Time Magazine 2013 Annual Report Download - page 40

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
INTRODUCTION
Management’s discussion and analysis of results of operations and financial condition (“MD&A”) is a
supplement to the accompanying consolidated financial statements and provides additional information on Time
Warner Inc.’s (“Time Warner” or the “Company”) businesses, current developments, financial condition, cash
flows and results of operations. MD&A is organized as follows:
•Overview. This section provides a general description of Time Warner’s business segments, as well as
recent developments the Company believes are important in understanding the results of its operations
and financial condition or in understanding anticipated future trends.
•Results of operations. This section provides an analysis of the Company’s results of operations for the
three years ended December 31, 2013. This analysis is presented on both a consolidated and a business
segment basis. In addition, a brief description of transactions and other items that affect the
comparability of the results being analyzed is provided.
•Financial condition and liquidity. This section provides an analysis of the Company’s cash flows for
the three years ended December 31, 2013 and the Company’s outstanding debt and commitments as of
December 31, 2013. Included in the analysis of outstanding debt is a discussion of the amount of
financial capacity available to fund the Company’s ongoing operations and future commitments, as well
as a discussion of other financing arrangements.
•Market risk management. This section discusses how the Company monitors and manages exposure to
potential gains and losses arising from changes in market rates and prices, such as interest rates, foreign
currency exchange rates and changes in the market value of financial instruments.
•Critical accounting policies. This section identifies those accounting policies that are considered
important to the Company’s results of operations and financial condition, require significant judgment
and involve significant management estimates. The Company’s significant accounting policies,
including those considered to be critical accounting policies, are summarized in Note 1 to the
accompanying consolidated financial statements.
•Caution concerning forward-looking statements. This section provides a description of the use of
forward-looking information appearing in this 2013 Annual Report to Shareholders, including in MD&A
and the consolidated financial statements. Such information is based on management’s current
expectations about future events, which are inherently susceptible to uncertainty and changes in
circumstances. Refer to “Risk Factors” in this 2013 Annual Report to Shareholders for a discussion of
the risk factors applicable to the Company.
OVERVIEW
Time Warner is a leading media and entertainment company whose major businesses encompass an array of
the most respected and successful media brands. Among the Company’s brands are TNT, TBS, CNN, HBO,
Cinemax, Warner Bros., New Line Cinema, People,Sports Illustrated and Time. During the year ended
December 31, 2013, the Company generated Revenues of $29.795 billion (up 4% from $28.729 billion in 2012),
Operating Income of $6.605 billion (up 12% from $5.918 billion in 2012), Net Income attributable to Time
Warner shareholders of $3.691 billion (up 26% from $2.925 billion in 2012) and Cash provided by operations of
$3.714 billion (up 8% from $3.442 billion in 2012). On March 6, 2013, Time Warner announced that its Board of
Directors has authorized management to proceed with plans for the complete legal and structural separation of
the Company’s Time Inc. segment from Time Warner (the “Time Separation”). Time Warner expects to
complete the Time Separation during the second quarter of 2014.
Time Warner Businesses
Time Warner classifies its operations into four reportable segments: Turner, Home Box Office, Warner Bros.
and Time Inc. In the fourth quarter of 2013, the Company separated its former Networks reportable segment into
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