<PAGE>
PROSPECTUS SUPPLEMENT
(TO PROSPECTUS DATED JUNE 7, 1995)
$500,000,000
TIME WARNER INC.
7.75% NOTES DUE JUNE 15, 2005
------------------------
Interest payable June 15 and December 15
------------------------
THE 7.75% NOTES DUE JUNE 15, 2005 (THE 'NOTES') WILL MATURE ON JUNE 15, 2005 AND
WILL NOT BE REDEEMABLE PRIOR TO MATURITY. THE NOTES WILL NOT BE SUBJECT TO ANY
SINKING FUND. THE NOTES WILL BE REPRESENTED BY BOOK-ENTRY SECURITIES
REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (THE 'DEPOSITARY')
OR ITS NOMINEE. INTERESTS IN SUCH BOOK-ENTRY SECURITIES WILL BE SHOWN
ON, AND TRANSFER THEREOF WILL BE EFFECTED ONLY THROUGH, RECORDS
MAINTAINED BY THE DEPOSITARY AND ITS PARTICIPANTS. EXCEPT AS
DESCRIBED HEREIN, NOTES IN DEFINITIVE FORM WILL NOT BE ISSUED.
SETTLEMENT FOR THE NOTES WILL BE MADE IN IMMEDIATELY AVAILABLE
FUNDS. SO LONG AS THE NOTES ARE REGISTERED IN THE NAME OF
THE DEPOSITARY OR ITS NOMINEE, THE NOTES WILL TRADE IN THE
DEPOSITARY'S SAME-DAY FUNDS SETTLEMENT SYSTEM AND
SECONDARY MARKET TRADING ACTIVITY IN THE NOTES WILL
THEREFORE SETTLE IN IMMEDIATELY AVAILABLE FUNDS. SEE
'DESCRIPTION OF THE NOTES' HEREIN.
------------------------
APPLICATION WILL BE MADE TO LIST THE NOTES ON THE NEW YORK STOCK EXCHANGE.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS TO WHICH IT RELATES. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PRICE 99.314% AND ACCRUED INTEREST
------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC(1) COMMISSIONS(2) COMPANY(1)(3)
------------- --------------- -------------
<S> <C> <C> <C>
Per Note.................................................. 99.314% .650% 98.664%
Total..................................................... $496,570,000 $3,250,000 $493,320,000
</TABLE>
- ------------
(1) Plus accrued interest from June 15, 1995.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
(3) Before deducting estimated expenses of $400,000 payable by the Company.
------------------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the several Underwriters and subject to approval of certain legal matters by
Shearman & Sterling, counsel for the Underwriters. It is expected that delivery
of the Notes will be made on or about June 19, 1995, through the book-entry
facilities of The Depository Trust Company, against payment therefor in
immediately available funds.
------------------------
MORGAN STANLEY & CO.
INCORPORATED
MERRILL LYNCH & CO.
SALOMON BROTHERS INC
June 14, 1995
<PAGE>
IN CONNECTION WITH THIS OFFERING THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE NOTES OFFERED
HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET.
SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
NO PERSON IS AUTHORIZED BY THE COMPANY OR BY THE UNDERWRITERS OR ANY DEALER
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE
ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN SO AUTHORIZED. NEITHER
THIS PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES DESCRIBED IN THIS PROSPECTUS SUPPLEMENT OR AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. THE
DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS OR ANY
SALE MADE HEREUNDER DOES NOT IMPLY THAT THE INFORMATION CONTAINED HEREIN OR
THEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE ON WHICH SUCH
INFORMATION IS GIVEN.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
The Company................................................................................................ S-3
Use of Proceeds............................................................................................ S-5
Consolidated Capitalization................................................................................ S-6
Selected Historical and Pro Forma Financial Information.................................................... S-8
Description of the Notes................................................................................... S-13
Certain United States Federal Income Tax Considerations.................................................... S-17
Underwriters............................................................................................... S-18
Legal Opinions............................................................................................. S-18
PROSPECTUS
Available Information...................................................................................... 2
Information Incorporated by Reference...................................................................... 2
Time Warner Inc. .......................................................................................... 3
Ratio of Earnings to Fixed Charges......................................................................... 4
Use of Proceeds............................................................................................ 5
Description of the Debt Securities......................................................................... 5
Description of Common Stock Warrants....................................................................... 9
Description of Common Stock................................................................................ 9
Global Securities.......................................................................................... 11
Holding Company Structure.................................................................................. 12
Plan of Distribution....................................................................................... 13
Legal Opinions............................................................................................. 13
Experts.................................................................................................... 13
</TABLE>
S-2
<PAGE>
THE COMPANY
The Company is the largest media and entertainment company in the world.
Its businesses are conducted in five principal areas: Publishing, Music, Filmed
Entertainment, Programming-HBO and Cable. Publishing consists principally of the
publication and distribution of magazines and books; Music consists principally
of the production and distribution of recorded music and the ownership and
administration of music copyrights; Filmed Entertainment consists principally of
the production and distribution of motion pictures and television programming,
the distribution of video cassettes and the ownership and operation of retail
stores and theme parks; Programming-HBO consists principally of the production
and distribution of pay television and cable programming; and Cable consists
principally of the operation of cable television systems.
The Company was incorporated in the State of Delaware in August 1983 and is
the successor to a New York corporation that was originally organized in 1922.
The Company changed its name from Time Incorporated to Time Warner Inc.
following its acquisition of 59.3% of the common stock of Warner Communications
Inc. ('WCI') in July 1989. WCI became a wholly owned subsidiary of the Company
in January 1990 upon the completion of the merger of WCI and a subsidiary of the
Company.
Time Warner Entertainment Company, L.P. ('TWE') was formed as a Delaware
limited partnership in 1992 to own and operate substantially all of the Filmed
Entertainment, Programming-HBO and Cable businesses owned and operated by the
Company prior to such date. Certain wholly owned subsidiaries of the Company
(the 'Time Warner General Partners') collectively own 63.27% of the pro rata
priority capital and residual equity interests in TWE and wholly owned
subsidiaries of ITOCHU Corporation, Toshiba Corporation and U S WEST Inc. ('U S
WEST') own pro rata priority capital and residual equity interests in TWE of
5.61%, 5.61% and 25.51%, respectively. In addition, the Time Warner General
Partners own priority capital interests senior and junior to the pro rata
priority capital interests.
