Time Warner Provides 2004 Business Outlook.Business Editors NEW YORK--(BUSINESS WIRE)--Jan. 28, 2004 Time Warner Inc. (NYSE NYSE See: New York Stock Exchange :TWX (TeletypeWriter eXchange Service) A U.S. and Canadian dial-up communications service that became part of Telex. In 1971, the Bell System sold TWX to Western Union. TWX transmitted 5-bit Murray code or 7-bit ASCII code at up to 150 bps. See Telex. ) today provided its full-year 2004 business outlook. As a result of recent and pending transactions involving the Company's Music businesses, Time Warner's 2004 business outlook treats its Music segment as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . Time Warner said that it expects 2004 full-year growth rates Growth Rates The compounded annualized rate of growth of a company's revenues, earnings, dividends, or other figures. Notes: Remember, historically high growth rates don't always mean a high rate of growth looking into the future. in 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. before Depreciation and Amortization, excluding impairments of goodwill and intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. and gains and losses from asset disposals ("Adjusted Operating Income before Depreciation and Amortization"), to be higher than the corresponding 2003 rates at each of its reporting segments, except for the Filmed Entertainment segment, which is anticipated to have difficult comparisons at its New Line studio. For the overall Company, Adjusted Operating Income before Depreciation and Amortization growth is expected to range from high-single to low-double digits, as compared to $8.8 billion in 2003, reflecting expected revenue gains and margin expansion. The Company reaffirmed that it expects Adjusted Operating Income before Depreciation and Amortization growth at its America See ITS. Online division to be in the low-double digits, off a base of $1.5 billion in 2003. The Company also stated that it expects to convert between 30% to 40% of its 2004 Adjusted Operating Income before Depreciation and Amortization into Free Cash Flow. The Company reaffirmed that it expects its America Online division to generate around $1 billion in Free Cash Flow in 2004. The outlook above does not include the impact of any future merger and restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. and sales and acquisitions of operating assets Operating Assets Another term for working capital. that may occur from time to time due to management decisions and changing business 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 . The Company is currently unable to forecast accurately the timing and magnitude of any such events. Use of Operating Income (Loss) before Depreciation and Amortization, Adjusted Operating Income (Loss) before Depreciation and Amortization and Use of Free Cash Flow The Company utilizes Operating Income (Loss) before Depreciation and Amortization, among other measures, to evaluate the performance of its businesses. The Company also evaluates the performance of its businesses using Operating Income (Loss) before Depreciation and Amortization excluding the impact of non-cash impairments of goodwill and intangible assets and gains and losses on asset sales (referred to herein as Adjusted Operating Income (Loss) before Depreciation and Amortization). Both Operating Income (Loss) before Depreciation and Amortization and Adjusted Operating Income (Loss) before Depreciation and Amortization are considered important indicators of the operational strength of the Company's businesses. Operating Income (Loss) before Depreciation and Amortization eliminates the uneven effect across all business segments of considerable amounts of non-cash depreciation of tangible assets Tangible Asset An asset that has a physical form such as machinery, buildings and land. Notes: This is the opposite of an intangible asset such as a patent or trademark. Whether an asset is tangible or intangible isn't inherently good or bad. and amortization of certain intangible assets that were recognized in business combinations. A limitation of this measure, however, is that it does not reflect the periodic costs of certain capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. tangible Possessing a physical form that can be touched or felt. Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. and intangible assets used in generating revenues in the Company's businesses. Moreover, Adjusted Operating Income (Loss) before Depreciation and Amortization does not reflect the diminution in value diminution in value n. in the event of a breach of contract, the decrease in value of property due to the failure to construct something exactly as specified in the contract. of goodwill and intangible assets or gains and losses on asset sales. Management evaluates the costs of such tangible and intangible assets, the impact of related impairments, as well as asset sales through other financial measures such as capital expenditures, investment spending and return on capital. The Company also utilizes Free Cash Flow to evaluate the performance of its businesses. Free Cash Flow is cash provided by continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the (as defined by accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. ) less capital expenditures and product development costs, principal payments on capital leases, dividends paid and partnership distributions, if any. Free Cash Flow is considered to be an important indicator Indicator Anything used to predict future financial or economic trends. Notes: In the context of technical analysis, an indicator is a mathematical calculation based on a securities price and/or volume. The result is used to predict future prices. of the Company's ability to reduce debt and make strategic investments. Operating Income (Loss) before Depreciation and Amortization, Adjusted Operating Income (Loss) before Depreciation and Amortization and Free Cash Flow should be considered in addition to, not as a substitute for, the Company's Operating Income (Loss), Net Income (Loss) and various cash flow measures (e.g., Cash Provided by Operations), as well as other measures of financial performance reported in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States. About Time Warner Inc. Time Warner Inc. is the world's leading media and entertainment company, whose businesses include filmed entertainment, interactive services, television networks, cable systems and publishing. In a separate release issued today, Time Warner Inc. reported financial results for its full-year and fourth quarter ended December December: see month. 31, 2003. The Company's earnings conference call can be heard live at 10:00 am ET on Wednesday Wednesday: see week. , January January: see month. 28, 2004. To listen to the call, visit www.timewarner.com/investors or 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. Keyword (1) A word used in a text search. (2) A word in a text document that is used in an index to best describe the contents of the document. (3) A reserved word in a programming or command language. 1. : IR. 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 or beliefs, and are subject to uncertainty and changes in circumstances. 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, sales of business assets, and the potential impact of future decisions by management that may result in merger and restructuring charges, as well as the potential impact of any future impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. charges to goodwill or other intangible assets. More detailed information about these factors may be found in filings by Time Warner Inc. with the Securities and Exchange Commission, including its 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. and quarterly report on Form 10-Q Form 10-Q See 10-Q. . 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.
