America Online Reports Record December Quarter; Net Income Climbed 67% to $365 Million, or $0.15 Per Share, Fully Taxed and Excluding One-Time Events.Business Editors NEW YORK--(BUSINESS WIRE)--Jan. 31, 2001 Advertising, Commerce & Other Revenues Rose 65% to Record $741 Million Worldwide AOL (A division of Time Warner, Inc., New York, NY, www.aol.com) The world's largest online information service with access to the Internet, e-mail, chat rooms and a variety of databases and services. Membership Added All-Time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal Record 2.1 Million in Quarter AOL Time Warner Reports Pro Forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Full-Year Revenues Increased 11% to $36.2 Billion and Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become Rose 19% to $8.4 Billion Time Warner's Adjusted EBITA EBITA Earnings Before Interest Taxes Amortization Grew 11% in 2000 AOL Time Warner Inc. (NYSE NYSE See: New York Stock Exchange : AOL) today reported record December December: see month. quarter results for America Online See AOL. , Inc. and pro forma results for the combined Company's December quarter and full year. In addition, the Company released the results for Time Warner Inc.'s December quarter and full year. * * (As a result of the AOL Time Warner merger, the Company is reporting the results of America Online, Inc.'s December quarter and AOL Time Warner's pro forma quarter and full year ending December 31, 2000. Although there is no reporting requirement, a summary of Time Warner's December quarter results is included later in the release as a convenience.) America Online, Inc. Results ---------------------------- In the December quarter, America Online reported all-time records in revenues, advertising, commerce and other revenues, operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , EBITDA and AOL membership growth. The Company's net income, fully taxed and excluding one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. events, climbed 67% to a record $365 million, or $0.15 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, up from $219 million, or $0.09 per diluted share, on the same basis last year. Including non-cash charges Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. of $535 million related to write-downs of various investments, the Company's reported net income was $37 million, or $0.01 per diluted share. On the same basis in the year-ago quarter, reported net income was $280 million, or $0.11 per diluted share. America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Online's December quarter revenues climbed 27% to nearly $2.1 billion from $1.6 billion in the year-ago quarter. Advertising, commerce and other revenues reached a record $741 million, climbing 65% over last year's corresponding quarter. The flagship This article is about the lead ship, store, or product of a group. For other uses, see Flagship (disambiguation). A flagship is the ship used by the commanding officer of a group of naval ships. AOL service posted record quarterly and full-year growth. In the December quarter, AOL gained 2.1 million new subscribers - including new highs of more than 1.2 million in the US and nearly 850,000 internationally. For the year, AOL added 6.2 million new members. At year's end, AOL totaled 26.7 million subscribers. The CompuServe An online information service that provides access to the Internet, e-mail, instant messaging and an integrated contact list. Founded in 1969 as a timesharing service, CompuServe is one of the oldest online services, being the first to offer e-mail in 1979 and online chat a year later. 2000 service added 213,000 members for the quarter and 897,000 for the full year, giving CompuServe a total membership of nearly 3.0 million at the end of 2000. AOL operating highlights from the quarter include: -- Subscription Revenues: Revenues from subscriptions increased to $1.2 billion, a 16% rise over last year's December quarter. -- Advertising & Commerce Revenues: Revenues from advertising and commerce climbed to $686 million, increasing 71% over last year's corresponding quarter. -- AOL Member Usage: Average usage per member per day was 63 minutes during the quarter, compared with 57 minutes during last year's December quarter. -- Operating Income: Operating income, before one-time events, rose 62% over the year-ago quarter to $503 million. -- Operating Margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: : Operating margins improved to 24%, from 19% in last year's December quarter. -- EBITDA: Before one-time events, EBITDA reached $652 million for the quarter, a 58% increase over a year ago. -- Cash Flow from Operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses : Cash flow from operations increased to $571 million, a 62% increase over 1999's December quarter. AOL Time Warner Inc. Pro Forma Results -------------------------------------- Driven by strong performances at America Online, Cable, Publishing and Networks, AOL Time Warner's pro forma 2000 revenues rose 11% to $36.2 billion, and adjusted EBITDA increased 19% to $8.4 billion. That compares to 1999's $32.5 billion in revenues and $7.0 billion in adjusted EBITDA. AOL Time Warner's 2000 adjusted diluted cash earnings per common share climbed 32% to $0.94, compared to $0.71 in 1999. The Company's subscription revenues increased 13% to $14.7 billion, and the Company finished the year with 130 million subscriptions, an increase of 16% over the prior year. Full-year advertising and commerce revenues increased 24% to more than $8.7 billion. For the December quarter, AOL Time Warner's revenues rose 8% to $10.2 billion, and adjusted EBITDA increased 14% to $2.4 billion. That compares to $9.5 billion in revenues and $2.1 billion in adjusted EBITDA in last year's corresponding quarter. Subscription revenues increased 11% to $3.8 billion, compared to $3.5 billion in 1999's December quarter, and advertising and commerce revenues increased 14% to $2.6 billion, compared to the year-ago quarter's $2.3 billion. AOL Time Warner's December quarter adjusted diluted cash earnings per common share climbed 17% to $0.28, compared to $0.24 in 1999. The schedules below reflect AOL Time Warner's pro forma performance for the December quarter and full year (in millions):
AOL TIME WARNER PRO FORMA SCHEDULES - DECEMBER QUARTER 2000
-------------------------------------------------
Adjusted (1) Actual
-------------------------------------------------
Pro Forma Pro Forma Pro Forma Pro Forma
2000 1999 2000 1999
--------- --------- --------- ---------
Revenues:
AOL $2,059 $1,618 $2,059 $1,618
Cable 1,594 1,406 1,594 1,406
Filmed Entertainment 2,411 2,387 2,411 2,387
Networks 1,793 1,732 1,793 1,732
Music 1,264 1,258 1,264 1,258
Publishing 1,429 1,333 1,429 1,333
Intersegment
eliminations (319) (274) (319) (274)
--------- --------- --------- ---------
Total Revenues $10,231 $9,460 $10,231 $9,460
-------------- ========= ========= ========= =========
EBITDA:
AOL $652 $412 $652 $412
Cable 767 660 767 656
Filmed Entertainment 183 218 183 112
Networks 443 447 443 447
Music 178 198 178 198
Publishing 290 267 290 267
Corporate (74) (83) (74) (83)
Merger-related costs - - (16) (5)
Intersegment
eliminations (18) - (18) -
--------- --------- -------- ---------
Total EBITDA $2,421 $2,119 $2,405 $2,004
------------ ========= ========= ======== =========
(1) In order to enhance comparability, results have been adjusted
to exclude the effects of certain transactions and nonrecurring items,
as described more fully in the accompanying notes.
AOL TIME WARNER PRO FORMA SCHEDULES - FULL YEAR 2000
---------------------------------------------
Adjusted (1) Actual
---------------------------------------------
Pro Forma Pro Forma Pro Forma Pro Forma
2000 1999 2000 1999
--------- --------- --------- ---------
Revenues:
AOL $7,703 $5,724 $7,703 $5,724
Cable 6,054 5,374 6,054 5,374
Filmed Entertainment 8,119 8,075 8,119 8,075
Networks 6,802 6,186 6,802 6,186
Music 4,148 3,933 4,148 3,933
Publishing 4,645 4,342 4,645 4,342
Intersegment eliminations (1,258) (1,109) (1,258) (1,109)
--------- --------- ------- ---------
Total Revenues $36,213 $32,525 $36,213 $32,525
-------------- ========= ========= ======= =========
EBITDA:
AOL $2,350 $1,335 $2,350 $1,335
Cable 2,831 2,465 2,859 3,622
Filmed Entertainment 796 892 796 1,001
Networks 1,502 1,410 1,502 1,410
Music 518 497 518 497
Publishing 747 721 747 721
Corporate (304) (278) (304) (278)
Merger-related costs - - (155) (123)
Intersegment eliminations (46) (10) (46) (10)
---------- --------- ------- ---------
Total EBITDA $8,394 $7,032 $8,267 $8,175
------------ ========= ========= ======= =========
(1) In order to enhance comparability, results have been adjusted
to exclude the effects of certain transactions and nonrecurring items,
as described more fully in the accompanying notes.
