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SECURITIES AND EXCHANGE COMMISSION

Page
Part IFINANCIAL INFORMATION
Item 1.Consolidated Financial Statements
Consolidated Balance Sheets as of September 30, 2017 (unaudited) and December 31, 2016 (audited)2
Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)3
Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2017 and 2016 (unaudited)4
Consolidated Statements of Stockholders' Equity for the Nine Months Ended September 30, 2017 and 2016 (unaudited)5
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2017 and 2016 (unaudited)6
Notes to the Consolidated Financial Statements7
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations29
Item 3.Quantitative and Qualitative Disclosures About Market Risk51
Item 4.Controls and Procedures52
PART IIOTHER INFORMATION
Item 1.Legal Proceedings53
Item 1A.Risk Factors53
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds53
Item 3.Defaults Upon Senior Securities53
Item 4.Mine Safety Disclosures53
Item 5.Other Information53
Item 6.Exhibits54
Signature55
September 30,
2017

December 31,
2016

ASSETS
Current assets
Cash and cash equivalents$332
$296
Short-term investments
40
Receivables, less allowances of $185 and $203 at September 30, 2017 and December 31, 2016, respectively409
543
Inventories, net of reserves29
31
Prepaid expenses and other current assets125
110
Total current assets895
1,020
Property, plant and equipment, net311
304
Intangible assets, net799
846
Goodwill2,048
2,069
Other assets65
66
Total assets$4,118
$4,305
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities$535
$598
Deferred revenue386
403
Current portion of long-term debt7
7
Total current liabilities928
1,008
Long-term debt1,216
1,233
Deferred tax liabilities185
210
Deferred revenue76
86
Other noncurrent liabilities333
328
Commitments and contingencies (Note 13)

Redeemable noncontrolling interests1

Stockholders' equity
Common stock, $0.01 par value, 400 million shares authorized; 99.61 million and 98.95 million shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively1
1
Preferred stock, $0.01 par value, 40 million shares authorized; none issued

Additional paid-in capital12,531
12,548
Accumulated deficit(10,791)(10,732)
Accumulated other comprehensive loss, net(362)(377)
Total Time Inc. stockholders' equity1,379
1,440
Equity attributable to noncontrolling interests

Total stockholders' equity1,379
1,440
Total liabilities and stockholders' equity$4,118
$4,305
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Revenues
Advertising$369
$417
$1,074
$1,203
Circulation197
223
609
697
Other113
110
326
309
Total revenues679
750
2,009
2,209
Costs of revenues280
327
867
956
Selling, general and administrative expenses306
339
976
1,085
Amortization of intangible assets20
22
59
63
Restructuring and severance costs26
43
73
54
Asset impairments
188
5
189
Goodwill impairment

50

(Gain) loss on operating assets, net(4)(2)(8)(18)
Operating income (loss)51
(167)(13)(120)
Bargain purchase (gain)


(3)
Interest expense, net16
16
50
51
Other (income) expense, net6
2
10
9
Income (loss) before income taxes29
(185)(73)(177)
Income tax provision (benefit)16
(73)(14)(73)
Net income (loss)13
(112)(59)(104)
Less: Net income (loss) attributable to noncontrolling interests



Net income (loss) attributable to Time Inc.$13
$(112)$(59)$(104)
Per share information attributable to Time Inc. common stockholders:
Basic net income (loss) per common share$0.14
$(1.13)$(0.59)$(1.05)
Weighted average basic common shares outstanding99.86
99.64
99.74
99.43
Diluted net income (loss) per common share$0.14
$(1.13)$(0.59)$(1.05)
Weighted average diluted common shares outstanding100.12
99.64
99.74
99.43
Cash dividends declared per share of common stock$0.04
$0.19
$0.27
$0.57
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Net income (loss)$13
$(112)$(59)$(104)
Other comprehensive income (loss), net of tax
Unrealized foreign currency translation gains (losses)11
(10)35
(53)
Benefit obligations
Unrealized gains (losses) occurring during the period(8)4
(24)21
Reclassification adjustment for (gains) losses realized in net income (loss)1
1
4
3
Net benefit obligations(7)5
(20)24
Other comprehensive income (loss)4
(5)15
(29)
Comprehensive income (loss)17
(117)(44)(133)
Less: Comprehensive income (loss) attributable to noncontrolling interests



