Time Warner Cable 2012 Annual Report Download - page 44

Download and view the complete annual report

Please find page 44 of the 2012 Time Warner Cable annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 154

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154

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, current developments, financial condition, cash flows
and results of operations. MD&A is organized as follows:
•Overview. This section provides a general description of TWC’s business, as well as recent developments the
Company believes are important in understanding the results of operations and financial condition or in
understanding anticipated future trends.
•Financial statement presentation. This section provides a summary of how the Company’s operations are
presented in the accompanying consolidated financial statements.
•Results of operations. This section provides an analysis of the Company’s results of operations for the three years
ended December 31, 2012.
•Financial condition and liquidity. This section provides an analysis of the Company’s cash flows for the three
years ended December 31, 2012, as well as a discussion of the Company’s outstanding debt and commitments as of
December 31, 2012. Also included is a discussion of the amount of financial capacity available to fund the
Company’s future commitments, as well as a discussion of other financing arrangements.
•Market risk management. This section discusses how the Company monitors and manages exposure to potential
gains and losses arising from changes in market rates and prices, such as interest and foreign currency exchange
rates.
•Critical accounting policies and estimates. This section discusses accounting policies and estimates that require
the use of assumptions that were uncertain at the time the estimate was made and that could have a material effect
on the Company’s consolidated results of operations or financial condition if there were changes in the estimate or
if a different estimate were made. The Company’s significant accounting policies, including those considered to be
critical accounting policies and estimates, are summarized in Note 3 to the accompanying consolidated financial
statements.
•Caution concerning forward-looking statements. This section provides a description of the use of forward-looking
information appearing in this report, including in MD&A and the consolidated financial statements. Such
information is based on management’s current expectations about future events, which are subject to uncertainty
and changes in circumstances. Refer to Item 1A, “Risk Factors,” in Part I of this report for a discussion of the risk
factors applicable to the Company.
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. As discussed below in “Recent Developments,” on February 29, 2012, TWC completed its acquisition of Insight
Communications Company, Inc. and its subsidiaries (“Insight”). As of December 31, 2012, TWC served approximately
15.2 million customers (approximately 14.7 million residential services customers and 563,000 business services customers)
who subscribed to one or more of its three primary services, totaling approximately 28.9 million primary service units.
TWC offers video, high-speed data and voice services to residential and business services customers over the
Company’s broadband cable systems. TWC’s business services also include networking and transport services (including cell
tower backhaul services) and managed and outsourced information technology (“IT”) solutions and cloud services. During
2012, TWC generated total revenue of approximately $21.4 billion. Of this total, approximately $18.2 billion and $1.9 billion
34