Time Warner Cable 2008 Annual Report Download - page 142

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 as of December 31, 2008,
excluding obligations related to long-term debt and preferred equity that are discussed in Note 7, and the estimated
timing and effect that such obligations are expected to have on the Company’s liquidity and cash flows in future
periods.
2009
2010-
2011
2012-
2013
2014 and
thereafter Total
(in millions)
Programming purchases
(a)
.............. $ 3,098 $ 5,076 $ 2,933 $ 527 $ 11,634
Facility leases
(b)
..................... 110 199 159 385 853
Data processing services............... 48 96 44 — 188
High-speed data connectivity
(c)
.......... 40 21 7 35 103
Digital Phone connectivity
(d)
........... 453 704 280 1 1,438
Set-top box and modem purchases ....... 175 — — — 175
Other ............................. 146 22 14 81 263
Total ............................. $ 4,070 $ 6,118 $ 3,437 $ 1,029 $ 14,654
(a)
Programming purchases represent contracts that the Company has with cable television networks and broadcast stations to provide
programming services to its subscribers. Typically, these arrangements provide that the Company purchase cable television and broadcast
programming for a certain number of subscribers as long as the Company is providing video services to such number of subscribers.
There is generally no obligation to purchase these services if the Company is not providing video 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 as of
December 31, 2008 applied to the per-subscriber contractual rates contained in the contracts that were in effect as of December 31, 2008,
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 as of December 31, 2008.
(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 as of December 31, 2008 and the per-subscriber contractual rates contained in the
contracts that were in effect as of December 31, 2008.
The Company’s total rent expense, which primarily includes facility rental expense and pole attachment rental
fees, amounted to $190 million in 2008, $182 million in 2007 and $149 million in 2006.
Minimum pension funding requirements have not been presented, as such amounts have not been determined
beyond 2008. The Company did not have a required minimum pension contribution obligation for its funded
defined benefit pension plans in 2008; however, the Company made discretionary cash contributions of $400 million
to these plans and expects to contribute at least $150 million to these plans in 2009.
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 named as
defendants several other programming content providers (collectively, the “programmer defendants”) as well as
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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)