Exhibit 99.1
TIME WARNER CABLE REPORTS
2008 SECOND-QUARTER RESULTS
2008 SECOND-QUARTER RESULTS
Revenue Generating Units Grew by 656,000 — Best Second Quarter Ever
Revenues Rose 7%, Adjusted OIBDA Grew 9% and Operating Income Increased 4% over Prior Year Quarter
NEW YORK, NY, August 6, 2008 —Time Warner Cable Inc. (NYSE: TWC) today reported financial results for its second quarter ended June 30, 2008.
Time Warner Cable President and Chief Executive Officer Glenn Britt said: “We added 20% more RGUs this quarter than in last year’s second quarter, fueled by improved net additions in every RGU category, despite a challenging economic environment. We also increased our Triple Play subscribers by a net 214,000, demonstrating that the value and simplicity of our bundles continue to attract consumers. The strength of our subscription business drove a 7% increase in revenues and a 9% rise in Adjusted OIBDA.”
SECOND-QUARTER RESULTS
Revenuesfor the second quarter of 2008 increased 7% ($284 million) over the prior year quarter to $4.3 billion. Subscription revenues grew 7% ($277 million) to $4.1 billion. Video revenues were up 2% ($57 million) to $2.6 billion, driven by continued growth in digital video services and video price increases, offset in part by a decrease in pay-per-view event revenues. High-speed data revenues rose 12% ($108 million) to $1.0 billion, as a result of continued year-over-year high-speed data subscriber growth. Voice revenues were up 39% ($112 million) to $397 million, reflecting a net increase in Digital Phone subscribers. Advertising revenues grew 3% ($7 million) to $233 million.
Revenuesfor the second quarter of 2008 increased 7% ($284 million) over the prior year quarter to $4.3 billion. Subscription revenues grew 7% ($277 million) to $4.1 billion. Video revenues were up 2% ($57 million) to $2.6 billion, driven by continued growth in digital video services and video price increases, offset in part by a decrease in pay-per-view event revenues. High-speed data revenues rose 12% ($108 million) to $1.0 billion, as a result of continued year-over-year high-speed data subscriber growth. Voice revenues were up 39% ($112 million) to $397 million, reflecting a net increase in Digital Phone subscribers. Advertising revenues grew 3% ($7 million) to $233 million.
Adjusted Operating Income before Depreciation and Amortization (“Adjusted OIBDA”),which excludes a noncash pretax impairment loss of $45 million on cable systems held for sale, rose 9% ($126 million) over the second quarter of 2007 to $1.6 billion, benefiting from revenue growth, offset partially by higher video programming, employee, voice and marketing costs. Video programming expenses increased 6% ($57 million) to $939 million, due to contractual rate increases and an increase in the percentage of basic video subscribers who also subscribe to expanded tiers of video services. Employee costs increased 5% ($40 million), resulting primarily from headcount and salary increases, offset partly by lower equity-based compensation expense, due mainly to the timing of 2008 grants. Voice costs rose 21% ($23 million) reflecting primarily growth in Digital Phone subscribers, offset partially by a decline in per-subscriber connectivity costs. Marketing expenses grew 14% ($19 million) to $151 million, resulting from intensified marketing efforts. Additionally, the prior year period included $6 million of merger-related and restructuring expenses.
Operating Incomewas up 4% ($27 million) over the same quarter of 2007 to $738 million, due to higher Adjusted OIBDA, offset partly by increased depreciation expense ($53 million) and a noncash pretax impairment loss on cable systems held for sale ($45 million).
Income and Per Share Results
For the second quarter of 2008, net income was $277 million, or $0.28 per basic and diluted common share, compared to net income of $272 million, or $0.28 per basic and diluted common share, for the second quarter of 2007.
For the second quarter of 2008, net income was $277 million, or $0.28 per basic and diluted common share, compared to net income of $272 million, or $0.28 per basic and diluted common share, for the second quarter of 2007.
