Time Warner Cable Inc. (NYSE:TWC)

The analysis reveals several notable trends in the intangible assets and goodwill of the subject company over the five-year period ending in 2015.

Customer Relationships

The value of customer relationships showed a significant increase from 50 million in 2011 to a peak of 600 million in 2014, before slightly decreasing to 597 million in 2015. This suggests a substantial growth phase followed by stabilization.

Cable Franchise Renewals and Access Rights

There was a steady and consistent growth in the value of cable franchise renewals and access rights, rising from 252 million in 2011 to 306 million in 2015. The incremental growth each year indicates ongoing investment or valuation adjustments in these rights.

Other Intangible Assets

The "Other" category experienced a mild increase over the period, starting at 37 million in 2011 and rising to 57 million in 2015, with minor fluctuations in intervening years.

Intangible Assets Subject to Amortization (Gross and Net)

The gross value of intangible assets subject to amortization rose sharply from 339 million in 2011 to 960 million in 2015, indicating acquisitions or capitalizations of amortizable intangibles. However, accumulated amortization also increased substantially from -111 million to -523 million, resulting in the net amortizable intangible assets peaking at 641 million in 2012 but then declining steadily to 437 million by 2015. This pattern suggests recognition of amortization expenses impacting the net book value of these assets adversely in later years.

Cable Franchise Rights

The value of cable franchise rights was relatively stable, holding around 26,000 million throughout the period with only negligible changes. This stability may reflect the nature of these rights as non-amortizable assets with long-term validity.

Intangible Assets Not Subject to Amortization

This category mirrors the cable franchise rights category in both values and trends, confirming these rights are classified as intangible assets not subject to amortization.

Total Intangible Assets

Total intangible assets remained relatively consistent, peaking slightly at 26,652 million in 2012 and declining marginally to 26,451 million by 2015, reflecting the offsetting dynamics between amortizable and non-amortizable components.

Goodwill

Goodwill increased substantially from 2,247 million in 2011 to a peak of 3,196 million in 2013, then slightly decreased to 3,139 million in 2015. This trend indicates an initial period of acquisitions or goodwill valuations rising, followed by minor impairments or adjustments.

Intangible Assets and Goodwill Combined

The combined total of intangible assets and goodwill reached a high point of 29,760 million in 2013 but experienced a marginal decline thereafter, reaching 29,590 million in 2015. This overall stability reflects a balanced interaction between additions, amortization, and goodwill adjustments.

In summary, the data indicates that the company experienced significant growth in certain intangible assets, particularly customer relationships and amortizable intangibles in the early years, followed by a phase of amortization reducing net amortizable asset values. Non-amortizable cable franchise rights remained a major and stable component of the intangible asset base. Goodwill showed growth consistent with acquisitions or valuation increases, stabilizing slightly in the latter years. Overall, total intangible assets and goodwill combined demonstrated relative stability with minor fluctuations, suggesting a mature asset base with ongoing management of amortization and impairments.

Total Assets

The reported total assets remained relatively stable over the five-year period, fluctuating slightly between approximately 48,000 million to 49,300 million US dollars. The highest value was observed in 2012 at 49,809 million, followed by a slight decline and then a stable range around 48,200 to 49,300 million. In contrast, the adjusted total assets, which exclude goodwill, showed a consistent downward trend from 46,029 million in 2011 to a low of 45,077 million in 2013, before witnessing a gradual recovery to 46,138 million by 2015. This indicates that the valuation adjustments, likely due to goodwill impairments or revaluation, suggest more variability in the asset base when goodwill is excluded.

Shareholders’ Equity

The reported total shareholders’ equity displayed some variability but generally increased over the period starting at 7,530 million in 2011, dipping to a low of 6,943 million in 2013, then rising significantly to 8,995 million in 2015. This upward movement in equity after 2013 could be reflective of operational improvements, profit retention, or other equity-positive activities. However, when adjusted for goodwill, shareholders’ equity shows a sharper declining trend from 5,283 million in 2011 to 3,747 million in 2013, followed by a recovery phase reaching 5,856 million in 2015. The adjustment results in consistently lower equity figures, indicating a material impact of goodwill on the reported equity and possibly underlying impairments or write-downs influencing the adjusted figures.

Insights

The disparity between reported and adjusted figures suggests that goodwill represents a significant portion of the total assets and equity. The downward trend in adjusted numbers until 2013, followed by recovery, may point to a period of goodwill write-downs or asset impairments that affected the company’s underlying asset and equity base. The subsequent recovery in adjusted figures aligns with improved equity in the reported data post-2013, which could indicate stabilization or growth in core operations excluding goodwill. Overall, the stability in reported total assets combined with volatility in adjusted figures highlights the importance of considering goodwill in evaluating the company’s financial health and suggests that the company experienced periods of asset revaluation impacting its net book value.

