Time Warner Cable 2006 Annual Report Download - page 95

2007
2008-
2009
2010-
2011
2012 and
Thereafter Total
(in millions)
Programming purchases
(a)
.............. $2,867 $ 4,203 $ 2,846 $1,843 $11,759
Outstanding debt obligations and
mandatorily redeemable preferred
membership units
(b)
................. 4 4,600 7,094 2,911 14,609
Interest and dividends
(c)
................ 922 1,594 957 2,816 6,289
Facility leases
(d)
..................... 73 140 128 461 802
Data processing services . . ............. 40 79 79 36 234
High-speed data connectivity ............ 19 3 1 — 23
Digital Phone connectivity
(e)
............ 193 401 196 — 790
Converter and modem purchases ......... 399 3 — — 402
Other ............................. 20 17 2 7 46
Total .............................. $4,537 $11,040 $11,303 $8,074 $34,954
(a)
The Company has purchase commitments with various programming vendors to provide video services to subscribers. Programming
fees represent a significant portion of its costs of revenues. Future fees under such contracts are based on numerous variables, including
number and type of customers. The amounts of the commitments reflected above are based on the number of subscribers at
December 31, 2006 applied to the per subscriber contractual rates contained in the contracts that were in effect as of December 31, 2006.
(b)
Outstanding debt obligations and mandatorily redeemable preferred membership units represent the principal amounts due on
outstanding debt obligations and mandatorily redeemable preferred membership units as of December 31, 2006. Amounts do not
include any fair value adjustments, bond premiums, discounts, interest payments or dividends.
(c)
With the exception of commercial paper issued under the Company’s commercial paper program, amounts are based on the outstanding
debt or mandatorily redeemable preferred membership units balances, respective interest or dividend rates (interest rates on variable-
rate debt were held constant through maturity at the December 31, 2006 rates) and maturity schedule of the respective instruments as of
December 31, 2006. With regard to commercial paper issued under the commercial paper program, amounts assume the outstanding
commercial paper and interest rates at December 31, 2006 will remain outstanding through the maturity of the underlying credit facility.
Interest ultimately paid on these obligations may differ based on changes in interest rates for variable-rate debt, as well as any potential
future refinancings entered into by the Company. See Note 9 to the accompanying consolidated financial statements for further details.
(d)
The Company has facility lease commitments under various operating leases including minimum lease obligations for real estate and
operating equipment.
(e)
Digital Phone connectivity commitments are based on the number of Digital Phone subscribers at December 31, 2006 and the per
subscriber contractual rates contained in the contracts that were in effect as of December 31, 2006.
The Company’s total rent expense, which primarily includes facility rental expense and pole attachment rental
fees, amounted to $149 million, $98 million and $101 million for the years ended December 31, 2006, 2005 and
2004, respectively.
Contingent Commitments
Prior to the TWE Restructuring, TWE had various contingent commitments, including guarantees, related to
TWE’s non-cable businesses, including Warner Bros., Home Box Office, and TWE’s interests in The WB
Television Network (which has subsequently ceased operations), Comedy Central (which was subsequently sold)
and the Courtroom Television Network (collectively, the “Non-cable Businesses”). In connection with the
restructuring of TWE, some of these commitments were not transferred with their applicable Non-cable Business
and they remain contingent commitments of TWE. Specifically, in connection with the Non-cable Businesses’
former investment in the Six Flags theme parks located in Georgia and Texas (“Six Flags Georgia” and “Six Flags
Texas,” respectively, and, collectively, the “Parks”), in 1997, Time Warner and TWE each agreed to guarantee (the
“Six Flags Guarantee”), for the benefit of the limited partners, certain obligations of the partnerships that hold the
Parks (the “Partnerships”), including the following (the “Guaranteed Obligations”): (a) the obligation to make a
minimum amount of annual distributions to the limited partners of the Partnerships; (b) the obligation to make a
minimum amount of capital expenditures each year; (c) the requirement that an annual offer to purchase be made in
90
TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION — (Continued)