Time Magazine 2013 Annual Report Download - page 43

TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)
integration of American Express Publishing Corporation (which is described further below) and certain real
estate consolidations.
Because of the Time Separation, the Company will continue to perform interim impairment reviews of Time
Inc.’s goodwill during 2014 for the periods prior to the Time Separation. The new long-range plan prepared by
Time Inc.’s senior management served as the basis for the discounted cash flow analysis used in the 2013 annual
impairment review. If market conditions worsen as compared to the assumptions incorporated in that long-range
plan, if market conditions associated with valuation multiples of comparable companies decline, or if Time Inc.’s
performance fails to meet current expectations, it is possible that the carrying value of Time Inc. will exceed its
fair value, which could result in the Company recognizing a noncash impairment of goodwill that could be
material.
Recent Developments
Eyeworks
On February 11, 2014, Warner Bros. entered into an agreement with Eyeworks Group (“Eyeworks”), a
television production and distribution company, to acquire its operations outside the U.S., which are located in 15
countries across Europe, South America, Australia and New Zealand, for approximately €200 million. The
transaction, which is subject to customary closing conditions including regulatory approval, is expected to close
in 2014.
Sale and Leaseback of Time Warner Center
On January 16, 2014, Time Warner sold the office space it owned in Time Warner Center for approximately
$1.3 billion. Time Warner also agreed to lease office space in Time Warner Center from the buyer until early
2019. In connection with these transactions, the Company expects to recognize a pretax gain of approximately
$700 million to $800 million, of which approximately $400 million to $500 million will be recognized in the first
quarter of 2014. The balance of the gain will be deferred and recognized ratably over the lease period. Time
Warner also expects to recognize a tax benefit of $50 million to $70 million related to the sale in the first quarter
of 2014. In addition, the Company reached preliminary agreement relating to the move of its Corporate
headquarters and its New York City-based employees to the Hudson Yards development on the west side of
Manhattan. The preliminary agreement is subject to the negotiation and execution of final agreements.
Revolving Credit Facilities Maturity Date Extension
On December 18, 2013, Time Warner amended its $5.0 billion senior unsecured credit facilities (the
“Revolving Credit Facilities”), which consist of two $2.5 billion revolving credit facilities, to extend the maturity
dates of both to December 18, 2018. Prior to the amendment, one facility had a maturity date of September 27,
2016 and the other had a maturity date of December 14, 2017. See “Financial Condition and Liquidity –
Outstanding Debt and Other Financing Arrangements” for more information.
2013 Debt Offering
On December 16, 2013, Time Warner issued $1.0 billion aggregate principal amount of debt securities in a
public offering. See “Financial Condition and Liquidity – Outstanding Debt and Other Financing Arrangements”
for more information.
Acquisition of AEP
On October 1, 2013, Time Inc. acquired American Express Publishing Corporation, now known as Time Inc.
Affluent Media Group (“AEP”), including Travel+Leisure and Food & Wine magazines and their related
27