Time Warner Cable 2006 Annual Report Download - page 2

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To our Shareholders, our Employees
and the Communities We Serve:
Time Warner Cable is in a thriving business.
Demand for our products and services is
strong and, in a competitive landscape, we
have continued to win increasing numbers of
subscribers with our differentiated offerings.
And now, as a public company, we have even
greater strategic flexibility. In the nearly 35
years that I’ve been in the cable industry, I’ve
never been more excited about our prospects.
We have a tremendous opportunity to grow
the business—by driving deeper penetration of
existing products, by improving the perform-
ance of the systems that we acquired in last
year’s transactions with Adelphia and Comcast
and through several new businesses for which
we’re laying the foundations right now.
Everywhere we operate, we are a local
business. Our employees and customers
live side by side in communities spread
across 33 states. Time Warner Cable prod-
ucts touch millions of neighbors each day,
and we take seriously our responsibility to
play a meaningful and constructive role in
the life of these communities.
In this, my first annual letter, I will review
the significant accomplishments of 2006
and give you a sense of our strategic
priorities for the coming year—so that
you can share our confidence in Time
Warner Cable’s exciting prospects.
Great Execution and New
Opportunities in 2006
We generated terrific operating and financial
results in 2006. It was the best year we’ve
had since I became CEO in 2001, and I
believe the best year in the company’s
history. Without a doubt, it was the busiest
year any of us can remember!
Our legacy systems, which are those cable
systems that we managed both before and
after the transactions with Adelphia and
Comcast, posted record subscriber growth,
measured in revenue generating units, or
RGUs. In our basic video product, the most
mature of our offerings, we added more
than three times the number of net sub-
scribers we added in the preceding year.
Residential high-speed data net additions
increased 20 percent. This acceleration is
remarkable for a product that just reached
its 10th anniversary. In addition, Digital
Phone had its best year ever!
These powerful subscriber trends led directly
to robust financial results. In our legacy
systems, we increased revenues by $1.3
billion, or 15 percent, in 2006—our highest
full-year revenue growth rate in four years.
We also substantially increased our scale—
and our opportunity for growth—last year
through significant transactions with Adelphia
and Comcast. Approximately four million of
our 13.4 million basic video subscribers came
to us through these transactions. As a result,
we closed the year with nearly 15 million
customer relationships, and our number of
RGUs approached 30 million.
A MESSAGE FROM THE PRESIDENT & CEO
WE HAVE A TREMENDOUS OPPORTUNITY TO GROW
THE BUSINESS—BY DRIVING DEEPER PENETRA-
TION OF EXISTING PRODUCTS, BY IMPROVING
THE PERFORMANCE OF THE SYSTEMS THAT WE
ACQUIRED IN LAST YEAR’S TRANSACTIONS
WITH ADELPHIA AND COMCAST AND THROUGH
SEVERAL NEW BUSINESSES FOR WHICH WE’RE
LAYING THE FOUNDATIONS RIGHT NOW.