UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Form 10-Q

þ		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2008 or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from                                         to

TIME WARNER CABLE INC.

Delaware		84-1496755
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

One Time Warner Center
North Tower
New York, New York 10019

(212) 364-8200

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer o
Non-accelerated filer þ (Do not check if a smaller reporting company)		Smaller reporting company o

     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

		Shares Outstanding
Description of Class		as of April 25, 2008
Class A Common Stock — $.01 par value			901,941,580
Class B Common Stock — $.01 par value			75,000,000

 

 

TIME WARNER CABLE INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND OTHER FINANCIAL INFORMATION

		Page
PART I. FINANCIAL INFORMATION
Management’s Discussion and Analysis of Results of Operations and Financial Condition			1
Item 4. Controls and Procedures			13
Consolidated Balance Sheet as of March 31, 2008 and December 31, 2007			14
Consolidated Statement of Operations for the Three Months Ended March 31, 2008 and 2007			15
Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2008 and 2007			16
Consolidated Statement of Shareholders’ Equity			17
Notes to Consolidated Financial Statements			18
Supplementary Information			28
PART II. OTHER INFORMATION
Item 1. Legal Proceedings			35
Item 6. Exhibits			35
EX-10.1 AMENDED AND RESTATED EMPLOYMENT AGREEMENT
EX-10.2 FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
EX-31.1 SECTION 302 CERTIFICATION OF THE PEO
EX-31.2 SECTION 302 CERTIFICATION OF THE PFO
EX-32 SECTION 906 CERTIFICATIONS OF THE PEO AND PFO

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION

INTRODUCTION

     Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is provided as a supplement to the accompanying consolidated financial statements and notes to help provide an understanding of Time Warner Cable Inc.’s (together with its subsidiaries, “TWC” or the “Company”) financial condition, cash flows and results of operations. MD&A is organized as follows:

	•		Overview. This section provides a general description of TWC’s business, as well as recent developments the Company believes are important in understanding the results of operations and financial condition or in understanding anticipated future trends.
	•		Financial statement presentation. This section provides a summary of how the Company’s operations are presented in the accompanying consolidated financial statements.
	•		Results of operations. This section provides an analysis of the Company’s results of operations for the three months ended March 31, 2008.
	•		Financial condition and liquidity. This section provides an analysis of the Company’s financial condition as of March 31, 2008 and cash flows for the three months ended March 31, 2008.
	•		Caution concerning forward-looking statements. This section provides a description of the use of forward-looking information appearing in this report, including in MD&A and the consolidated financial statements. Such information is based on management’s current expectations about future events, which are inherently susceptible to uncertainty and changes in circumstances. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007 (the “2007 Form 10-K”) for a discussion of the risk factors applicable to the Company.

OVERVIEW

     TWC is the second-largest cable operator in the U.S., with technologically advanced, well-clustered systems located mainly in five geographic areas — New York State (including New York City), the Carolinas, Ohio, southern California (including Los Angeles) and Texas. As of March 31, 2008, TWC served approximately 14.7 million customers who subscribed to one or more of its video, high-speed data and voice services, representing approximately 33.0 million revenue generating units.

     Time Warner Inc. (“Time Warner”) currently owns approximately 84.0% of the common stock of TWC (representing a 90.6% voting interest). The financial results of TWC’s operations are consolidated by Time Warner. Time Warner also owns a 12.43% non-voting common stock interest in a subsidiary of TWC. The Company and its Board of Directors are in discussions with Time Warner regarding a possible change in Time Warner’s ownership in the Company.

     TWC principally offers three services — video, high-speed data and voice — over its broadband cable systems. TWC markets its services separately and in “bundled” packages of multiple services and features. As of March 31, 2008, 50% of TWC’s customers subscribed to two or more of its primary services, including 18% of its customers who subscribed to all three primary services. Historically, TWC has focused primarily on residential customers, while also selling video, high-speed data and commercial networking and transport services to commercial customers. Recently, TWC has begun selling voice services to small- and medium-sized businesses as part of an increased emphasis on its commercial business. In addition, TWC earns revenues by selling advertising time to national, regional and local businesses.

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

     Video is TWC’s largest service in terms of revenues generated and, as of March 31, 2008, TWC had approximately 13.3 million basic video subscribers. Although providing video services is a competitive and highly penetrated business, TWC expects to continue to increase video revenues through the offering of advanced digital video services, as well as through price increases and digital video subscriber growth. As of March 31, 2008, TWC had approximately 8.3 million digital video subscribers, which represented approximately 62% of its basic video subscribers. TWC’s digital video subscribers provide a broad base of potential customers for additional services. Video programming costs represent a major component of TWC’s expenses and are expected to continue to increase, reflecting contractual rate increases, subscriber growth and the expansion of service offerings. TWC expects that its video service margins will continue to decline over the next few years as increases in programming costs outpace growth in video revenues.

     As of March 31, 2008, TWC had approximately 7.9 million residential high-speed data subscribers. TWC expects continued strong growth in residential high-speed data subscribers and revenues during 2008; however, the rate of growth of both subscribers and revenues is expected to continue to slow over time as high-speed data services become increasingly well-penetrated. TWC also offers commercial high-speed data services and had 280,000 commercial high-speed data subscribers as of March 31, 2008.

     Approximately 3.2 million residential subscribers received Digital Phone service, TWC’s IP-based telephony voice service, as of March 31, 2008. TWC expects strong increases in Digital Phone subscribers and revenues for the foreseeable future. TWC also rolled out Business Class Phone, a commercial Digital Phone service, to small- and medium-sized businesses during 2007 in the majority of its systems and expects to complete the roll-out in the remainder of its systems during 2008. As of March 31, 2008, TWC had 10,000 commercial Digital Phone subscribers.

     Some of TWC’s principal competitors, direct broadcast satellite operators and incumbent local telephone companies in particular, either offer or are making significant capital investments that will allow them to offer services that provide features and functions comparable to the video, high-speed data and/or voice services offered by TWC. These services are also offered in bundles similar to TWC’s and, in certain cases, such offerings include wireless service. The availability of these bundled service offerings has intensified competition, and TWC expects that competition will continue to intensify in the future as these offerings become more prevalent. TWC plans to continue to enhance its services with innovative offerings, which TWC believes will distinguish its services from those of its competitors.

FINANCIAL STATEMENT PRESENTATION

Revenues

     The Company’s revenues consist of Subscription and Advertising revenues. Subscription revenues consist of revenues from video, high-speed data and voice services.

     Video revenues include monthly fees for basic, expanded basic and digital services from both residential and commercial subscribers. Video revenues from digital services, or digital video revenues, include revenues from digital tiers, digital pay channels, pay-per-view, video-on-demand, subscription-video-on-demand and digital video recorder services. Video revenues also include related equipment rental charges, installation charges and franchise fees collected on behalf of local franchising authorities. Several ancillary items are also included within video revenues, such as commissions earned on the sale of merchandise by home shopping services and rental income earned on the leasing of antenna attachments on the Company’s transmission towers. In each period presented, these ancillary items constitute less than 2% of video revenues.

     High-speed data revenues include monthly subscriber fees from both residential and commercial subscribers, along with related equipment rental charges, home networking fees and installation charges. High-speed data revenues also include fees received from certain distributors of TWC’s Road Runner^TM high-speed data service (including cable systems managed by the Advance/Newhouse Partnership) and fees

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

received from third-party internet service providers whose on-line services are provided to some of TWC’s customers.

     Voice revenues include monthly subscriber fees from residential and commercial Digital Phone subscribers, along with related installation charges. For the three months ended March 31, 2007, voice revenues also included monthly subscriber fees from circuit-switched telephone subscribers (93,000 subscribers as of March 31, 2007). During the first quarter of 2008, TWC substantially completed the process of discontinuing the provision of circuit-switched telephone service in accordance with regulatory requirements. As a result, as of March 31, 2008, Digital Phone was the only voice service that TWC offered.

     Advertising revenues include the fees charged to local, regional and national advertising customers for advertising placed on the Company’s video and high-speed data services. Nearly all Advertising revenues are attributable to the Company’s video service.

Costs and Expenses

     Costs of revenues include: video programming costs (including fees paid to the programming vendors net of certain amounts received from the vendors); high-speed data connectivity costs; voice network costs; other service-related expenses, including non-administrative labor costs directly associated with the delivery of services to subscribers; maintenance of the Company’s delivery systems; franchise fees; and other related costs. The Company’s programming agreements are generally multi-year agreements that provide for the Company to make payments to the programming vendors at agreed upon rates based on the number of subscribers to which the Company provides the service.

