Time Warner Inc. Reports First-Quarter 2009 Results

NEW YORK--(Business Wire)--
Time Warner Inc. (NYSE:TWX) today reported financial results for its first
quarter ended March 31, 2009.

Chairman and Chief Executive Officer Jeff Bewkes said: "I`m pleased that our
Content Group grew Adjusted OIBDA by 3% during the quarter - despite a
challenging economic environment that`s affecting all of our businesses,
particularly advertising at our AOL and Publishing segments. Our results keep us
firmly on track to achieve our full-year business outlook."

Mr. Bewkes continued: "With our separation of Time Warner Cable, Time Warner has
become a more content-focused company. We`re also working to determine the right
ownership structure for AOL. With our powerful brands, industry-leading scale,
track record of innovation, heightened focus on efficiency and strong balance
sheet, I`m confident that we`ll continue to make progress toward our key
long-term goals - to be the world`s leading content company and improve returns
to our stockholders."

Company Results

On March 12, 2009, the Company completed the separation of Time Warner Cable
Inc. Accordingly, the Company has presented the financial condition and results
of operations of the Cable segment as discontinued operations for all periods
presented.

In the quarter, Revenues declined 7% from 2008 to $6.9 billion, due mainly to
decreases at the AOL, Publishing and Filmed Entertainment segments, offset
partially by an increase at the Networks segment.

Adjusted Operating Income before Depreciation and Amortization decreased 7% to
$1.6 billion. Declines at the AOL and Publishing segments more than offset
growth at the Networks and Filmed Entertainment segments. Operating Income was
down 9% to $1.2 billion.

For the Content Group (which consists of the Networks, Filmed Entertainment,
Publishing and Corporate segments), Revenues declined 4%, Adjusted Operating
Income before Depreciation and Amortization grew 3%, and Operating Income
increased 2%.

For the first three months of 2009, Cash provided by operations from continuing
operations totaled $1.4 billion, and Free Cash Flow amounted to $1.3billion
(reflecting an 83% conversion rate of Adjusted Operating Income before
Depreciation and Amortization). As of March 31, 2009, Net Debt was $10.4
billion, down $10.3billion from $20.7 billion at the end of 2008, due primarily
to the $9.3 billion special cash dividend received from Time Warner Cable Inc.
on March 12, 2009, in connection with the separation, as well as the generation
of Free Cash Flow.

All common share and per common share amounts in the current and prior periods
reflect the Company`s 1-for-3 reverse stock split, which became effective on
March 27, 2009. Adjusted Diluted Income per Common Share from Continuing
Operations ("Adjusted EPS") was $0.45 for the three months ended March 31, 2009,
compared to $0.48 in last year`s first quarter. Diluted Income per Common Share
from Continuing Operations was $0.46 for the three months ended March 31, 2009
and 2008.

Segment Performance

Presentation of Financial Information

The schedule below reflects Time Warner`s financial performance for the three
months ended March 31, by line of business (millions).

In the presentation of financial information in this release, Adjusted Operating
Income (Loss) before Depreciation and Amortization excludes the impact ofnoncash
impairments of goodwill, intangible and fixed assets, as well as gains and
losses on asset sales and amounts related to securities litigation and
government investigations. Operating Income includes these amounts in their
respective periods. Refer to the reconciliations of Adjusted Operating Income
(Loss) before Depreciation and Amortization to Operating Income (Loss) before
Depreciation and Amortization and the reconciliations of Operating Income (Loss)
before Depreciation and Amortization to Operating Income (Loss) in this release
for details.

Three Months Ended March 31,
2009 2008
Revenues: (recast)(a)
Networks $ 2,808 $ 2,659
Filmed Entertainment 2,633 2,840
Publishing 806 1,045
Intersegment eliminations (161 ) (189 )
Total Content Group Revenues 6,086 6,355
AOL 867 1,128
Intersegment eliminations (8 ) (13 )

Total Revenues $ 6,945 $ 7,470

Adjusted Operating Income (Loss) before Depreciation and Amortization(b):
Networks $ 1,064 $ 958
Filmed Entertainment 308 280
Publishing 12 145
Corporate (77 ) (99 )
Intersegment eliminations -- (9 )
Total Content Group Adjusted Operating Income (Loss)before Depreciation and
Amortization
1,307 1,275
AOL 255 405
Total Adjusted Operating Income (Loss) beforeDepreciation and Amortization
$ 1,562 $ 1,680

Operating Income (Loss)(b):
Networks $ 960 $ 874
Filmed Entertainment 214 183
Publishing (32 ) 93
Corporate (94 ) (114 )
Intersegment eliminations -- (9 )
Total Content Group Operating Income (Loss) 1,048 1,027
AOL 150 284
Total Operating Income (Loss) $ 1,198 $ 1,311

