Time Magazine 2015 Annual Report Download - page 57

TIME WARNER INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION - (Continued)
certain theatrical films and videogames. Theatrical film valuation adjustments for the year ended December 31, 2014 and
2013 were $86 million and $51 million, respectively. Videogame valuation adjustments for the year ended December 31,
2014 and 2013 were $51 million and $53 million, respectively. The increase in film and television production costs for the
year ended December 31, 2014 was primarily due to the performance and mix of product released.
Refer to “Transactions and Other Items Affecting Comparability” for a discussion of Asset impairments, Gain (loss) on
operating assets, Venezuelan foreign currency loss and external costs related to mergers, acquisitions and dispositions for the
years ended December 31, 2014 and 2013, which affected the comparability of the Warner Bros. segment’s results.
The results for the year ended December 31, 2014 included $169 million of Restructuring and severance costs
primarily related to headcount reductions in connection with restructuring activities designed to position the Company for the
current operating environment and reallocate resources to the Company’s growth initiatives. The results for the year ended
December 31, 2013 included $49 million of Restructuring and severance costs primarily related to executive severance costs.
The decrease in Operating Income for the year ended December 31, 2014 was primarily due to higher Costs of
revenues and higher Restructuring and severance costs, partially offset by higher Revenues.
Corporate. Operating Loss at Corporate for the years ended December 31, 2015, 2014 and 2013 was as follows
(millions):
Year Ended December 31, % Change
2015 2014 2013 2015 vs. 2014 2014 vs. 2013
Selling, general and administrative (a) ..... $ (330) $ (449) $ (403) (27)% 11%
Curtailment .......................... — — 38 NM NM
Gain on operating assets ................ — 441 8 NM NM
Asset impairments .................... (15) (7) (7) 114% —%
Restructuring and severance costs ........ (1) (31) (2) (97)% NM
Depreciation ......................... (21) (27) (28) (22)% (4)%
Operating Loss ....................... $ (367) $ (73) $ (394) NM (81)%
(a) Selling, general and administrative expenses exclude depreciation.
2015 vs. 2014
Refer to “Transactions and Other Items Affecting Comparability” for a discussion of Asset impairments, Gain on
operating assets and external costs related to mergers, acquisitions and dispositions for the years ended December 31, 2015
and 2014, which affected the comparability of Corporate’s results.
Excluding the $441 million Gain on Operating assets during the year ended December 31, 2014, Operating Loss for the
year ended December 31, 2015 decreased primarily due to lower external costs related to mergers, acquisitions and
dispositions of $46 million, lower equity based compensation expense of $46 million, which mainly reflected lower expenses
for performance stock units due to a decrease in the Company’s stock price, lower Restructuring and severance costs as well
as lower costs related to enterprise efficiency initiatives. The enterprise efficiency initiatives involve the centralization of
certain administrative functions to generate cost savings or other benefits for the Company.
Selling, general and administrative expenses included costs related to enterprise efficiency initiatives of $27 million
and $43 million for the years ended December 31, 2015 and 2014, respectively.
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