Time Warner Cable 2011 Annual Report Download - page 70

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)
Contractual and Other Obligations
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 accompanying consolidated balance sheet.
The following table summarizes the Company’s aggregate contractual obligations as of December 31, 2011, and the
estimated timing and effect that such obligations are expected to have on the Company’s liquidity and cash flows in future
periods (in millions):
2012 2013-2014 2015-2016 Thereafter Total
Programming and content purchases(a) ......... $ 3,986 $ 7,295 $ 5,397 $ 7,580 $ 24,258
Outstanding debt obligations and TW NY Cable
Preferred Membership Units(b) ............. 2,104 3,554 504 20,415 26,577
Interest and dividends(c) .................... 1,743 3,048 2,705 14,605 22,101
Facility leases(d) .......................... 127 231 198 345 901
Voice connectivity(e) ....................... 309 213 — — 522
Data processing services ................... 59 38 — — 97
High-speed data connectivity(f) ............... 34 15 4 19 72
Other(g) ................................. 237 161 24 100 522
Total ................................... $ 8,599 $ 14,555 $ 8,832 $ 43,064 $ 75,050
(a) Programming purchases represent contracts that the Company has with cable television networks and broadcast stations to provide programming
services to its subscribers. The amounts included above represent estimates of the future programming costs for these contract requirements and
commitments based on subscriber numbers and tier placement as of December 31, 2011 applied to the per-subscriber rates contained in these contracts.
Actual amounts due under such contracts may differ from the amounts above based on the actual subscriber numbers and tier placements. These
amounts also include programming rights negotiated directly with content owners for distribution on TWC-owned channels or networks.
(b) Outstanding debt obligations and TW NY Cable Preferred Membership Units represent principal amounts due on outstanding debt obligations and the
TW NY Cable Preferred Membership Units as of December 31, 2011. Amounts do not include any fair value adjustments, bond premiums, discounts,
interest rate derivatives, interest payments or dividends.
(c) Amounts are based on the outstanding debt or TW NY Cable Preferred Membership Units balances, respective interest or dividend rates (interest rates
on variable-rate debt were held constant through maturity at the December 31, 2011 rates) and maturity schedule of the respective instruments as of
December 31, 2011. Interest ultimately paid on these obligations may differ based on changes in interest rates for variable-rate debt, as well as any
potential future refinancings entered into by the Company. See Notes 9 and 10 to the accompanying consolidated financial statements for further details.
(d) The Company has lease obligations under various operating leases including minimum lease obligations for real estate and operating equipment.
(e) Voice connectivity obligations relate to transport, switching and interconnection services, primarily provided by Sprint, that allow for the origination
and termination of local and long-distance telephony traffic. These expenses also include related technical support services. In the fourth quarterof
2010, the Company began replacing Sprint as the provider of these services. There is generally no obligation to purchase these services if the Company
is not providing voice service. The amounts included above are estimated based on the number of voice subscribers as of December 31, 2011 and the
per-subscriber contractual rates contained in the contracts that were in effect as of December 31, 2011 and also reflect the replacement of Sprint
between the fourth quarter 2010 and the first quarter of 2014.
(f) High-speed data connectivity obligations are based on the contractual terms for bandwidth circuits that were in use as of December 31, 2011.
(g) Other contractual obligations does not include the Company’s reserve for uncertain tax positions and related accrued interest and penalties, which as of
December 31, 2011 totaled $66 million, as the specific timing of any cash payments relating to this obligation cannot be projected with reasonable
certainty.
The Company’s total rent expense amounted to $202 million, $212 million and $212 million in 2011, 2010 and 2009,
respectively. Included within these amounts are pole attachment rental fees of $55 million, $71 million and $72 million in
2011, 2010 and 2009, respectively.
Minimum pension funding requirements have not been presented as such amounts have not been determined beyond
2011. The Company was not required to make any cash contributions to its qualified defined benefit pension plans in 2011;
however, the Company made cash contributions of $405 million to the pension plans during 2011 and may make
discretionary cash contributions to the pension plans in 2012.
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