UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

For the quarterly period endedSeptemberJune 30, 20132014 or

For the transition period from ________________________to _________________________to

Commission File Number: 001-33335

TIME WARNER CABLE INC.

(Exact name of registrant as specified in its charter)

60 Columbus Circle

New York, New York 10023

(Address of principal executive offices) (Zip Code)

(212) 364-8200

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ No¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yesþ No¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  þ

TIME WARNER CABLE INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

AND OTHER FINANCIAL INFORMATION

TIME WARNER CABLE INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION

INTRODUCTION

Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is a supplement to the accompanying consolidated financial statements and provides additional information on Time Warner Cable Inc.’s (together with its subsidiaries, “TWC” or the “Company”) business, any recent developments, financial condition, cash flows and results of operations. MD&A is organized as follows:

OVERVIEW

TWC is among the largest providers of video, high-speed data and voice services in the U.S., with technologically advanced, well-clustered cable systems located mainly in five geographic areas – New York State (including New York City), the Carolinas, the Midwest (including Ohio, Kentucky and Wisconsin), Southern California (including Los Angeles) and Texas. TWC’s mission is to connect its customers to the world—simply, reliably and with superior service. As of SeptemberJune 30, 2013,2014, TWC served approximately 15.1 million customers (approximately 14.5 million residential services customers and 606,000 business services customers) who subscribed to one or more of its video, high-speed data and voice services.

TWC offers video, high-speed data and voice services to residential and business services customers over the Company’s broadband cable systems. TWC’s residential services also include security and home management services, and TWC’s business services also include networking and transport services (including cell tower backhaul services) and enterprise-class, cloud-enabled hosting, managed applications and services. During the ninesix months ended SeptemberJune 30, 2013, TWC generated total2014, TWC’s revenue increased 2.6% to approximately $11.3 billion.

Comcast Merger

On February 12, 2014, the Company entered into an Agreement and Plan of approximately $16.5 billion. Of this total, approximately $13.8 billionMerger with Comcast Corporation (“Comcast”) whereby the Company agreed to merge with and $1.7 billion were frominto a 100% owned subsidiary of Comcast (the “Comcast merger”). Upon completion of the provisionComcast merger, all of residentialthe outstanding shares of the Company will be cancelled and business services, respectively. TWC also sells advertisingeach issued and outstanding share will be converted into the right to receive 2.875 shares of Class A common stock of Comcast. Merger integration planning is underway, with the Company and Comcast working toward a varietyclosing by year-end 2014, subject to receipt of national, regionalshareholder and local customers, which resulted in advertising revenue of $741 million during the nine months ended September 30, 2013. Additionally, TWC generated $284 million of revenue from other sources during the nine months ended September 30, 2013.

As of September 30, 2013, TWC had approximately 11.4 million residential video subscribers, 11.1 million residential high-speed data subscribers and 4.8 million residential voice subscribers,regulatory approvals, as well as 193,000 businesssatisfaction of certain other closing conditions.

On April 25, 2014, Comcast entered into a binding agreement with Charter Communications, Inc., (“Charter”), which contemplates three transactions (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 will result in the combined company divesting a net total of approximately 3.9 million video subscribers, 500,000 business high-speed dataa portion of which are TWC subscribers and 262,000 business voice subscribers. TWC markets its services separately and(primarily in “bundled” packages of multiple services and features. As of September 30, 2013, 60.3% of TWC’s customers subscribed to two or more of its video, high-speed data and voice services, including 26.9% of its customers who subscribed to all three of these services.

TWC believes it will increase annual residential and business services revenue for 2013 and the foreseeable future thereafter.Midwest). The increase in business services revenue isdivestiture transactions are expected to occur contemporaneously with one another and are conditioned upon and will occur following the closing of the Comcast merger. They are also subject to a number of other conditions. The Comcast merger is not conditioned upon the closing of the divestiture transactions and, accordingly, the Comcast merger can be driven by growth in customers, an increasing percentagecompleted regardless of customers purchasing more services, as well as higher-priced tiers of service, and price increases. The increase in residential services revenue is anticipated to be primarily from growth in residential high-speed data revenue, which is expected to increase due to growth inwhether the divestiture transactions are ultimately completed.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Reportable Segments

Effective in the first quarter of 2014, the Company determined it has three reportable segments: Residential Services, Business Services and Other Operations. The Company’s reportable segments have been determined based on how management evaluates and manages the business. The Company has recast its financial information and disclosures for the prior periods to reflect the segment disclosures as if the current presentation had been in effect throughout all periods presented. For additional information about the components of each of the Company’s reportable segments, as well as shared functions, refer to “—Financial Statement Presentation—Reportable Segments,” below.

