Time Magazine 2009 Annual Report Download - page 77

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Description of Business
Time Warner Inc. (“Time Warner” or the “Company”) is a leading media and entertainment company, whose
businesses include television networks, filmed entertainment and publishing. Time Warner classifies its operations
into three reportable segments: Networks: consisting principally of cable television networks that provide
programming; Filmed Entertainment: consisting principally of feature film, television and home video
production and distribution; and Publishing: consisting principally of magazine publishing. Financial
information for Time Warner’s various reportable segments is presented in Note 14.
Changes in Basis of Presentation
The 2008 and 2007 financial information has been recast so that the basis of presentation is consistent with that
of the 2009 financial information. This recast reflects (i) the financial condition and results of operations of Time
Warner Cable Inc. (“TWC”) and AOL Inc. (“AOL”) as discontinued operations for all periods presented, (ii) the
adoption of recent accounting guidance pertaining to noncontrolling interests, (iii) the adoption of recent
accounting guidance pertaining to participating securities and (iv) the 1-for-3 reverse stock split of the
Company’s common stock that became effective on March 27, 2009.
AOL Separation from Time Warner
On July 8, 2009, the Company repurchased Google Inc.’s (“Google”) 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. After repurchasing this stake, Time Warner
owned 100% of AOL.
On December 9, 2009 (the “Distribution Date”), the Company disposed of all of its shares of AOL common
stock. The disposition was made pursuant to a separation and distribution agreement entered into on November 16,
2009 by Time Warner and AOL for the purpose of legally and structurally separating AOL from Time Warner (the
“AOL Separation”). The AOL Separation was effected as a pro rata dividend of all shares of AOL common stock
held by Time Warner in a spin-off to Time Warner stockholders.
With the completion of the AOL Separation, the Company disposed of its AOL segment in its entirety.
Accordingly, the Company has presented the financial condition and results of operations of its former AOL
segment as discontinued operations in the consolidated financial statements for all periods presented. For a
summary of discontinued operations, see Note 3.
TWC Separation from Time Warner
On March 12, 2009 (the “Distribution Record Date”), the Company disposed of all of its shares of TWC
common stock. The disposition was made pursuant to a separation agreement entered into on May 20, 2008, among
Time Warner, TWC and certain of their subsidiaries (the “Separation Agreement”) for the purpose of legally and
structurally separating TWC from Time Warner (the “TWC Separation”). The TWC Separation was effected as a
pro rata dividend of all shares of TWC common stock held by Time Warner in a spin-off to Time Warner
stockholders.
Prior to the Distribution Record Date, on March 12, 2009, TWC, in accordance with the terms of the Separation
Agreement, paid a 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”), which resulted in the receipt by Time Warner of $9.253 billion.
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