Time Magazine 2014 Annual Report Download - page 44

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)
Investment Gains (Losses), Net
For the year ended December 31, 2014, the Company recognized $30 million of investment gains, net, consisting of $29
million of gains related to fair value adjustments to warrants to purchase common stock of CME held by the Company and
$1 million of net miscellaneous investment gains.
For the year ended December 31, 2013, the Company recognized $61 million of investment gains, net, consisting of a $65
million gain on the sale of the Company’s investment in a theater venture in Japan, which included a $10 million gain related
to a foreign currency contract, $6 million of net miscellaneous losses and a net noncash gain of $2 million associated with an
option to acquire securities that was terminated during the third quarter of 2013.
For the year ended December 31, 2012, the Company recognized $30 million of investment losses, net, 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.
Amounts Related to the Separation of Time Warner Cable Inc.
For the years ended December 31, 2014, 2013 and 2012, the Company recognized $1 million of other expense, $10
million of other income and $9 million of other income, 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,
2014, 2013 and 2012, the Company also recognized $10 million, $7 million and $5 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, 2014, 2013 and 2012, the Company recognized $2 million of other income, $1 million
of losses and $7 million of losses, 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.
Amounts Related to the Time Separation
For the year ended December 31, 2014, the Company recognized $3 million of other income related to the expiration,
exercise and net change in the estimated fair value of Time Warner equity awards held by certain Time Inc. employees.
Items Affecting Comparability Relating to Equity Method Investments
For the year ended December 31, 2014, the Company recognized $70 million as its share of discontinued operations
recorded by an equity method investee and $27 million as its share of a loss on the extinguishment of debt recorded by an
equity method investee. For the years ended December 31, 2013 and 2012, the Company recognized $18 million and $94
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. The gain on the sale and leaseback of the Company’s space in
Time Warner Center was offset by the utilization of tax attributes.
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