TWE is the principal component of the Company's Entertainment Group, which
is not consolidated with the Company for financial reporting purposes. Certain
cable systems to be acquired as a result of the Transactions referred to in
'Recent Developments' will be owned by consolidated subsidiaries of the Company.
The balance of the Company's cable systems are owned by TWE or the TWE-A/N
Partnership (as defined herein), in which TWE owns a two-thirds interest.
Accordingly, although TWE will manage substantially all the cable systems owned
by the Company, TWE and the TWE-A/N Partnership, the results of operations of
the cable systems owned by the Company's consolidated subsidiaries will be
included in the Company's consolidated results, while the results of operations
of the cable systems owned by TWE and the TWE-A/N Partnership will be included
in the consolidated results of the Entertainment Group. See 'Selected Historical
and Pro Forma Financial Information'.
The Company is a holding company and its assets consist primarily of
investments in its consolidated and unconsolidated subsidiaries, including TWE.
The Company's ability to service its indebtedness, including the Notes, is
dependent primarily upon the earnings of its consolidated and unconsolidated
subsidiaries, including TWE, and the distribution or other payment of such
earnings to the Company. See 'Holding Company Structure' in the accompanying
Prospectus.
As used in this Prospectus Supplement, unless the context otherwise
requires, the term 'the Company' refers to Time Warner Inc. and its consolidated
and unconsolidated subsidiaries and includes TWE.
S-3
<PAGE>
RECENT DEVELOPMENTS
As summarized below and more fully described in the Company's Current
Report on Form 8-K dated May 30, 1995, the Company has recently entered into or
consummated a number of transactions to acquire, operate or dispose of cable
television systems and certain other assets. These transactions will, among
other things, result in the acquisition of cable systems by subsidiaries of the
Company serving approximately 2.2 million subscribers and a 50% interest in
Paragon Communications ('Paragon'), which serves 967,000 subscribers (the other
50% interest in Paragon is already owned by TWE).
The Company (i) closed on May 2, 1995, its acquisition of Summit
Communications Group, Inc. ('Summit'); (ii) agreed on January 26, 1995, to
acquire KBLCOM Incorporated ('KBLCOM'), a subsidiary of Houston Industries
Incorporated; and (iii) agreed on February 6, 1995, to acquire Cablevision
Industries Corporation ('CVI') and related companies (collectively, the
'Acquisitions'). To acquire Summit, the Company issued approximately 1.55
million shares of Common Stock, and approximately 3.26 million shares of a new
convertible preferred stock ('Series C Preferred Stock') and assumed $146
million of indebtedness. To acquire KBLCOM, the Company will issue one million
shares of Common Stock and 11 million shares of a new convertible preferred
stock ('Series D Preferred Stock') and assume or incur approximately $1.3
billion of indebtedness, including $111 million of the Company's allocable share
of Paragon's indebtedness. To acquire CVI and its related companies, the Company
will issue 2.5 million shares of Common Stock and 6.5 million shares of new
convertible preferred stock (3.25 million shares of Series E Preferred Stock and
3.25 million shares of Series F Preferred Stock) and assume or incur
approximately $2 billion of debt of CVI and its related companies.
On April 1, 1995, TWE and the Advance/Newhouse Partnership
('Advance/Newhouse'), a New York general partnership between Newhouse
Broadcasting Corporation and a wholly-owned subsidiary of Advance Publications,
Inc., formed a New York general partnership known as the Time Warner
Entertainment-Advance/Newhouse Partnership (the 'TWE-A/N Partnership'), in which
TWE owns a two-thirds equity interest and is the managing partner. The TWE-A/N
Partnership was formed to own and operate cable television systems (or interests
therein) serving approximately 4.5 million subscribers and certain foreign cable
investments and programming investments (the 'TWE-A/N Transaction').
TWE (i) agreed on April 17, 1995, subject to certain conditions, to
recapitalize Six Flags Entertainment Corporation ('Six Flags'), sell 51% of its
interest therein and grant certain licenses to Six Flags and (ii) announced on
May 18, 1995, the sale of 15 of its unclustered cable television systems serving
approximately 144,000 subscribers (the 'Asset Sale Transactions'). The net
proceeds from the Asset Sale Transactions will be used to reduce outstanding
indebtedness of TWE.
The Company and TWE are currently in negotiations with an administrative
agent for a bank syndicate regarding a five-year revolving credit facility (the
'New Credit Agreement') expected to be executed in late June or early July 1995,
pursuant to which TWE, the TWE-A/N Partnership and a wholly owned subsidiary of
the Company ('TWI Cable') will be borrowers. The New Credit Agreement will
enable such entities to refinance certain indebtedness assumed from the
companies acquired or to be acquired in the Acquisitions, to refinance existing
indebtedness of TWE and to finance the ongoing working capital, capital
expenditure and other corporate needs of each borrower (the '1995 Debt
Refinancing').
The Acquisitions, TWE-A/N Transaction, Asset Sale Transactions and 1995
Debt Refinancing are collectively referred to herein as the 'Transactions'. For
a further discussion of the Transactions, reference is made to the Company's
Current Report on Form 8-K dated May 30, 1995, which is incorporated herein by
reference.
On June 14, 1995, the Company filed a registration statement with the
Securities and Exchange Commission for the offering of 12,057,561 Preferred
Exchangeable Redemption Cumulative Securities (the 'PERCS'r') of Time Warner
Financing Trust. The PERCS, which are expected to be accounted for as a minority
interest consisting of redeemable exchangeable preferred securities of a
subsidiary, will be subject to mandatory redemption on December 23, 1997 for an
amount per PERCS equal to the lesser of $54.41 and the then market value of a
share of common stock of Hasbro, Inc. ('Hasbro'), payable in
S-4
<PAGE>
cash or, at the Company's option, Hasbro common stock. The net proceeds to the
Company of the PERCS offering, which will be based on the price of the Hasbro
common stock at the time of offering, are estimated to be $400 million and will
be used to reduce outstanding indebtedness. There can be no assurance, however,
that the PERCS offering will be completed.
USE OF PROCEEDS
The net proceeds to the Company from the sale of Notes will be used to
repurchase, redeem or otherwise repay outstanding indebtedness of the Company.
