Time Magazine 2013 Annual Report Download - page 47

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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, 2012, the Company recognized $30 million of net investment losses,
consisting of $19 million of net miscellaneous losses, a $16 million loss on an investment in a network in Turkey
recognized as part of the Imagine and TNT Turkey Shutdowns and noncash income of $5 million associated with
a fair value adjustment on certain options to redeem securities.
For the year ended December 31, 2011, the Company recognized net investment losses of $136 million,
consisting of a $131 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.
Amounts Related to the Separation of Time Warner Cable Inc.
For the years ended December 31, 2013, 2012 and 2011, the Company recognized other income of $10
million, $9 million and $4 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, 2013, 2012 and 2011, the Company also recognized $7 million, $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 Warner Music Group
For the years ended December 31, 2013 and 2012, the Company recognized losses of $1 million and $7
million, respectively, primarily related to a tax indemnification obligation associated with the disposition of
Warner Music Group (“WMG”) in 2004. These amounts have been reflected in Other loss, net in the
accompanying Consolidated Statement of Operations.
Items Affecting Comparability Relating to Equity Method Investments
For the years ended December 31, 2013, 2012 and 2011, the Company recognized $18 million, $94 million
and $1 million, respectively, as its share of noncash impairments recorded by an equity method investee. In
addition, for the year ended December 31, 2013, the Company recognized $12 million as its share of a noncash
loss on the extinguishment of debt recorded by the equity method investee. These amounts have been reflected in
Other loss, net in the accompanying Consolidated Statement of Operations.
Income Tax Impact
The income tax impact reflects the estimated tax provision or tax benefit associated with each item affecting
comparability. The 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 usage of capital loss carryforwards in connection with the 2013 sale of the Company’s investment in a theater
venture in Japan.
Consolidated Results
The following discussion provides an analysis of the Company’s results of operations and should be read in
conjunction with the accompanying Consolidated Statement of Operations.
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