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Time Warner Inc. Reports Fourth-Quarter And Full-Year 2012 Results

INFORMATION ON BUSINESS OUTLOOK RELEASE & CONFERENCE CALL

Time Warner Inc. issued a separate release today regarding its 2013 full-year business outlook.

The Company’s conference call can be heard live at 10:30 am ET on Wednesday, February 6, 2013. To listen to the call, visit www.timewarner.com/investors.

           
TIME WARNER INC.
CONSOLIDATED BALANCE SHEET
(Unaudited; millions, except share amounts)
 
December 31, December 31,
2012 2011
 
ASSETS
Current assets
Cash and equivalents $ 2,841 $ 3,476
Receivables, less allowances of $1,757 and $1,957 7,385 6,922
Inventories 2,060 1,890
Deferred income taxes 474 663
Prepaid expenses and other current assets   528     481  
Total current assets 13,288 13,432
 
Noncurrent inventories and theatrical film and television production costs 6,785 6,594
Investments, including available-for-sale securities 2,047 1,820
Property, plant and equipment, net 3,942 3,963
Intangible assets subject to amortization, net 2,108 2,232
Intangible assets not subject to amortization 7,642 7,805
Goodwill 30,446 30,029
Other assets   2,046     1,926  
Total assets $ 68,304   $ 67,801  
 
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 8,069 $ 7,815
Deferred revenue 1,011 1,084
Debt due within one year   749     23  
Total current liabilities 9,829 8,922
 
Long-term debt 19,122 19,501
Deferred income taxes 2,127 2,541
Deferred revenue 523 549
Other noncurrent liabilities 6,825 6,334
 
Equity
Common stock, $0.01 par value, 1.652 billion and 1.652 billion shares
issued and 932 million and 974 million shares outstanding 17 17
Paid-in-capital 154,577 156,114
Treasury stock, at cost (720 million and 678 million shares) (35,077 ) (33,651 )
Accumulated other comprehensive loss, net (988 ) (852 )
Accumulated deficit   (88,652 )   (91,671 )
Total Time Warner Inc. shareholders’ equity 29,877 29,957
Noncontrolling interests   1     (3 )
Total equity   29,878     29,954  
Total liabilities and equity $ 68,304   $ 67,801  
 
           
TIME WARNER INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited; millions, except per share amounts)
 
Three Months Ended Year Ended
12/31/12       12/31/11 12/31/12       12/31/11
 
Revenues $ 8,164 $ 8,193 $ 28,729 $ 28,974
Costs of revenues (4,436 ) (4,732 ) (15,934 ) (16,311 )
Selling, general and administrative (1,641 ) (1,664 ) (6,333 ) (6,439 )
Amortization of intangible assets (70 ) (67 ) (248 ) (269 )
Restructuring and severance costs (35 ) (29 ) (119 ) (113 )
Asset impairments (4 ) (29 ) (186 ) (44 )
Gain on operating assets, net   49     1     9     7  
Operating income 2,027 1,673 5,918 5,805
Interest expense, net (307 ) (312 ) (1,253 ) (1,210 )
Other loss, net   (69 )   (180 )   (123 )   (229 )
 
Income before income taxes 1,651 1,181 4,542 4,366
Income tax provision   (483 )   (409 )   (1,526 )   (1,484 )
Net income 1,168 772 3,016 2,882
Less Net loss attributable to
noncontrolling interests   -     1     3     4  
Net income attributable to Time Warner Inc.
shareholders $ 1,168   $ 773   $ 3,019   $ 2,886  
 
Per share information attributable to
Time Warner Inc. common shareholders:
Basic net income per common share $ 1.24   $ 0.78   $ 3.14   $ 2.74  
Average basic common shares outstanding   942.1     992.2     954.4     1,046.2  
 
Diluted net income per common share $ 1.21   $ 0.76   $ 3.09   $ 2.71  
Average diluted common shares outstanding   966.9     1,010.7     976.3     1,064.5  
 
Cash dividends declared per share of common
stock $ 0.260   $ 0.235   $ 1.040   $ 0.940  
 
           
TIME WARNER INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended December 31,
(Unaudited; millions)
 
  2012     2011  
 
OPERATIONS
Net income $ 3,016 $ 2,882
Adjustments for noncash and nonoperating items:
Depreciation and amortization 892 922
Amortization of film and television costs 7,210 7,032
Asset impairments 186 44
Loss on investments and other assets, net 69 168
Equity in losses of investee companies, net of cash distributions 88 95
Equity-based compensation 234 225
Deferred income taxes (150 ) 135
Changes in operating assets and liabilities, net of acquisitions   (8,069 )   (8,055 )
Cash provided by operations from continuing operations 3,476 3,448
Cash used by operations from discontinued operations   (34 )   (16 )
Cash provided by operations   3,442     3,432  
 
INVESTING ACTIVITIES
Investments in available-for-sale securities (37 ) (34 )
Investments and acquisitions, net of cash acquired (668 ) (365 )
Capital expenditures (643 ) (772 )
Investment proceeds from available-for-sale securities 1 16
Other investment proceeds   101     69  
Cash used by investing activities   (1,246 )   (1,086 )
 
FINANCING ACTIVITIES
Borrowings 1,039 3,037
Debt repayments (686 ) (80 )
Proceeds from exercise of stock options 1,107 204
Excess tax benefit from equity instruments 83 22
Principal payments on capital leases (11 ) (12 )
Repurchases of common stock (3,272 ) (4,611 )
Dividends paid (1,011 ) (997 )
Other financing activities   (80 )   (96 )
Cash used by financing activities   (2,831 )   (2,533 )
 
DECREASE IN CASH AND EQUIVALENTS (635 ) (187 )
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD   3,476     3,663  
CASH AND EQUIVALENTS AT END OF PERIOD $ 2,841   $ 3,476  
 