Certain pretax items in the current year quarter affected comparability, including $47 million of costs associated with the Company’s planned separation from Time Warner, a $45 million noncash impairment loss on cable systems held for sale and an $8 million noncash impairment charge on an equity-method investment. The $47 million of separation-related costs consisted of $10 million of direct transaction costs and $37 million of financing costs related to the funding of the planned $10.9 billion special dividend. On an after-tax basis, these items reduced net income by $62 million or $0.06 per basic and diluted common share. Excluding the impact of these items, net income increased for the second quarter of 2008 as compared to the same quarter of 2007, due primarily to an increase in Operating Income and a decrease in interest expense offset in part by higher income tax provision.
Cash Provided by Operating Activitiesfor the first six months of 2008 was $2.5 billion, an increase of $331 million over the first six months of 2007, driven by an increase in Adjusted OIBDA and a change in working capital requirements, offset partially by higher pension plan contributions.
Capital Expendituresfor the first six months of 2008 totaled $1.7 billion, an increase of $157 million compared to the first six months of 2007, due primarily to higher customer premise equipment purchases, which rose 16% ($120 million).
Free Cash Flowfor the first six months of 2008 was $825 million, an increase of $234 million over the first six months of 2007, due mainly to an increase in cash provided by operating activities, offset in part by an increase in capital expenditures. Net debt and mandatorily redeemable preferred equity membership units, as of June 30, 2008, totaled $12.9 billion.
Table 1
Second Quarter Results
(Unaudited)
Second Quarter Results
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2008 | 2007 | %Change | 2008 | 2007 | %Change | |||||||||||||||||||
(in millions) | (in millions) | |||||||||||||||||||||||
Subscription revenues: | ||||||||||||||||||||||||
Video | $ | 2,636 | $ | 2,579 | 2 | % | $ | 5,239 | $ | 5,083 | 3 | % | ||||||||||||
High-speed data | 1,032 | 924 | 12 | % | 2,026 | 1,818 | 11 | % | ||||||||||||||||
Voice | 397 | 285 | 39 | % | 763 | 549 | 39 | % | ||||||||||||||||
Total Subscription revenues | 4,065 | 3,788 | 7 | % | 8,028 | 7,450 | 8 | % | ||||||||||||||||
Advertising revenues | 233 | 226 | 3 | % | 430 | 415 | 4 | % | ||||||||||||||||
Total revenues | $ | 4,298 | $ | 4,014 | 7 | % | $ | 8,458 | $ | 7,865 | 8 | % | ||||||||||||
Adjusted OIBDA | $ | 1,570 | $ | 1,444 | 9 | % | $ | 2,972 | $ | 2,751 | 8 | % | ||||||||||||
Operating Income | $ | 738 | $ | 711 | 4 | % | $ | 1,374 | $ | 1,290 | 7 | % | ||||||||||||
2
SUBSCRIBER UPDATE
For definitions of certain terms, please refer to Table 2 below, which presents select subscriber and penetration data.
For definitions of certain terms, please refer to Table 2 below, which presents select subscriber and penetration data.
Highlights
RGUsexceeded 33.6 million — reflecting net additions of 656,000, a record for any second quarter — driven by year-over-year improvement in net additions in all RGU categories.Customer relationshipstotaled 14.7 million, andTriple Play subscriberssurpassed 2.8 million (or 19% of total customer relationships), benefiting from 214,000 net additions during the second quarter.