Residential Services Segment

TWC offers video, high-speed data and voice services, as well as security and home management services, to residential customers. As of June 30, 2014, the Company served 14.5 million residential services customers and, during the six months ended June 30, 2014, TWC generated approximately $9.2 billion of revenue from the provision of residential services, which represented 81.6% of TWC’s total revenue.

TWC’s video service provides over 300 channels (including, on average, 200 high-definition (“HD”) channels) and 19,000 hours of video-on-demand programming, which, increasingly, consumers can watch on the device of their choosing, both inside and outside the home. TWC’s high-speed data service is available in a range of speed (from up to 2 to 300 megabits per second (“Mbps”) downstream), price and consumption (unlimited, 30 gigabyte (“GB”) and 5 GB) levels and, for most high-speed data customers, includes access to a nationwide network of more than 250,000 Cable WiFi hotspots along with communications and Internet security features. TWC’s voice service provides unlimited calling to the U.S., Canada, Puerto Rico and Mexico and access to popular features in one simple package. TWC’s IntelligentHome service provides state-of-the-art security and home management technology, taking advantage of TWC’s always-on broadband network and around-the-clock security monitoring centers.

Residential Services revenue has benefited from increases in the number of high-speed data subscribers and growth in revenue per residential customer relationship (the latter due to an increasing percentage of subscribers purchasing more advanced, higher-priced tiers of service and increases in prices and high-speed data equipment rental charges. Future revenue growth rates will depend oncharges), offset by losses in residential video subscribers.

Residential Services programming costs represent a significant portion of the Company’s abilityoperating costs and expenses and are expected to attract, retaincontinue to increase, reflecting rate increases on existing programming services and upsellthe carriage of new networks, partially offset by a decline in total video subscribers. TWC expects that its programming costs as a percentage of video revenue will continue to increase, in part due to an increasingly competitive environment.

Business Services Segment

TWC offers a wide range of business high-speed data, networking, voice, video, hosting and cloud computing services. As of June 30, 2014, TWC served 658,000 business customers, including small and medium businesses; large enterprises; government, education and non-profit institutions; and telecommunications carriers. TWC offers business services at retail and wholesale using its own network infrastructure and third-party infrastructure as required to meet customer needs.

During the six months ended June 30, 2014, revenue from the provision of business services increased 23.3% to $1.4 billion, which represented 12.0% of TWC’s total revenue. The Company expects continued strong growth in Business Services revenue driven by an increase in the number of customers (the result of continued penetration of buildings currently on its network and investment to connect new buildings to its network) and revenue per customer (due to growing product penetration, demand for higher-priced tiers of service and price increases). Given the large opportunity and TWC’s still modest share in business services, the Company has established a target of growing Business Services to exceed $5 billion in annual revenue by 2018.

On December 31, 2013, TWC completed its acquisition of DukeNet Communications, LLC (“DukeNet”), a regional fiber optic network company that provides data and high-capacity bandwidth services to wireless carrier, data center, government and enterprise customers in North Carolina and South Carolina, as well as five other states in the Southeast.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Beginning in 2014, the results of DukeNet, which generated revenue of $58 million for the six months ended June 30, 2014, are included in the Business Services segment.

Other Operations Segment

TWC’s Other Operations segment principally consists of (i) Time Warner Cable Media (“TWC Media”), the advertising sales arm of TWC; (ii) the Company’s regional sports networks that carry Los Angeles Lakers’ basketball games and other sports programming (Time Warner Cable SportsNet and Time Warner Cable Deportes and, collectively, the “Lakers’ RSNs”); (iii) the Company’s local sports, news and lifestyle channels (e.g., Time Warner Cable News NY1); (iv) other operating revenue and costs, including those derived from the Advance/Newhouse Partnership and home shopping network-related services; and (v) beginning in 2014, operating revenue and costs associated with SportsNet LA, discussed below. During the six months ended June 30, 2014, TWC generated revenue from Other Operations of $836 million.

As discussed further below in “—Financial Statement Presentation,” TWC Media sells video and online advertising inventory to local, regional and national advertising customers and increase pricing, which can be impactedalso sells advertising inventory on behalf of other video distributors, including, among others, Verizon Communications Inc.’s (“Verizon”) FiOS, AT&T Inc.’s (“AT&T”) U-verse and Charter. Advertising revenue generated by competitive factors,TWC Media is cyclical, benefiting in years that include political elections as a result of political candidate and issue-related advertising.

On February 25, 2014, American Media Productions, LLC (“American Media Productions”), an unaffiliated third party, launched SportsNet LA, a regional sports network carrying the stateLos Angeles Dodgers’ baseball games and other sports programming. In accordance with long-term agreements with American Media Productions, TWC acts as the network’s exclusive advertising and affiliate sales agent and has certain branding and programming rights with respect to the network. In addition, TWC provides certain production and technical services to American Media Productions. As a result of the economylaunch of SportsNet LA, related revenue, including intersegment revenue, and regulation.expenses are included in the Company’s Other Operations segment.

