Time Warner Cable 2012 Annual Report Download - page 123

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
17. RELATED PARTY TRANSACTIONS
A summary of TWC’s transactions with related parties (e.g., equity-method investees) for the years ended December 31,
2012, 2011 and 2010 is as follows (in millions):
Year Ended December 31,
2012 2011 2010
Revenue ...........................................................$ 9 $ 17 $ 17
Cost of revenue:
Programming services ................................................$ (207) $ (225) $ (238)
Other costs ........................................................ (24) (25) (19)
Total .............................................................$ (231) $ (250) $ (257)
18. COMMITMENTS AND CONTINGENCIES
In March 2003, the interests in cable networks and filmed entertainment held by TWE were transferred to Time Warner
and all of Time Warner’s interests in cable systems were transferred to the Company (the “TWE Restructuring”). Prior to 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, Warner
Communications Inc., 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. In connection with an internal reorganization
discussed further in Note 20, on September 30, 2012, TWE merged with and into TWCE, with TWCE as the surviving entity.
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, 2012 and 2011 totaled $353 million and
$335 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, was
$237 million in 2012, $202 million in 2011 and $212 million in 2010. 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 $138 million in 2013,
$130 million in 2014, $116 million in 2015, $108 million in 2016, $83 million in 2017 and $299 million thereafter.
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