TIME WARNER INC.

Exhibit 99.1


For Immediate Release:

TIME WARNER INC. REPORTS SECOND QUARTER 2005 RESULTS

Company Reaches Agreement in Principle to Resolve Its Primary Securities Class Action Litigation
and Reserves $3 Billion Related to All Pending Securities Litigation Matters

Board of Directors Authorizes $5 Billion Stock Repurchase Program

NEW YORK, August 3, 2005 – Time Warner Inc. (NYSE:TWX) today reported financial results for its second quarter ended June 30, 2005. The Company also announced that it has reached an agreement in principle to resolve its primary securities class action litigation and established reserves of $3 billion related to this and all other related securities litigation matters. In addition, Time Warner’s Board of Directors has authorized a $5 billion stock repurchase program over the next two years.

Chairman and Chief Executive Officer Dick Parsons said: “Reaching an agreement in principle to settle this securities litigation and reserving for it and all other related matters mark important steps toward putting these matters behind us. By working to resolve these issues now, we’re aiming to avoid the costs, risks and distractions of protracted litigation. Even after considering the reserve, our balance sheet remains strong.”

Commenting on the results, Mr. Parsons added: “Our performance this quarter, which faced very difficult prior-year comparisons, keeps us on track to achieve our full-year objectives. Importantly, we generated industry-leading Free Cash Flow of $2 billion through the first half of the year, demonstrating the vitality of our businesses.

“In addition, our businesses continue to make significant progress. Driving double-digit gains across its key financial metrics in the quarter, Time Warner Cable delivered impressive subscriber growth through the aggressive deployment of its high-speed data, Digital Phone and enhanced digital video services. With the beta launch of AOL.com, which is available free to all Internet users, America Online is positioning itself to capitalize on compelling online advertising and broadband trends. We continue to create and package very successful content at our studios and TV networks, including Warner Bros.’ Batman Begins and Charlie and the Chocolate Factory, New Line’s Monster-in-Law and Wedding Crashers and TNT originals The Closer and Into the West. In the second half of the year, we’ll look to extend our competitive positions and regain operating growth momentum.”

Commenting on the share repurchase program, Mr. Parsons concluded: “As part of our commitment to deliver value to our shareholders, we’re pleased our Board of Directors has decided that the Company’s strong balance sheet, robust Free Cash Flow generation and excellent growth prospects support management’s recommendation for a $5 billion stock repurchase program. At the same time, we’ll continue to invest in organic growth and high-return, high-growth strategic opportunities and pay our previously announced regular quarterly cash dividend. Our board and management team believe that this overall program to deliver value to our shareholders underscores Time Warner’s recent progress and our confidence in its future success.”

Company Results

In the quarter, Revenues decreased 1% over the same period in 2004 to $10.7 billion, with expected declines at the Filmed Entertainment and AOL segments offset almost entirely by growth at the Cable, Networks and Publishing segments.

Adjusted Operating Income before Depreciation and Amortization declined 3% to $2.6 billion, reflecting primarily significant decreases at the Filmed Entertainment segment as a result of difficult prior-year comparisons. The Company reported an Operating Loss of $1.2 billion, due to legal reserves related to the securities litigation, which reduced Operating Income by $3 billion. This compares to Operating Income in the prior-year quarter of $1.8 billion.

For the first six months, Cash Provided by Operations was $3.5 billion, and Free Cash Flow totaled $2.0 billion (reflecting a 38% conversion rate of Adjusted Operating Income before Depreciation and Amortization).

As of June 30, Net Debt totaled $13.0 billion, down $3.2 billion from $16.2 billion at the end of 2004.

Diluted Loss per Common Share before discontinued operations and cumulative effect of accounting change was $0.07 for the three months ended June 30, compared to income of $0.19 in last year’s second quarter. The current-quarter amounts included the aforementioned legal reserves and other items affecting comparability that are described in detail in the accompanying Consolidated Reported Net Income and Per Share Results section. The net impact of such items was to decrease the current-year results by $0.25 per diluted common share.

Update on Securities Class Action Litigation

The Company has reached an agreement in principle for the settlement of the primary securities class action pending against it. The tentative settlement is reflected in a Memorandum of Understanding, dated as of July 29, 2005, between the lead plaintiff and the Company. Under the proposed settlement, $2.4 billion will be paid by Time Warner into a settlement fund for the members of the class represented in the action. In addition, the $150 million previously paid by Time Warner into a fund in connection with the settlement of the investigation by the Department of Justice will be made available to the class, and Time Warner will use its best efforts to have the $300 million, which it previously paid in connection with the settlement of its Securities and Exchange Commission investigation, transferred to the settlement fund for the class. The proposed settlement is subject to completion of final documentation and preliminary and final court approval, as well as other conditions. At this time, there can be no assurance that these conditions will be met and that the settlement of the securities class action litigation will receive preliminary or final court approval. Ernst & Young also has agreed to a settlement in this litigation matter and will pay $100 million.