(a) The 2008 financial information has been recast so that the basis of presentation is consistent with that of the 2009
financial information. Refer to Note 1, "Description of Business and Basis of Presentation."
(b) Adjusted Operating Income (Loss) before Depreciation and Amortization and Operating Income (Loss) for the three
months ended March 31, 2009 and 2008, respectively, included restructuring costs of (millions):

Three Months Ended March 31,
2009 2008
(recast)(a)
Networks $ -- $ --
Filmed Entertainment (37 ) (116 )
Publishing 1 (10 )
AOL (58 ) (9 )
Corporate -- (7 )
Total restructuring costs $ (94 ) $ (142 )

Presented below is a discussion of Time Warner`s segments for the first quarter
of 2009. Unless otherwise noted, the dollar amounts in parentheses represent
year-over-year changes.

NETWORKS (Turner Broadcasting & HBO)

Revenues climbed 6% ($149 million) to $2.8 billion, with growth of 9% ($155
million) in Subscription revenues, offset partially by a decline of 2% ($16
million) in Advertising revenues. Subscription revenues benefited primarily from
higher rates at both Turner and HBO and the impact of the consolidation of HBO
Latin America Group ("HBO LAG"). Advertising revenues decreased, reflecting
mainly declines at Turner`s international networks, due in part to the impact of
unfavorable foreign exchange rates, and a slight decline at its domestic
entertainment networks, reflecting weakened demand.

Operating Income before Depreciation and Amortization grew 11% ($106 million) to
$1.1 billion, reflecting mainly increased revenues and lower newsgathering
costs, offset partially by higher marketing and programming expenses.
Programming expenses increased 2% to $925 million. Programming expenses in the
current year and prior year quarters included charges of $5 million and $21
million, respectively, related to decisions not to proceed with certain original
programming. Operating Income before Depreciation and Amortization also
benefited from the consolidation of HBO LAG.

Operating Income rose 10% ($86 million) to $960 million, resulting primarily
from the increase in Operating Income before Depreciation and Amortization,
offset partly by increased depreciation ($8 million) and amortization ($12
million) expenses.

FILMED ENTERTAINMENT

Revenues declined 7% ($207 million) to $2.6 billion, reflecting difficult
comparisons to the prior year quarter, due primarily to lower DVD sales, driven
by fewer home video releases and reduced catalog sales in the current year
quarter, as well as the impact of unfavorable foreign exchange rates and reduced
theatrical revenues. The current year quarter included revenues from the
theatrical performances of Gran Torino, The Curious Case of Benjamin Button, Yes
Man and Watchmen, while revenues in the prior year quarter benefited from the
theatrical and home video performance of I Am Legend, as well as the theatrical
performances of 10,000 B.C. and The Bucket List. These declines were offset in
part by higher television licensing fees, as the prior year quarter was
negatively affected by the Writers Guild of America (East and West) strike, as
well as higher interactive video game revenues, due mainly to the release of
F.E.A.R. 2: Project Origin.

Operating Income before Depreciation and Amortization increased 10% ($28
million) to $308 million, as the impact of lower revenues and higher television
production costs, associated with increased network deliveries, were more than
offset by lower print and advertising expenses, due primarily to the timing,
quantity and mix of titles, as well as reduced restructuring charges ($79
million) and lower overhead costs.

Operating Income increased 17%($31million) to$214 million, due mainly to the
increase in Operating Income before Depreciation and Amortization.

PUBLISHING

Revenues decreased 23% ($239 million) to $806million, due to declines of 30%
($167 million) in Advertising revenues, 16% ($58 million) in Subscription
revenues and 18% ($21 million) in Other revenues. The decline in Advertising
revenues reflected decreases in print magazine revenues, including the impact of
unfavorable foreign exchange rates at IPC, as well as lower custom publishing
revenues and declines in online revenues. Subscription revenues decreased, due
primarily to the negative impact of foreign exchange rates at IPC and lower
magazine newsstand sales, resulting in part from wholesaler disruptions, and
lower subscription sales. Other revenues decreased, resulting mainly from
declines at Synapse and Southern Living At Home, which is held for sale, offset
partly by the impact of the acquisition of QSP, Inc.

Operating Income before Depreciation and Amortization declined 92% ($133
million) to $12 million, due mainly to the decrease in revenues and an $18
million increase in bad debt reserves related to a newsstand wholesaler, as well
as higher pension expense, offset in part by lower overhead expenses, including
cost savings related to the reorganization in the fourth quarter of 2008. The
prior year quarter also included restructuring charges of$10 million.

