Time Warner Cable 2011 Annual Report Download - page 117

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
18. RELATED PARTY TRANSACTIONS
In the normal course of conducting its business, the Company has various transactions with equity-method investments,
Time Warner and affiliates and subsidiaries of Time Warner. Effective March 12, 2009, upon completion of the Separation,
Time Warner and its affiliates are no longer related parties. A summary of these transactions for the years ended
December 31, 2011, 2010 and 2009 is as follows (in millions):
Year Ended December 31,
2011 2010 2009
Revenues ............................................................. $ 17 $ 17 $ 16
Costs of revenues:
Programming services provided by equity-method investees .................... $ (225) $ (238) $ (231)
Programming services provided by subsidiaries of Time Warner and affiliates ...... — — (168)
Other costs charged by equity-method investees .............................. (25) (19) (16)
Total ................................................................ $ (250) $ (257) $ (415)
Selling, general and administrative expenses ................................. $ — $ — $ (3)
19. COMMITMENTS AND CONTINGENCIES
Prior to the restructuring of TWE, which was completed in March 2003 (the “TWE Restructuring”), TWE had various
contingent commitments, including guarantees, related to the TWE non-cable businesses. In connection with the TWE
Restructuring, some of these commitments were not transferred with their applicable non-cable business and they remain
contingent commitments of TWE. Time Warner and its subsidiary, WCI, have agreed, on a joint and several basis, to
indemnify TWE from and against any and all of these contingent liabilities, but TWE remains a party to these commitments.
TWC has cable franchise agreements containing provisions requiring the construction of cable plant and the provision
of services to customers within the franchise areas. In connection with these obligations under existing franchise agreements,
TWC obtains surety bonds or letters of credit guaranteeing performance to municipalities and public utilities and payment of
insurance premiums. Such surety bonds and letters of credit as of December 31, 2011 and 2010 totaled $335 million and
$322 million, respectively. Payments under these arrangements are required only in the event of nonperformance. TWC does
not expect that these contingent commitments will result in any amounts being paid in the foreseeable future.
Contractual Obligations
The Company has obligations to make future payments for goods and services under certain contractual arrangements.
These contractual obligations secure the future rights to various assets and services to be used in the normal course of the
Company’s 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 Company’s total rent expense, which primarily includes facility rental expense and pole attachment rental fees,
amounted to $202 million in 2011, $212 million in 2010 and $212 million in 2009. The Company has lease obligations under
various operating leases including minimum lease obligations for real estate and operating equipment.
The minimum rental commitments under long-term operating leases during the next five years are $127 million in 2012,
$119 million in 2013, $112 million in 2014, $103 million in 2015, $95 million in 2016 and $345 million thereafter.
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