In connection with reaching the agreement in principle on the securities class action litigation, the Company has established a reserve of $2.4 billion. Although the Company has reached an agreement in principle to settle the primary securities class action, other related litigation remains pending, including shareholder derivative actions, lawsuits alleging ERISA violations and securities actions brought by individual shareholders. The Company has established an additional reserve totaling $600 million in connection with these remaining related securities litigation matters pending against the Company. This $600 million amount represents the Company’s current best estimate of its potential financial exposure in these matters. The aggregate $3 billion reserve established, however, does not consider any future insurance recoveries under existing insurance policies because the Company cannot reliably estimate the amount of recovery at this time.

$5 Billion Stock Repurchase Program

The Board of Directors has authorized a $5 billion stock repurchase program over the next two years.

Purchases for the stock repurchase program may be made from time to time on the open market and in privately negotiated transactions. Size and timing of these purchases will be based on factors including price and business and market conditions.

Performance of Segments

The schedules below reflect Time Warner’s performance for the three and six months ended June 30, by line of business (in millions):

Three Months and Six Months Ended June 30:


	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Revenues:
AOL	$	2,097		$	2,177		$	4,230		$	4,368
Cable		2,357			2,116			4,603			4,159
Filmed Entertainment		2,636			3,091			5,650			6,078
Networks		2,489			2,378			4,774			4,573
Publishing		1,502			1,443			2,742			2,590
Intersegment Eliminations		(337	)		(345	)		(772	)		(723	)


Total Revenues	$	10,744		$	10,860		$	21,227		$	21,045


Adjusted Operating Income before Depreciation and Amortization ^(a):
AOL ^(b)	$	550		$	497		$	1,090		$	986
Cable		900			817			1,722			1,567
Filmed Entertainment		219			417			629			829
Networks^(c)		635			661			1,422			1,403
Publishing^(d)		348			357			515			519
Corporate ^(e)		(104	)		(112	)		(206	)		(276	)
Intersegment Eliminations		22			10			(7	)		23


Total Adjusted Operating Income before Depreciation and Amortization ^(a)	$	2,570		$	2,647		$	5,165		$	5,051


Operating Income:
AOL ^(b)	$	368		$	276		$	692		$	553
Cable		495			443			921			829
Filmed Entertainment		137			339			465			674
Networks ^(c)		570			602			1,298			1,285
Publishing ^(d)		291			288			404			390
Corporate ^(e)		(114	)		(120	)		(225	)		(300	)
Legal reserves related to securities litigation ^(f)		(3,000	)		—			(3,000	)		—
Intersegment Eliminations		22			10			(7	)		23


Total Operating Income	$	(1,231	)	$	1,838		$	548		$	3,454


^(a)		Adjusted Operating Income before Depreciation and Amortization excludes the impact of noncash impairments of goodwill, intangible and fixed assets, as well as gains and losses on asset sales, legal reserves related to the government investigations and legal reserves related to securities litigation. Refer to the reconciliations of Adjusted Operating Income before Depreciation and Amortization to Operating Income before Depreciation and Amortization on pages 12 and 13. Operating Income includes these items in their respective periods.

^(b)		For the three and six months ended June 30, 2005, Adjusted Operating Income before Depreciation and Amortization excludes a $5 million gain related to the sale of a building and a $3 million gain related to the 2004 sale of Netscape Security Solutions. Additionally, for the six months ended June 30, 2005, Adjusted Operating Income before Depreciation and Amortization excludes a noncash goodwill impairment charge of $24 million related to America Online Latin America, Inc., and a $2 million gain from the resolution of a contingent gain related to the 2004 sale of Netscape Security Solutions; for the three and six months ended June 30, 2004, Adjusted Operating Income before Depreciation and Amortization excludes a noncash impairment of $10 million related to the sale of a building; Operating Income includes these amounts in their respective periods.

^(c)		For the six months ended June 30, 2004, Adjusted Operating Income before Depreciation and Amortization excludes a loss of approximately $7 million related to the sale of the winter sports teams. Operating Income includes this amount in the period.

^(d)		For the six months ended June 30, 2005, Adjusted Operating Income before Depreciation and Amortization excludes an $8 million gain related to the collection of a loan made in conjunction with the Company’s 2003 sale of Time Life Inc., which was previously fully reserved due to concerns about recoverability; for the six months ended June 30, 2004, it excludes an $8 million gain related to the sale of a building. Operating Income includes these items in their respective periods.

^(e)		For the three and six months ended June 30, 2004, Adjusted Operating Income before Depreciation and Amortization and Operating Income include $14 million and $67 million, respectively, of costs associated with the relocation from the Company’s former corporate headquarters, of which approximately $3 million of this charge was reversed in the first quarter of 2005, as updated estimates indicate certain costs would no longer be incurred.

^(f)		This amount will be reflected in the results of the Corporate segment.

Presented below is a discussion of Time Warner’s segments for the second quarter of 2005. Unless otherwise noted, the dollar amounts in parentheses represent year-over-year changes.

AOL (America Online)

Revenues declined 4% ($80 million) to $2.1 billion, reflecting a 45% increase ($99 million) in Advertising revenues, more than offset by a 9% decrease ($168 million) in Subscription revenues. Advertising revenues benefited from growth in paid search ($30 million), as well as the Advertising.com acquisition ($60 million), which closed in August of 2004. The decrease in Subscription revenues was due primarily to a decline in domestic membership. Included in Revenues was an increase of $28 million from changes in foreign currency exchange rates.