Competition

The operations of each of TWC’s reportable segments face intense competition, both from existing competitors and, as a result of the rapid development of new technologies, services and products, from new entrants.

Residential Services Segment

TWC faces intense competition for residential services customers from a variety of alternative communications, information and entertainment delivery sources. TWC competes with incumbent local telephone companies and other overbuilders across each of its residential services. Some of these competitors offer a broad range of services with features and functions comparable to those provided by TWC and in bundles similar to those offered by TWC, sometimes including wireless service. Each of TWC’s residential services also faces competition from other companies that provide services on a stand-alone basis. TWC’s residential video service faces competition from direct broadcast satellite services, and increasingly from companies that deliver content to consumers over the Internet. TWC’s residential high-speed data and voice services face competition from wireless Internet and voice providers. TWC’s residential voice service also faces competition from “over-the-top” phone services and other alternatives.

Business Services Segment

TWC also competes acrossfaces significant competition as to each of its business services offerings. Its business high-speed data, networking and voice services withface competition from a variety of telecommunication carriers, including incumbent local and long-distance service providers.telephone companies. TWC’s cell tower backhaul service also faces competition from local and long-distance service providers,traditional telephone companies as well as other telecommunications carriers, such as metro and regional fiber providers.fiber-based carriers. TWC’s business video service faces competition from direct broadcast satellite providers. TWC also competes with cloud, hosting and related service providers and application serviceapplication-service providers.

Technological advances and product innovations have increased and will likely continue to increase the number of alternatives available to TWC’s current and potential residential and business services customers, further intensifying competition.

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OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Other Operations Segment

TWC faces intense competition in its advertising business across many different platforms and from a wide range of local and national competitors. Competition has increased and will likely continue to increase as new formats for advertising seek to attract the same advertisers. TWC competes for advertising revenue against, among others, local broadcast stations, national cable and broadcast networks, radio, newspapers, magazines and outdoor advertisers, as well as online advertising companies.

For the nine months ended September 30, 2013, video programming and employee costs represented 34.2% and 34.4%, respectively, of the Company’s total operating expenses. Video programming costs are expected to continue to increase, reflecting rate increases on existing programming services and the carriage of new networks, partially offset by a decline in total video subscribers. TWC expects that its video programming costs as a percentage of video revenue will continue to increase, in part due to the more competitive environment discussed above. Employee costs are also expected to continue to increase as a result of many factors, including higher compensation expenses per employee and headcount, reflecting the Company’s investment in business services, regional sports networks and other areas of growth.

Recent Developments

DukeNet Acquisition

On October 4, 2013, TWC entered into a definitive agreement with Duke Energy Corporation and investment funds managed by Alinda Capital Partners to acquire DukeNet Communications, LLC (“DukeNet”) for $600 million in cash, including the repayment of debt. DukeNet, a regional fiber optic network company, provides data and high-capacity bandwidth services to wireless carrier, data center, government, and enterprise customers in North Carolina and South Carolina, as well as five other states in the Southeast. The transaction, which is subject to various customary closing conditions, including receipt of regulatory approvals, is expected to close in the first quarter of 2014.

Common Stock Repurchase Program

On July 25, 2013,As a result of the Company’s Board of Directors increasedentry into the remaining authorization under its existingmerger agreement with Comcast, the Company’s common stock repurchase program (the “Stock Repurchase Program”), which was $775suspended on February 13, 2014. From the inception of the Stock Repurchase Program in the fourth quarter of 2010 through February 12, 2014, the Company repurchased 92.9 million as of July 24, 2013, to an aggregate of up to $4.0 billionshares of TWC common stock effective July 25, 2013. Purchasesfor $7.744 billion. As of June 30, 2014, the Company had $2.723 billion remaining under the Stock Repurchase Program mayauthorization.

Financial Statement Presentation

Basis of Presentation

Changes in Basis of Presentation

Effective in the first quarter of 2014, the Company determined it has three reportable segments. The Company has recast its financial information and disclosures for the prior periods to reflect the segment disclosures as if the current presentation had been in effect throughout all periods presented. Refer to Note 11 to the accompanying consolidated financial statements for further information regarding the Company’s segment information.

Additionally, during the first quarter of 2014, the Company revised its categorization of operating costs and expenses to be consistent with how such costs and expenses are presented to management and to provide a more meaningful presentation. The Company has recast the accompanying consolidated financial statements, financial information and disclosures of operating costs and expenses for the prior periods to reflect the new categorization, which had no impact on total operating costs and expenses, Operating Income or net income attributable to TWC shareholders for any period presented. The Company’s consolidated operating costs and expenses are presented in the following categories: (i) programming and content, (ii) sales and marketing, (iii) technical operations, (iv) customer care and (v) other operating costs.

