Time Magazine 2011 Annual Report Download

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For nearly
a century,
we’ve captured
the world’s
imagination
with powerful
stories …
Annual Report 2011

Table of contents

  • Page 1
    Annual Report 2011 For nearly a century, we've captured the world's imagination with powerful stories ...

  • Page 2
    that inform

  • Page 3
    and inspire.

  • Page 4
    Stories that delight and define generations.

  • Page 5
    Giving millions a voice and connecting billions.

  • Page 6
    We don't just embrace the future, we shape it.

  • Page 7
    With today's best storytellers. And tomorrow's. Wherever. Whenever. However.

  • Page 8
    And while the way people experience our stories may change,

  • Page 9
    one thing never will: our commitment to tell them.

  • Page 10
    Time Warner. A passion for stories, timely and timeless.

  • Page 11
    ..., when the Warner brothers made the first talking picture, The Jazz Singer, and Henry Luce and Briton Hadden invented the newsweekly by launching TIME. They were groundbreaking new forms of popular media - forever changing the stories we told and the ways we told them. Television, of course, would...

  • Page 12
    ...an art form, producing breathtaking and award-winning series such as Game of Thrones, Boardwalk Empire, and True Blood as well as films, mini-series, and documentaries such as Game Change, Mildred Pierce, and Paradise Lost 3: Purgatory. And for the 2011-2012 broadcast television season, Warner Bros...

  • Page 13
    ... who purchase a DVD with a digital cloud copy that is accessible on a wide range of devices. And at our publishing business it's what we call All Access, which allows consumers to enjoy their favorite magazines in print, on tablets, and online, all for one price. A year ago, all these initiatives...

  • Page 14
    ... Public Policy Olaf Olafsson Executive Vice President, International and Corporate Strategy Time Warner Senior Operating Executives Philip I. Kent Chairman and CEO, Turner Broadcasting System, Inc. Barry M. Meyer Chairman and CEO, Warner Bros. Entertainment Inc. Bill Nelson Chairman and CEO, Home...

  • Page 15
    ... of Equity ...Notes to Consolidated Financial Statements ...Management's Report on Internal Control Over Financial Reporting ...Reports of Independent Registered Public Accounting Firm ...Selected Financial Information ...Quarterly Financial Information ...Comparison of Cumulative Total Returns...

  • Page 16
    [THIS PAGE INTENTIONALLY LEFT BLANK] 2

  • Page 17
    ... and movies. Turner's news networks consist of CNN and HLN. The domestic television household numbers ("U.S. television households") provided below are as reported by Nielsen Media Research as of December 2011. In 2011, Turner continued to expand its online and mobile offerings for on demand viewing...

  • Page 18
    ... million U.S. television households as of December 2011. Cartoon Network offers original and syndicated series and movies for youth and families. For the 2011-2012 season, Cartoon Network's original series include Adventure Time, Ben 10: Ultimate Alien, Destroy Build Destroy, Dude, What Would Happen...

  • Page 19
    ... featured on the CNN network or CNN.com. Live streaming from the network is also available to authenticated subscribers online and on mobile devices. In addition, CNN operates CNNMoney.com and related mobile websites and apps in partnership with Time Inc.'s Money and Fortune magazines and CNNMexico...

  • Page 20
    ..., such as True Blood, Boardwalk Empire, Game of Thrones and Curb Your Enthusiasm, as well as movies, miniseries, boxing matches and sports news programs, comedy specials, family programming and documentaries. In 2011, Cinemax launched its first original primetime series, Strike Back. Home Box Office...

  • Page 21
    ... most new release titles, an UltraViolet digital copy), video on demand ("VOD") and electronic sell-through ("EST"). Warner Bros. generally releases newly produced films to brick and mortar retailers, by-mail and kiosk rental services 28 to 56 days following their release to other home entertainment...

  • Page 22
    ... of the leading entertainment news brands in the U.S. across online, TV and mobile platforms. WBTVG operates websites for many of its syndicated television properties, including The Ellen DeGeneres Show and Extra. Warner Home Video ("WHV"), a division of Warner Bros. Home Entertainment Inc. ("WBHE...