Total Asset Turnover

The reported total asset turnover shows a gradual upward trend over the five-year period, increasing from 0.41 in 2011 to 0.48 in 2015. The adjusted total asset turnover, which accounts for goodwill, consistently remains higher than the reported figures and also exhibits a steady increase from 0.43 to 0.51, indicating improving efficiency in asset utilization throughout the period.

Financial Leverage

Reported financial leverage initially rises from 6.41 in 2011 to a peak of 6.95 in 2013, but then declines steadily to 5.48 by 2015. The adjusted financial leverage demonstrates a more pronounced increase, moving from 8.71 in 2011 to 12.03 in 2013, followed by a significant reduction to 7.88 by 2015. This pattern suggests an initial increase in reliance on debt or equity financing adjusted for goodwill, followed by efforts to deleverage in the latter years.

Return on Equity (ROE)

Reported ROE experiences notable growth from 22.11% in 2011 to a peak of 29.61% in 2012, before gradually declining to 20.5% in 2015. Adjusted ROE presents a stronger upward movement, surging to 52.15% in 2013 before decreasing to 31.49% in 2015. The adjusted figures indicate that goodwill adjustments significantly enhance perceived profitability but also highlight a downtrend in returns post-2013.

Return on Assets (ROA)

The reported ROA improves from 3.45% in 2011 to 4.33% in 2012, then stabilizes around 4% across subsequent years, ending slightly lower at 3.74% in 2015. The adjusted ROA follows a similar trajectory but maintains marginally higher values, peaking at 4.59% in 2012 and gently declining to 4% by 2015. This indicates that asset profitability, while relatively stable, experiences a slight downward shift in later years after adjusting for goodwill.

Total Assets

The reported total assets exhibited slight fluctuations, starting at 48,276 million US dollars in 2011, peaking at 49,809 million in 2012, then decreasing to 48,273 million in 2013, followed by minor increases to reach 49,277 million by the end of 2015. The adjusted total assets, which exclude goodwill, showed a somewhat similar pattern but at consistently lower levels. Adjusted assets started at 46,029 million in 2011, reached a high of 46,920 million in 2012, then declined to 45,077 million in 2013, and gradually increased to 46,138 million in 2015. This indicates a modest overall decline in net asset base excluding goodwill, despite fluctuations in the reported figures.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios demonstrated a steady upward trend throughout the period. Reported total asset turnover increased from 0.41 in 2011 to 0.48 in 2015, indicating an improvement in the efficiency of using reported assets to generate revenues. Adjusted total asset turnover showed a similar progression, rising from 0.43 in 2011 to 0.51 in 2015, suggesting enhanced operational efficiency when goodwill is excluded from the asset base. The consistent increase in turnover ratios implies improving asset utilization over the five-year span.

Overall Insights

The data reveals relative stability in reported total assets with minor year-to-year changes, while adjusted total assets experienced a slight downward trend before a modest recovery. Concurrently, the increase in both reported and adjusted asset turnover ratios reflects progressive improvements in asset productivity. This combination suggests that despite relatively stable or slightly declining asset bases, the company has been increasingly effective in generating revenues from its assets. The divergence between reported and adjusted figures highlights the impact of goodwill on the asset base and underscores the importance of considering adjustments when evaluating operational efficiency.

The financial data displays several notable trends over the five-year period from 2011 to 2015, reflecting changes in asset levels, shareholders' equity, and financial leverage under both reported and goodwill-adjusted bases.

Total Assets

Reported total assets show a relatively stable pattern, beginning at approximately $48.3 billion in 2011, with a slight increase to just under $49.3 billion by 2015. Adjusted total assets, which presumably exclude goodwill or reflect goodwill adjustments, follow a similar pattern but at lower absolute values, starting at about $46.0 billion in 2011 and reaching around $46.1 billion in 2015. Both measures indicate minor fluctuations but overall stability without significant growth or decline.

Shareholders' Equity

Reported shareholders' equity experiences variability, moving from $7.53 billion in 2011 to a dip in 2013 of $6.94 billion, followed by recovery in the subsequent years to $8.99 billion in 2015. In contrast, adjusted shareholders’ equity shows a more pronounced decline early on, dropping from $5.28 billion in 2011 to $3.75 billion in 2013, before rebounding to $5.86 billion in 2015. The adjusted equity remains consistently below the reported figures, reflecting the impact of goodwill adjustments on net worth.

Financial Leverage

Reported financial leverage ratios (total assets to equity) begin at 6.41 in 2011, increase slightly to a peak of 6.95 in 2013, and then decline steadily to 5.48 in 2015, indicating a gradual reduction in leverage from the 2013 high point. The adjusted financial leverage, which uses the adjusted equity base, is significantly higher throughout, starting at 8.71 in 2011 and escalating to a peak of 12.03 in 2013, followed by a notable decrease to 7.88 in 2015. This suggests that when goodwill is excluded or properly adjusted, the company’s leverage appeared more pronounced, especially around 2013, and then improved markedly over the last two years.