     Selling, general and administrative expenses include amounts not directly associated with the delivery of services to subscribers or the maintenance of the Company’s delivery systems, such as administrative labor costs, marketing expenses, billing system charges, non-plant repair and maintenance costs, fees paid to Time Warner for reimbursement of certain administrative support functions and other administrative overhead costs.

Use of Operating Income before Depreciation and Amortization and Free Cash Flow

     Operating Income before Depreciation and Amortization (“OIBDA”) is a financial measure not calculated and presented in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company defines OIBDA as Operating Income before depreciation of tangible assets and amortization of intangible assets. Management utilizes OIBDA, among other measures, in evaluating the performance of the Company’s business because OIBDA eliminates the uneven effect across its business of considerable amounts of depreciation of tangible assets and amortization of intangible assets recognized in business combinations. Additionally, management utilizes OIBDA because it believes this measure provides valuable insight into the underlying performance of the Company’s individual cable systems by removing the effects of items that are not within the control of local personnel charged with managing these systems such as income tax provision, other income (expense), net, minority interest expense, net, income from equity investments, net, and interest expense, net. In this regard, OIBDA is a significant measure used in the Company’s annual incentive compensation programs. OIBDA also is a metric used by the Company’s parent, Time Warner, to evaluate the Company’s performance and is an important measure in the Time Warner reportable segment disclosures. A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues in the Company’s business. To compensate for this limitation, management evaluates the investments in such tangible and intangible assets through other financial measures, such as capital expenditure budget variances, investment spending levels and return on capital analyses. Another limitation of this measure is that it does not reflect the significant costs borne by the Company for income taxes, debt servicing costs, the share of OIBDA related to the minority ownership, the results of the Company’s equity investments or other non-operational income or expense. Management compensates for this limitation through other financial measures such as a review of net income and earnings per share.

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

     Free Cash Flow is a non-GAAP financial measure. The Company defines Free Cash Flow as cash provided by operating activities (as defined under GAAP) plus excess tax benefits from the exercise of stock options, less cash provided by (used by) discontinued operations, capital expenditures, partnership distributions and principal payments on capital leases. Management uses Free Cash Flow to evaluate the Company’s business. The Company believes this measure is an important indicator of its liquidity, including its ability to reduce net debt and make strategic investments, because it reflects the Company’s operating cash flow after considering the significant capital expenditures required to operate its business. A limitation of this measure, however, is that it does not reflect payments made in connection with investments and acquisitions, which reduce liquidity. To compensate for this limitation, management evaluates such expenditures through other financial measures such as return on investment analyses.

     Both OIBDA and Free Cash Flow should be considered in addition to, not as a substitute for, the Company’s Operating Income, net income and various cash flow measures (e.g., cash provided by operating activities), as well as other measures of financial performance and liquidity reported in accordance with GAAP, and may not be comparable to similarly titled measures used by other companies. A reconciliation of OIBDA to Operating Income is presented under “Results of Operations.” A reconciliation of Free Cash Flow to cash provided by operating activities is presented under “Financial Condition and Liquidity.”

RESULTS OF OPERATIONS

Recent Accounting Standards

     See Note 2 to the accompanying consolidated financial statements for a discussion of the accounting standards adopted during the three months ended March 31, 2008 and recent accounting standards not yet adopted.

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007

     The following discussion provides an analysis of the Company’s results of operations and should be read in conjunction with the accompanying consolidated statement of operations.

     Revenues. Revenues by major category were as follows (in millions):

		Three Months Ended March 31,
		2008				2007				% Change
Subscription:
Video		$	2,603			$	2,504				4	%
High-speed data			994				894				11	%
Voice			366				264				39	%
Total Subscription			3,963				3,662				8	%
Advertising			197				189				4	%
Total		$	4,160			$	3,851				8	%

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

     Selected subscriber-related statistics were as follows (in thousands):

		March 31,
		2008				2007				% Change
Basic video(a)			13,306				13,448				(1	%)
Digital video(b)			8,283				7,548				10	%
Residential high-speed data(c)			7,924				7,000				13	%
Commercial high-speed data(c)			280				254				10	%
Residential Digital Phone(d)			3,170				2,094				51	%
Commercial Digital Phone(d)			10				—			NM
Revenue generating units(e)			32,973				30,437				8	%
Customer relationships(f)			14,722				14,685				—

     Subscription revenues increased as a result of increases in video, high-speed data and voice revenues. The increase in video revenues was primarily due to the continued growth of digital video services and video price increases. Additional information regarding the major components of video revenues was as follows (in millions):

		Three Months Ended March 31,
		2008				2007				% Change
Basic video services		$	1,551			$	1,549				—
Digital video services			632				563				12	%
Equipment rental and installation charges			269				245				10	%
Franchise fees			112				109				3	%
Other			39				38				3	%
Total video		$	2,603			$	2,504				4	%

     High-speed data revenues increased primarily due to growth in high-speed data subscribers. Strong growth rates for high-speed data revenues are expected to continue during the remainder of 2008.

     The increase in voice revenues was due to growth in Digital Phone subscribers. Voice revenues for the three months ended March 31, 2007 also included $14 million of revenues associated with subscribers who received traditional, circuit-switched telephone service. Strong growth rates for voice revenues are expected to continue during the remainder of 2008.

     Average monthly subscription revenue (which includes video, high-speed data and voice revenues) per basic video subscriber (“subscription ARPU”) increased 9% to $99.65 for the three months ended March 31, 2008 from $91.04 for the three months ended March 31, 2007. This increase was primarily a result of the increased penetration of digital video, high-speed data and Digital Phone and higher video prices, as discussed above.

     Advertising revenues increased slightly to $197 million for the three months ended March 31, 2008 from $189 million for the three months ended March 31, 2007.

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

     Costs of revenues. The major components of costs of revenues were as follows (in millions):

		Three Months Ended March 31,
		2008				2007				% Change
Video programming		$	929			$	880				6	%
Employee			584				547				7	%
High-speed data			40				44				(9	%)
Voice			128				112				14	%
Franchise fees			112				109				3	%
Other direct operating costs			214				191				12	%
Total		$	2,007			$	1,883				7	%

     Costs of revenues increased 7%, primarily related to increases in video programming, employee, voice and other direct operating costs. As a percentage of revenues, costs of revenues were 48% for the three months ended March 31, 2008 compared to 49% for the three months ended March 31, 2007.

     The increase in video programming costs was primarily due to contractual rate increases and the expansion of service offerings, partially offset by lower basic video subscribers. Average programming costs per basic video subscriber increased 7% to $23.37 per month in 2008 from $21.88 per month in 2007.

     Employee costs increased primarily due to higher headcount resulting from the continued growth of digital video, high-speed data and Digital Phone services, as well as salary increases.

     High-speed data costs consist of the direct costs associated with the delivery of high-speed data services, including network connectivity costs. High-speed data costs decreased due to a decrease in per-subscriber connectivity costs, partially offset by subscriber growth.

     Voice costs consist of the direct costs associated with the delivery of voice services, including network connectivity costs. Voice costs increased primarily due to growth in Digital Phone subscribers, partially offset by a decline in per-subscriber connectivity costs.

     Other direct operating costs increased primarily due to increases in certain other costs associated with the continued growth of digital video, high-speed data and Digital Phone services.

     Selling, general and administrative expenses. The major components of selling, general and administrative expenses were as follows (in millions):

		Three Months Ended March 31,
		2008				2007				% Change
Employee		$	310			$	263				18	%
Marketing			158				123				28	%
Other			283				265				7	%
Total		$	751			$	651				15	%

     Selling, general and administrative expenses increased as a result of higher employee, marketing and other costs. Employee costs increased, due primarily to greater headcount, salary increases and higher equity-based compensation expense, reflecting mainly the timing of 2008 grants, which were made during the first quarter as compared to 2007 grants, which were made in the second quarter. Marketing costs increased as a result of intensified marketing efforts during the first quarter of 2008. Other costs increased primarily due to higher administrative costs associated with the increase in headcount discussed above.

     Merger-related and restructuring costs. For the three months ended March 31, 2007, the Company expensed non-capitalizable merger-related costs associated with the 2006 transactions with Adelphia Communications Corporation (“Adelphia”) and Comcast Corporation (together with its subsidiaries,

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

“Comcast”) of $4 million. In addition, the results for the three months ended March 31, 2007 included restructuring costs of $6 million.