Operating Loss of $32 million reflected a decline of $125 million compared to
the year-ago quarter`s Operating Income of $93 million, resulting primarily from
the decline in Operating Income before Depreciation and Amortization.

AOL

Revenues decreased 23% ($261 million) to $867 million, due to a 27% decline
($146 million) in Subscription revenues and a 20% decrease ($109 million) in
Advertising revenues. The decline in Subscription revenues reflects mainly a
continuing decrease in subscribers, related primarily to AOL`s strategy to offer
its e-mail and certain other products free of charge. Driving the decrease in
Advertising revenues were declines in sales of advertising on third-party
Internet sites, as well as display advertising and paid-search advertising on
AOL Network sites.

Operating Income before Depreciation and Amortization declined 37% ($150
million) to $255 million, resulting primarily from lower revenues, offset partly
by lower traffic acquisition costs ($58 million), lower personnel and overhead
costs, as well as reduced marketing, network and other expenses. The current and
prior year quarters also included netrestructuring charges of$58million and $9
million, respectively.

Operating Income decreased 47% ($134million) to $150 million, due primarily to
lower Operating Income before Depreciation and Amortization, offset in part by
lower depreciation expense ($14 million).

Key Operating Metrics

During the quarter, AOL had 106 million average monthly domestic unique visitors
and 58 billion domestic page views, according to comScore Media Metrix, which
translates into 181 average monthly domestic page views per unique visitor.

As of March 31, 2009, the AOL service had 6.3 million U.S. access subscribers, a
decline of 570,000 from the prior quarter and 2.4 million from the year-ago
quarter, reflecting subscriber losses due partially to AOL`s strategy to
prioritize its advertising business.

CONSOLIDATED REPORTED NET INCOME AND PER SHARE RESULTS

For the three months ended March 31, 2009, the Company reported Net Income
of$661 million, or $0.55 per diluted common share. This compares to Net Income
in 2008`s first quarter of$771 million, or $0.64 per diluted common share.

Adjusted EPS was$0.45for the three months ended March 31, 2009, compared to
$0.48 in last year`s first quarter. Adjusted EPS declined in the current year
quarter compared to the prior year quarter, due to lower Adjusted Operating
Income before Depreciation and Amortization.

For the three months ended March 31, 2009, the Company reported Income from
Continuing Operations of$555 million, or $0.46 per diluted common share. This
compares to Income from Continuing Operations in the comparable 2008 quarter
of$548 million, or $0.46 per diluted common share.

Refer to the reconciliation of Adjusted EPS to Diluted Income per Common Share
from Continuing Operations in this release for details.

Discontinued operations in 2009 and 2008 included the operating results of Time
Warner Cable Inc. for all periods presented. Specifically, discontinued
operations reflected Net Income of $106 million for the first quarter of 2009
and $223 million for the prior year quarter.

STOCK REPURCHASE PROGRAM UPDATE

From the announcement of the Company`s $5 billion stock repurchase program on
August 1, 2007, through April 28, 2009, the Company repurchased approximately 51
million shares of common stock for approximately $2.8 billion. These amounts are
unchanged from those reported in the Company`s 2008 full-year and fourth-quarter
earnings release issued on February 4, 2009.

Use of Non-GAAP Financial Measures

The Company utilizes Operating Income (Loss) 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 (Loss) 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, and amounts related to securities litigation
and government investigations(referred to herein as Adjusted Operating Income
(Loss) before Depreciation and Amortization). The Company also uses Content
Group Adjusted Operating Income (Loss) before Depreciation and Amortization to
further evaluate the Content Group businesses relative to their peers. Operating
Income (Loss) before Depreciation and Amortization and the Adjusted Operating
Income (Loss) before Depreciation and Amortization measures are considered
important indicators of the operational strength of the Company`s businesses.
Operating Income (Loss) before Depreciation and Amortization eliminates the
uneven effect across all business segments of noncash depreciation of tangible
assets and amortization of certain intangible assets that were primarily
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, the Adjusted Operating Income (Loss) before Depreciation and
Amortization measures do not reflect gains and losses on asset sales or amounts
related to securities litigation and government investigations or any impairment
charge related to goodwill, intangible assets and fixed assets. Management
evaluates the investments in such tangible and intangible assets through other
financial measures, such as capital expenditure budgets, investment spending
levels and return on capital.

