Time Magazine 2009 Annual Report Download - page 56

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As previously noted, the Company recognized legal reserves as well as legal and other professional fees related
to the defense of various securities lawsuits, totaling $21 million in 2008 and $180 million in 2007. In addition, the
Company recognized related insurance recoveries of $9 million in 2007.
The 2008 and 2007 results included $12 million and $10 million of restructuring costs, respectively, due
primarily to involuntary employee terminations as a result of the Company’s cost savings initiatives at the Corporate
segment. These initiatives resulted in annual savings of more than $50 million.
Excluding the items noted above, Operating Loss before Depreciation and Amortization and Operating Loss
decreased due primarily to lower corporate costs, related primarily to the cost savings initiatives.
FINANCIAL CONDITION AND LIQUIDITY
Management believes that cash generated by or available to the Company should be sufficient to fund its capital
and liquidity needs for the foreseeable future, including quarterly dividend payments and the remaining $3 billion
common stock repurchase program. Time Warner’s sources of cash include cash provided by operations, cash and
equivalents on hand, available borrowing capacity under its committed credit facilities and commercial paper
program and access to capital markets. Time Warner’s unused committed capacity at December 31, 2009 was
$11.731 billion, including $4.800 billion of cash and equivalents.
As part of the TWC Separation, the Company received $9.253 billion on March 12, 2009 as its portion of the
payment by TWC of the special cash dividend of $10.27 per share to all holders of TWC Class A Common Stock
and TWC Class B Common Stock as of the close of business on March 11, 2009 (aggregating $10.856 billion) (the
“Special Dividend”).
In late January 2009, Google Inc. (“Google”) exercised its right to request that AOL register Google’s 5%
equity interest in AOL for sale in an initial public offering. Time Warner exercised its right to purchase Google’s
equity interest for cash based on the appraised fair market value of the equity interest in lieu of conducting an initial
public offering. On July 8, 2009, the Company repurchased Google’s 5% interest in AOL for $283 million in cash,
which amount included a payment in respect of Google’s pro rata share of cash distributions to Time Warner by
AOL attributable to the period of Google’s investment in AOL.
Current Financial Condition
At December 31, 2009, Time Warner had $15.416 billion of debt, $4.800 billion of cash and equivalents (net
debt of $10.616 billion, defined as total debt less cash and equivalents) and $33.383 billion of shareholders’ equity,
compared to $21.896 billion of debt, $1.099 billion of cash and equivalents (net debt of $20.797 billion, defined as
total debt less cash and equivalents) and $42.288 billion of shareholders’ equity at December 31, 2008.
44
TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)