Time Magazine 2015 Annual Report Download - page 104

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TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Debt Tender Offer and Redemption
In June 2015, Time Warner purchased $687 million aggregate principal amount of the $1.0 billion aggregate principal
amount outstanding of its 5.875% Notes due 2016 (the “2016 Notes”) through a tender offer. In August 2015, the Company
redeemed the $313 million aggregate principal amount of the 2016 Notes that remained outstanding following the tender
offer. The premiums paid and costs incurred in connection with this purchase and redemption were $71 million for the year
ended December 31, 2015 and were recorded in Other loss, net in the accompanying Consolidated Statement of Operations.
Maturities of Public Debt
The Company’s public debt matures as follows (millions):
2016 2017 2018 2019 2020 Thereafter
Debt ..... $ 150 $ 500 $ 600 $ 650 $ 1,400 $ 20,501
Covenants and Credit Rating Triggers
Each of the credit agreements for the Revolving Credit Facilities (the “Credit Agreement”) and the Company’s public
debt indentures contain customary covenants. A breach of the covenants in the Credit Agreement that continues beyond any
grace period constitutes a default, which can limit the Company’s ability to borrow and can give rise to a right of the lenders
to terminate the Revolving Credit Facilities and/or require immediate payment of any outstanding debt. A breach of the
covenants in the public debt indentures beyond any grace period constitutes a default, which can require immediate payment
of the outstanding debt. There are no credit ratings-based defaults or covenants in the Credit Agreement or public debt
indentures.
The interest rate on borrowings under the Revolving Credit Facilities and the facility fee are based in part on the
Company’s credit ratings. Therefore, if the Company’s credit ratings are lowered, the cost of maintaining the Revolving
Credit Facilities and the cost of borrowing increase and, conversely, if the ratings improve, such costs decrease. As of
December 31, 2015, the Company’s investment grade debt ratings were as follows: Fitch BBB+, Moody’s Baa2, and S&P
BBB.
As of December 31, 2015, the Company was in compliance with all covenants in the Credit Agreement and its public
debt indentures. The Company does not anticipate that it will have any difficulty in the foreseeable future complying with the
covenants in its Credit Agreement or public debt indentures.
Other Obligations
Other long-term debt obligations consist of capital lease and other obligations, including committed financings by
subsidiaries under local bank credit agreements. At December 31, 2015 and 2014, the weighted average interest rate for other
long-term debt obligations was 3.32% and 2.59%, respectively. Other long-term debt obligations of $125 million mature in
2018.
Capital Leases
The Company has entered into various leases primarily related to network equipment that qualify as capital lease
obligations. As a result, the present value of the remaining future minimum lease payments is recorded as a capitalized lease
asset and related capital lease obligation in the Consolidated Balance Sheet. Assets recorded under capital lease obligations
totaled $125 million and $113 million as of December 31, 2015 and 2014, respectively. Related accumulated amortization
totaled $81 million and $69 million as of December 31, 2015 and 2014, respectively.
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