SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant x Filed by a Party other than the Registrant ¨
Check the appropriate box:
¨ | Preliminary Proxy Statement | |
¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
¨ | Definitive Proxy Statement | |
¨ | Definitive Additional Materials | |
x | Soliciting Material Pursuant to §240.14a-12 |
TIME WARNER CABLE INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x | No fee required. | |||
¨ | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies:
| |||
(2) | Aggregate number of securities to which transaction applies:
| |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
| |||
(4) | Proposed maximum aggregate value of transaction:
| |||
(5) | Total fee paid:
| |||
¨ | Fee paid previously with preliminary materials. | |||
¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid:
| |||
(2) | Form, Schedule or Registration Statement No.:
| |||
(3) | Filing Party:
| |||
(4) | Date Filed:
|
On January 30, 2014, the following materials were posted to Time Warner Cable Inc.s website:
TWC and Charter
Comparison January 30, 2014 |
Forward-Looking
Statements and Disclaimers 2
ADDITIONAL INFORMATION
Time Warner Cable expects to file a proxy statement with the U.S. Securities and Exchange Commission
(SEC) and to provide any definitive proxy statement to its security holders.
INVESTORS AND SECURITY HOLDERS OF TIME WARNER CABLE ARE URGED TO READ THIS DOCUMENT AND ANY
OTHER DOCUMENTS FILED BY TIME WARNER CABLE WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders will be able
to obtain free copies of the definitive proxy statement (when available) and any other documents filed
with the SEC by Time Warner Cable through the web site maintained by the SEC at
http://www.sec.gov.
CERTAIN INFORMATION REGARDING PARTICIPANTS Time Warner Cable and certain of its directors and executive officers may be deemed to be participants
in a solicitation under the rules of the SEC. Security holders may obtain information
regarding the names, affiliations and interests of Time Warner Cables directors and executive officers in
Time Warner Cables Annual Report on Form 10-K for the year ended December 31, 2012, which
was filed with the SEC on February 15, 2013, and its proxy statement for the 2013 Annual
Meeting, which was filed with the SEC on April 4, 2013. These documents can be obtained free of charge
from the sources indicated above. Additional information regarding the interests of these
participants in any proxy solicitation and a description of their direct and indirect
interests, by security holdings or otherwise, will also be included in any proxy statement and other relevant materials to be
filed with the SEC if and when they become available. FORWARD-LOOKING
STATEMENTS AND DISCLAIMERS
This communication does not constitute an offer to buy or solicitation of an offer to sell any
securities. This document includes certain forward- looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 and Time Warner Cable intends that all such
statements be covered by the safe harbor provisions of the federal securities laws. Statements
herein regarding future financial and operating results and any other statements about future
expectations constitute forward-looking statements. These forward-looking statements may be
identified by words such as believe, expects, anticipates,
projects, intends, should, estimates or similar expressions. These statements
are based on managements 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, and other factors affecting the operations of Time Warner Cable. More
detailed information about these factors may be found in filings by Time Warner Cable with the
SEC, 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.
The materials herein may contain certain previously published third-party material. Unless
otherwise indicated, consent of the author and publication has not been obtained to use the
material as proxy soliciting material.
All trademarks remain the property of their respective owners.
