Time Warner Cable 2006 Annual Report Download - page 144

the agreements were executed. Under this arrangement, the subsidiary makes periodic payments to TWC that are
classified a reduction of programming costs in the accompanying consolidated statement of operations. Payments
received and accrued under this agreement totaled approximately $36 million, $30 million and $15 million in 2006,
2005 and 2004, respectively.
13. SHAREHOLDERS’ EQUITY
TWC is authorized to issue up to 20 billion shares of Class A common stock, par value $0.01 per share, and
5 billion shares of Class B common stock, par value $0.01 per share. As of December 31, 2006, 902 million shares of
Class A common stock and 75 million shares of Class B common stock were issued and outstanding. TWC has also
authorized 1.0 billion shares of preferred stock, par value $0.01 per share; however, no preferred shares have been
issued, nor does the Company have any current plans to issue any preferred shares.
Prior to the closing of the Transactions, Comcast held 179 million shares of TWC’s Class A common stock, of
which 43 million shares were classified as mandatorily redeemable as a result of an agreement with Comcast entered
into in 2004 that under certain circumstances would have required TWC to redeem such shares. As a result of the
closing of the Redemptions, the requirement terminated and such shares were reclassified to shareholders’ equity
before ultimately being redeemed on July 31, 2006, in connection with the TWC Redemption discussed below.
On July 31, 2006, in connection with the TWC Redemption, Comcast’s 17.9% interest in TWC’s outstanding
Class A common stock was redeemed, and in connection with the Adelphia Acquisition, shares representing 17.3%
of TWC’s outstanding Class A common stock were issued to Adelphia for the assets TWC acquired, both of which
are discussed more fully in Note 5.
During 2006, immediately after the closing of the Redemptions but prior to the closing of the Adelphia
Acquisition, TWC paid a stock dividend to holders of record of TWC’s Class A and Class B common stock of
999,999 shares of Class A or Class B common stock, respectively, per share of Class A or Class B common stock
held at that time. All prior period common share and related per common share information has been recast to
reflect the effect of the stock dividend.
Each share of Class A common stock votes as a single class with respect to the election of Class A directors,
which are required to represent not less than one-sixth of the Company’s directors and not more than one-fifth of the
Company’s directors. Each share of the Company’s Class B common stock votes as a single class with respect to the
election of Class B directors, which are required to represent not less than four-fifths of the Company’s directors.
Each share of Class B common stock issued and outstanding generally has ten votes on any matter submitted to a
vote of the stockholders, and each share of Class A common stock issued and outstanding has one vote on any matter
submitted to a vote of stockholders. Except for the voting rights characteristics described above, there are no
differences between the Class A and Class B common stock. The Class A common stock and the Class B common
stock will generally vote together as a single class on all matters submitted to a vote of the stockholders, except with
respect to the election of directors. The Class B common stock is not convertible into the Company’s Class A
common stock. As a result of its shareholdings, Time Warner has the ability to cause the election of all Class A and
Class B directors.
As of December 31, 2006, Time Warner holds an 84.0% economic interest TWC (representing a 90.6% voting
interest), through ownership of 82.7% of TWC’s Class A common stock and all of the outstanding shares of TWC’s
Class B common stock.
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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)