Adjusted Operating Income before Depreciation and Amortization climbed 11% ($53 million) to $550 million, as lower network ($158 million) and marketing costs and higher Advertising revenues more than offset the decline in domestic Subscription revenues.

Operating Income rose 33% ($92 million) to $368 million, benefiting from the increase in Adjusted Operating Income before Depreciation and Amortization and lower depreciation expense ($27 million).

Subscriber Update

As of June 30, the AOL service totaled 20.8 million U.S. members, a decline of 917,000 from the prior quarter and 2.6 million from the year-ago quarter. In Europe, the AOL service had 6.2 million members, a decrease of 99,000 from the previous quarter and a decline of 80,000 from last year’s quarter.

Highlights

America Online launched the beta version of AOL.com, which provides internet users worldwide with free access to AOL’s world-class online content. Last month, AOL set a record for streaming video simultaneously, as millions tuned in to the webcast of the Live 8 concerts at AOL.com.

CABLE (Time Warner Cable)

Revenues climbed 11% ($241 million) to $2.4 billion, reflecting a 12% increase ($231 million) in Subscription revenues and an 8% rise in Advertising revenues. The growth in Subscription revenues was driven by a 21% increase ($92 million) in high-speed data revenues, higher Digital Phone revenues ($54 million), 19% growth ($32 million) in enhanced digital video services revenues and increased basic cable rates. Average monthly revenue per basic cable subscriber rose 12% to $84, marking the sixth consecutive quarter of double-digit, year-over-year growth.

Operating Income before Depreciation and Amortization grew 10% ($83 million) to $900 million, reflecting higher revenues, offset partially by video programming cost increases ($65 million) as well as higher marketing and general operating costs. Second quarter results include $13 million of restructuring costs, reflecting previously announced changes in Time Warner Cable’s corporate and divisional management structure.

Operating Income rose 12% ($52 million) to $495 million, driven by the increase in Operating Income before Depreciation and Amortization offset by a modest increase in depreciation expense ($31 million or up 9%).

Subscriber Update

As of June 30, Time Warner Cable managed 10.9 million basic video cable subscribers, which included nearly 1.6 million subscribers in unconsolidated joint ventures. Total basic video cable subscribers were down slightly (5,000) from the previous quarter. Digital video subscribers rose 144,000 over the previous quarter, the largest increase since the first quarter of 2003, for a total of 5.1 million. Digital penetration of basic video cable subscribers was 46% at the end of the quarter. In the same period, Digital Video Recorder subscribers climbed 132,000 to 1.1 million subscribers, representing 22% of digital video customers.

Residential high-speed data subscribers increased by 201,000 in the quarter for a total of 4.3 million, representing 22% of service-ready homes passed. This is the second consecutive quarter residential high-speed data net subscribers have increased by over 200,000. Digital Phone subscribers rose 242,000 in the quarter for a total of 614,000, nearly 60% more net subscriber additions than the previous quarter.

FILMED ENTERTAINMENT (Warner Bros. Entertainment and New Line Cinema)

Revenues decreased 15% ($455 million) to $2.6 billion, due to difficult comparisons to the prior-year quarter’s worldwide theatrical and theatrical home video revenues, offset in part by higher international television revenues.

Operating Income before Depreciation and Amortization declined 47% ($198 million), related to lower contributions from New Line’s The Lord of the Rings trilogy and reduced television contributions. Television results reflected lower contributions from domestic syndication revenues as well as from Friends and The Drew Carey Show, which ended their broadcast network runs last year. Operating Income before Depreciation and Amortization also faced difficult comparisons to the prior-year’s theatrical home video releases at Warner Bros., most notably The Matrix Revolutions and The Last Samurai, which were offset partially by lower theatrical valuation adjustments.

Operating Income decreased 60% ($202 million) to $137 million, due to the decline in Operating Income before Depreciation and Amortization as well as slightly higher depreciation expense.

Highlights

Notable theatrical releases during the quarter included Warner Bros.’ Batman Begins and New Line’s Monster-in-Law. Through August 1, Batman Begins and Monster-in-Law have generated worldwide box office receipts of more than $350 million and $120 million, respectively.

Warner Home Video ranked #1 in the U.S. for the year through June 18 in total home video sales, capturing a 19.4% share. Leading home video releases during the quarter included Warner Bros.’ Ocean’s Twelve, The Aviator and The Phantom of the Opera, as well as New Line’s Blade: Trinity.

Warner Bros. Television received 23 Primetime Emmy nominations, led by Two and a Half Men with six and The West Wing with five, including its sixth straight nomination for Outstanding Drama Series.

NETWORKS (Turner Broadcasting, HBO and The WB Network)

Revenues increased 5% ($111 million) to $2.5 billion, reflecting growth in Subscription and Advertising revenues. Subscription revenues rose 5% ($71 million), primarily as a result of higher rates and increased subscribers at Turner Broadcasting and HBO. These subscription gains were offset in part by the lower net effect of resolving certain contractual agreements ($22 million in the current

quarter compared to approximately $50 million last year). Advertising revenues grew 5% ($44 million), led by an 8% climb at the Turner networks.

