Time Magazine 2014 Annual Report Download - page 57

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TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION – (Continued)
On January 16, 2014, Time Warner sold the space it owned in Time Warner Center for approximately $1.3 billion and
agreed to lease space in Time Warner Center from the buyer until early 2019. In connection with these transactions, the
Company recognized a pretax gain of $441 million and a tax benefit of $58 million during 2014. Additionally, a pretax gain
of approximately $325 million has been deferred and is being recognized ratably over the lease period. In February 2015, the
Company entered into agreements relating to the construction and development of office and studio space in the Hudson
Yards development on the west side of Manhattan in order to consolidate its Corporate headquarters and its New York City-
based employees. Based on current construction cost and space projections, the Company expects to invest approximately
$1.7 billion in the Hudson Yards development project over the next five years.
Cash Flows
Cash and equivalents increased by $802 million, including $190 million of Cash used by discontinued operations, for the
year ended December 31, 2014. Cash and equivalents decreased by $944 million, including $468 million of Cash provided
by discontinued operations for the year ended December 31, 2013. Components of these changes are discussed below in
more detail.
Operating Activities from Continuing Operations
Details of Cash provided by operations from continuing operations are as follows (millions):
Year Ended December 31,
2014 2013 2012
(recast) (recast)
Operating Income .......................................... $ 5,975 $ 6,268 $ 5,498
Depreciation and amortization ................................ 733 759 765
Venezuela foreign currency loss ............................... 173 - -
Net interest payments(a) ...................................... (1,224) (1,158) (1,220)
Net income taxes paid(b) ..................................... (1,494) (1,087) (1,189)
All other, net, including working capital changes ................. (482) (1,524) (867)
Cash provided by operations from continuing operations ........... $ 3,681 $ 3,258 $ 2,987
(a) Includes interest income received of $50 million, $44 million and $42 million in 2014, 2013 and 2012, respectively.
(b) Includes income tax refunds received of $108 million, $87 million and $78 million in 2014, 2013 and 2012, respectively, and income tax sharing
payments to TWC of $6 million in 2012.
Cash provided by operations from continuing operations for the year ended December 31, 2014 increased primarily due to
lower cash used by working capital, partially offset by higher net income taxes paid and lower Operating Income. Cash used
by working capital decreased primarily due to the timing of restructuring and severance payments and lower participation
payments.
Cash provided by operations for the year ended December 31, 2013 increased primarily due to higher Operating Income,
lower net income taxes paid and lower net interest payments, partially offset by higher cash used by working capital, which
primarily reflected higher participation payments and advances.
41