Time Magazine 2009 Annual Report Download - page 108

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have a controlling financial interest and accordingly does not consolidate these SPEs. In addition, the Company
does not guarantee and is not otherwise responsible for the equity and debt in these SPEs and does not participate in
the profits or losses of these SPEs. The Company accounts for these arrangements based on their substance. That is,
the Company records the costs of producing the films as an asset and records the net benefit received from the
investors as a reduction of film costs resulting in lower film cost amortization for the films involved in the
arrangement. At December 31, 2009, such SPEs were capitalized with approximately $3.3 billion of debt and equity
from the third-party investors. These transactions resulted in reductions of film cost amortization totaling
$14 million, $43 million and $34 million during the years ended December 31, 2009, 2008 and 2007, respectively.
8. INCOME TAXES
Domestic and foreign income before income taxes, discontinued operations and cumulative effect of
accounting change is as follows (millions):
2009 2008 2007
(recast) (recast)
Years Ended December 31,
Domestic ........................................ $ 3,281 $ (4,622) $ 2,551
Foreign.......................................... 2 225 195
Total .......................................... $ 3,283 $ (4,397) $ 2,746
Current and deferred income taxes (tax benefits) provided on income from continuing operations are as follows
(millions):
2009 2008 2007
Years Ended December 31,
(recast) (recast)
Federal:
Current ........................................... $ 413 $ (72) $ (581)
Deferred .......................................... 461 373 1,187
Foreign:
Current
(a)
.......................................... 389 314 216
Deferred .......................................... (84) (30) (6)
State and Local:
Current ........................................... 51 43 (72)
Deferred .......................................... (36) 64 115
Total ............................................. $ 1,194 $ 692 $ 859
(a)
Includes foreign withholding taxes of $263 million in 2009, $205 million in 2008 and $148 million in 2007.
96
TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)