Strong Business Momentum for AOL Time Warner in 2001 ---------------------------------------------------- Steve Case Steve Case (born August 21, 1958) is a businessman best known as the co-founder and former chief executive officer and chairman of America Online (AOL). He reached his highest profile when he played an instrumental role in AOL's merger with Time Warner in 2000. , AOL Time Warner's Chairman, said: "With a combination of assets that transcends traditional categories, AOL Time Warner is uniquely positioned to deliver the highest-quality products and services to consumers around the world. We will use interactivity to lead the transformation of the media and communications industries communications industry, broadly defined, the business of conveying information. Although communication by means of symbols and gestures dates to the beginning of human history, the term generally refers to mass communications. , and our Company will focus on connecting the dots for consumers in this new, converged world." Jerry Jer·ry n. pl. Jer·ries Chiefly British Slang A German, especially a German soldier. [Alteration of German. Levin lev·in n. Archaic Lightning. [Middle English levene, levin; see leuk- in Indo-European roots.] , AOL Time Warner's Chief Executive Officer, said: "These record results underscore The underscore character (_) is often used to make file, field and variable names more readable when blank spaces are not allowed. For example, NOVEL_1A.DOC, FIRST_NAME and Start_Routine. (character) underscore - _, ASCII 95. the strong momentum that AOL Time Warner's businesses bring into the merged company. AOL Time Warner's current businesses are generating substantial growth and will benefit from the cross-company initiatives and transformational opportunities already underway. By bringing the power of the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the together with the world's most potent po·tent adj. 1. Exerting or capable of exerting strong physiological or chemical effects. 2. Able to perform sexual intercourse. Used of a male. and trusted information and entertainment brands, we have created a one-of-a-kind company positioned for sustainable high growth." Review of Operations and Pro Forma Results ------------------------------------------ The results announced today provide a strong growth foundation for AOL Time Warner, the world's first Internet-powered media and communications company Communications Company is a communications unit of the United States Marine Corps. They are part of Combat Logistics Regiment 37 , 3rd Marine Logistics Group (3MLG) and III Marine Expeditionary Force (III MEF). The unit is based out of the Marine Corps Base Camp Smedley D. , which was created through the January January: see month. 11, 2001 completion of the America Online and Time Warner merger. Bob Pittman Pittman may refer to: People
Incremental cost is additional or increased cost of an item or service apart from its actual cost. advertising/commerce revenues and to cross-sell other products and services." Dick Parsons Parsons, city (1990 pop. 11,924), Labette co., SE Kans.; inc. 1871. It is a shipping point for dairy products, grain, and livestock. Manufactures include ammunition, wire and paper products, plastics, and appliances. , AOL Time Warner's Co-Chief Operating Officer, said: "Our content businesses are perfectly positioned to take advantage of interactivity to drive down production and distribution costs distribution costs distribute npl → Vertriebskosten pl , while building new promotional platforms. AOL Time Warner is leading the development of new businesses and industries - from interactive television and electronic books to digital music and video-on-demand The ability to deliver a movie, sports event or other video program to a TV set whenever the customer requests it. Video-on-demand (VOD) typically refers to free and paid programs from the cable TV companies or the telephone companies that offer video over DSL lines. - to capitalize To regard the cost of an improvement or other purchase as a capital asset for purposes of determining Income Tax liability. To calculate the net worth upon which an investment is based. To issue company stocks or bonds to finance an investment. fully on new releases and our leading libraries of films, TV, animation animation Process of giving the illusion of movement to drawings, models, or inanimate objects. From the mid-1850s, such optical devices as the zoetrope produced the illusion of animation. Stop-action photography enabled the production of cartoon films. , music and book titles." America Online During the quarter, America Online experienced record-breaking Adj. 1. record-breaking - surpassing any previously established record; "a record-breaking high jump"; "record-breaking crowds" best - (superlative of `good') having the most positive qualities; "the best film of the year"; "the best solution"; "the best time for membership growth and usage, continued to expand its industry-leading advertising and shopping, and rolled out new AOL Anywhere products. -- Underscoring how AOL is becoming more central to everyday life, AOL membership growth reached new highs - with more than 1.2 million net additions in the US and nearly 850,000 internationally - for a record of 2.1 million new subscribers in the quarter. After averaging a December quarter record of 63 minutes per day online, AOL members have increased their average usage in January to more than 68 minutes daily. -- This trend is becoming increasingly international, with AOL Europe's AOL and CompuServe services adding a record 1.4 million new subscribers in 2000 - including a December quarter high of 627,000 net additions - for a total of 4.6 million members. In Spain Spain, Span. España (āspä`nyä), officially Kingdom of Spain, constitutional monarchy (2005 est. pop. 40,341,000), 194,884 sq mi (504,750 sq km), including the Balearic and Canary islands, SW Europe. , AOL Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). and Banco Santander Santander, city (1990 pop. 194,221), capital of Cantabria prov., N Spain, in Cantabria, on the Bay of Biscay. It is a seaport, fishing center, and a popular resort. On the nearby peninsula of Magdalena is a former royal summer palace. Central Hispano His·pa·no n. pl. His·pa·nos 1. A native or resident of Spanish descent living in the southwest United States. 2. A Hispanic. have announced the creation of a joint venture to launch a new AOL-branded interactive service in the first half of this year. And, in Brazil Brazil (brəzĭl`), Port. Brasil, officially Federative Republic of Brazil, republic (2005 est. pop. 186,113,000), 3,286,470 sq mi (8,511,965 sq km), E South America. , AOL Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. and Banco Itau launched their co-branded, customized America Online Brazil service for Banco Itau's 7 million banking customers. Today, America Online announced that the AOL-branded services outside the US have surpassed the 5 million member mark. -- Making AOL-branded interactivity available to consumers anywhere and anyplace an·y·place adv. To, in, or at any place; anywhere. See Usage Note at everyplace. Adv. 1. anyplace - at or in or to any place; "you can find this food anywhere"; (`anyplace' is used informally for `anywhere') anywhere , the Company extended its AOL Anywhere initiatives - including the successful launches of AOLbyPHONE, AOL Mobile Communicator, AOL Instant Messenger See AIM. on Internet-ready Sprint PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. phones and Instant AOL on the Gateway Connected Touch Pad (1) To fill a data structure with bits or characters. See padding. (2) (PAD) (Packet Assembler/Disassembler) A communications device that formats outgoing data into packets of the required length for transmission in an X. . In addition, AOL TV AOL TV was the name of both a thin client which uses a television for display (rather than a monitor), and the online service that supports it, both of which were launched in June 2000 to compete with WebTV. The product and service were developed by America Online. forged forge 1 n. 1. A furnace or hearth where metals are heated or wrought; a smithy. 2. A workshop where pig iron is transformed into wrought iron. v. new key agreements with such leading programming partners as the National Geographic Channel
QVC Question Valid Command , BBC America BBC America is an American television network, owned and operated by BBC Worldwide, which was launched on March 29, 1998, available on both cable and satellite. It is one of two BBC branded channels broadcast in the United States, the other being global news channel, BBC World. and the NBA NBA abbr. 1. National Basketball Association 2. National Boxing Association NBA (US) n abbr (= National Basketball Association) → Basketball-Dachverband (= . -- During the 2000 holiday season, AOL members spent a record $4.6 billion shopping online and set a new all-time high for shopping of $20 billion over the full year - double the amount spent in 1999. -- Continuing to capitalize on Cap´i`tal`ize on` v. t. 1. To turn (an opportunity) to one's advantage; to take advantage of (a situation); to profit from; as, to capitalize on an opponent's mistakes s>. this powerful reach, the Company strongly extended its industry-leading advertising and commerce during the quarter. AOL and Volvo Volvo Cars is the luxury car maker using the Volvo Trademark. The Volvo Group is a Swedish supplier of commercial transport solutions providing products such as trucks, buses and construction equipment, drive systems for marine and industrial applications, aerospace initiated the auto industry's first online-only launch of a new car, while General Motors, DaimlerChrysler and the UAW (spelling) UAW - Misspelling of "IAW"? made AOL their preferred Internet provider Internet provider - Internet Service Provider for their nearly 300,000 employees/members. Among the Company's other partnerships launched in the quarter were Sears Roebuck & Co., Federated Connected and treated as one. See federated database and federated directories. Department Stores This is a list of department stores. In the case of department store groups the location of the flagship store is given. This list does not include large specialist stores, which sometimes resemble department stores. , General Mills  This article or section may contain a proseline.Please help [ convert this timeline] into prose or, if necessary, a . , Schwab Schwab is a German name meaning "man from Swabia" and may refer to:
