Time Warner Cable 2006 Annual Report Download - page 139

As of July 31, 2006, TWC increased its common equity ownership in TWE from 94.3% to 100%. Net income
for financial reporting purposes of TWE is allocated to the partners in accordance with the partners’ common
ownership interests. Income for tax purposes is allocated in accordance with the partnership agreement and related
tax law. As a result, the allocation of taxable income to the partners differs from the allocation of net income for
financial reporting purposes. In addition, pursuant to the partnership agreement, TWE makes tax distributions based
upon the taxable income of the partnership. The payments are made to each partner in accordance with their
common ownership interest.
11. EMPLOYEE BENEFIT PLANS
The Company participates in various funded and unfunded non-contributory defined benefit pension plans
administered by Time Warner (the “Pension Plans”) and the TWC Savings Plan (the “401K Plan”), a defined pre-tax
contribution plan.
Benefits under the Pension Plans for all employees are determined based on formulas that reflect employees’
years of service and compensation levels during their employment period and participation in the plans. Former
Adelphia and Comcast employees that became TWC employees in connection with the Transactions will not
receive credit for their years of employment by Adelphia or Comcast and are subject to a one-year waiting period
before becoming eligible to participate in the Pension Plans. The Pension Plans’ assets are held in a master trust with
plan assets of another Time Warner defined benefit pension plan (the “Master Trust”). Time Warner’s common
stock represents approximately 3% of total defined benefit pension plan assets held in the Master Trust at both
December 31, 2006 and 2005. TWC uses a December 31 measurement date for the majority of its plans. A summary
of activity for the Pension Plans is as follows (in millions):
2006 2005
As of December 31,
Change in Benefit Obligations:
Projected benefit obligation, beginning of year ......................... $ 937 $781
Service cost ................................................. 63 49
Interest cost ................................................. 58 51
Actuarial gain (loss) ........................................... (4) 64
Benefits paid ................................................ (16) (12)
Net periodic benefit costs from discontinued operations ................. 4 4
Projected benefit obligation, end of year .............................. $1,042 $937
Accumulated benefit obligation .................................... $ 867 $784
Change in Plan Assets:
Fair value of plan assets, beginning of year............................ $ 927 $802
Actual return on plan assets ..................................... 130 46
Employer contributions ........................................ 101 91
Benefits paid ................................................ (16) (12)
Fair value of plan assets, end of year ................................ $1,142 $927
Funded Status:
Fair value of plan assets, end of year ................................ $1,142 $927
Projected benefit obligation, end of year .............................. 1,042 937
Funded status ................................................. 100 (10)
Unrecognized actuarial loss ....................................... — 306
Net amount recognized .......................................... $ 100 $296
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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)