Time Warner Inc. Reports Fourth-Quarter And Full-Year 2012 Results
Stock quotes in this article:
TWX
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.Select the service that is right for you!
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