Table 2
Select Subscriber and Penetration Data
Select Subscriber and Penetration Data
Net | ||||||||||||
Additions | ||||||||||||
6/30/08 | 3/31/08 | (Declines) | ||||||||||
(in thousands) | ||||||||||||
Subscriber Data: | ||||||||||||
Revenue generating units(a) | 33,629 | 32,973 | 656 | |||||||||
Customer relationships(b) | 14,737 | 14,722 | 15 | |||||||||
Double play subscribers(c) | 4,760 | 4,748 | 12 | |||||||||
Triple play subscribers(d) | 2,824 | 2,610 | 214 | |||||||||
Bundled subscribers(e) | 7,584 | 7,358 | 226 | |||||||||
Homes passed(f) | 26,726 | 26,624 | 102 | |||||||||
Basic video subscribers(g) | 13,297 | 13,306 | (9 | ) | ||||||||
Digital video subscribers(h) | 8,483 | 8,283 | 200 | |||||||||
Residential high-speed data subscribers(i) | 8,125 | 7,924 | 201 | |||||||||
Commercial high-speed data subscribers(i) | 287 | 280 | 7 | |||||||||
Residential Digital Phone subscribers(j) | 3,421 | 3,170 | 251 | |||||||||
Commercial Digital Phone subscribers(j) | 16 | 10 | 6 | |||||||||
6/30/08 | 3/31/08 | |||||||||||
Penetration Data: | ||||||||||||
Basic video(k) | 49.8% | 50.0% | ||||||||||
Digital video(l) | 63.8% | 62.3% | ||||||||||
Residential high-speed data(m) | 30.7% | 30.1% | ||||||||||
Residential Digital Phone(n) | 13.4% | 12.6% | ||||||||||
Double play(o) | 32.3% | 32.3% | ||||||||||
Triple play(p) | 19.2% | 17.7% | ||||||||||
Bundled(q) | 51.5% | 50.0% |
(a) | Revenue generating units represent the total of all basic video, digital video, high-speed data and voice (including circuit-switched telephone service, as applicable) subscribers. | |
(b) | Customer relationships represent the number of subscribers who receive at least one level of service, encompassing video, high-speed data and voice services, without regard to the number of services purchased. For example, a subscriber who purchases only high-speed data service and no video service will count as one customer relationship, and a subscriber who purchases both video and high-speed data services will also count as only one customer relationship. | |
(c) | Double play subscriber numbers reflect customers who subscribe to two of the Company’s primary services (video, high-speed data and voice). | |
(d) | Triple play subscriber numbers reflect customers who subscribe to all three of the Company’s primary services (video, high-speed data and voice). | |
(e) | Bundled subscriber numbers reflect customers who subscribe to two or more of the Company’s primary services. | |
(f) | Homes passed represent the estimated number of service-ready single residence homes, apartment and condominium units and commercial establishments passed by the Company’s cable systems without further extending the transmission lines. | |
(g) | Basic video subscriber numbers reflect billable subscribers who receive at least basic video service. | |
(h) | Digital video subscriber numbers reflect billable subscribers who receive any level of video service via digital transmissions. | |
(i) | High-speed data subscriber numbers reflect billable subscribers who receive Road Runner high-speed data service or any of the other high-speed data services offered by the Company. | |
(j) | Digital Phone subscriber numbers reflect billable subscribers who receive an IP-based telephony service. | |
(k) | Basic video penetration represents basic video subscribers as a percentage of homes passed. | |
(l) | Digital video penetration represents digital video subscribers as a percentage of basic video subscribers. | |
(m) | Residential high-speed data penetration represents residential high-speed data subscribers as a percentage of estimated high-speed data service-ready homes passed. | |
(n) | Residential Digital Phone penetration represents residential Digital Phone subscribers as a percentage of estimated Digital Phone service-ready homes passed. | |
(o) | Double play penetration represents double play subscribers as a percentage of customer relationships. |
3
(p) | Triple play penetration represents triple play subscribers as a percentage of customer relationships. | |
(q) | Bundled penetration represents bundled subscribers as a percentage of customer relationships. |
Use of OIBDA, Adjusted OIBDA and Free Cash Flow
Operating Income before Depreciation and Amortization (“OIBDA”) is a financial measure not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines OIBDA as Operating Income before depreciation of tangible assets and amortization of intangible assets. The Company also evaluates the performance of its business using OIBDA excluding the impact of noncash impairments of goodwill, intangible and fixed assets, as well as gains and losses on asset sales (referred to herein as “Adjusted OIBDA”). Management utilizes OIBDA and Adjusted OIBDA, among other measures, in evaluating the performance of the Company’s business because they eliminate the uneven effect across its business of considerable amounts of depreciation of tangible assets and amortization of intangible assets recognized in business combinations. Additionally, management utilizes OIBDA and Adjusted OIBDA because it believes these measures provide valuable insight into the underlying performance of the Company’s individual cable systems by removing the effects of items that are not within the control of local personnel charged with managing these systems such as income tax provision, other income (expense), net, minority interest expense, net, income from equity investments, net, and interest expense, net. In this regard, OIBDA and Adjusted OIBDA are significant measures used in the Company’s annual incentive compensation programs. OIBDA and Adjusted OIBDA also are metrics used by the Company’s parent, Time Warner Inc. (“Time Warner”), to evaluate the Company’s performance, and OIBDA is an important measure in the Time Warner reportable segment disclosures. A limitation of OIBDA and Adjusted OIBDA, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s business. Moreover, Adjusted OIBDA does not reflect gains and losses on asset sales or any impairment charge related to goodwill, intangible assets and fixed assets. To compensate for this limitation, management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analyses. Another limitation of these measures is that they do not reflect the significant costs borne by the Company for income taxes, debt servicing costs, the share of OIBDA and Adjusted OIBDA related to the minority ownership, the results of the Company’s equity investments or other non-operational income or expense. Management compensates for this limitation through other financial measures such as a review of net income and earnings per share.