Reclassifications

As discussed above, certain reclassifications have been made to the prior period financial information presented herein to conform to the current year presentation.

Consolidated

Revenue.  The Company generates revenue from each of its reportable segments: Residential Services, Business Services and Other Operations, which includes revenue generated by TWC Media, the Lakers’ RSNs, SportsNet LA and other operating revenue, including amounts derived from the Advance/Newhouse Partnership and home shopping network-related services. Each of the reportable segments is discussed below under “Reportable Segments.”

Operating costs and expenses

Programming and content.  Programming and content costs include (i) video programming costs for the Residential Services and Business Services segments and (ii) content costs, which include (a) the content acquisition costs associated with the Lakers’ RSNs and (b) other content production costs for the Lakers’ RSNs and the Company’s local sports, news and lifestyle channels. Beginning in 2014, programming and content costs also include the content acquisition and production costs associated with SportsNet LA. Content acquisition costs for the Los Angeles Lakers’ basketball games and Los Angeles Dodgers’ baseball games are recorded as games are exhibited over the applicable season.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

made from timeSales and marketing.  Sales and marketing costs consist of the costs incurred at the Residential Services, Business Services and Other Operations segments to time onsell and market the open marketCompany’s services. Costs primarily include employee-related and in privately negotiated transactions. The sizethird-party marketing costs (e.g., television, online, print and timingradio advertising). Employee-related costs primarily include costs associated with retail centers and activities related to direct sales and retention sales.

Technical operations.  Technical operations costs consist of the costs incurred at the Residential Services, Business Services and Other Operations segments associated with the installation, repair and maintenance of the Company’s purchases under the Stock Repurchase Program are based on a number of factors, including businessdistribution plant. Costs primarily include employee-related costs and market conditions, financial capacity and TWC’s common stock price. From the inceptionmaterials costs associated with non-capitalizable activities.

Customer care.  Customer care costs consist of the Stock Repurchase Program incosts incurred at the fourth quarterResidential Services and Business Services segments associated with the Company’s customer service activities. Costs primarily include employee-related costs and outsourced customer care costs.

Other operating.  Other operating costs consist of 2010 through October 29, 2013,all other operating costs incurred at the Company repurchased 87.0 million shares of TWC common stock for $6.978 billion, of which $1.968 billion was repurchased during 2013. As of October 29, 2013, the Company had $3.489 billion remaining under the Stock Repurchase Program. Absent any significant events, the Company expects to repurchase at least $2.5 billion of TWC common stock during 2013.Residential Services, Business Services and Other Operations segments that are not specifically identified above, including Residential Services and Business Services video franchise and other fees. Other operating costs also include operating costs associated with broad “corporate” functions (e.g., accounting and finance, information technology, executive management, legal and human resources). In addition, other operating costs include functions supporting more than one reportable segment that are centrally managed, including costs associated with facilities (e.g., rent, property taxes and utilities), network operations (e.g., employee costs associated with central engineering activities), vehicles and procurement.

SportsNet LAReportable Segments

In early 2014, the Company expects American Media Productions, LLC (“American Media Productions”) to launch SportsNet LA, a regional sports network owned by American Media Productions that will carry the Los Angeles Dodgers’ baseball games and other sports programming. In accordance with TWC’s long-term affiliation agreement with American Media Productions, TWC will act as the network’s exclusive advertising and affiliate sales agent and will have certain branding and programming rights with respect to the network. In addition, TWC will provide certain production and technical services to American Media Productions.

FINANCIAL STATEMENT PRESENTATION

Revenue

The Company’s segment results include intercompany transactions related to programming provided to the Residential Services and Business Services segments by the Lakers’ RSNs, the Company’s local sports, news and lifestyle channels and, beginning in 2014, SportsNet LA. These services are reflected as programming expense for the Residential Services and Business Services segments and as revenue consistsfor the Other Operations segment and are eliminated in consolidation. Additionally, the operating costs described above that are associated with broad “corporate” functions or functions supporting more than one reportable segment are recorded as shared functions and are not allocated to the reportable segments. 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 residential services, business services, advertising and other revenue.the results of operations that each segment would have achieved had they operated as stand-alone entities during the periods presented.

Residential services.Services Segment

Revenue.  Residential servicesServices segment revenue consists of revenue from residential video, high-speed data, voice and other services each discussed below.offered to residential subscribers. The Company sells residential video, high-speed data and voice services to residential subscribers separately and in bundled packages at rates lower than if the subscriber purchases each product on an individual basis. Revenue received from such subscribers to bundled packages is allocated to each product in a pro-rata manner based on the standalone selling price of each of the respective services.

