Time Warner Cable 2006 Annual Report Download - page 51

Download and view the complete annual report

Please find page 51 of the 2006 Time Warner Cable annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 166

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166

executive officer of a subsidiary of Time Warner that is a sister company of TWC and four of TWC’s directors
(including Glenn A. Britt, TWC’s President and Chief Executive Officer) served as executive officers of Time
Warner or its predecessors in the past. A number of TWC’s directors and all of its executive officers also have
restricted shares, restricted stock units and/or options to purchase shares of Time Warner common stock. In
addition, many of TWC’s directors and executive officers have invested in Time Warner common stock through
their participation in Time Warner’s and TWC’s savings plans. These past and ongoing relationships with Time
Warner and any significant financial interest in Time Warner by these persons may present conflicts of interest that
could materially adversely affect TWC’s business, financial results or financial condition. For example, these
decisions could be materially related to:
• the nature, quality and cost of services rendered to TWC by Time Warner;
• the desirability of corporate opportunities, such as the entry into new businesses or pursuit of potential
acquisitions, particularly those that might allow TWC to compete with Time Warner; and
• employee retention or recruiting.
The TWC Certificate of Incorporation requires that TWC’s board of directors include independent members,
subject to certain limitations, and the TWC By-Laws require that certain related party transactions be approved by a
majority of these independent directors.
Time Warner and its affiliates may compete with TWC in one or more lines of business and may provide
some services under the “Time Warner” brand or similar brand names.
Time Warner and its affiliates are engaged in a diverse range of entertainment and media-related businesses,
including filmed entertainment, home video and Internet-related businesses, and these businesses may have
interests that conflict with or compete in some manner with TWC’s business. Time Warner and its affiliates are
generally under no obligation to share any future business opportunities available to it with TWC and the TWC
Certificate of Incorporation contains provisions that release Time Warner and its affiliates, including TWC’s
directors who are also Time Warner’s employees or executive officers, from this obligation and any liability that
would result from breach of this obligation. Time Warner may deliver video, high-speed data, voice and wireless
services over DSL, satellite or other means using the “Time Warner” brand name or similar brand names, potentially
causing confusion among customers and complicating TWC’s marketing efforts. For instance, Time Warner has
licensed the use of “Time Warner Telecom,” until July 2007, and “TW Telecom” and “TWTC” to Time Warner
Telecom Inc., a former affiliate of Time Warner and a provider of managed voice and data networking solutions to
enterprise organizations, which may compete with TWC’s commercial offerings. Any competition directly with
Time Warner or its affiliates could materially adversely impact TWC’s business, financial results or financial
condition.
TWC is party to agreements with Time Warner governing the use of TWC’s brand names, including the
“Time Warner Cable” brand name that may be terminated by Time Warner if TWC fails to perform its obli-
gations under those agreements or if TWC undergoes a change of control.
Some of the agreements governing the use of TWC’s brand names may be terminated by Time Warner if TWC:
• commits a significant breach of its obligations under such agreements;
• undergoes a change of control, even if Time Warner causes that change of control by selling some or all of its
interest in TWC; or
• materially fails to maintain the quality standards established for the use of these brand names and the
products and services related to these brand names.
TWC licenses its brand name, “Time Warner Cable,” and the trademark “Road Runner” from affiliates of Time
Warner. TWC believes the “Time Warner Cable” and “Road Runner” brand names are valuable, and their loss could
materially adversely affect TWC’s business, financial results or financial condition.
46