Time Magazine 2011 Annual Report Download - page 41

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)
For the year ended December 31, 2010, the Company recognized net investment gains of $32 million,
including $13 million of miscellaneous investment gains, net, and noncash income of $19 million related to fair
value adjustments on certain options to redeem securities.
For the year ended December 31, 2009, the Company recognized net investment losses of $21 million,
including a $23 million impairment of the Company’s investment in Miditech Pvt. Limited, a programming
production company in India, and $43 million of other miscellaneous investment losses, net, partially offset by a
$28 million gain on the sale of the Company’s investment in TiVo Inc. and a $17 million gain on the sale of the
Company’s investment in Eidos plc.
Amounts Related to the Separation of Time Warner Cable Inc.
For the year ended December 31, 2011, the Company recognized $4 million of other income related to the
expiration, exercise and net change in the estimated fair value of Time Warner equity awards held by Time
Warner Cable Inc. (“TWC”) employees and $9 million of other loss related to changes in the value of a TWC tax
indemnification receivable.
For the year ended December 31, 2010, the Company recognized $6 million of other loss related to the
expiration, exercise and net change in the estimated fair value of Time Warner equity awards held by TWC
employees.
For the year ended December 31, 2009, the Company recognized $20 million of other income related to the
increase in the 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 AOL Inc.
For the year ended December 31, 2009, the Company incurred $15 million of costs related to the separation
of AOL Inc. (“AOL”), which have been recorded in Other loss, net in the accompanying Consolidated Statement
of Operations. These costs were related to the solicitation of consents from debt holders to amend the indentures
governing certain of the Company’s debt securities.
Premiums Paid and Transaction Costs Incurred in Connection with Debt Redemptions
For the year ended December 31, 2010, the Company recognized $364 million of premiums paid and
transaction costs incurred in connection with debt redemptions, which were recorded in Other loss, net in the
accompanying Consolidated Statement of Operations. During the year ended December 31, 2010, the Company
repurchased and redeemed all $1.0 billion aggregate principal amount of the 6.75% Notes due 2011 of Time
Warner, all $1.0 billion aggregate principal amount of the 5.50% Notes due 2011 of Time Warner, $1.362 billion
aggregate principal amount of outstanding 6.875% Notes due 2012 of Time Warner and $568 million aggregate
principal amount of outstanding 9.125% Debentures due 2013 of Historic TW Inc. (“Historic TW”) (as successor
by merger to Time Warner Companies, Inc.).
Income Tax Impact and Tax Items Related to TWC
The income tax impact reflects the estimated tax provision or tax benefit associated with each item affecting
comparability. Such estimated tax provisions or tax benefits vary based on certain factors, including the
taxability or deductibility of the items and foreign tax on certain transactions. For the year ended December 31,
2009, the Company also recognized approximately $24 million of tax benefits attributable to the impact of
certain state tax law changes on TWC net deferred liabilities.
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