  • Page 23
    ... on advertising revenues, as measured by Publishers Information Bureau ("PIB"). In addition to publishing magazines, Time Inc. also operates a number of websites, as well as book publishing businesses, marketing services businesses and other marketing businesses. As of December 31, 2011, Time Inc...

  • Page 24
    ... single-copy issues and digital subscriptions of Time Inc.'s U.S. magazines for download on digital devices through Next Issue Media's digital storefront, which opened in 2011. In addition, print subscribers of Time Inc.'s U.S. magazines are able to access through Next Issue Media the tablet edition...

  • Page 25
    ... and tips on family and health, entertainment and recipes; housetohome.co.uk, a home inspiration and decorating resource; and NME.com, a contemporary music news and reviews website. In March 2011, IPC launched 25 mobile-optimized websites for some of its magazines and by the end of 2011 had over 35...

  • Page 26
    ...sold the school fundraising business, QSP, which offers fundraising programs that help schools and youth groups raise money through the sale of subscriptions to Time Inc.'s and other publishers' magazines, among other products. Available Information and Website The Company's annual report on Form 10...

  • Page 27
    ...changes in consumer behavior. The Company's businesses compete with each other and all other sources of entertainment, news and other information, including television, premium pay television services, films, the Internet, home video products, videogames, social networking sites, sports, print media...

  • Page 28
    ...of subscribers to the Networks segment's premium pay television services, (5) the Publishing segment's magazine circulation and (6) the number of unique visitors to the Company's websites. The underperformance of a film, particularly an "event" film (which typically has high production and marketing...

  • Page 29
    ... are increasing the number of media and entertainment choices available to consumers and may cause changes in consumer behavior that could negatively affect the attractiveness of the Company's offerings to advertisers. Advertising sales and rates are also dependent on audience measurement and they...

  • Page 30
    ... advantage of business opportunities, which could result in costly redesign efforts, discontinuance of certain product and service offerings or other competitive harm. The Internet Corporation for Assigned Names and Numbers plans to expand the Internet by accepting applications for unlimited generic...

  • Page 31
    ... relating to professional sports leagues for which the Networks segment has the rights to produce and telecast live games or events may preclude the Networks segment from telecasting scheduled games or events, which could have a negative impact on the Networks segment's subscription and advertising...

  • Page 32
    ... more of its content digitally, engages in more electronic transactions with consumers, outsources more of its information systems to third-party vendors and relies on more cloud-based information and technology systems, the related security risks will increase and the Company will need to expend...

  • Page 33
    ...further, or retail video service rates charged by affiliates continue to increase, subscribers may cancel their video service subscriptions, reduce the number of services they subscribe to or elect to subscribe to a lower-priced tier that may not include all of the segment's networks and premium pay...

  • Page 34
    ... in a decrease in subscription revenues, as well as a decrease in advertising revenues for the segment's advertising-supported networks. RISKS RELATING TO TIME WARNER'S FILMED ENTERTAINMENT BUSINESSES Sales of DVDs have been declining, which may adversely affect Warner Bros.' growth prospects and...

  • Page 35
    ... and rebates, currently offered in certain U.S. states and international territories (particularly the United Kingdom) are reduced or discontinued, Warner Bros.' capital requirements for production would increase. RISKS RELATING TO TIME WARNER'S PUBLISHING BUSINESS The Publishing segment's results...

  • Page 36
    ...uncertainty and changes in circumstances. Refer to "Risk Factors" in this 2011 Annual Report to Stockholders for a discussion of the risk factors applicable to the Company. • • • • • OVERVIEW Time Warner is a leading media and entertainment company whose major businesses encompass an...

  • Page 37
    ... from the sale of advertising. In 2011, Turner continued to expand its online and mobile offerings for on demand viewing of programs on its networks and live streaming of its CNN and HLN networks to authenticated subscribers. Turner has a multi-year arrangement with the National Basketball...

  • Page 38
    ...sale of advertising, magazine subscriptions and newsstand sales. In January 2012, the Publishing segment negotiated a binding sale and sold the school fundraising business, QSP, which offers fundraising programs that help schools and youth groups raise money through the sale of subscriptions to Time...

  • Page 39
    ... period as follows (millions): Year Ended December 31, 2011 2010 2009 Asset impairments ...Gain (loss) on operating assets ...Other ...Impact on Operating Income ...Investment gains (losses), net ...Amounts related to the separation of Time Warner Cable Inc...Costs related to the separation of AOL...