     Reconciliation of Operating Income to OIBDA. The following table reconciles Operating Income to OIBDA. In addition, the table provides the components from Operating Income to net income for purposes of the discussions that follow (in millions):

		Three Months Ended March 31,
		2008				2007				% Change
Net income		$	242			$	276				(12	%)
Income tax provision			165				187				(12	%)
Income before income taxes			407				463				(12	%)
Interest expense, net			199				227				(12	%)
Income from equity investments, net			(5	)			(3	)			67	%
Minority interest expense, net			41				38				8	%
Other income, net			(6	)			(146	)			(96	%)
Operating Income			636				579				10	%
Depreciation			701				649				8	%
Amortization			65				79				(18	%)
OIBDA		$	1,402			$	1,307				7	%

     OIBDA. OIBDA increased principally as a result of revenue growth (particularly growth in high margin high-speed data revenues), partially offset by higher costs of revenues and selling, general and administrative expenses, as discussed above.

     Depreciation expense. The increase in depreciation expense was primarily associated with purchases of customer premise equipment, scalable infrastructure and line extensions (each of which is primarily driven by customer demand) occurring during or subsequent to the first quarter of 2007.

     Amortization expense. Amortization expense decreased primarily due to the absence of amortization expense associated with customer relationships recorded in connection with the 2003 restructuring of Time Warner Entertainment Company, L.P., a subsidiary of TWC, which were fully amortized at the end of the first quarter of 2007.

     Operating Income. Operating Income increased primarily due to the increase in OIBDA and the decrease in amortization expense, partially offset by the increase in depreciation expense, as discussed above.

     Interest expense, net. Interest expense, net, decreased due to a decrease in variable rate debt outstanding, as well as decreases in average interest rates on borrowings, partially offset by an increase in the Company’s fixed rate debt outstanding. In April 2007, the Company issued $5.0 billion in aggregate principal amount of fixed rate senior unsecured notes and debentures, the net proceeds of which were used to repay a portion of the Company’s variable rate debt that was previously outstanding.

     Other income, net. Other income, net for the three months ended March 31, 2008 primarily relates to a pretax gain recorded on the sale of a cost-method investment. During the three months ended March 31, 2007, the Company recorded a pretax gain of $146 million as a result of the distribution of the assets of Texas and Kansas City Cable Partners, L.P. to TWC and Comcast on January 1, 2007, which was treated as a sale of the Company’s 50% equity interest in the pool of assets consisting of the Houston cable systems (the “TKCCP Gain”).

     Income before income taxes. Income before income taxes decreased primarily due to a decrease in other income, net due to the TKCCP Gain recorded in 2007, as discussed above, partially offset by an increase in Operating Income and a decrease in interest expense, net.

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

     Income tax provision. TWC’s income tax provision has been prepared as if the Company operated as a stand-alone taxpayer for all periods presented. For the three months ended March 31, 2008 and 2007, the Company recorded income tax provisions of $165 million and $187 million, respectively. The effective tax rate was approximately 41% and 40% for the three months ended March 31, 2008 and 2007, respectively.

     Net income and net income per common share. Net income was $242 million for the three months ended March 31, 2008 compared to $276 million for the three months ended March 31, 2007. Basic and diluted net income per common share were $0.25 for the three months ended March 31, 2008 compared to $0.28 for the three months ended March 31, 2007. Net income and net income per common share decreased primarily due to a decrease in other income, net due to the TKCCP Gain recorded in 2007, as discussed above, partially offset by an increase in Operating Income and decreases in interest expense, net and income tax provision.

FINANCIAL CONDITION AND LIQUIDITY

     Management believes that cash generated by or available to TWC should be sufficient to fund its capital and liquidity needs for the foreseeable future. TWC’s sources of cash include cash provided by operating activities, cash and equivalents on hand, available borrowing capacity under its committed credit facilities and commercial paper program, and access to the capital markets. TWC’s unused committed available funds were $4.226 billion as of March 31, 2008, reflecting $226 million in cash and equivalents and $4.000 billion of available borrowing capacity under the Company’s $6.0 billion senior unsecured five-year revolving credit facility (the “Cable Revolving Facility”).

Current Financial Condition

     As of March 31, 2008, the Company had $13.226 billion of debt, $226 million of cash and equivalents (net debt of $13.000 billion, defined as total debt less cash and equivalents), $300 million of mandatorily redeemable non-voting Series A Preferred Membership Units issued by a subsidiary of TWC, Time Warner NY Cable LLC (“TW NY”), in connection with the acquisition of Adelphia (the “TW NY Preferred Membership Units”) and $24.997 billion of shareholders’ equity. As of December 31, 2007, the Company had $13.577 billion of debt, $232 million of cash and equivalents (net debt of $13.345 billion), $300 million of TW NY 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 March 31, 2008 (in millions):

Balance as of December 31, 2007(a)		$	13,345
Cash provided by operating activities			(1,186	)
Capital expenditures			846
All other, net			(5	)
Balance as of March 31, 2008(a)		$	13,000

Cash Flows

     Cash and equivalents decreased by $6 million and $4 million for the three months ended March 31, 2008 and 2007, respectively. Components of these changes are discussed below in more detail.

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Operating Activities

Details of cash provided by operating activities are as follows (in millions):

		Three Months Ended March 31,
		2008				2007
OIBDA		$	1,402			$	1,307
Net interest payments(a)			(212	)			(255	)
Pension plan contributions			(50	)			—
Noncash equity-based compensation			34				5
Merger-related and restructuring payments, net of accruals(b)			(4	)			(5	)
Net income taxes refunded(c)			1				1
Net cash flows from discontinued operations(d)			—				54
All other, net, including working capital changes			15				(101	)
Cash provided by operating activities		$	1,186			$	1,006

     Cash provided by operating activities increased from $1.006 billion for the three months ended March 31, 2007 to $1.186 billion for the three months ended March 31, 2008. This increase was primarily related to an increase in OIBDA (due to revenue growth, partially offset by increases in costs of revenues and selling, general and administrative expenses, as previously discussed), the change in working capital requirements and a decrease in net interest payments, partially offset by 2008 pension plan contributions and the absence in 2008 of cash flows from discontinued operations. The decrease in net interest payments was due to a decrease in interest expense (as previously discussed) and the timing of interest payments, and the change in working capital requirements was primarily due to the timing of payments and collections of accounts receivable.

     The Economic Stimulus Act of 2008, enacted in the first quarter of 2008, provides for a bonus first year depreciation deduction of 50% of qualified property. The benefits of this legislation are applicable to certain of the Company’s capital expenditures and are expected to reduce the Company’s net income tax payments in 2008.

     The Company anticipates making discretionary cash contributions of approximately $150 million to its funded defined benefit pension plans in 2008, subject to market conditions and other considerations, $50 million of which has been contributed as of March 31, 2008.

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Investing Activities

Details of cash used by investing activities are as follows (in millions):

		Three Months Ended March 31,
		2008				2007
Investments and acquisitions, net of cash acquired and distributions received:
Distributions received from an investee(a)		$	—			$	48
All other			(5	)			9
Capital expenditures			(846	)			(720	)
Other investing activities			10				3
Cash used by investing activities		$	(841	)		$	(660	)

     Cash used by investing activities increased from $660 million for the three months ended March 31, 2007 to $841 million for the three months ended March 31, 2008. This increase was principally due to an increase in capital expenditures, driven by greater penetration of digital video, high-speed data and Digital Phone services, as well as the absence in 2008 of distributions received from an investee.

     TWC’s capital expenditures included the following major categories (in millions):

		Three Months Ended March 31,
		2008				2007
Customer premise equipment(a)		$	446			$	339
Scalable infrastructure(b)			104				99
Line extensions(c)			87				76
Upgrades/rebuilds(d)			63				58
Support capital(e)			146				148
Total capital expenditures		$	846			$	720

     TWC incurs expenditures associated with the construction of its cable systems. Costs associated with the construction of the cable transmission and distribution facilities and new cable service installations are capitalized. TWC generally capitalizes expenditures for tangible fixed assets having a useful life of greater than one year. Capitalized costs include direct material, labor and overhead, as well as interest. Sales and marketing costs, as well as the costs of repairing or maintaining existing fixed assets, are expensed as incurred. With respect to certain customer premise equipment, which includes set-top boxes and high-speed data and telephone cable modems, TWC capitalizes installation charges only upon the initial deployment of these assets. All costs incurred in subsequent disconnects and reconnects are expensed as incurred.

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

Depreciation on these assets is provided, generally using the straight-line method, over their estimated useful lives. For set-top boxes and modems, the useful life is 3 to 5 years, and, for distribution plant, the useful life is up to 16 years.

Financing Activities

     Details of cash used by financing activities are as follows (in millions):

		Three Months Ended March 31,
		2008				2007
Borrowings (repayments), net(a)		$	166			$	624
Borrowings			141				173
Repayments			(655	)			(1,079	)
Other financing activities			(3	)			(68	)
Cash used by financing activities		$	(351	)		$	(350	)

     Cash used by financing activities was $350 million for the three months ended March 31, 2007 compared to $351 million for the three months ended March 31, 2008, as the increase in net repayments under the Company’s debt obligations was offset by a decrease in payments for other financing activities.

