8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 4, 2010

TIME WARNER CABLE INC.

(Exact name of registrant as specified in its charter)

Delaware	001-33335	84-1496755
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

60 Columbus Circle, New York, New York 10023
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 364-8200

Not Applicable

(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

EX-99.1

Item 2.02 Results of Operations and Financial Condition.

            The following information is furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

            On November 4, 2010, Time Warner Cable Inc. (“Time Warner Cable”) issued a press release setting forth its financial results for its third quarter ended September 30, 2010. A copy of Time Warner Cable’s press release is attached as Exhibit 99.1 to this report. Time Warner Cable does not intend for this Item 2.02 or Exhibit 99.1 to be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or to be incorporated by reference into filings under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

Exhibit	Description
99.1	Press release issued November 4, 2010 by Time Warner Cable Inc. and furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

SIGNATURE

          Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	TIME WARNER CABLE INC.
	By:	/s/ Robert D. Marcus
	Name:	Robert D. Marcus
	Title:	Senior Executive Vice President and Chief Financial Officer
Date:   November 4, 2010

EXHIBIT INDEX

Exhibit	Description
99.1	Press release issued November 4, 2010 by Time Warner Cable Inc. and furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”

EX-99.1

Exhibit 99.1

TIME WARNER CABLE REPORTS
2010 THIRD-QUARTER RESULTS

NEW YORK, NY, November 4, 2010 – Time Warner Cable Inc. (NYSE: TWC) today reported financial results for its third quarter ended September 30, 2010.

Time Warner Cable Chief Executive Officer Glenn Britt said: “This is an exciting time at Time Warner Cable. We’re introducing several new offerings that give our customers control in ways that are simple and easy. We’re performing well financially, despite the economic and competitive climate. And our confidence in the strength and stability of our cash flow makes it possible to return a large amount of capital to shareholders through regular dividends and the $4 billion share repurchase program we announced this morning.”

FINANCIAL RESULTS

Revenues for the third quarter of 2010 increased 5.2% from the third quarter of 2009 to $4.7 billion. Subscription revenues grew 4.5% year-over-year to $4.5 billion, driven by a 3.5% increase in residential subscription revenues and a 21.6% increase in commercial subscription revenues. Advertising revenues increased 22.5% to $223 million. Residential subscription revenue growth was driven by increases in high-speed data, video and voice revenues. The growth in residential high-speed data revenues was the result of growth in high-speed data subscribers and, to a lesser extent, increases in average revenues per subscriber. Residential video revenues increased as a result of video price increases, year-over-year growth of digital video subscribers and an increase in DVR service revenues, partially offset by a year-over-year decline in video subscribers and a decrease in transactional video-on-demand revenues. The growth in residential voice revenues was driven by an increase in Digital Phone subscribers, partially offset by a decrease in average monthly revenues per Digital Phone subscriber. Commercial subscription revenue growth was due primarily to an increase in cell tower backhaul revenues and increases in Business Class Phone and commercial high-speed data subscribers. Advertising revenue growth was driven by year-over-year increases in a wide range of categories, most significantly automotive, media and political.

