Time Magazine 2015 Annual Report Download - page 43

TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - (Continued)
On February 10, 2015, Venezuelan government officials announced changes to Venezuela’s foreign currency exchange
system. Those changes included the elimination of the SICAD 2 exchange due to the merger of the SICAD 1 and SICAD 2
exchanges into a single SICAD exchange as well as the creation of the Simadi exchange, which is a new free market foreign
currency exchange. On their initial date of activity, the exchange rates published by the Central Bank of Venezuela were
12 VEF to each U.S. Dollar for the SICAD exchange and 170 VEF to each U.S. Dollar for the Simadi exchange. Given the
restrictions associated with the official government rate and the SICAD exchange, starting on February 10, 2015, the
Company began to use the Simadi exchange rate to remeasure its VEF-denominated transactions and balances and
recognized a pretax foreign exchange loss of $22 million in the Consolidated Statement of Operations during the year ended
December 31, 2015. As of December 31, 2014, the Company used the SICAD 2 exchange rate to remeasure its VEF-
denominated monetary assets, and, for the year ended December 31, 2014, recognized a pre-tax foreign exchange loss of
$173 million in the accompanying Consolidated Statement of Operations.
RESULTS OF OPERATIONS
Recent Accounting Guidance
See Note 1, “Description of Business, Basis of Presentation and Summary of Significant Accounting Policies,” to the
accompanying consolidated financial statements for a discussion of recent accounting guidance.
Transactions and Other Items Affecting Comparability
As more fully described herein and in the related notes to the accompanying consolidated financial statements, the
comparability of Time Warner’s results from continuing operations has been affected by transactions and certain other items
in each period as follows (millions):
Year Ended December 31,
2015 2014 2013
Asset impairments ............................................ $ (25) $ (69) $ (61)
Gain (loss) on operating assets, net ............................... (1) 464 129
Venezuelan foreign currency loss ................................ (22) (173) —
Other ....................................................... (10) (80) 5
Impact on Operating Income .................................... (58) 142 73
Investment gains (losses), net .................................... (31) 30 61
Amounts related to the separation of Time Warner Cable Inc. .......... (8) (11) 3
Amounts related to the disposition of Warner Music Group ............ — 2 (1)
Amounts related to the separation of Time Inc. ...................... (9) 3 —
Premiums paid and costs incurred on debt redemption ................ (72) — —
Items affecting comparability relating to equity method investments ..... (27) (97) (30)
Pretax impact ................................................ (205) 69 106
Income tax impact of above items ................................ 57 165 (59)
Impact of items affecting comparability on income from continuing
operations attributable to Time Warner Inc. shareholders ............ $ (148) $ 234 $ 47
In addition to the items affecting comparability described above, the Company incurred Restructuring and severance
costs of $60 million, $512 million and $183 million for the years ended December 31, 2015, 2014 and 2013, respectively.
For the years ended December 31, 2015 and 2014, the Turner segment incurred programming impairments of $131 million
and $526 million, respectively, which were partially offset by intersegment eliminations of $2 million and $138 million,
respectively. For further discussion of Restructuring and severance costs and the programming impairments, see “Overview,”
“Consolidated Results” and “Business Segment Results.”
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