Time Warner Cable 2008 Annual Report Download - page 60

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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 a
supplement to the accompanying consolidated financial statements and provides additional information on Time
Warner Cable Inc.’s (together with its subsidiaries, “TWC” or the “Company”) business, current developments,
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, 2008.
•Financial condition and liquidity. This section provides an analysis of the Company’s cash flows for the
three years ended December 31, 2008, as well as a discussion of the Company’s outstanding debt and
commitments that existed as of December 31, 2008. 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 monitors and manages exposure to
potential gains and losses arising from changes in market rates and prices, such as interest rates.
•Critical accounting policies and estimates. This section discusses accounting policies and estimates that
require the use of assumptions that were uncertain at the time the estimate was made and that could have a
material effect on the Company’s consolidated results of operations or financial condition if there were
changes in the estimate or if a different estimate was made. The Company’s significant accounting policies,
including those considered to be critical accounting policies and estimates, 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 state-
ments. 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, 2008, TWC served approximately 14.6 million
customers who subscribed to one or more of its video, high-speed data and voice services, representing approx-
imately 34.2 million revenue generating units.
Time Warner Inc. (“Time Warner”) currently owns approximately 84% of the common stock of TWC
(representing a 90.6% voting interest), and also currently owns an indirect 12.43% non-voting common stock
interest in TW NY Cable Holding Inc. (“TW NY”), a subsidiary of TWC. The financial results of TWC’s operations
are consolidated by Time Warner. On May 20, 2008, TWC and its subsidiaries, Time Warner Entertainment
Company, L.P. (“TWE”) and TW NY, entered into a Separation Agreement (the “Separation Agreement”) with
Time Warner and its subsidiaries, Warner Communications Inc. (“WCI”), Historic TW Inc. (“Historic TW”) and
American Television and Communications Corporation (“ATC”), the terms of which will govern TWC’s legal and
structural separation from Time Warner. Refer to “—Recent Developments” for further details.
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