(in millions; unaudited)	3rd Quarter									Year-to-Date 9/30
	2010			2009			Change			2010			2009			Change
Subscription revenues:
Video	$	2,743		$	2,698			1.7	%	$	8,264		$	8,071			2.4	%
High-speed data		1,255			1,138			10.3	%		3,680			3,362			9.5	%
Voice		513			480			6.9	%		1,511			1,402			7.8	%
Total subscription revenues		4,511			4,316			4.5	%		13,455			12,835			4.8	%
Advertising revenues		223			182			22.5	%		612			501			22.2	%
Total revenues	$	4,734		$	4,498			5.2	%	$	14,067		$	13,336			5.5	%
Adjusted Operating Income before Depreciation and Amortization (“Adjusted OIBDA”) rose 5.7% over the third quarter of 2009 to $1.7 billion driven by revenue growth, partially offset by a 5.0% increase in operating expenses, in particular, higher employee, video programming, marketing and voice expenses.
Employee expenses of $979 million were 4.0% higher than the third quarter of 2009, driven by higher headcount and compensation offset, in part, by a decrease in pension expense. Video programming expenses grew 3.5% to $1.0 billion due to contractual rate increases and incremental retransmission consent expense offset, in part, by a decline in video subscribers. Additionally, video programming costs were reduced by approximately $15 million in the third quarter of 2010 and increased by approximately $5 million in the third quarter of 2009 as a result of changes in cost estimates for programming services carried without a contract, reversals of previously accrued audit reserves and certain contract settlements. Marketing expense was up 11.4% to $156 million, while voice costs increased 4.3% to $168 million due to subscriber growth.
Operating Income was up 12.0% over the third quarter of 2009 to $927 million primarily as a result of higher Adjusted OIBDA and a decrease in amortization expense, partially offset by an increase in depreciation expense.
Adjusted OIBDA for the third quarter of 2010 excludes the expenses noted in the table below.
(in millions; unaudited)	3rd Quarter									Year-to-Date 9/30
	2010			2009			Change			2010			2009			Change
Adjusted OIBDA(a)	$	1,715		$	1,623			5.7%		$	5,137		$	4,782			7.4%
Adjusted OIBDA margin(b)		36.2%			36.1%						36.5%			35.9%
Separation-related “make-up” equity award costs		(1	)		(4	)		(75.0	%)		(5	)		(6	)		(16.7	%)
Restructuring costs		(13	)		(14	)		(7.1	%)		(44	)		(64	)		(31.3	%)
Gain on sale of cable systems		—			—		NM				—			2			(100.0	%)
OIBDA(a)		1,701			1,605			6.0%			5,088			4,714			7.9%
Depreciation		(745	)		(713	)		4.5%			(2,237	)		(2,105	)		6.3%
Amortization		(29	)		(64	)		(54.7	%)		(156	)		(183	)		(14.8	%)
Operating Income	$	927		$	828			12.0%		$	2,695		$	2,426			11.1%

NM — Not meaningful.

(a)	Refer to Note 2 to the accompanying consolidated financial statements for a definition of OIBDA and Adjusted OIBDA.
(b)	Adjusted OIBDA margin is defined as Adjusted OIBDA as a percentage of total revenues.

Net Income Attributable to TWC Shareholders was $360 million, or $1.00 per basic and diluted common share, for the third quarter of 2010 compared to $268 million, or $0.76 per basic and diluted common share, in the prior year quarter.

2

(in millions, except per share data;
unaudited)	3rd Quarter							Year-to-Date 9/30
	2010		2009		Change			2010		2009		Change
Net income attributable to TWC shareholders	$	360	$	268		34.3	%	$	916	$	748		22.5	%
Net income per common share attributable to TWC common shareholders:
Basic	$	1.00	$	0.76		31.6	%	$	2.56	$	2.15		19.1	%
Diluted	$	1.00	$	0.76		31.6	%	$	2.55	$	2.14		19.2	%

Refer to Note 1 to the accompanying consolidated financial statements for certain items affecting the comparability of net income attributable to TWC shareholders.

Adjusted OIBDA less Capital Expenditures for the first nine months of 2010 totaled $3.0 billion, a 19.8% increase over the first nine months of 2009, due to higher Adjusted OIBDA and lower capital expenditures. Capital Expenditures were $2.1 billion in the first nine months of 2010, a 6.1% decrease from the first nine months of 2009, largely reflecting lower residential capital spending, partly offset by higher commercial capital spending. The decline in residential capital spending was primarily attributable to lower spending on support capital, customer premise equipment and scalable infrastructure. The increase in commercial capital spending was primarily related to higher spending on line extensions and scalable infrastructure.