Adjusted EPS is Diluted Income per Common Share from Continuing Operations
attributable to Time Warner Inc. shareholders excluding noncash impairments of
goodwill, intangible and fixed assets and investments; gains and losses on sales
of operating assets and investments; external costs related to mergers,
acquisitions, investments or dispositions, as well as contingent consideration
related to such transactions, to the extent such costs are expensed; and amounts
related to securities litigation and government investigations, as well as the
impact of taxes and noncontrolling interests on the above items.Adjusted EPS is
considered an important indicator of the operational strength of the Company`s
businesses as this measure eliminates amounts that do not reflect the
fundamental performance of the Company`s businesses. The Company utilizes
Adjusted EPS, among other measures, to evaluate the performance of its
businesses both on an absolute basis and relative to its peers and the broader
market. Many investors also use an adjusted EPS measure as a common basis for
comparing the performance of different companies. Some limitations of this
measure, however, are that it does not reflect certain cash charges that affect
the operating results of the Company`s businesses and that it involves judgment
as to whether items affect fundamental operating performance. Also, a general
limitation of Adjusted EPS is that this measure is not prepared in accordance
with U.S. generally accepted accounting principles and may not be comparable to
similarly titled measures of other companies due to differences in methods of
calculation and excluded items.

Free Cash Flow is Cash Provided by Operations (as defined by U.S. generally
accepted accounting principles) plus payments related to securities litigation
and government investigations (net of any insurance recoveries), external costs
related to mergers, acquisitions, investments or dispositions, and excess tax
benefits from the exercise of stock options, less cash flow attributable to
discontinued operations, capital expenditures and product development costs,
principal payments on capital leases and partnership distributions, if any. The
Company uses Free Cash Flow to evaluate its businesses and this measure is
considered 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 payments made in connection with the securities
litigation and government investigations, which reduce liquidity.

Operating Income (Loss) before Depreciation and Amortization, the Adjusted
Operating Income (Loss) before Depreciation and Amortization measures, Adjusted
EPS and Free Cash Flow should be considered in addition to, not as a substitute
for, the Company`s Operating Income, Net Income, Diluted Income per Common Share
from Continuing Operations 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., a global leader in media and entertainment with businesses in
television networks, filmed entertainment, publishing and interactive services,
uses its industry-leading operating scale and brands to create, package and
deliver high-quality content worldwide through multiple distribution platforms.

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, strategic 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.

Information on Time Warner`s Business Outlook Release and Conference Call

Time Warner Inc. issued a separate release today regarding its 2009 full-year
business outlook.

The Company`s conference call can be heard live at 10:30 am ET on Wednesday,
April 29, 2009.To listen to the call, visit www.timewarner.com/investors or AOL
Keyword: IR.

In addition, prior to the call, Time Warner will post on its Web site updated
trending schedules that include recast financial information for 2007 and 2008.
To access the trending schedules, visit www.timewarner.com/investors or AOL
Keyword: IR.

TIME WARNER INC.
CONSOLIDATED BALANCE SHEET
(Unaudited; millions, except per share amounts)

March 31, December 31,
2009 2008
(recast)
ASSETS

Current assets
Cash and equivalents $ 7,115 $ 1,233
Receivables, less allowances of $1,878 and $2,269 4,674 5,664
Inventories 2,050 1,989
Deferred income taxes 723 624
Prepaid expenses and other current assets 725 772
Current assets of discontinued operations -- 6,480
Total current assets 15,287 16,762

Noncurrent inventories and film costs 5,054 5,192
Investments, including available-for-sale securities 944 1,036
Property, plant and equipment, net 4,769 4,896
Intangible assets subject to amortization, net 3,492 3,564
Intangible assets not subject to amortization 7,723 7,728
Goodwill 32,357 32,428
Other assets 1,203 1,220
Noncurrent assets of discontinued operations -- 41,231
Total assets $ 70,829 $ 114,057

LIABILITIES AND EQUITY

Current liabilities
Accounts payable and accrued liabilities $ 7,789 $ 8,194
Deferred revenue 966 1,012
Debt due within one year 2,080 2,066
Current liabilities of discontinued operations 52 2,865
Total current liabilities 10,887 14,137

Long-term debt 15,402 19,889
Deferred income taxes 1,127 974
Deferred revenue 273 266
Other noncurrent liabilities 6,712 6,801
Noncurrent liabilities of discontinued operations -- 26,320

Equity
Time Warner common stock, $0.01 par value, 1.631 and 1.630 billion shares issued and 16 16
1.196 and 1.196 billion shares outstanding
Paid-in-capital 162,116 169,564
Treasury stock, at cost (434 million and 434 million shares) (25,836 ) (25,836 )
Accumulated other comprehensive loss, net (1,392 ) (1,676 )
Accumulated deficit (99,118 ) (99,780 )
Total Time Warner Inc. shareholders` equity 35,786 42,288
Noncontrolling interests (including $0 and $2,751 attributable to discontinued 642 3,382
operations)
Total equity 36,428 45,670
Total liabilities and equity $ 70,829 $ 114,057

