Time Warner Cable 2014 Annual Report Download - page 67

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TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)
Outstanding Debt and Available Financial Capacity
Debt as of December 31, 2014 and 2013 was as follows:
Interest
Rate
Outstanding Balance as of
December 31,
Maturity 2014 2013
(in millions)
TWC notes and debentures(a) ................... 2015-2042 5.762%(b) $ 21,065 $ 22,938
TWCE debentures(c) .......................... 2023-2033 7.901%(b) 2,061 2,065
Revolving credit facility(d) ..................... 2017 — —
Commercial paper program(d) .................. 2017 0.437%(b) 507 —
Capital leases ............................... 2016-2042 85 49
Total debt(e) ................................ $ 23,718 $ 25,052
(a) Outstanding balance amounts of the TWC notes and debentures as of December 31, 2014 and 2013 each include £1.267 billion of senior unsecured
notes valued at $1.973 billion and $2.098 billion, respectively, using the exchange rates at each date.
(b) Rate represents a weighted-average effective interest rate as of December 31, 2014 and, for the TWC notes and debentures, includes the effects of
interest rate swaps and cross-currency swaps.
(c) Outstanding balance amounts of the TWCE debentures as of December 31, 2014 and 2013 include an unamortized fair value adjustment of $61
million and $65 million, respectively, primarily consisting of the fair value adjustment recognized as a result of the 2001 merger of America Online,
Inc. (now known as AOL Inc.) and Time Warner Inc. (now known as Historic TW Inc.).
(d) As of December 31, 2014, the Company had $2.933 billion of available borrowing capacity under the Revolving Credit Facility (which reflects a
reduction of $60 million for outstanding letters of credit backed by the Revolving Credit Facility).
(e) Outstanding balance amounts of total debt as of December 31, 2014 and 2013 include current maturities of $1.017 billion and $1.767 billion,
respectively.
See Note 9 for further details regarding the Company’s outstanding debt and other financing arrangements, including
certain information about maturities, covenants and rating triggers related to such debt and financing arrangements. As of
December 31, 2014, TWC was in compliance with the leverage ratio covenant of the Revolving Credit Facility, with a
ratio of consolidated total debt as of December 31, 2014 to consolidated EBITDA for 2014 of approximately 2.8 times. In
accordance with the Revolving Credit Facility agreement, consolidated total debt as of December 31, 2014 was calculated
as (a) total debt per the accompanying consolidated balance sheet less the TWCE unamortized fair value adjustment
(discussed above) and the fair value of debt subject to interest rate swaps, less (b) total cash per the accompanying
consolidated balance sheet in excess of $25 million. In accordance with the Revolving Credit Facility agreement,
consolidated EBITDA for 2014 was calculated as Operating Income plus depreciation, amortization and equity-based
compensation expense.
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.
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