(in millions; unaudited)	3rd Quarter									Year-to-Date 9/30
	2010			2009			Change			2010			2009			Change
Adjusted OIBDA(a)	$	1,715		$	1,623			5.7%		$	5,137		$	4,782			7.4%
Capital expenditures		(676	)		(758	)		(10.8	%)		(2,148	)		(2,287	)		(6.1	%)
Adjusted OIBDA less Capital expenditures(a)	$	1,039		$	865			20.1%		$	2,989		$	2,495			19.8%

^(a) Refer to Note 2 to the accompanying consolidated financial statements for a definition of Adjusted OIBDA and Adjusted OIBDA less Capital Expenditures.

Free Cash Flow for the first nine months of 2010 increased 8.2% to $1.6 billion from $1.5 billion in the first nine months of 2009, due to an increase in Adjusted OIBDA and decreases in capital expenditures and pension plan contributions, offset partly by higher cash tax and interest payments. Cash Provided by Operating Activities for the first nine months of 2010 was $3.8 billion, a 0.8% decrease from the first nine months of 2009. This decrease was related primarily to increases in cash tax and interest payments, offset partly by higher Adjusted OIBDA and lower pension plan contributions.

(in millions; unaudited)	3rd Quarter									Year-to-Date 9/30
	2010			2009			Change			2010			2009			Change
Cash provided by operating activities	$	1,082		$	1,234			(12.3	%)	$	3,774		$	3,805			(0.8	%)
Add: Excess tax benefit from exercise of stock options		2			—		NM				15			—		NM
Less:
Capital expenditures		(676	)		(758	)		(10.8	%)		(2,148	)		(2,287	)		(6.1	%)
Cash paid for other intangible assets		(12	)		(7	)		71.4%			(21	)		(17	)		23.5%
Other		—			(4	)		(100.0	%)		(1	)		(5	)		(80.0	%)
Free Cash Flow(a)	$	396		$	465			(14.8	%)	$	1,619		$	1,496			8.2%

NM — Not meaningful.

^(a) Refer to Note 2 to the accompanying consolidated financial statements for a definition of Free Cash Flow.

3

Net Debt and Mandatorily Redeemable Preferred Equity totaled $20.5 billion as of September 30, 2010, down $1.1 billion since December 31, 2009. The decline in net debt and preferred equity was driven by Free Cash Flow offset, in part, by the quarterly cash dividend payments and the increase in the fair value of debt subject to interest rate swap contracts (which was equal to the increase in the fair value of the underlying swaps which are separately recorded as assets in the accompanying consolidated balance sheet).

(in millions; unaudited)	9/30/10			12/31/09
Long-term debt	$	21,314		$	22,331
Debt due within one year		—			—
Total debt		21,314			22,331
Cash and equivalents		(1,128	)		(1,048	)
Net debt(a)		20,186			21,283
Mandatorily redeemable preferred equity		300			300
Net debt and mandatorily redeemable preferred equity	$	20,486		$	21,583

^(a) Net debt is defined as total debt less cash and equivalents.

SUBSCRIBER METRICS

In the third quarter, high-speed data subscribers grew by 104,000 and Digital Phone subscribers increased by 34,000, while video subscribers declined by 155,000, resulting in a net loss of 17,000 Primary Service Units (“PSUs”). Double Play Subscriber net additions were 15,000 and Triple Play Subscriber net additions were 14,000 in the third quarter, and bundled subscribers totaled 8.6 million, or 59.4% of total customer relationships, as of September 30, 2010.

(in thousands)			Net
			Additions
	6/30/10		(Declines)			9/30/10
Video subscribers		12,706		(155	)		12,551
Residential high-speed data subscribers		9,291		95			9,386
Commercial high-speed data subscribers		315		9			324
Residential Digital Phone subscribers		4,302		22			4,324
Commercial Digital Phone subscribers		90		12			102
Primary service units		26,704		(17	)		26,687
Digital video subscribers		9,059		(46	)		9,013
Revenue generating units		35,763		(63	)		35,700
Single play subscribers		5,951		(89	)		5,862
Double play subscribers		4,889		15			4,904
Triple play subscribers		3,658		14			3,672
Customer relationships		14,498		(60	)		14,438

Refer to the Trending Schedules posted on the Company’s website at www.timewarnercable.com/investors for definitions related to the Company’s subscriber metrics.