Comprehensive income (loss) attributable to Time Inc.$17
$(117)$(44)$(133)
Nine Months Ended September 30, 2017
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss, Net
Total Stockholders' Equity
Balance as of
December 31, 2016
$1
$12,548
$(10,732)$(377)$1,440
Net income (loss)

(59)
(59)
Other comprehensive income (loss)


15
15
Dividends declared
(27)

(27)
Equity-based compensation, net of withholding taxes
10


10
Balance as of
September 30, 2017
$1
$12,531
$(10,791)$(362)$1,379
Nine Months Ended September 30, 2016
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Accumulated Other Comprehensive Loss, Net
Total Stockholders' Equity
Balance as of
December 31, 2015
$1
$12,604
$(10,570)$(226)$1,809
Net income (loss)

(104)
(104)
Other comprehensive income (loss)


(29)(29)
Dividends declared
(58)

(58)
Purchase of common stock

(109)
(109)
Equity-based compensation, net of withholding taxes
12


12
Balance as of
September 30, 2016
$1
$12,558
$(10,783)$(255)$1,521
Nine Months Ended
September 30,
2017
2016
OPERATING ACTIVITIES
Net income (loss)$(59)$(104)
Adjustments to reconcile Net income (loss) to Cash provided by (used in) operations
Depreciation and amortization101
104
Amortization of deferred financing costs and discounts on indebtedness3
4
Asset impairments5
189
Goodwill impairment50

(Gain) loss on sale of operating assets(1)(11)
(Gain) loss on repurchases of 5.75% Senior Notes
(4)
Amortization of deferred gain on sale-leaseback(6)(7)
Bargain purchase (gain)
(3)
(Income) loss on equity-method investments3
12
Cost-method investment impairment4

Equity-based compensation expense18
21
Deferred income taxes(26)(77)
Changes in operating assets and liabilities
Receivables161
75
Inventories2
(4)
Prepaid expenses and other assets(18)15
Accounts payable and other liabilities(107)(110)
Other, net9
6
Cash provided by (used in) operations139
106
INVESTING ACTIVITIES
Acquisitions, net of cash acquired(22)(192)
(Investments in) dispositions of cost and equity-method investments(3)(19)
Proceeds from (payments for) dispositions(4)29
Purchases of short-term investments
(60)
Maturities of short-term investments40
60
Capital expenditures(56)(78)
Issuances of notes receivable(2)(16)
Repayments of notes receivable1

Cash provided by (used in) investing activities(46)(276)
FINANCING ACTIVITIES
Purchase of common stock
(111)
Repurchase of 5.75% Senior Notes
(45)
Principal payments on Term Loan(20)(5)
Withholding taxes paid on equity-based compensation(8)(8)
Dividends paid(27)(58)
Contingent/deferred consideration payments(3)(2)
Cash provided by (used in) financing activities(58)(229)
Effect of exchange rate changes on Cash and cash equivalents 1
(8)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS36
(407)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD296
651
CASH AND CASH EQUIVALENTS, END OF PERIOD$332
$244
September 30,
2017

December 31,
2016

Short-term investments(a)$
$40
Equity-method investments(b)7
9
Cost-method investments(c)4
6
Total$11
$55
(a)Our Short-term investments consist of term deposits with original maturities greater than three months and remaining maturities of less than one year. Our term deposits are carried at amortized cost on the accompanying Balance Sheets as held-to-maturity securities. Cost approximates fair value due to the short-term nature of the term deposits.
(b)Our Equity-method investments consist primarily of joint ventures. During the three and nine months ended September 30, 2017, we recorded equity losses of $1 million and $3 million, respectively. During the three and nine months ended September 30, 2016, we recognized equity losses of $1 million and $12 million, respectively, related primarily to resuming applying the equity-method after providing additional financial support to certain equity-method investees.
(c)During the nine months ended September 30, 2017, we made a $2 million investment in a privately-held transaction marketing technology company. During the nine months ended September 30, 2016, we made a $3 million investment in a privately-held e-commerce subscription company. We use available qualitative and quantitative information to evaluate all Cost-method investments for impairment at least quarterly.
September 30, 2017December 31, 2016
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
Assets
Cash and cash equivalents - Money market funds$247
$
$
$247
$102
$
$
$102
Liabilities
Put option liability(a)

