An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)
Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

Time Warner Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Total undiscounted future operating lease payments	1,128)	1,154)	1,260)	1,480)	1,910)
Discount rate¹	4.10%	3.91%	5.45%	5.38%	5.83%

Total present value of future operating lease payments	976)	1,016)	1,083)	1,262)	1,600)

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).

¹ Internal rate of return on capital leases

2017 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.10%
2018	323)	2018	323)	310)
2019	184)	2019	184)	170)
2020	123)	2020	123)	109)
2021	94)	2021	94)	80)
2022	85)	2022	85)	70)
2023 and thereafter	319)	2023	85)	67)
		2024	85)	64)
		2025	85)	62)
		2026	64)	45)
Total:	1,128)		1,128)	976)

Based on: 10-K (reporting date: 2017-12-31).

2016 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 3.91%
2017	310)	2017	310)	298)
2018	285)	2018	285)	264)
2019	146)	2019	146)	130)
2020	91)	2020	91)	78)
2021	63)	2021	63)	52)
2022 and thereafter	259)	2022	63)	50)
		2023	63)	48)
		2024	63)	46)
		2025	63)	45)
		2026	7)	5)
Total:	1,154)		1,154)	1,016)

Based on: 10-K (reporting date: 2016-12-31).

2015 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 5.45%
2016	314)	2016	314)	298)
2017	300)	2017	300)	270)
2018	275)	2018	275)	235)
2019	135)	2019	135)	109)
2020	82)	2020	82)	63)
2021 and thereafter	154)	2021	82)	60)
		2022	72)	50)
Total:	1,260)		1,260)	1,083)

Based on: 10-K (reporting date: 2015-12-31).

2014 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 5.38%
2015	317)	2015	317)	301)
2016	309)	2016	309)	278)
2017	284)	2017	284)	243)
2018	259)	2018	259)	210)
2019	125)	2019	125)	96)
2020 and thereafter	186)	2020	125)	91)
		2021	61)	42)
Total:	1,480)		1,480)	1,262)

Based on: 10-K (reporting date: 2014-12-31).

2013 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 5.83%
2014	410)	2014	410)	387)
2015	378)	2015	378)	338)
2016	343)	2016	343)	289)
2017	310)	2017	310)	247)
2018	192)	2018	192)	145)
2019 and thereafter	277)	2019	192)	137)
		2020	85)	57)
Total:	1,910)		1,910)	1,600)

Based on: 10-K (reporting date: 2013-12-31).

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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)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	976)	1,016)	1,083)	1,262)	1,600)
Total assets (adjusted)	70,185)	66,982)	64,931)	64,521)	69,594)
Adjustment to Total Debt
Total debt (as reported)	23,744)	24,339)	23,792)	22,494)	20,165)
Add: Operating lease liability (before adoption of FASB Topic 842)²	976)	1,016)	1,083)	1,262)	1,600)
Total debt (adjusted)	24,720)	25,355)	24,875)	23,756)	21,765)

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).

^{1, 2} Equal to total present value of future operating lease payments.

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 Turnover¹
Reported total asset turnover	0.45	0.44	0.44	0.43	0.44
Adjusted total asset turnover	0.45	0.44	0.43	0.42	0.43
Debt to Equity²
Reported debt to equity	0.84	1.00	1.01	0.92	0.67
Adjusted debt to equity	0.87	1.04	1.05	0.97	0.73
Return on Assets³ (ROA)
Reported ROA	7.58%	5.95%	6.00%	6.05%	5.43%
Adjusted ROA	7.48%	5.86%	5.90%	5.93%	5.30%

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).

¹ See details »

² See details »

³ See details »

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 improved from 2015 to 2016 and from 2016 to 2017.
Adjusted debt to equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Time Warner Inc. adjusted debt to equity ratio improved 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 Operating Leases
Selected Financial Data (US$ in millions)
Revenues	31,271)	29,318)	28,118)	27,359)	29,795)
Adjusted total assets	70,185)	66,982)	64,931)	64,521)	69,594)
Activity Ratio
Adjusted total asset turnover²	0.45	0.44	0.43	0.42	0.43

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 ÷ 70,185 = 0.45

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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 improved 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 debt	23,744)	24,339)	23,792)	22,494)	20,165)
Total Time Warner Inc. shareholders’ equity	28,375)	24,335)	23,619)	24,476)	29,904)
Solvency Ratio
Debt to equity¹	0.84	1.00	1.01	0.92	0.67
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	24,720)	25,355)	24,875)	23,756)	21,765)
Total Time Warner Inc. shareholders’ equity	28,375)	24,335)	23,619)	24,476)	29,904)
Solvency Ratio
Adjusted debt to equity²	0.87	1.04	1.05	0.97	0.73

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 Debt to equity = Total debt ÷ Total Time Warner Inc. shareholders’ equity
= 23,744 ÷ 28,375 = 0.84

² Adjusted debt to equity = Adjusted total debt ÷ Total Time Warner Inc. shareholders’ equity
= 24,720 ÷ 28,375 = 0.87

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Solvency ratio	Description	The company
Adjusted debt-to-equity	A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity.	Time Warner Inc. adjusted debt-to-equity ratio improved 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)
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 Operating Leases
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	70,185)	66,982)	64,931)	64,521)	69,594)
Profitability Ratio
Adjusted ROA²	7.48%	5.86%	5.90%	5.93%	5.30%

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 ÷ 70,185 = 7.48%

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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 Operating Leases

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Adjustments to Financial Statements for Operating Leases

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

Adjusted Financial Ratios for Operating Leases (Summary)

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

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)