Time Magazine 2011 Annual Report Download - page 120

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table summarizes the Company’s contingent commitments at December 31, 2011. For put/call
options where payment obligations are outside the Company’s control, the timing of amounts presented in the
table represents the earliest period in which payment could be made. For other contingent commitments, the
timing of amounts presented in the table represents when the maximum contingent commitment will expire, but
does not mean that the Company expects 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) .......................... $ 1,100 $ 37 $ 77 $ 81 $ 905
Letters of credit and other contingent
commitments ....................... 1,179 660 6 328 185
Total contingent commitments ........... $ 2,279 $ 697 $ 83 $ 409 $ 1,090
(a) Amounts primarily reflect the Six Flags Guarantee discussed below.
The following is a description of the Company’s contingent commitments at December 31, 2011:
• Guarantees primarily include guarantees the Company has provided on certain operating commitments
entered into by entities formerly owned by the Company, including the arrangement described below.
Six Flags
In connection with the Company’s former investment in the Six Flags theme parks located in Georgia
and Texas (collectively, the “Parks”), in 1997, certain subsidiaries of the Company (including Historic
TW and, in connection with the separation of TWC in 2009, Warner Bros. Entertainment Inc.) agreed
to guarantee (the “Six Flags Guarantee”) certain obligations of the partnerships that hold the Parks (the
“Partnerships”) for the benefit of the limited partners in such Partnerships, including: annual payments
made at the Parks or to the limited partners and additional obligations at the end of the respective terms
for the Partnerships in 2027 and 2028 (the “Guaranteed Obligations”). The aggregate undiscounted
estimated future cash flow requirements covered by the Six Flags Guarantee over the remaining term
(through 2028) are approximately $1.0 billion (for a net present value of approximately $408 million).
To date, no payments have been made by the Company pursuant to the Six Flags Guarantee.
Six Flags Entertainment Corporation (formerly known as Six Flags, Inc. and Premier Parks Inc.) (“Six
Flags”), which has the controlling interest in the Parks, has agreed, pursuant to a subordinated
indemnity agreement (the “Subordinated Indemnity Agreement”), to guarantee the performance of the
Guaranteed Obligations when due and to indemnify Historic TW, among others, if the Six Flags
Guarantee is called upon. If Six Flags defaults in its indemnification obligations, Historic TW has the
right to acquire control of the managing partner of the Parks. Six Flags’ obligations to Historic TW are
further secured by its interest in all limited partnership units held by Six Flags.
In connection with Six Flags’ emergence from bankruptcy, on April 30, 2010, a Time Warner
subsidiary (TW-SF LLC), as lender, entered into a 5-year $150 million multiple draw term facility with
certain affiliates of the Partnerships, as borrowers, which could be used only to fund such affiliates’
annual obligations to purchase certain limited partnership units of the Partnerships. The facility, which
had no loans made under it, terminated on December 20, 2011 in connection with the refinancing of
Six Flags’ secured credit facility.
Because the Six Flags Guarantee existed prior to December 31, 2002 and no modifications to the
arrangements have been made since the date the guarantee came into existence, the Company is
required to continue to account for the Guaranteed Obligations as a contingent liability. Based on its
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