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OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Operating costs and expenses.  Residential Services segment operating costs and expenses include the operating costs and expenses that management believes are necessary to assess the performance of and allocate resources to the Residential Services segment. Such costs include programming costs, sales and marketing costs, technical operations costs, customer care costs, video franchise and other fees and other operating costs (e.g., events and movies) and digital video recorder (“DVR”) service.

High-speed data.  High-speed data revenue primarily includes residential subscriber fees for the Company’s high-speed data servicesconnectivity costs, voice network costs and bad debt expense). Employee costs directly attributable to the Residential Services segment are included within each operating cost and expense category as applicable. Operating costs and expenses exclude costs and expenses related equipment rentalto “corporate” functions and installation charges. The Company offers multiple tiers of high-speed data services providing various service speeds, data usage levels and other attributes to meet the different needs of its subscribers. In addition, high-speed data revenue includes fees received from third-party Internet service providersfunctions supporting more than one reportable segment that are centrally managed (e.g., Earthlink) whose online servicesfacilities, network operations, vehicles and procurement) and are provided to somenot within the control of TWC’s customers.segment management.

Voice.Business Services Segment  Voice revenue includes residential subscriber fees for the Company’s voice services, along with related installation charges, as well as fees collected on behalf of governmental authorities.

Other.Revenue.  Other revenue includes revenue from security and home management services and other residential subscriber-related fees.

Business services.  Business servicesServices segment revenue consists of revenue from business video, high-speed data, voice, wholesale transport and other services each discussed below.offered to business customers. The Company sells business video, high-speed data and voice services to business subscribers separately and in bundled packages, and the revenue is allocated to each product in a pro-rata manner based on the standalone selling price of each of the respective services.

Operating costs and expenses.  Business Services segment operating costs and expenses include the operating costs and expenses that management believes are necessary to assess the performance of and allocate resources to the Business Services segment. Such costs are consistent with the operating costs and expense categories described above under residential services.

Video.  Video revenue includesResidential Services operating costs and expenses. Operating costs and expenses exclude costs and expenses related to “corporate” functions and functions supporting more than one reportable segment that are centrally managed (e.g., facilities, network operations, vehicles and procurement) and are not within the same fee categories received from business video subscribers as described above under residential video revenue.control of segment management.

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OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

High-speed data.Other Operations Segment  High-speed data

Revenue

Operating costs and expenses.  Other operating costs and expenses primarily includes business subscriber fees forinclude operating costs associated with TWC Media, the Company’s high-speed data servicesLakers’ RSNs and related installation charges. High-speed data revenue also includes amounts generated by the sale of commercial networking and point-to-point transport services, such as Metro Ethernet services.

Voice.  Voice revenue includes business subscriber fees for the Company’s voice services, along with related installation charges, as well as fees collected on behalf of governmental authorities.

Wholesale transport.  Wholesale transport revenue primarily includes amounts generated by the sale of point-to-point transport services offered to wireless telephone providers (i.e., cell tower backhaul) and other carriers.

Other.  Other revenue primarily includes revenue from enterprise-class, cloud-enabled hosting, managed applications and services and other business subscriber-related fees.

Advertising.  Advertising revenue is generated through the sale of video and online advertising inventory to local, regional and national advertising customers. The Company derives most of its advertising revenue from the sale of advertising inventory on cable networks owned by third parties. The rights to such advertising inventory are acquired by the Company in connection with its agreements to carry such networks or through contractual agreements to sell advertising inventory on behalf of other video distributors (including, among others, Verizon Communications Inc.’s FiOS and AT&T Inc.’s U-verse). The Company also generates advertising revenue from the sale of inventory on its own local sports, news and lifestyle channels and, beginning in 2014, SportsNet LA.

Shared Functions

Operating costs and expenses.  Shared functions operating costs and expenses consist of costs associated with broad “corporate” functions (e.g., Time Warner Cable SportsNetaccounting and Time Warner Cable Deportes (collectively, the “LA RSNs,” discussed further below)finance, information technology, executive management, legal and NY1 News).

Other.  Other revenue primarily includes (i) fees paid to TWC by the Advance/Newhouse Partnership for (a) the ability to distribute the Company’s high-speed data servicehuman resources) or functions supporting more than one reportable segment that are centrally managed (e.g., facilities, network operations, vehicles and (b) TWC’s management of certain functions, including, among others, the acquisition of programming rights,procurement) as well as other activities not attributable to a reportable segment.

Merger-related and restructuring costs.  All merger-related and restructuring costs incurred by the provision of certain functions, including engineering; (ii) beginning in the fourth quarter of 2012, fees from distributors of the LA RSNs, the Company’s two Los Angeles regional sports networks launched on October 1, 2012 that carry Los Angeles Lakers’ basketball games and other sports programming; and (iii) home shopping network-related revenue (including commissions earned on the sale of merchandise and carriage fees).

