Time Warner Cable 2007 Annual Report Download - page 122

and 2006 totaled $299 million and $328 million, respectively. Payments under these arrangements are required only
in the event of nonperformance. TWC does not expect that these contingent commitments will result in any amounts
being paid in the foreseeable future.
Contractual Obligations
The Company has obligations under certain contractual arrangements to make future payments for goods and
services. These contractual obligations secure the future rights to various assets and services to be used in the
normal course of operations. For example, the Company is contractually committed to make certain minimum lease
payments for the use of property under operating lease agreements. In accordance with applicable accounting rules,
the future rights and obligations pertaining to firm commitments, such as operating lease obligations and certain
purchase obligations under contracts, are not reflected as assets or liabilities in the consolidated balance sheet.
The following table summarizes the Company’s aggregate contractual obligations at December 31, 2007,
excluding obligations related to long-term debt and preferred equity that are discussed in Note 8, and the estimated
timing and effect that such obligations are expected to have on the Company’s liquidity and cash flows in future
periods. TWC expects to fund these obligations with cash provided by operating activities generated in the ordinary
course of business.
2008
2009-
2010
2011-
2012
2013 and
thereafter Total
(in millions)
Programming purchases
(a)
. . . . . . . . . . . . . . . . . . . . . . $ 2,955 $ 4,574 $ 2,964 $ 812 $ 11,305
Facility leases
(b)
............................. 101 174 143 324 742
Data processing services . . . . . . . . . . . . . . . . . . . . . . . 47 93 83 6 229
High-speed data connectivity
(c)
................... 49 39 4 20 112
Digital Phone connectivity
(d)
.................... 314 616 232 — 1,162
Set-top box and modem purchases . . . . . . . . . . . . . . . . 71 — — — 71
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 60 4 8 146
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 3,611 $ 5,556 $ 3,430 $ 1,170 $ 13,767
(a)
Programming purchases represent contracts that the Company has with cable television networks to provide programming services to its
subscribers. Typically, these arrangements provide that the Company purchase cable television programming for a certain number of
subscribers as long as the Company is providing cable services to such number of subscribers. There is generally no obligation to purchase
these services if the Company is not providing cable services. 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 included above
represent estimates of future programming costs based on subscriber numbers at December 31, 2007 applied to the per-subscriber
contractual rates contained in the contracts that were in effect as of December 31, 2007, for which the Company does not have the right to
cancel the contract or for contracts with a guaranteed minimum commitment.
(b)
The Company has facility lease obligations under various operating leases including minimum lease obligations for real estate and
operating equipment.
(c)
High-speed data connectivity obligations are based on the contractual terms for bandwidth circuits that were in use at December 31, 2007.
(d)
Digital Phone connectivity obligations relate to transport, switching and interconnection services that allow for the origination and
termination of local and long-distance telephony traffic. These expenses also include related technical support services. There is generally
no obligation to purchase these services if the Company is not providing Digital Phone service. The amounts included above are based on
the number of Digital Phone subscribers at December 31, 2007 and the per-subscriber contractual rates contained in the contracts that
were in effect as of December 31, 2007.
The Company’s total rent expense, which primarily includes facility rental expense and pole attachment rental
fees, amounted to $182 million in 2007, $149 million in 2006 and $98 million in 2005.
Legal Proceedings
On September 20, 2007, Brantley, et al. v. NBC Universal, Inc., et al. was filed in the U.S. District Court for the
Central District of California against the Company and Time Warner. The complaint, which also names as
defendants several other programming content providers (collectively, the “programmer defendants”) as well as
other cable and satellite providers (collectively, the “distributor defendants”), alleges violations of Sections 1 and 2
of the Sherman Antitrust Act. Among other things, the complaint alleges coordination between and among the
117
TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)