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CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
 9 Months Ended
Sep. 30, 2013
Condensed Consolidating Financial Statements Disclosure [Abstract]  
Condensed Consolidating Financial Statements Disclosure

15.       CONDENSED CONSOLIDATING FINANCIAL STATEMENTS

 

Set forth below are condensed consolidating financial statements presenting the financial position, results of operations (including comprehensive income) and cash flows of (i) Time Warner Cable Inc. (the “Parent Company”), (ii) TW NY Cable Holding Inc. (“TW NY”), Time Warner Cable Enterprises LLC (“TWCE”) and Time Warner Cable Internet Holdings II LLC (“TWC Internet Holdings II” and, together with TW NY and TWCE, the “Guarantor Subsidiaries”), on a combined basis, (iii) the direct and indirect non-guarantor subsidiaries of the Parent Company (the “Non-Guarantor Subsidiaries”) on a combined basis and (iv) the eliminations necessary to arrive at the information for Time Warner Cable Inc. on a consolidated basis. TW NY is a direct 100% owned subsidiary of the Parent Company. TWCE and TWC Internet Holdings II are indirect 100% owned subsidiaries of the Parent Company. The Guarantor Subsidiaries have fully and unconditionally, jointly and severally, directly, guaranteed the debt securities issued by the Parent Company in its 2007 registered exchange offer and subsequent public offerings. The Parent Company owns all of the voting and economic interests, directly or indirectly, of the Guarantor Subsidiaries.

 

There are no legal or regulatory restrictions on the Parent Company's ability to obtain funds from any of its 100% owned subsidiaries through dividends, loans or advances.

 

These condensed consolidating financial statements should be read in conjunction with the consolidated financial statements of Time Warner Cable Inc.

 

Basis of Presentation

 

In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) the Parent Company's interests in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries, (ii) the Guarantor Subsidiaries' interests in the Non-Guarantor Subsidiaries and (iii) the Non-Guarantor Subsidiaries interests in the Guarantor Subsidiaries, where applicable, even though all such subsidiaries meet the requirements to be consolidated under GAAP. All intercompany balances and transactions between the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been eliminated, as shown in the column “Eliminations.” All assets and liabilities have been allocated to the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries generally based on legal entity ownership. Certain administrative costs have been allocated to the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries based on revenue recorded at the respective entity. A portion of the interest expense incurred by the Parent Company and the Guarantor Subsidiaries has been allocated to the Non-Guarantor Subsidiaries based on revenue recorded at the respective entity. The income tax provision has been presented based on each subsidiary's legal entity activity including income tax benefits related to allocated administrative costs and interest expense. Deferred income taxes have been presented based upon the temporary differences between the carrying amounts of the respective assets and liabilities of the applicable entities.

 

The Company's condensed consolidating financial information as of September 30, 2013 and December 31, 2012 and for the three and nine months ended September 30, 2013 and 2012 is as follows (in millions):

Condensed Consolidating Balance Sheet as of September 30, 2013
                      
              Non-      
        Parent Guarantor Guarantor    TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
ASSETS              
Current assets:              
 Cash and equivalents$ 656 $ — $ 220 $ — $ 876
 Short-term investments in U.S. Treasury              
  securities  250   —   —   —   250
 Receivables, net  45   —   847   —   892
 Receivables from affiliated parties  128   —   28   (156)   —
 Deferred income tax assets  4   7   298   —   309
 Other current assets  133   15   181   —   329
Total current assets  1,216   22   1,574   (156)   2,656
Investments in and amounts due from              
 consolidated subsidiaries  41,913   33,488   6,218   (81,619)   —
Investments  16   54   13   —   83
Property, plant and equipment, net  —   31   14,596   —   14,627
Intangible assets subject to amortization, net  —   7   566   —   573
Intangible assets not subject to amortization  —   —   26,012   —   26,012
Goodwill  —   —   2,886   —   2,886
Other assets  510   —   84   —   594
Total assets$ 43,655 $ 33,602 $ 51,949 $ (81,775) $ 47,431
                      