Operating Income before Depreciation and Amortization (“OIBDA”) is a financial measure not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines OIBDA as Operating Income before depreciation of tangible assets and amortization of intangible assets. The Company also evaluates the performance of its business using OIBDA excluding the impact of noncash impairments of goodwill, intangible and fixed assets, as well as gains and losses on asset sales (referred to herein as “Adjusted OIBDA”). Management utilizes OIBDA and Adjusted OIBDA, among other measures, in evaluating the performance of the Company’s business because they eliminate the uneven effect across its business of considerable amounts of depreciation of tangible assets and amortization of intangible assets recognized in business combinations. Additionally, management utilizes OIBDA and Adjusted OIBDA because it believes these measures provide valuable insight into the underlying performance of the Company’s individual cable systems by removing the effects of items that are not within the control of local personnel charged with managing these systems such as income tax provision, other income (expense), net, minority interest expense, net, income from equity investments, net, and interest expense, net. In this regard, OIBDA and Adjusted OIBDA are significant measures used in the Company’s annual incentive compensation programs. OIBDA and Adjusted OIBDA also are metrics used by the Company’s parent, Time Warner Inc. (“Time Warner”), to evaluate the Company’s performance, and OIBDA is an important measure in the Time Warner reportable segment disclosures. A limitation of OIBDA and Adjusted OIBDA, however, is that they do not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s business. Moreover, Adjusted OIBDA does not reflect gains and losses on asset sales or any impairment charge related to goodwill, intangible assets and fixed assets. To compensate for this limitation, management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analyses. Another limitation of these measures is that they do not reflect the significant costs borne by the Company for income taxes, debt servicing costs, the share of OIBDA and Adjusted OIBDA related to the minority ownership, the results of the Company’s equity investments or other non-operational income or expense. Management compensates for this limitation through other financial measures such as a review of net income and earnings per share.
Free Cash Flow is a non-GAAP financial measure. The Company defines Free Cash Flow as cash provided by operating activities (as defined under GAAP) plus excess tax benefits from the exercise of stock options, less cash provided by (used by) discontinued operations, capital expenditures, partnership distributions and principal payments on capital leases. Management uses Free Cash Flow to evaluate the Company’s business. The Company believes this measure is an important indicator of its liquidity, including its ability to reduce net debt and make strategic investments, because it reflects the Company’s operating cash flow after considering the significant capital expenditures required to operate its business. A limitation of this measure, however, is that it does not reflect payments made in connection with investments and acquisitions, which reduce liquidity. To compensate for this limitation, management evaluates such expenditures through other financial measures such as return on investment analyses.
OIBDA, Adjusted OIBDA and Free Cash Flow should be considered in addition to, not as a substitute for, the Company’s Operating Income, net income 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.
About Time Warner Cable
Time Warner Cable is the second-largest cable operator in the U.S., with technologically advanced, well-clustered systems located mainly in five geographic areas — New York State (including New York City), the Carolinas, Ohio, southern California (including Los Angeles) and Texas. As of June 30, 2008, Time Warner Cable served approximately 14.7 million customers who subscribed to one or more of its video, high-speed data and voice services, representing approximately 33.6 million revenue generating units.
