Time Warner Cable 2012 Annual Report Download - page 46

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)
Company’s Board of Directors declared an increased quarterly cash dividend of $0.65 per share of TWC common stock,
payable in cash on March 15, 2013 to stockholders of record at the close of business on February 28, 2013. In addition to
paying quarterly cash dividends, during 2012, TWC repurchased common stock under its common stock repurchase program
(the “Stock Repurchase Program”). Purchases under the Stock Repurchase Program may be made from time to time on the
open market and in privately negotiated transactions. The size and timing of the Company’s purchases under the Stock
Repurchase Program are based on a number of factors, including business and market conditions, financial capacity and
TWC’s common stock price. From the inception of the Stock Repurchase Program in the fourth quarter of 2010 through
February 13, 2013, the Company repurchased 70.8 million shares of TWC common stock for $5.340 billion and, as of
February 13, 2013, the Company had $1.902 billion remaining under the Stock Repurchase Program.
Recent Developments
Wireless-related Transactions
SpectrumCo
On August 24, 2012, SpectrumCo, LLC (“SpectrumCo”), a joint venture between TWC, Comcast Corporation
(“Comcast”) and Bright House Networks, LLC (“Bright House”), sold all of its advanced wireless spectrum licenses to
Cellco Partnership (doing business as Verizon Wireless), a joint venture between Verizon Communications Inc. (“Verizon”)
and Vodafone Group Plc, for $3.6 billion in cash. Upon closing, TWC, which owns 31.2% of SpectrumCo, received
$1.112 billion and recorded a pretax gain of $430 million ($261 million on an after-tax basis), which is included in other
income (expense), net, in the accompanying consolidated statement of operations for the year ended December 31, 2012. As
of December 31, 2012, the balance of the Company’s investment in SpectrumCo was $8 million, representing TWC’s share
of SpectrumCo’s remaining members’ equity (primarily consisting of cash and equivalents, net of accrued expenses).
During the second quarter of 2012, the Company and Verizon Wireless began selling each other’s products and services
in a number of cities under agency agreements entered into by TWC, Comcast, Bright House and Verizon Wireless that
allow the cable companies to sell Verizon Wireless-branded wireless service, and Verizon Wireless to sell each cable
company’s services. Subject to certain conditions, the cable companies have the option to offer wireless service under their
own brands utilizing Verizon Wireless’ network, although the Company currently has no plans to offer such service. In
addition, the cable companies and Verizon Wireless have formed an innovation technology joint venture to better integrate
wireless and wireline services. These activities are subject to the requirements contained in the August 16, 2012 consent
decree executed with the Department of Justice in connection with the SpectrumCo transaction, which limits where Verizon
Wireless can sell TWC’s services as well as TWC’s ability to enter into agreements with Verizon under certain
circumstances. The consent decree is pending the approval of the United States District Court for the District of Columbia.
Clearwire
On September 13, 2012, the Company exchanged all of its beneficially owned shares of Class B common stock of
Clearwire Corporation (“Clearwire”) together with all of its beneficially owned Class B common units of Clearwire
Communications LLC (“Clearwire Communications”) for shares of Class A common stock of Clearwire. On September 27,
2012, the Company sold these shares of Class A common stock for $64 million in cash. The sale resulted in a pretax gain of
$64 million, which is included in other income (expense), net, in the accompanying consolidated statement of operations for
the year ended December 31, 2012.
In addition, during the year ended December 31, 2012, the Company recorded an income tax benefit of $19 million
primarily related to the sale of Clearwire’s Class A common stock. The income tax benefit included the reversal of a
$46 million valuation allowance against a deferred income tax asset associated with the Company’s investment in Clearwire,
which had been established due to the uncertainty of realizing the full benefit of such asset. The Company reversed the
valuation allowance as a result of its ability to fully realize the capital losses from the sale of its Clearwire interests by
offsetting capital gains related to SpectrumCo’s sale of its spectrum licenses.
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