EX-12.3 4 0004.txt RATIO OF EARNINGS TO FIXED CHARGES Exhibit 12.3 TIME WARNER INC. RATIO OF EARNINGS TO FIXED CHARGES Pro Forma(a) Historical --------------------- ------------------------------------------------------------------- Nine Nine Months Year Months Ended Ended Ended September Decem- September 30, ber 31, 30, Year Ended December 31, 2000 1999 2000(b) 1999(b) 1998 1997 1996 1995 --------------------- ------------------------------------------------------------------- Earnings: Net income (loss) before income taxes and cumulative effect of account change $(4,139) $ (2,446) $ 314 $ 3,500 $ 586 $ 832 $ 4 $ 2 Interest expense 1,265 1,512 1,265 1,512 891 1,049 968 877 Amortization of capitalized interest 5 9 5 9 10 18 6 2 Portion of rents representative of an interest factor 133 172 133 172 94 78 63 57 Preferred stock dividend requirements of majority-owned subsidiaries 39 57 39 57 52 72 72 11 Adjustment for partially owned subsidiaries and 50% owned companies 174 440 174 440 960 938 801 691 Undistributed losses (earnings) of less than 50% owned companies 1 46 1 46 42 4 52 117 ------- -------- ------- ------- ------- ------- ------- ------- Total earnings $(2,522) $ (210) $ 1,931 $ 5,736 $ 2,635 $ 2,991 $ 1,966 $ 1,757 ======= ======== ======= ======= ======= ======= ======== ======= Fixed Charges: Interest expense $ 1,265 $ 1,512 $ 1,265 $ 1,512 $ 891 $ 1,049 $ 968 $ 877 Capitalized interest 6 6 6 6 1 15 7 4 Portion of rents representative of an interest factor 133 172 133 172 94 78 63 57 Preferred stock dividend requirements of majority-owned subsidiaries 39 57 39 57 52 72 72 11 Adjustment for partially owned subsidiaries and 50% owned companies 80 86 80 86 721 622 607 697 ------- -------- ------- ------- ------- ------- ------- ------- Total fixed charges $ 1,523 $ 1,833 $ 1,523 $ 1,833 $ 1,759 $ 1,836 $ 1,717 $ 1,646 ======= ======== ======= ======= ======= ======= ======= ======= Pretax income necessary to cover preferred dividend requirements 19 88 19 88 915 541 347 72 ------- -------- ------- ------- ------- ------- ------- ------- Total combined $ 1,542 $ 1,921 $ 1,542 $ 1,921 $ 2,674 $ 2,377 $ 2,064 $ 1,718 ======= ======== ======= ======= ======= ======= ======= ======= Ratio of earnings to fixed charges (deficiency in the coverage of fixed charges by earnings before fixed charges) $(4,045) $ (2,043) 1.3x 3.1x 1.5x 1.6x 1.1x 1.1x ======= ======== ======= ====== ======= ======= ======= ======= Ratio of earnings to combined fixed charges and preferred dividend require- ments (deficiency in the coverage of combined fixed charges and preferred dividend requirements deficiency) $(4,064) $ (2,131) 1.3x 3.0x $ (39) $ 1.3x $ (98) $ 1.0x ======= ======== ======= ====== ======= ======= ======= ======= (a) As a result of the merger of America Online and Time Warner, the pro forma ratios of Time Warner have been adjusted to reflect an allocable portion of AOL Time Warner's new basis of accounting on a pushdown basis. The historical ratios are reflected at Time Warner's historical cost basis of accounting. Time Warner's pro forma ratios are presented to give effect to the merger of America Online and Time Warner as if it occurred on January 1, 1999. (b) The ratios for the nine months ended September 30, 2000 and the year ended December 31, 1999 reflect the consolidation of the Entertainment Group, which substantially consists of Time Warner Entertainment Company, L.P. ("TWE"), to the beginning of 1999. Because Time Warner's ratios for all periods presented include 100% of TWE's earnings and fixed charges, the ratios for periods prior to 1999 have not changed as a result of such consolidation. However, the individual components as presented above are no longer comparable.