Time Warner Inc. Reports Third-Quarter 2009 Results
http://www.businesswire.com/news/home/20091104005570/en
NEW YORK--(Business Wire)--
Time Warner Inc. (NYSE:TWX) today reported financial results for its third
quarter ended September 30, 2009.
Chairman and Chief Executive Officer Jeff Bewkes said: "Time Warner is firmly on
track to post solid results this year in spite of the tough economic
environment. Driven by the better-than-expected performance at our Content Group
this quarter, we're raising our 2009 business outlook. We still expect to spin
off AOL by the end of the year, and we`re making great progress on our other
longer-term strategic priorities. At the same time, we're investing even more in
our businesses and increasing our direct returns to stockholders this year,
while significantly strengthening our balance sheet. I`m confident that the new
content-focused Time Warner will be well positioned to deliver steady and
attractive stockholder returns in 2010 and beyond."
Company Results(1)
In the quarter, Revenues declined 6% from the third quarter of 2008 to $7.1
billion. Lower revenues at the AOL, Publishing and Filmed Entertainment segments
more than offset growth at the Networks segment.
Adjusted Operating Income before Depreciation and Amortization ("Adjusted
OIBDA") was down 9% to $1.8 billion, as declines at the AOL and Publishing
segments more than offset growth at the Networks and Filmed Entertainment
segments. Operating Income decreased 10% to $1.4 billion.
For the Content Group (which consists of the Networks, Filmed Entertainment,
Publishing and Corporate segments), Revenues were down 3%, Adjusted OIBDA
decreased 1%, and Operating Income declined 2%.
For the first nine months of 2009, Cash Provided by Operations from Continuing
Operations was $3.5 billion, and Free Cash Flow totaled $3.0 billion (reflecting
a 61% conversion rate of Adjusted OIBDA). As of September 30, 2009, Net Debt was
$10.4 billion, down $10.3 billion 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 its separation from the
Company, as well as the generation of Free Cash Flow.
Adjusted Diluted Income per Common Share from Continuing Operations ("Adjusted
EPS") was $0.61 for the three months ended September 30, 2009, compared to
$0.65in last year`s third quarter. Diluted Income per Common Share from
Continuing Operations was $0.55for the three months ended September 30, 2009,
compared to $0.63 in last year`s third quarter.(2)
______________
(1) 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.
(2) All common share and per common share amounts in the current and prior
periods reflect the Company`s 1-for-3 reverse stock split on March 27, 2009.
Segment Performance
Presentation of Financial Information
The schedule below reflects Time Warner`s financial performance for the three
and nine months ended September 30, by line of business (millions).
Refer to "Use of Non-GAAP Financial Measures" and the reconciliations of
Adjusted OIBDA to Operating Income (Loss) before Depreciation and Amortization
("OIBDA") and the reconciliations of OIBDA to Operating Income (Loss) in this
release for details.
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
Revenues: (recast)(a) (recast)(a)
Networks $ 2,874 $ 2,731 $ 8,645 $ 8,216
Filmed Entertainment 2,780 2,881 7,746 8,285
Publishing 914 1,118 2,635 3,339
Intersegment eliminations (202 ) (153 ) (561 ) (485 )
Total Content Group Revenues 6,366 6,577 18,465 19,355
AOL 777 1,012 2,448 3,197
Intersegment eliminations (8 ) (10 ) (24 ) (34 )
Total Revenues $ 7,135 $ 7,579 $ 20,889 $ 22,518
Adjusted OIBDA(b):
Networks $ 1,096 $ 1,008 $ 3,141 $ 2,826
Filmed Entertainment 385 381 956 857
Publishing 139 241 295 655
Corporate (69 ) (68 ) (217 ) (244 )
Intersegment eliminations 14 19 - 17
Total Content Group Adjusted OIBDA 1,565 1,581 4,175 4,111
AOL 239 398 765 1,153
Total Adjusted OIBDA $ 1,804 $ 1,979 $ 4,940 $ 5,264
Operating Income (Loss)(b):
Networks $ 938 $ 909 $ 2,773 $ 2,532
Filmed Entertainment 291 275 648 552
Publishing 97 162 167 473
Corporate (86 ) (85 ) (268 ) (290 )
Intersegment eliminations 14 19 - 17
Total Content Group Operating Income (Loss) 1,254 1,280 3,320 3,284
AOL 134 268 449 782
Total Operating Income (Loss) $ 1,388 $ 1,548 $ 3,769 $ 4,066
(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 OIBDA and Operating Income (Loss) for the three and nine months ended September 30, 2009 and 2008, respectively, included restructuring costs of (millions):
Three Months Ended September 30, Nine Months Ended September 30,
2009 2008 2009 2008
(recast)(a) (recast)(a)
Networks $ - $ - $ - $ -
Filmed Entertainment (17 ) (17 ) (85 ) (130 )
Publishing (12 ) (1 ) (7 ) (16 )
AOL (10 ) (2 ) (83 ) (15 )
Corporate - - - (7 )
Total Restructuring Costs $ (39 ) $ (20 ) $ (175 ) $ (168 )
Presented below is a discussion of Time Warner`s segments for the third quarter
of 2009. Unless otherwise noted, the dollar amounts in parentheses represent
year-over-year changes.