  • Page 40
    ... the year ended December 31, 2011, the Company recorded noncash impairments of $6 million at the Networks segment primarily related to a tradename impairment, $21 million at the Filmed Entertainment segment of which $12 million related to capitalized software costs and $17 million at the Publishing...

  • Page 41
    ... estimated fair value of Time Warner equity awards held by TWC employees. In addition, the Company incurred pretax direct transaction costs, primarily legal and professional fees, related to the separation of TWC of $6 million for the year ended December 31, 2009. Costs Related to the Separation of...

  • Page 42
    ... Networks segment, $41 million at the Filmed Entertainment segment, $18 million at the Publishing segment and $2 million at the Corporate segment. The total number of employees terminated across the segments in 2011 was approximately 1,200. For the year ended December 31, 2010, the Company incurred...

  • Page 43
    ... decline in interest expense due to lower average interest rates. Other Loss, Net. Other loss, net detail is shown in the table below (millions): Year Ended December 31, 2011 2010 Investment gains (losses), net ...Amounts related to the separation of TWC ...Premiums paid and transaction costs...

  • Page 44
    ... CONDITION - (Continued) Business Segment Results Networks. Revenues and Operating Income of the Networks segment for the years ended December 31, 2011 and 2010 are as follows (millions): Year Ended December 31, 2011 2010 % Change Revenues: Subscription ...Advertising ...Content ...Other ...Total...

  • Page 45
    ... Income of the Filmed Entertainment segment for the years ended December 31, 2011 and 2010 are as follows (millions): Year Ended December 31, 2011 2010 % Change Revenues: Subscription ...Advertising ...Content ...Other ...Total revenues ...Costs of revenues(a) ...Selling, general and administrative...

  • Page 46
    ... revenues for the years ended December 31, 2011 and 2010 are as follows (millions): Year Ended December 31, 2011 2010 % Change Theatrical product: Theatrical film ...Home video and electronic delivery ...Television licensing ...Consumer products and other ...Total theatrical product ...Television...

  • Page 47
    TIME WARNER INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - (Continued) The components of Costs of revenues for the Filmed Entertainment segment are as follows (millions): Year Ended December 31, 2011 2010 % Change Film costs ...Print and advertising ...

  • Page 48
    ... Operating Income of the Publishing segment for the years ended December 31, 2011 and 2010 are as follows (millions): Year Ended December 31, 2011 2010 % Change Revenues: Subscription ...Advertising ...Content ...Other ...Total revenues ...Costs of revenues(a) ...Selling, general and administrative...

  • Page 49
    ...its digital strategy and increases in production costs. In addition, the Company is anticipating continued softness in domestic magazine advertising and newsstand sales during the first quarter of 2012. Corporate. Operating Loss of the Corporate segment for the years ended December 31, 2011 and 2010...

  • Page 50
    ... 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...

  • Page 51
    .... MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - (Continued) Other Loss, Net. Other loss, net detail is shown in the table below (millions): Year Ended December 31, 2010 2009 Investment gains (losses), net ...Amounts related to the separation of TWC ...Costs...

  • Page 52
    ... CONDITION - (Continued) Business Segment Results Networks. Revenues and Operating Income of the Networks segment for the years ended December 31, 2010 and 2009 are as follows (millions): Year Ended December 31, 2010 2009 % Change Revenues: Subscription ...Advertising ...Content ...Other ...Total...

  • Page 53
    ... Income of the Filmed Entertainment segment for the years ended December 31, 2010 and 2009 are as follows (millions): Year Ended December 31, 2010 2009 % Change Revenues: Subscription ...Advertising ...Content ...Other ...Total revenues ...Costs of revenues(a) ...Selling, general and administrative...

  • Page 54
    ... increase in television product licensing fees for the year ended December 31, 2010 was due primarily to higher revenues from worldwide syndication. Television product revenues from home video and electronic delivery were essentially flat due to the timing and mix of product. Other content revenues...

  • Page 55
    TIME WARNER INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - (Continued) The components of Costs of revenues for the Filmed Entertainment segment are as follows (millions): Year Ended December 31, 2010 2009 % Change Film costs ...Print and advertising ...

