Time Warner Cable 2006 Annual Report Download - page 75
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Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment
In September 2006, the EITF reached a consensus on EITF Issue No. 06-01, Accounting for Consideration
Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to
Receive Service from the Service Provider (“EITF 06-01”). EITF 06-01 provides that consideration provided to the
manufacturers or resellers of specialized equipment should be accounted for as a reduction of revenue if the
consideration provided is in the form of cash and the service provider directs that such cash be provided directly to
the customer. Otherwise, the consideration should be recorded as an expense. EITF 06-01 will be effective for TWC
as of January 1, 2008 and is not expected to have a material impact on the Company’s consolidated financial
statements.
Quantifying Effects of Prior Years Misstatements in Current Year Financial Statements
In September 2006, the SEC issued Staff Accounting Bulletin (“SAB”) No. 108, Considering the Effects of
Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements (“SAB 108”).
SAB 108 requires that registrants quantify errors using both a balance sheet and statement of operations approach
and evaluate whether either approach results in a misstated amount that, when all relevant quantitative and
qualitative factors are considered, is material. SAB 108 became effective for TWC in the fourth quarter of 2006 and
did not have a material impact on the Company’s consolidated financial statements.
Fair Value Measurements
In September 2006, the FASB issued FASB Statement No. 157, Fair Value Measurements (“FAS 157”).
FAS 157 establishes a single authoritative definition of fair value, sets out a framework for measuring fair value, and
expands on required disclosures about fair value measurement. FAS 157 is effective for TWC on January 1, 2008
and will be applied prospectively. The provisions of FAS 157 are not expected to have a material impact on the
Company’s consolidated financial statements.
2006 vs. 2005
Consolidated Results
Revenues. Revenues by major category were as follows (in millions):
2006 2005 % Change
Year Ended December 31,
Subscription:
Video............................................. $ 7,632 $6,044 26%
High-speed data ..................................... 2,756 1,997 38%
Digital Phone ....................................... 715 272 163%
Total Subscription ..................................... 11,103 8,313 34%
Advertising .......................................... 664 499 33%
Total ............................................... $11,767 $8,812 34%
70
TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION — (Continued)