Non-GAAP Financial Measures

The Company refers to certain financial measures that are not presented in accordance with U.S. generally accepted accounting principles (“GAAP”), including Operating Income (Loss) before Depreciation and Amortization, Adjusted OIBDA, Adjusted OIBDA less Capital Expenditures and Free Cash Flow. Refer to Note 2 to the accompanying consolidated financial statements for a discussion of the Company’s use of non-GAAP financial measures.

4

About Time Warner Cable

Time Warner Cable is the second-largest cable operator in the U.S., with technologically advanced, well-clustered systems located mainly in five geographic areas — New York State (including New York City), the Carolinas, Ohio, Southern California (including Los Angeles) and Texas. Time Warner Cable serves more than 14 million customers who subscribe to one or more of its video, high-speed data and voice services. Time Warner Cable Business Class offers a suite of phone, Internet, Ethernet and cable television services to businesses of all sizes. Time Warner Cable Media Sales, the advertising arm of Time Warner Cable, offers national, regional and local companies innovative advertising solutions that are targeted and affordable. More information about the services of Time Warner Cable is available at www.timewarnercable.com, www.twcbc.com and www.twcmediasales.com.

Additional details on financial and subscriber metrics are included in the Trending Schedules posted on the Company’s Investor Relations website at www.timewarnercable.com/investors.

Information on Conference Call

Time Warner Cable’s earnings conference call can be heard live at 8:30 am ET on Thursday, November 4, 2010. To listen to the call, visit www.timewarnercable.com/investors.

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s 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 Inc. More detailed information about these factors may be found in filings by Time Warner Cable Inc. with the Securities and Exchange Commission, 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.

Contacts:
Corporate Communications	Investor Relations
Alex Dudley   (212) 364-8229	Tom Robey           (212) 364-8218
Justin Venech (212) 364-8242	Laraine Mancini    (212) 364-8202

# # #

5

TIME WARNER CABLE INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)

	September 30,			December 31,
	2010			2009
	(in millions)
ASSETS
Current assets:
Cash and equivalents	$	1,128		$	1,048
Receivables, less allowances of $91 million and $74 million as of September 30, 2010 and December 31, 2009, respectively		673			663
Deferred income tax assets		133			139
Other current assets		409			252
Total current assets		2,343			2,102
Investments		905			975
Property, plant and equipment, net		13,666			13,919
Intangible assets subject to amortization, net		139			274
Intangible assets not subject to amortization		24,092			24,092
Goodwill		2,090			2,111
Other assets		451			221
Total assets	$	43,686		$	43,694
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	342		$	478
Deferred revenue and subscriber-related liabilities		163			170
Accrued programming expense		787			738
Other current liabilities		1,504			1,572
Total current liabilities		2,796			2,958
Long-term debt		21,314			22,331
Mandatorily redeemable preferred equity issued by a subsidiary		300			300
Deferred income tax liabilities, net		9,382			8,957
Other liabilities		461			459
TWC shareholders’ equity:
Common stock, $0.01 par value, 355.6 million and 352.5 million shares issued and outstanding as of September 30, 2010 and December 31, 2009, respectively		4			4
Paid-in capital		9,607			9,813
Accumulated other comprehensive loss, net		(289	)		(319	)
Retained earnings (accumulated deficit)		103			(813	)
Total TWC shareholders’ equity		9,425			8,685
Noncontrolling interests		8			4
Total equity		9,433			8,689
Total liabilities and equity	$	43,686		$	43,694

See accompanying notes.

Certain reclassifications have been made to the prior year financial information to conform to the current period presentation.