LIABILITIES AND EQUITY              
Current liabilities:              
 Accounts payable$ — $ — $ 468 $ — $ 468
 Deferred revenue and subscriber-related              
  liabilities  —   —   192   —   192
 Payables to affiliated parties  28   —   128   (156)   —
 Accrued programming expense  —   —   897   —   897
 Current maturities of long-term debt  1,769   —   2   —   1,771
 Other current liabilities  476   66   1,094   —   1,636
Total current liabilities  2,273   66   2,781   (156)   4,964
Long-term debt  21,168   2,066   27   —   23,261
Deferred income tax liabilities, net  40   325   11,349   —   11,714
Long-term payables to affiliated parties  7,641   —   8,702   (16,343)   —
Other liabilities  345   1   480   —   826
TWC shareholders’ equity:              
 Due to (from) TWC and subsidiaries  5,526   (11)   (5,515)   —   —
 Other TWC shareholders’ equity  6,662   31,155   34,121   (65,276)   6,662
Total TWC shareholders’ equity  12,188   31,144   28,606   (65,276)   6,662
Noncontrolling interests  —   —   4   —   4
Total equity  12,188   31,144   28,610   (65,276)   6,666
Total liabilities and equity$ 43,655 $ 33,602 $ 51,949 $ (81,775) $ 47,431

Condensed Consolidating Balance Sheet as of December 31, 2012
                      
              Non-      
        Parent Guarantor Guarantor    TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
ASSETS              
Current assets:              
 Cash and equivalents$ 2,174 $ — $ 1,130 $ — $ 3,304
 Short-term investments in U.S. Treasury              
  securities  150   —   —   —   150
 Receivables, net  49   —   834   —   883
 Receivables from affiliated parties  35   —   29   (64)   —
 Deferred income tax assets  5   4   308   —   317
 Other current assets  54   —   169   —   223
Total current assets  2,467   4   2,470   (64)   4,877
Investments in and amounts due from              
 consolidated subsidiaries  40,656   32,103   6,161   (78,920)   —
Investments  17   58   12   —   87
Property, plant and equipment, net  —   33   14,709   —   14,742
Intangible assets subject to amortization, net  —   10   631   —   641
Intangible assets not subject to amortization  —   —   26,011   —   26,011
Goodwill  —   —   2,889   —   2,889
Other assets  580   —   53   (71)   562
Total assets$ 43,720 $ 32,208 $ 52,936 $ (79,055) $ 49,809
                      
LIABILITIES AND EQUITY              
Current liabilities:              
 Accounts payable$ 1 $ — $ 646 $ — $ 647
 Deferred revenue and subscriber-related              
  liabilities  —   —   183   —   183
 Payables to affiliated parties  29   —   35   (64)   —
 Accrued programming expense  —   —   872   —   872
 Current maturities of long-term debt  1,516   —   2   —   1,518
 Mandatorily redeemable preferred equity  —   —   300   —   300
 Other current liabilities  631   61   1,113   —   1,805
Total current liabilities  2,177   61   3,151   (64)   5,325
Long-term debt  23,078   2,070   23   —   25,171
Deferred income tax liabilities, net  —   267   11,084   (71)   11,280
Long-term payables to affiliated parties  7,641   —   8,702   (16,343)   —
Other liabilities  275   3   472   —   750
TWC shareholders’ equity:              
 Due to (from) TWC and subsidiaries  3,270   120   (3,390)   —   —
 Other TWC shareholders’ equity  7,279   29,687   32,890   (62,577)   7,279
Total TWC shareholders’ equity  10,549   29,807   29,500   (62,577)   7,279
Noncontrolling interests  —   —   4   —   4
Total equity  10,549   29,807   29,504   (62,577)   7,283
Total liabilities and equity$ 43,720 $ 32,208 $ 52,936 $ (79,055) $ 49,809