TIME WARNER INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended March 31,
(Unaudited; millions, except per share amounts)

2009 2008
(recast)
Revenues:
Subscription $ 2,559 $ 2,608
Advertising 1,540 1,828
Content 2,636 2,809
Other 210 225
Total revenues 6,945 7,470
Costs of revenues (3,880 ) (4,167 )
Selling, general and administrative (1,652 ) (1,732 )
Amortization of intangible assets (121 ) (118 )
Restructuring costs (94 ) (142 )
Operating income 1,198 1,311
Interest expense, net (312 ) (347 )
Other loss, net (39 ) (59 )
Income from continuing operations before income taxes 847 905
Income tax provision (288 ) (345 )
Income from continuing operations 559 560
Discontinued operations, net of tax 131 262
Net income 690 822
Less Net income attributable to noncontrolling interests (29 ) (51 )
Net income attributable to Time Warner Inc. shareholders $ 661 $ 771

Amounts attributable to Time Warner Inc. shareholders:
Income from continuing operations $ 555 $ 548
Discontinued operations, net of tax 106 223
Net income $ 661 $ 771

Per share information attributable to Time Warner Inc. common shareholders:
Basic income per common share from continuing operations $ 0.46 $ 0.46
Discontinued operations 0.09 0.19
Basic net income per common share $ 0.55 $ 0.65
Average basic common shares outstanding 1,196.1 1,193.0

Diluted income per common share from continuing operations $ 0.46 $ 0.46
Discontinued operations 0.09 0.18
Diluted net income per common share $ 0.55 $ 0.64
Average diluted common shares outstanding 1,200.3 1,200.2

Cash dividends declared per share of common stock $ 0.1875 $ 0.1875

TIME WARNER INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31,
(Unaudited, millions)

2009 2008
(recast)
OPERATIONS
Net income $ 690 $ 822
Less Discontinued operations, net of tax 131 262
Net income from continuing operations 559 560
Adjustments for noncash and nonoperating items:
Depreciation and amortization 357 365
Amortization of film and television costs 1,624 1,377
Loss on investments and other assets, net 2 26
Equity in losses of investee companies, net of cash distributions 22 19
Equity-based compensation 71 75
Deferred income taxes (40 ) 37
Changes in operating assets and liabilities, net of acquisitions (1,170 ) (843 )
Cash provided by operations from continuing operations 1,425 1,616

INVESTING ACTIVITIES
Investments in available-for-sale securities (2 ) --
Investments and acquisitions, net of cash acquired (50 ) (253 )
Capital expenditures and product development costs (134 ) (146 )
Investment proceeds from available-for-sale securities 5 --
Special Dividend received from Time Warner Cable Inc. 9,253 --
Other investment proceeds 112 30
Cash provided (used) by investing activities from continuing operations 9,184 (369 )

FINANCING ACTIVITIES
Borrowings 3,507 2,112
Debt repayments (7,986 ) (2,716 )
Proceeds from exercise of stock options -- 34
Excess tax benefit on stock options -- 2
Principal payments on capital leases (11 ) (10 )
Repurchases of common stock -- (332 )
Dividends paid (226 ) (224 )
Other financing activities (9 ) (18 )
Cash used by financing activities from continuing operations (4,725 ) (1,152 )
Cash provided by continuing operations 5,884 95

Cash provided by operations from discontinued operations 582 1,180
Cash used by investing activities from discontinued operations (622 ) (841 )
Cash used by financing activities from discontinued operations (5,224 ) (348 )
Effect of change in cash and equivalents of discontinued operations 5,262 6
Cash used by discontinued operations (2 ) (3 )
INCREASE IN CASH AND EQUIVALENTS 5,882 92
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 1,233 1,285
CASH AND EQUIVALENTS AT END OF PERIOD $ 7,115 $ 1,377

TIME WARNER INC.
RECONCILIATION OF ADJUSTED OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION TO OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION
(Unaudited, millions)

Three Months Ended March 31, 2009

Adjusted Amounts Operating
Operating Related To Income/(Loss)
Income/(Loss) Securities Before
Before Litigation & Gains/(Losses) Depreciation
Depreciation Asset Government From And
And Amortization Impairments Investigations Asset Disposals Amortization
Networks $ 1,064 $ -- $ -- $ -- $ 1,064
Filmed Entertainment 308 -- -- -- 308
Publishing 12 -- -- -- 12
Corporate(a) (77 ) -- (7 ) -- (84 )
Intersegment eliminations -- -- -- -- --
Total Content Group 1,307 -- (7 ) -- 1,300
AOL 255 -- -- -- 255
Total $ 1,562 $ -- $ (7 ) $ -- $ 1,555