  • Page 56
    ... Operating Income of the Publishing segment for the years ended December 31, 2010 and 2009 are as follows (millions): Year Ended December 31, 2010 2009 % Change Revenues: Subscription ...Advertising ...Content ...Other ...Total revenues ...Costs of revenues(a) ...Selling, general and administrative...

  • Page 57
    ... committed credit facilities and commercial paper program and access to capital markets. Time Warner's unused committed capacity at December 31, 2011 was $8.536 billion, which included $3.476 billion of Cash and equivalents. Current Financial Condition At December 31, 2011, Time Warner had $19.524...

  • Page 58
    ... negotiated transactions. The size and timing of these purchases are based on a number of factors, including price and business and market conditions. From January 1, 2011 through February 21, 2012, the Company repurchased 146 million shares of common stock for $5.008 billion pursuant to trading...

  • Page 59
    ... the year ended December 31, 2010 was primarily due to the Company's receipt of $9.253 billion on March 12, 2009 as its portion of the payment by TWC of 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...

  • Page 60
    ..., the Company paid $2.000 billion (plus accrued interest) for floating rate public debt that matured on November 13, 2009. Cash Flows from Discontinued Operations Details of Cash provided (used) by discontinued operations are as follows (millions): Year Ended December 31, 2011 2010 2009 Cash...

  • Page 61
    ... obligations totaling $23 million are due within the next twelve months. 2011 Debt Offerings Time Warner has a shelf registration statement filed with the SEC that allows it to offer and sell from time to time debt securities, preferred stock, common stock and warrants to purchase debt and equity...

  • Page 62
    ..., which support the commercial paper program. Additional Information The obligations of each of the borrowers under the Company's Revolving Credit Facilities and the obligations of Time Warner under the commercial paper program and the Company's outstanding public debt are directly or indirectly...

  • Page 63
    ... in nature involving certain of the Company's investees (Note 16). The table does not include the Company's reserve for uncertain tax positions and related accrued interest and penalties, which at December 31, 2011 totaled $2.509 billion, as the specific timing of any cash payments relating to...

  • Page 64
    ...at December 31, 2011 (millions): Purchase Obligations Total 2012 2013-2014 2015-2016 Thereafter Network programming ...Creative talent and employment agreements(b) ...Obligations to use certain printing facilities for the production of magazines ...Advertising, marketing and sponsorship obligations...

  • Page 65
    ... risk in the Company's businesses originates from sales of various products or services and is dispersed among many different counterparties. At December 31, 2011, no single customer had a receivable balance greater than 5% of total Receivables. The Company's exposure to customer credit risk is...

  • Page 66
    ... risk related to unremitted or forecasted royalties and license fees owed to Time Warner domestic companies for the sale or anticipated sale of U.S. copyrighted products abroad because such amounts may be adversely affected by changes in foreign currency exchange rates. Similarly, the Company enters...

  • Page 67
    TIME WARNER INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - (Continued) Equity Risk The Company is exposed to market risk as it relates to changes in the market value of its investments. The Company invests in equity instruments of public and private ...

  • Page 68
    ... related to its digital strategy and increases in production costs and (vi) anticipated continued softness in domestic magazine advertising and newsstand sales at the Publishing segment in the first quarter of 2012. The Company's forward-looking statements are based on management's current...

  • Page 69
    ... by the Company in this 2011 Annual Report to Stockholders speak only as of the date on which they are made. The Company is under no obligation to, and expressly disclaims any obligation to, update or alter its forward-looking statements, whether as a result of new information, subsequent events or...

  • Page 70
    ... Current liabilities Accounts payable and accrued liabilities ...Deferred revenue ...Debt due within one year ...Total current liabilities ...Long-term debt ...Deferred income taxes ...Deferred revenue ...Other noncurrent liabilities ...Commitments and Contingencies (Note 16) Equity Common stock...

  • Page 71
    TIME WARNER INC. CONSOLIDATED STATEMENT OF OPERATIONS Year Ended December 31, (millions, except per share amounts) 2011 2010 2009 Revenues: Subscription ...$ 9,523 Advertising ...6,116 Content ...12,635 Other ...700 Total revenues ...Costs of revenues ...Selling... share of common stock ...$ 28,974 ...