Costs and Expenses

Cost of revenue includes the following costs directly associated with the delivery of services to subscribers or the maintenance of the Company’s delivery systems: video programming costs; high-speed data connectivity costs; voice network costs; other service-related expenses, including non-administrative labor; franchise fees; and other related costs. Beginning in the fourth quarter of 2012, cost of revenue also includes direct costs associated with the LA RSNs, including content acquisition costs. Content acquisition costs for the Los Angeles Lakers’ basketball gamesCompany are recorded as games are exhibited over the applicable season.shared functions.

Selling, general and administrative expenses include amounts not directly associated with the delivery of services to subscribers or the maintenance of the Company’s delivery systems, such as administrative labor costs, marketing expenses, bad debt expense, billing system charges, non-plant repair and maintenance costs and other administrative overhead costs.

Cost of revenue and selling, general and administrative expenses exclude depreciation expense, which is presented separately in the accompanying consolidated statement of operations.

Use of Operating Income before Depreciation and Amortization

In discussing its 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 Operating Income before Depreciation and Amortization (“OIBDA”), which the Company defines as Operating Income before depreciation of tangible assets and amortization of intangible assets.

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Management uses For additional information regarding the use of segment OIBDA, among other measures, in evaluatingsee Note 11 to the performance of the Company’s business because it eliminates 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). Performance measures derived from OIBDA are also used in the Company’s annual incentive compensation programs. In addition, this measure is commonly used by analysts, investors and others in evaluating the Company’s performance.

This measure has inherent limitations. For example, OIBDA does 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, among other measures, various cash flow measures, which reflect capital expenditure decisions, and net income attributable to TWC shareholders, which reflects the periodic costs of capitalized assets. OIBDA also fails 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. Management compensates for these limitations by using other analytics such as a review of net income attributable to TWC shareholders.

This non-GAAP measure should be considered in addition to, not as a substitute for, the Company’s Operating Income and net income attributable to TWC shareholders, as well as other measures ofaccompanying consolidated financial performance reported in accordance with GAAP, and may not be comparable to similarly titled measures used by other companies.

Basis of Presentationstatements.

ReclassificationsRecent Accounting Standards

Certain reclassifications have been madeSee Note 2 to the prior yearaccompanying consolidated financial informationstatements for recently issued accounting standards yet to conform to the current year presentation.be adopted.

RESULTS OF OPERATIONS

Three and NineSix Months Ended SeptemberJune 30, 20132014 Compared to Three and NineSix Months Ended SeptemberJune 30, 20122013

The following discussion provides an analysis of the Company’s results of operations and should be read in conjunction with the accompanying consolidated statement of operations, as well as the consolidated financial statements and notes thereto and MD&A included in the 20122013 Form 10-K.10-K, as recast in the Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”) on April 24, 2014.

Revenue. Revenue by major category was

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Consolidated Results

The consolidated financial results for the Company for the three and six months ended June 30, 2014 and 2013 were as follows (in millions):

Revenue.  The increase in revenue for the three months ended June 30, 2014 was due to increases in revenue at all segments. The increase in revenue for the six months ended June 30, 2014 was due to increases in revenue at the Business Services and Other Operations segments, partially offset by a decrease in revenue at the Residential Services segment.

Revenue by segment is discussed in greater detail below in “Segment Results.”

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Costs and expenses

Operating costs and expenses.  The increase in operating costs and expenses for the three and six months ended June 30, 2014 was primarily due to increases in the following, which are discussed further in “Segment Results”: programming costs at the Residential Services segment; content costs at the Other Operations segment; sales and marketing costs at the Residential Services and Business Services segments; customer care costs at the Residential Services segment; and costs associated with advertising inventory sold on behalf of other video distributors (“ad rep agreements”) at the Other Operations segment; partially offset by decreases in voice costs at the Residential Services and Business Services segments. The growth in operating costs and expenses for the three and six months ended June 30, 2014 was reduced by a decrease in pension expense of $27 million and $61 million, respectively.

Depreciation.  Depreciation for the three and six months ended June 30, 2014 was impacted by certain Insight Communications Company, Inc. (“Insight”) assets (acquired on February 29, 2012) that were fully depreciated as of August 2013, offset by an increase associated with certain DukeNet assets (acquired on December 31, 2013) and growth in shorter-lived capitalized software assets.

Merger-related and restructuring costs.  For the three and six months ended June 30, 2014, the Company incurred merger-related costs of $52 million and $115 million, respectively. These costs primarily consisted of Comcast merger-related costs, which, for the three and six months ended June 30, 2014, included employee retention costs of $40 million and $69 million, respectively, and advisory and legal fees of $9 million and $42 million, respectively. Merger-related costs for the three and six months ended June 30, 2014 also included $3 million and $4 million, respectively, incurred in connection with the DukeNet acquisition. During the three and six months ended June 30, 2013, the Company incurred merger-related costs of $5 million and $7 million, respectively, in connection with the Insight acquisition. The Company expects to incur additional merger-related costs during the remainder of 2014 in connection with the Comcast merger.