Operating Income before Depreciation and Amortization declined 4% ($26 million) to $635 million, reflecting higher programming, marketing and general operating expenses, primarily at Turner. The increase in programming expenses ($45 million) is related mainly to an increase in original series, which include Into the West, The Real Gilligan’s Island 2 and The Closer, as well as higher sports rights at Turner. Also contributing to the quarter’s results were difficult comparisons to the prior-year quarter’s favorable resolution of certain contractual agreements and the reversal of bad debt reserves associated with the Adelphia bankruptcy ($14 million).

Operating Income decreased 5% ($32 million) to $570 million, reflecting the decline in Operating Income before Depreciation and Amortization and higher depreciation expense.

Highlights

Among advertising-supported cable networks, TNT finished the quarter #1 in prime-time and total day delivery of all key adult audiences (except total day for Adults 18-34 where it finished #2 behind Adult Swim). TNT has had 20 consecutive quarters of year-over-year growth in total day delivery among Adults 18-49. Cartoon Network ranked #1 in prime-time delivery of Kids 2-11.

HBO received 93 Primetime Emmy nominations – the most of any network for the fifth year in a row. The Life and Death of Peter Sellers and Warm Springs led all contenders with 16 nominations each, while Deadwood and Six Feet Under received nominations for Outstanding Drama Series. Turner received a total of 13 nominations, including eight for TNT, four for Cartoon Network and one for Turner Classic Movies. CNN programming received four News & Documentary Emmy nominations.

PUBLISHING (Time Inc.)

Revenues rose 4% ($59 million) to $1.5 billion, reflecting 34% growth ($43 million) in Content revenues and 4% growth ($26 million) in Advertising revenues. Year-over-year growth in Content revenues was led by Time Warner Book Group. Advertising gains were related primarily to contributions from recent magazine launches, the acquisition of Essence, as well as strength at Southern Living, Real Simple and InStyle. This was offset in part by advertising declines at Time, Sports Illustrated and Fortune.

Operating Income before Depreciation and Amortization decreased 3% ($9 million) to $348 million, due partially to higher start-up losses on magazine launches ($9 million). Growth at Time Warner Book Group was offset by lower contributions from certain core magazines.

Operating Income was essentially flat (increased $3 million) at $291 million, with lower depreciation and amortization expenses more than offsetting the decline in Operating Income before Depreciation and Amortization.

Highlights

Based on Publishers Information Bureau (PIB) data, Time Inc.’s 2005 industry-leading share of overall domestic advertising through June 30 was 23.2%.

Time Warner Book Group added 15 titles to the New York Times bestseller list this quarter. Nicholas Sparks’ True Believer, Malcolm Gladwell’s Blink, James Patterson’s 4^th of July and Michael Connelly’s The Closers all ranked #1 during the second quarter.

Consolidated Reported Net Income and Per Share Results

For the three months ended June 30, 2005, the Company reported a Net Loss of $321 million, or $0.07 per diluted common share. This compares to Net Income in 2004 of $777 million, or $0.17 per diluted common share.

For the three months ended June 30, 2005, the Company reported a Loss before Discontinued Operations and Cumulative Effect of Accounting Change of $321 million, or $0.07 per diluted common share. This compares to Income before Discontinued Operations and Cumulative Effect of Accounting Change in 2004 of $882 million, or $0.19 per diluted common share.

Certain pre-tax items in the current-year quarter affected comparability, including legal reserves of $3 billion related to the securities litigation and a $27 million loss on the Warner Music Group option. These items were offset in part by a $925 million gain on the sale of the Company’s remaining stake in Google, a $36 million gain on the sale of an investment in Columbia House, a $5 million gain on the sale of a building at AOL and a $3 million gain related to the 2004 sale of Netscape Security Solutions. In addition, the income tax provision reflected tax benefits of approximately $1.2 billion, associated primarily with the impact of state tax law changes in Ohio and New York enacted in the second quarter of 2005 and the settlement accrual related to the securities litigation. Certain pre-tax items in the prior-year quarter also affected comparability, including a $10 million impairment related to the sale of a building at AOL, offset by $10 million in net investment gains.

In aggregate, these items had the net effect of reducing the current year’s Income before Discontinued Operations and Cumulative Effect of Accounting Change by $1.2 billion (net of taxes), or $0.25 per diluted common share, with no net impact to the previous year’s Income before Discontinued Operations and Cumulative Effect of Accounting Change. Excluding such items, the decrease in Income before Discontinued Operations and Cumulative Effect of Accounting Change and Diluted Income per Common Share before Discontinued Operations and Cumulative Effect of Accounting Change was driven primarily by lower Operating Income, offset primarily by lower net interest expense.