The weighted average interest rate on the Company's outstanding indebtedness as
of March 31, 1995, was 8.3%.
S-5
<PAGE>
CONSOLIDATED CAPITALIZATION
The consolidated historical and pro forma capitalization of the Company and
the Entertainment Group, consisting principally of TWE, at March 31, 1995, is
set forth below. The Entertainment Group is not consolidated with the Company
for financial reporting purposes. The consolidated pro forma capitalization of
the Company and the Entertainment Group gives effect to the Asset Sale
Transactions, the TWE-A/N Transaction and the 1995 Debt Refinancing and, with
respect to the Company only, also gives effect to the Acquisitions, in each case
as if such transactions occurred at such date. The consolidated pro forma, as
adjusted capitalization of the Company gives effect to (i) the Transactions,
(ii) the PERCS offering and (iii) the issuance of the Notes offered hereby, as
if such transactions occurred at such date. Although the proceeds to the Company
of the PERCS offering and the issuance of the Notes offered hereby will be used
to reduce outstanding indebtedness of the Company, the Company has not yet
determined which indebtedness it will repurchase, redeem or otherwise repay. See
'Use of Proceeds'. The pro forma capitalization is presented for informational
purposes only and is not necessarily indicative of the future capitalization of
the Company and the Entertainment Group.
<TABLE>
<CAPTION>
TIME WARNER INC. ENTERTAINMENT GROUP
------------------------------------- ---------------------
PRO PRO FORMA PRO
HISTORICAL FORMA AS ADJUSTED HISTORICAL FORMA
---------- ------- ------------ ---------- -------
(MILLIONS)
<S> <C> <C> <C> <C> <C>
Long-term debt:
7.45% and 7.95% notes................... $ 1,000 $ 1,000 $ 1,000 $ -- $ --
Redeemable reset notes (8.7% yield)..... 1,755 1,755 1,755 -- --
Zero coupon exchangeable notes (6.25%
yield)................................ 555 555 555 -- --
Zero coupon convertible notes (5%
yield)................................ 982 982 982 -- --
8.75%, 9.125% and 9.15% Debentures...... 2,248 2,248 2,248 -- --
8.75% Convertible subordinated
debentures............................ 2,226 2,226 2,226 -- --
7.75% Notes offered hereby.............. -- -- 497 (a) -- --
Debt due to TWE (7.13% interest
rate)(b).............................. 400 400 400 -- --
CVI 10 3/4% Senior notes................ -- 300 300 -- --
CVI 9 1/4% Senior debentures............ -- 200 200 -- --
Summit 10 1/2% Senior subordinated
debentures............................ -- 140 140 -- --
New credit agreement(c)................. -- 2,733 2,733 -- 1,682
TWE credit agreement (weighted average
interest rate of 6.8%)(d)(e).......... -- -- -- 2,450 --
TWE commercial paper (weighted average
interest rate of 6.5%)(e)............. -- -- -- 748 748
Six Flags 9.25% zero coupon notes(f).... -- -- -- 126 --
TWE 8 7/8%, 9 5/8% and 10.15%
Notes(e).............................. -- -- -- 1,197 1,197
TWE 7 1/4%, 8 3/8% and 8 3/8%
Debentures(e)......................... -- -- -- 2,583 2,583
Other................................... 235 235 235 58 58
Reduction of debt with proceeds from the
issuance of the PERCS and the Notes
offered hereby........................ -- -- (893 )(a) -- --
---------- ------- --------- ---------- -------
Subtotal................................ 9,401 12,774 12,378 7,162 6,268
Reclassification of debt due to TWE to
investments in and amounts due to the
Entertainment Group(b)................ (400) (400) (400 ) -- --
---------- ------- --------- ---------- -------
Total long-term debt............... 9,001 12,374 11,978 7,162 6,268
Minority interest -- redeemable exchangeable
preferred securities....................... -- 400 (a) -- --
Shareholders' equity:
Preferred stock liquidation
preference............................ 140 2,240 2,240 -- --
Equity applicable to common stock....... 973 1,200 1,200 -- --
---------- ------- --------- ---------- -------
Total shareholders' equity.............. 1,113 3,440 3,440 -- --
Time Warner General Partners' senior
capital.................................... -- -- -- 1,696 1,696
Partners' capital............................ -- -- -- 6,463 6,421
---------- ------- --------- ---------- -------
Total capitalization......................... $ 10,114 $15,814 $15,818 $ 15,321 $14,385
---------- ------- --------- ---------- -------
---------- ------- --------- ---------- -------
</TABLE>
(footnotes on next page)
S-6
<PAGE>
(footnotes from previous page)
(a) The net proceeds to the Company of the PERCS offering, which will be based
on the price of the Hasbro common stock at the time of offering, are
estimated to be $400 million. Although the proceeds to the Company of the
PERCS offering and the issuance of the Notes offered hereby will be used to
reduce outstanding indebtedness of the Company, the Company has not yet
determined which indebtedness it will repurchase, redeem or otherwise
repay.
(b) The Company and TWE entered into a credit agreement in 1994 that allows the
Company to borrow up to $400 million from TWE through September 15, 2000.
Outstanding borrowings from TWE bear interest at LIBOR plus 1% per annum.
Under TWE's bank credit agreement, TWE is permitted (effective July 1,
1995) to loan the Company up to $1.5 billion. For financial reporting
purposes, the $400 million of currently outstanding loans from TWE to the
Company have been reclassified and shown as a reduction in the Company's
investments in and amounts due to the Entertainment Group.
(c) It is anticipated that the New Credit Agreement will permit borrowings in
an aggregate amount of up to $9 billion, which the Company and TWE may
reduce to the extent of any excess availability resulting from the
anticipated debt reductions associated with the Asset Sale Transactions.
