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TIME WARNER CABLE INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
common stock and participating security according to dividends declared and participation rights in undistributed earnings.
Diluted net income 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 attributable to TWC common shareholders per basic and diluted
common share (in millions, except per share data):
Year Ended December 31,
2011 2010 2009
Net income attributable to TWC shareholders ........................... $ 1,665 $ 1,308 $ 1,070
Less: Net income allocated to participating securities(a) .................... (11) (9) —
Net income attributable to TWC common shareholders ................... $ 1,654 $ 1,299 $ 1,070
Average common shares outstanding:
Basic ........................................................... 329.7 354.2 349.0
Dilutive effect of nonparticipating equity awards ........................ 2.6 2.3 0.6
Dilutive effect of participating equity awards(a) .......................... 3.0 3.0 1.3
Diluted ......................................................... 335.3 359.5 350.9
Net income per common share attributable to TWC common shareholders:
Basic ........................................................... $ 5.02 $ 3.67 $ 3.07
Diluted ......................................................... $ 4.97 $ 3.64 $ 3.05
(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.
Diluted net income per common share attributable to TWC common shareholders for the year ended December 31, 2011
and 2009 excludes 2.2 million and 6.8 million common shares, respectively, that may be issued under the Company’s equity-
based compensation plans because they do not have a dilutive effect. For the year ended December 31, 2010 antidilutive
common shares related to equity-based compensation plans were insignificant.
5. SEPARATION FROM TIME WARNER, RECAPITALIZATION AND TWC REVERSE STOCK SPLIT
On March 12, 2009, TWC’s separation from Time Warner (the “Separation”) 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 Cable Holding Inc. (“TW NY”), and Time Warner and its subsidiaries,
Warner Communications Inc. (“WCI”), Historic TW Inc. (“Historic TW”) and American Television and Communications
Corporation. 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 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”). The
TW NY Exchange, the Special Dividend, the Recapitalization, the Separation and the Spin-Off Dividend 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.
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