Condensed Consolidating Statement of Operations for the Three Months Ended September 30, 2013
                      
              Non-      
        Parent Guarantor Guarantor    TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Revenue$ — $ — $ 5,518 $ — $ 5,518
Cost of revenue  —   —   2,564   —   2,564
Selling, general and administrative  —   —   949   —   949
Depreciation  —   —   790   —   790
Amortization  —   —   32   —   32
Merger-related and restructuring costs  —   —   23   —   23
Total costs and expenses  —   —   4,358   —   4,358
Operating Income  —   —   1,160   —   1,160
Equity in pretax income (loss) of              
 consolidated subsidiaries  834   763   (2)   (1,595)   —
Interest expense, net  (53)   (1)   (325)   —   (379)
Other income (expense), net  —   (2)   2   —   —
Income before income taxes  781   760   835   (1,595)   781
Income tax provision  (249)   (252)   (245)   497   (249)
Net income  532   508   590   (1,098)   532
Less: Net income attributable to              
 noncontrolling interests  —   —   —   —   —
Net income attributable to TWC shareholders$ 532 $ 508 $ 590 $ (1,098) $ 532

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended September 30, 2013
                      
            Non-    
        Parent Guarantor Guarantor   TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Net income$ 532 $ 508 $ 590 $ (1,098) $ 532
Change in accumulated unrealized losses on              
 pension benefit obligation, net of tax  10   —   —   —   10
Change in accumulated deferred gains (losses)              
 on cash flow hedges, net of tax  77   —   —   —   77
Other comprehensive income  87   —   —   —   87
Comprehensive income  619   508   590   (1,098)   619
Less: Comprehensive income attributable to              
 noncontrolling interests  —   —   —   —   —
Comprehensive income attributable to              
 TWC shareholders$ 619 $ 508 $ 590 $ (1,098) $ 619

Condensed Consolidating Statement of Operations for the Three Months Ended September 30, 2012
                      
              Non-      
        Parent Guarantor Guarantor    TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Revenue$ — $ — $ 5,363 $ — $ 5,363
Cost of revenue  —   —   2,499   —   2,499
Selling, general and administrative  —   —   918   —   918
Depreciation  —   —   789   —   789
Amortization  —   —   31   —   31
Merger-related and restructuring costs  2   —   30   —   32
Total costs and expenses  2   —   4,267   —   4,269
Operating Income (Loss)  (2)   —   1,096   —   1,094
Equity in pretax income of              
 consolidated subsidiaries  1,255   803   232   (2,290)   —
Interest expense, net  (67)   (46)   (289)   —   (402)
Other income, net  1   432   63   —   496
Income before income taxes  1,187   1,189   1,102   (2,290)   1,188
Income tax provision  (379)   (431)   (307)   738   (379)
Net income  808   758   795   (1,552)   809
Less: Net income attributable to              
 noncontrolling interests  —   —   (1)   —   (1)
Net income attributable to TWC shareholders$ 808 $ 758 $ 794 $ (1,552) $ 808

Condensed Consolidating Statement of Comprehensive Income for the Three Months Ended September 30, 2012
                      
            Non-    
        Parent Guarantor Guarantor   TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Net income$ 808 $ 758 $ 795 $ (1,552) $ 809
Change in accumulated unrealized losses on              
 pension benefit obligation, net of tax  7   —   —   —   7
Change in accumulated deferred gains (losses)              
 on cash flow hedges, net of tax  46   —   —   —   46
Other comprehensive income  53   —   —   —   53
Comprehensive income  861   758   795   (1,552)   862
Less: Comprehensive income attributable to              
 noncontrolling interests  —   —   (1)   —   (1)
Comprehensive income attributable to              
 TWC shareholders$ 861 $ 758 $ 794 $ (1,552) $ 861

Condensed Consolidating Statement of Operations for the Nine Months Ended September 30, 2013
                      