|
TWC is Better
Positioned Than Charter, Reflecting Years of Innovation and Investment
TWC has higher video and high-speed data (HSD) penetration
TWC generates more Revenue, Adjusted OIBDA and Free Cash Flow per passing
TWC provides significantly more high-definition (HD) channels and video on demand (VOD)
content
TWC invested ~$750 million in switched digital video and node splitting, resulting in TWC
having the best-in-class two-way hybrid fiber coaxial (HFC) network, which
has allowed us to provide significantly more HD channels and VOD capacity
TWC TV®, our IP video app, is now available on 7 platforms with 300 live channels and
over 4,000 hours of VOD in the home and up to 24 live channels and 1,200 hours of VOD
from 40 networks outside of the home TWC offers customers home management and security
service over broadband (IntelligentHome); Charter does not TWC
provides
customers
access
to
over
200k
Cable
Wi-Fi®
hotspots;
Charter
does
not
TWCs residential philosophy emphasizes consumer choice
TWC: Emphasizes consumer choice; offers a variety of HSD speeds at different prices and allows
consumers to choose traditional set top boxes or embrace the
bring-your-own-box environment (including IPTV options such as Roku)
Charter: Generally deploys traditional set-top boxes in homes and forces customers to pay
for those boxes TWC offers a much stronger business services platform with an experienced
team, dedicated resources and an expansive network with 860K buildings on network,
including 58K fiber connected buildings, and 14K connected cell towers TWC has a $1
billion media sales business that also sells advertising on behalf of Charter in several of Charters key service areas
(including LA and Dallas)
Note: Refer to slides 9-11 for definitions, additional information and
reconciliations for non-GAAP financial measures. 3
TWC
provides
a
broader
video
experience
across
multiple
consumer
platforms,
both
inside
and
outside
the
home |
Time Warner
Cable (12/31/2013)
Charter
(9/30/2013)
Video
38.1%
34.0%
HSD
38.9%
36.4%
Voice
17.3%
19.9%
All
Digital
Markets
NYC; Augusta, ME; Parts of KY
and IN
(1)
; Parts of LA
(100% LA in 2014)
Fort Worth, TX;
Parts of CA, SC, MA, MI
36.1%
34.6%
21.6%
13.5%
11.8%
4.5%
$106
$107
Per Average Estimated Passing:
$744
$652
268
226
161
88
88
29
TWC Has Higher Margins and Generates More
Adjusted OIBDA and FCF Per Passing, Despite More
Competitive Footprint
4
Source: Company filings
Note:
(1)
(2)
Penetration
Metrics
(Residential &
Business)
LTM Margins
(2)
(3)
LTM Financials per
Customer
Relationship and
Estimated Passing
(3)
Adjusted OIBDA as % of revenue
Adjusted OIBDA less Capex as % of revenue
Free Cash Flow as % of revenue
Average Monthly Revenue Per Customer Relationship:
Residential services
Revenue
Adjusted OIBDA
Adjusted OIBDA less Capex
Free Cash Flow (reported)
Refer to slides 9-11 for definitions, additional information and reconciliations for
non-GAAP financial measures. TWC metrics and LTM financials through Q4 2013; Charter metrics and LTM
financials through Q3 2013 and pro forma for Bresnan, per Charter 3Q 2013 trending schedule.
Charter Adjusted OIBDA calculated as reported Adjusted EBITDA less stock based
compensation.
Includes Louisville, Lexington, Covington and Bowling Green, KY and Evansville, IN.
Includes residential and business services.
(3)
Free Cash Flow metrics based on reported financials (not pro forma for Bresnan) as Free Cash
Flow not reported pro forma for Bresnan. |
TWC Has a More
Advanced Video Product and Offers Broader Customer Choice
5
Time Warner Cable
(12/31/2013)
Charter
(9/30/2013)
183
101
231 (NYC)
170
18K+
10K+
75K Hours (2014)
Unknown
2.8mm going to 6mm in 2014
Potentially coming 2014
Yes
Not Currently Offered
Apple
iOS, Android, Roku, Samsung
Smart TVs, Xbox 360, Amazon Kindle Fire,
PC and Mac Computers
iOS, Android, Amazon Kindle Fire
300
100
Over 4,000
Unknown
Up to 24 Live Channels
(2)
and 1,200
Hours of VOD Content from 40 Networks
1 Network Group
26 TWC News Channels
16 TWC Sports Channels
10 Others (incl. English and Spanish)
None
100 Mbps (going to 300 Mbps in 2014)
100 Mbps
30K
None
200K+
None
IntelligentHome (44K subscribers)
None
Video #12 / HSD #13 / Voice #12
Video #11 / HSD #12 / Voice #10
Video Product
(1)
(2)
HSD and Other
Residential
Offerings
Other
Source: Company filings, Call transcripts.
Note: TWC also sells advertising on behalf of Charter in several service areas, including LA,
Dallas, Charlotte, Green Bay and Raleigh. (1)
Source: Charter 3Q13 Earnings Call transcript.
(2)
Channels available to customers in given markets.
