-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CCZl+hCCGxUMwea4GRxRlrgkPs8Y5OTMjcXH+VtcU25sTCgrBiUsRQnG6y+6KNSR rJtG56hvURfME/4J/2NtZA== 0001021387-98-000002.txt : 19980220 0001021387-98-000002.hdr.sgml : 19980220 ACCESSION NUMBER: 0001021387-98-000002 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980210 ITEM INFORMATION: FILED AS OF DATE: 19980219 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TIME WARNER INC/ CENTRAL INDEX KEY: 0001021387 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 133527249 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-12259 FILM NUMBER: 98545615 BUSINESS ADDRESS: STREET 1: TIME & LIFE BLDG ROCKFELLER CENTER STREET 2: 75 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2124848000 MAIL ADDRESS: STREET 1: TW INC STREET 2: 75 ROCKEFELLER PLAZA CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: TW INC DATE OF NAME CHANGE: 19960822 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): February 10, 1998 TIME WARNER INC. (Exact name of registrant as specified in its charter) Delaware 1-12259 13-3527249 (State or other jurisdiction (Commission (I.R.S. Employer of incorporation File Number) Identification No.) or organization) 75 Rockefeller Plaza, New York, NY 10019 (Address of principal executive offices) (zip code) (212) 484-8000 (Registrant's telephone number, including area code) Not Applicable (Former name or former address, if changed since last report) Item 5. On February 10, 1998, Time Warner Inc. announced its results of operations for the quarter and the year ended December 31, 1997 as set forth below. TIME WARNER INC. CONSOLIDATED STATEMENT OF OPERATIONS BY BUSINESS SEGMENT (In millions, except per share amounts) (Unaudited) Three Months Ended Years Ended December 31, December 31, 1997 1996 1997 1996 Revenues: Publishing $1,286 $1,166 $ 4,290 $ 4,117 Music 1,056 1,190 3,691 3,949 Cable Networks - TBS 808 680 2,900 680 Filmed Entertainment - TBS 434 455 1,531 455 Cable 257 232 997 909 Intersegment elimination (5) (23) (115) (46) ------- ------ ------- ------- Total revenues $3,836 $3,700 $13,294 $10,064 ======= ====== ======= ======= Business segment operating income before depreciation and amortization: Publishing $ 228 $ 200 $ 608 $ 535 Music 174 290 550 744 Cable Networks - TBS 188 162 660 162 Filmed Entertainment - TBS 99 32 207 32 Cable 141 124 553 476 Intersegment elimination (2) 5 (13) 5 ------ ------ ------- ------ 828 813 2,565 1,954 Depreciation and amortization (359) (311) (1,294) (988) ------ ------ ------- ------- Business segment operating income 469 502 1,271 966 Equity in pretax income of Entertainment Group, substantially all TWE 164 20 686 290 Interest and other, net (140) (320) (1,044) (1,174) Corporate expenses (21) (26) (81) (78) ------- ------ ------- ------- Income before income taxes 472 176 832 4 Income tax provision (225) (117) (531) (160) ------- ------- ------- ------- Income (loss) before extraordinary item 247 59 301 (156) Extraordinary loss on retirement of debt, net of income tax benefits of $21 million, $- million, $37 million and $22 million, respectively (31) - (55) (35) ------- ------ -------- -------- Net income (loss) 216 59 246 (191) Preferred dividend requirements (81) (77) (319) (257) ------- ------- -------- -------- Net income (loss) applicable to common shares $ 135 $ (18) $ (73) $ (448) ======= ======= ======== ======== Basic income (loss) per common share: Income (loss) before extraordinary item $ 0.29 $(0.03) $ (0.03) $ (0.95) ====== ======= ======== ======== Net income (loss) $ 0.23 $(0.03) $ (0.13) $ (1.04) ====== ======= ======== ======== Average common shares 577.5 558.7 567.7 431.2 ====== ======= ======== ======== Diluted income (loss) per common share: Income (loss) before extraordinary item $ 0.28 $(0.03) $(0.03) $ (0.95) ====== ======= ======= ======== Net income (loss) $ 0.22 $(0.03) $(0.13) $ (1.04) ====== ======= ======= ======== Average common shares 600.0 558.7 567.7 431.2 ====== ======= ======= ======== ENTERTAINMENT GROUP COMBINED STATEMENT OF OPERATIONS BY BUSINESS SEGMENT (In millions; unaudited) Three Months Ended Years Ended December 31, December 31, 1997 1996 1997 1996 Revenues: Filmed Entertainment - Warner Bros. $ 1,642 $1,713 $ 5,472 $ 5,648 Broadcasting - The WB Network 52 31 136 87 Cable Networks - HBO 471 462 1,923 1,763 Cable 1,097 988 4,243 3,851 Intersegment elimination (124) (150) (446) (488) ------- ------- -------- -------- Total revenues $ 3,138 $3,044 $11,328 $10,861 ======= ======= ======= ======== Business segment operating income before depreciation and amortization: Filmed Entertainment - Warner Bros. $ 135 $ 123 $ 601 $ 546 Broadcasting - The WB Network (28) (35) (87) (98) Cable Networks - HBO 107 91 413 350 Cable 616 402 1,920 1,536 ------- ------- -------- -------- 830 581 2,847 2,334 Depreciation and amortization (359) (336) (1,386) (1,244) ------- -------- -------- -------- Business segment operating income 471 245 1,461 1,090 Interest and other, net (200) (155) (357) (524) Minority interest (77) (53) (305) (207) Corporate services (18) (17) (72) (69) ------- ------- ------- ------- Income before income taxes 176 20 727 290 Income tax provision (21) (21) (85) (70) ------- ------- ------- ------- Income (loss) before extraordinary item 155 (1) 642 220 Extraordinary loss on retirement of debt (23) - (23) - ------- ------- ------- ------- Net income (loss) $132 $ (1) $ 619 $ 220 ======= ======== ======= ======== TIME WARNER INC. AND ENTERTAINMENT GROUP NOTES TO STATEMENTS OF OPERATIONS Note 1: Basis of Presentation Time Warner classifies its business interests into four fundamental areas: Entertainment, consisting principally of interests in recorded music and music publishing, filmed entertainment, television production and television broadcasting; Cable Networks, consisting principally of interests in cable television programming; Publishing, consisting principally of interests in magazine publishing, book publishing and direct marketing; and Cable, consisting principally of interests in cable television systems. A majority of Time Warner's interests in filmed entertainment, television production, television broadcasting and cable television systems, and a portion of its interests in cable television programming are held through Time Warner Entertainment Company, L.P. ("TWE"). Time Warner owns general and limited partnership interests in TWE consisting of 74.49% of the pro rata priority capital ("Series A Capital") and residual equity capital ("Residual Capital"), and 100% of the senior priority capital ("Senior Capital") and junior priority capital ("Series B Capital"). The remaining 25.51% limited partnership interests in the Series A Capital and Residual Capital of TWE are held by a subsidiary of U S WEST, Inc. Time Warner does not consolidate TWE and certain related companies (the "Entertainment Group") for financial reporting purposes. No portion of TWE's net income for the years ended December 31, 1997 and 1996 was allocated to the limited partnership interests. Note 2: TBS Transaction On October 10, 1996, Time Warner acquired the remaining 80% interest in Turner Broadcasting System, Inc. ("TBS") that it did not already own. In connection therewith, Time Warner issued approximately 179.8 million shares of common stock to the former shareholders of TBS capital stock and approximately 14 million stock options to replace all outstanding TBS stock options. Time Warner also assumed approximately $2.8 billion of indebtedness. The acquisition cost of approximately $6.2 billion was allocated to the net assets acquired in accordance with the purchase method of accounting for business combinations. Note 3: Gains on Disposition of Assets In the fourth quarter of 1997, Time Warner redeemed certain mandatorily redeemable preferred securities of a wholly owned subsidiary for all of its interest in Hasbro, Inc. ("Hasbro"). In connection with this redemption and the related disposal of its interest in Hasbro, Time Warner recognized a $200 million pretax gain which has been included in interest and other, net, in Time Warner's 1997 consolidated statement of operations. In 1997, in an effort to enhance its geographic clustering of cable television properties, TWE sold or exchanged various cable television systems. As a result of these transactions, TWE recognized net gains of approximately $160 million in the fourth quarter of 1997, and approximately $200 million for the year. Such amounts have been included in the operating results of the Cable division in the Entertainment Group's 1997 combined statement of operations. In the first quarter of 1997, TWE sold its 58% interest in E! Entertainment Television, Inc. A pretax gain of approximately $250 million relating to this sale has been included in interest and other, net, in the Entertainment Group's 1997 combined statement of operations. Note 4: Income Taxes The relationship between income before income taxes and income tax expense of Time Warner is affected by the amortization of goodwill and certain other financial statement expenses that are not deductible for income tax purposes. Income tax expense of Time Warner includes all income taxes related to its allocable share of partnership income and its equity in the income tax expense of corporate subsidiaries of the Entertainment Group. Note 5: Income (Loss) per Common Share Basic income (loss) per common share is based upon the net income (loss) applicable to common shares after preferred dividend requirements and upon the weighted average of common shares outstanding during the period. Diluted income (loss) per common share adjusts for the effect of convertible securities and stock options only in the periods in which such effect would have been dilutive. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of New York, State of New York, on February 19, 1998. TIME WARNER INC. By: /s/ John A. LaBarca Name: John A. LaBarca Title: Senior Vice President -----END PRIVACY-ENHANCED MESSAGE-----