Free Cash Flow

     Reconciliation of Cash provided by operating activities to Free Cash Flow. The following table reconciles Cash provided by operating activities to Free Cash Flow (in millions):

		Three Months Ended March 31,
		2008				2007
Cash provided by operating activities		$	1,186			$	1,006
Reconciling items:
Adjustments relating to the operating cash flow of discontinued operations			—				(54	)
Cash provided by continuing operating activities			1,186				952
Add: Excess tax benefit from exercise of stock options			—				3
Less:
Capital expenditures			(846	)			(720	)
Partnership tax distributions, stock option distributions and principal payments on capital leases			(1	)			(11	)
Free Cash Flow		$	339			$	224

     Free Cash Flow increased from $224 million for the three months ended March 31, 2007 to $339 million for the three months ended March 31, 2008 primarily as a result of an increase in cash provided by continuing operating activities, partially offset by an increase in capital expenditures, as discussed above.

Time Warner Approval Rights

     Under a shareholder agreement entered into between TWC and Time Warner on April 20, 2005 (the “Shareholder Agreement”), TWC is required to obtain Time Warner’s approval prior to incurring additional debt (except for ordinary course issuances of commercial paper or borrowings under the Cable Revolving Facility up to the limit of that credit facility, to which Time Warner has consented) or rental expenses (other than with respect to certain approved leases) or issuing preferred equity, if its consolidated ratio of debt, including preferred equity, plus six times its annual rental expense to EBITDAR (the “TW Leverage Ratio”) then exceeds, or would as a result of the incurrence or issuance exceed, 3:1. Under certain circumstances, TWC is required to include the indebtedness, annual rental expense obligations and

TIME WARNER CABLE INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION—(Continued)

EBITDAR of certain unconsolidated entities that it manages and/or in which it owns an equity interest, in the calculation of the TW Leverage Ratio. The Shareholder Agreement defines EBITDAR, at any time of measurement, as operating income plus depreciation, amortization and rental expense (for any lease that is not accounted for as a capital lease) for the twelve months ending on the last day of TWC’s most recent fiscal quarter, including certain adjustments to reflect the impact of significant transactions as if they had occurred at the beginning of the period.

     The following table sets forth the calculation of the TW Leverage Ratio for the twelve months ended March 31, 2008 (in millions, except ratio):

Total debt		$	13,226
TW NY Preferred Membership Units			300
Six times annual rental expense			1,104
Total		$	14,630
EBITDAR		$	6,021
TW Leverage Ratio			2.43x

CAUTION CONCERNING FORWARD-LOOKING STATEMENTS

     This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, particularly statements anticipating future growth in revenues, OIBDA, cash provided by operating activities and other financial measures. Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes” and words and terms of similar substance used in connection with any discussion of future operating or financial performance identify forward-looking statements. These forward-looking statements are based on management’s current expectations and beliefs about future events. As with any projection or forecast, they are inherently susceptible to uncertainty and changes in circumstances, and the Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements whether as a result of such changes, new information, subsequent events or otherwise.

     Various factors could adversely affect the operations, business or financial results of TWC in the future and cause TWC’s actual results to differ materially from those contained in the forward-looking statements, including those factors discussed in detail in Item 1A, “Risk Factors,” in the 2007 Form 10-K and in TWC’s other filings made from time to time with the Securities and Exchange Commission (the “SEC”) after the date of this report. In addition, the Company operates in a highly competitive, consumer and technology-driven and rapidly changing business. The Company’s business is affected by government regulation, economic, strategic, political and social conditions, consumer response to new and existing products and services, technological developments and, particularly in view of new technologies, its continued ability to protect and secure any necessary intellectual property rights. TWC’s actual results could differ materially from management’s expectations because of changes in such factors.

     Further, lower than expected valuations associated with the Company’s cash flows and revenues may result in the Company’s inability to realize the value of recorded intangibles and goodwill. Additionally, achieving the Company’s financial objectives could be adversely affected by the factors discussed in detail in Item 1A, “Risk Factors,” in the 2007 Form 10-K, as well as:

	•		economic slowdowns;
	•		the impact of terrorist acts and hostilities;
	•		changes in the Company’s plans, strategies and intentions;
	•		the impacts of significant acquisitions, dispositions and other similar transactions;
	•		the failure to meet earnings expectations; and
	•		decreased liquidity in the capital markets, including any reduction in the ability to access the capital markets for debt securities or bank financings.

TIME WARNER CABLE INC.
Item 4. CONTROLS AND PROCEDURES

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

     The Company, under the supervision and with the participation of its management, including the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as such term is defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed in reports filed or submitted by the Company under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that information required to be disclosed by the Company is accumulated and communicated to the Company’s management to allow timely decisions regarding the required disclosure.

Changes in Internal Control Over Financial Reporting

     There have not been any changes in the Company’s internal control over financial reporting during the quarter ended March 31, 2008 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

TIME WARNER CABLE INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)

		March 31,				December 31,
		2008				2007
		(in millions)
ASSETS
Current assets
Cash and equivalents		$	226			$	232
Receivables, less allowances of $84 million and $87 million as of March 31, 2008 and December 31, 2007, respectively			627				743
Receivables from affiliated parties			4				2
Prepaid expenses and other current assets			127				95
Deferred income tax assets			80				91
Total current assets			1,064				1,163
Investments			729				735
Property, plant and equipment, net			12,932				12,873
Intangible assets subject to amortization, net			664				719
Intangible assets not subject to amortization			38,930				38,925
Goodwill			2,106				2,117
Other assets			98				68
Total assets		$	56,523			$	56,600
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	318			$	417
Deferred revenue and subscriber-related liabilities			180				164
Payables to affiliated parties			181				204
Accrued programming expense			524				509
Other current liabilities			1,187				1,237
Current liabilities of discontinued operations			—				5
Total current liabilities			2,390				2,536
Long-term debt			13,226				13,577
Mandatorily redeemable preferred membership units issued by a subsidiary			300				300
Deferred income tax liabilities, net			13,432				13,291
Long-term payables to affiliated parties			22				36
Other liabilities			405				430
Minority interests			1,751				1,724
Commitments and contingencies (Note 7)
Shareholders’ equity
Class A common stock, $0.01 par value, 902 million shares issued and outstanding as of March 31, 2008 and December 31, 2007			9				9
Class B common stock, $0.01 par value, 75 million shares issued and outstanding as of March 31, 2008 and December 31, 2007			1				1
Paid-in-capital			19,456				19,411
Accumulated other comprehensive loss, net			(171	)			(174	)
Retained earnings			5,702				5,459
Total shareholders’ equity			24,997				24,706
Total liabilities and shareholders’ equity		$	56,523			$	56,600

See accompanying notes.

TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)

		Three Months Ended March 31,
		2008				2007
		(in millions, except per share data)
Revenues:
Subscription:
Video		$	2,603			$	2,504
High-speed data			994				894
Voice			366				264
Total Subscription			3,963				3,662
Advertising			197				189
Total revenues(a)			4,160				3,851
Costs and expenses:
Costs of revenues(a)(b)			2,007				1,883
Selling, general and administrative(a)(b)			751				651
Depreciation			701				649
Amortization			65				79
Merger-related and restructuring costs			—				10
Total costs and expenses			3,524				3,272
Operating Income			636				579
Interest expense, net			(199	)			(227	)
Income from equity investments, net			5				3
Minority interest expense, net			(41	)			(38	)
Other income, net			6				146
Income before income taxes			407				463
Income tax provision			(165	)			(187	)
Net income		$	242			$	276
Basic net income per common share		$	0.25			$	0.28
Average basic common shares outstanding			976.9				976.9
Diluted net income per common share		$	0.25			$	0.28
Average diluted common shares outstanding			977.4				976.9

		Three Months Ended March 31,
		2008				2007
		(in millions)
Revenues		$	3			$	3
Costs of revenues			(270	)			(251	)
Selling, general and administrative			(4	)			(5	)

See accompanying notes.

TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)

		Three Months Ended March 31,
		2008				2007
		(in millions)
OPERATING ACTIVITIES
Net income		$	242			$	276
Adjustments for noncash and nonoperating items:
Depreciation and amortization			766				728
Pretax gain on sale of 50% equity interest in the Houston Pool of TKCCP			—				(146	)
Pretax gain on sale of cost-method investment			(9	)			—
Income from equity investments, net of cash distributions			—				9
Minority interest expense, net			41				38
Deferred income taxes			130				136
Equity-based compensation			34				5
Changes in operating assets and liabilities, net of acquisitions:
Receivables			104				134
Accounts payable and other liabilities			(66	)			(218	)
Other changes			(56	)			(10	)
Adjustments relating to discontinued operations(a)			—				54
Cash provided by operating activities			1,186				1,006
INVESTING ACTIVITIES
Investments and acquisitions, net of cash acquired and distributions received			(5	)			57
Capital expenditures			(846	)			(720	)
Proceeds from sale of cost-method investment			9				—
Proceeds from disposal of property, plant and equipment			1				3
Cash used by investing activities			(841	)			(660	)
FINANCING ACTIVITIES
Borrowings (repayments), net(b)			166				624
Borrowings(c)			141				173
Repayments(c)			(655	)			(1,079	)
Excess tax benefit from exercise of stock options			—				3
Principal payments on capital leases			—				(1	)
Distributions to owners, net			(1	)			(10	)
Other			(2	)			(60	)
Cash used by financing activities			(351	)			(350	)
DECREASE IN CASH AND EQUIVALENTS			(6	)			(4	)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD			232				51
CASH AND EQUIVALENTS AT END OF PERIOD		$	226			$	47

See accompanying notes.

TIME WARNER CABLE INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
(Unaudited)

		Three Months Ended March 31,
		2008				2007
		(in millions)
BALANCE AT BEGINNING OF PERIOD		$	24,706			$	23,564
Net income			242				276
Other comprehensive income			3				2
Comprehensive income			245				278
Impact of adopting new accounting pronouncements(a)			1				(34	)
Equity-based compensation			34				5
Allocations from Time Warner and other, net			11				(2	)
BALANCE AT END OF PERIOD		$	24,997			$	23,811

See accompanying notes.

TIME WARNER CABLE INC.

(Unaudited)

1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

     Time Warner Cable Inc. (together with its subsidiaries, “TWC” or the “Company”) is the second-largest cable operator in the U.S., with technologically advanced, well-clustered systems located mainly in five geographic areas — New York State (including New York City), the Carolinas, Ohio, southern California (including Los Angeles) and Texas. As of March 31, 2008, TWC served approximately 14.7 million customers who subscribed to one or more of its video, high-speed data and voice services, representing approximately 33.0 million revenue generating units.

     Time Warner Inc. (“Time Warner”) currently owns approximately 84.0% of the common stock of TWC (representing a 90.6% voting interest). The financial results of TWC’s operations are consolidated by Time Warner. Time Warner also owns a 12.43% non-voting common stock interest in a subsidiary of TWC. The Company and its Board of Directors are in discussions with Time Warner regarding a possible change in Time Warner’s ownership in the Company.

     TWC principally offers three services — video, high-speed data and voice — over its broadband cable systems. TWC markets its services separately and in “bundled” packages of multiple services and features. As of March 31, 2008, 50% of TWC’s customers subscribed to two or more of its primary services, including 18% of its customers who subscribed to all three primary services. Historically, TWC has focused primarily on residential customers, while also selling video, high-speed data and commercial networking and transport services to commercial customers. Recently, TWC has begun selling voice services to small- and medium-sized businesses as part of an increased emphasis on its commercial business. In addition, TWC earns revenues by selling advertising time to national, regional and local businesses.

     Video is TWC’s largest service in terms of revenues generated and, as of March 31, 2008, TWC had approximately 13.3 million basic video subscribers. Although providing video services is a competitive and highly penetrated business, TWC continues to increase video revenues through the offering of advanced digital video services, as well as through price increases and digital video subscriber growth. As of March 31, 2008, TWC had approximately 8.3 million digital video subscribers, which represented approximately 62% of its basic video subscribers. TWC’s digital video subscribers provide a broad base of potential customers for additional services.

     As of March 31, 2008, TWC had approximately 7.9 million residential high-speed data subscribers. TWC also offers commercial high-speed data services and had 280,000 commercial high-speed data subscribers as of March 31, 2008.

     Approximately 3.2 million residential subscribers received Digital Phone service, TWC’s IP-based telephony voice service, as of March 31, 2008. In 2008, TWC continued to roll out Business Class Phone, a commercial Digital Phone service, to small- and medium-sized businesses. As of March 31, 2008, TWC had 10,000 commercial Digital Phone subscribers.

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Basis of Presentation

Basis of Consolidation

     The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of TWC and all entities in which TWC has a controlling voting interest, as well as allocations of certain Time Warner corporate costs deemed reasonable by management to present the Company’s consolidated results of operations, financial position, changes in equity and cash flows on a stand-alone basis. In accordance with Financial Accounting Standards Board (“FASB”) Interpretation No. 46 (revised 2003), Consolidation of Variable Interest Entities—an interpretation of ARB No. 51, the consolidated financial statements include the results of Time Warner Entertainment-Advance/Newhouse Partnership (“TWE-A/N”) only for the systems that are controlled by TWC and for which TWC holds an economic interest. The Time Warner corporate costs include specified administrative services, including selected tax, human resources, legal, information technology, treasury, financial, public policy and corporate and investor relations services, and approximate Time Warner’s estimated cost for services rendered. Intercompany accounts and transactions between consolidated companies have been eliminated in consolidation.

Use of Estimates

     The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and footnotes thereto. Actual results could differ from those estimates.

     Significant estimates inherent in the preparation of the consolidated financial statements include accounting for asset impairments, allowances for doubtful accounts, investments, depreciation and amortization, business combinations, pension benefits, equity-based compensation, income taxes, contingencies and certain programming arrangements. Allocation methodologies used to prepare the consolidated financial statements are based on estimates and have been described in the notes, where appropriate.

Reclassifications

     Certain reclassifications have been made to the prior year’s financial information to conform to the March 31, 2008 presentation.

Interim Financial Statements

     The consolidated financial statements are unaudited; however, in the opinion of management, they contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the financial position, the results of operations and cash flows for the periods presented in conformity with GAAP applicable to interim periods. The consolidated financial statements should be read in conjunction with the audited consolidated financial statements of TWC included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007.

Net Income per Common Share

     Basic net income per common share is computed by dividing net income by the weighted average of common shares outstanding during the period. Weighted-average common shares include shares of Class A common stock and Class B common stock. Diluted net income per common share adjusts basic net income per common share for the effects of stock options and restricted stock units only in the periods in

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

which such effect is dilutive. Set forth below is a reconciliation of basic and diluted net income per common share (in millions, except per share data):

		Three Months Ended March 31,
		2008				2007
Net income		$	242			$	276
Average common shares outstanding—basic			976.9				976.9
Dilutive effect of equity awards			0.5				—
Average common shares outstanding—diluted			977.4				976.9
Net income per common share:
Basic		$	0.25			$	0.28
Diluted		$	0.25			$	0.28

2. RECENT ACCOUNTING STANDARDS

Accounting Standards Adopted in 2008

Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment

     On January 1, 2008, the Company adopted the provisions of EITF Issue No. 06-1, Accounting for Consideration Given by a Service Provider to Manufacturers or Resellers of Equipment Necessary for an End-Customer to Receive Service from the Service Provider (“EITF 06-1”). EITF 06-1 provides that consideration provided to the manufacturers or resellers of specialized equipment should be accounted for as a reduction of revenue if the consideration provided is in the form of cash and the service provider directs that such cash be provided directly to the customer. Otherwise, the consideration should be recorded as an expense. The adoption of the provisions of EITF 06-1 did not have a material impact on the Company’s consolidated financial statements.

Accounting for Postretirement Benefit Aspects of Split-Dollar Life Insurance Arrangements

     On January 1, 2008, the Company adopted the provisions of EITF Issue No. 06-10, Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements (“EITF 06-10”), which requires that a company recognize a liability for the postretirement benefits associated with collateral assignment split-dollar life insurance arrangements. The provisions of EITF 06-10 are applicable in instances where the Company has contractually agreed to maintain a life insurance policy (i.e., the Company pays the premiums) for an employee in periods in which the employee is no longer providing services. The adoption of EITF 06-10 did not have a material impact on the Company’s consolidated financial statements.

Fair Value Measurements

     On January 1, 2008, the Company adopted certain provisions of Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards (“Statement”) No. 157, Fair Value Measurements (“FAS 157”), which establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and expands on required disclosures about fair value measurement. The provisions of FAS 157 adopted on January 1, 2008 relate to financial assets and liabilities as well as other assets and liabilities carried at fair value on a recurring basis and did not have a material impact on the Company’s consolidated financial statements. The provisions of FAS 157 related to other nonfinancial assets and liabilities will be effective for TWC on January 1, 2009, and will be applied prospectively. The Company is currently evaluating the impact that the provisions of FAS 157 related to other nonfinancial assets and liabilities will have on the Company’s consolidated financial statements.

