Time Magazine 2011 Annual Report Download - page 93

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The cost basis, unrealized gains and fair market value of available-for-sale securities are set forth below
(millions):
December 31,
2011 2010
Cost basis .............................................................. $ 66 $ 39
Gross unrealized gain .................................................... 20 14
Fair value .............................................................. $ 86 $ 53
Gains and losses reclassified from Accumulated other comprehensive loss, net to Other loss, net in the
Consolidated Statement of Operations are determined based on the specific identification method.
Cost-Method Investments
The Company’s cost-method investments typically include investments in start-up companies and investment
funds as well as its investment in CME. The Company uses available qualitative and quantitative 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 recognized net gains of $20 million
related to the sale of various investments. For the year ended December 31, 2009, the Company recognized net
gains of $52 million related to the sale of investments, primarily consisting of 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.
Investment Writedowns
For the years ended December 31, 2011, 2010 and 2009, the Company incurred writedowns to reduce the
carrying value of certain investments that experienced other-than-temporary impairments.
For the year ended December 31, 2011, the writedowns were $180 million, including $11 million related to
equity-method investments and $169 million of cost-method investments, primarily related to CME. For the year
ended December 31, 2010, the writedowns were $7 million, including $1 million related to equity-method
investments and $6 million of cost-method investments. For the year ended December 31, 2009, the writedowns
were $73 million, including $41 million related to equity-method investments, primarily at the Networks
segment, and $15 million of available-for-sale securities.
While Time Warner has recognized all declines that are believed to be other-than-temporary as of
December 31, 2011, it is reasonably possible that individual investments in the Company’s portfolio may
experience an other-than-temporary decline in value in the future if the underlying investee experiences poor
operating results or the U.S. or certain foreign equity markets experience further declines in value.
79