Average Number of HD Channels
Most Number of HD Channels
On Demand Movies and TV Shows
VOD Hours of Capacity
STB with cloud-based guide
Whole Home DVR Offering
In-Home Live IP Linear Channels
In-Home VOD Hours (TV App)
Out-of-Home Content (TV App)
Fastest Internet Speed
Company WiFi Hotspots
Access to Cable Wi-Fi®
hotspots
Home Security & Automation
J.D. Power 2013 Overall Customer
Satisfaction Rankings
TV Apps
Exclusive Local Content |
Time Warner
Cable (12/31/2013)
Charter
(9/30/2013)
LTM Business services revenue
$2.3 billion
$0.8 billion
Customer
Relationships
624
359
Video
196
166
HSD
517
245
Voice
275
138
Fiber Lit Buildings
58K
6K
Cell Towers
14K
3K
Buildings on Network
860K
Unknown
Anticipated new buildings in 2014
75K
Unknown
Hosting and Cloud Computing
NaviSite
Offerings
Enterprise-Class Hosting
Managed Applications
Cloud Computing
Basic Web and Email Hosting
Business Services Acquisitions
NaviSite (2011)
DukeNet (2013)
None
Scale
TWC Has a Much Broader Business Services
Organization With Dedicated Resources
6
Business
Services Subs
(000s)
Business
Services
Offerings
(1)
Source: Company filings, Call transcripts, Telecom Ramblings.
Note: TWC metrics and LTM financials through Q4 2013; Charter metrics and LTM financials
through Q3 2013 and pro forma for Bresnan, per Charter 3Q 2013 trending schedule. TWC
services cell towers in Charters markets through DukeNet acquisition.
(1)
Charter equivalizes its business video customers and customer relationships while TWC reports
billable subscribers. For commercial accounts, equivalizing results in a higher
subscriber count than reporting on a billable basis (i.e., if TWC was to report on an
equivalized basis the subscriber and customer relationship count would be meaningfully higher).
(2)
Source: Telecom Ramblings.
(3)
Source: Charter Investor Presentation 12/4/2012 (most recently available data).
(1)
(2)
(3) |
TWC Has Been
Recognized for Superior Technology and Business Customer Service
7
TWC
Technical
and
Engineering
Emmy®
Awards
(Charter
has
none)
TWC Business Services Recognition
Engineering Award for
Outstanding
Achievement in
Technological
Development
Mid-1990s
Best Use of On
Demand Technology
Over Private Networks
for Start Over®
2005-2006
Development, Productization
and Commercialization of
Interactive Video on Demand
Two-Way Infrastructure and
Signaling
2006-2007
Pioneering the
Development of
Multi-Room DVR
2011-2012
Development and
Commercialization of
Cable Interconnects
for Local Video Ad
Insertion
2011-2012
Pioneering Work in
Implementation and
Deployment of
Network DVR
2012-2013
Pioneering
Development of VOD
Dynamic Advertising
Insertion
2012-2013
Full-Service
Network
2011
J.D. Power
Highest in Customer
Satisfaction with Large
Enterprise Business
Wireline Service
2013
CRN
Top Channel Partner in
the Network
Connectivity Category
2013
Frost & Sullivan
Primary Network Service
Provider of Choice for U.S.
Business Communications
Executives
2012 |
Non-GAAP
Financial Measures and Reconciliation Schedules |
9
Non-GAAP Financial Measures
In discussing its performance, the Company may use certain measures that are not calculated and
presented in accordance with U.S. generally accepted accounting principles
(GAAP). These measures include OIBDA, Adjusted OIBDA, Adjusted OIBDA less capital expenditures and Free Cash Flow, which the
Company defines as follows:
OIBDA (Operating Income before Depreciation and Amortization) means Operating Income before
depreciation of tangible assets and amortization of intangible assets.
Adjusted OIBDA means OIBDA excluding the impact, if any, of noncash impairments of goodwill,
intangible and fixed assets; gains and losses on asset sales; merger-related and
restructuring costs; and costs associated with certain equity awards granted to employees to offset value lost as a result of TWCs
separation from Time Warner Inc. on March 12, 2009.
Adjusted OIBDA less capital expenditures means Adjusted OIBDA minus capital expenditures.