6

TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2010			2009			2010			2009
	(in millions, except per share data)
Revenues:
Subscription:
Video	$	2,743		$	2,698		$	8,264		$	8,071
High-speed data		1,255			1,138			3,680			3,362
Voice		513			480			1,511			1,402
Total Subscription		4,511			4,316			13,455			12,835
Advertising		223			182			612			501
Total revenues		4,734			4,498			14,067			13,336
Costs and expenses:
Costs of revenues(a)		2,239			2,163			6,657			6,423
Selling, general and administrative(a)		781			716			2,278			2,137
Depreciation		745			713			2,237			2,105
Amortization		29			64			156			183
Restructuring costs		13			14			44			64
Gain on sale of cable systems		—			—			—			(2	)
Total costs and expenses		3,807			3,670			11,372			10,910
Operating Income		927			828			2,695			2,426
Interest expense, net		(346	)		(348	)		(1,034	)		(974	)
Other expense, net		(25	)		(19	)		(58	)		(83	)
Income before income taxes		556			461			1,603			1,369
Income tax provision		(193	)		(193	)		(683	)		(600	)
Net income		363			268			920			769
Less: Net income attributable to noncontrolling interests		(3	)		—			(4	)		(21	)
Net income attributable to TWC shareholders	$	360		$	268		$	916		$	748
Net income per common share attributable to TWC common shareholders:
Basic	$	1.00		$	0.76		$	2.56		$	2.15
Diluted	$	1.00		$	0.76		$	2.55		$	2.14
Average common shares outstanding:
Basic		355.5			352.4			354.4			347.9
Diluted		361.0			354.5			359.4			348.9
Cash dividends declared per share	$	0.40		$	—		$	1.20		$	—
Special cash dividend declared and paid per share	$	—		$	—		$	—		$	30.81

^(a) Costs of revenues and selling, general and administrative expenses exclude depreciation.

See accompanying notes.

Certain reclassifications have been made to the prior year financial information to conform to the current period presentation.

7

TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

	Nine Months Ended
	September 30,
	2010			2009
	(in millions)
OPERATING ACTIVITIES
Net income	$	920		$	769
Adjustments for noncash and nonoperating items:
Depreciation		2,237			2,105
Amortization		156			183
Pretax gain on asset sales		—			(2	)
Loss from equity investments, net of cash distributions		83			42
Deferred income taxes		461			458
Equity-based compensation		82			77
Changes in operating assets and liabilities, net of acquisitions and dispositions:
Receivables		(14	)		47
Accounts payable and other liabilities		(226	)		136
Other changes		75			(10	)
Cash provided by operating activities		3,774			3,805
INVESTING ACTIVITIES
Acquisitions and investments, net of cash acquired and distributions received		55			6
Capital expenditures		(2,148	)		(2,287	)
Other investing activities		7			9
Cash used by investing activities		(2,086	)		(2,272	)
FINANCING ACTIVITIES
Borrowings (repayments), net(a)		(1,261	)		2,215
Borrowings(b)		—			10,071
Repayments(b)		(8	)		(7,877	)
Debt issuance costs		—			(26	)
Proceeds from exercise of stock options		86			2
Dividends paid		(432	)		—
Payment of special cash dividend		—			(10,856	)
Other financing activities		7			(5	)
Cash used by financing activities		(1,608	)		(6,476	)
Increase (decrease) in cash and equivalents		80			(4,943	)
Cash and equivalents at beginning of period		1,048			5,449
Cash and equivalents at end of period	$	1,128		$	506

(a)	Borrowings (repayments), net, reflects borrowings under the Company’s commercial paper program with original maturities of three months or less, net of repayments of such borrowings.
(b)	Amounts represent borrowings and repayments related to debt instruments with original maturities greater than three months.

See accompanying notes.

Certain reclassifications have been made to the prior year financial information to conform to the current period presentation.