(10)(10)

(10)(10)
Contingent consideration(b)

(1)(1)

(2)(2)
Other - liabilities(c)

(3)(3)

(2)(2)
Total$247
$
$(14)$233
$102
$
$(14)$88
(a)Our Put option liability, included within Other noncurrent liabilities, relates to an equity-method investment, the fair value of which was derived using a lattice model for which we used unobservable inputs that are classified as Level 3 under the fair value hierarchy. Adjustments to the fair value of this obligation are included as a component of Other (income) expense, net in the Statements of Operations.
(b)Contingent consideration consists of earn-out liabilities in connection with acquisitions. At September 30, 2017, $1 million is included in Accounts payable and accrued liabilities. At December 31, 2016, $1 million is included in Accounts payable and accrued liabilities and $1 million in Other noncurrent liabilities. Fair values were derived using a Monte Carlo simulation approach or a probability weighted present value of expected future payouts approach, for which we used unobservable inputs that are classified as Level 3 under the fair value hierarchy. Adjustments to the fair value of such obligations are included as a component of Selling, general and administrative expenses in the Statements of Operations. Such contingent considerations are based primarily on financial targets and other operational metrics.
(c)Our other liabilities, included within Other noncurrent liabilities, relate primarily to a lease guarantee. The fair value of the lease guarantee was derived using a probability weighted present value of expected future payments approach, for which we used unobservable inputs that are classified as Level 3 under the fair value hierarchy. Adjustments to the fair value of such obligations are included as a component of Selling, general and administrative expenses in the Statements of Operations.
2017
2016
Beginning Balance as of January 1$14
$19
Issuances2
2
Settlements(2)(1)
Fair value adjustments
(3)
Foreign exchange movements
(2)
Other adjustments
(2)
Ending Balance as of September 30$14
$13
September 30, 2017December 31, 2016
Carrying Amount
Estimated Fair Value
Carrying Amount
Estimated Fair Value
Debt instruments
Term Loan$654
$664
$672
$687
5.75% Senior Notes569
586
568
597
$1,223
$1,250
$1,240
$1,284
September 30,
2017

December 31,
2016

5.75% Senior Notes$575
$575
Senior Credit Facilities
Term Loan662
682
Unamortized discount and deferred financing costs(14)(17)
Total debt obligations1,223
1,240
Less: Current portion of long-term debt7
7
Long-term debt$1,216
$1,233
Three Months Ended
September 30, 2017
Nine Months Ended
September 30, 2017
Pre-tax
Tax
(Provision)
Benefit

Net of Tax
Pre-tax
Tax
(Provision)
Benefit

Net of Tax
Unrealized foreign currency translation gains (losses)$11
$
$11
$35
$
$35
Unrealized gains (losses) on pension benefit obligations(10)2
(8)(29)5
(24)
Reclassification adjustment for (gains) losses on pension benefit obligations realized in Net income (loss) attributable to Time Inc.(a)2
(1)1
5
(1)4
Other comprehensive income (loss)$3
$1
$4
$11
$4
$15
Three Months Ended
September 30, 2016
Nine Months Ended
September 30, 2016
Pre-tax
Tax
(Provision)
Benefit

Net of Tax
Pre-tax
Tax
(Provision)
Benefit

Net of Tax
Unrealized foreign currency translation gains (losses)$(10)$
$(10)$(53)$
$(53)
Unrealized gains (losses) on pension benefit obligations5
(1)4
26
(5)21
Reclassification adjustment for (gains) losses on pension benefit obligations realized in Net income (loss) attributable to Time Inc.(a)1

