Time Warner Cable 2007 Annual Report Download - page 52

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TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
INTRODUCTION
Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is provided
as a supplement to the accompanying consolidated financial statements and notes to help provide an understanding
of Time Warner Cable Inc.’s (together with its subsidiaries, “TWC” or the “Company”) financial condition, cash
flows and results of operations. MD&A is organized as follows:
•Overview. This section provides a general description of TWC’s business, as well as recent developments
the Company believes are important in understanding the results of operations and financial condition or in
understanding anticipated future trends.
•Financial statement presentation. This section provides a summary of how the Company’s operations are
presented in the accompanying consolidated financial statements.
•Results of operations. This section provides an analysis of the Company’s results of operations for the
three years ended December 31, 2007.
•Financial condition and liquidity. This section provides an analysis of the Company’s cash flows for the
three years ended December 31, 2007, as well as a discussion of the Company’s outstanding debt and
commitments that existed as of December 31, 2007. Included in the analysis of outstanding debt is a
discussion of the amount of financial capacity available to fund the Company’s future commitments, as
well as a discussion of other financing arrangements.
•Market risk management. This section discusses how the Company manages exposure to potential gains
and losses arising from changes in market rates and prices, such as interest rates.
•Critical accounting policies. This section discusses accounting policies that are considered important to
the Company’s results of operations and financial condition, require significant judgment and require
estimates on the part of management in application. The Company’s significant accounting policies,
including those considered to be critical accounting policies, are summarized in Note 3 to the
accompanying consolidated financial statements.
•Caution concerning forward-looking statements. This section provides a description of the use of
forward-looking information appearing in this report, including in MD&A and the consolidated
financial statements. Such information is based on management’s current expectations about future
events, which are inherently susceptible to uncertainty and changes in circumstances. Refer to Item 1A,
“Risk Factors” in Part I of this report, for a discussion of the risk factors applicable to the Company.
OVERVIEW
TWC is the second-largest cable operator in the U.S., with technologically advanced, well-clustered systems
located mainly in five geographic areas—New York state (including New York City), the Carolinas, Ohio, southern
California (including Los Angeles) and Texas. As of December 31, 2007, TWC served approximately 14.6 million
customers who subscribed to one or more of its video, high-speed data and voice services, representing
approximately 32.1 million revenue generating units.
On July 31, 2006, a subsidiary of TWC, Time Warner NY Cable LLC (“TW NY”), and Comcast Corporation
(together with its subsidiaries, “Comcast”) completed the acquisition of substantially all of the cable assets of
Adelphia Communications Corporation (“Adelphia”) and related transactions. In addition, effective January 1,
2007, TWC began consolidating the results of certain cable systems located in Kansas City, south and west Texas
and New Mexico (the “Kansas City Pool”) upon the distribution of the assets of Texas and Kansas City Cable
Partners, L.P. (“TKCCP”) to TWC and Comcast. Prior to January 1, 2007, TWC’s interest in TKCCP was reported
as an equity-method investment. Refer to “—Recent Developments” for further details.
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