Any reductions in excess availability under the New Credit Agreement would
not affect the pro forma consolidated capitalization of the Company and the
Entertainment Group. Based upon an assumed $9 billion of aggregate
availability under the New Credit Agreement, borrowings are expected to be
limited to $4 billion in the case of TWI Cable, $5 billion in the case of
the TWE-Advance/Newhouse Partnership and $9 billion in the case of TWE,
subject in each case to certain limitations and adjustments. It is also
anticipated that such borrowings will bear interest at different rates for
each of the three borrowers, generally equal to LIBOR plus a margin ranging
from 50 to 87.5 basis points based on the credit rating or financial
leverage of the applicable borrower. The New Credit Agreement is expected
to contain certain covenants for each borrower relating, to, among other
things, additional indebtedness; liens on assets; cash flow coverage and
leverage ratios; and loans, advances, distributions and other cash payments
or transfers of assets from the borrowers to their respective partners or
affiliates. See 'Recent Developments' and the Company's Current Report on
Form 8-K dated May 30, 1995 incorporated herein by reference, for a
description of the New Credit Agreement.
(d) As of March 31, 1995, the TWE bank credit agreement provided for up to $5.2
billion of borrowings and consisted of a $4.2 billion revolving credit
facility with available credit reducing at June 30, 1995 and thereafter by
$200 million per quarter through June 30, 1996, by $125 million per quarter
from September 30, 1996 through September 30, 1999, and by $1.575 billion
at final maturity on December 31, 1999; and a $986 million term loan with
repayments of $66 million on June 30, 1995, $98 million per quarter
beginning September 30, 1995 through March 31, 1996, $27 million per
quarter beginning June 30, 1996 through June 30, 1999, $20 million on
September 30, 1999 and a final repayment of $255 million on December 31,
1999. Unused credit is available for general business purposes and to
support commercial paper borrowings. Outstanding borrowings under the
credit agreement generally bear interest at LIBOR plus 5/8% per annum.
(e) Guaranteed by certain subsidiaries of the Company which are the general
partners of TWE.
(f) Guaranteed by TWE.
S-7
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL INFORMATION
TIME WARNER INC. SELECTED HISTORICAL FINANCIAL INFORMATION
The selected historical financial information of the Company set forth
below has been derived from and should be read in conjunction with the
consolidated financial statements and other financial information of the Company
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 and with the unaudited consolidated condensed financial
statements contained in the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, which are incorporated herein by reference. The
selected historical financial information for all periods after 1992 reflects
the deconsolidation of the Entertainment Group, principally consisting of TWE,
effective January 1, 1993. The selected historical financial information for
1992 and periods prior to such date has not been changed; however, selected
financial information for 1992 retroactively reflecting the deconsolidation is
presented as supplementary information under the column heading 'restated' to
facilitate comparative analysis. Capitalized terms are as defined and described
in such historical financial statements, or elsewhere herein.
The selected historical financial information for 1993 reflects the
issuance of $6.1 billion of long-term debt and the use of $500 million of cash
and equivalents in 1993 for the exchange or redemption of preferred stock having
an aggregate liquidation preference of $6.4 billion. The selected historical
financial information for 1992 reflects the capitalization of TWE on June 30,
1992 and associated refinancings, and the acquisition of the 18.7% minority
interest in American Television and Communications Corporation ('ATC') as of
June 30, 1992, using the purchase method of accounting for business
combinations. Per common share amounts and average common shares have been
restated to give effect to the four-for-one common stock split that occurred on
September 10, 1992.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED DECEMBER 31,
MARCH 31, --------------------------------------------------------
--------------- RESTATED
1995 1994 1994 1993 1992 1992 1991 1990
------ ------ ------ ------ -------- ------- ------- -------
(MILLIONS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT INFORMATION
Revenues........................................ $1,817 $1,558 $7,396 $6,581 $6,309 $13,070 $12,021 $11,517
Depreciation and amortization................... 112 105 437 424 384 1,172 1,109 1,138
Business segment operating income............... 138 112 713 591 529 1,343 1,154 1,114
Equity in pretax income of Entertainment
Group......................................... 22 45 176 281 226 -- -- --
Interest and other, net......................... 155 158 724 718 351 882 966 1,133
Net income (loss)(a)(b)......................... (47) (51) (91) (221) 86 86 (99) (227)
Net loss applicable to common shares (after
preferred dividends).......................... (50) (54) (104) (339) (542) (542) (692) (786)
Per share of common stock:
Net loss(a)(b)............................. $(0.13) $(0.14) $(0.27) $(0.90) $(1.46) $ (1.46) $ (2.40) $ (3.42)
Dividends.................................. $ 0.09 $ 0.08 $ 0.35 $ 0.31 $0.265 $ 0.265 $ 0.25 $ 0.25
Average common shares(b)........................ 379.5 378.6 378.9 374.7 371.0 371.0 288.2 229.9
Ratio of earnings to fixed charges (deficiency
in the coverage of fixed charges by earnings
before fixed charges)(c)...................... 1.0x 1.0x 1.1x 1.1x 1.4x 1.4x 1.1x $(101)
</TABLE>
S-8
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
MARCH 31, RESTATED
1995 1994 1993 1992 1992 1991 1990
--------- ------- ------- ------- -------- ------- -------
(MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMATION
Investments in and amounts due to and from Entertainment
Group................................................... $ 5,443 $ 5,350 $ 5,627 $ 5,392 $ -- $ -- $ --
Total assets.............................................. 16,608 16,716 16,892 17,043 27,366 24,889 25,337
Long-term debt............................................ 9,001 8,839 9,291 2,897 10,068 8,716 11,184
Shareholders' equity:
Preferred stock liquidation preference............... 140 140 140 6,532 6,532 6,256 5,954
Equity applicable to common stock.................... 973 1,008 1,230 1,635 1,635 2,242 360
Total shareholder's equity........................... 1,113 1,148 1,370 8,167 8,167 8,498 6,314
</TABLE>
- ------------
(a) The net loss for the year ended December 31, 1993 includes an extraordinary
loss on the retirement of debt of $57 million ($.15 per common share) and
an unusual charge of $70 million ($.19 per common share) from the effect of
the new income tax law on the Company's deferred income tax liability. The
net loss for the year ended December 31, 1991 includes a $36 million
after-tax charge ($.12 per common share) relating to the restructuring of
the Publishing division.
(b) In August 1991, the Company completed the sale of 137.9 million shares of
Common Stock pursuant to a rights offering. Net proceeds of $2.558 billion
from the rights offering were used to reduce indebtedness under the
Company's bank credit agreement. If the rights offering had been completed
at the beginning of 1991, net loss for the year would have been reduced to
$33 million, or $1.70 per common share, and there would have been 369.3
million shares of common stock outstanding during the year.