Three Months Ended March 31, 2008 (recast)

Adjusted Amounts Operating
Operating Related To Income/(Loss)
Income/(Loss) Securities Before
Before Litigation & Gains/(Losses) Depreciation
Depreciation Asset Government From And
And Amortization Impairments Investigations Asset Disposals Amortization
Networks $ 958 $ -- $ -- $ -- $ 958
Filmed Entertainment 280 -- -- -- 280
Publishing 145 -- -- -- 145
Corporate(a) (99 ) -- (4 ) -- (103 )
Intersegment eliminations (9 ) -- -- -- (9 )
Total Content Group 1,275 -- (4 ) -- 1,271
AOL 405 -- -- -- 405
Total $ 1,680 $ -- $ (4 ) $ -- $ 1,676

(a) For the three months ended
March 31, 2009 and 2008,
Operating Loss before
Depreciation and
Amortization includes $7
million and $4 million,
respectively, in net
expenses related to
securities litigation and
government investigations.

TIME WARNER INC.
RECONCILIATION OF OPERATING INCOME (LOSS) BEFORE DEPRECIATION AND AMORTIZATION TO OPERATING INCOME (LOSS)
(Unaudited, millions)

Three Months Ended March 31, 2009

Operating
Income/(Loss)
Before Depreciation Operating
And Amortization Depreciation Amortization Income/(Loss)
Networks $ 1,064 $ (86 ) $ (18 ) $ 960
Filmed Entertainment 308 (40 ) (54 ) 214
Publishing 12 (31 ) (13 ) (32 )
Corporate(a) (84 ) (10 ) -- (94 )
Intersegment eliminations -- -- -- --
Total Content Group 1,300 (167 ) (85 ) 1,048
AOL 255 (69 ) (36 ) 150
Total $ 1,555 $ (236 ) $ (121 ) $ 1,198

Three Months Ended March 31, 2008 (recast)

Operating
Income/(Loss)
Before Depreciation Operating
And Amortization Depreciation Amortization Income/(Loss)
Networks $ 958 $ (78 ) $ (6 ) $ 874
Filmed Entertainment 280 (41 ) (56 ) 183
Publishing 145 (34 ) (18 ) 93
Corporate(a) (103 ) (11 ) -- (114 )
Intersegment eliminations (9 ) -- -- (9 )
Total Content Group 1,271 (164 ) (80 ) 1,027
AOL 405 (83 ) (38 ) 284
Total $ 1,676 $ (247 ) $ (118 ) $ 1,311

(a) For the three months ended
March 31, 2009 and 2008,
Operating Loss before
Depreciation and
Amortization includes $7
million and $4 million,
respectively, in net
expenses related to
securities litigation and
government investigations.

TIME WARNER INC.
RECONCILIATION OF ADJUSTED DILUTED INCOME PER COMMON SHARE FROM CONTINUING
OPERATIONS TO DILUTED INCOME PER COMMON SHARE FROM CONTINUING OPERATIONS
(Unaudited; millions, except per share amounts)

Adjusted diluted income per common share from continuing operations is diluted
income per common share from continuing operations attributable to Time Warner
Inc. shareholders excluding noncash impairments of goodwill, intangible and
fixed assets and investments; gains and losses on sales of operating assets and
investments; external costs related to mergers, acquisitions, investments or
dispositions, as well as contingent consideration related to such transactions,
to the extent such costs are expensed; and amounts related to securities
litigation and government investigations, as well as the impact of taxes and
noncontrolling interests on the above items.

A reconciliation of adjusted diluted income per common share from continuing
operations to diluted income per common share from continuing operations and the
related reconciliation of adjusted income from continuing operations to income
from continuing operations are set forth below:

Three Months Ended March 31,
2009 2008

Amounts related to securities litigation and government investigations $ (7 ) $ (4 )
Impact on Operating Income (7 ) (4 )

Investment losses, net (13 ) (36 )
Costs related to the separation of Time Warner Cable Inc. (5 ) (1 )
Pretax impact (25 ) (41 )
Income tax impact of above items 6 7
Tax items related to Time Warner Cable Inc. 24 --
After-tax impact 5 (34 )
Noncontrolling interest impact 5 --
Impact of items affecting comparability on income from continuing operations $ 10 $ (34 )