Free Cash Flow means cash provided by operating activities (as defined under GAAP) excluding
the impact, if any, of cash provided or used by discontinued operations, plus (i) any
income taxes paid on investment sales and (ii) any excess tax benefit from equity-based compensation, less (i) capital expenditures,
(ii) cash paid for other intangible assets (excluding those associated with business
combinations), (iii) partnership distributions to third parties and (iv) principal
payments on capital leases. Management uses OIBDA and Adjusted OIBDA, among other
measures, in evaluating the performance of the Companys business because they eliminate the
effects of (i) considerable amounts of noncash depreciation and amortization and (ii) items
not within the control of the Companys operations managers (such as income tax
provision, other income (expense), net, and interest expense, net). Adjusted OIBDA further eliminates the effects of certain noncash items
identified in the definition of Adjusted OIBDA above. Adjusted OIBDA less capital
expenditures also allows management to evaluate performance including the effect of
capital spending decisions. Adjusted OIBDA and Adjusted OIBDA less capital expenditures are also significant performance measures used in the
Companys annual incentive compensation programs. Management believes that Free
Cash Flow is an important indicator of the Companys ability to generate cash,
reduce net debt, pay dividends, repurchase common stock and make strategic investments, after the payment of cash taxes, interest and other cash items.
In addition, all of these measures are commonly used by analysts, investors and others in
evaluating the Companys performance and liquidity. These measures have inherent
limitations. For example, OIBDA and Adjusted OIBDA do not reflect capital expenditures or the periodic costs of certain
capitalized assets used in generating revenue. To compensate for such limitations,
management evaluates performance through Adjusted OIBDA less capital expenditures and
Free Cash Flow, which reflect capital expenditure decisions, and net income attributable to TWC shareholders, which reflects the periodic costs
of capitalized assets. Adjusted OIBDA and Adjusted OIBDA less capital expenditures do
not reflect any of the items noted as exclusions in the definition of Adjusted OIBDA
above. To compensate for these limitations, management evaluates performance through OIBDA and net income attributable to TWC
shareholders, which do reflect such items. OIBDA, Adjusted OIBDA and Adjusted OIBDA less
capital expenditures also fail to reflect the significant costs borne by the Company
for income taxes and debt servicing costs, the results of the Companys equity investments and other non-operational income or expense.
Management compensates for these limitations by using other analytics such as a review of net
income attributable to TWC shareholders. Free Cash Flow, a liquidity measure,
does not reflect payments made in connection with investments and acquisitions, which reduce liquidity. To compensate for this limitation,
management evaluates such investments and acquisitions through other measures such as return
on investment analyses. These non-GAAP measures should be considered in addition
to, not as substitutes for, the Companys Operating Income, net income attributable to TWC
shareholders 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. |
Reconciliations
of Non-GAAP Financial Measures for the Year Ended December 31, 2013
($ in millions)
10
Reconciliation of Adjusted OIBDA to Operating Income:
Adjusted OIBDA
7,980
$
Merger-related and restructuring
costs (119)
Depreciation
(3,155)
Amortization
(126)
Operating Income
4,580
$
Adjusted OIBDA and Operating Income less
capital expenditures Total capital expenditures
3,198
$
Adjusted OIBDA less capital
expenditures 4,782
$
Operating Income less capital
expenditures 1,382
$
Reconciliation of Cash provided by
operating activities to Free Cash Flow: Cash provided by operating activities
5,753
$
Add:
Excess tax benefit from equity-based compensation
93
Less:
Capital expenditures
(3,198)
Cash paid for other intangible assets
(40)
Other
(2)
Free Cash Flow
2,606
$
|
Reconciliations
of Non-GAAP Financial Measures for the Year Ended December 31, 2013
($ in millions, except per average estimated passing metrics)
11
Metrics as percentages of revenue:
Total revenue
22,120
$
Adjusted OIBDA as a percentage of
revenue 36.1%
Operating Income as a percentage of revenue
20.7%
Adjusted OIBDA less capital expenditures as a percentage of revenue
21.6%
Operating Income less capital expenditures as a percentage of revenue
6.2%
Free Cash Flow as a percentage of revenue
11.8%
Cash provided by operating activities as a percentage of revenue
26.0%
Metrics per average estimated passing:
Average annual estimated passings (in thousands)
29,732
Adjusted OIBDA per average annual
estimated passing 268
$
Operating
Income per average annual estimated passing 154
$
Adjusted OIBDA
less capital expenditures per average annual estimated passing 161
$
Operating
Income less capital expenditures per average annual estimated passing 46
$
Free Cash Flow per average annual estimated passing
88
$
Cash provided by operating activities per average annual estimated passing
193
$
|