Overall, the data reveals that despite relatively stable asset levels, shareholders’ equity under both reported and adjusted bases showed a trough around 2013 before improving by 2015. Financial leverage correspondingly rose to a high point in 2013, particularly under the adjusted calculation, and subsequently decreased, suggesting efforts or circumstances that improved the company’s equity base or reduced liabilities in the latter part of the observed period. The consistent gap between reported and adjusted figures underscores the material impact of goodwill adjustments on the financial position and leverage assessment.

The data reveals distinct trends in both reported and goodwill-adjusted financial metrics over the five-year period ending December 31, 2015.

Shareholders' Equity

The reported total shareholders' equity exhibited fluctuations, starting at 7,530 million US dollars in 2011, slightly declining to 6,943 million by 2013, before rebounding to reach 8,995 million in 2015. This indicates a recovery and strengthening of equity in the latter years.

In contrast, the adjusted total shareholders' equity, which likely excludes goodwill and intangible assets, showed a more consistent decline from 5,283 million in 2011 down to 3,747 million in 2013, followed by a moderate increase up to 5,856 million by 2015. Although the adjusted equity values remained significantly lower than the reported figures, the upward trend in the final two years suggests improvement in tangible equity base.

Return on Equity (ROE)

The reported ROE started at 22.11% in 2011 and experienced an upward trend to a peak of 29.61% in 2012. It then gradually declined over the following years to 20.5% in 2015. This pattern indicates strong profitability relative to equity in earlier years with a diminishing return by 2015.

The adjusted ROE, similarly, showed high values throughout the period, beginning at 31.52% in 2011 and reaching an apex of 52.15% in 2013. After this peak, adjusted ROE declined sharply to 31.49% in 2015, though it remained higher than the reported ROE. The higher adjusted ROE figures suggest that when the impact of goodwill is excluded, the company generated even greater profitability relative to the adjusted equity base.

Overall, the company’s reported equity position displays recovery after a mid-period dip, while the adjusted equity values show a sharper initial decline followed by a period of reinforcement. Despite high profitability indicated by ROE in earlier years, there is a consistent downward trend over time in both reported and adjusted metrics, signaling potential challenges in maintaining returns on equity levels. The disparity between reported and adjusted figures underscores the significant impact of goodwill on the company’s equity and profitability assessments.

The analysis of the provided financial data reveals several key trends and insights regarding the company's asset base and return on assets (ROA) over the five-year period from 2011 to 2015. Both reported and goodwill adjusted figures are considered to provide a clear perspective on financial performance and asset valuation.

Total Assets

The reported total assets exhibit a relatively stable trend, starting at US$48,276 million in 2011, peaking slightly in 2012 at US$49,809 million, then decreasing to US$48,273 million in 2013, and maintaining a level around US$48,500 million through 2014 and 2015, where it reaches US$49,277 million. This indicates a modest fluctuation but overall stability in the asset base as reported.

The adjusted total assets, which exclude goodwill, follow a somewhat similar pattern but at lower absolute values, reflecting the removal of goodwill-related amounts. Adjusted assets start at US$46,029 million in 2011 and decline to US$45,077 million by 2013, then move slightly upward in 2014 and 2015, ending at US$46,138 million. The downward trend early in the period suggests some reduction or revaluation of intangible assets, while the slight recovery later points to stabilization or asset growth excluding goodwill.

Return on Assets (ROA)

The reported ROA shows a general improvement in the second year, rising from 3.45% in 2011 to 4.33% in 2012, followed by a slight decrease and fluctuations to 4.05% in 2013, a slight increase to 4.19% in 2014, and a decline to 3.74% in 2015. These variations indicate some volatility in profitability relative to the asset base, with the highest efficiency observed in 2012 and a gradual decline thereafter.

Adjusted ROA, reflecting profitability excluding the impact of goodwill on assets, consistently registers higher percentages than reported ROA, starting at 3.62% in 2011 and increasing to a peak of 4.59% in 2012. It remains relatively elevated through 2013 and 2014 at 4.33% and 4.48%, respectively, before dipping slightly to 4.00% in 2015. This pattern suggests that when goodwill is excluded, asset utilization efficiency appears stronger and less variable, pointing to a potentially more accurate reflection of operational performance.

Comparative Insights

The presence of goodwill in total assets moderately increases the asset base, which tends to compress ROA figures when included. Adjusted ROA being higher signifies that goodwill amortization or impairment may have a dilutive effect on reported profitability metrics.

The trend in adjusted assets indicates cautious asset management and possible write-downs or disposals of intangible assets, reflected in the lower adjusted totals compared to reported totals. The stabilization of adjusted assets post-2013 may suggest strategic decisions to maintain asset quality.