Time Warner Cable 2006 Annual Report Download - page 7

TWC by TKCCP effective on January 1, 2007. For additional information with respect to the distribution of the assets
of TKCCP to its partners on January 1, 2007, see “Management’s Discussion and Analysis of Results of Operations
and Financial Condition — Recent Developments” in the financial pages herein.
Recent Developments
Transactions with Adelphia and Comcast
On July 31, 2006, TWC completed the following transactions with Adelphia and Comcast:
•The Adelphia Acquisition. TW NY acquired certain assets and assumed certain liabilities from Adelphia
for approximately $8.9 billion in cash and 156 million shares, or 17.3%, of TWC Class A common stock
(approximately 16% of TWC’s total common stock). The former Adelphia cable systems acquired, after
giving effect to the transactions with Adelphia and Comcast, are referred to herein as the “Adelphia Acquired
Systems.” On the same day, Comcast purchased certain assets and assumed certain liabilities from Adelphia
for approximately $3.6 billion in cash. Together, TW NY and Comcast purchased substantially all of the
cable assets of Adelphia (the “Adelphia Acquisition”).
•The Redemptions. Immediately before the Adelphia Acquisition, TWC and TWE redeemed Comcast’s
interests in TWC and TWE, respectively, in exchange for the capital stock of a subsidiary of TWC and a
subsidiary of TWE, respectively, together holding both an aggregate of approximately $2 billion in cash and
cable systems serving approximately 751,000 basic video subscribers (the “TWC Redemption” and the
“TWE Redemption,” respectively, and, together, the “Redemptions”).
•The Exchange. Immediately after the Adelphia Acquisition, TW NY and Comcast also swapped certain
cable systems, most of which were acquired from Adelphia, in order to enhance TWC’s and Comcast’s
respective geographic clusters of subscribers (the “Exchange”). The former Comcast cable systems acquired
from Comcast in the Exchange are referred to herein as the “Comcast Acquired Systems.”
For additional information regarding the Adelphia Acquisition, the Redemptions and the Exchange, see “— The
Transactions.”
The Adelphia Acquisition was designed to be a taxable acquisition of assets that would result in a tax basis in
the acquired assets equal to the purchase price TW NY paid. The resulting step-up in the tax basis of the assets
would increase future tax deductions, reduce future net cash tax payments and thereby increase TWC’s future cash
flows. See “Management’s Discussion and Analysis of Results of Operations and Financial Condition — Recent
Developments — Tax Benefits from the Transactions.”
TKCCP Dissolution
TKCCP, a 50-50 joint venture between TWC and Comcast, which, as of December 31, 2006, served
approximately 1.6 million basic video subscribers throughout Houston, Kansas City, south and west Texas and
New Mexico is in the process of being dissolved. In connection with the pending dissolution, on January 1, 2007,
TKCCP distributed its assets to its partners. TWC received TKCCP’s cable systems in Kansas City, south and west
Texas and New Mexico (the “Kansas City Pool”), which collectively served approximately 788,000 basic video
subscribers as of December 31, 2006, and Comcast received the Houston cable systems (the “Houston Pool”).
Comcast has refinanced the debt of TKCCP. TWC has not and will not assume any debt of TKCCP in connection
with the distribution of TKCCP’s assets or the dissolution. See “Management’s Discussion and Analysis of Results
of Operations and Financial Condition — Recent Developments — Dissolution of TKCCP.”
Caution Concerning Forward-Looking Statements and Risk Factors
This Annual Report on Form 10-K 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 expec-
tations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from the
expectations contained herein due to changes in economic, business, competitive, technological and/or regulatory
factors. For more detailed information about these factors, and risk factors with respect to the Company’s
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