  • Page 72
    TIME WARNER INC. CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year Ended December 31, (millions) 2011 2010 2009 Net income ...Other comprehensive income, net of tax: Foreign currency translation adjustments ...Unrealized gains (losses) on securities: Unrealized gains (losses) occurring during the...

  • Page 73
    ... FLOWS Year Ended December 31, (millions) 2011 2010 2009 OPERATIONS Net income ...Less Discontinued operations, net of tax ...Net income from continuing operations ...Adjustments for noncash and nonoperating items: Depreciation and amortization ...Amortization of film and television costs ...Asset...

  • Page 74
    ...-In Treasury (Accumulated Capital Stock Deficit) Common Stock Total Noncontrolling Interests Total Equity BALANCE AT DECEMBER 31, 2008 ...Net income ...Other comprehensive income ...Cash dividends ...Common stock repurchases ...Time Warner Cable Inc. Special Dividend ...Time Warner Cable Inc...

  • Page 75
    ... 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...

  • Page 76
    ... on the part of management in its application. The development and selection of these critical accounting policies have been determined by Time Warner's management and the related disclosures have been reviewed with the Audit and Finance Committee of the Board of Directors of the Company. Due to the...

  • Page 77
    ...Networks segments primarily related to home entertainment products (e.g., DVD and Blu-ray disc sales) and $296 million and $405 million, respectively, at the Publishing segment for magazines and direct marketing sales. Allowance for Doubtful Accounts The Company monitors customer credit risk related...

  • Page 78
    ... for hedge accounting, changes in fair value are recognized immediately in earnings. See Note 7 for additional information regarding derivative instruments held by the Company and risk management strategies. Property, Plant and Equipment Property, plant and equipment are stated at cost. Additions to...

  • Page 79
    ... In evaluating the factors described above for available-for-sale securities, the Company presumes a decline in value to be other-than-temporary if the quoted market price of the security is 20% or more below the investment's cost basis for a period of six months or more (the "20% criterion") or the...

  • Page 80
    ... on the Company's most recent budgets and business plans and, when applicable, various growth rates are assumed for years beyond the current business plan period. Discount rate assumptions are based on an assessment of the risk inherent in the future cash flows of the respective reporting units. If...

  • Page 81
    ...had the fair values of each of the Company's reporting units been hypothetically lower by 20% as of December 31, 2011, the Time Inc. reporting unit book value would have exceeded fair value by approximately $400 million and the Warner Bros. reporting unit book value would have exceeded fair value by...

  • Page 82
    ... term of the option. The Company determines the expected dividend yield percentage by dividing the expected annual dividend by the market price of Time Warner common stock at the date of grant. For more information, see Note 12. Revenues and Costs Networks Subscription revenues are recognized as...

  • Page 83
    ... three years of such initial exhibition, through home video, electronic sell-through, video-on-demand, premium cable, basic cable and broadcast networks. Theatrical revenues are recognized as the films are exhibited. Revenues from home video sales are recognized at the later of the delivery date or...

  • Page 84
    ... precede the date the Company may bill the customers for these sales. Unbilled accounts receivable, which primarily relate to the distribution of television product at the Filmed Entertainment and Networks segments, totaled $2.975 billion and $2.339 billion at December 31, 2011 and December 31, 2010...

  • Page 85
    ...films, the star power of the lead actors and actresses, the rating and genre of the film, pre-release market research (including test market screenings) and the expected number of theaters in which the film will be released. Management updates such estimates based on information available during the...

  • Page 86
    ... company may retain final approval over the distribution, marketing, advertising and publicity for each film or videogame in all media, including the timing and extent of the releases, the pricing and packaging of packaged goods units and approval of all television licenses. The Filmed Entertainment...

  • Page 87
    ... the year ended December 31, 2011 was not significant. In accounting for this arrangement, the Company recorded Advertising revenues for the advertisements aired on Turner's networks and amortized Turner's share of the programming rights fee based on the ratio of current period advertising revenues...

  • Page 88
    ... 2011 annual impairment test. In 2011, the Company recorded noncash impairments of intangible assets primarily related to certain tradenames of $13 million at the Publishing segment, $5 million at the Networks segment and $1 million at the Filmed Entertainment segment. In 2010, the Company recorded...