              Non-      
        Parent Guarantor Guarantor    TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Revenue$ — $ — $ 16,543 $ — $ 16,543
Cost of revenue  —   —   7,764   —   7,764
Selling, general and administrative  —   —   2,825   —   2,825
Depreciation  —   —   2,371   —   2,371
Amortization  —   —   95   —   95
Merger-related and restructuring costs  —   —   81   —   81
Total costs and expenses  —   —   13,136   —   13,136
Operating Income  —   —   3,407   —   3,407
Equity in pretax income (loss) of              
 consolidated subsidiaries  2,424   2,288   (1)   (4,711)   —
Interest expense, net  (183)   (2)   (990)   —   (1,175)
Other income, net  1   1   8   —   10
Income before income taxes  2,242   2,287   2,424   (4,711)   2,242
Income tax provision  (828)   (854)   (797)   1,651   (828)
Net income  1,414   1,433   1,627   (3,060)   1,414
Less: Net income attributable to              
 noncontrolling interests  —   —   —   —   —
Net income attributable to TWC shareholders$ 1,414 $ 1,433 $ 1,627 $ (3,060) $ 1,414

Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended September 30, 2013
                      
            Non-    
        Parent Guarantor Guarantor   TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Net income$ 1,414 $ 1,433 $ 1,627 $ (3,060) $ 1,414
Change in accumulated unrealized losses on              
 pension benefit obligation, net of tax  56   —   —   —   56
Change in accumulated deferred gains (losses)              
 on cash flow hedges, net of tax  91   —   —   —   91
Other comprehensive income  147   —   —   —   147
Comprehensive income  1,561   1,433   1,627   (3,060)   1,561
Less: Comprehensive income attributable to              
 noncontrolling interests  —   —   —   —   —
Comprehensive income attributable to              
 TWC shareholders$ 1,561 $ 1,433 $ 1,627 $ (3,060) $ 1,561

Condensed Consolidating Statement of Operations for the Nine Months Ended September 30, 2012
                      
              Non-      
        Parent Guarantor Guarantor    TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Revenue$ — $ — $ 15,901 $ — $ 15,901
Cost of revenue  —   —   7,377   —   7,377
Selling, general and administrative  —   —   2,694   —   2,694
Depreciation  —   —   2,377   —   2,377
Amortization  —   —   79   —   79
Merger-related and restructuring costs  24   —   74   —   98
Total costs and expenses  24   —   12,601   —   12,625
Operating Income (Loss)  (24)   —   3,300   —   3,276
Equity in pretax income of              
 consolidated subsidiaries  2,814   2,474   163   (5,451)   —
Interest expense, net  (230)   (145)   (829)   —   (1,204)
Other income, net  1   417   75   —   493
Income before income taxes  2,561   2,746   2,709   (5,451)   2,565
Income tax provision  (919)   (1,043)   (878)   1,920   (920)
Net income  1,642   1,703   1,831   (3,531)   1,645
Less: Net income attributable to              
 noncontrolling interests  —   —   (3)   —   (3)
Net income attributable to TWC shareholders$ 1,642 $ 1,703 $ 1,828 $ (3,531) $ 1,642

Condensed Consolidating Statement of Comprehensive Income for the Nine Months Ended September 30, 2012
                      
            Non-    
        Parent Guarantor Guarantor   TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Net income$ 1,642 $ 1,703 $ 1,831 $ (3,531) $ 1,645
Change in accumulated unrealized losses on              
 pension benefit obligation, net of tax  9   —   —   —   9
Change in accumulated deferred gains (losses)              
 on cash flow hedges, net of tax  9   —   —   —   9
Other comprehensive income  18   —   —   —   18
Comprehensive income  1,660   1,703   1,831   (3,531)   1,663
Less: Comprehensive income attributable to              
 noncontrolling interests  —   —   (3)   —   (3)
Comprehensive income attributable to              
 TWC shareholders$ 1,660 $ 1,703 $ 1,828 $ (3,531) $ 1,660

Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2013
                      
              Non-      
        Parent Guarantor Guarantor    TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Cash provided (used) by operating activities$ (239) $ (361) $ 4,754 $ — $ 4,154
                      
INVESTING ACTIVITIES              
Capital expenditures  —   —   (2,371)   —   (2,371)
Purchases of investments  (575)   (11)   —   —   (586)
Return of capital from investees  —   7   —   —   7
Proceeds from sale, maturity and collection of              
 investments  476   —   —   —   476
Acquisition of intangible assets  —   (3)   (27)   —   (30)
Other investing activities  —   —   19   —   19
Cash used by investing activities  (99)   (7)   (2,379)   —   (2,485)
                      
FINANCING ACTIVITIES              
Repayments of long-term debt  (1,500)   —   —   —   (1,500)
Redemption of mandatorily redeemable              
 preferred equity  —   —   (300)   —   (300)
Repurchases of common stock  (1,856)   —   —   —   (1,856)
Dividends paid  (573)   —   —   —   (573)
Proceeds from exercise of stock options  124   —   —   —   124
Excess tax benefit from equity-based              
 compensation  81   —   —   —   81
Taxes paid in cash in lieu of shares issued              
 for equity-based compensation  —   —   (64)   —   (64)
Net change in investments in and amounts due              
 from consolidated subsidiaries  2,552   368   (2,920)   —   —
Other financing activities  (8)   —   (1)   —   (9)
Cash provided (used) by financing activities  (1,180)   368   (3,285)   —   (4,097)
                      
Decrease in cash and equivalents  (1,518)   —   (910)   —   (2,428)
Cash and equivalents at beginning of period  2,174   —   1,130   —   3,304
Cash and equivalents at end of period$ 656 $ — $ 220 $ — $ 876
                      

Condensed Consolidating Statement of Cash Flows for the Nine Months Ended September 30, 2012
                      
              Non-      
        Parent Guarantor Guarantor    TWC
        Company Subsidiaries Subsidiaries Eliminations Consolidated
Cash provided (used) by operating activities$ 41 $ (661) $ 4,735 $ — $ 4,115
                      
INVESTING ACTIVITIES              
Capital expenditures  —   —   (2,191)   —   (2,191)
Business acquisitions, net of cash acquired  (1,350)   —   10   —   (1,340)
Purchases of investments  —   (16)   (41)   —   (57)
Return of capital from investees  —   1,112   —   —   1,112
Acquisition of intangible assets  (3)   —   (24)   —   (27)
Investments in (distributions and sale              
 proceeds from) consolidated subsidiaries  —   —   (363)   363   —
Other investing activities  —   —   21   —   21
Cash provided (used) by investing activities  (1,353)   1,096   (2,588)   363   (2,482)
                      
FINANCING ACTIVITIES              
Short-term borrowings, net  363   —   —   (363)   —
Proceeds from issuance of long-term debt  2,258   —   —   —   2,258
Repayments of long-term debt  (1,500)   (250)   —   —   (1,750)
Repayments of long-term debt assumed in              
 acquisitions  —   —   (1,730)   —   (1,730)
Debt issuance costs  (25)   —   —   —   (25)
Repurchases of common stock  (1,287)   —   —   —   (1,287)
Dividends paid  (529)   —   —   —   (529)
Proceeds from exercise of stock options  124   —   —   —   124
Excess tax benefit from equity-based              
 compensation  55   —   18   —   73
Taxes paid in cash in lieu of shares issued              
 for equity-based compensation  —   —   (43)   —   (43)
Net change in investments in and amounts due              
 from consolidated subsidiaries  292   (185)   (107)   —   —
Other financing activities  (16)   —   (32)   —   (48)
Cash used by financing activities  (265)   (435)   (1,894)   (363)   (2,957)
                      
Increase (decrease) in cash and equivalents  (1,577)   —   253   —   (1,324)
Cash and equivalents at beginning of period  4,372   —   805   —   5,177
Cash and equivalents at end of period$ 2,795 $ — $ 1,058 $ — $ 3,853