Time Magazine 2011 Annual Report Download - page 103

Download and view the complete annual report

Please find page 103 of the 2011 Time Magazine annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
performance share unit), is exercised (in the case of a stock option) or otherwise expires or is cancelled. This
reduction is recorded as an adjustment to additional paid-in capital (“APIC”), to the extent that the realization of
excess tax deductions on prior equity-based compensation awards were recorded directly to APIC. The
cumulative amount of such excess tax deductions is referred to as the Company’s “APIC Pool.” Any shortfall
balance recognized in excess of the Company’s APIC Pool is charged to Income tax provision in the
Consolidated Statement of Operations. The Company’s APIC Pool was sufficient to absorb any shortfalls such
that no shortfalls were charged to the Income tax provision during the periods presented.
Accounting for Uncertainty in Income Taxes
The Company recognizes income tax benefits for tax positions determined more likely than not to be
sustained upon examination, based on the technical merits of the positions.
The Company does not currently 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 Company’s position with respect to these uncertain tax positions be upheld, the majority of the effect would
be recorded in the Consolidated Statement of Operations as part of the Income tax provision.
Changes in the Company’s uncertain income tax positions, excluding the related accrual for interest and
penalties, from January 1 through December 31 are set forth below (millions):
Year Ended December 31,
2011 2010 2009
Beginning balance ........................................ $ 2,100 $ 1,953 $ 1,954
Additions for prior year tax positions .......................... 88 134 130
Additions for current year tax positions ........................ 120 80 227
Reductions for prior year tax positions ......................... (153) (52) (273)
Settlements .............................................. (15) (8) (66)
Lapses in statute of limitations ............................... (18) (7) (19)
Ending balance ........................................... $ 2,122 $ 2,100 $ 1,953
During the year ended December 31, 2011, the Company recorded interest reserves through the Consolidated
Statement of Operations of approximately $51 million and made interest payments in connection with
settlements reached during 2011 of approximately $12 million. During the year ended December 31, 2010, the
Company recorded interest reserves through the Consolidated Statement of Operations of approximately $84
million and made interest payments in connection with settlements reached during 2010 of approximately $8
million. The amount accrued for interest and penalties as of December 31, 2011 and 2010 was $387 million and
$349 million, respectively. The Company’s policy is to recognize interest and penalties accrued on uncertain tax
positions as part of income tax expense.
During the quarter ended December 31, 2011, the Company settled an uncertain tax matter that resulted in a
reduction of net unrecognized tax benefits and interest of approximately $46 million which affected the
Company’s effective tax rate.
The Company and its subsidiaries file income tax returns in the U.S. and various state and local and foreign
jurisdictions. The Internal Revenue Service (“IRS”) is currently conducting an examination of the Company’s
U.S. income tax returns for the 2005 through 2007 period. The tax years that remain subject to examination by
significant jurisdiction are as follows:
U.S. federal .............................................. 2002 through the current period
California ............................................... 2007 through the current period
New York State ........................................... 2000 through the current period
New York City ........................................... 2000 through the current period
89