Time Warner Cable 2010 Annual Report Download - page 96

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Diluted net loss per common share attributable to TWC common shareholders for 2008 excludes 0.2 million
common shares issuable under the Company’s stock compensation plans because they did not have a dilutive effect due to
the Company’s loss from continuing operations.
5. SEPARATION FROM TIME WARNER, RECAPITALIZATION AND TWC REVERSE STOCK SPLIT
On March 12, 2009, TWC’s separation from Time Warner was completed pursuant to a Separation Agreement dated
as of May 20, 2008 (the “Separation Agreement”) between TWC and its subsidiaries, Time Warner Entertainment
Company, L.P. (“TWE”) and TW NY, and Time Warner and its subsidiaries, Warner Communications Inc. (“WCI”),
Historic TW Inc. (“Historic TW”) and American Television and Communications Corporation (“ATC”). In accordance
with the Separation Agreement, on February 25, 2009, Historic TW transferred its 12.43% non-voting common stock
interest in TW NY to TWC in exchange for 26.7 million newly issued shares (after giving effect to the TWC Reverse
Stock Split discussed below) of TWC’s Class A common stock (the “TW NY Exchange”). On March 12, 2009, TWC paid
a special cash dividend of $30.81 per share (after giving effect to the TWC Reverse Stock Split), aggregating
$10.856 billion, to holders of record on March 11, 2009 of TWC’s outstanding Class A common stock and Class B
common stock (the “Special Dividend”). Following the payment of the Special Dividend, each outstanding share of
TWC Class A common stock and TWC Class B common stock was automatically converted (the “Recapitalization”) into
one share of common stock, par value $0.01 per share (the “TWC Common Stock”). TWC’s separation from Time Warner
(the “Separation”) was effected as a pro rata dividend of all shares of TWC Common Stock held by Time Warner to
holders of record of Time Warner’s common stock (the “Spin-Off Dividend” or the “Distribution”). The TW NY
Exchange, the Special Dividend, the Recapitalization, the Separation and the Distribution collectively are referred to as
the “Separation Transactions.”
In connection with the Separation Transactions, on March 12, 2009, the Company implemented a reverse stock split
at a 1-for-3 ratio (the “TWC Reverse Stock Split”), effective immediately after the Recapitalization. The shares of TWC
Common Stock distributed in the Spin-Off Dividend reflected both the Recapitalization and the TWC Reverse Stock
Split.
6. NAVISITE ACQUISITION
On February 1, 2011, TWC entered into an agreement to acquire NaviSite, Inc. (“NaviSite”) for $5.50 per share of
NaviSite common stock in cash, or a total equity value of approximately $230 million. As of February 1, 2011, NaviSite
had approximately $50 million of debt and approximately $35 million of preferred equity. NaviSite provides enterprise-
class hosting, managed application, messaging and cloud services. NaviSite common stock is listed on the NASDAQ
Capital Market. The transaction, which is subject to NaviSite stockholder approval, certain regulatory approvals and
customary closing conditions, is expected to close in the second quarter of 2011. On February 8, 2011, a lawsuit was filed
on behalf of a purported class of NaviSite stockholders against NaviSite, certain of its officers and directors and TWC
alleging breaches of fiduciary duty and that the consideration to be paid in connection with the transaction is inadequate.
The lawsuit seeks to enjoin the transaction and monetary damages. The Company intends to defend against this lawsuit
vigorously.
84
TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)