Use of Operating Income before Depreciation and Amortization, Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow

The Company utilizes Operating Income 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 before Depreciation and Amortization excluding the impact of noncash impairments of goodwill, intangible and fixed assets, as well as gains and losses on asset sales, legal reserves related to the government investigations, and legal reserves related to securities litigation (referred to herein as Adjusted Operating Income before Depreciation and Amortization). Both Operating Income before Depreciation and Amortization and Adjusted Operating Income before Depreciation and Amortization are considered important indicators of the operational strength of the Company’s businesses. Operating Income before Depreciation and Amortization eliminates the uneven effect across all business segments of considerable amounts of noncash depreciation of tangible assets 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 tangible and intangible assets used in generating revenues in the Company’s businesses. Moreover, Adjusted Operating Income before Depreciation and Amortization does not reflect the diminution in value 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.

Free Cash Flow is Cash Provided by Operations (as defined by U.S. generally accepted accounting principles) plus payments related to securities litigation, less cash provided by discontinued operations, capital expenditures and product development costs, principal payments on capital leases, and partnership distributions, if any. Free Cash Flow is considered to be an important indicator of the Company’s liquidity, including its ability to reduce net debt, make strategic investments, pay dividends to common shareholders and repurchase stock. A limitation of this measure, however, is that it does not reflect securities litigation payments, which reduce liquidity.

Operating Income before Depreciation and Amortization, Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow should be considered in addition to, not as a substitute for, the Company’s Operating Income, Net Income and various cash flow measures (e.g., Cash Provided by Operations), as well as other measures of financial performance and liquidity reported in accordance with U.S. generally accepted accounting principles.

About Time Warner Inc.

Time Warner Inc. is a leading media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks and publishing.

Information on Business Outlook Release and Earnings Conference Call

Time Warner Inc. issued a separate release today regarding its 2005 full-year business outlook.

The Company’s earnings conference call can be heard live at 8:30 am ET on Wednesday, August 3, 2005. To listen to the call, visit www.timewarner.com/investors or AOL Keyword: IR.

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 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 by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, and other factors affecting the operation of the businesses of Time Warner Inc. More detailed information about these factors may be found in filings by Time Warner with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Report on Form 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.

Contacts:


Corporate Communications		Investor Relations
Edward Adler (212) 484-6630		John Martin (212) 484-6579
Susan Duffy (212) 484-6686		Jim Burtson (212) 484-8719
Mia Carbonell (212) 484-6684		Kelli Turner (212) 484-8269

TIME WARNER INC.

CONSOLIDATED BALANCE SHEET
(Unaudited)


	June 30,			December 31,
	2005			2004
	(millions, except
	per share amounts)
ASSETS
Current assets
Cash and equivalents	$	7,592		$	6,139
Restricted cash		150			150
Receivables, less allowances of $1.966 and $2.109 billion		5,001			5,512
Inventories		1,638			1,737
Prepaid expenses and other current assets		1,006			920


Total current assets		15,387			14,458

Noncurrent inventories and film costs		4,454			4,415
Investments, including available-for-sale securities		3,438			4,703
Property, plant and equipment, net		13,200			13,094
Intangible assets subject to amortization, net		3,689			3,892
Intangible assets not subject to amortization		39,698			39,656
Goodwill		39,745			39,667
Other assets		2,976			3,273


Total assets	$	122,587		$	123,158


LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	1,030		$	1,339
Participations payable		2,284			2,580
Royalties and programming costs payable		1,168			1,018
Deferred revenue		1,599			1,653
Debt due within one year		1,188			1,672
Other current liabilities		7,673			6,468
Current liabilities of discontinued operations		40			50


Total current liabilities		14,982			14,780

Long-term debt		19,361			20,703
Deferred income taxes		14,339			14,943
Deferred revenue		730			749
Mandatorily convertible preferred stock		—			1,500
Other liabilities		4,898			4,160
Noncurrent liabilities of discontinued operations		7			38
Minority interests		5,650			5,514

Shareholders’ equity
Series LMCN-V common stock, $0.01 par value, 87.2 and 105.7 million shares outstanding		1			1
Time Warner common stock, $0.01 par value, 4.604 and 4.483 billion shares outstanding		46			45
Paid-in-capital		157,934			156,252
Accumulated other comprehensive income (loss), net		(370	)		106
Accumulated deficit		(94,991	)		(95,633	)


Total shareholders’ equity		62,620			60,771


Total liabilities and shareholders’ equity	$	122,587		$	123,158

Note: Certain reclassifications have been made to the prior year’s financial information to conform to the June 30, 2005 presentation.

TIME WARNER INC.

CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
	(millions, except per share amounts)
Revenues:
Subscription	$	5,618		$	5,486		$	11,110		$	10,800
Advertising		2,020			1,846			3,667			3,293
Content		2,816			3,237			5,899			6,354
Other		290			291			551			598


Total revenues		10,744			10,860			21,227			21,045
Costs of revenues		(6,249	)		(6,342	)		(12,249	)		(12,313	)
Selling, general and administrative		(2,571	)		(2,515	)		(5,099	)		(4,960	)
Amortization of intangible assets		(152	)		(157	)		(302	)		(311	)
Legal reserves related to securities litigation		(3,000	)		—			(3,000	)		—
Restructuring costs		(11	)		2			(23	)		2
Asset impairments		—			(10	)		(24	)		(10	)
Gains on disposal of assets, net		8			—			18			1


Operating income (loss)		(1,231	)		1,838			548			3,454

Interest expense, net		(324	)		(383	)		(670	)		(787	)
Other income, net		989			33			1,100			64
Minority interest expense, net		(72	)		(62	)		(131	)		(118	)

Income (loss) before income taxes, discontinued operations and cumulative effect of accounting change		(638	)		1,426			847			2,613
Income tax benefit (provision)		317			(544	)		(205	)		(1,019	)


Income (loss) before discontinued operations and cumulative effect of accounting change		(321	)		882			642			1,594
Discontinued operations, net of tax		—			(105	)		—			110

Income (loss) before cumulative effect of accounting change		(321	)		777			642			1,704
Cumulative effect of accounting change, net of tax		—			—			—			34

Net income (loss)	$	(321	)	$	777		$	642		$	1,738


Basic income (loss) per common share before discontinued operations and cumulative effect of accounting change	$	(0.07	)	$	0.19		$	0.14		$	0.35
Discontinued operations		—			(0.02	)		—			0.02
Cumulative effect of accounting change		—			—			—			0.01


Basic net income (loss) per common share	$	(0.07	)	$	0.17		$	0.14		$	0.38

Diluted income (loss) per common share before discontinued operations and cumulative effect of accounting change	$	(0.07	)	$	0.19		$	0.14		$	0.34
Discontinued operations		—			(0.02	)		—			0.02
Cumulative effect of accounting change		—			—			—			0.01


Diluted net income (loss) per common share	$	(0.07	)	$	0.17		$	0.14		$	0.37


Average basic common shares		4,683.1			4,561.7			4,636.6			4,555.4


Average diluted common shares		4,683.1			4,700.7			4,725.6			4,698.1

Note: Certain reclassifications have been made to the prior year’s financial information to conform to the June 30, 2005 presentation.

TIME WARNER INC.

CONSOLIDATED STATEMENT OF CASH FLOWS
Six Months Ended June 30,
(Unaudited)


	2005			2004
	(millions)
OPERATIONS
Net income^(a)	$	642		$	1,738
Adjustments for noncash and nonoperating items:
Cumulative effect of accounting change, net of tax		—			(34	)
Depreciation and amortization		1,611			1,588
Amortization of film costs		1,462			1,518
Asset impairments		24			10
Gain on investments and other assets, net		(1,074	)		(54	)
Equity in income of investee companies, net of cash distributions		(33	)		(7	)
Legal reserves related to securities litigation		3,000			—
Changes in operating assets and liabilities, net of acquisitions^(b)		(2,158	)		(1,463	)
Adjustments relating to discontinued operations		(11	)		10


Cash provided by operations^(c)		3,463			3,306


INVESTING ACTIVITIES
Investments and acquisitions, net of cash acquired		(258	)		(213	)
Capital expenditures and product development costs		(1,448	)		(1,341	)
Investment proceeds from available-for-sale securities		976			40
Other investment proceeds		368			2,632


Cash provided (used) by investing activities		(362	)		1,118


FINANCING ACTIVITIES
Borrowings		1,203			1,489
Debt repayments		(3,037	)		(2,865	)
Proceeds from exercise of stock options		158			224
Principal payments on capital leases		(67	)		(102	)
Other		95			16


Cash used by financing activities		(1,648	)		(1,238	)


INCREASE IN CASH AND EQUIVALENTS		1,453			3,186

CASH AND EQUIVALENTS AT BEGINNING OF PERIOD		6,139			3,040


CASH AND EQUIVALENTS AT END OF PERIOD	$	7,592		$	6,226


(a)		Includes net income from discontinued operations of $110 million for the six months ended June 30, 2004.

(b)		2005 includes a $300 million payment related to the government investigations.

(c)		2005 includes an approximate $36 million use of cash related to changing the fiscal year end of certain international operations from November 30 to December 31.

Note: Certain reclassifications have been made to the prior year’s financial information to conform to the June 30, 2005 presentation.

TIME WARNER INC.

RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION TO
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
(millions, unaudited)

Three Months Ended June 30, 2005


	Adjusted					Legal Reserves
	Operating Income/(Loss)					Related To			Gains/(Losses)		Operating Income/(Loss)
	Before Depreciation			Asset		Securities			From		Before Depreciation
	And Amortization			Impairments		Litigation			Asset Disposals		And Amortization
AOL^(a)	$	550		$	—	$	—		$	8	$	558
Cable		900			—		—			—		900
Filmed Entertainment		219			—		—			—		219
Networks		635			—		—			—		635
Publishing		348			—		—			—		348
Corporate^(b)		(104	)		—		(3,000	)		—		(3,104	)
Intersegment elimination		22			—		—			—		22

Total	$	2,570		$	—	$	(3,000	)	$	8	$	(422	)