TIME WARNER INC.
RECONCILIATION OF GUIDANCE
($ in millions)
(Unaudited)
Year Ended Reconciliation
December 31, 2003 of 2004 Guidance
------------------ -------------------------
Reconciliation of
Operating Income Before
Depreciation and
Amortization, excluding
impairments of goodwill
and intangible assets and
gains and losses from
asset disposals to
Operating Income (Loss):
Time Warner Inc.
----------------
Operating Income Before
Depreciation and
Amortization, excluding
impairments of goodwill
and intangible assets and
gains and losses from High single to low double
asset disposals $ 8,809 digit growth
Depreciation and Mid single to high teen
Amortization (3,140) growth
Impairment of goodwill and No material impairment
intangible assets (318) expected
Gains and losses from No material gains/losses
asset disposals 14 expected
------------------
Increase in absolute
Operating Income (Loss) $ 5,365 dollar amount
==================
AOL
---
Operating Income Before
Depreciation and
Amortization, excluding
impairments of goodwill
and intangible assets and
gains and losses from
asset disposals $ 1,507 Low double digit growth
Depreciation and Down single digit to high
Amortization (844) teen growth
Impairment of goodwill and No material impairment
intangible assets - expected
Gains and losses from No material gains/losses
asset disposals - expected
------------------
Increase in absolute
Operating Income (Loss) $ 663 dollar amount
==================
Cable
-----
Operating Income Before
Depreciation and
Amortization, excluding
impairments of goodwill
and intangible assets and
gains and losses from Growth rate exceeds 2003
asset disposals $ 2,992 growth rate of 9%
Depreciation and
Amortization (1,461) Double digit growth
Impairment of goodwill and No material impairment
intangible assets - expected
Gains and losses from No material gains/losses
asset disposals - expected
------------------
Increase in absolute
Operating Income (Loss) $ 1,531 dollar amount
==================
Filmed Entertainment
--------------------
Operating Income Before
Depreciation and
Amortization, excluding
impairments of goodwill
and intangible assets and Growth rate falls short
gains and losses from of the 2003 growth rate
asset disposals $ 1,422 of 15%
Depreciation and Increase in absolute
Amortization (292) dollar amount
Impairment of goodwill and No material impairment
intangible assets - expected
Gains and losses from No material gains/losses
asset disposals 43 expected
------------------
Decrease in absolute
Operating Income (Loss) $ 1,173 dollar amount
==================
Networks
--------
Operating Income Before
Depreciation and
Amortization, excluding
impairments of goodwill
and intangible assets and
gains and losses from Growth rate exceeds 2003
asset disposals $ 2,246 growth rate of 11%
Depreciation and Increase in absolute
Amortization (218) dollar amount
Impairment of goodwill and No material impairment
intangible assets (219) expected
Gains and losses from No material gains/losses
asset disposals - expected
------------------
Increase in absolute
Operating Income (Loss) $ 1,809 dollar amount
==================
Publishing
----------
Operating Income Before
Depreciation and
Amortization, excluding
impairments of goodwill
and intangible assets and
gains and losses from Growth rate improves over
asset disposals $ 1,083 2003 decline of 6%
Depreciation and Decrease in absolute
Amortization (291) dollar amount
Impairment of goodwill and No material impairment
intangible assets (99) expected
Gains and losses from No material gains/losses
asset disposals (29) expected
------------------
Increase in absolute
Operating Income (Loss) $ 664 dollar amount
==================
Reconciliation of Free
Cash Flow to Cash
Provided by Operations:
Time Warner Inc.
----------------
Free Cash Flow from
Continuing Operations $ 3,312 Free cash flow conversion
between 30% to 40% of
Operating income before
depreciation and
amortization, excluding
impairments of goodwill
and intangible assets and
gains and losses from
asset disposals
Capital expenditures and
product development costs
plus principal payments
on capital leases (all
from continuing Increase in absolute
operations) 2,939 dollar amount
------------------
Cash provided by
continuing operations
Cash Provided by exceeding 90% of
Continuing Operations $ 6,251 operating income
==================
AOL
---
Free Cash Flow $ 1,022 Around $1.0 billion
Capital expenditures and
product development costs
plus principal payments Low single digit to high
on capital leases 642 teens growth
------------------
Cash Provided by
Operations $ 1,664 More than $1.6 billion
==================
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