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Recent Accounting Standards Not Yet Adopted

Business Combinations

     In December 2007, the FASB issued Statement No. 141 (revised 2007), Business Combinations (“FAS 141R”). FAS 141R establishes principles and requirements for how an acquirer in a business combination (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures the goodwill acquired in a business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of financial statements to evaluate the nature and financial effects of the business combination. FAS 141R will be applied prospectively to business combinations that have an acquisition date on or after January 1, 2009. The provisions of FAS 141R will not impact the Company’s consolidated financial statements for prior periods.

Noncontrolling Interests

     In December 2007, the FASB issued Statement No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 (“FAS 160”). The provisions of FAS 160 establish accounting and reporting standards for the noncontrolling interest in a subsidiary including the accounting treatment upon the deconsolidation of a subsidiary. The provisions of FAS 160 will be effective for TWC on January 1, 2009 and will be applied prospectively, except for the presentation of the noncontrolling interests, which for all prior periods would be reclassified to equity in the consolidated balance sheet and adjusted out of net income in the consolidated statement of operations. The Company is currently evaluating the impact the provisions of FAS 160 will have on the Company’s consolidated financial statements.

3. TEXAS AND KANSAS CITY CABLE PARTNERS, L.P. JOINT VENTURE

     Texas and Kansas City Cable Partners, L.P. (“TKCCP”) was a 50-50 joint venture between a consolidated subsidiary of TWC (TWE-A/N) and Comcast Corporation (together with its subsidiaries, “Comcast”). On January 1, 2007, TKCCP distributed its assets to its partners. TWC received certain cable assets located in Kansas City, south and west Texas and New Mexico (the “Kansas City Pool”), which served approximately 788,000 basic video subscribers as of December 31, 2006, and Comcast received the pool of assets consisting of the Houston cable systems (the “Houston Pool”), which served approximately 795,000 basic video subscribers as of December 31, 2006. TWC began consolidating the results of the Kansas City Pool on January 1, 2007. TKCCP was formally dissolved on May 15, 2007. For accounting purposes, TWC treated the distribution of TKCCP’s assets as a sale of TWC’s 50% equity interest in the Houston Pool and as an acquisition of Comcast’s 50% equity interest in the Kansas City Pool. As a result of the sale of TWC’s 50% equity interest in the Houston Pool, TWC recorded a pretax gain of $146 million in the first quarter of 2007, which is included as a component of other income, net, in the consolidated statement of operations for the three months ended March 31, 2007.

4. EQUITY-BASED COMPENSATION

Time Warner Equity Plans

     Prior to 2007, Time Warner granted options to purchase Time Warner common stock and shares of Time Warner common stock (“restricted stock”) or restricted stock units (“RSUs”) under its equity plans (collectively, the “Time Warner Equity Awards”) to employees of TWC. TWC recognizes compensation expense for the fair value of such awards according to the provisions of FASB Statement No. 123 (revised 2004), Share-Based Payment. Time Warner has not granted Time Warner Equity Awards to employees of TWC since TWC Class A common stock began to trade publicly in March 2007. In addition, employees of Time Warner who become employed by TWC retain their Time Warner Equity Awards pursuant to their

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

terms and TWC records equity-based compensation expense from the date of transfer through the end of the applicable vesting period. The stock options granted by Time Warner to employees of TWC were granted with exercise prices equal to, or in excess of, the fair market value of a share of Time Warner common stock at the date of grant. Generally, the stock options vest ratably over a four-year vesting period and expire ten years from the date of grant. The awards of restricted stock or RSUs generally vest between three to five years from the date of grant. Holders of Time Warner restricted stock and RSU awards are generally entitled to receive cash dividends or dividend equivalents, respectively, paid by Time Warner during the period of time that the restricted stock or RSU awards are unvested. Certain Time Warner stock options and RSU awards provide for accelerated vesting upon an election to retire pursuant to TWC’s defined benefit retirement plans or after reaching a specified age and years of service.

TWC Equity Plan

     The Time Warner Cable Inc. 2006 Stock Incentive Plan (the “2006 Plan”) provides for the issuance of up to 100 million shares of TWC Class A common stock to directors, employees and certain non-employee advisors of TWC. The Company made its first grant of equity awards in April 2007. Stock options have been granted under the 2006 Plan with exercise prices equal to the fair market value of TWC Class A common stock at the date of grant. Generally, the stock options vest ratably over a four-year vesting period and expire ten years from the date of grant. Certain stock option awards provide for accelerated vesting upon an election to retire pursuant to TWC’s defined benefit retirement plans or after reaching a specified age and years of service. For the three months ended March 31, 2008, TWC granted approximately 4.6 million stock options at a weighted-average grant date fair value of $10.22 ($6.03, net of tax) per option. The table below presents the weighted-average values of the assumptions used to value TWC stock options at their grant date for the three months ended March 31, 2008.

Expected volatility			30.0	%
Expected term to exercise from grant date		6.52 years
Risk-free rate			3.2	%
Expected dividend yield			0.0	%

     Pursuant to the 2006 Plan, the Company also granted RSU awards, which generally vest over a four-year period from the date of grant. Certain RSU awards provide for accelerated vesting upon an election to retire pursuant to TWC’s defined benefit retirement plans or after reaching a specified age and years of service. Shares of TWC Class A common stock will generally be issued in connection with the vesting of an RSU. RSUs awarded to non-employee directors are not subject to vesting restrictions and the shares underlying the RSUs will be issued in connection with a director’s termination of service as a director. For the three months ended March 31, 2008, TWC granted approximately 2.8 million RSUs at a weighted-average grant date fair value of $27.51 per RSU.

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Equity-based Compensation Expense

     Compensation expense and the related tax benefit recognized for Time Warner and TWC equity-based compensation plans for the three months ended March 31, 2008 and 2007 is as follows (in millions):

		Three Months Ended March 31,
		2008				2007
Time Warner Equity Plans:
Compensation cost recognized:
Stock options		$	3			$	4
Restricted stock and restricted stock units			1				1
Total impact on Operating Income		$	4			$	5
Tax benefit recognized		$	2			$	2
TWC Equity Plan:
Compensation cost recognized:
Stock options		$	13			$	—
Restricted stock units			17				—
Total impact on Operating Income		$	30			$	—
Tax benefit recognized		$	12			$	—

5. PENSION COSTS

     The Company participates in various funded and unfunded noncontributory defined benefit pension plans administered by Time Warner. Pension benefits are determined based on formulas that reflect the employees’ years of service and compensation during their employment period and participation in the plans. TWC uses a December 31 measurement date for its plans. A summary of the components of the net periodic benefit costs is as follows (in millions):

		Three Months Ended March 31,
		2008				2007
Service cost		$	25			$	17
Interest cost			20				17
Expected return on plan assets			(25	)			(23	)
Amounts amortized			4				3
Net periodic benefit costs		$	24			$	14
Contributions		$	50			$	—

     After considering the funded status of the Company’s defined benefit pension plans, movements in the discount rate, investment performance and related tax consequences, the Company may choose to make contributions to its pension plans in any given year. As of March 31, 2008, there were no minimum required contributions for TWC’s funded plans. However, the Company anticipates making discretionary cash contributions of approximately $150 million to its funded defined benefit pension plans in 2008, subject to market conditions and other considerations, $50 million of which has been contributed as of March 31, 2008. For the Company’s unfunded plan, contributions will continue to be made to the extent benefits are paid. Benefit payments for the unfunded plan are expected to be $2 million in 2008.

6. MERGER-RELATED AND RESTRUCTURING COSTS

     Cumulatively, through December 31, 2007, the Company expensed non-capitalizable merger-related costs of $56 million associated with transactions with Adelphia Communications Corporation and Comcast, which had been fully paid as of December 31, 2007. For the three months ended March 31, 2007, the Company incurred costs of $4 million and made payments of $6 million associated with merger-related activities.

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

     The Company has incurred cumulative restructuring costs of $65 million as part of its broader plans to simplify its organizational structure and enhance its customer focus, and payments of $53 million have been made against this accrual as of March 31, 2008. Of the remaining $12 million liability, $6 million is classified as a current liability and $6 million is classified as a noncurrent liability in the consolidated balance sheet as of March 31, 2008. Amounts are expected to be paid through 2011.

