Time Warner Cable 2010 Annual Report Download - page 95

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Legal Contingencies
The Company is subject to legal, regulatory and other proceedings and claims that arise in the ordinary course of
business. The Company records an estimated liability for those proceedings and claims arising in the ordinary course of
business when the loss from such proceedings and claims becomes probable and reasonably estimable. The Company
reviews outstanding claims with internal and external counsel to assess the probability and the estimates of loss. The
Company reassesses the risk of loss as new information becomes available and adjusts liabilities as appropriate. The
actual cost of resolving a claim may be substantially different from the amount of the liability recorded. Differences
between the estimated and actual amounts determined upon ultimate resolution, individually or in the aggregate, are not
expected to have a material adverse effect on the Company’s consolidated financial position but could possibly be
material to the Company’s consolidated results of operations or cash flow for any one period.
Segments
Public companies are required to disclose certain information about their reportable operating segments. Operating
segments are defined as significant components of an enterprise for which separate financial information is available and
is evaluated on a regular basis by the chief operating decision makers in deciding how to allocate resources to an
individual segment and in assessing performance of the segment. The Company has determined that it has only one
reportable segment.
4. EARNINGS PER SHARE
Basic net income (loss) attributable to TWC common shareholders is determined using the two-class method and is
computed by dividing net income (loss) attributable to TWC common shareholders by the weighted average of common
shares outstanding during the period. The two-class method is an earnings allocation formula that determines income
(loss) per share for each class of common stock and participating security according to dividends declared and
participation rights in undistributed earnings. Diluted net income (loss) attributable to TWC common shareholders
reflects the more dilutive earnings per share amount calculated using the treasury stock method or the two-class method.
Set forth below is a reconciliation of net income (loss) attributable to TWC common shareholders per basic and
diluted common share (in millions, except per share data):
2010 2009 2008
Year Ended December 31,
Net income (loss) attributable to TWC shareholders ................ $ 1,308 $ 1,070 $ (7,344)
Less: Net income allocated to participating securities
(a)
............. (9) — —
Net income (loss) attributable to TWC common shareholders ......... $ 1,299 $ 1,070 $ (7,344)
Average common shares outstanding:
Basic .................................................. 354.2 349.0 325.7
Dilutive effect of non-participating equity awards ................ 2.3 0.6 —
Diluted (two-class method) .................................. 356.5 349.6 325.7
Dilutive effect of participating equity awards
(a)
.................. 3.0 1.3 —
Diluted (treasury stock method) ............................... 359.5 350.9 325.7
Net income (loss) per common share attributable to TWC common
shareholders:
Basic ................................................ $ 3.67 $ 3.07 $ (22.55)
Diluted ............................................... $ 3.64 $ 3.05 $ (22.55)
(a)
The Company’s restricted stock units granted to employees and non-employee directors are considered participating securities with respect to
regular quarterly cash dividends.
83
TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)