Income from continuing operations $ 555 $ 548
Less Impact of items affecting comparability on income from continuing operations 10 (34 )
Adjusted income from continuing operations $ 545 $ 582

Per share information attributable to Time Warner Inc. common shareholders:
Diluted income per common share from continuing operations $ 0.46 $ 0.46
Less Impact of items affecting comparability on diluted income per common share 0.01 (0.02 )
from continuing operations
Adjusted diluted income per common share from continuing operations $ 0.45 $ 0.48

Diluted average common shares outstanding 1,200.3 1,200.2

TIME WARNER INC.
RECONCILIATION OF ADJUSTED DILUTED INCOME PER COMMON SHARE FROM CONTINUING
OPERATIONS TO DILUTED INCOME PER COMMON SHARE FROM CONTINUING OPERATIONS -
(Continued)
(Unaudited; millions, except per share amounts)

Amounts Related to Securities Litigation

The Company recognized legal and other professional fees related to the defense
of various securities lawsuits, totaling $7 million and $4 million for the three
months ended March 31, 2009 and 2008, respectively.

Investment Losses, Net

For the three months ended March 31, 2009, the Company recognized $13 million of
miscellaneous investment losses. For the three months ended March 31, 2008, the
Company recognized a $26 million impairment on the Company`s investment in Eidos
plc (formerly SCi Entertainment Group plc) and $10 million of losses resulting
from market fluctuations in equity derivative instruments.

Costs Related to the Separation of TWC

For the three months ended March 31, 2009 and 2008, the Company incurred pretax
direct transaction costs (e.g., legal and professional fees) related to the
separation of Time Warner Cable Inc. ("TWC") of $5 million and $1 million,
respectively.

Income Tax Impact and Tax Items Related to TWC

The income tax impact reflects the estimated tax or tax benefit associated with
each item affecting comparability. Such estimated taxes or tax benefits vary
based on certain factors, including the taxability or deductibility of the items
and foreign tax on certain gains. For the three months ended March 31, 2009, the
Company also recognized approximately $24 million of tax benefits attributable
to the impact of certain state tax law changes on TWC net deferred tax
liabilities.

Noncontrolling Interest Impact

For the three months ended March 31, 2009, the $5 million noncontrolling
interest item affecting comparability reflects the minority owner`s share of the
tax provision related to changes in certain state tax laws.

TIME WARNER INC.
RECONCILIATION OF CASH PROVIDED BY OPERATIONS FROM CONTINUING OPERATIONS TO FREE CASH FLOW
(Unaudited, millions)

Three Months Ended March 31,
2009 2008
(recast)
Cash provided by operations from continuing operations $ 1,425 $ 1,616
Add payments related to securities litigation and government investigations 7 4
Add external costs related to mergers, acquisitions, investments or dispositions 5 --
Add excess tax benefits on stock options -- 2
Less capital expenditures and product development costs (134 ) (146 )
Less principal payments on capital leases (11 ) (10 )
Free Cash Flow(a) $ 1,292 $ 1,466

(a) Free Cash Flow is cash
provided by operations (as
defined by U.S. generally
accepted accounting
principles) plus payments
related to securities
litigation and government
investigations (net of any
insurance recoveries),
external costs related to
mergers, acquisitions,
investments or dispositions
and excess tax benefits
from the exercise of stock
options, less cash flow
attributable to
discontinued operations,
capital expenditures and
product development costs,
principal payments on
capital leases, and
partnership distributions,
if any.

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1: DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business

Time Warner Inc. ("Time Warner" or the "Company") is a leading media and
entertainment company, whose businesses include television networks, filmed
entertainment, publishing and interactive services. Time Warner classifies its
operations into four reportable segments: Networks: consisting principally of
cable television networks that provide programming; Filmed Entertainment:
consisting principally of feature film, television and home video production and
distribution; Publishing: consisting principally of magazine publishing; and
AOL: consisting principally of interactive consumer and advertising services.

Changes in Basis of Presentation

The 2008 financial information has been recast so that the basis of presentation
is consistent with that of the 2009 financial information. This recast reflects
(i) the financial condition and results of operations of Time Warner Cable Inc.
("TWC") as discontinued operations for all periods presented, (ii) the adoption
of Financial Accounting Standards Board ("FASB") Statement of Financial
Accounting Standards No. 160, Noncontrolling Interests in Consolidated Financial
Statements - an amendment of ARB No. 51 ("FAS 160"), (iii) the adoption of FASB
Staff Position ("FSP") Emerging Issues Task Force ("EITF") Issue No. 03-6-1,
Determining Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities ("FSP No. EITF 03-6-1"), and (iv) the 1-for-3 reverse
stock split of the Company`s common stock that became effective on March 27,
2009.