1
3

3
Other comprehensive income (loss)$(4)$(1)$(5)$(24)$(5)$(29)
(a)Included within Selling, general and administrative expenses on the accompanying Statements of Operations.
Balance, December 31, 2016(a)$2,069
Acquisitions(b)13
Impairments(c)(50)
Foreign exchange movements16
Balance, September 30, 2017(a)$2,048
(a)The carrying amount of Goodwill presented was net of accumulated impairments of $16 billion as of both September 30, 2017 and December 31, 2016.
September 30, 2017
Weighted Average Useful Life (in years)Gross
Accumulated Amortization
Net
Tradenames19$1,086
$(368)$718
Customer lists and other intangible assets(a)6671
(590)81
$1,757
$(958)$799
December 31, 2016
Weighted Average Useful Life (in years)Gross
Accumulated Amortization
Net
Tradenames18$1,084
$(324)$760
Customer lists and other intangible assets(a)6659
(573)86
$1,743
$(897)$846
(a)As of September 30, 2017, other intangible assets included capitalized software of $53 million, with accumulated amortization of $23 million. As of December 31, 2016 other intangible assets included capitalized software of $48 million, with accumulated amortization of $15 million. These other intangible assets are amortized over their useful lives of three to seven years.
Remainder of 2017$19
201876
201973
202069
202166
202265
Thereafter431
Total$799
Three Months Ended September 30,
20172016
Net income (loss)
Shares
Per share amount
Net income (loss)
Shares
Per share amount
Basic Net Income (Loss) per Common Share
Net income (loss) attributable to Time Inc.$13.53
$(112.40)
Less net income associated with participating securities

Basic net income (loss) per common share$13.53
99.86
$0.14
$(112.40)99.64
$(1.13)
Diluted Net Income (Loss) per Common Share
Net income (loss) attributable to Time Inc.$13.53
$(112.40)
Less net income associated with participating securities

Effect of dilutive securities
0.26


Diluted net income (loss) per common share$13.53
100.12
$0.14
$(112.40)99.64
$(1.13)
Nine Months Ended September 30,
20172016
Net income (loss)
Shares
Per share amount
Net income (loss)
Shares
Per share amount
Basic Net Income (Loss) per Common Share
Net income (loss) attributable to Time Inc.$(58.50)$(104.39)
Less net income associated with participating securities

Basic net income (loss) per common share$(58.50)99.74
$(0.59)$(104.39)99.43
$(1.05)
Diluted Net Income (Loss) per Common Share
Net income (loss) attributable to Time Inc.$(58.50)$(104.39)
Less net income associated with participating securities

Effect of dilutive securities



Diluted net income (loss) per common share$(58.50)99.74
$(0.59)$(104.39)99.43
$(1.05)
Nine Months Ended
September 30, 2017
Expected volatility26.81%
Expected term to exercise from grant date (in years)2.63
Risk-free rate1.51%
Expected dividend yield1.20%
Weighted-average grant date fair value per option$2.42
Nine Months Ended
September 30,
2017
2016
Number Granted
RSUs1
2
Stock options
3
Performance options1
N/A
Outperformance plan performance stock units
1
Weighted Average Grant Date Fair Value
RSUs$17.19
$12.84
Stock optionsN/A
$14.42
Performance options$14.20
N/A
Outperformance plan performance stock unitsN/A
$8.09
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
RSUs$4
$4
$12
$16
Stock options1
1
2
4
Other2

4

Total expense included in Operating income (loss)$7
$5
$18
$20
Income tax benefit recognized$2
$1
$5
$5
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Interest cost$5
$4
$14
$16
Expected return on plan assets(12)(10)(34)(34)
Amortization of net loss2
1
5
3
Net periodic benefit cost (income)$(5)$(5)$(15)$(15)
Employee Terminations
Other Exit
Costs

Total
Remaining liability as of December 31, 2016$70
$28
$98
Net accruals68
5
73
Non-cash adjustments(a)(2)1
(1)
Cash paid(69)(21)(90)
Remaining liability as of September 30, 2017$67
$13
$80
(a)Non-cash adjustments relate primarily to the effect of foreign exchange rate changes.
September 30,
2017

December 31,
2016

Inventories, net of reserves:
Raw materials - paper$27
$30
Finished goods2
1
Total inventories, net of reserves$29
$31
September 30,
2017

December 31,
2016

Prepaid expenses and other current assets:
Prepaid production costs$24
$20
Prepaid commissions17
18
Postage deposit15
12
Prepaid income taxes7
6
Due from Time Warner
3
Other prepaid expenses and other current assets62
51
Total prepaid expenses and other current assets$125
$110
September 30,
2017