-- Among the advancements in the Company's other interactive brands, Netscape (1) (Netscape Communications Corporation, Mountain View, CA, www.netscape.com) Part of America Online (AOL), Netscape specializes in Web software, including the Netscape Web browser. officially released its revolutionary Netscape 6 browser browser Software that allows a computer user to find and view information on the Internet. The first text-based browser for the World Wide Web became available in 1991; Web use expanded rapidly after the release in 1993 of a browser called Mosaic, which used and Netscape's enhanced Web site, Netscape.com. The Company's Local brands and businesses - Digital City, MapQuest Noun 1. MapQuest - a free, widely-used Web Map Server trademark - a formally registered symbol identifying the manufacturer or distributor of a product Verb 1. , Moviefone - extended their #1 market-leading positions during the quarter. Digital City now reaches more than 6 million unique users a month; MapQuest reaches over 7 million; and Moviefone's popular 777-film phone service and moviefone.com Internet site continue to reach one in every five moviegoers. The AOL Local sales force added more than 350 new local advertisers. In addition, America Online's instant messaging Exchanging text messages in real time between two or more people logged into a particular instant messaging (IM) service. Instant messaging is more interactive than e-mail because messages are sent immediately, whereas e-mail messages can be queued up in a mail server for seconds or products showed strong growth in registered users with 84 million for AOL Instant Messenger and 88 million for ICQ ("I Seek You") A conferencing program for the Internet from Mirabilis, Tel Aviv, Israel (www.icq.com). It provides interactive chat, e-mail and file transfer and can alert you when someone on your predefined list has also come online. . The Company's music player Winamp surpassed 56 million installations. Cable For the December quarter, Time Warner Cable's revenues climbed 13% to $1.6 billion, compared to $1.4 billion in the prior year's quarter, and its advertising and commerce revenues rose 20% to $160 million. Time Warner Cable's adjusted EBITDA grew 16% to $767 million, over the 1999 quarter's $660 million. Over the full year, Time Warner Cable's revenues increased 13% to $6.1 billion, compared to $5.4 billion in 1999, and its advertising and commerce revenues climbed 21% to $503 million. Time Warner Cable's adjusted EBITDA rose 15% to $2.8 billion, over the 1999 quarter's $2.5 billion. -- Time Warner Cable This article or section needs sources or references that appear in reliable, third-party publications. Alone, primary sources and sources affiliated with the subject of this article are not sufficient for an accurate encyclopedia article. continued to aggressively roll out its digital cable and Road Runner road runner: see cuckoo. Road Runner thrives on outwitting Wile E. Coyote. [Comics: “Beep Beep the Road Runner” in Horn, 105] See : Cunning Road Runner high-speed Internet See broadband. services. During the year, the Company added 1.3 million new digital subscribers - including 479,000 in the quarter - for a total of 1.7 million subscribers. That represents a penetration The successful unauthorized breach of a security perimeter. See penetration test. rate of nearly 10% of all digital homes passed. And Road Runner gained 616,000 new subscribers - including 227,000 in the quarter - for a total of 946,000 subscribers. Time Warner Cable ended the year with 12.8 million basic cable subscribers. -- Time Warner Cable announced it would increase its ownership in Road Runner. This restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , expected to be completed by April of 2001, will end Road Runner's exclusivity on Time Warner Cable, clearing the way for the Company to offer multiple Internet Service Providers Internet service provider (ISP) Company that provides Internet connections and services to individuals and organizations. For a monthly fee, ISPs provide computer users with a connection to their site (see data transmission), as well as a log-in name and password. (ISPs) on its systems on an accelerated basis. Time Warner Cable has announced an agreement with EarthLink EarthLink (NASDAQ: ELNK), is an Internet service provider headquartered in Atlanta, Georgia, USA. Business EarthLink provides a variety of Internet connection types, including dial-up, DSL, satellite, and cable. , the nation's second-largest ISP (1) See in-system programmable. (2) (Internet Service Provider) An organization that provides access to the Internet. Connection to the user is provided via dial-up, ISDN, cable, DSL and T1/T3 lines. , to enable EarthLink to offer high-speed Internet access, content, applications and functionality, including video streaming See streaming video and video stream. , over Time Warner Cable's systems. Filmed Entertainment Filmed Entertainment reported slightly higher revenues for the quarter and the year, increasing to $2.4 billion and $8.1 billion, respectively. Its adjusted EBITDA declined 16% to $183 million for the quarter, and 11% to $796 million for the year. -- Warner Home Video Warner Home Video is the home video unit of Warner Bros. Home Entertainment Group, a division of Warner Bros. Entertainment, Inc. It was founded in 1978 as WCI Home Video (for Warner Communications, Inc.). It was re-named Warner Home Video in 1980. revenues of DVD-formatted releases were more than $930 million in 2000, an 89% increase over 1999, with strong sales from "The Green Mile" and "The Perfect Storm." DVD DVD: see digital versatile disc. DVD in full digital video disc or digital versatile disc Type of optical disc. The DVD represents the second generation of compact-disc (CD) technology. is the fastest-growing new media format for consumers in US history, with an installed base of 14.7 million households in 2000, versus 4.8 million in December 1999. Theatrical revenues in 2000 benefited from the worldwide box office success of "The Perfect Storm" ($327 million to date), "Space Cowboys Space Cowboy may refer to:
adj. 1. Having the same tastes, habits, or temperament; sympathetic. 2. Of a pleasant disposition; friendly and sociable: a congenial host. 3. " ($94 million to date). -- These were offset by the underperformance of New Line Cinema's "Little Nicky Nicky is a given name, and may refer to: In pop culture:
1 City (1990 pop. 21,907), seat of Mower co., SE Minn., on the Cedar River, near the Iowa line; inc. 1868. The commercial and industrial center of a rich farm region, it is noted as home to the Hormel meatpacking company, whose Spam Town museum Powers: The Spy Who Shagged shag 1 n. 1. A tangle or mass, especially of rough matted hair. 2. a. A coarse long nap, as on a woolen cloth. b. Cloth having such a nap. 3. A rug with a thick rough pile. Me," and "Analyze an·a·lyze v. 1. To examine methodically by separating into parts and studying their interrelations. 2. To separate a chemical substance into its constituent elements to determine their nature or proportions. 3. This;" comparisons with 1999's strong performance in domestic syndication See syndication format. , including the initial off-network availability of the highly popular "The Drew Carey Drew Allison Carey (born May 23, 1958) is an American comedian, actor, and game show host. After serving in the U.S. Marines and making a name for himself in stand-up comedy, Carey eventually gained popularity starring on his own sitcom, The Drew Carey Show Show;" and underperformance at the retail store operations, which the Company plans to divest To deprive or take away. Divest is usually used in reference to the relinquishment of authority, power, property, or title. If, for example, an individual is disinherited, he or she is divested of the right to inherit money. . -- A recently announced restructuring at New Line is designed to refocus Verb 1. refocus - focus once again; The physicist refocused the light beam" focus - cause to converge on or toward a central point; "Focus the light on this image" 2. the studio's efforts on mid-sized films that have been its strongest market historically. Networks For the December quarter, Networks' revenues climbed 4% to $1.8 billion, compared to $1.7 billion in the prior year's quarter, while its advertising and commerce revenues essentially were flat at $705 million. Networks' EBITDA slightly declined to $443 million versus the 1999 quarter's $447 million. Over the full year, Networks' revenues increased 10% to $6.8 billion, compared to $6.2 billion in 1999, while its advertising and commerce revenues climbed 15% to $2.6 billion. Networks' 2000 EBITDA rose 7% to $1.5 billion, compared to 1999's $1.4 billion. -- Among the drivers of Networks' success were HBO's addition of 1.2 million subscribers in 2000; advertising gains at the Cartoon Network For Cartoon Network outside of the United States, see . Cartoon Network is a cable television network created by Turner Broadcasting which primarily shows animated programming. , Turner Network Television Turner Network Television, usually referred to as TNT, is an American cable TV network created by media mogul Ted Turner and currently owned by the Turner Broadcasting System division of Time Warner. (TNT TNT: see trinitrotoluene. TNT in full trinitrotoluene Pale yellow, solid organic compound made by adding nitrate (−NO2) groups to toluene. ), TBS TBS Tablespoon TBS Tokyo Broadcasting System, Inc. TBS Treasury Board Secretariat (Canada) TBS Tris-Buffered Saline TBS Tris Buffered Saline TBS Turn Based Strategy (games) Superstation su·per·sta·tion n. A television or radio station that broadcasts to a nationwide audience by satellite, cable, or both. , CNN CNN or Cable News Network Subsidiary company of Turner Broadcasting Systems. It was created by Ted Turner in 1980 to present 24-hour live news broadcasts, using satellites to transmit reports from news bureaus around the world. , and CNN International CNN International (CNNI) is an English language television network that carries news, current affairs and business programming world-wide. It is owned by Time Warner, and is affiliated and shares much content with CNN, which is limited to the United States and Canada. ; increased distribution and rate increases for the Cartoon Network, TNT, TBS Superstation, Turner Turner can refer to:
World Championship Wrestling (WCW) was an American professional wrestling promotion which existed from 1988 to 2001. (WCW WCW World Championship Wrestling WCW Wellesley Centers for Women WCW West Coast Watchers ) and increased investments in the development of digital media businesses. -- Cartoon Network registered the strongest December quarter ratings and delivery performance in its history, helping drive its best year ever in these categories. That includes the largest net gain (179,000) in prime-time household delivery among all ad-supported basic cable networks for the year. Cartoon Network was the third highest-rated ad-supported cable network in prime time for the year and tied for the second highest-rated in total day. -- Becoming the first cable network to reach more than 80 million households, TBS Superstation continued to be the top basic cable network in total-day delivery of adults aged 18 to 49 and 25 to 54. Reflecting the Company's continued strategic investment in the highest-quality entertainment, TBS Superstation delivered seven of basic cable's 10 highest-rated theatrical films in 2000. -- CNN solidified so·lid·i·fy v. so·lid·i·fied, so·lid·i·fy·ing, so·lid·i·fies v.tr. 1. To make solid, compact, or hard. 2. To make strong or united. v.intr. its position as the #1 24-hour cable news network in the US for the year, leading in ratings, household delivery and total viewers VIEWERS. Persons appointed by the courts to see and examine certain matters, and make a report of the facts together with their opinion to the court. In practice they are usually appointed to lay out roads and the like. Vide Experts. . CNN's domestic reach exceeds all other 24-hour news networks combined. CNN's Web sites lead all other news and information sites in time spent on them. -- Extending its leadership as the premium television network, HBO Hyperbaric oxygen therapy (HBO) A form of oxygen therapy in which the patient breathes oxygen in a pressurized chamber. Mentioned in: Ozone Therapy launched HBO Latino, a Spanish-language channel designed to reflect the diversity of Latino culture in the US. In January, HBO won 4 Golden Globe Awards, the most of any television network, including two awards for the hit series "Sex and the City." -- During the November November: see month. sweeps ratings period, The WB Network scored the highest year-to-year increases of any network in almost every key demographic See demographics. category. For the quarter, Kids' WB Kids' WB is the Saturday morning cartoon block of The CW Television Network's weekend programming. The CW is the result of The WB merge with UPN in 2006. History Early years ! continued to be ranked as the #1 broadcast network for children aged 2 to 11 on Saturday Saturday: see week; Sabbath. mornings. -- The Turner Networks recently disclosed dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). its planned sale of WCW, which experienced declining results in the quarter and year. And CNN has announced a restructuring designed to help it operate more efficiently and better capitalize on major news events such as the 2000 presidential election. Music For the December quarter, the Warner Music Group's revenues were essentially flat with last year's corresponding quarter, while EBITDA declined 10% to $178 million. Over the full year, Warner Music Group Warner Music Group (WMG) is one of the four major record labels. Warner Music Group also has a publishing arm, Warner/Chappell Music, which dates back to 1929, when Jack Warner, president of Warner Bros. Pictures Inc. posted modest growth of 5% in revenues to $4.1 billion, compared to $3.9 billion in 1999, and a 4% increase in EBITDA to $518 million from $497 million in 1999. -- These results benefited from strong overseas performance by Warner Music International and higher income from DVD manufacturing operations Manufacturing operations concern the operation of a facility, as opposed to maintenance, supply and distribution, health, and safety, emergency response, human resources, security, information technology and other infrastructural support organizations. , partially offset by lower US recorded music recorded music n → música grabada sales. Warner Music became the first of the major music companies to offer albums in DVD-Audio A high-resolution audio format approved by the DVD Forum in 1999. DVD-Audio and SACD were the two next-generation digital audio formats for enhanced sound quality, but neither one caught on (see high-resolution audio). Like CDs, DVD-Audio uses PCM encoding. format, which represents the most significant industry format launch since the introduction of the CD nearly 20 years ago. -- Warner Music Group artists earned 85 Grammy Grammy award for musical achievement. [Am. Cult.: Misc.] See : Music Grammy awarded by the National Academy of Recording Arts and Sciences for the best in the recording field. [Am. Hist.: Misc.] See : Prize nominations in January, including such key categories as Record of the Year, Album of the Year and Song of the Year. Top worldwide sellers for the year include: Madonna Madonna (Madonna Louise Ciccone) (mədŏn`ə, chĭkō`nē), 1958–, American pop singer and actress, b. Bay City, Mich. She trained as a dancer at the Univ. , Red Hot Chili Peppers Red Hot Chili Peppers are an American alternative rock band formed in Los Angeles, California in 1983. For most of its career, the group has consisted of vocalist Anthony Kiedis, guitarist John Frusciante, bassist Michael "Flea" Balzary, and drummer Chad Smith. , The Corrs, matchbox twenty, Eric ERIC Educational Research Information Clearinghouse ERIC Educational Resources Information Center ERIC ERISA Industry Committee ERIC Epidemiologic Research and Information Center (Durham, NC) Clapton Clapton may refer to:
Alejandro Sanz is the second son of María Pizarro Medina from Alcalá de los Gazules, and Jesús Sánchez Madero from Algeciras. , Enya, Yuki Yuki or Yūki may refer to: Japan Places Yuki or Yūki may refer to multiple places in Japan:
adj. Slang Having a bisexual orientation. [From the likening of a bisexual person to an appliance that works on either alternating or direct current. , Cher Cher, department, France Cher (shĕr), department (1990 pop. 332,000), central France, in Berry. Chief cities are Vierzon and Bourges, the capital. Cher, river, France Cher, river, c. , Tim McGraw Mc·Graw , John Joseph Called "Little Napoleon." 1873-1934. American baseball player (1891-1900) and manager (1902-1932) of the New York Giants, which he led to 2,840 victories, including 10 pennants and 3 World Series championships (1905, , Luis Miguel Luis Miguel Gallego Basteri (born on April 19, 1970 in San Juan, Puerto Rico) is a Puerto Rican-Mexican pop singer of Italian and Spanish descent that was raised in Mexico. He is best known for his crooning vocals and romantic ballads. , All Saints All´ Saints` 1. The first day of November, called, also, Allhallows or Hallowmas; a feast day kept in honor of all the saints; also, the season of this festival. and Green Day. -- Among the Company's innovative online promotions, Warner Bros. Records Warner Bros. Records Inc. is an American record label that operates as a wholly owned subsidiary of Warner Music Group. It is internationally known as WEA International Inc. and AOL's music service Spinner launched Madonna's latest CD, "Music," with a world-premiere global listening party in September September: see month. , followed by Madonna's first-ever live AOL chat with 120,000-plus fans. The album debuted the following week at #1 on the Billboard best-selling best·sell·er also best seller n. A product, such as a book, that is among those sold in the largest numbers. best album chart. Publishing For the December quarter, Publishing's revenues climbed 7% to $1.4 billion, compared to $1.3 billion in the year-ago quarter, and advertising and commerce revenues grew 8% to $883 million. Its EBITDA rose 9% to $290 million, over the prior year December quarter's $267 million. Over the full year, Publishing's revenues climbed 7% to $4.6 billion, compared to $4.3 billion in the prior year, and advertising and commerce revenues increased 11% to $2.8 billion. Its EBITDA rose 4% to $747 million, over last year's $721 million. -- Contributing to this growth were advertising gains at Fortune and In Style, partially offset by increased investments in the development of digital media businesses. -- Last year's launches of eCompany Now and Real Simple also contributed to Publishing's revenue growth, as did Time Inc.'s December quarter acquisition of Times Mirror Magazines, publisher of 26 titles including Golf, Ski, Skiing skiing, sport of sliding over snow on skis—long, narrow, flexible runners. Water skiing is a warm-weather sport in which a motor-propelled craft tows a skier through the water. , Popular Science, Field & Stream and Yachting. With this acquisition, Time Inc. now publishes 64 magazines and reaches a total of more than 250 million readers. -- Test cross-promotions of magazine subscriptions on the AOL service experienced a strong start - especially for Sports Illustrated Sports Illustrated is the largest weekly American sports magazine owned by media conglomerate Time Warner. It has over 3 million subscribers and is read by 23 million adults each week, including over 18 million men, 19% of the adult males in the country. , Time, Entertainment Weekly and Real Simple - generating more than 750,000 new subscribers for the year. Time Warner Inc. Results For the full year, Time Warner's EBITA grew 11% to $5.4 billion, and revenues climbed 6% to $28.5 billion over the prior year, when adjusted for certain items that affect the comparability of operating results, as described in an attachment See attach a file. to this release. The full year's basic net income per common share, when adjusted to exclude the aggregate effect of certain significant nonrecurring Non`re`cur´ring a. 1. Nonrecurrent; as, the costs of a layoff are considered as a nonrecurring expense s>. items, was $0.39 in 2000, compared to $0.37 per common share in 1999. For the December quarter, Time Warner's adjusted EBITA rose 7% to $1.6 billion, and revenues grew 4% to $8.2 billion over 1999's December quarter. The quarter's adjusted basic net income per common share was $0.18 in 2000, compared to $0.20 per common share in 1999. About AOL Time Warner AOL Time Warner (NYSE: AOL) is the world's first Internet-powered media and communications company, whose industry-leading businesses include interactive services, cable systems, publishing, music, networks and filmed entertainment. The Company is hosting a presentation to the financial community, beginning at 8:30 am ET. The presentation will be broadcast live on the Company's Web site at www.aoltimewarner.com/investors/. Caution Concerning Forward-Looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This document includes certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements are based on management's current expectations and are naturally subject to uncertainty and changes in circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . Actual results may vary materially from those expressed or implied Inferred from circumstances; known indirectly. In its legal application, the term implied is used in contrast with express, where the intention regarding the subject matter is explicitly and directly indicated. by the statements herein due to changes in economic, business, competitive, technological and/or and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. factors and factors affecting the integration of the businesses of Time Warner Inc. and America Online, Inc. More detailed information about those factors is set forth in filings by AOL Time Warner, Time Warner and America Online with the Securities and Exchange Commission, including AOL Time Warner's registration statement on Form S-4, Time Warner's most recent quarterly report on Form 10-Q Form 10-Q See 10-Q. and America Online's most recent annual report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . AOL Time Warner is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. AOL TIME WARNER INC. SUPPLEMENTAL FINANCIAL INFORMATION
-- Exhibit A: America Online, Inc.