NETWORKS (Turner Broadcasting & HBO)
Revenues rose 5% ($143 million) to $2.9 billion, with 9% growth ($163 million)
in Subscription revenues, partially offset by a 12% decline ($27 million) in
Content revenues and a 1% decrease ($4 million) in Advertising revenues.
Subscription revenues benefited primarily from the impact of the consolidation
of HBO Latin America Group ("HBO LAG"), as well as higher subscription rates at
both Turner and HBO, partly offset by the unfavorable impact of foreign exchange
rates at Turner. Content revenues decreased due to lower ancillary sales of
HBO`s original programming, offset in part by the effect of lower than
anticipated home video returns of approximately $25 million. Advertising
revenues reflected a decline at Turner`s news networks and the unfavorable
impact of foreign exchange rates, partially offset by an increase at domestic
entertainment networks.
Adjusted OIBDA increased 9% ($88 million) to $1.1 billion, driven by higher
revenues and the consolidation of HBO LAG, as well as lower marketing and
newsgathering costs. Programming costs rose 10%, due to the impact of the
consolidation of HBO LAG and higher original programming expenses at Turner.
Operating Income grew 3% ($29 million) to $938 million, due mostly to higher
Adjusted OIBDA,partly offset by a $52 million noncash impairment of intangible
assets related to Turner`s interest in a general entertainment network in India
and higher depreciation ($5 million) and amortization ($5 million) expenses.
FILMED ENTERTAINMENT
Revenues declined 4% ($101 million) to $2.8 billion, due primarily to lower
revenues from home video and interactive games, and the unfavorable impact of
foreign exchange rates. Theatrical film revenues from third-quarter 2009
releases, such as Harry Potter and the Half-Blood Prince and The Final
Destination, as well as carryover from The Hangover, were slightly lower than in
the prior year quarter, which benefited from the success of The Dark Knight.
OIBDA rose 1% ($4 million) to $385 million, as the lower revenues were more than
offset by overhead savings, lower print and advertising costs and a reduction in
manufacturing and related costs.
Operating Income increased 6%($16million) to$291 million, due mainly to lower
amortization expenses ($13 million).
PUBLISHING
Revenues decreased 18% ($204 million) to $914million, due to declines of 22%
($129 million) in Advertising revenues, 13% ($49 million) in Subscription
revenues and 24% ($32 million) in Other revenues. The decline in Advertising
revenues reflected mainly lower print magazine revenues. Subscription revenues
decreased due to lower magazine subscription and newsstand sales, as well as the
unfavorable impact of foreign exchange rates at IPC. The decline in Other
revenues resulted from decreases at the non-magazine businesses, including
Southern Living At Home, which was sold during the third quarter of 2009.
Adjusted OIBDA declined 42% ($102 million) to $139 million, due mainly to the
decrease in revenues and higher pension expense, partly offset by lower overhead
costs, including cost savings related to the reorganization in the fourth
quarter of 2008. The current and prior year quarters included restructuring
charges of $12 million and $1 million, respectively.
Operating Income decreased 40% ($65 million) to $97 million, resulting primarily
from the decline in Adjusted OIBDA, partly offset by the effect of a $30 million
noncash asset impairment incurred in the third quarter of 2008 related to a
sub-lease with a tenant that filed for bankruptcy.
AOL
Revenues were down 23% ($235 million) to $777 million, resulting from a 29%
decline ($138 million) in Subscription revenues due to continued subscriber
losses and an 18% decrease ($92 million) in Advertising revenues. The decline in
Advertising revenues was due primarily to lower paid-search and display
advertising on AOL Media, reduced sales of advertising on third-party Internet
sites and the unfavorable impact of foreign exchange rates.
Adjusted OIBDA declined 40% ($159 million) to $239 million, due primarily to
lower revenues, partially offset by lower traffic acquisition costs and reduced
overhead, network and other expenses. The current and prior year quarters also
included netrestructuring charges of$10million and $2 million, respectively.
Operating Income decreased 50% ($134million) to $134 million, due to the decline
in Adjusted OIBDA, partly offset by lower amortization ($11 million) and
depreciation ($10 million) expenses.