(c) For purposes of the ratio of earnings to fixed charges, earnings were
calculated by adding pretax income, interest expense, previously
capitalized interest amortized to expense, the portion of rents
representative of an interest factor, the Company's proportionate share of
such items for its partially-owned subsidiaries and 50%-owned companies,
and undistributed losses of less-than-50%-owned companies. Fixed charges
consist of interest expense, interest capitalized, the portion of rents
representative of an interest factor and the Company's proportionate share
of such items for partially-owned subsidiaries and 50%-owned companies. For
periods in which earnings before fixed charges were insufficient to cover
fixed charges, the dollar amount of coverage deficiency, instead of the
ratio, is disclosed. Earnings as defined include significant noncash
charges for depreciation and amortization. Fixed charges for the three
months ended March 31, 1995 and 1994 and the year ended December 31, 1994
include noncash interest expense of $57 million, $52 million and $219
million, respectively, relating to the Company's Redeemable Reset Notes due
2002 and its Liquid Yield Options Notes due 2012 and 2013.
S-9
<PAGE>
ENTERTAINMENT GROUP SELECTED HISTORICAL FINANCIAL INFORMATION
The selected historical financial information of the Entertainment Group
set forth below has been derived from and should be read in conjunction with the
consolidated financial statements and other financial information of the Company
and TWE contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 and with the unaudited consolidated condensed financial
statements and other financial information of the Company and TWE contained in
the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
1995, which are incorporated herein by reference. The selected historical
financial information for all periods after 1992 gives effect to TWE's
consolidation of Six Flags effective as of January 1, 1993, as a result of the
1993 Six Flags acquisition. The selected historical financial information for
periods prior to such date has not been changed; however, selected financial
information for 1992 retroactively reflecting the consolidation is presented as
supplementary information under the column heading 'restated' to facilitate
comparative analysis. For periods prior to January 1, 1993, the Entertainment
Group is consolidated with the Company for financial reporting purposes and,
accordingly, is also reflected in the Company's summary historical financial
data.
The selected historical financial information for 1993 gives effect to the
admission of U S WEST as an additional limited partner of TWE as of September
15, 1993 and the issuance of $2.6 billion of TWE debentures during the year to
reduce indebtedness under the TWE credit agreement, and for 1992 gives effect to
the initial capitalization of TWE and associated refinancings as of the dates
such transactions were consummated and the Company's acquisition of the ATC
minority interest as of June 30, 1992, using the purchase method of accounting
and reflected in the consolidated financial statements of TWE under the pushdown
method of accounting.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED YEARS ENDED DECEMBER 31,
MARCH 31, -----------------------------------------------------
--------------- RESTATED
1995 1994 1994 1993 1992 1992 1991 1990
------ ------ ------ ------ -------- ------ ------ ------
(MILLIONS, EXCEPT RATIOS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
OPERATING STATEMENT INFORMATION
Revenues................................................. $2,073 $1,927 $8,509 $7,963 $7,251 $6,761 $6,068 $5,671
Depreciation and amortization............................ 230 216 959 909 857 788 733 775
Business segment operating income........................ 201 206 852 905 855 814 724 549
Interest and other, net.................................. 164 146 616 564 569 531 526 648
Net income(loss)(a)...................................... 11 41 136 207 173 173 103 (180)
TWE ratio of earnings to fixed charges (deficiency in the
coverage of fixed charges by earnings before fixed
charges)(b)............................................ 1.1x 1.4x 1.4x 1.4x 1.4x 1.4x 1.4x $ (138)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------------------------
MARCH 31, RESTATED
1995 1994 1993 1992 1992 1991 1990
--------- ------- ------- -------- ------- ------- -------
(MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET INFORMATION
Total assets.............................................. $19,043 $18,992 $18,202 $ 16,733 $15,886 $14,230 $14,415
Long-term debt............................................ 7,162 7,160 7,125 7,684 7,171 4,571 6,516
Time Warner General Partners' senior capital.............. 1,696 1,663 1,536 -- -- -- --
Partners' capital......................................... 6,463 6,491 6,228 6,483 6,483 6,717 5,809
</TABLE>
- ------------
(a) Net income for the year ended December 31, 1993 includes an extraordinary
loss on the retirement of debt of $10 million.
(b) For purposes of the ratio of earnings to fixed charges, earnings were
calculated by adding pretax income, interest expense, previously
capitalized interest amortized to expense, the portion of rents
representative of an interest factor, TWE's proportionate share of such
items for its partially-owned subsidiaries and 50%-owned companies, and
undistributed losses of less-than-50%-owned companies. Fixed charges
consist of interest expense, interest capitalized, the portion of rents
representative of an interest factor and TWE's proportionate share of such
items for partially-owned subsidiaries and 50%-owned companies. For periods
in which earnings before fixed charges were insufficient to cover fixed
charges, the dollar amount of coverage deficiency, instead of the ratio, is
disclosed. Earnings as defined include significant noncash charges for
depreciation and amortization.
S-10
<PAGE>
TIME WARNER INC. AND ENTERTAINMENT GROUP SELECTED PRO FORMA FINANCIAL
INFORMATION
The unaudited selected pro forma balance sheet information of the Company
and the Entertainment Group at March 31, 1995 set forth below gives effect to
the Asset Sale Transactions, the TWE-A/N Transaction and the 1995 Debt
Refinancing and, with respect to the Company only, also gives effect to the
Acquisitions in each case as if such transactions occurred at such date. The
unaudited selected pro forma operating statement information of the Company and
the Entertainment Group for the three months ended March 31, 1995 and the year
ended December 31, 1994 set forth below gives effect to each applicable
transaction as if it had occurred at the beginning of such periods. No pro forma
effect has been given in the information set forth below to the PERCS offering
or to the issuance of the Notes offered hereby and the use of the net proceeds
therefrom to repurchase, redeem or otherwise repay outstanding indebtedness
because such transactions will not have a material effect on the Company (see
'Consolidated Capitalization'). The selected pro forma financial information
should be read in conjunction with the 'Time Warner Inc. and the Entertainment
Group Pro Forma Consolidated Condensed Financial Statements' included in the
Company's Current Report on Form 8-K dated May 30, 1995, which is incorporated
herein by reference.