The Company incurred restructuring costs of $9 million and $26 million for the three and six months ended June 30, 2014, respectively, and $22 million and $51 million for the three and six months ended June 30, 2013, respectively, primarily related to employee terminations and other exit costs. The Company expects to incur additional restructuring costs during the remainder of 2014.

Operating Income.  Operating Income for the three months ended June 30, 2014 decreased primarily due to higher operating cost and expenses and merger-related and restructuring costs, partially offset by growth in revenue, as discussed above. Operating Income for the six months ended June 30, 2014 increased slightly primarily due to growth in revenue, partially offset by higher operating cost and expenses, as well as merger-related and restructuring costs, as discussed above.

Interest expense, net.  Interest expense, net, for the three and six months ended June 30, 2014 decreased primarily due to lower average fixed-rate debt outstanding during the periods as compared to 2013.

Other income, net.  Other income, net, detail is shown in the table below (in millions):

Income tax provision. For the three months ended June 30, 2014 and 2013, the Company recorded income tax provisions of $323 million and $319 million, respectively. For the six months ended June 30, 2014 and 2013, the Company recorded income tax provisions of $587 million and $579 million, respectively. The effective tax rates were 39.3% and

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Selected residential subscriber-related statistics as of June 30, 2014 and 2013 were as follows (in thousands):

Residential services revenue. The major components of residential services revenue were as follows (in millions):

TIME WARNER CABLE INC.Revenue.  Residential Services segment revenue for the three months ended June 30, 2014 increased primarily due to an increase in high-speed data revenue, partially offset by decreases in video and voice revenue, each of which is discussed further below. Residential Services segment revenue for the six months ended June 30, 2014 declined primarily due to decreases in video and voice revenue, partially offset by an increase in high-speed data revenue, each of which is discussed further below.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

For residential services, averageAverage monthly revenue per unit for the Residential Services segment for the three and six months ended June 30, 2014 and 2013 was as follows:

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OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

The major components of residential video revenue for the three and six months ended June 30, 2014 and 2013 were as follows (in millions):

The decrease in residential video revenue for the three and ninesix months ended SeptemberJune 30, 20132014 was primarily due to decreasesa decline in video subscribers, and premium network revenue (which, for the three and nine months ended September 30, 2013, was reduced by approximately $15 million of subscriber credits issued in connection with a temporary blackout of a premium network resulting from a dispute with a programming vendor) and, for the nine months ended September 30, 2013, lower transactional video-on-demand revenue. For both periods, these decreases were partially offset by an increase in average revenue per subscriber as a result of price increases and a greater percentage of subscribers purchasing higher-priced tiers of service and, for the nine months ended September 30, 2013, two additional months of Insight revenue.increases.

Residential high-speed data revenue increased for the three and ninesix months ended SeptemberJune 30, 2013 increased2014 due to growth in average revenue per subscriber and an increase in high-speed data subscribers. The increase in average revenue per subscriber was primarily due to an increaseincreases in prices and equipment rental charges and a greater percentage of subscribers purchasing higher-priced tiers of service. Additionally,

The decrease in residential voice revenue for the ninethree and six months ended SeptemberJune 30, 2014 was primarily due to a decrease in average revenue per subscriber.

Operating costs and expenses.  Operating costs and expenses for the three and six months ended June 30, 2014 increased primarily due to increases in programming costs, sales and marketing costs and customer care costs, partially offset by a decline in other operating costs. Selected Residential Services average monthly costs per subscriber for the three and six months ended June 30, 2014 and 2013 residential high-speed data revenue benefitedwere as follows:

For the three and six months ended June 30, 2014, the increase in programming costs (which include intercompany expense from two additionalthe Other Operations segment for programming costs associated with the Lakers’ RSNs, the Company’s local sports, news and lifestyle channels and, beginning in 2014, SportsNet LA) was primarily due to contractual rate increases and the carriage of SportsNet LA, partially offset by a decline in video subscribers. The Company expects the rate of growth in Residential Services average monthly programming costs per video subscriber in the second half of 2014 to increase compared to the second half of 2013.

Sales and marketing costs for the three and six months of Insight revenue.ended June 30, 2014 increased primarily due to headcount growth and higher compensation costs per employee, including customer retention, and, for the six months ended June 30, 2014, increased marketing activities.

Customer care costs for the three and six months ended June 30, 2014 increased primarily due to growth in employee costs.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

The decrease in residential voice revenueOther operating costs for the three and ninesix months ended SeptemberJune 30, 2013 was2014 decreased due to a decline in average revenue per subscriber and fewer voice subscribers. For the nine months ended September 30, 2013, the decreasecosts, which was partially offset by two additionalhigher bad debt expense for the three months of Insight revenue.

