Cash Flow Statement

The cash flow statement provides information about a company cash receipts and cash payments during an accounting period, showing how these cash flows link the ending cash balance to the beginning balance shown on the company balance sheet.

The cash flow statement consists of three parts: cash flows provided by (used in) operating activities, cash flows provided by (used in) investing activities, and cash flows provided by (used in) financing activities.

Time Warner Inc., consolidated cash flow statement

US$ in millions

12 months ended:	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Net income	5,244)	3,925)	3,832)	3,827)	3,691)
Discontinued operations, net of tax	—)	(11)	(37)	67)	(137)
Net income from continuing operations	5,244)	3,914)	3,795)	3,894)	3,554)
Depreciation and amortization	694)	669)	681)	733)	886)
Amortization of film and television costs	9,162)	8,324)	8,030)	8,040)	7,262)
Asset impairments	16)	43)	25)	69)	140)
Venezuelan foreign currency loss	—)	—)	—)	173)	—)
(Gain) loss on investments and other assets, net	(367)	(131)	31)	(464)	(65)
Equity in losses of investee companies, net of cash distributions	191)	324)	161)	232)	218)
Equity-based compensation	227)	277)	182)	219)	256)
Deferred income taxes	(1,010)	236)	328)	166)	759)
Premiums paid and costs incurred on debt redemption	1,087)	1,008)	72)	—)	—)
Adjustments for noncash and nonoperating items	10,000)	10,750)	9,510)	9,168)	9,456)
Receivables	(704)	(1,201)	(112)	(403)	(366)
Inventories and film costs	(9,574)	(8,774)	(8,526)	(7,789)	(7,194)
Accounts payable and other liabilities	624)	631)	(200)	592)	(492)
Other changes	(496)	(637)	(616)	(1,781)	(1,242)
Changes in operating assets and liabilities, net of acquisitions	(10,150)	(9,981)	(9,454)	(9,381)	(9,294)
Cash provided by operations	5,094)	4,683)	3,851)	3,681)	3,716)
Investments in available-for-sale securities	(1)	(9)	(41)	(30)	(27)
Investments and acquisitions, net of cash acquired	(706)	(1,228)	(672)	(950)	(485)
Capital expenditures	(656)	(432)	(423)	(474)	(602)
Proceeds from Time Inc. in the Time Separation	—)	—)	—)	1,400)	—)
Proceeds from the sale of Time Warner Center	—)	—)	—)	1,264)	—)
Other investment proceeds	367)	309)	143)	173)	204)
Cash (used) provided by investing activities	(996)	(1,360)	(993)	1,383)	(910)
Borrowings	4,270)	3,830)	3,768)	2,409)	1,028)
Debt repayments	(5,001)	(3,304)	(2,344)	(72)	(762)
Proceeds from exercise of stock options	206)	172)	165)	338)	674)
Excess tax benefit from equity instruments	—)	88)	151)	179)	179)
Principal payments on capital leases	(39)	(14)	(11)	(11)	(9)
Repurchases of common stock	—)	(2,322)	(3,632)	(5,504)	(3,708)
Dividends paid	(1,265)	(1,269)	(1,150)	(1,109)	(1,074)
Other financing activities	(1,172)	(1,103)	(260)	(173)	(111)
Cash used by financing activities	(3,001)	(3,922)	(3,313)	(3,943)	(3,783)
Cash used by operations from discontinued operations	(15)	(17)	(8)	(16)	(2)
Cash used by investing activities from discontinued operations	—)	—)	—)	(51)	—)
Cash used by financing activities from discontinued operations	—)	—)	—)	(36)	—)
Effect of change in cash and equivalents of discontinued operations	—)	—)	—)	(87)	—)
Cash used by discontinued operations	(15)	(17)	(8)	(190)	(2)
Effect of Venezuelan exchange rate changes on cash and equivalents	—)	—)	—)	(129)	—)
Increase (decrease) in cash and equivalents	1,082)	(616)	(463)	802)	(979)
Cash and equivalents at beginning of period	1,539)	2,155)	2,618)	1,816)	2,841)
Cash and equivalents at end of period	2,621)	1,539)	2,155)	2,618)	1,862)

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).

Net Income and Operations: Net income demonstrated an overall upward trend, increasing from $3,691 million in 2013 to $5,244 million in 2017, with a notable jump between 2016 and 2017. Net income from continuing operations also followed a similar pattern, reflecting consistent profitability from ongoing business activities. Discontinued operations showed variability and became negligible by 2017.
Depreciation, Amortization, and Asset Impairments: Depreciation and amortization expenses decreased slightly from 2013 through 2016 before increasing moderately in 2017. Amortization of film and television costs steadily increased over the five years, rising significantly from $7,262 million in 2013 to $9,162 million in 2017, indicating possibly greater investment or expense recognition in content assets. Asset impairments declined progressively, suggesting fewer write-downs over time.
Unusual and Non-Operating Items: The Venezuelan foreign currency loss was recorded only in 2014, indicating an isolated foreign exchange impact. Gains and losses on investments and other assets were inconsistent but showed a favorable increase in losses turning into gains in some years, especially a large gain in 2014. Equity losses in investee companies fluctuated without a clear trend. Deferred income taxes fluctuated broadly, with a significant negative balance in 2017 reflecting tax-related benefits or adjustments. Premiums paid and debt redemption costs appeared only in later years, rising sharply in 2016 and 2017, indicative of substantial refinancing or debt restructuring activities.
Cash Flow from Operations and Working Capital Changes: Cash provided by operations demonstrated an upward trend, increasing from $3,716 million in 2013 to $5,094 million in 2017, affirming improving operational cash generation. However, changes in operating assets and liabilities consistently used cash over the period, becoming more pronounced in later years. Negative movements primarily came from increasing inventories and film costs and receivables. Accounts payable and other liabilities changes were volatile, at times providing cash inflows and at other times using cash.
Investing Activities: Cash used by investing activities fluctuated, with significant inflows in 2014 mainly due to proceeds from the separation of Time Inc. and the sale of the Time Warner Center. Excluding these one-time gains, investing activities generally used cash, driven by consistent investments and acquisitions, which peaked in 2016. Capital expenditures remained somewhat stable until a rise in 2017. Investment proceeds increased steadily, indicating some cash returns on investments.
Financing Activities: Borrowings increased steadily over the years, reaching $4,270 million in 2017, while debt repayments grew even more rapidly, particularly in 2016 and 2017, suggesting active debt management and deleveraging. Repurchases of common stock were significant in the early years but appear to have ceased or were not recorded after 2016. Dividends paid remained relatively stable, indicating consistent shareholder returns. Overall, cash used by financing activities was substantial but decreased in 2017 compared to prior years.
Cash Position and Discontinued Operations: Cash and equivalents experienced fluctuations, with a notable increase in 2014 due to divestitures. However, a decline followed leading to a dip in 2016 before recovering sharply in 2017. Cash used by discontinued operations was minor but persistent through the years. A negative effect from Venezuelan exchange rate changes was recorded only in 2014, impacting cash balances.
Summary: The data demonstrate strong profitability growth, steady improvement in operational cash flow, and active management of investments and financing. Large content amortization expenses and working capital investments reflect ongoing capital-intensive operations. The company engaged in significant debt refinancing and deleveraging, while returning cash to shareholders through dividends and, initially, share repurchases. One-time divestiture gains in 2014 enhanced investing cash flow temporarily. Overall, financial activities suggest strategic shifts and stable financial health with an improving liquidity position by 2017.

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Time Warner Inc. (NYSE:TWX)

Cash Flow Statement