  • Page 89
    ... 31, 2009 Adjustments Adjustments 2010 Adjustments Adjustments 2011 Networks Gross goodwill ...Impairments ...Net goodwill ...Filmed Entertainment Gross goodwill ...Impairments ...Net goodwill ...Publishing Gross goodwill ...Impairments ...Net goodwill ...Time Warner Gross goodwill ...Impairments...

  • Page 90
    ...2010 purchase, which was primarily derived using a combination of market and income valuation techniques. CME Investment Central European Media Enterprises Ltd. ("CME") is a publicly-traded broadcasting company operating leading networks in six Central and Eastern European countries. On May 18, 2009...

  • Page 91
    ...is as follows (millions, except per share amounts): Year Ended December 31, 2009 Total revenues ...Pretax income ...Income tax provision ...Net income ...Net income attributable to Time Warner Inc. shareholders ...Per share information attributable to Time Warner Inc. common shareholders: Basic net...

  • Page 92
    ...direct transaction costs (e.g., legal and professional fees) related to the separations of TWC and AOL of $112 million. The Networks segment of Time Warner recognized approximately $170 million of Subscription revenues from TWC in 2009 through the Distribution Record Date. 4. INVESTMENTS The Company...

  • Page 93
    ... information to evaluate all cost-method investments for impairment at least quarterly. Gain on Sale of Investments For the year ended December 31, 2011, the Company recognized net gains of $14 million related to the sale of various investments. For the year ended December 31, 2010, the Company...

  • Page 94
    ... than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3). The following table presents information about...

  • Page 95
    ... exceeding ten years. Key inputs employed in the DCF methodology include estimates of a film's ultimate revenue and costs as well as a discount rate. The discount rate utilized in the DCF analysis is based on the weighted average cost of capital of the respective business (e.g., Warner Bros.) plus...

  • Page 96
    ...): December 31, 2011 December 31, 2010 Inventories: Programming costs, less amortization ...DVDs, books, paper and other merchandise ...Total inventories ...Less: current portion of inventory ...Total noncurrent inventories ...Film costs - Theatrical:(a) Released, less amortization ...Completed...

  • Page 97
    ... are classified within Prepaid expenses and other current assets or Accounts payable and accrued liabilities in the Company's Consolidated Balance Sheet. At December 31, 2011 and December 31, 2010, $19 million of gains and $21 million of losses, respectively, related to cash flow hedges are recorded...

  • Page 98
    ... Credit Facilities, commercial paper program and public debt of the Company rank pari passu with the senior debt of the respective obligors thereon. The weighted-average interest rate on Time Warner's total debt was 6.35% and 6.52% at December 31, 2011 and 2010, respectively. Revolving Credit...

  • Page 99
    ... Company's fixed-rate public debt had maturities ranging from 2012 to 2041. 2011 Debt Offerings Time Warner has a shelf registration statement filed with the SEC that allows it to offer and sell from time to time debt securities, preferred stock, common stock and warrants to purchase debt and equity...

  • Page 100
    ...December 31, 2011 and 2010, respectively. Future minimum capital lease payments at December 31, 2011 are as follows (millions): 2012 ...2013 ...2014 ...2015 ...2016 ...Thereafter ...Total ...Amount representing interest ...Present value of minimum lease payments ...Current portion ...Total long-term...

  • Page 101
    ... 31, 2011, such SPEs were capitalized with approximately $3.1 billion of debt and equity from the third-party investors. These transactions resulted in reductions of film cost amortization totaling $34 million, $7 million and $14 million during the years ended December 31, 2011, 2010 and 2009...

  • Page 102
    ... to certain equity awards may currently be in excess of the tax benefit ultimately received. The applicable accounting rules require that the deferred tax asset related to an equity-based compensation award be reduced only at the time the award vests (in the case of a restricted stock unit or 88

  • Page 103
    ...anticipate that its existing reserves related to uncertain tax positions as of December 31, 2011 will significantly increase or decrease during the twelve-month period ending December 31, 2012; however, various events could cause the Company's current expectations to change in the future. Should the...

  • Page 104
    ... purchases are based on a number of factors, including price and business and market conditions. Shares Authorized and Outstanding At December 31, 2011, shareholders' equity of Time Warner included 974 million shares of common stock (net of 678 million shares of common stock held in treasury). As of...