     Information relating to the restructuring costs is as follows (in millions):

		Employee				Other
		Terminations				Exit Costs				Total
Remaining liability as of December 31, 2006		$	18			$	5			$	23
Accruals			7				6				13
Cash paid			(12	)			(8	)			(20	)
Remaining liability as of December 31, 2007			13				3				16
Cash paid			(3	)			(1	)			(4	)
Remaining liability as of March 31, 2008		$	10			$	2			$	12

7. COMMITMENTS AND CONTINGENCIES

Legal Proceedings

     On September 20, 2007, Brantley, et al. v. NBC Universal, Inc., et al. was filed in the U.S. District Court for the Central District of California against the Company and Time Warner. The complaint, which also names as defendants several other programming content providers (collectively, the “programmer defendants”) as well as other cable and satellite providers (collectively, the “distributor defendants”), alleges violations of Sections 1 and 2 of the Sherman Antitrust Act. Among other things, the complaint alleges coordination between and among the programmer defendants to sell and/or license programming on a “bundled” basis to the distributor defendants, who in turn purportedly offer that programming to subscribers in packaged tier, rather than on a per channel (or “à la carte”) basis. Plaintiffs, who seek to represent a purported nationwide class of cable and satellite subscribers, demand, among other things, unspecified treble monetary damages and an injunction to compel the offering of channels to subscribers on an “à la carte” basis. On December 3, 2007, plaintiffs filed an amended complaint in this action (the “First Amended Complaint”) that, among other things, dropped the Section 2 claims and all allegations of horizontal coordination. On December 21, 2007, the programmer defendants, including Time Warner, and the distributor defendants, including TWC, filed motions to dismiss the First Amended Complaint. On March 10, 2008, the court granted these motions, dismissing the First Amended Complaint with leave to amend. On March 20, 2008, plaintiffs filed a second amended complaint (the “Second Amended Complaint”) that modified certain aspects of the First Amended Complaint in an attempt to address the deficiencies noted by the court in its prior dismissal order. On April 22, 2008 the programmer defendants, including Time Warner, and the distributor defendants, including the Company, filed motions to dismiss the Second Amended Complaint. The Company intends to defend against this lawsuit vigorously.

     On June 22, 2005, Mecklenburg County filed suit against TWE-A/N in the General Court of Justice District Court Division, Mecklenburg County, North Carolina. Mecklenburg County, the franchisor in TWE-A/N’s Mecklenburg County cable system, alleges that TWE-A/N’s predecessor failed to construct an institutional network in 1981 and that TWE-A/N assumed that obligation upon the transfer of the franchise in 1995. Mecklenburg County is seeking compensatory damages and TWE-A/N’s release of certain video channels it is currently using on the cable system. On April 14, 2006, TWE-A/N filed a motion for summary judgment, which is pending. TWE-A/N intends to defend against this lawsuit vigorously.

     On June 16, 1998, plaintiffs in Andrew Parker and Eric DeBrauwere, et al. v. Time Warner Entertainment Company, L.P. and Time Warner Cable filed a purported nationwide class action in U.S. District Court for the Eastern District of New York claiming that TWE sold its subscribers’ personally identifiable information and failed to inform subscribers of their privacy rights in violation of the Cable

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Communications Policy Act of 1984 and common law. The plaintiffs seek damages and declaratory and injunctive relief. On August 6, 1998, TWE filed a motion to dismiss, which was denied on September 7, 1999. On December 8, 1999, TWE filed a motion to deny class certification, which was granted on January 9, 2001 with respect to monetary damages, but denied with respect to injunctive relief. On June 2, 2003, the U.S. Court of Appeals for the Second Circuit vacated the District Court’s decision denying class certification as a matter of law and remanded the case for further proceedings on class certification and other matters. On May 4, 2004, plaintiffs filed a motion for class certification, which the Company opposed. On October 25, 2005, the court granted preliminary approval of a class settlement arrangement on terms that were not material to the Company. A final settlement approval hearing was held on May 19, 2006, but final approval of that settlement was denied on January 26, 2007. The parties subsequently reached a revised settlement to resolve this action and submitted their agreement to the district court on April 2, 2008. The revised settlement is subject to preliminary and final approval by the district court; there can be no assurance that the settlement will receive either approval. Absent the issuance of all required court approvals of the revised settlement, the Company intends to defend against this lawsuit vigorously.

Certain Patent Litigation

     On September 1, 2006, Ronald A. Katz Technology Licensing, L.P. (“Katz”) filed a complaint in the U.S. District Court for the District of Delaware alleging that TWC and several other cable operators, among other defendants, infringe a number of patents purportedly relating to the Company’s customer call center operations and/or voicemail services. The plaintiff is seeking unspecified monetary damages as well as injunctive relief. On March 20, 2007, this case, together with other lawsuits filed by Katz, was made subject to a Multidistrict Litigation (“MDL”) Order transferring the case for pretrial proceedings to the U.S. District Court for the Central District of California. The Company intends to defend against this lawsuit vigorously.

     On July 14, 2006, Hybrid Patents Inc. filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that the Company and a number of other cable operators infringed a patent purportedly relating to high-speed data and IP-based telephony services. The plaintiff is seeking unspecified monetary damages as well as injunctive relief. The Company intends to defend against the claim vigorously.

     On June 1, 2006, Rembrandt Technologies, LP (“Rembrandt”) filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that the Company and a number of other cable operators infringed several patents purportedly related to a variety of technologies, including high-speed data and IP-based telephony services. In addition, on September 13, 2006, Rembrandt filed a complaint in the U.S. District Court for the Eastern District of Texas alleging that the Company infringes several patents purportedly related to “high-speed cable modem internet products and services.” In each of these cases, the plaintiff is seeking unspecified monetary damages as well as injunctive relief. On June 18, 2007, these cases, along with other lawsuits filed by Rembrandt, were made subject to an MDL Order transferring the case for pretrial proceedings to the U.S. District Court for the District of Delaware. The Company intends to defend against these lawsuits vigorously.

     On April 26, 2005, Acacia Media Technologies (“AMT”) filed suit against TWC in the U.S. District Court for the Southern District of New York alleging that TWC infringes several patents held by AMT. AMT has publicly taken the position that delivery of broadcast video (except live programming such as sporting events), pay-per-view, VOD and ad insertion services over cable systems infringe its patents. AMT has brought similar actions regarding the same patents against numerous other entities, and all of the previously pending litigations have been made the subject of an MDL Order consolidating the actions for pretrial activity in the U.S. District Court for the Northern District of California. On October 25, 2005, the TWC action was consolidated into the MDL proceedings. The plaintiff is seeking unspecified monetary damages as well as injunctive relief. The Company intends to defend against this lawsuit vigorously.

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

     From time to time, the Company receives notices from third parties claiming that it infringes their intellectual property rights. Claims of intellectual property infringement could require TWC to enter into royalty or licensing agreements on unfavorable terms, incur substantial monetary liability or be enjoined preliminarily or permanently from further use of the intellectual property in question. In addition, certain agreements entered may require the Company to indemnify the other party for certain third-party intellectual property infringement claims, which could increase the Company’s damages and its costs of defending against such claims. Even if the claims are without merit, defending against the claims can be time consuming and costly.

     As part of the TWE Restructuring, Time Warner agreed to indemnify the cable businesses of TWE from and against any and all liabilities relating to, arising out of or resulting from specified litigation matters brought against the TWE non-cable businesses. Although Time Warner has agreed to indemnify the cable businesses of TWE against such liabilities, TWE remains a named party in certain litigation matters.

     The costs and other effects of pending or future litigation, governmental investigations, legal and administrative cases and proceedings (whether civil or criminal), settlements, judgments and investigations, claims and changes in those matters (including those matters described above), and developments or assertions by or against the Company relating to intellectual property rights and intellectual property licenses, could have a material adverse effect on the Company’s business, financial condition and operating results.

8. ADDITIONAL FINANCIAL INFORMATION

Other Cash Flow Information

     Additional financial information with respect to cash (payments) and receipts is as follows (in millions):

		Three Months Ended March 31,
		2008				2007
Cash paid for interest		$	(215	)		$	(257	)
Interest income received			3				2
Cash paid for interest, net		$	(212	)		$	(255	)
Cash paid for income taxes		$	(1	)		$	(4	)
Cash refunds of income taxes			2				5
Cash refunds of income taxes, net		$	1			$	1

     Noncash financing activities for the three months ended March 31, 2007 included TWC’s 50% equity interest in the Houston Pool of TKCCP, valued at $880 million, delivered as the purchase price for Comcast’s 50% equity interest in the Kansas City Pool of TKCCP.

Additional information with respect to capital expenditures is as follows (in millions):

		Three Months Ended March 31,
		2008				2007
Cash paid for capital expenditures		$	(846	)		$	(720	)
Decrease in accruals for capital expenditures			85				104
Accrual basis capital expenditures		$	(761	)		$	(616	)

TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Interest Expense, Net

     Interest expense, net consists of (in millions):

		Three Months Ended March 31,
		2008				2007
Interest income		$	3			$	2
Interest expense			(202	)			(229	)
Total interest expense, net		$	(199	)		$	(227	)

Video, High-speed Data and Voice Direct Costs

     Direct costs associated with the video, high-speed data and voice services (included within costs of revenues) consist of (in millions):

		Three Months Ended March 31,
		2008				2007
Video		$	929			$	880
High-speed data			40				44
Voice			128				112
Total direct costs		$	1,097			$	1,036

     The direct costs associated with the video service include video programming costs. The direct costs associated with the high-speed data and voice services include network connectivity and certain other costs.

