Time Warner Cable 2011 Annual Report Download - page 65

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TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)
Current Financial Condition
As of December 31, 2011, the Company had $26.442 billion of debt, $5.177 billion of cash and equivalents (net debt of
$21.265 billion, defined as total debt less cash and equivalents), $300 million of mandatorily redeemable non-voting Series A
Preferred Equity Membership Units (the “TW NY Cable Preferred Membership Units”) issued by a subsidiary of TWC,
Time Warner NY Cable LLC (“TW NY Cable”), and $7.530 billion of total TWC shareholders’ equity. As of December 31,
2010, the Company had $23.121 billion of debt, $3.047 billion of cash and equivalents (net debt of $20.074 billion), $300
million of TW NY Cable Preferred Membership Units and $9.210 billion of total TWC shareholders’ equity.
The following table shows the significant items contributing to the change in net debt from December 31, 2010 to
December 31, 2011 (in millions):
Balance as of December 31, 2010 ............................................................ $ 20,074
Cash provided by operating activities ......................................................... (5,688)
Capital expenditures ....................................................................... 2,937
Repurchases of common stock ............................................................... 2,657
Dividends paid ........................................................................... 642
NaviSite acquisition, net(a) ................................................................... 323
NewWave cable systems acquisition .......................................................... 259
Decrease in the fair value of debt subject to interest rate swap contracts(b) ............................. 121
Proceeds from exercise of stock options ....................................................... (114)
All other, net ............................................................................. 54
Balance as of December 31, 2011 ............................................................ $ 21,265
(a) In addition to the NaviSite purchase price, amount includes the repayment of NaviSite’s debt and capital leases assumed.
(b) The increase in the fair value of debt subject to interest rate swap contracts is equal to the increase in the fair value of the underlying swaps, which are
separately recorded as assets in the accompanying consolidated balance sheet. See Note 11 to the accompanying consolidated financial statements fora
discussion of the Company’s accounting for its interest rate swap contracts.
On April 28, 2011, TWC filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission
(the “SEC”) that allows TWC to offer and sell from time to time a variety of securities.
As previously discussed, on August 15, 2011, TWC entered into the Merger Agreement to acquire Insight and its
subsidiaries. TWC agreed to pay $3.0 billion in cash for Insight, as reduced by Insight’s indebtedness for borrowed money
and similar obligations and subject to customary adjustments. The Company has obtained all necessary regulatory approvals
and expects the transaction to close by the end of the first quarter of 2012. See Note 6 to the accompanying consolidated
financial statements for additional information on this acquisition.
As previously discussed, on December 2, 2011, SpectrumCo entered into an agreement pursuant to which it will sell its
AWS licenses to Verizon Wireless for $3.6 billion. TWC, which owns 31.2% of SpectrumCo, will be entitled to receive
approximately $1.1 billion (approximately $950 million on an after-tax basis). The transaction, which is subject to certain
regulatory approvals and customary closing conditions, is expected to close during 2012.
On January 25, 2012, the Company’s Board of Directors declared a quarterly cash dividend of $0.56 per share of TWC
common stock, payable in cash on March 15, 2012 to stockholders of record at the close of business on February 29, 2012.
From the inception of the Stock Repurchase Program through February 15, 2012, the Company repurchased 47.8
million shares of TWC common stock for $3.325 billion. As of February 15, 2012, the Company had $3.917 billion
remaining under the Stock Repurchase Program.
Cash Flows
Cash and equivalents increased $2.130 billion and $1.999 billion in 2011 and 2010, respectively, and decreased $4.401
billion in 2009. Components of these changes are discussed below in more detail.
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