The Company expects that residential services revenue in 2013 (which includes two additionalended June 30, 2014. Voice costs for the three and six months of Insight revenue, as discussed above) will increase compared to 2012,ended June 30, 2014 decreased $63 million and $124 million, respectively, primarily due to growtha decrease in residential high-speed data revenue, which is expected to increasedelivery costs per subscriber as a result of continued growththe replacement of Sprint Corporation as the provider of voice transport, switching and interconnection services (which was completed during the first quarter of 2014). The Company expects Residential Services average monthly voice costs per voice subscriber to decrease in average revenue per subscriber and the numbersecond half of subscribers. The2014 compared to the second half of 2013.

OIBDA.  OIBDA for the three months ended June 30, 2014 decreased slightly due to an increase in residential high-speed data revenue is expected to beoperating costs and expenses, partially offset by revenue growth. OIBDA for the six months ended June 30, 2014 decreased due to an increase in operating costs and expenses and a decline in residential video revenue (primarily as a resultrevenue.

Business Services.  The financial results of a continued decline in residential video subscribers).

the Business services revenue.The major components of business services revenueServices segment for the three and six months ended June 30, 2014 and 2013 were as follows (in millions):

Business services revenue for the three and nine months ended September 30, 2013 increased primarily due to growth in high-speed data and voice subscribers, as well as increases in cell tower backhaul revenue of $12 million and $32 million, respectively, and Metro Ethernet revenue of $9 million and $23 million, respectively. Business services revenue for the nine months ended September 30, 2013 also benefited from two additional months of Insight revenue.

Advertising revenue.  Advertising revenue for the three months ended September 30, 2013 decreased primarily due to declines in political advertising revenue. For the nine months ended September 30, 2013, advertising revenue was essentially flat as the declines in political advertising revenue were offset by growth in non-political advertising revenue (primarily associated with advertising inventory sold on behalf of other video distributors) and two additional months of Insight revenue. The Company expects advertising revenue in the fourth quarter of 2013 to decrease compared to the fourth quarter of 2012 due to a significant decline in political advertising revenue.

Other revenue. Other revenue for the three and nine months ended September 30, 2013 increased primarily due to fees from distributors of the LA RSNs.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Cost of revenue. The major components of cost of revenue were as follows (in millions, except per subscriber data):

Cost of revenue for the three and nine months ended September 30, 2013 increased primarily related to increases in video programming, employee and other direct operating costs, partially offset by a decline in voice costs.

The increase in video programming costs for the three and nine months ended September 30, 2013 was primarily due to contractual rate increases and carriage of new networks, partially offset by a decline in video subscribers. Video programming costs were reduced by approximately $10 million and $20 million for the three and nine months ended September 30, 2013, respectively, and by approximately $5 million and $20 million for the three and nine months ended September 30, 2012, respectively, due to changes in cost estimates for programming services primarily resulting from contract negotiations, changes in programming audit reserves and certain contract settlements. Additionally, video programming costs for the nine months ended September 30, 2013 were impacted by two additional months of Insight costs. The Company expects the rate of growth in video programming costs per video subscriber in the fourth quarter of 2013 to increase compared to the rate of growth in the first nine months of the year.

Employee costs for the three and nine months ended September 30, 2013 increased primarily as a result of increased headcount and higher compensation costs per employee. For the three and nine months ended September 30, 2013, employee medical costs increased $3 million and $19 million, respectively. Additionally, employee costs for the nine months ended September 30, 2013 were impacted by two additional months of Insight costs.

Voice costs consist of the direct costs associated with the delivery of voice services, including network connectivity costs. Voice costs for the three and nine months ended September 30, 2013 decreased primarily due to a decrease in delivery costs per subscriber as a result of the ongoing replacement of Sprint Corporation (“Sprint”) as the provider of voice transport, switching and interconnection services, as well as a decline in voice subscribers. For the nine months ended September 30, 2013, the decrease in voice costs was partially offset by the impact of two additional months of Insight costs. As of September 30, 2013, TWC had replaced Sprint with respect to nearly 70% of TWC’s voice lines, and the Company expects to complete the migration of the remaining voice lines during the fourth quarter of 2013 and the first quarter of 2014. As a result, the Company expects average voice costs per voice subscriber to continue to decrease in the fourth quarter of 2013 compared to the fourth quarter of 2012.

Other direct operating costs for the three and nine months ended September 30, 2013 increased as a result of costs associated with advertising inventory sold on behalf of other video distributors and, for the nine months ended September 30, 2013, the LA RSNs.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS

OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Selling, generalSelected business subscriber-related statistics as of June 30, 2014 and administrative expenses.   The components of selling, general and administrative expenses2013 were as follows (in millions)thousands):