Time Warner Cable is the second-largest cable operator in the U.S., with technologically advanced, well-clustered systems located mainly in five geographic areas — New York State (including New York City), the Carolinas, Ohio, southern California (including Los Angeles) and Texas. As of June 30, 2008, Time Warner Cable served approximately 14.7 million customers who subscribed to one or more of its video, high-speed data and voice services, representing approximately 33.6 million revenue generating units.
4
Information on 2008 Business Outlook Release and Conference Call
Time Warner Cable issued a separate release today regarding its updated 2008 full-year business outlook.
Time Warner Cable issued a separate release today regarding its updated 2008 full-year business outlook.
The Company’s earnings conference call can be heard live at 8:30 am ET on Wednesday, August 6, 2008. To listen to the call, visit www.timewarnercable.com/investors or AOL Keyword: TWC IR.
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, the planned separation from Time Warner Inc., and other factors affecting the operations of Time Warner Cable Inc. More detailed information about these factors may be found in filings by Time Warner Cable Inc. with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Time Warner Cable is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
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, the planned separation from Time Warner Inc., and other factors affecting the operations of Time Warner Cable Inc. More detailed information about these factors may be found in filings by Time Warner Cable Inc. with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Time Warner Cable is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
Contacts: | ||
Corporate Communications | Investor Relations | |
Alex Dudley (212) 364-8229 | Tom Robey (212) 364-8218 | |
Laraine Mancini (212) 364-8202 |
# # #
5
TIME WARNER CABLE INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
CONSOLIDATED BALANCE SHEET
(Unaudited)
June 30, | December 31, | |||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and equivalents | $ | 3,849 | $ | 232 | ||||
Receivables, less allowances of $93 million and $87 million as of June 30, 2008 and December 31, 2007, respectively | 713 | 743 | ||||||
Receivables from affiliated parties | 4 | 2 | ||||||
Prepaid expenses and other current assets | 126 | 95 | ||||||
Deferred income tax assets | 80 | 91 | ||||||
Total current assets | 4,772 | 1,163 | ||||||
Investments | 731 | 735 | ||||||
Property, plant and equipment, net | 13,172 | 12,873 | ||||||
Intangible assets subject to amortization, net | 609 | 719 | ||||||
Intangible assets not subject to amortization | 38,906 | 38,925 | ||||||
Goodwill | 2,106 | 2,117 | ||||||
Other assets | 157 | 68 | ||||||
Total assets | $ | 60,453 | $ | 56,600 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 447 | $ | 417 | ||||
Deferred revenue and subscriber-related liabilities | 166 | 164 | ||||||
Payables to affiliated parties | 188 | 204 | ||||||
Accrued programming expense | 532 | 509 | ||||||
Other current liabilities | 1,219 | 1,237 | ||||||
Current liabilities of discontinued operations | — | 5 | ||||||
Total current liabilities | 2,552 | 2,536 | ||||||
Long-term debt | 16,463 | 13,577 | ||||||
Mandatorily redeemable preferred equity membership units issued by a subsidiary | 300 | 300 | ||||||
Deferred income tax liabilities, net | 13,662 | 13,291 | ||||||
Long-term payables to affiliated parties | 24 | 36 | ||||||
Other liabilities | 406 | 430 | ||||||
Minority interests | 1,776 | 1,724 | ||||||
Shareholders’ equity | ||||||||
Class A common stock, $0.01 par value, 902 million shares issued and outstanding as of June 30, 2008 and December 31, 2007 | 9 | 9 | ||||||