-- Exhibit B: AOL Time Warner Inc. Pro Forma
-- Exhibit C: Time Warner Inc.
Exhibit A
AMERICA ONLINE, INC.
CONSOLIDATED SUMMARY OF RESULTS
(in millions, except per share amounts)
Three months ended Twelve months ended
December 31, December 31,
------------------ -------------------
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited)
Revenues:
Subscription services $ 1,233 $ 1,067 $ 4,777 $ 3,874
Advertising, commerce
and other 741 449 2,567 1,403
Enterprise solutions 85 102 359 447
------- ------- ------- -------
Total revenues 2,059 1,618 7,703 5,724
Costs and expenses:
Cost of revenues 940 818 3,595 3,034
Sales and marketing 322 236 1,186 886
Product development 65 77 279 301
General and administrative 193 158 716 518
Amortization of goodwill 36 18 100 68
Merger & restructuring
charges - 5 10 98
------- ------- ------- -------
Total costs and
expenses 1,556 1,312 5,886 4,905
Income from operations 503 306 1,817 819
Other income (expense), net (440) 159 67 815
------- ------- ------- -------
Income before provision for
income taxes 63 465 1,884 1,634
Provision for income taxes (26) (185) (732) (607)
------- ------- ------- -------
Net income $ 37 $ 280 $1,152 $1,027
======= ======= ======= =======
Earnings per share-diluted $ 0.01 $ 0.11 $ 0.45 $ 0.40
Earnings per share-basic $ 0.02 $ 0.12 $ 0.50 $ 0.47
Weighted average shares
outstanding-diluted 2,575 2,623 2,595 2,599
Weighted average shares
outstanding-basic 2,356 2,270 2,323 2,199
AMERICA ONLINE, INC.
SUPPLEMENTAL INFORMATION
(In millions, except per share amounts)
(Unaudited)
Three months ended
December 31,
-------------------------
2000 1999
------ -------
Income before taxes $ 63 $ 465
Adjustments for one-time items:
Investment (Gains)/Losses 465 (111)
SFAS 133 adjustments 70 -
Merger charges - 5
------ -------
Adjusted income before taxes 598 359
Assumed tax provision (233) (140)
------ -------
Income net of assumed tax provision $ 365 $ 219
======= =======
Diluted earnings per share excluding
one-time items:
Earnings per share - diluted (1) $ 0.15 $ 0.09
Weighted average shares outstanding
- diluted (1) 2,511 2,507
Other Selected Data
EBITDA $ 652 $ 412
Net cash provided by operations $ 571 $ 353
Free cash flow $ 438 $ 137
(1) Weighted average shares outstanding based on fully taxed
diluted share calculation including common stock equivalents.
Twelve months ended
December 31,
---------------------------
2000 1999
-------- --------
Income before taxes $ 1,884 $ 1,634
Adjustments for one-time items:
Investment (Gains)/Losses 190 (111)
SFAS 133 adjustments 70 -
Gain on sale of Excite investments - (567)
Transition expenses - 25
Merger & restructuring charges 10 98
------- --------
Adjusted income before taxes 2,154 1,079
Assumed tax provision (839) (421)
------- --------
Income net of assumed tax provision $ 1,315 $ 658
======= ========
Diluted earnings per share excluding
one-time items:
Earnings per share - diluted (1) $ 0.53 $ 0.27
Weighted average shares outstanding -
diluted (1) 2,509 2,449
Other Selected Data
EBITDA $ 2,350 $ 1,335
Net cash provided by operations $ 1,958 $ 1,640
Free cash flow $ 1,315 $ 1,080
(1) Weighted average shares outstanding based on fully taxed
diluted share calculation including common stock equivalents.
Exhibit B
AOL TIME WARNER INC.
PRO FORMA STATEMENT OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
-------------------- ------------------
2000 1999 2000 1999
-------- -------- ------- --------
Revenues:
Subscriptions $ 3,825 $ 3,450 $14,733 $13,044
Advertising and commerce 2,592 2,265 8,744 7,029
Content and other 3,814 3,745 12,736 12,452
-------- -------- ------- -------
Total revenues 10,231 9,460 36,213 32,525
Costs and expenses (10,017) (9,460) (36,469) (33,907)
Gain (loss) on sale or
exchange of cable
television systems - (4) 28 1,157
Gain on early termination of
video distribution agreement - - - 215
Write-down of retail store assets - (106) - (106)
Merger-related costs (16) (5) (155) (123)
-------- -------- ------- -------
Operating income (loss) 198 (115) (383) (239)
Interest expense, net (352) (344) (1,373) (1,333)
Other income (expense), net (828) 970 (1,356) 1,235
Minority interest (76) (73) (264) (475)
-------- -------- ------- -------
Income (loss) before income
taxes, extraordinary loss
on retirement of
debt and cumulative effect
of accounting change (1,058) 438 (3,376) (812)
Income tax provision (31) (632) (551) (1,570)
-------- -------- ------- -------
Loss before extraordinary loss
on retirement of debt and
cumulative effect of
accounting change (1,089) (194) (3,927) (2,382)
Extraordinary loss on
retirement of debt,
net of $9 million
income tax benefit - - - (12)
-------- -------- ------- -------
Loss before cumulative effect
of accounting change (1,089) (194) (3,927) (2,394)
Cumulative effect of
accounting change, net
of $295 million
income tax benefit - - (443) -
-------- -------- ------- -------
Net loss (1,089) (194) (4,370) (2,394)
Preferred dividend requirements (3) (7) (14) (52)
-------- -------- ------- -------
Net loss applicable
to common shares $ (1,092) $ (201) $(4,384) $(2,446)
======== ======== ======= =======
Basic and diluted loss per
common share before
extraordinary loss on
retirement of debt and
cumulative effect
of accounting change $ (0.25) $ (0.05) $ (0.92) $ (0.59)
Extraordinary loss on
retirement of debt - - - (0.01)
Cumulative effect of
accounting change - - (0.10) -
-------- -------- ------- -------
Basic net loss per common
share $ (0.25) $ (0.05) $ (1.02) $ (0.60)
======== ======== ======= =======
Diluted cash earnings
per share $ 0.14 $ 0.48 $ 0.79 $ 1.35
======== ======== ======= =======
Basic common shares 4,350.1 4,199.8 4,300.8 4,099.5
======== ======== ======= =======
Diluted common shares for
cash earnings per share 4,581.3 4,594.7 4,588.6 4,696.5
======== ======== ======= =======
See accompanying notes.