The selected pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the financial position or
operating results that would have occurred if the transactions given retroactive
effect therein had been consummated as of the dates indicated, nor is it
necessarily indicative of future financial conditions or operating results.
<TABLE>
<CAPTION>
THREE MONTHS YEAR ENDED
ENDED MARCH 31, 1995 DECEMBER 31, 1994
----------------------- -----------------------
TIME ENTERTAINMENT TIME ENTERTAINMENT
WARNER GROUP WARNER GROUP
------ ------------- ------ -------------
(MILLIONS, EXCEPT PER SHARE AMOUNTS AND RATIOS)
<S> <C> <C> <C> <C>
PRO FORMA OPERATING STATEMENT INFORMATION
Revenues................................................................... $2,025 $ 2,264 $8,217 $ 8,790
Depreciation and amortization.............................................. 232 270 918 1,040
Business segment operating income.......................................... 149 239 645 928
Equity in pretax income of Entertainment Group............................. 56 -- 217 --
Interest and other, net.................................................... 220 168 938 651
Net income (loss).......................................................... (59) 41 (263) 183
Net loss applicable to common shares (after preferred dividends)........... (81) -- (353) --
Per share of common stock:
Net loss.............................................................. (.21) -- (.92) --
Dividends............................................................. (.09) -- (.35) --
Average common shares...................................................... 384.6 -- 384.0 --
Time Warner and TWE ratio of earnings to fixed charges (deficiency in the
coverage of fixed charges by earnings before fixed charges)(a)........... $ (18) 1.6x $ (73) 1.7x
</TABLE>
<TABLE>
<CAPTION>
MARCH 31, 1995
-----------------------
TIME ENTERTAINMENT
WARNER GROUP
------ -------------
(MILLIONS)
<S> <C> <C>
PRO FORMA BALANCE SHEET INFORMATION
Investments in and amounts due to and from Entertainment Group....................................... $5,401 $ --
Total assets......................................................................................... 24,566 18,916
Long-term debt....................................................................................... 12,374 6,268
Shareholders' equity:
Preferred stock liquidation preference.......................................................... 2,240 --
Equity applicable to common stock............................................................... 1,200 --
Total shareholders' equity...................................................................... 3,440 --
Time Warner General Partners' senior capital......................................................... -- 1,696
Partners' capital.................................................................................... -- 6,421
</TABLE>
(footnote on following page)
S-11
<PAGE>
(footnote from previous page)
(a) For purposes of the ratio of earnings to fixed charges, earnings were
calculated by adding pretax income, interest expense, previously
capitalized interest amortized to expense, the portion of rents
representative of an interest factor, the proportionate share for each of
the Company and TWE, respectively, of such items for its partially-owned
subsidiaries and 50%-owned companies, and undistributed losses of
less-than-50%-owned companies. Fixed charges consist of interest expense,
interest capitalized, the portion of rents representative of an interest
factor and the proportionate share for each of the Company and TWE,
respectively, of such items for partially-owned subsidiaries and 50%-owned
companies. For periods in which earnings before fixed charges were
insufficient to cover fixed charges, the dollar amount of coverage
deficiency, instead of the ratio, is disclosed. Earnings as defined include
significant noncash charges for depreciation and amortization. Fixed
charges for the Company for the three months ended March 31, 1995 and the
year ended December 31, 1994 included noncash interest expense of $57
million and $219 million, respectively, relating to the Company's
Redeemable Reset Notes due 2002 and its Liquid Yield Option Notes due 2012
and 2013.
S-12
<PAGE>
DESCRIPTION OF THE NOTES
The Notes are a series of Debt Securities described in the accompanying
Prospectus that will be issued under an indenture dated as of January 15, 1993
(the 'Indenture'), between the Company and Chemical Bank, as trustee (the
'Trustee'). The following description of the particular terms of the Notes
offered hereby supplements, and to the extent inconsistent therewith replaces,
the description of the general terms and provisions of the Debt Securities set
forth in the accompanying Prospectus, to which description reference is hereby
made. Capitalized terms used by not defined herein or in the accompanying
Prospectus have the meanings given to them in the Indenture. Section references
are to the Indenture unless otherwise indicated.
GENERAL
The Notes will be limited to $500,000,000 in aggregate principal amount,
will bear interest from June 15, 1995 and will mature on June 15, 2005. Each
Note will bear interest at the annual rate set forth on the cover page of this
Prospectus Supplement, payable semiannually on June 15 and December 15 of
each year, commencing December 15, 1995 (each an 'Interest Payment Date'), to
holders of record at the close of business on the June 1 or December 1 next
preceding each such Interest Payment Date. The Notes will be issued only in
registered form, without coupons, in denominations of $1,000 and integral
multiples thereof. The principal of and interest on the Notes will be payable
and the transfer of the Notes will be registrable through the Depositary as
described under ' -- Book Entry System' below. (Sections 305 and 202 and Form of
Note) The Company will not charge a service charge for any registration of
transfer or exchange of Notes; however, the Company may require payment by a
Holder of a sum sufficient to cover any tax, assessment or other governmental
charge payable in connection therewith. (Section 305) The Trustee shall
authenticate and deliver Notes in accordance with the Indenture and the
procedures for dating, due execution by the Company and book-entry transfer set
forth therein. (Section 303)
RANKING AND HOLDING COMPANY STRUCTURE
The Notes will be senior indebtedness of the Company and will rank pari
passu with all other unsecured and unsubordinated debt of the Company. See
'Consolidated Capitalization'. The Notes may be deemed to be effectively
subordinated to all existing and future liabilities, including indebtedness, of
subsidiaries of the Company. As of March 31, 1995, the Company's consolidated
and unconsolidated subsidiaries had approximately $13.9 billion of total
liabilities, including approximately $7.3 billion of indebtedness. Indebtedness
of the Company's consolidated and unconsolidated subsidiaries is expected to
increase by approximately $2.5 billion as a result of the Transactions referred
to in 'The Company -- Recent Developments'. The Company's rights and the rights
of its creditors, including holders of Notes, to participate in the distribution
of assets of any subsidiary upon such subsidiary's liquidation or reorganization
will be subject to prior claims of such subsidiary's creditors, including trade
creditors, except to the extent the Company may itself be a creditor with
recognized claims against such subsidiary. See 'Holding Company Structure' in
the accompanying Prospectus.