Three Months Ended June 30, 2004


	Adjusted						Legal Reserves
	Operating Income/(Loss)						Related To		Gains/(Losses)		Operating Income/(Loss)
	Before Depreciation			Asset			Securities		From		Before Depreciation
	And Amortization			Impairments			Litigation		Asset Disposals		And Amortization
AOL^(a)	$	497		$	(10	)	$	—	$	—	$	487
Cable		817			—			—		—		817
Filmed Entertainment		417			—			—		—		417
Networks		661			—			—		—		661
Publishing		357			—			—		—		357
Corporate		(112	)		—			—		—		(112	)
Intersegment elimination		10			—			—		—		10

Total	$	2,647		$	(10	)	$	—	$	—	$	2,637


(a)		For the three months ended June 30, 2005, Operating Income (Loss) before Depreciation and Amortization includes an approximate $5 million gain related to the sale of a building and a $3 million gain from the resolution of a previously contingent gain related to the 2004 sale of Netscape Security Solutions. For the three months ended June 30, 2004, Operating Income before Depreciation and Amortization includes a $10 million impairment charge related to a building that was held for sale.

(b)		Operating Loss before Depreciation and Amortization includes $3 billion in legal reserves related to securities litigation.

TIME WARNER INC.

RECONCILIATION OF ADJUSTED OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION TO
OPERATING INCOME BEFORE DEPRECIATION AND AMORTIZATION
(millions, unaudited)

Six Months Ended June 30, 2005


	Adjusted						Legal Reserves
	Operating Income/(Loss)						Related To			Gains/(Losses)		Operating Income/(Loss)
	Before Depreciation			Asset			Securities			From		Before Depreciation
	And Amortization			Impairments			Litigation			Asset Disposals		And Amortization
AOL^(a)	$	1,090		$	(24	)	$	—		$	10	$	1,076
Cable		1,722			—			—			—		1,722
Filmed Entertainment		629			—			—			—		629
Networks		1,422			—			—			—		1,422
Publishing^(b)		515			—			—			8		523
Corporate^(d)		(206	)		—			(3,000	)		—		(3,206	)
Intersegment elimination		(7	)		—			—			—		(7	)

Total	$	5,165		$	(24	)	$	(3,000	)	$	18	$	2,159

Six Months Ended June 30, 2004


	Adjusted						Legal Reserves
	Operating Income/(Loss)						Related To		Gains/(Losses)			Operating Income/(Loss)
	Before Depreciation			Asset			Securities		From			Before Depreciation
	And Amortization			Impairments			Litigation		Asset Disposals			And Amortization
AOL^(a)	$	986		$	(10	)	$	—	$	—		$	976
Cable		1,567			—			—		—			1,567
Filmed Entertainment		829			—			—		—			829
Networks^(c)		1,403			—			—		(7	)		1,396
Publishing^(b)		519			—			—		8			527
Corporate		(276	)		—			—		—			(276	)
Intersegment elimination		23			—			—		—			23

Total	$	5,051		$	(10	)	$	—	$	1		$	5,042


(a)		For the six months ended June 30, 2005, Operating Income before Depreciation and Amortization includes a $24 million noncash impairment charge related to goodwill associated with America Online Latin America, Inc. (“AOLA”), an approximate $5 million gain related to the sale of a building and a $5 million gain from the resolution of a previously contingent gain related to the 2004 sale of Netscape Security Solutions. For the six months ended June 30, 2004, Operating Income before Depreciation and Amortization includes a $10 million impairment charge related to a building that was held for sale.

(b)		For the six months ended June 30, 2005, Operating Income before Depreciation and Amortization includes an $8 million gain related to the collection of a loan made in conjunction with the Company’s 2003 sale of Time Life Inc., which was previously fully reserved due to concerns about recoverability. For the six months ended June 30, 2004, Operating Income before Depreciation and Amortization includes an $8 million gain related to the sale of a building.

(c)		For the six months ended June 30, 2004, Operating Income before Depreciation and Amortization includes an approximate $7 million loss related to the sale of the winter sports teams.

(d)		Operating Income (Loss) before Depreciation and Amortization includes $3 billion in legal reserves related to securities litigation.

TIME WARNER INC.

RECONCILIATION OF OPERATING INCOME BEFORE DEPRECIATION
AND AMORTIZATION TO OPERATING INCOME
(millions, unaudited)

Three Months Ended June 30, 2005


	Operating Income/(Loss)
	Before Depreciation									Operating
	And Amortization			Depreciation			Amortization			Income/(Loss)
AOL^(a)	$	558		$	(143	)	$	(47	)	$	368
Cable		900			(386	)		(19	)		495
Filmed Entertainment		219			(30	)		(52	)		137
Networks		635			(57	)		(8	)		570
Publishing		348			(31	)		(26	)		291
Corporate^(b)		(3,104	)		(10	)		—			(3,114	)
Intersegment elimination		22			—			—			22

Total	$	(422	)	$	(657	)	$	(152	)	$	(1,231	)

Three Months Ended June 30, 2004


	Operating Income/(Loss)
	Before Depreciation									Operating
	And Amortization			Depreciation			Amortization			Income/(Loss)
AOL^(a)	$	487		$	(170	)	$	(41	)	$	276
Cable		817			(355	)		(19	)		443
Filmed Entertainment		417			(25	)		(53	)		339
Networks		661			(51	)		(8	)		602
Publishing		357			(33	)		(36	)		288
Corporate		(112	)		(8	)		—			(120	)
Intersegment elimination		10			—			—			10

Total	$	2,637		$	(642	)	$	(157	)	$	1,838


(a)		For the three months ended June 30, 2005, Operating Income (Loss) before Depreciation and Amortization and Operating Income (Loss) include an approximate $5 million gain related to the sale of a building and a $3 million gain from the resolution of a previously contingent gain related to the 2004 sale of Netscape Security Solutions. For the three months ended June 30, 2004, Operating Income before Depreciation and Amortization and Operating Income include a $10 million impairment charge related to a building that was held for sale.