AOL TIME WARNER INC.
NOTES TO PRO FORMA STATEMENT OF OPERATIONS
Note 1: Basis of Presentation
Basis of Presentation
The pro forma financial statements for AOL Time Warner Inc. ("AOL
Time Warner") are presented as if the merger between America Online,
Inc. ("America Online") and Time Warner Inc. ("Time Warner") had
occurred on January 1, 1999. These results reflect reclassifications
of each company's historical operating results and segment information
to conform to the combined Company's financial statement presentation,
as follows:
-- Time Warner's digital media results have been allocated to the
business segments now responsible for managing those operations and
will no longer be treated as a distinct line item;
-- Income and losses related to equity-method investments,
including Book-of-the-Month Club, which was deconsolidated in the
first quarter of 2000, and gains and losses on the sale of investments
have been reclassified from EBITDA and operating income to other
income (expense), net, to better reflect the core operations of the
business segments;
-- Corporate expenses have been reclassified to selling, general
and administrative costs as a reduction of EBITDA and operating
income; and
-- Merger-related costs have been moved from other income
(expense), net, to EBITDA and operating income.
Hereinafter, we refer to America Online, Time Warner and AOL Time
Warner individually and collectively as the "Company."
Description of Business
The Company classifies its business interests into six fundamental
areas: AOL, consisting principally of interactive services, Web
brands, Internet technologies and electronic commerce services; Cable,
consisting principally of interests in cable television systems;
Filmed Entertainment, consisting principally of interests in filmed
entertainment and television production; Networks, consisting
principally of interests in cable television and broadcast network
programming; Music, consisting principally of interests in recorded
music and music publishing; and Publishing, consisting principally of
interests in magazine publishing, book publishing and direct
marketing.
A majority of the Company's interests in Filmed Entertainment and
Cable segments, and a portion of its interests in the Networks segment
are held through Time Warner Entertainment Company, L.P. ("TWE").
Revenue Classification Changes
In the fourth quarter of 2000, the Company adopted Securities and
Exchange Commission Staff Accounting Bulletin No. 101, "Revenue
Recognition in Financial Statements" ("SAB 101"). SAB 101 clarifies
certain existing accounting principles for the timing of revenue
recognition and the classification of revenues in financial
statements. While the Company's existing revenue recognition policies
are consistent with the provisions of SAB 101, the new rules result in
changes as to how revenues from certain transactions are classified in
our AOL, Networks and Music segments. As a result of applying the
provisions of SAB 101, the Company's revenues and costs during the
fourth quarter were reduced by an equal amount of $82 million in 2000
and $65 million in 1999. For the year, the Company's revenues and
costs were reduced by an equal amount of $359 million in 2000 and $229
million in 1999.
Adjusted Results
In order to meaningfully assess underlying operating trends,
management believes that operating results for each period should be
analyzed after excluding the effects of significant nonrecurring items
discussed in Note 2. As such, the foregoing discussion and analysis
focuses on amounts and trends adjusted to exclude the impact of these
unusual items. However, unusual items may occur in any period.
Accordingly, investors and other users of this financial information
individually should consider the types of events and transactions for
which adjustments have been made.
Note 2: Significant Gains, Charges and Other Nonrecurring Items
Gains on the Sale or Exchange of Cable Television Systems
and Investments
In 2000 and 1999, largely in an ongoing effort to enhance its
geographic clustering of cable television properties, the Company
continued to sell or exchange various cable television systems and
investments. In connection with the sale or exchange of consolidated
cable television systems, the operating results of the Cable segment
include net pretax losses of $4 million for the three months ended
December 31, 1999 and net pretax gains for the year of $28 million in
2000 and $1.157 billion in 1999. In connection with the sale or
exchange of unconsolidated cable television systems and related
investments, other income (expense), net, includes net pretax gains of
$16 million and $1.003 billion for the three months ended December 31,
2000 and 1999, respectively, and net pretax gains for the year of $9
million in 2000 and $1.090 billion in 1999.
1999 Gain on Termination of MGM Video Distribution Agreement
In March 1999, Warner Bros. and Metro-Goldwyn-Mayer, Inc. ("MGM")
terminated a long-term distribution agreement under which Warner Bros.
had exclusive worldwide distribution rights for MGM/United Artists
home video product. In connection with the early termination and
settlement of this distribution agreement, Warner Bros. recognized a
net pretax gain of approximately $215 million, which has been included
in the operating results of the Company's Filmed Entertainment segment
in the accompanying pro forma statement of operations for the year
ended December 31, 1999.
1999 Warner Bros. Retail Stores Write-Down
In December 1999, Warner Bros. recorded a noncash pretax charge of
$106 million to reduce the carrying value of certain fixed assets and
leasehold improvements used in its retail store operations. The charge
represents the excess of the carrying value of the assets used in
Warner Bros.'s retail stores over the discounted future cash flows
from such operations. The charge has been included in the operating
results of the Company's Filmed Entertainment segment in the
accompanying pro forma statement of operations for the three and
twelve months ended December 31, 1999.
Road Runner Restructuring Charge
The high-speed online businesses of Time Warner Cable and AT&T
Corp. ("AT&T") are managed in a separate venture ("Road Runner") in
which the common equity interests are collectively owned 68.6% by the
Company, TWE and TWE-A/N and 31.4% by AT&T. In addition, Microsoft and
Compaq each own a preferred equity interest in Road Runner that is
convertible into a 10% common equity interest (the "Preferred Equity
Interests").
In December 2000, Time Warner announced that it had agreed with
its partners to restructure the ownership of Road Runner. Under the
restructuring, the Preferred Equity Interests will be redeemed and
substantially all of the assets of Road Runner will be distributed to
the Company and AT&T. As a result of the restructuring, the Company
recognized a one-time restructuring charge of $41 million in
connection with this transaction. This charge is classified in other
income (expense), net, in the accompanying pro forma statement of
operations for the three and twelve months ended December 31, 2000.
1999 Gain on Time Warner Telecom's Initial Public Offering
In May 1999, Time Warner Telecom Inc. ("Time Warner Telecom"), an
integrated communications provider that provides a wide range of
telephony and data services to businesses, completed an initial public
offering of 20% of its common stock (the "Time Warner Telecom IPO").
In connection with the Time Warner Telecom IPO and certain related
transactions, the Company's ownership interest in Time Warner Telecom
was diluted from 62% to 48%. As a result, the Company recognized a
pretax gain of approximately $115 million. This gain has been included
in other income (expense), net, in the accompanying pro forma
statement of operations for the year ended December 31, 1999.
Investment-Related Gains
The Company recognized pretax gains of approximately $208 million
during the fourth quarter of 1999 related to the sale or exchange of
certain investments. During the year, pretax gains recognized related
to the sale or exchange of certain investments were approximately $340
million in 2000 and approximately $775 million in 1999. These gains
have been included in other income (expense), net, in the accompanying
pro forma statement of operations for the year ended December 31, 2000
and 1999.
Six Flags
In connection with the 1998 sale of its 49% interest in Six Flags
Entertainment Corporation ("Six Flags"), TWE deferred a $400 million
gain as a result of unresolved uncertainties related to litigation and
certain secondary performance guarantees. For each quarter of 1999 and
in the first quarter of 2000, $10 million of the deferred pretax gain
was recognized as the aggregate financial exposure declined. These
amounts are classified in other income (expense), net, in the
accompanying pro forma statement of operations for the three months
ended December 31, 1999 and year ended December 31, 2000 and 1999.
In December 1998, a jury returned an adverse verdict in the Six
Flags litigation in the amount of $454 million. TWE and its former 51%
partner in Six Flags were financially responsible for this judgment.
TWE appealed the verdict, but, in July 2000, an appellate court
unexpectedly affirmed the jury's verdict. As a result, TWE revised its
estimate of its financial exposure and recorded a one-time, pretax
charge of $50 million in the second quarter of 2000 to cover its
additional financial exposure in excess of established reserves, which
consisted of the unrecognized portion of the deferred gain and accrued
interest. The $50 million charge is classified in two components in
the Company's accompanying pro forma statement of operations: $26
million of the charge, representing an accrual for additional
interest, is included in interest expense, net, and the remaining $24
million is included in other income (expense), net, in the
accompanying pro forma statement of operations for the year ended
December 31, 2000.