Other Current Liabilities

     Other current liabilities consist of (in millions):

		March 31,				December 31,
		2008				2007
Accrued compensation and benefits		$	245			$	310
Accrued franchise fees			149				169
Accrued sales and other taxes			161				127
Accrued insurance			139				133
Accrued interest			182				193
Accrued advertising and marketing support			85				71
Other accrued expenses			226				234
Total other current liabilities		$	1,187			$	1,237

TIME WARNER CABLE INC.

     Time Warner Entertainment Company, L.P. (“TWE”) and TW NY Cable Holding Inc. (“TW NY Holding” and, together with TWE, the “Guarantor Subsidiaries”) are subsidiaries of Time Warner Cable Inc. (the “Parent Company”). The Guarantor Subsidiaries have fully and unconditionally, jointly and severally, directly or indirectly, guaranteed the debt issued by the Parent Company in its 2007 registered exchange offer. The Parent Company owns 100% of the voting interests, directly or indirectly, of both TWE and TW NY Holding.

     The Securities and Exchange Commission’s rules require that condensed consolidating financial information be provided for subsidiaries that have guaranteed debt of a registrant issued in a public offering, where each such guarantee is full and unconditional and where the voting interests of the subsidiaries are 100% owned by the registrant. Set forth below are condensed consolidating financial statements presenting the financial position, results of operations, and cash flows of (i) the Parent Company, (ii) the Guarantor Subsidiaries on a combined basis (as such guarantees are joint and several), (iii) the direct and indirect non-guarantor subsidiaries of the Parent Company (the “Non-Guarantor Subsidiaries”) on a combined basis and (iv) the eliminations necessary to arrive at the information for Time Warner Cable Inc. on a consolidated basis.

     There are no legal or regulatory restrictions on the Parent Company’s ability to obtain funds from any of its subsidiaries through dividends, loans or advances.

     These condensed consolidating financial statements should be read in conjunction with the consolidated financial statements of Time Warner Cable Inc.

Basis of Presentation

     In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) the Parent Company’s interests in the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries and (ii) the Guarantor Subsidiaries’ interests in the Non-Guarantor Subsidiaries, where applicable, even though all such subsidiaries meet the requirements to be consolidated under U.S. generally accepted accounting principles. All intercompany balances and transactions between the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been eliminated, as shown in the column “Eliminations.”

     The accounting bases in all subsidiaries, including goodwill and identified intangible assets, have been allocated to the applicable subsidiaries. Interest income (expense) is determined based on third-party debt and the relevant intercompany amounts within the respective legal entity.

     Time Warner Cable Inc. is not a separate taxable entity for U.S. federal and various state income tax purposes and its results are included in the consolidated U.S. federal and certain state income tax returns of Time Warner Inc. In the condensed consolidating financial statements, tax expense has been presented based on each subsidiary’s legal entity basis. Deferred taxes of the Parent Company, the Guarantor Subsidiaries and the Non-Guarantor Subsidiaries have been presented based upon the temporary differences between the carrying amounts of the respective assets and liabilities of the applicable entities.

     Costs incurred by the Parent Company, the Guarantor Subsidiaries or the Non-Guarantor Subsidiaries are allocated to the various entities based on the relative usage of such expenses.

TIME WARNER CABLE INC.
SUPPLEMENTARY INFORMATION
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet
March 31, 2008
(Unaudited)

										Non-
		Parent				Guarantor				Guarantor								TWC
		Company				Subsidiaries				Subsidiaries				Eliminations				Consolidated
										(in millions)
ASSETS
Current assets
Cash and equivalents(a)		$	170			$	3,894			$	—			$	(3,838	)		$	226
Receivables, net			—				152				475				—				627
Receivables from affiliated parties			805				3				409				(1,213	)			4
Prepaid expenses and other current assets			7				56				64				—				127
Deferred income tax assets			80				41				41				(82	)			80
Total current assets			1,062				4,146				989				(5,133	)			1,064
Investments in and amounts due (to) from consolidated subsidiaries			51,183				23,319				10,139				(84,641	)			—
Investments			—				33				696				—				729
Property, plant and equipment, net			—				3,279				9,653				—				12,932
Intangible assets subject to amortization, net			—				6				658				—				664
Intangible assets not subject to amortization			—				8,150				30,780				—				38,930
Goodwill			4				3				2,099				—				2,106
Other assets			64				5				29				—				98
Total assets		$	52,313			$	38,941			$	55,043			$	(89,774	)		$	56,523
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	—			$	21			$	297			$	—			$	318
Deferred revenue and subscriber-related liabilities			—				62				118				—				180
Payables to affiliated parties			—				462				932				(1,213	)			181
Accrued programming expense			—				317				207				—				524
Other current liabilities			152				515				520				—				1,187
Total current liabilities			152				1,377				2,074				(1,213	)			2,390
Long-term debt			9,893				3,333				—				—				13,226
Mandatorily redeemable preferred membership units issued by a subsidiary			—				—				300				—				300
Mandatorily redeemable preferred equity issued by a subsidiary			—				2,400				—				(2,400	)			—
Deferred income tax liabilities, net			13,387				7,065				7,115				(14,135	)			13,432
Long-term payables to affiliated parties			3,838				443				8,703				(12,962	)			22
Other liabilities			46				155				204				—				405
Minority interests			—				3,271				—				(1,520	)			1,751
Shareholders’ equity
Due (to) from TWC and subsidiaries			—				559				(102	)			(457	)			—
Other shareholders’ equity			24,997				20,338				36,749				(57,087	)			24,997
Total shareholders’ equity			24,997				20,897				36,647				(57,544	)			24,997
Total liabilities and shareholders’ equity		$	52,313			$	38,941			$	55,043			$	(89,774	)		$	56,523

TIME WARNER CABLE INC.
SUPPLEMENTARY INFORMATION
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS—(Continued)

Consolidating Balance Sheet
December 31, 2007

										Non-
		Parent				Guarantor				Guarantor								TWC
		Company				Subsidiaries				Subsidiaries				Eliminations				Consolidated
										(in millions)
ASSETS
Current assets
Cash and equivalents(a)		$	185			$	3,458			$	—			$	(3,411	)		$	232
Receivables, net			—				171				572				—				743
Receivables from affiliated parties			719				2				359				(1,078	)			2
Prepaid expenses and other current assets			5				40				50				—				95
Deferred income tax assets			91				52				52				(104	)			91
Total current assets			1,000				3,723				1,033				(4,593	)			1,163
Investments in and amounts due (to) from consolidated subsidiaries			50,704				23,223				9,752				(83,679	)			—
Investments			13				38				684				—				735
Property, plant and equipment, net			—				3,268				9,605				—				12,873
Intangible assets subject to amortization, net			—				6				713				—				719
Intangible assets not subject to amortization			—				8,150				30,775				—				38,925
Goodwill			4				3				2,110				—				2,117
Other assets			35				4				29				—				68
Total assets		$	51,756			$	38,415			$	54,701			$	(88,272	)		$	56,600
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable		$	—			$	41			$	376			$	—			$	417
Deferred revenue and subscriber-related liabilities			—				59				105				—				164
Payables to affiliated parties			30				408				844				(1,078	)			204
Accrued programming expense			—				308				201				—				509
Other current liabilities			82				569				586				—				1,237
Current liabilities of discontinued operations			—				3				2				—				5
Total current liabilities			112				1,388				2,114				(1,078	)			2,536
Long-term debt			10,240				3,337				—				—				13,577
Mandatorily redeemable preferred membership units issued by a subsidiary			—				—				300				—				300
Mandatorily redeemable preferred equity issued by a subsidiary			—				2,400				—				(2,400	)			—
Deferred income tax liabilities, net			13,244				7,008				7,008				(13,969	)			13,291
Long-term payables to affiliated parties			3,411				416				8,704				(12,495	)			36
Other liabilities			43				180				207				—				430
Minority interests			—				3,116				—				(1,392	)			1,724
Shareholders’ equity
Due (to) from TWC and subsidiaries			—				450				(350	)			(100	)			—
Other shareholders’ equity			24,706				20,120				36,718				(56,838	)			24,706
Total shareholders’ equity			24,706				20,570				36,368				(56,938	)			24,706
Total liabilities and shareholders’ equity		$	51,756			$	38,415			$	54,701			$	(88,272	)		$	56,600