(b)		Operating Loss before Depreciation and Amortization and Operating Loss include $3 billion in legal reserves related to securities litigation.

TIME WARNER INC.

RECONCILIATION OF OPERATING INCOME BEFORE DEPRECIATION
AND AMORTIZATION TO OPERATING INCOME
(millions, unaudited)

Six Months Ended June 30, 2005


	Operating Income/(Loss)
	Before Depreciation									Operating
	And Amortization			Depreciation			Amortization			Income/(Loss)
AOL^(a)	$	1,076		$	(290	)	$	(94	)	$	692
Cable		1,722			(762	)		(39	)		921
Filmed Entertainment		629			(60	)		(104	)		465
Networks		1,422			(112	)		(12	)		1,298
Publishing^(b)		523			(66	)		(53	)		404
Corporate^(d)		(3,206	)		(19	)		—			(3,225	)
Intersegment elimination		(7	)		—			—			(7	)

Total	$	2,159		$	(1,309	)	$	(302	)	$	548

Six Months Ended June 30, 2004


	Operating Income/(Loss)
	Before Depreciation									Operating
	And Amortization			Depreciation			Amortization			Income/(Loss)
AOL^(a)	$	976		$	(340	)	$	(83	)	$	553
Cable		1,567			(701	)		(37	)		829
Filmed Entertainment		829			(49	)		(106	)		674
Networks^(c)		1,396			(100	)		(11	)		1,285
Publishing^(b)		527			(63	)		(74	)		390
Corporate		(276	)		(24	)		—			(300	)
Intersegment elimination		23			—			—			23

Total	$	5,042		$	(1,277	)	$	(311	)	$	3,454


(a)		For the six months ended June 30, 2005, Operating Income before Depreciation and Amortization and Operating Income include a $24 million noncash impairment charge related to goodwill associated with AOLA, an approximate $5 million gain related to the sale of a building and a $5 million gain from the resolution of a previously contingent gain related to the 2004 sale of Netscape Security Solutions. For the six months ended June 30, 2004, Operating Income before Depreciation and Amortization and Operating Income include a $10 million impairment charge related to a building that was held for sale.

(b)		For the six months ended June 30, 2005, Operating Income before Depreciation and Amortization and Operating Income include an $8 million gain related to the collection of a loan made in conjunction with the Company’s 2003 sale of Time Life Inc., which was previously fully reserved due to concerns about recoverability. For the six months ended June 30, 2004, Operating Income before Depreciation and Amortization and Operating Income include an $8 million gain related to the sale of a building.

(c)		For the six months ended June 30, 2004, Operating Income before Depreciation and Amortization and Operating Income include an approximate $7 million loss related to the sale of the winter sports teams.

(d)		Operating Income (Loss) before Depreciation and Amortization and Operating Income (Loss) include $3 billion in legal reserves related to securities litigation.

TIME WARNER INC.

RECONCILIATION OF CASH PROVIDED BY OPERATIONS TO FREE CASH FLOW
(millions, unaudited)


	Three Months Ended June 30,						Six Months Ended June 30,
	2005			2004			2005			2004
Cash provided by operations	$	1,609		$	1,487		$	3,463		$	3,306
Less discontinued operations:
Net income (loss)		—			105			—			(110	)
Other changes		4			(84	)		11			(10	)


Cash provided by continuing operations		1,613			1,508			3,474			3,186
Capital expenditures and product development costs		(797	)		(784	)		(1,448	)		(1,341	)
Principal payments on capital leases		(30	)		(54	)		(67	)		(102	)


Free Cash Flow^(a)	$	786		$	670		$	1,959		$	1,743


(a)		Free Cash Flow is cash provided by operations (as defined by U.S. generally accepted accounting principles) plus payments related to securities litigation, less cash provided by discontinued operations, capital expenditures and product development costs, principal payments on capital leases, and partnership distributions, if any.


Delaware	1-15062	13-4099534

(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)


Exhibit		Description

	99.1	Press release issued August 3, 2005 by Time Warner Inc. and furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”


	TIME WARNER INC.
	By:	/s/ Wayne H. Pace
		Name:	Wayne H. Pace
		Title:	Executive Vice President and Chief Financial Officer
Date: August 3, 2005


Exhibit		Description

	99.1	Press release issued August 3, 2005 by Time Warner Inc. and furnished pursuant to Item 2.02, “Results of Operations and Financial Condition.”