NEW YORK (CNN/Money) - AOL Time Warner Inc. plans to take a $54 billion first-quarter charge mostly to reflect declines in the value of AOL's purchase of Time Warner Inc., the media conglomerate said in its annual report released Monday.

The $54 billion charge, which nearly equals the gross national income of such countries as New Zealand and Hungary, beat the record set by JDS Uniphase which posted a $50.1 billion last summer.

AOL had said in January that it expected to take a $40 billion to $60 billion charge in the first quarter of 2002 to reflect overall market declines since the merger was announced in January 2000.

The $54 billion charge will make the world's largest Internet and media company's future earnings look bigger, but it reflects the drop in valuation of the combined company since AOL bought Time Warner in a deal initially valued at $181 billion.

By the time the deal closed in January 2001, AOL Time Warner (AOL: down $0.29 to $24.21, Research, Estimates) was valued at $106 billion. AOL's stock has fallen about 47 percent since the deal was completed.

In the filing, AOL Time Warner also confirmed it was in talks with the Newhouse family, which owns newspaper and magazine firm Advance Publications Inc., about its stake in Time Warner Entertainment (TWE) and in high-speed Internet service Road Runner.

AOL Time Warner said the outcome of the talks, which come as the company is seeking to expand its cable footprint, could have an impact on its cable operations.

TWE holds AOL Time Warner's interests in filmed entertainment -- home to "Lord of the Rings" and "Harry Potter and the Sorcerer's Stone," cable, and part of its interests in the network unit.

AOL Time Warner owns 74.5 percent of TWE while AT&T Corp. holds 25.5 percent. AOL Time Warner and AT&T (T: Research, Estimates) have been in talks periodically in the last year to unwind the partnership, and AOL said it was continuing those talks.

Separately, the company also disclosed that AOL Europe, which is seen as key to its international growth strategy, had about $573 million of debt and $758 million of redeemable preferred securities outstanding at the end of 2001.

Earlier this year, AOL Europe bought back Bertelsmann AG's stake for $6.75 billion cash -- a price that many on Wall Street thought was too high for a venture that had $600 million in losses at the end of 2001.

AOL Time Warner is the parent company of CNN/Money.

--Staff and Wires