8

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.    ITEMS AFFECTING COMPARABILITY

       The following items affected the comparability of net income attributable to TWC shareholders for the three and nine months ended September 30, 2010 and 2009:

(in millions, except per share data)	3rd Quarter						Year-to-Date 9/30
	2010			2009			2010			2009
Restructuring costs	$	(13	)	$	(14	)	$	(44	)	$	(64	)
Equity award reimbursement obligation to Time Warner(a)		(2	)		(5	)		5			(13	)
Separation-related “make-up” equity award costs(b)		(1	)		(4	)		(5	)		(6	)
Amortization adjustment(c)		—			—			—			13
Separation-related costs(d)		—			—			—			(41	)
Investment gains		—			—			—			3
Gain on sale of cable systems(e)		—			—			—			2
Investment in The Reserve Fund’s Primary Fund		1			—			1			(10	)
Pretax impact		(15	)		(23	)		(43	)		(116	)
Income tax impact of the above items		5			9			17			39
Income tax impact of expired Time Warner stock options(f)		2			—			(68	)		—
Decrease in deferred tax asset valuation allowance(g)		23			—			29			—
Income tax impact of certain state tax law changes in California		—			—			—			(38	)
Portion of above items impacting income attributable to noncontrolling interests		—			—			—			1
After-tax impact	$	15		$	(14	)	$	(65	)	$	(114	)
Impact per basic common share	$	0.04		$	(0.04	)	$	(0.18	)	$	(0.33	)
Impact per diluted common share	$	0.04		$	(0.04	)	$	(0.18	)	$	(0.33	)

(a)	Pursuant to an agreement with Time Warner Inc. (“Time Warner”), Time Warner Cable Inc. (“TWC” or the “Company”) is obligated to reimburse Time Warner for the cost of certain Time Warner equity awards held by TWC employees upon exercise or vesting of such awards. Amounts represent the change in the reimbursement obligation, which fluctuates primarily with the fair value of the underlying equity awards and is recorded in earnings in the period of change.
(b)	As a result of the Company’s separation (the “Separation”) from Time Warner, pursuant to their terms, Time Warner equity awards held by TWC employees were forfeited and/or experienced a reduction in value as of the date of the Separation. Amounts represent the costs associated with TWC stock options and restricted stock units granted to TWC employees during the second quarter of 2009 to offset these forfeitures and/or reduced values.
(c)	Amounts represent adjustments to reduce excess amortization recorded in prior years.
(d)	Amount consists of direct transaction costs (e.g., legal and professional fees) and debt issuance costs ($28 million and $13 million, respectively, for the nine months ended September 30, 2009).
(e)	Amount represents a gain related to the fourth quarter 2008 sale of cable systems as a result of a post-closing purchase price adjustment.
(f)	As a result of the Separation on March 12, 2009, TWC employees who held stock options under Time Warner equity plans were treated as if their employment with Time Warner had been terminated without cause at the time of the Separation. In most cases, this treatment resulted in shortened exercise periods, generally one year from the date of Separation, for vested Time Warner stock options held by TWC employees. During the nine months ended September 30, 2010, TWC recorded a net noncash charge of $68 million related to the reversal of previously recognized deferred income tax benefits primarily as a result of the expiration, on March 12, 2010, of these Time Warner stock options.
(g)	Amounts represent adjustments to the Company’s valuation allowance for deferred tax assets associated with an equity-method investment.

2.    USE OF 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:

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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

• OIBDA (Operating Income (Loss) before Depreciation and Amortization) means Operating Income (Loss) 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 the Separation.

• 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 any excess tax benefits from the exercise of stock options, less (i) capital expenditures, (ii) cash paid for other intangible assets, (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 Company’s business because they eliminate the effects of (1) considerable amounts of noncash depreciation and amortization and (2) items not within the control of the Company’s operations managers (such as net income (loss) attributable to noncontrolling interests, income tax benefit (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 Company’s annual incentive compensation programs. Management believes that Free Cash Flow is an important indicator of the Company’s liquidity after the payment of cash taxes, interest and other cash items, including its ability to reduce net debt, pay dividends, repurchase common stock and make strategic investments. In addition, all of these measures are commonly used by analysts, investors and others in evaluating the Company’s 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 revenues. 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 (loss) 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 (loss) 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 share of OIBDA, Adjusted OIBDA and Adjusted OIBDA less Capital Expenditures attributable to noncontrolling interests, the results of the Company’s 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 (loss) 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 measures should be considered in addition to, not as substitutes for, the Company’s Operating Income (Loss), net income (loss) 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.

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