Time Warner Cable 2008 Annual Report Download - page 33

no direct interest in TWE and Comcast no longer has any interest in TWE. As of December 31, 2008, TWE had
$2.6 billion in principal amount of outstanding debt securities with maturities ranging from 2012 to 2033 and fixed
interest rates ranging from 8.375% to 10.15%. See “Management’s Discussion and Analysis of Results of
Operations and Financial Condition—Financial Condition and Liquidity—Outstanding Debt and Mandatorily
Redeemable Preferred Equity and Available Financial Capacity.”
The TWE partnership agreement requires that transactions between TWC and its subsidiaries, on the one hand,
and TWE and its subsidiaries, on the other hand, be conducted on an arm’s-length basis, with management,
corporate or similar services being provided by TWC on a “no mark-up” basis with fair allocations of administrative
costs and general overhead.
TWE-A/N Partnership Agreement
The following description summarizes certain provisions of the partnership agreement relating to TWE-A/N.
Such description does not purport to be complete and is subject to, and is qualified in its entirety by reference to, the
provisions of the TWE-A/N partnership agreement.
Partners of TWE-A/N. The general partnership interests in TWE-A/N are held by TW NY Cable and TWE
(together with TW NY Cable, the “TW Partners”) and A/N, a partnership owned by wholly owned subsidiaries of
Advance Publications Inc. and Newhouse Broadcasting Corporation. The TW Partners also hold preferred
partnership interests. TWE acquired its interest in TWE-A/N as the result of a merger of its wholly-owned
subsidiary, TWE-A/N Holdco, L.P. (which previously held the interest), into TWE on December 31, 2008.
2002 restructuring of TWE-A/N. The TWE-A/N cable television joint venture was formed by TWE and A/N in
December 1995. A restructuring of the partnership was completed during 2002. As a result of this restructuring,
cable systems and their related assets and liabilities serving approximately 2.1 million subscribers as of Decem-
ber 31, 2002 (which amount is not included in TWE-A/N’s 4.8 million consolidated subscribers, as of December 31,
2008) located primarily in Florida (the “A/N Systems”), were transferred to a subsidiary of TWE-A/N (the “A/N
Subsidiary”). As part of the restructuring, effective August 1, 2002, A/N’s interest in TWE-A/N was converted into
an interest that tracks the economic performance of the A/N Systems, while the TW Partners retain the economic
interests and associated liabilities in the remaining TWE-A/N cable systems. Also, in connection with the
restructuring, TWC effectively acquired A/N’s interest in Road Runner. TWE-A/N’s financial results, other than
the results of the A/N Systems, are consolidated with TWC’s.
Management and operations of TWE-A/N. Subject to certain limited exceptions, TWE is the managing
partner, with exclusive management rights of TWE-A/N, other than with respect to the A/N Systems. Also, subject
to certain limited exceptions, A/N has authority for the supervision of the day-to-day operations of the A/N
Subsidiary and the A/N Systems. In connection with the 2002 restructuring, TWE entered into a services agreement
with A/N and the A/N Subsidiary under which TWE agreed to exercise various management functions, including
oversight of programming and various engineering-related matters. TWE and A/N also agreed to periodically
discuss cooperation with respect to new product development. TWC receives a fee for providing the A/N Subsidiary
with high-speed data services and the management functions noted above.
Restrictions on transfer—TW Partners. Each TW Partner is generally permitted to directly or indirectly
dispose of its entire partnership interest at any time to a wholly owned affiliate of TWE (in the case of transfers by
TWE) or to TWE, Time Warner or a wholly owned affiliate of TWE or Time Warner (in the case of transfers by TW
NY Cable). In addition, the TW Partners are also permitted to transfer their partnership interests through a pledge to
secure a loan, or a liquidation of TWE in which Time Warner, or its affiliates, receives a majority of the interests of
TWE-A/N held by the TW Partners. TWE is allowed to issue additional partnership interests in TWE so long as
Time Warner continues to own, directly or indirectly, either 35% or 43.75% of the residual equity capital of TWE,
depending on when the issuance occurs.
Restrictions on transfer—A/N Partner. A/N is generally permitted to directly or indirectly transfer its entire
partnership interest at any time to certain members of the Newhouse family or specified affiliates of A/N. A/N is
also permitted to dispose of its partnership interest through a pledge to secure a loan and in connection with
specified restructurings of A/N.
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