Key Operating Metrics
During the quarter, AOL had 102 million average monthly domestic unique visitors
and 44 billion domestic page views, according to comScore Media Metrix, which
translates into 144 average monthly domestic page views per unique visitor.
As of September 30, 2009, the AOL service had 5.4 million U.S. access
subscribers, a decline of 438,000 from the prior quarter and 2.1 million from
September 30, 2008.
Consolidated Reported Net Income and Per Share Results
For the three months ended September 30, 2009, the Company reported Net Income
of$661 million, or $0.55 per diluted common share. This compares to Net Income
in the prior year quarter of$1.1 billion, or $0.89 per diluted common share.
Adjusted EPS was$0.61for the three months ended September 30, 2009, compared to
$0.65 in the third quarter of last year. The decline in Adjusted EPS was due to
lower Adjusted OIBDA, offset in part by the impact of a decrease in the
effective tax rate, lower amortization and depreciation expenses and lower
interest expense.
For the three months ended September 30, 2009, the Company reported Income from
Continuing Operations of$662 million, or $0.55 per diluted common share,
compared to Income from Continuing Operations of$761 million, or$0.63per diluted
common share, in the third quarter of 2008.
Refer to the reconciliation of Adjusted EPS to Diluted Income per Common Share
from Continuing Operations in this release for details.
Discontinued operations included the operating results of Time Warner Cable Inc.
for all periods presented. Specifically, discontinued operations reflected Net
Income of $306 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 November 2, 2009, the Company has repurchased
approximately 83 million shares of common stock for approximately $3.7billion.
These amounts reflect the purchase of 18 million shares of common stock for
approximately $530 million since the Company reported second-quarter 2009
earnings on July 29, 2009.
Use of Non-GAAP Financial Measures
The Company utilizes Operating Income (Loss) before Depreciation and
Amortization ("OIBDA"), among other measures, to evaluate the performance of its
businesses. The Company also evaluates the performance of its businesses using
OIBDA 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 OIBDA"). The Company also uses Content Group Adjusted OIBDA to further
evaluate the Content Group businesses relative to their peers. OIBDA and the
Adjusted OIBDA measures are considered important indicators of the operational
strength of the Company`s businesses. OIBDA 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 OIBDA 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. common 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 from Continuing Operations 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 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.
OIBDA, the Adjusted OIBDA 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 from
Continuing 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 throughmultiple 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 Reports 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 & 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,
November 4, 2009.To listen to the call, visit www.timewarner.com/investors or
AOL Keyword: IR.
TIME WARNER INC.
CONSOLIDATED BALANCE SHEET
(Unaudited; millions, except per share amounts)
September 30, December 31,
2009 2008
(recast)
ASSETS
Current assets
Cash and equivalents $ 7,126 $ 1,233
Receivables, less allowances of $1,799 and $2,269 4,833 5,664
Inventories 1,892 1,842
Deferred income taxes 704 624
Prepaid expenses and other current assets 697 772
Current assets of discontinued operations - 6,480
Total current assets 15,252 16,615
Noncurrent inventories and film costs 5,658 5,339
Investments, including available-for-sale securities 1,174 1,036
Property, plant and equipment, net 4,691 4,896
Intangible assets subject to amortization, net 3,470 3,564
Intangible assets not subject to amortization 7,831 7,728
Goodwill 31,978 32,428
Other assets 1,212 1,220
Noncurrent assets of discontinued operations - 41,231
Total assets $ 71,266 $ 114,057
LIABILITIES AND EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 8,084 $ 8,194
Deferred revenue 970 1,012
Debt due within one year 2,090 2,066
Current liabilities of discontinued operations 2 2,865
Total current liabilities 11,146 14,137
Long-term debt 15,410 19,889
Deferred income taxes 1,447 974
Deferred revenue 269 266
Other noncurrent liabilities 6,506 6,801
Noncurrent liabilities of discontinued operations - 26,320
Equity
Time Warner common stock, $0.01 par value, 1.632 billion and 1.630 billion shares issued and 1.171 billion and 1.196 billion shares outstanding
