
|
|
|
|
(1,045
|
)
|
|
|
|
(3,003
|
)
|
|
|
|
263
|
|
|
|
|
(15,559
|
)
|
Adjusted OIBDA(b)
|
|
|
8,489
|
|
|
|
|
1,987
|
|
|
|
|
665
|
|
|
|
|
(3,003
|
)
|
|
|
|
-
|
|
|
|
|
8,138
|
|
Merger-related and restructuring costs
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
(203
|
)
|
|
|
|
-
|
|
|
|
|
(203
|
)
|
OIBDA(b)
|
$
|
|
8,489
|
|
|
$
|
|
1,987
|
|
|
$
|
|
665
|
|
|
$
|
|
(3,206
|
)
|
|
$
|
|
-
|
|
|
|
|
7,935
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,560
|
)
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(136
|
)
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
4,239
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
All revenue included in Intersegment Eliminations is associated with
the Other Operations segment.
|
(b)
|
|
Refer to Note 5 for definitions of OIBDA and Adjusted OIBDA.
|
|
|
|
(in millions)
|
Full Year 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
Residential Services Segment
|
|
|
Business Services Segment
|
|
|
Other Operations Segment
|
|
|
Shared Functions
|
|
|
Intersegment Eliminations
|
|
|
Total Consolidated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue(a)
|
$
|
|
18,446
|
|
|
|
$
|
|
2,838
|
|
|
|
$
|
|
1,772
|
|
|
|
$
|
|
-
|
|
|
|
$
|
|
(244
|
)
|
|
|
$
|
|
22,812
|
|
Operating costs and expenses
|
|
|
(9,823
|
)
|
|
|
|
|
(1,119
|
)
|
|
|
|
|
(985
|
)
|
|
|
|
|
(2,901
|
)
|
|
|
|
|
244
|
|
|
|
|
|
(14,584
|
)
|
Adjusted OIBDA(b)
|
|
|
8,623
|
|
|
|
|
|
1,719
|
|
|
|
|
|
787
|
|
|
|
|
|
(2,901
|
)
|
|
|
|
|
-
|
|
|
|
|
|
8,228
|
|
Merger-related and restructuring costs
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
(225
|
)
|
|
|
|
|
-
|
|
|
|
|
|
(225
|
)
|
OIBDA(b)
|
$
|
|
8,623
|
|
|
|
$
|
|
1,719
|
|
|
|
$
|
|
787
|
|
|
|
$
|
|
(3,126
|
)
|
|
|
$
|
|
-
|
|
|
|
|
|
8,003
|
|
Depreciation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(3,236
|
)
|
Amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(135
|
)
|
Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
4,632
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
All revenue included in Intersegment Eliminations is associated with
the Other Operations segment.
|
(b)
|
|
Refer to Note 5 for definitions of OIBDA and Adjusted OIBDA.
|
|
|
|
Intersegment Eliminations relates to the programming provided to the
Residential Services and Business Services segments by TWC-owned and/or
operated regional sports networks 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.
5. 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, net). 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/20160128005390/en/
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