  • Page 105
    TIME WARNER INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) The following summary sets forth the activity within Other comprehensive income (loss) (millions): Pretax Tax (provision) benefit Net of tax Year Ended December 31, 2009...December 31, 2011 December 31, 2010 Foreign currency ...

  • Page 106
    ... to grant equity awards to employees and non-employee directors, covering an aggregate of 70 million shares of common stock. Generally, stock options have been granted to employees and non-employee directors of Time Warner with exercise prices equal to the fair market value on the date of grant...

  • Page 107
    ... for in the Company's equity plans, the number of stock options, RSUs and target PSUs outstanding at each of the Distribution Date and Distribution Record Date, respectively, and the exercise prices of such stock options were adjusted to maintain the fair value of those awards (collectively, the...

  • Page 108
    ... in the table below represent the weighted-average value of the applicable assumption used to value stock options at their grant date. 2011 Year Ended December 31, 2010 2009 Expected volatility ...Expected term to exercise from grant date ...Risk-free rate ...Expected dividend yield ... 29.5% 6.31...

  • Page 109
    ... 31, 2009, the Company granted 0.2 million target PSUs at a weighted-average grant date fair value per PSU of $23.67. Equity-Based Compensation Expense Compensation expense recognized for equity-based compensation plans is as follows (millions): Year Ended December 31, 2011 2010 2009 Stock options...

  • Page 110
    ... follows: Defined Benefit Plans Benefit Obligation (millions) December 31, 2011 2010 Change in benefit obligation: Projected benefit obligation, beginning of year ...Service cost ...Interest cost ...Plan participant contributions ...Actuarial loss ...Benefits paid ...Curtailments ...Plan amendments...

  • Page 111
    ...-average assumptions used to determine benefit obligations and net periodic benefit costs for the years ended December 31: Benefit Obligations 2011 2010 2009 Net Periodic Benefit Costs 2011 2010 2009 Discount rate ...Rate of compensation increase ...Expected long-term return on plan assets ... 4.91...

  • Page 112
    ...2 Level 3 Total Level 1 December 31, 2010 Level 2 Level 3 Total Cash and cash equivalents ...Insurance contracts ...Equity securities: Domestic equities ...International equities ...Fixed income securities: U.S. government and agency securities ...Municipal bonds ...Investment grade corporate bonds...

  • Page 113
    ... plans during the year ended December 31, 2011. For the Company's unfunded plans, contributions will continue to be made to the extent benefits are paid. Information about the expected benefit payments for the Company's defined benefit plans is as follows (millions): 2012 2013 2014 2015 2016 2017...

  • Page 114
    ... benefit plans that provide health and welfare benefits to active and retired participants, primarily at the Filmed Entertainment segment. Total contributions made by the Company to these other multiemployer benefit plans for the years ended December 31, 2011, 2010 and 2009 were $157 million, $165...

  • Page 115
    ... expensed as incurred by segment for the years ended December 31, 2011, 2010 and 2009 are as follows (millions): Year Ended December 31, 2011 2010 2009 Networks ...Filmed Entertainment ...Publishing ...Corporate ...Total restructuring and severance costs ... $ 52 41 18 2 $ 6 30 61 - $ 8 105 99...

  • Page 116
    ... (Loss), Assets and Capital expenditures of Time Warner in each of its reportable segments is set forth below (millions): Subscription Year Ended December 31, 2011 Advertising Content Other Total Revenues Networks ...Filmed Entertainment ...Publishing ...Intersegment eliminations ...Total revenues...

  • Page 117
    TIME WARNER INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Subscription Year Ended December 31, 2010 Advertising Content Other Total Revenues Networks ...Filmed Entertainment ...Publishing ...Intersegment eliminations ...Total revenues ... $ 7,671 66 1,291 - $ 9,028 Subscription $ ...

  • Page 118
    ...209 4,700 $ 66,707 Year Ended December 31, 2011 2010 2009 Capital Expenditures Networks ...Filmed Entertainment ...Publishing ...Corporate ...Total capital expenditures ... $ 330 313 48 81 $ 772 $ 291 272 49 19 $ 631 $ 268 187 58 34 $ 547 Long-lived hard assets located outside the United States...

