Time Magazine 2012 Annual Report Download - page 118

Download and view the complete annual report

Please find page 118 of the 2012 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 134

  • 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

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table summarizes the Company’s contingent commitments at December 31, 2012. For put
options where payment obligations are outside the Company’s control, the timing of amounts presented in the
table represents the earliest period in which the 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 2013 2014-2015 2016-2017 Thereafter
Guarantees ........................... $ 991 $ 37 $ 77 $ 81 $ 796
Letters of credit and other contingent
commitments ....................... 1,124 128 203 235 558
Total contingent commitments ............ $ 2,115 $ 165 $ 280 $ 316 $ 1,354
The following is a description of the Company’s contingent commitments at December 31, 2012:
• Guarantees consist of 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 $991 million (for a net present value of $406 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.
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
evaluation of the current facts and circumstances surrounding the Guaranteed Obligations and the
Subordinated Indemnity Agreement, the Company is unable to predict the loss, if any, that may be
incurred under the Guaranteed Obligations, and no liability for the arrangements has been recognized at
December 31, 2012. 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
Agreement.
• Generally, letters of credit, bank guarantees and surety bonds support performance and payments for a
wide range of global contingent and firm obligations, including insurance, litigation appeals, import of
102