REDEMPTION
The Notes are not redeemable prior to maturity.
COVENANTS OF THE COMPANY
LIMITATION ON LIENS. The Indenture provides that neither the Company nor
any Material Subsidiary of the Company shall incur, create, issue, assume,
guarantee or otherwise become liable for any indebtedness for money borrowed
that is secured by a lien on any asset now owned or hereafter acquired by it
unless the Company makes or causes to be made effective provision whereby the
Notes will be secured by such lien equally and ratably with (or prior to) all
other indebtedness thereby secured so long as any such indebtedness shall be
secured. The foregoing restriction does not apply to the following:
(i) liens existing as of the date of the Indenture;
S-13
<PAGE>
(ii) liens created by Subsidiaries of the Company to secure
indebtedness of such Subsidiaries to the Company or to one or more other
Subsidiaries of the Company;
(iii) liens affecting property of a person existing at the time it
becomes a Subsidiary of the Company or at the time it merges into or
consolidates with the Company or a Subsidiary of the Company or at the time
of a sale, lease or other disposition of all or substantially all of the
properties of such person to the Company or its Subsidiaries;
(iv) liens on property exiting at the time of the acquisition thereof
or incurred to secure payment of all or a part of the purchase price
thereof or to secure Indebtedness incurred prior to, at the time of, or
within one year after the acquisition thereof for the purpose of financing
all or part of the purchase price thereof;
(v) liens on any property to secure all or part of the cost of
improvements or construction thereon or indebtedness incurred to provide
funds for such purpose in a principal amount not exceeding the cost of such
improvements or construction;
(vi) liens consisting of or relating to the sale, transfer or
financing of motion pictures, video and television programs, sound
recordings, books or rights with respect thereto to or with so-called tax
shelter groups or other third-party investors in connection with the
financing of such motion pictures, video and television programming, sound
recordings or books in the ordinary course of business and the granting to
the Company or any of its Subsidiaries of rights to distribute such motion
pictures, video and television programming, sound recordings or books;
provided, however, that no such lien shall attach to any asset or right of
the Company or its Subsidiaries (other than the motion pictures, video and
television programming, sound recordings, books or rights which were sold,
transferred to or financed by the tax shelter group or third-party
investors in question or the proceeds arising therefrom);
(vii) liens on shares of stock, indebtedness or other securities of a
Person that is not a Subsidiary;
(viii) other liens arising in connection with indebtedness of the
Company and its Subsidiaries in an aggregate principal amount for the
Company and its Subsidiaries not exceeding at the time such lien is issued,
created or assumed the greater of (A) 10% of the Consolidated Net Worth of
the Company and (B) $500 million; and
(ix) any extensions, renewal or replacement of any lien referred to in
the foregoing clauses (i) through (viii) inclusive, or of any indebtedness
secured thereby; provided that the principal amount of indebtedness secured
thereby shall not exceed the principal amount of indebtedness so secured at
the time of such extension, renewal or replacement, or at the time the lien
was issued, created or assumed or otherwise permitted, and that such
extension, renewal or replacement lien shall be limited to all or part of
substantially the same property which secured the lien extended, renewed or
replaced (plus improvements on such property). (Section 1006)
LIMITATION ON SENIOR DEBT. The Indenture provides that the Company will
not, and will not permit any of its Subsidiaries to, incur, create, issue,
assume, guarantee or otherwise become directly or indirectly liable for
(collectively, 'incur') any Senior Debt, if after giving effect to such
incurrence of Senior Debt, determined on a pro forma basis as if such incurrence
had occurred on the first day of the Test Period, the Consolidated Cash Flow
Coverage Ratio for the Company and its Subsidiaries for the Test Period would be
less than 1.5 to 1; provided, however, that the foregoing restrictions will not
apply to TWE or any of its Subsidiaries to the extent that the application of
such restrictions would be prohibited under, or cause a violation of, TWE's bank
credit agreement as in effect from time to time or any successor or replacement
credit agreement. (Section 1007)
Other than the restrictions in the Indenture on liens and incurrence of
Senior Debt described above, the Indenture and the Notes do not contain any
covenants or other provisions designed to afford holders of the Notes protection
in the event of a recapitalization or highly leveraged transaction involving the
Company.
LIMITATION ON MERGER, CONSOLIDATION AND CERTAIN SALES OF ASSETS. The
Indenture provides that the Company will not merge or consolidate with or into,
or convey or transfer its property substantially as
S-14
<PAGE>
an entirety to, any Person unless (a) the successor is organized and existing
under the laws of the United States or any State or the District of Columbia,
(b) the successor assumes the Company's obligations under the Indenture and the
Notes on the same terms and conditions and (c) immediately after giving effect
to such transaction, there is no default under the Indenture. (Section 801)
CERTAIN DEFINITIONS
The following are certain of the terms defined in the Indenture:
'Consolidated Cash Flow' means, for any period, the net income of the
Company and its Subsidiaries as determined on a consolidated basis in
accordance with GAAP consistently applied, plus the sum of depreciation,
amortization, other noncash charges which reduce net income, income tax
expense and interest expense, in each case to the extent deducted in
determining such net income, and excluding extraordinary gains or losses.
Notwithstanding the foregoing, for purposes of determining the Consolidated
Cash Flow of the Company, there shall be included, in respect of each other
Person that is accounted for by the Company on the equity method (as
determined in accordance with GAAP), the Company's proportionate amount of
such other Person's and its Subsidiaries' consolidated net income,
depreciation, amortization, other noncash charges which reduce net income,
income tax expense and interest expense, in each case to the extent
deducted in determining such other Person's net income, excluding
extraordinary gains and losses.
'Consolidated Cash Flow Coverage Ratio' means, for any period, the
ratio for such period of Consolidated Cash Flow to Consolidated Interest
Expense. In determining the Consolidated Cash Flow Coverage Ratio, effect
shall be given to the application of the proceeds of Senior Debt whose
incurrence is being tested to the extent such proceeds are used to repay or
refinance other Senior Debt.