December 31,
2016

Other assets:
Deferred tax assets$19
$19
Notes receivable(a)11
10
Equity-method investments7
9
Other tax asset6
6
Cost-method investments4
6
Display racks4
4
Other noncurrent assets14
12
Total other assets$65
$66
September 30,
2017

December 31,
2016

Accounts payable and accrued liabilities:
Accounts payable$201
$232
Accrued compensation106
126
Restructuring and severance69
89
Rebates and allowances47
43
Distribution expenses payable25
28
Liability to Time Warner25
24
Accrued other taxes19
18
Accrued interest15
7
Deferred gain(b)9
8
Barter liabilities5
4
Contingent consideration1
1
Other current liabilities13
18
Total accounts payable and accrued liabilities$535
$598
September 30,
2017

December 31,
2016

Other noncurrent liabilities:
Deferred rent$137
$112
Deferred gain(b)64
64
Noncurrent tax reserves and interest48
38
Noncurrent deferred compensation26
28
Noncurrent pension and postretirement liabilities(c)15
44
Restructuring and severance11
9
Put option liability10
10
Liability to Time Warner 1
1
Contingent consideration
1
Other noncurrent liabilities21
21
Total other noncurrent liabilities$333
$328
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Other (income) expense, net:
Investment (gains) losses, net$2
$1
$4
$1
(Income) loss on equity-method investments1
1
3
12
(Gain) loss on extinguishment of debt


(4)
Other (income) expense3

3

Total other (income) expense, net$6
$2
$10
$9
Nine Months Ended
September 30,
2017
2016
Cash Flows:
Cash payments made for income taxes$8
$2
Income tax refund received(4)(58)
Cash tax (receipts) payments, net$4
$(56)
Cash payments made for interest$40
$41
Interest income received(2)(1)
Cash interest (receipts) payments, net$38
$40
(a)Notes receivable relates primarily to a loan we provided of £10 million to a printing vendor for our U.K. operations to assist in financing its purchase of the printing facilities of our former printing vendor in June 2016. The loan was provided in order to maintain continuity in printing operations for our U.K. business. The interest rate on the loan is 8% per annum and has a term of five years with principal repayments of £0.3 million per quarter and £5 million at the end of the five year term. As of September 30, 2017, for the UK Notes receivable, $1 million is in Prepaid expenses and other current assets and $10 million is in Other assets.
(b)The Deferred gain related to the sale-leaseback of the Blue Fin Building that was completed in the fourth quarter of 2015 and will be recognized ratably over the lease term through 2025.
(c) See Note 11, "Benefit Plans," for more information on Noncurrent pension and postretirement liabilities.
Continuing to grow our digital audiences and digital advertising revenues through growth in native and branded content, targeting and programmatic, and video solutions;
Innovating how we produce, market and distribute our print products, and re-engineer our operations in order to sustain this important source of cash flows;
Enriching and utilizing the power of our proprietary first-party data for direct to consumer marketing, targeted advertising, product development and editorial;
Launching new primarily digitally-transacted paid products and services, leveraging our significant consumer relationships and marketing engine;
Pursuing selective rationalization of our brand portfolio, the potential sale of non-core assets and joint venture opportunities;
Executing on our strategic transformation program with the majority of initiatives expected to be implemented in the first 18 months after the program launch, targeting estimated annual cost savings of more than $400 million and margin expansion; and
Three Months Ended
September 30,
Nine Months Ended
September 30,
2017
2016
2017
2016
Restructuring and severance costs$26
$43
$73
$54
Asset impairments
188
5
189
Goodwill impairment

50

(Gain) loss on operating assets, net(4)(2)(8)(18)
Other costs8
2
18
23
Impact on Operating income (loss)30
231
138
248
Bargain purchase (gain)


