Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Time Warner Inc., balance sheet: goodwill and intangible assets

US$ in millions

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Film library	3,430)	3,432)	3,432)	3,432)	3,452)
Brands, tradenames and other intangible assets	707)	702)	716)	710)	2,156)
Intangible assets subject to amortization, gross	4,137)	4,134)	4,148)	4,142)	5,608)
Accumulated amortization	(3,552)	(3,351)	(3,199)	(3,001)	(3,688)
Intangible assets subject to amortization, net	585)	783)	949)	1,141)	1,920)
Intangible assets not subject to amortization	7,006)	7,005)	7,029)	7,032)	7,629)
Intangible assets	7,591)	7,788)	7,978)	8,173)	9,549)
Goodwill	27,776)	27,752)	27,689)	27,565)	30,563)
Goodwill and intangible assets	35,367)	35,540)	35,667)	35,738)	40,112)

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

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Item	Description	The company
Intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Time Warner Inc. intangible assets decreased from 2015 to 2016 and from 2016 to 2017.
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Time Warner Inc. goodwill increased from 2015 to 2016 and from 2016 to 2017.
Goodwill and intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Time Warner Inc. goodwill and intangible assets decreased from 2015 to 2016 and from 2016 to 2017.

Time Warner Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Adjustment to Total Assets
Total assets (as reported)	69,209)	65,966)	63,848)	63,259)	67,994)
Less: Goodwill	27,776)	27,752)	27,689)	27,565)	30,563)
Total assets (adjusted)	41,433)	38,214)	36,159)	35,694)	37,431)
Adjustment to Total Time Warner Inc. Shareholders’ Equity
Total Time Warner Inc. shareholders’ equity (as reported)	28,375)	24,335)	23,619)	24,476)	29,904)
Less: Goodwill	27,776)	27,752)	27,689)	27,565)	30,563)
Total Time Warner Inc. shareholders’ equity (adjusted)	599)	(3,417)	(4,070)	(3,089)	(659)

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

Time Warner Inc., Financial Data: Reported vs. Adjusted

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Time Warner Inc., adjusted financial ratios

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Total Asset Turnover
Reported total asset turnover	0.45	0.44	0.44	0.43	0.44
Adjusted total asset turnover	0.75	0.77	0.78	0.77	0.80
Financial Leverage
Reported financial leverage	2.44	2.71	2.70	2.58	2.27
Adjusted financial leverage	69.17	—	—	—	—
Return on Equity (ROE)
Reported ROE	18.49%	16.13%	16.23%	15.64%	12.34%
Adjusted ROE	875.96%	—	—	—	—
Return on Assets (ROA)
Reported ROA	7.58%	5.95%	6.00%	6.05%	5.43%
Adjusted ROA	12.66%	10.27%	10.60%	10.72%	9.86%

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Time Warner Inc. adjusted total asset turnover ratio deteriorated from 2015 to 2016 and from 2016 to 2017.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Time Warner Inc. adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Time Warner Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Revenues	31,271)	29,318)	28,118)	27,359)	29,795)
Total assets	69,209)	65,966)	63,848)	63,259)	67,994)
Activity Ratio
Total asset turnover¹	0.45	0.44	0.44	0.43	0.44
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenues	31,271)	29,318)	28,118)	27,359)	29,795)
Adjusted total assets	41,433)	38,214)	36,159)	35,694)	37,431)
Activity Ratio
Adjusted total asset turnover²	0.75	0.77	0.78	0.77	0.80

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

2017 Calculations

¹ Total asset turnover = Revenues ÷ Total assets
= 31,271 ÷ 69,209 = 0.45

² Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 31,271 ÷ 41,433 = 0.75

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Time Warner Inc. adjusted total asset turnover ratio deteriorated from 2015 to 2016 and from 2016 to 2017.

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Total assets	69,209)	65,966)	63,848)	63,259)	67,994)
Total Time Warner Inc. shareholders’ equity	28,375)	24,335)	23,619)	24,476)	29,904)
Solvency Ratio
Financial leverage¹	2.44	2.71	2.70	2.58	2.27
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	41,433)	38,214)	36,159)	35,694)	37,431)
Adjusted total Time Warner Inc. shareholders’ equity	599)	(3,417)	(4,070)	(3,089)	(659)
Solvency Ratio
Adjusted financial leverage²	69.17	—	—	—	—

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

2017 Calculations

¹ Financial leverage = Total assets ÷ Total Time Warner Inc. shareholders’ equity
= 69,209 ÷ 28,375 = 2.44

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Time Warner Inc. shareholders’ equity
= 41,433 ÷ 599 = 69.17

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	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Time Warner Inc. shareholders	5,247)	3,926)	3,833)	3,827)	3,691)
Total Time Warner Inc. shareholders’ equity	28,375)	24,335)	23,619)	24,476)	29,904)
Profitability Ratio
ROE¹	18.49%	16.13%	16.23%	15.64%	12.34%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Time Warner Inc. shareholders	5,247)	3,926)	3,833)	3,827)	3,691)
Adjusted total Time Warner Inc. shareholders’ equity	599)	(3,417)	(4,070)	(3,089)	(659)
Profitability Ratio
Adjusted ROE²	875.96%	—	—	—	—

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

2017 Calculations

¹ ROE = 100 × Net income attributable to Time Warner Inc. shareholders ÷ Total Time Warner Inc. shareholders’ equity
= 100 × 5,247 ÷ 28,375 = 18.49%

² Adjusted ROE = 100 × Net income attributable to Time Warner Inc. shareholders ÷ Adjusted total Time Warner Inc. shareholders’ equity
= 100 × 5,247 ÷ 599 = 875.96%

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	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Time Warner Inc. shareholders	5,247)	3,926)	3,833)	3,827)	3,691)
Total assets	69,209)	65,966)	63,848)	63,259)	67,994)
Profitability Ratio
ROA¹	7.58%	5.95%	6.00%	6.05%	5.43%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Time Warner Inc. shareholders	5,247)	3,926)	3,833)	3,827)	3,691)
Adjusted total assets	41,433)	38,214)	36,159)	35,694)	37,431)
Profitability Ratio
Adjusted ROA²	12.66%	10.27%	10.60%	10.72%	9.86%

Based on: 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31).

2017 Calculations

¹ ROA = 100 × Net income attributable to Time Warner Inc. shareholders ÷ Total assets
= 100 × 5,247 ÷ 69,209 = 7.58%

² Adjusted ROA = 100 × Net income attributable to Time Warner Inc. shareholders ÷ Adjusted total assets
= 100 × 5,247 ÷ 41,433 = 12.66%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Time Warner Inc. adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Time Warner Inc. (NYSE:TWX)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Time Warner Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Time Warner Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)