Investment-Related Charge
During the fourth quarter of 2000, the Company recorded a $579
million noncash pretax charge to reduce the carrying value of its
investment portfolio, primarily due to signficant market declines
experienced in the fourth quarter. This charge is classified in other
income (expense), net, in the accompanying pro forma statement of
operations for the three and twelve months ended December 31, 2000.
Columbia House Investment Write-Down
In March 2000, the proposed merger between CDNOW, Inc. and
Columbia House was terminated. In connection with the termination of
the merger, the risk associated with the timely execution of certain
strategic alternatives for Columbia House's operations and the
transformation of Columbia House's traditional business model to an
online one increased. As a result, management concluded that the
decline in Columbia House's business was likely to continue through
the near term. As such, the Company recorded a $220 million noncash
pretax charge in the first quarter of 2000 to reduce the carrying
value of its investment in Columbia House to an estimate of its fair
value. The charge has been included in other income (expense), net, in
the accompanying pro forma statement of operations for the year ended
December 31, 2000.
Merger-Related Costs
Merger-related costs consist of special charges related to mergers
and merger-related restructurings, including the America Online-Time
Warner merger in 2000, Time Warner's terminated merger agreement with
EMI Group, plc ("EMI") in 2000 and the America Online-Netscape merger
in 1999.
In connection with the America Online-Time Warner and America
Online-Netscape mergers, the Company has been incurring one-time
merger-related costs, which are required to be expensed in accordance
with generally accepted accounting principles. In addition, due to the
termination of Time Warner's merger agreement with EMI, the Company
wrote off all of its capitalized merger-related costs that were
incurred in connection with the EMI transaction in the third quarter
of 2000. Merger-related costs for the fourth quarter amounted to $16
million in 2000 and $5 million in 1999. Merger-related costs for the
year amounted to $155 million in 2000 and $123 million in 1999. These
costs have been included in the operating results in the accompanying
pro forma statement of operations.
Cumulative Effect of Change in Film Accounting Principle
In June 2000, the Company adopted Statement of Position 00-2,
"Accounting by Producers and Distributors of Films" ("SOP 00-2"). SOP
00-2 established new film accounting standards, including changes in
revenue recognition and accounting for advertising, development and
overhead costs. The Company adopted the provisions of SOP 00-2
retroactive to the beginning of 2000. As a result, the Company's
operating results for the year ended December 31, 2000 include a
one-time, noncash, after-tax charge of approximately $443 million,
primarily to reduce the carrying value of its film inventory. This
charge has been reflected as a cumulative effect of an accounting
change in the accompanying pro forma statement of operations.
1999 Extraordinary Loss on the Retirement of Debt
During the third quarter of 1999, the Company incurred a $12
million extraordinary loss in connection with the refinancing of
certain debt securities. This loss has been reflected as an
extraordinary item in the accompanying pro forma statement of
operations.
Note 3: Income Taxes
The relationship between income before income taxes and income tax
expense of the Company is affected by the amortization of goodwill and
certain other financial statement expenses that are not deductible for
income tax purposes.
Note 4: Net Loss per Common Share
Basic net loss per common share is based upon the net loss
applicable to common shares after preferred dividend requirements and
upon the weighted average of common shares outstanding during the
period. Diluted net loss per common share adjusts for the effect of
convertible securities, stock options and other potentially dilutive
financial instruments only in the periods in which such effect would
have been dilutive.
Note 5: Comparability of Net Loss per Common Share
As described more fully above, net loss per common share has been
affected by certain significant, nonrecurring items recognized in 2000
and 1999. The aggregate net effect of these items was to increase
(decrease) basic net loss per common share by $(0.08) for the fourth
quarter of 2000 and by $0.15 in 1999. For the year, the aggregate net
effect was to increase (decrease) basic net loss per common share by
$(0.20) in 2000 and $0.43 in 1999.
Note 6: Diluted Cash Earnings Per Share
Diluted cash earnings per share is defined as pretax income
excluding the effect of noncash amortization expense for consolidated
and unconsolidated entities, less cash paid for taxes. Diluted cash
earnings per share is calculated using weighted average shares
outstanding after considering all outstanding options and dilutive
securities. As described more fully above, diluted cash earnings per
share has been affected by certain significant, nonrecurring items
recognized in 2000 and 1999. The aggregate net effect of these items
was to increase (decrease) diluted cash earnings per share by $(0.14)
for the fourth quarter of 2000 and by $0.24 in 1999. For the year, the
aggregate net effect was to increase (decrease) diluted cash earnings
per share by $(0.15) in 2000 and $0.64 in 1999.
Exhibit C
TIME WARNER INC.
CONSOLIDATED STATEMENT OF OPERATIONS
BY BUSINESS SEGMENT
ADJUSTED RESULTS
(In millions; unaudited)
Three Months Ended Years Ended
December 31, December 31,
--------------------- -----------------
2000 1999 2000 1999
------ ------ -------- -------
Adjusted:
Revenues:
Cable Networks $1,626 $1,594 $ 6,288 $5,802
Publishing 1,429 1,333 4,645 4,342
Music 1,264 1,258 4,148 3,933
Filmed Entertainment 2,413 2,387 8,116 8,075
Broadcasting - The WB Network 143 138 453 384
Cable 1,594 1,422 6,054 5,480
Intersegment elimination (319) (274) (1,261) (1,109)
------ ------ -------- -------
Revenues Before Digital Media 8,150 7,858 28,443 26,907
Digital Media 27 1 71 1
------ ------ ------- -------
Total Revenues $8,177 $7,859 $28,514 $26,908
====== ====== ======= =======
Business segment operating income
before amortization ("EBITA"):
Cable Networks $ 440 $ 394 $ 1,602 $ 1,397
Publishing 308 260 802 694
Music 167 183 443 449
Filmed Entertainment 171 190 751 751
Broadcasting - The WB Network 5 3 (62) (92)
Cable 515 457 1,906 1,691
Intersegment elimination (18) - (46) (10)
------ ------ ------- -------
EBITA Before Digital Media 1,588 1,487 5,396 4,880
Digital Media (81) (17) (228) (17)
------ ------ ------- -------
Total EBITA $1,507 $1,470 $ 5,168 $ 4,863
====== ====== ======= =======
TIME WARNER INC.
CONSOLIDATED STATEMENT OF OPERATIONS
BY BUSINESS SEGMENT
ACTUAL RESULTS
(In millions; unaudited)
Three Months Ended Years Ended
December 31, December 31,
--------------------- -----------------
2000 1999 2000 1999
------ ------ ------- -------
Actual:
Revenues:
Cable Networks $1,626 $1,594 $ 6,288 $5,802
Publishing(1) 1,429 1,426 4,645 4,663
Music 1,264 1,258 4,148 3,933
Filmed Entertainment 2,413 2,387 8,116 8,075
Broadcasting - The WB Network 143 138 453 384
Cable(1) 1,594 1,406 6,054 5,374
Intersegment elimination (319) (274) (1,261) (1,109)
------ ------ ------- -------
Revenues Before Digital Media 8,150 7,935 28,443 27,122
Digital Media 27 1 71 1
------ ------ ------- -------
Total Revenues $8,177 $7,936 $28,514 $27,123
====== ====== ======= =======
EBITA:
Cable Networks $ 440 $ 394 $ 1,602 $ 1,397
Publishing(1) 308 260 802 679
Music 167 183 443 449
Filmed Entertainment(1) 171 191 802 997
Broadcasting - The WB Network 5 3 (62) (92)
Cable(1) 531 1,450 1,943 3,927
Intersegment elimination (18) - (46) (10)
------ ------ ------- -------
EBITA Before Digital Media 1,604 2,481 5,484 7,347
Digital Media(1) (125) (17) (272) (17)
------ ------ ------- -------
Total EBITA $1,479 $2,464 $ 5,212 $ 7,330
====== ====== ======= =======
(1) The comparability of the operating results for publishing, filmed
entertainment, cable and digital media has been affected by
certain transactions and nonrecurring items. See accompanying
notes.