Class B common stock, $0.01 par value, 75 million shares issued and outstanding as of June 30, 2008 and December 31, 2007 | 1 | 1 | ||||||
Paid-in-capital | 19,463 | 19,411 | ||||||
Accumulated other comprehensive loss, net | (180 | ) | (174 | ) | ||||
Retained earnings | 5,977 | 5,459 | ||||||
Total shareholders’ equity | 25,270 | 24,706 | ||||||
Total liabilities and shareholders’ equity | $ | 60,453 | $ | 56,600 | ||||
6
TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in millions, except per share data) | (in millions, except per share data) | |||||||||||||||
Revenues: | ||||||||||||||||
Subscription: | ||||||||||||||||
Video | $ | 2,636 | $ | 2,579 | $ | 5,239 | $ | 5,083 | ||||||||
High-speed data | 1,032 | 924 | 2,026 | 1,818 | ||||||||||||
Voice | 397 | 285 | 763 | 549 | ||||||||||||
Total Subscription | 4,065 | 3,788 | 8,028 | 7,450 | ||||||||||||
Advertising | 233 | 226 | 430 | 415 | ||||||||||||
Total revenues | 4,298 | 4,014 | 8,458 | 7,865 | ||||||||||||
Costs and expenses: | ||||||||||||||||
Costs of revenues(a) | 2,018 | 1,872 | 4,025 | 3,755 | ||||||||||||
Selling, general and administrative(a) | 710 | 692 | 1,461 | 1,343 | ||||||||||||
Depreciation | 722 | 669 | 1,423 | 1,318 | ||||||||||||
Amortization | 65 | 64 | 130 | 143 | ||||||||||||
Loss on cable systems held for sale | 45 | — | 45 | — | ||||||||||||
Merger-related and restructuring costs | — | 6 | — | 16 | ||||||||||||
Total costs and expenses | 3,560 | 3,303 | 7,084 | 6,575 | ||||||||||||
Operating Income | 738 | 711 | 1,374 | 1,290 | ||||||||||||
Interest expense, net | (219 | ) | (227 | ) | (418 | ) | (454 | ) | ||||||||
Income from equity investments, net | 5 | 4 | 10 | 7 | ||||||||||||
Minority interest expense, net | (46 | ) | (41 | ) | (87 | ) | (79 | ) | ||||||||
Other income (expense), net | (19 | ) | (3 | ) | (13 | ) | 143 | |||||||||
Income before income taxes | 459 | 444 | 866 | 907 | ||||||||||||
Income tax provision | (182 | ) | (172 | ) | (347 | ) | (359 | ) | ||||||||
Net income | $ | 277 | $ | 272 | $ | 519 | $ | 548 | ||||||||
Basic net income per common share | $ | 0.28 | $ | 0.28 | $ | 0.53 | $ | 0.56 | ||||||||
Average basic common shares outstanding | 976.9 | 976.9 | 976.9 | 976.9 | ||||||||||||
Diluted net income per common share | $ | 0.28 | $ | 0.28 | $ | 0.53 | $ | 0.56 | ||||||||
Average diluted common shares outstanding | 978.1 | 977.2 | 977.6 | 977.1 | ||||||||||||
(a) | Costs of revenues and selling, general and administrative expenses exclude depreciation. |
7
TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30, | ||||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
OPERATING ACTIVITIES | ||||||||
Net income | $ | 519 | $ | 548 | ||||
Adjustments for noncash and nonoperating items: | ||||||||
Depreciation and amortization | 1,553 | 1,461 | ||||||
Pretax gain on sale of 50% equity interest in the Houston Pool of TKCCP | — | (146 | ) | |||||
Pretax gain on sale of cost-method investment | (9 | ) | — | |||||
Pretax loss on cable systems held for sale | 45 | — | ||||||
(Income) loss from equity investments, net of cash distributions | (3 | ) | 8 | |||||
Pretax impairment loss on equity-method investment | 8 | — | ||||||
Minority interest expense, net | 87 | 79 | ||||||
Deferred income taxes | 341 | 183 | ||||||
Equity-based compensation | 48 | 38 | ||||||
Changes in operating assets and liabilities, net of acquisitions: | ||||||||
Receivables | 18 | 68 | ||||||
Accounts payable and other liabilities | (30 | ) | (97 | ) | ||||
Other changes | (42 | ) | 16 | |||||
Adjustments relating to discontinued operations | — | 46 | ||||||
Cash provided by operating activities | 2,535 | 2,204 | ||||||
INVESTING ACTIVITIES | ||||||||
Investments and acquisitions, net of cash acquired and distributions received | (26 | ) | 23 | |||||
Capital expenditures | (1,708 | ) | (1,551 | ) | ||||