                 
TIME WARNER INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(Unaudited; dollars in millions)
 
Reconciliations of
Adjusted Operating Income (Loss) to Operating Income (Loss) and
Adjusted Operating Income Margin to Operating Income Margin
 
Three Months Ended December 31, 2012
           
Adjusted Gain (Loss) on
Operating Asset Operating Operating Income
Income (Loss) Impairments Assets, Net Other (Loss)
Networks $ 1,336 $ 4 $ 34 $ 4 $ 1,378
Film and TV Entertainment 555 (2 ) - (1 ) 552
Publishing 201 (6 ) 5 - 200
Corporate (95 ) - 10 (1 ) (86 )
Intersegment eliminations   (17 )   -     -     -     (17 )
Total $ 1,980   $ (4 ) $ 49   $ 2   $ 2,027  
 
Margin (a) 24.3 % (0.1 %) 0.6 % - 24.8 %
 
Three Months Ended December 31, 2011
 
Adjusted Gain (Loss) on
Operating Asset Operating Operating Income
Income (Loss) Impairments Assets, Net Other (Loss)
Networks $ 1,144 $ (6 ) $ - $ - $ 1,138
Film and TV Entertainment 433 (6 ) 1 (1 ) 427
Publishing 224 (17 ) - - 207
Corporate (83 ) - - (3 ) (86 )
Intersegment eliminations   (13 )   -     -     -     (13 )
Total $ 1,705   $ (29 ) $ 1   $ (4 ) $ 1,673  
 
Margin (a) 20.8 % (0.4 %) - - 20.4 %
 

Please see below for additional information on items affecting comparability.

   
Year Ended December 31, 2012            
                 
Adjusted Gain (Loss) on
Operating Asset Operating Operating Income
Income (Loss) Impairments Assets, Net Other (Loss)
Networks $ 4,881 $ (176 ) $ 34 $ (20 ) $ 4,719
Film and TV Entertainment 1,237 (4 ) 1 (6 ) 1,228
Publishing 463 (6 ) (36 ) (1 ) 420
Corporate (358 ) - 10 (4 ) (352 )
Intersegment eliminations   (97 )   -     -     -     (97 )
Total $ 6,126   $ (186 ) $ 9   $ (31 ) $ 5,918  
 
Margin (a) 21.3 % (0.6 %) - (0.1 %) 20.6 %
 
Year Ended December 31, 2011
 
Adjusted Gain (Loss) on
Operating Asset Operating Operating Income
Income (Loss) Impairments Assets, Net Other (Loss)
Networks $ 4,431 $ (6 ) $ (2 ) $ (7 ) $ 4,416
Film and TV Entertainment 1,279 (21 ) 9 (4 ) 1,263
Publishing 580 (17 ) - - 563
Corporate (336 ) - - (11 ) (347 )
Intersegment eliminations   (90 )   -     -     -     (90 )
Total $ 5,864   $ (44 ) $ 7   $ (22 ) $ 5,805  
 
Margin (a) 20.2 % (0.2 %) - - 20.0 %
 

Please see below for additional information on items affecting comparability.

 

_________________________

 
(a) Adjusted Operating Income Margin is defined as Adjusted Operating Income divided by Revenues. Operating Income Margin is defined as Operating Income divided by Revenues.
 
           
TIME WARNER INC.
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(Unaudited; millions, except per share amounts)
 
Reconciliations of
Adjusted Net Income attributable to Time Warner Inc. common shareholders to
Net Income attributable to Time Warner Inc. common shareholders and
Adjusted EPS to Diluted Net Income per Common Share
 
Three Months Ended Year Ended
12/31/12       12/31/11 12/31/12       12/31/11
 
Asset impairments $ (4 ) $ (29 ) $ (186 ) $ (44 )
Gain on operating assets, net 49 1 9 7
Other   2     (4 )   (31 )   (22 )
Impact on Operating Income 47 (32 ) (208 ) (59 )
 
Investment gains (losses), net (44 ) (167 ) (73 ) (168 )
Amounts related to the separation of Time
Warner Cable Inc. (2 ) 5 4 (5 )
Amounts related to the disposition of the
Warner Music Group   (2 )   -     (7 )   -  
Pretax impact (1 ) (194 ) (284 ) (232 )
Income tax impact of above items   41     21     100     43  
Impact of items affecting comparability on net
income attributable to Time Warner Inc.
shareholders $ 40   $ (173 ) $ (184 ) $ (189 )
 
Amounts attributable to Time Warner Inc.
shareholders:
Net income $ 1,168 $ 773 $ 3,019 $ 2,886
Less Impact of items affecting comparability
on net income   40     (173 )   (184 )   (189 )
Adjusted net income $ 1,128   $ 946   $ 3,203   $ 3,075  
 
Per share information attributable to Time
Warner Inc. common shareholders:
Diluted net income per common share $ 1.21 $ 0.76 $ 3.09 $ 2.71
Less Impact of items affecting comparability on
diluted net income per common share   0.04     (0.18 )   (0.19 )   (0.18 )
Adjusted EPS $ 1.17   $ 0.94   $ 3.28   $ 2.89  
Average diluted common shares outstanding   966.9     1,010.7     976.3     1,064.5  
 

Asset Impairments

During the three months and year ended December 31, 2012, the Company recognized a $4 million reversal and $174 million of charges, respectively, at the Networks segment in connection with the shutdown of Turner’s general entertainment network, Imagine, in India and TNT television operations in Turkey (the “Imagine and TNT Turkey Shutdowns”) primarily related to certain receivables, including value added tax receivables, inventories and long-lived assets, including Goodwill.

Stock quotes in this article: TWX 

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