Time Magazine 2009 Annual Report Download - page 106

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indentures governing the publicly traded debt securities of the Company and its subsidiaries other than the indenture
entered into in November 2006 (other than the 2006 Indenture, collectively, the “Indentures”). Completion of the
Consent Solicitation resulted in the adoption on April 16, 2009 of certain amendments to each Indenture that
provide that certain restrictive covenants will not apply (subject to the concurrent or prior issuance of the guarantee
by HBO discussed below) to a conveyance or transfer by Historic AOL LLC of its properties and assets substantially
as an entirety, unless such conveyance or transfer constitutes a conveyance or transfer of the properties and assets of
the issuer and the guarantors under the relevant Indenture and their respective subsidiaries, taken as a whole,
substantially as an entirety. In connection with the AOL Separation, on December 3, 2009, HBO issued a guarantee
of the obligations of Historic TW (including in its capacity as successor to Time Warner Companies, Inc.), whether
as issuer or guarantor, under the Indentures and the Securities.
Capital Leases
The Company has entered into various leases primarily related to network equipment that qualify as capital
lease obligations. As a result, the present value of the remaining future minimum lease payments is recorded as a
capitalized lease asset and related capital lease obligation in the consolidated balance sheet. Assets recorded under
capital lease obligations totaled $183 million and $165 million as of December 31, 2009 and 2008, respectively.
Related accumulated amortization totaled $75 million and $52 million as of December 31, 2009 and 2008,
respectively.
Future minimum capital lease payments at December 31, 2009 are as follows (millions):
2010 ................................................................. $ 21
2011 ................................................................. 20
2012 ................................................................. 18
2013 ................................................................. 18
2014 ................................................................. 15
Thereafter ............................................................. 57
Total ................................................................. 149
Amount representing interest ............................................... (35)
Present value of minimum lease payments ..................................... 114
Current portion ......................................................... (16)
Total long-term portion . . . ................................................ $ 98
Accounts Receivable Securitization Facilities
Time Warner has two accounts receivable securitization facilities that provide for the accelerated receipt of up
to an aggregate of $805 million of cash on certain available short-term home video and network programming
distribution trade accounts receivable. At December 31, 2009, these facilities were fully utilized. In connection with
each of these securitization facilities, subsidiaries of the Company (each a “transferor”) sell, on a revolving and
nonrecourse basis, their accounts receivable meeting specific criteria (“Pooled Receivables”) to a wholly owned
special purpose entity (“SPE”). This sale is designed such that the possibility that the transferor or its creditors could
reclaim the assets is remote, even in bankruptcy. The SPE then transfers a percentage interest in these receivables to
third-party financial institutions or commercial paper conduits sponsored by financial institutions. These
securitization transactions are accounted for as sales because the Company has relinquished control of the
securitized receivables. Accordingly, accounts receivable sold to the SPEs under these facilities are excluded
from receivables in the consolidated balance sheet. The Company is not the primary beneficiary with regard to these
financial institutions or commercial paper conduits and, accordingly, does not consolidate their operations.
94
TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)