| [September 13, 2005] |
 |
Time Warner Reaffirms 2005 Full-Year Business Outlook
NEW YORK --(Business Wire)-- Sept. 13, 2005 -- In anticipation of Entertainment & Networks Group Chairman Jeffrey Bewkes's presentation at an investor conference this afternoon, Time Warner Inc. (NYSE:TWX) today reaffirmed its 2005 full-year business outlook.
The Company continues to expect that its 2005 full-year growth rate in Adjusted Operating Income before Depreciation and Amortization will be in the high-single digits, as compared to $9.9 billion in 2004. This expectation reflects anticipated revenue gains and margin expansion.
In addition, Time Warner reaffirmed its expectation that it will convert between 30% to 40% of its 2005 Adjusted Operating Income before Depreciation and Amortization into Free Cash Flow.
The outlook above does not include the impact of any future merger and restructuring charges that have not been identified and sales and acquisitions of operating assets that may occur from time to time due to management decisions and changing business circumstances, as well as the impact of any future reserves or payments made in connection with the pending securities litigation. The Company is currently unable to forecast precisely the timing and magnitude of any such events.
Information on the Bewkes Presentation
Mr. Bewkes's presentation is expected to begin at approximately 3:00 pm ET. An audio Webcast of the presentation will be available online at http://www.timewarner.com/investors.
To listen to the live Webcast, please go to the Web site 15 minutes prior to the start of the presentation to register, download and install any necessary software. Also, an archive of the Webcast will be posted on http://www.timewarner.com/investors.
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. Free Cash Flow includes the impact of the settlement with the Department of Justice ($210 million in 2004) and the settlement with the Securities and Exchange Commission ($300 million in 2005).
Operating Income before Depreciation and Amortization, Adjusted Operating Income before Depreciation and Amortization and Free Cash Flow should be considered in addition to, not as a substitute for, the Company's Operating Income, Net Income and various cash flow measures (e.g., Cash Provided by Operations), as well as other measures of financial performance and liquidity reported in accordance with U.S. generally accepted accounting principles.
About Time Warner Inc.
Time Warner Inc. is a leading media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks and publishing.
Caution Concerning Forward-Looking Statements
This document includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs, and are subject to uncertainty and changes in circumstances. Actual results may vary materially from those expressed or implied by the statements herein due to changes in economic, business, competitive, technological and/or regulatory factors, sales of business assets, and the potential impact of future decisions by management that may result in merger and restructuring charges, as well as the potential impact of any future impairment charges to goodwill or other intangible assets. More detailed information about these factors may be found in filings by Time Warner Inc. with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Time Warner is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise. -0- *T TIME WARNER INC. RECONCILIATION OF GUIDANCE ($ in millions) (Unaudited) Year Ended December 31, Reconciliation of 2005 2004 Guidance ------------ -------------------------- Reconciliation of Adjusted Operating Income before Depreciation and Amortization to Operating Income: (1) Time Warner Inc. ------------------------------ Adjusted Operating Income $ 9,871 High single digit growth before Depreciation and Amortization Depreciation and Amortization (3,207) Low to high single digit growth Impairment of goodwill, (10) No further impairment intangible and fixed assets expected (2) Gains and losses from asset 21 No further gains/losses sales expected (3) Legal reserves related to the (510) No further reserves government investigations (4) related to government investigations expected (4) Legal reserves related to - Unable to estimate securities litigation (5) further reserves for ----------- pending securities litigation (5) Operating Income $ 6,165 Decrease in absolute =========== dollar amount Free Cash Flow (6) $ 3,280 Free Cash Flow conversion between 30% to 40% of Adjusted Operating Income before Depreciation and Amortization Capital expenditures and 3,215 Increase in absolute product development costs dollar amount plus principal payments on capital leases (all from continuing operations) Payments related to securities - Increase in absolute litigation dollar amount ----------- Cash provided by continuing 6,495 Cash provided by operations continuing operations exceeding 85% of Operating Income Cash provided by discontinued 123 Decrease in absolute operations dollar amount ----------- Cash Provided by Operations $ 6,618 Cash Provided by Operations exceeding 85% of Operating Income =========== Notes: ------------------------------ (1) 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. (2) Year-to-date June 30, 2005, the Company has recognized $24 million in noncash impairments of goodwill. (3) Year-to-date June 30, 2005, the Company has recognized $18 million in gains from asset sales. (4) In 2004, the Company established $510 million of legal reserves related to the government investigations. (5) Year-to-date June 30, 2005, the Company has established $3 billion of legal reserves related to securities litigation. (6) Free Cash Flow is defined as 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 includes the impact of settlements with the Department of Justice ($210 million in 2004) and the Securities and Exchange Commission ($300 million in 2005). *T
[ Back To TMCnet.com's Homepage ]
|
INDUSTRIES
Activate Email 
Find Solutions for Enterprises, SMBs & Service Providers at the INTERNET TELEPHONY Conference and EXPO East, January 20-22, 2010. Miami, FL.
