Time Warner Cable 2008 Annual Report Download - page 80

(net debt of $13.345 billion), $300 million of TW NY Cable Preferred Membership Units and $24.706 billion of
shareholders’ equity.
The following table shows the significant items contributing to the decrease in net debt from December 31,
2007 to December 31, 2008 (in millions):
Balance as of December 31, 2007
(a)
............................................... $ 13,345
Cash provided by operating activities............................................... (5,300)
Capital expenditures ........................................................... 3,522
Debt issuance costs ............................................................ 97
Investments and acquisitions, net of cash acquired and distributions received
(b)
................ 685
Proceeds from the sale of cable systems ............................................ (51)
All other, net . . . ............................................................. (19)
Balance as of December 31, 2008
(a)
............................................... $ 12,279
(a)
Amounts include unamortized fair value adjustments of $114 million and $126 million as of December 31, 2008 and December 31, 2007,
respectively, which include the fair value adjustment recognized as a result of the merger of America Online, Inc. (now known as AOL
LLC) and Time Warner Inc. (now known as Historic TW Inc.).
(b)
Amount primarily includes the Company’s investment of $536 million in Clearwire LLC (which includes $6 million of transaction-
related costs) and the $103 million reclassification of the Company’s investment in The Reserve Fund. See below for further discussion.
As discussed in “Overview—Recent Developments—2008 Bond Offerings and Credit Facilities,” the Shelf
Registration Statement on file with the SEC allows TWC to offer and sell from time to time senior and subordinated
debt securities and debt warrants.
As discussed in “Overview—Recent Developments—Separation from Time Warner, Recapitalization and
Reverse Stock Split of TWC Common Stock,” upon completion of the TW Internal Restructuring, TWC’s board of
directors or a committee thereof will declare the Special Dividend to holders of TWC’s outstanding Class A
common stock and Class B common stock, including Time Warner, in an amount equal to $10.27 per share
(aggregating $10.855 billion), which will be paid prior to the completion of the Separation.
As discussed in “Overview—Recent Developments—2008 Bond Offerings and Credit Facilities,” pending the
payment of the Special Dividend, a portion of the net proceeds of the 2008 Bond Offerings was used to repay
variable-rate debt with lower interest rates, and the remainder was invested in accordance with the Company’s
investment policy.
The Company invests its cash and equivalents in a combination of money market, government and treasury
funds, as well as bank certificates of deposit, in accordance with the Company’s investment policy of diversifying its
investments and limiting the amount of its investments in a single entity or fund. Consistent with the foregoing, the
Company invested a portion of the cash proceeds of the June 2008 Bond Offering in The Reserve Fund’s Primary
Fund (“The Reserve Fund”). On the morning of September 15, 2008, the Company requested a full redemption of its
$490 million investment in The Reserve Fund, but the redemption request was not honored. On September 22, 2008,
The Reserve Fund announced that redemptions of shares were suspended pursuant to an SEC order requested by
The Reserve Fund so that an orderly liquidation could be effected. Through December 31, 2008, the Company has
received $387 million from The Reserve Fund representing its pro rata share of partial distributions made by The
Reserve Fund. The Company has not been informed as to when the remaining amount will be returned. However,
the Company believes its remaining receivable is recoverable. As a result of the status of The Reserve Fund, the
Company has classified the remaining $103 million receivable from The Reserve Fund as of December 31, 2008 as
prepaid expenses and other current assets in the Company’s consolidated balance sheet and within investments and
acquisitions, net of cash acquired and distributions received, in the Company’s consolidated statement of cash
flows.
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TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)