16 16
Paid-in-capital 161,483 169,564
Treasury stock, at cost (461 million and 434 million shares) (26,535 ) (25,836 )
Accumulated other comprehensive loss, net (1,047 ) (1,676 )
Accumulated deficit (97,775 ) (99,780 )
Total Time Warner Inc. shareholders` equity 36,142 42,288
Noncontrolling interests (including $0 and $2,751 attributable to discontinued operations)
346 3,382
Total equity 36,488 45,670
Total liabilities and equity $ 71,266 $ 114,057
TIME WARNER INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited; millions, except per share amounts)
Three Months Ended Nine Months Ended
9/30/09 9/30/08 9/30/09 9/30/08
(recast) (recast)
Revenues:
Subscription $ 2,562 $ 2,584 $ 7,669 $ 7,800
Advertising 1,632 1,856 4,943 5,763
Content 2,754 2,906 7,680 8,278
Other 187 233 597 677
Total revenues 7,135 7,579 20,889 22,518
Costs of revenues (3,924 ) (4,103 ) (11,645 ) (12,612 )
Selling, general and administrative (1,612 ) (1,726 ) (4,862 ) (5,225 )
Amortization of intangible assets (115 ) (140 ) (348 ) (387 )
Restructuring costs (39 ) (20 ) (175 ) (168 )
Asset impairments (57 ) (39 ) (57 ) (57 )
Loss on sale of assets - (3 ) (33 ) (3 )
Operating income 1,388 1,548 3,769 4,066
Interest expense, net (297 ) (321 ) (904 ) (999 )
Other income (loss), net (51 ) 29 (71 ) (21 )
Income from continuing operations before income taxes
1,040 1,256 2,794 3,046
Income tax provision (377 ) (487 ) (1,042 ) (1,147 )
Income from continuing operations 663 769 1,752 1,899
Discontinued operations, net of tax (1 ) 355 130 890
Net income 662 1,124 1,882 2,789
Less Net income attributable to noncontrolling interests
(1 ) (57 ) (41 ) (159 )
Net income attributable to Time Warner Inc. shareholders
$ 661 $ 1,067 $ 1,841 $ 2,630
Amounts attributable to Time Warner Inc.shareholders:
Income from continuing operations $ 662 $ 761 $ 1,736 $ 1,873
Discontinued operations, net of tax (1 ) 306 105 757
Net income $ 661 $ 1,067 $ 1,841 $ 2,630
Per share information attributable toTime Warner Inc. common shareholders:
Basic income per common share from continuing operations
$ 0.56 $ 0.64 $ 1.45 $ 1.57
Discontinued operations - 0.25 0.09 0.63
Basic net income per common share $ 0.56 $ 0.89 $ 1.54 $ 2.20
Average basic common shares outstanding 1,179.9 1,194.8 927
Other liabilities 2,151 576
Total liabilities 25,911 25,796
Stockholders` equity:
Common stock 4 4
Additional paid-in capital 42,864 42,270
Contingent consideration 1,309 --
Retained earnings 3,069 1,080
Accumulated other comprehensive income 50 58
Total stockholders` equity 47,296 43,412
Total liabilities & stockholders` equity $ 73,207 $ 69,208
BIOCLINICA, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows+
(In thousands)
(unaudited)
For the Nine Months Ended
09/30/09 09/30/08
Cash flows from operating activities:
Net income 1,989 2,959
Adjustments to reconcile net income to net cash provided by
Operating activities:
Depreciation and amortization 2,109 2,347
(Benefit) provision for deferred income taxes (820 ) 240
Bad debt expense (recovery) 84 (29 )
Stock based compensation expense 599 538
Loss from discontinued operations -- 1,165
Changes in operating assets and liabilities:
Decrease (increase) in accounts receivable 1,573 (1,364 )
Decrease in prepaid expenses and other current assets 748 68
Decrease in other assets 119 53
(Decrease) Increase in accounts payable (1,204 ) 1,404
Increase in accrued expenses and other current liabilities 160 515
Decrease in deferred revenue (1,407 ) (1,133 )
Decrease in other liabilities (80 ) (39 )
Increase in net assets held for sale -- 506
Cash provided by continuing operations activities $ 3,870 $ 7,230
Cash used by discontinued operations $ -- $ (1,671 )
Net cash provided by operating activities $ 3,870 $ 5,559
Cash flows from investing activities:
Purchases of property and equipment (2,435 ) (2,120 )
Net cash received for sale of assets of discontinued operations 500 --
Net cash paid for acquisitions (3,144 ) (8,129 )
Net cash used in investing activities
from continuing operations $ (5,079 ) $ (10,249 )
Purchase of plant, property and equipment for
discontinued operations $ -- $ (240 )
Net cash used in investing activities $ (5,079 ) $ (10,489 )
Cash flows from financing activities:
Payments under equipment lease obligations (43 ) (135 )
Excess tax benefit related to stock options -- 77
Proceeds from exercise of stock options 27 381
Net cash (used in) provided by financing activities
from continuing operations $ (16 ) $ 323
Effect of exchange rate changes on cash 20 55
Net decrease in cash and cash equivalents (1,205 ) (4,662 )
Cash and cash equivalents at beginning of period 14,265 17,915
Cash and cash equivalents at end of period $ 13,060 $ 13,253
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
