Time Magazine 2010 Annual Report Download - page 40

Revenues. The components of revenues are as follows (millions):
2010 2009 % Change
Years Ended December 31,
Subscription ........................................ $ 9,028 $ 8,445 7%
Advertising......................................... 5,682 5,161 10%
Content ........................................... 11,565 11,074 4%
Other ............................................. 613 708 (13%)
Total revenues ...................................... $ 26,888 $ 25,388 6%
The increase in Subscription revenues for the year ended December 31, 2010 was primarily related to an
increase at the Networks segment. Advertising revenues increased for the year ended December 31, 2010 primarily
reflecting growth at the Networks and Publishing segments. The increase in Content revenues for the year ended
December 31, 2010 was due primarily to increases at the Filmed Entertainment and Networks segments.
Each of the revenue categories is discussed in greater detail by segment in “Business Segment Results.”
Costs of Revenues. For the years ended December 31, 2010 and 2009, costs of revenues totaled
$15.023 billion and $14.235 billion, respectively, and, as a percentage of revenues, were 56% for both years.
The segment variations are discussed in “Business Segment Results.”
Selling, General and Administrative Expenses. For the year ended December 31, 2010, selling, general and
administrative expenses increased 1% to $6.126 billion from $6.073 billion in 2009, primarily due to an increase at
the Networks segment, partially offset by a decrease at the Publishing segment. In addition, selling, general and
administrative expenses for the year ended December 31, 2010 included a $58 million reserve reversal at the
Networks segment in connection with the resolution of litigation relating to the Winter Sports Teams. The segment
variations are discussed in “Business Segment Results.”
Included in costs of revenues and selling, general and administrative expenses is depreciation expense, which
increased to $674 million in 2010 from $668 million in 2009.
Amortization Expense. Amortization expense decreased to $264 million in 2010 from $280 million in 2009.
Restructuring Costs. For the year ended December 31, 2010, the Company incurred restructuring costs of
$97 million primarily related to various employee terminations and other exit activities, consisting of $6 million at
the Networks segment, $30 million at the Filmed Entertainment segment and $61 million at the Publishing segment.
The total number of employees terminated across the segments in 2010 was approximately 500.
During the year ended December 31, 2009, the Company incurred restructuring costs of $212 million primarily
related to various employee terminations and other exit activities, including $8 million at the Networks segment,
$105 million at the Filmed Entertainment segment and $99 million at the Publishing segment. The total number of
employees terminated across the segments in 2009 was approximately 1,500.
Operating Income. Operating Income increased to $5.428 billion for the year ended December 31, 2010 from
$4.470 billion for the year ended December 31, 2009. Excluding the items previously noted under “Significant
Transactions and Other Items Affecting Comparability” totaling $28 million of income and $148 million of expense
for the years ended December 31, 2010 and 2009, respectively, Operating Income increased $782 million, primarily
reflecting increases at the Networks and Publishing segments. The segment variations are discussed under
“Business Segment Results.”
Interest Expense, Net. For the year ended December 31, 2010, interest expense, net, increased to
$1.178 billion from $1.166 billion for the year ended December 31, 2009 primarily due to the absence in 2010
of a prior year $43 million benefit in connection with the resolution of an international VAT matter and higher net
debt, partially offset by lower rates.
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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)