Time Magazine 2012 Annual Report Download - page 46

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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, 2011, the Company recognized net investment losses of $168 million,
including a $163 million noncash impairment related to the Company’s investment in CME, $3 million of net
miscellaneous losses and a noncash loss of $2 million associated with a fair value adjustment on certain options
to redeem securities.
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 associated with
a fair value adjustment on certain options to redeem securities.
Amounts Related to the Separation of Time Warner Cable Inc.
For the years ended December 31, 2012, 2011 and 2010, the Company recognized other income of
$9 million, other income of $4 million and other loss of $6 million, respectively, 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, which has been reflected in Other loss, net in the accompanying Consolidated
Statement of Operations. For the years ended December 31, 2012 and 2011, the Company also recognized
$5 million and $9 million, respectively, of other loss related to changes in the value of a TWC tax
indemnification receivable, which has also been reflected in Other loss, net in the accompanying Consolidated
Statement of Operations.
Amounts Related to the Disposition of the Warner Music Group
For the year ended December 31, 2012, the Company recognized $7 million of losses primarily related to a
tax indemnification obligation associated with the disposition of the Warner Music Group (“WMG”) in 2004.
This amount has been reflected in Other loss, net in the accompanying Consolidated Statement of Operations.
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
The income tax impact reflects the estimated tax provision or tax benefit associated with each item affecting
comparability. Such estimated tax provision or tax benefit can vary based on certain factors, including the
taxability or deductibility of the items and foreign tax on certain items. For the year ended December 31, 2012,
the income tax impact includes a $42 million benefit reflecting the reversal of a valuation allowance related to
the expected usage of capital loss carryforwards in connection with the Film and TV Entertainment segment’s
agreement to sell its investment in a joint venture in Japan. The sale of such investment is expected to close in the
first quarter of 2013.
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