  • Page 119
    ...24.008 billion at December 31, 2011, which are payable as follows (millions): 2012 ...2013 ...2014 ...2015 ...2016 ...Thereafter ...Total ...Contingent Commitments The Company also has certain contractual arrangements that would require it to make payments or provide funding if certain circumstances...

  • Page 120
    ... to incur an obligation to make any payments within that time period. In addition, amounts presented do not reflect the effects of any indemnification rights the Company might possess (millions). Nature of Contingent Commitments Total 2012 2013-2014 2015-2016 Thereafter Guarantees(a) ...Letters of...

  • Page 121
    ... 31, 2011. Because of the specific circumstances surrounding the arrangements and the fact that no active or observable market exists for this type of financial guarantee, the Company is unable to determine a current fair value for the Guaranteed Obligations and related Subordinated Indemnity...

  • Page 122
    ..."). This administrative proceeding relates to CNN America's December 2003 and January 2004 terminations of its contractual relationships with Team Video, under which Team Video had provided electronic newsgathering services in Washington, DC and New York, NY. The National Association of Broadcast...

  • Page 123
    ... Services L.L.C. (collectively, "Anderson News") filed an antitrust lawsuit in the U.S. District Court for the Southern District of New York against several magazine publishers, distributors and wholesalers, including Time Inc. and one of its subsidiaries, Time/Warner Retail Sales & Marketing...

  • Page 124
    ... FINANCIAL STATEMENTS - (Continued) 18. ADDITIONAL FINANCIAL INFORMATION Cash Flows Additional financial information with respect to cash payments and receipts is as follows (millions): Year Ended December 31, 2011 2010 2009 Cash payments made for interest ...Interest income received ...Cash...

  • Page 125
    ... consist of (millions): December 31, 2011 December 31, 2010 Accounts payable ...Accrued expenses ...Participations payable ...Programming costs payable ...Accrued compensation ...Accrued interest ...Accrued income taxes ...Total accounts payable and accrued liabilities ...Other Noncurrent...

  • Page 126
    ... inadequate because of changes in conditions or that the degree of compliance with the policies and procedures may decline. Management conducted an evaluation of the effectiveness of the Company's system of internal control over financial reporting as of December 31, 2011 based on the framework...

  • Page 127
    ... of Time Warner Inc. ("Time Warner") as of December 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive income, cash flows and equity for each of the three years in the period ended December 31, 2011. Our audits also included the Supplementary Information and...

  • Page 128
    ... the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Time Warner as of December 31, 2011 and 2010, and the related consolidated statements of operations, comprehensive income, cash flows and equity for each of the three years in the period ended December...

  • Page 129
    ... made to conform to the 2011 presentation. 2011 Year Ended December 31, 2010 2009 2008(a)(b) (millions, except per share amounts) 2007(b) Selected Operating Statement Information: Total revenues ...Operating income (loss) ...Net income (loss) ...Amounts attributable to Time Warner Inc. shareholders...

  • Page 130
    ... operations ...Common stock - high ...Common stock - low ...Cash dividends declared per share of common stock ...2010 Total revenues ...Operating income ...Net income ...Net income attributable to Time Warner Inc. shareholders: ...Per share information attributable to Time Warner Inc. common...

  • Page 131
    ... Group Index") by measuring the changes in common stock prices from December 31, 2006, plus reinvested dividends and distributions through 2011. The common stock of the following companies is included in the Peer Group Index: CBS Corporation (Class B), News Corporation (Class A), Viacom Inc. (Class...

  • Page 132
    ...invested on December 31, 2006 in each of the Company's Common Stock, the S&P 500 Index, and the Peer Group Index and reflects reinvestment of dividends and distributions on a monthly basis and quarterly market capitalization weighting. From 2007 through 2011, the Company paid a quarterly dividend of...

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  • Page 135
    .... Contact Information Corporate Headquarters Time Warner Inc. One Time Warner Center New York, NY 10019-8016 212-484-8000 Time Warner Corporate Website: www.timewarner.com Investor Relations Time Warner Inc. One Time Warner Center New York, NY 10019-8016 866-INFO-TWX e-mail: [email protected] Media...

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    Time Warner. A passion for stories, timely and timeless.