Time Warner Cable 2006 Annual Report Download - page 123

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The following table summarizes information about Time Warner stock options awarded to TWC employees
that are outstanding at December 31, 2006:
Options
Number
of Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
Aggregate
Intrinsic
Value
(in thousands) (in years) (in thousands)
Outstanding at December 31, 2005 ........ 53,952 $27.22
Granted ............................ 8,872 17.40
Exercised ........................... (2,779) 12.86
Forfeited or expired ................... (1,963) 26.98
Outstanding at December 31, 2006 ........ 58,082 26.38 6.01 $196,200
Exercisable at December 31, 2006 ........ 38,169 31.38 4.88 $ 94,886
At December 31, 2006, the number, weighted-average exercise price, aggregate intrinsic value and weighted-
average remaining contractual term of options vested and expected to vest approximate amounts for options
outstanding. Total unrecognized compensation cost related to unvested stock option awards at December 31, 2006,
prior to the consideration of expected forfeitures is approximately $39 million and is expected to be recognized over
a weighted-average period of 2 years.
The weighted-average fair value of a Time Warner stock option granted to TWC employees during the year
was $4.47 ($2.68 net of taxes) in 2006 and $5.11 ($3.07 net of taxes) in both 2005 and 2004. The total intrinsic value
of options exercised during the years ended December 31, 2006, 2005 and 2004 was approximately $16 million,
$7 million and $8 million, respectively. The tax benefits realized from stock options exercised during the years
ended December 31, 2006, 2005 and 2004 were approximately $6 million, $3 million and $3 million, respectively.
Upon exercise of Time Warner options, TWC is obligated to reimburse Time Warner for the excess of the
market price of the stock on the day of exercise over the option price. TWC records a stock option distribution
liability and a corresponding adjustment to shareholders’ equity with respect to unexercised options. This liability
will increase or decrease depending on the market price of Time Warner common stock and the number of options
held by TWC employees. This liability was $137 million and $55 million as of December 31, 2006 and 2005,
respectively, and is included in long-term payables to affiliated parties in the accompanying consolidated balance
sheet. TWC reimbursed Time Warner approximately $16 million, $7 million and $8 million during the years ended
December 31, 2006, 2005 and 2004, respectively, in connection with the exercise of Time Warner options.
Restricted Stock and Restricted Stock Unit Plans
The following table summarizes information about Time Warner restricted stock and RSUs granted to TWC
employees that are unvested at December 31, 2006:
Restricted Stock and Restricted Stock Units
Number of
Shares/Units
Weighted-
Average
Grant Date
Fair Value
(in thousands)
Unvested at December 31, 2005 ............................... 332 $13.32
Granted ................................................. 431 17.40
Vested .................................................. (106) 10.72
Forfeited ................................................ — —
Unvested at December 31, 2006 ............................... 657 16.42
118
TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)