(3)
(Gain) loss on extinguishment of debt


(4)
Cost-method investment impairment4

4

Income tax impact of above items(10)(86)(51)(93)
Impact on Net income (loss) attributable to Time Inc. from items affecting comparability$24
$145
$91
$148
Equity-Method Losses: We had suspended recognizing equity losses for certain equity-method investments as our investee losses were in excess of the investments' carrying amounts. During the nine months ended September 30. 2017, we provided additional financial support to an equity-method investee and recognized $1 million in equity losses related to this funding. During the three and nine months ended September 30, 2016, we provided additional financial support to certain equity-method investments and recognized $1 million and $12 million, respectively, in equity losses related to these transactions.
Three Months Ended
September 30,
2017
2016
% Change
Revenues$679
$750
(9%)
Operating expenses628
917
(32%)
Operating income (loss)51
(167)NM
Interest expense, net16
16
%
Other (income) expense, net6
2
NM
Income tax provision (benefit)16
(73)NM
Net income (loss)$13
$(112)NM
Three Months Ended
September 30,
2017
2016
% Change
Revenues
Advertising
Print and other advertising$237
$288
(18%)
Digital advertising132
129
2%
Total advertising revenues369
417
(12%)
Circulation197
223
(12%)
Other113
110
3%
Total revenues$679
$750
(9%)
Three Months Ended
September 30,
2017
2016
Revenues
Advertising54%56%
Circulation29%30%
Other17%14%
Total revenues100%100%
Three Months Ended
September 30,
2017
2016
% Change
Circulation
Subscription$135
$148
(9%)
Newsstand55
68
(19%)
Other circulation7
7
%
Total circulation revenues$197
$223
(12%)
Three Months Ended
September 30,
2017
2016
% Change
Sources of Revenues
Magazines$433
$506
(14)%
Digital165
160
3 %
Brand Extensions & Other81
84
(4)%
Total revenues$679
$750
(9)%
Three Months Ended
September 30,
2017
2016
% Change
Operating expenses
Costs of revenues
Production costs$141
$154
(8%)
Editorial costs78
101
(23%)
Other60
71
(15%)
Total costs of revenues(a)279
326
(14%)
Selling, general and administrative expenses(a)293
326
(10%)
Amortization of intangible assets20
22
(9%)
Depreciation14
14
%
Restructuring and severance costs26
43
(40%)
Asset impairments
188
(100%)
(Gain) loss on operating assets, net(4)(2)100%
Operating expenses$628
$917
(32%)
(a)Costs of revenues and Selling, general and administrative expenses set forth above exclude depreciation.
Nine Months Ended
September 30,
2017
2016
% Change
Revenues$2,009
$2,209
(9%)
Operating expenses2,022
2,329
(13%)
Operating income (loss)(13)(120)89%
Bargain purchase (gain)
(3)(100%)
Interest expense, net50
51
(2%)
Other (income) expense, net10
9
11%
Income tax provision (benefit)(14)(73)(81%)
Net income (loss)$(59)$(104)43%
Nine Months Ended
September 30,
2017
2016
% Change
Revenues
Advertising
Print and other advertising$698
$857
(19%)
Digital advertising376
346
9%
Total advertising revenues1,074
1,203
(11%)
Circulation609
697
(13%)
Other326
309
6%
Total revenues$2,009
$2,209
(9%)
Nine Months Ended
September 30,
2017
2016
Revenues
Advertising53%54%
Circulation30%32%
Other17%14%
Total revenues100%100%
Nine Months Ended
September 30,
2017
2016
% Change
Circulation
Subscription$416
$463
(10%)
Newsstand169
210
(20%)
Other circulation24
24
%
Total circulation revenues$609
$697
(13%)
Nine Months Ended
September 30,
2017
2016
% Change
Sources of Revenues
Magazines$1,300
$1,560
(17)%
Digital480
429
12 %
Brand Extensions & Other229
220
4 %
Total revenues$2,009
$2,209
(9)%
Nine Months Ended
September 30,
2017
2016
% Change
Operating expenses
Costs of revenues
Production costs$422
$478
(12%)
Editorial costs243
289
(16%)
Other198
185
7%
Total costs of revenues(a)863
952
(9%)
Selling, general and administrative expenses(a)938
1,048
(10%)
Amortization of intangible assets59
63
(6%)
Depreciation42
41
2%
Restructuring and severance costs73
54
35%
Asset impairments5
189
(97%)
Goodwill impairment50