TIME WARNER INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share amounts)
(Unaudited)
Three Months Ended Years Ended
December 31, December 31,
---------------------- -----------------
2000 1999 2000 1999
------- ------- ------- -------
Revenues $8,177 $7,936 $28,514 $27,123
------- ------- ------- -------
Costs and expenses (7,064) (6,808) (24,692) (23,525)
Gain on sale or exchange of
cable television systems and
investments 16 999 37 2,247
Gain on early termination of
video distribution agreement - - - 215
Gain on sale of interest in
CanalSatellite - 97 - 97
Write-down of retail store
assets - (106) - (106)
------- ------- ------- -------
Business segment operating
income 1,129 2,118 3,859 6,051
Interest expense (431) (402) (1,696) (1,511)
Other income (expense), net (224) (166) (1,054) (402)
Corporate expenses (41) (43) (174) (163)
Minority interest (76) (73) (264) (475)
------- ------- ------- -------
Income before income taxes,
extraordinary loss on
retirement of debt and
cumulative effect of
accounting change 357 1,434 671 3,500
Income tax provision (151) (586) (403) (1,540)
------- ------- ------- -------
Income before
extraordinary loss on
retirement of debt and
cumulative effect of
accounting change 206 848 268 1,960
Extraordinary loss on
retirement of debt,
net of $9 million
income tax benefit - - - (12)
------- ------- ------- -------
Income before
cumulative effect of
accounting change 206 848 268 1,948
Cumulative effect of
accounting change,
net of $295 million
income tax benefit - - (443) -
------- ------- ------- -------
Net income (loss) 206 848 (175) 1,948
Preferred dividend
requirements (3) (7) (14) (52)
------- ------- ------- -------
Net income (loss) applicable
to common shares $ 203 $ 841 $ (189) $ 1,896
======= ======= ======= =======
Basic income per common
share before extraordinary
loss on retirement of debt
and cumulative effect of
accounting change $ 0.15 $ 0.65 $ 0.19 $ 1.51
Extraordinary loss on
retirement of debt - - - (0.01)
Cumulative effect of
accounting change - - (0.33) -
------- ------ ------- -------
Basic net income (loss) per
common share $ 0.15 $ 0.65 $ (0.14) $ 1.50
======= ====== ======= =======
Basic common shares 1,329.2 1,286.5 1,318.6 1,267.0
======= ======= ======= =======
Diluted income per common
share before extraordinary
loss on retirement of debt
and cumulative effect of
accounting change $ 0.15 $ 0.62 $ 0.19 $ 1.43
Extraordinary loss on
retirement of debt - - - (0.01)
Cumulative effect of accounting
change - - (0.33) -
------- ------- ------- -------
Diluted net income (loss)
per common share $ 0.15 $ 0.62 $(0.14) $ 1.42
======= ======= ======= =======
Diluted common shares 1,329.2 1,391.8 1,318.6 1,398.3
======= ======= ======= =======
See accompanying notes.
TIME WARNER INC.
NOTES TO CONSOLIDATED STATEMENTS OF OPERATIONS
Note 1: Revenue Classification Changes
In the fourth quarter of 2000, Time Warner Inc. ("Time Warner")
adopted Securities and Exchange Commission Staff Accounting Bulletin
No. 101, "Revenue Recognition in Financial Statements" ("SAB 101").
SAB 101 clarifies certain existing accounting principles for the
timing of revenue recognition and the classification of revenues in
financial statements. While Time Warner's existing revenue recognition
policies are consistent with the provisions of SAB 101, the new rules
result in changes as to how revenues from certain transactions are
classified in the Cable Networks and Music segments. As a result of
applying the provisions of SAB 101, Time Warner's revenues and costs
during the fourth quarter were reduced by an equal amount of $28
million in 2000 and $50 million in 1999. For the year, Time Warner's
revenues and costs were reduced by an equal amount of $198 million in
2000 and $200 million in 1999.
Note 2: Adjusted Results
In order to meaningfully assess underlying operating trends,
management believes that operating results for each period should be
analyzed after excluding the effects of significant nonrecurring
items. As such, the foregoing discussion and analysis focuses on
amounts and trends adjusted to exclude the impact of these unusual
items. However, unusual items may occur in any period. Accordingly,
investors and other users of this financial information individually
should consider the types of events and transactions for which
adjustments have been made.
Following is a discussion of the significant nonrecurring items
that have been excluded from Time Warner's adjusted operating results.
While the nonrecurring items are the same as those items excluded from
the adjusted pro forma operating results of AOL Time Warner, the
location where the nonrecurring item is being adjusted may differ from
that of Time Warner due to reclassifications made to Time Warner's
historical operating results on a pro forma basis to conform to the
combined company's financial statement presentation. Such
reclassifications are discussed in detail in the accompanying notes to
the pro forma financial statements of AOL Time Warner.
Publishing
-- In the first quarter of 2000, the Company formed a 50-50 joint
venture with Bertelsmann AG ("Bertelsmann"). In connection with this
transaction, the Company has deconsolidated its domestic book club
operations in 2000 and is accounting for its interest in the joint
venture under the equity method of accounting. The Company's share of
the operating results of the joint venture has been included in other
income (expense), net, in the accompanying consolidated statement of
operations. During the three months ended December 31, 1999, the
Publishing segment's operating results included revenues of $93
million, no EBITA and operating losses of $1 million relating to
Book-of-the-Month Club. For the year ended December 31, 1999, the
Publishing segment's operating results included revenues of $321
million, EBITA losses of $15 million and operating losses of $18
million relating to Book-of-the-Month Club.
Filmed Entertainment
-- A net pretax gain of $215 million recognized in the first
quarter of 1999 in connection with the early termination and
settlement of a long-term, home video distribution agreement for
MGM home video product.
-- A pretax charge of $106 million recognized in the fourth
quarter of 1999 in connection with Warner Bros.'s retail operations.
-- Net pretax gains of $65 million recognized in the third quarter
of 2000 and $97 million recognized in the fourth quarter of 1999,
principally in connection with the sale of an interest in
CanalSatellite.
-- A pretax gain of $10 million recognized in the first quarter of
2000 and in each of the quarters in 1999 related to the partial
recognition of a deferred gain in connection with the 1998 sale of Six
Flags and a pretax charge of $50 million recognized in the second
quarter of 2000 in connection with the Six Flags litigation. The $50
million charge is classified in two components: $26 million of the
charge, representing an accrual for additional interest, is included
in interest expense, and the remaining $24 million is included in the
results of the Filmed Entertainment segment.
Cable
-- Net pretax gains related to the sale or exchange of certain
cable television systems and investments of approximately $16 million
and $999 million recognized in the fourth quarter of 2000 and 1999,
respectively. For the full year, net pretax gains recognized were
approximately $37 million and $2.247 billion in 2000 and 1999,
respectively.
Digital Media
-- A pretax charge of approximately $44 million recognized in the
fourth quarter of 2000 to reduce the carrying value of certain
investments due to significant declines in market value in the fourth
quarter.
Other Income (Expense), Net
-- A noncash pretax charge of approximately $220 million
recognized in the first quarter of 2000 to reduce the carrying value
of Time Warner's interest in Columbia House, a 50%-owned equity
investee.
-- A pretax gain of approximately $115 million recognized in the
second quarter of 1999 in connection with the initial public offering
of a 20% interest in Time Warner Telecom.
-- A pretax charge of approximately $41 million recognized in the
fourth quarter of 2000 in connection with the Road Runner
restructuring.
-- Special charges related to mergers and merger-related
restructurings, including the America Online - Time Warner merger in
2000 and Time Warner's recently terminated merger agreement with EMI
in 2000. Combined merger-related costs amounted to $16 million for the
fourth quarter of 2000 and $145 million for the year ended December
31, 2000. These costs have been classified in other income (expense),
net, in the accompanying consolidated statement of operations.
Other
-- A one-time, noncash, after-tax charge of approximately $443
million to adopt a new film accounting standard, retroactive to the
beginning of 2000.
-- An after-tax extraordinary loss of approximately $12 million on
the retirement of debt recognized in the third quarter of 1999.
Note 3: Comparability of Net Income (Loss) per Common Share
As described more fully in Note 2, net income (loss) per common
share has been affected by certain significant, nonrecurring items
recognized in 2000 and 1999. The aggregate net effect of these items
was to increase (decrease) basic net income per common share by
$(0.03) for the fourth quarter of 2000 and by $0.45 in 1999. On a
diluted basis, the aggregate net effect was to increase (decrease) net
income per common share by $(0.03) for the fourth quarter of 2000 and
by $0.43 in 1999. For the year, the aggregate net effect was to
increase (decrease) basic net income per common share by $(0.53) in
2000 and $1.13 in 1999. For the year, on a diluted basis, the
aggregate net effect was an increase (decrease) in net income per
common share of $(0.53) in 2000 and $1.05 in 1999.
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