Time Warner Cable 2008 Annual Report Download - page 132

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Time Warner Stock Options
The following table summarizes information about Time Warner stock options held by TWC employees that
were outstanding as of December 31, 2008:
Number
of Options
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Life
Aggregate
Intrinsic
Value
(in thousands) (in years) (in thousands)
Outstanding as of December 31, 2007 ........... 53,033 $ 27.19
Transferred
(a)
............................. 334 14.92
Exercised ................................ (472) 10.43
Forfeited or expired ........................ (3,901) 27.38
Outstanding as of December 31, 2008 ........... 48,994 27.39 3.92 $ —
Exercisable as of December 31, 2008 ........... 43,795 28.56 3.56 $ —
(a)
Transferred amounts represent outstanding Time Warner stock options held by employees of Time Warner who transferred to TWC during
the year, net of Time Warner stock options held by employees of TWC who transferred to Time Warner during the year.
As of December 31, 2008, the number, weighted-average exercise price, aggregate intrinsic value and
weighted-average remaining contractual term of Time Warner stock options vested and expected to vest approx-
imate amounts for options outstanding. Total unrecognized compensation cost related to unvested Time Warner
stock options as of December 31, 2008, without taking into account expected forfeitures, is $8 million and is
expected to be recognized over a weighted-average period of one year.
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 tax) in 2006. The total intrinsic value of Time Warner stock options exercised during the
year was $2 million in 2008, $24 million in 2007 and $16 million in 2006. The tax benefits realized from Time
Warner stock options exercised during the year were $1 million in 2008, $10 million in 2007 and $6 million in 2006.
Upon exercise of Time Warner stock 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 Time Warner stock
options. This liability will increase or decrease depending on the market price of Time Warner common stock and
the number of Time Warner stock options held by TWC employees. This liability was $0 and $36 million as of
December 31, 2008 and 2007, respectively, and is included in long-term payables to affiliated parties in the
consolidated balance sheet. TWC reimbursed Time Warner $2 million in 2008, $24 million in 2007 and $16 million
in 2006 in connection with the exercise of Time Warner stock options.
122
TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)