NM
(Gain) loss on operating assets, net(8)(18)(56%)
Operating expenses$2,022
$2,329
(13%)
(a)Costs of revenues and Selling, general and administrative expenses set forth above exclude depreciation.
Nine Months Ended
September 30,
2017
2016
Net income (loss)$(59)$(104)
Adjustments to reconcile Net income (loss) to Cash provided by (used in) operations
Depreciation and amortization101
104
Amortization of deferred financing costs and discounts on indebtedness3
4
Asset impairments5
189
Goodwill impairment50

(Gain) loss on sale of operating assets(1)(11)
(Gain) loss on repurchases of 5.75% Senior Notes
(4)
Amortization of deferred gain on sale-leaseback(6)(7)
Bargain purchase (gain)
(3)
(Income) loss on equity-method investments3
12
Cost-method investment impairment4

Equity-based compensation expense18
21
Deferred income taxes(26)(77)
All other net, including working capital changes(a)47
(18)
Cash provided by (used in) operations$139
$106
(a)Includes domestic net income tax paid of $2 million and received of $56 million for the nine months ended September 30, 2017 and 2016, respectively, and foreign net income taxes paid of $2 million and nil for the nine months ended September 30, 2017 and 2016, respectively.
Nine Months Ended
September 30,
2017
2016
Acquisitions, net of cash acquired$(22)$(192)
(Investments in) dispositions of cost and equity-method investments(3)(19)
Proceeds from (payments for) dispositions(4)29
Purchases of short-term investments
(60)
Maturities of short-term investments40
60
Capital expenditures(56)(78)
Issuances of notes receivable(2)(16)
Repayments of notes receivable1

Cash provided by (used in) investing activities$(46)$(276)
Nine Months Ended
September 30,
2017
2016
Purchase of common stock$
$(111)
Repurchase of 5.75% Senior Notes
(45)
Principal payments on Term Loan(20)(5)
Withholding taxes paid on equity-based compensation(8)(8)
Dividends paid(27)(58)
Contingent/deferred consideration payments(3)(2)
Cash provided by (used in) financing activities$(58)$(229)
changes in and the execution of our plans, initiatives and strategies, including our strategic transformation program;
recent and future changes in technology, including methods for the delivery of our content;
changes in consumer behavior, including changes in spending behavior and changes in when, where and how content is consumed;
our ability to develop or acquire technologies that enable us to serve changing consumer behaviors and support our evolving business needs;
our ability to deal effectively with economic slowdowns or other economic or market difficulties;
possible disruptions in our retail distribution channels due to challenging conditions in the highly-concentrated wholesale magazine distribution industry, the financial instability of certain wholesalers and a reduction of retail outlets as a result of weak economic or industry conditions;
increases in the price of paper or in postal rates and services or disruption of services from our suppliers including our printers;
changes in advertising market conditions or advertising expenditures due to, among other things, economic conditions, changes in consumer behavior, changes in advertising standards or the implementation of technologies that interfere with advertisements, pressure from public interest groups, changes in laws and regulations and other societal or political developments;
our ability to exploit and protect our intellectual property rights in and to our content and other products;
lower than expected valuations associated with our cash flows and revenues, which could impair our ability to realize the value of recorded intangible assets and Goodwill;
increased volatility or decreased liquidity in the capital markets, including any limitation on our ability to access the capital markets, refinance our outstanding indebtedness or obtain bank financing on acceptable terms;
impacts on our pension obligations due to changes in equity markets, our credit rating, interest rates, actuarial assumptions and regulatory actions;
the effect of any significant acquisitions, investments, dispositions and other similar transactions by us;
the impact of terrorist acts, hostilities, natural disasters (including extreme weather) and pandemic viruses;
a disruption, breach (including misappropriation or accidental release of data) or failure of network and information systems or other technology on which our business relies (including the network and information systems or other technology of our vendors, partners and suppliers), or any delay in recovering from such, that occurs as a result of computer viruses, malware, hackers or similar causes, including possible loss of revenue due to cancellation of customers' credit cards on file for subscription auto-renewals resulting from credit card data breaches affecting us or third parties, and reputational harm that may result from any of these incidents;
changes in tax and other laws and regulations affecting our domestic or international operations, including the impact of Brexit;
the outcome of litigation and other proceedings, including the matters described in the notes to our Financial Statements, as well as possible regulatory actions and civil claims involving privacy issues related to consumer data collection and use practices; and

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