Proceeds from sale of cost-method investment | 9 | — | ||||||
Proceeds from disposal of property, plant and equipment | 2 | 4 | ||||||
Cash used by investing activities | (1,723 | ) | (1,524 | ) | ||||
FINANCING ACTIVITIES | ||||||||
Borrowings (repayments), net(a) | (166 | ) | 266 | |||||
Borrowings(b) | 5,203 | 5,629 | ||||||
Repayments(b) | (2,145 | ) | (6,448 | ) | ||||
Debt issuance costs | (85 | ) | (28 | ) | ||||
Excess tax benefit from exercise of stock options | — | 5 | ||||||
Principal payments on capital leases | — | (2 | ) | |||||
Distributions to owners, net | (2 | ) | (19 | ) | ||||
Other | — | (64 | ) | |||||
Cash provided (used) by financing activities | 2,805 | (661 | ) | |||||
INCREASE IN CASH AND EQUIVALENTS | 3,617 | 19 | ||||||
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD | 232 | 51 | ||||||
CASH AND EQUIVALENTS AT END OF PERIOD | $ | 3,849 | $ | 70 | ||||
(a) | Borrowings (repayments), net, reflects borrowings under the Company’s commercial paper program with original maturities of three months or less, net of repayments of such borrowings. | |
(b) | Amounts represent borrowings and repayments related to debt instruments with original maturities greater than three months. |
Note: Certain reclassifications have been made to the prior year’s financial information to conform to the June 30, 2008 presentation.
8
TIME WARNER CABLE INC.
RECONCILIATION OF NON-GAAP AND OTHER FINANCIAL MEASURES
(Unaudited)
RECONCILIATION OF NON-GAAP AND OTHER FINANCIAL MEASURES
(Unaudited)
Reconciliation of Operating Income to
Adjusted Operating Income before Depreciation and Amortization
Adjusted Operating Income before Depreciation and Amortization
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Operating Income | $ | 738 | $ | 711 | $ | 1,374 | $ | 1,290 | ||||||||
Depreciation | 722 | 669 | 1,423 | 1,318 | ||||||||||||
Amortization | 65 | 64 | 130 | 143 | ||||||||||||
Operating Income before Depreciation and Amortization | 1,525 | 1,444 | 2,927 | 2,751 | ||||||||||||
Loss on cable systems held for sale | 45 | — | 45 | — | ||||||||||||
Adjusted Operating Income before Depreciation and Amortization | $ | 1,570 | $ | 1,444 | $ | 2,972 | $ | 2,751 | ||||||||
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2008 | 2007 | 2008 | 2007 | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Cash provided by operating activities | $ | 1,349 | $ | 1,198 | $ | 2,535 | $ | 2,204 | ||||||||
Reconciling items: | ||||||||||||||||
Adjustments relating to the operating cash flow of discontinued operations | — | 8 | — | (46 | ) | |||||||||||
Cash provided by continuing operating activities | 1,349 | 1,206 | 2,535 | 2,158 | ||||||||||||
Add: Excess tax benefit from exercise of stock options | — | 2 | — | 5 | ||||||||||||
Less: | ||||||||||||||||
Capital expenditures from continuing operations | (862 | ) | (831 | ) | (1,708 | ) | (1,551 | ) | ||||||||
Partnership tax distributions, stock option distributions and principal payments on capital leases of continuing operations | (1 | ) | (10 | ) | (2 | ) | (21 | ) | ||||||||
Free Cash Flow | $ | 486 | $ | 367 | $ | 825 | $ | 591 | ||||||||
Reconciliation of Net Debt
June 30, | December 31, | |||||||
2008 | 2007 | |||||||
(in millions) | ||||||||
Long-term debt | $ | 16,463 | $ | 13,577 | ||||
Debt due within one year | — | — | ||||||
Total debt | 16,463 | 13,577 | ||||||
Less: Cash and equivalents | (3,849 | ) | (232 | ) | ||||
Net debt(a) | 12,614 | 13,345 | ||||||
Mandatorily redeemable preferred equity membership units issued by a subsidiary | 300 | 300 | ||||||
Net debt and mandatorily redeemable preferred equity membership units issued by a subsidiary | $ | 12,914 | $ | 13,645 | ||||
(a) | Net debt is defined as total debt less cash and equivalents. |
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