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):
October 15, 1997
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 October 15, 1997, Time Warner Inc. announced its results of
operations for the quarter ended September 30, 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 Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues:
Publishing $1,027 $1,034 $3,004 $2,951
Music 880 900 2,635 2,759
Cable Networks - TBS 748 - 2,092 -
Filmed Entertainment - TBS 363 - 1,097 -
Cable 248 230 740 677
Intersegment elimination (35) (7) (110) (23)
Total revenues $3,231 $2,157 $9,458 $6,364
Business segment operating income before
depreciation and amortization:
Publishing $ 114 $ 99 $ 380 $ 335
Music 111 143 376 454
Cable Networks - TBS 151 - 472 -
Filmed Entertainment - TBS 70 - 108 -
Cable 141 122 412 352
Intersegment elimination (4) - (11) -
583 364 1,737 1,141
Depreciation and amortization (320) (225) (935) (677)
Business segment operating income 263 139 802 464
Equity in pretax income of Entertainment Group,
substantially all TWE 96 61 522 270
Interest and other, net (309) (276) (904) (854)
Corporate expenses (17) (16) (60) (52)
Income (loss) before income taxes 33 (92) 360 (172)
Income tax (provision) benefit (61) 1 (306) (43)
Income (loss) before extraordinary
item (28) (91) 54 (215)
Extraordinary loss on retirement of debt, net of income
tax benefits of $5 million, $ - million, $16 million
and $22 million, respectively (7) - (24) (35)
Net income (loss) (35) (91) 30 (250)
Preferred dividend requirements (81) (76) (238) (180)
Net loss applicable to common
shares $ (116) $ (167) $ (208) $ (430)
Loss per common share:
Loss before extraordinary item $(0.19) $(0.43) $(0.33) $(1.02)
Net loss $(0.20) $(0.43) $(0.37) $(1.11)
Average common shares 573.3 385.0 564.4 . 388.7
ENTERTAINMENT GROUP
COMBINED STATEMENT OF OPERATIONS
BY BUSINESS SEGMENT
(In millions; unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
Revenues:
Filmed Entertainment -
Warner Bros. $1,399 $1,445 $3,830 $3,935
Broadcasting - The WB Network 31 23 84 56
Cable Networks - HBO 482 426 1,452 1,301
Cable 1,060 955 3,146 2,863
Intersegment elimination (115) (129) (322) (338)
Total revenues $2,857 $2,720 $8,190 $7,817
Business segment operating income before
depreciation and amortization:
Filmed Entertainment -
Warner Bros. $ 161 $ 146 $ 466 $ 423
Broadcasting - The WB Network (21) (27) (59) (63)
Cable Networks - HBO 107 91 306 259
Cable 454 390 1,304 1,134
701 600 2,017 1,753
Depreciation and amortization (366) (323) (1,027) (908)
Business segment operating income 335 277 990 845
Interest and other, net (146) (147) (157) (369)
Minority interest (64) (52) (228) (154)
Corporate services (18) (17) (54) (52)
Income before income taxes 107 61 551 270
Income tax provision (27) (10) (64) (49)
Net income $ 80 $ 51 $ 487 $ 221
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,
television broadcasting and theme parks; Cable Networks, consisting
principally of interests in cable television programming and sports
franchises; 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 nine months ended September 30, 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
preliminarily allocated to the net assets acquired in accordance with the
purchase method of accounting for business combinations.
Note 3: Gain on Sale of Investment in E! Entertainment Television, Inc.
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 reflected in the Entertainment
Group's combined statement of operations for the nine months ended
September 30, 1997.
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.
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 October 20, 1997.
TIME WARNER INC.
By: /s/ John A. LaBarca
Name: John A. LaBarca
Title: Senior Vice President