TWC Separation from Time Warner

On March 12, 2009 (the "Distribution Record Date"), the Company disposed of all
of its shares of TWC common stock. The disposition was made pursuant to a
separation agreement entered into on May 20, 2008, among Time Warner, TWC and
certain of their subsidiaries (the "Separation Agreement") for the purpose of
achieving the legal and structural separation of TWC from Time Warner (the "TWC
Separation"). The TWC Separation was effected as a pro rata dividend of all
shares of TWC common stock held by Time Warner in a spin-off to Time Warner
stockholders.

Prior to the Distribution Record Date, on March 12, 2009, TWC, in accordance
with the terms of the Separation Agreement, paid a special cash dividend of
$10.27 per share to all holders of TWC Class A Common Stock and TWC Class B
Common Stock as of the close of business on March 11, 2009 (aggregating $10.856
billion) that resulted in the receipt by Time Warner of $9.253 billion.

With the completion of the TWC Separation, the Company disposed of the Cable
segment in its entirety. Accordingly, the Company has presented the financial
condition and results of operations of the Cable segment as discontinued
operations in the consolidated financial statements for all periods presented.

Noncontrolling Interests

On January 1, 2009, the Company adopted the provisions of FAS 160. The
provisions of FAS 160 establish accounting and reporting standards for the
noncontrolling interest in a consolidated subsidiary, including the accounting
treatment upon the deconsolidation of a subsidiary. FAS 160 is being applied
prospectively, except for the provisions related to the presentation of
noncontrolling interests. As of March 31, 2009 and December 31, 2008,
noncontrolling interests of $642 million and $3.382 billion, respectively, have
been classified as a component of equity in the consolidated balance sheet. For
the three months ended March 31, 2009 and 2008, net income attributable to
noncontrolling interests of $29 million and $51 million, respectively, is
included in net income. Earnings per share has not been affected as a result of
the adoption of the provisions of FAS 160.

TIME WARNER INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Determining Whether Instruments Granted in Share-Based Payment Transactions are
Participating Securities

On January 1, 2009, the Company adopted the provisions of FSP No. EITF 03-6-1.
The provisions of FSP No. EITF 03-6-1 require that all outstanding unvested
share-based payment awards that contain rights to nonforfeitable dividends or
dividend equivalents (such as restricted stock units granted by the Company) be
considered participating securities. Because the awards are participating
securities, the Company is required to apply the two-class method of computing
basic and diluted earnings per share (the "Two-Class Method"). The retrospective
application of the provisions of FSP No. EITF 03-6-1 did not change any
prior-period earnings per share amounts.

Note 2:INTERSEGMENT TRANSACTIONS

In the normal course of business, the Time Warner segments enter into
transactions with one another. The most common types of intersegment
transactions include:

* The Filmed Entertainment segment generating Content revenues by licensing
television and theatrical programming to the Networks segment;
* The Networks, Publishing and AOL segments generating Advertising revenues by
promoting the products and services of other Time Warner segments.

These intersegment transactions are recorded by each segment at estimated fair
value as if the transactions were with third parties and, therefore, impact
segment performance. While intersegment transactions are treated like
third-party transactions to determine segment performance, the revenues (and
corresponding expenses or assets recognized by the segment that is counterparty
to the transaction) are eliminated in consolidation and, therefore, do not
impact consolidated results.

Additionally, transactions between divisions within the same reporting segment
(e.g., a transaction between Home Box Office, Inc. and Turner Broadcasting
System, Inc. within the Networks segment) are eliminated in arriving at segment
performance and, therefore, do not impact segment results.

Revenues recognized by Time Warner`s segments on intersegment transactions are
as follows:

Three Months Ended March 31,
2009 2008
(millions)
Intersegment Revenues (recast)
Networks $ 24 $ 25
Filmed Entertainment 138 167
Publishing 6 6
AOL 1 4
Total intersegment revenues $ 169 $ 202

Note 3: FILMED ENTERTAINMENT HOME VIDEO AND ELECTRONIC DELIVERY REVENUES

Three Months Ended March 31,
2009 2008
(millions)
Home video and electronic delivery of theatrical $ 477 $ 810
product revenues
Home video and electronic delivery of television 157 160
product revenues

Time Warner Inc.
Corporate Communications
Edward Adler, 212-484-6630
Keith Cocozza, 212-484-7482
or
Investor Relations
Doug Shapiro, 212-484-8926
Michael Kopelman, 212-484-8920

Copyright Business Wire 2009