'Consolidated Interest Expense' means, for any period, cash interest
expense of the Company and its Subsidiaries on Senior Debt for such period
other than the amount amortized during such period in respect of all fees
paid in connection with the incurrence of such Senior Debt, such expense to
be determined on a consolidated basis in accordance with GAAP consistently
applied. Notwithstanding the foregoing, for purposes of determining the
Consolidated Interest Expense of the Company, there shall be included, in
respect of each other Person that is accounted for by the Company on the
equity method (as determined in accordance with GAAP), the Company's
proportionate amount of the cash interest expense of such other Person and
its Subsidiaries on Senior Debt for the relevant period other than the
amount amortized during such period in respect of all fees paid in
connection with the incurrence of such Senior Debt, such expense to be
determined on a consolidated basis in accordance with GAAP consistently
applied.
'Consolidated Net Worth' means, at the date of any determination, the
consolidated stockholders' equity of the Company and its Subsidiaries,
determined on a consolidated basis in accordance with GAAP consistently
applied; provided that the Company's 8 3/4% Convertible Subordinated
Debentures due January 10, 2015 that are then outstanding shall be
considered equity for the purposes of the computation of the Company's
Consolidated Net Worth.
'GAAP' means generally accepted accounting principles as such
principles are in effect as of the date of the Indenture.
'Material Subsidiary' means any Person that is a Subsidiary if at the
end of the most recent fiscal quarter of the Company, the aggregate amount,
determined in accordance with GAAP consistently applied, of securities of,
loans and advances to, and other investments in, such Person held by the
Company and its other Subsidiaries exceeded 10% of the Company's
Consolidated Net Worth.
'Person' means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
S-15
<PAGE>
'Senior Debt' means, with respect to any Person, all indebtedness of
such Person, in respect of money borrowed, determined in accordance with
GAAP consistently applied, other than indebtedness as to which the
instrument governing such indebtedness provides that such indebtedness is,
or which is in effect, subordinated or junior in right of payment to any
other indebtedness of such Person.
'Subsidiary' means, with respect to any Person, any corporation more
than 50% of the voting stock of which is owned directly or indirectly by
such Person, and any partnership, association, joint venture or other
entity in which such Person owns more than 50% of the equity interests or
has the power to elect a majority of the board of directors or other
governing body.
'Test Period' means, with respect to any date, the period consisting
of the most recent four full fiscal quarters for which financial
information is generally available.
BOOK ENTRY SYSTEM
The Notes initially will be represented by one or more global securities
(the 'Global Securities') deposited with The Depository Trust Company ('DTC')
and registered in the name of a nominee of DTC. Except as set forth below, the
Notes will be available for purchase in denominations of $1,000, and integral
multiples thereof, in book-entry form only.
Unless and until certificated Notes are issued under the limited
circumstances described below, no beneficial owner of a Note shall be entitled
to receive a definitive certificate representing a Note. So long as DTC or any
successor depositary (the 'Depositary') or its nominee is the registered owner
of all the Global Securities, the Depositary or such nominee, as the case may
be, will be considered to be the sole owner or holder of the Notes for all
purposes of the Indenture. Unless and until exchanged in whole or in part for
the Notes represented thereby, the Global Securities may not be transferred
except in their entirety by the Depositary to a nominee of the Depositary or by
a nominee of such Depositary to such Depositary or another nominee of such
Depositary or by the Depositary or any nominee to a successor depositary or any
nominee of such successor.
So long as the Global Securities represent the Notes, payments of interest
and principal will be made to the Depositary or its nominee, as the registered
owner of the Global Securities. Payments to beneficial owners of the Notes are
expected to be made through the Depositary or its nominee, as described in the
Prospectus. None of the Company, the Trustee, any Paying Agent or the Registrar
will have any responsibility or liability for any aspect of the records relating
to, or payments made on account of, beneficial ownership interests in the Global
Securities for the Notes or for maintaining, supervising or reviewing any
records relating to such beneficial interests.
If the Depositary is at any time unwilling, unable or ineligible to
continue as depositary and a successor depositary is not appointed by the
Company with 90 days, the Company will issue individual Notes in definitive form
in exchange for the Global Securities representing the Notes. In addition, the
Company may at any time and in its sole discretion determine not to have the
Notes represented by Global Securities, and, in such event, will issue
individual Notes in definitive form in exchange for the Global Securities. In
either instance, the Company will issue Notes in definitive form equal in
aggregate principal amount to the Global Securities, in such names and in such
principal amounts as the Depositary shall request. Notes so issued in definitive
form will be issued in denominations of $1,000 and integral multiples thereof
and will be issued in registered form only, without coupons.
DTC has advised the Company and the Underwriters as follows: DTC is a
limited-purpose trust company organized under the laws of the State of New York,
a member of the Federal Reserve System, a 'clearing corporation' within the
meaning of the New York Uniform Commercial Code and a 'clearing agency'
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934, as amended. DTC was created to hold securities of its participants
and to facilitate the clearance and settlement of securities transactions among
its participants in such securities through electronic book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. DTC's participants include securities brokers and
dealers (including the Underwriters), banks, trust companies, clearing
corporations and certain other organizations, some of which (and/or their
representatives) own DTC. Access to DTC's book-entry system is also available
S-16
<PAGE>
to others, such as banks, brokers, dealers and trust companies that clear
through or maintain a custodial relationship with a participant, either directly
or indirectly.
A further description of the Depositary's procedures with respect to Global
Securities is set forth in the accompanying Prospectus under 'Description of the
Debt Securities -- Global Securities'. The Depositary has confirmed to the
Company, the Underwriters and the Trustee that it intends to follow such
procedures.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
NON-U.S. HOLDERS
The following is a summary of certain United States Federal income tax
consequences that may be relevant to a beneficial owner of the Notes that is not
(i) a citizen or resident of the United States, (ii) a corporation created or
organized under the laws of the United States or any State thereof or the
District of Columbia or (iii) a person otherwise subject to United States
Federal income taxation on its worldwide income (any of the foregoing, a
'Non-U.S. Holder'). This summary deals only with Non-U.S. Holders that are
initial holders of the Notes and that will hold the Notes as capital assets. It
does not address the tax considerations applicable to Non-U.S. Holders if income
or gain in respect of the Notes is effectively connected with the conduct of a
trade or business in the United States.
Generally, payments of interest made with respect to the Notes to a
Non-U.S. Holder will not be subject to United States Federal income or
withholding tax, provided that (i) the Non-U.S. Holder does not actually or
constructively own 10% or more of the total combined voting power of all classes
of stock of the Company entitled to vote, (ii) the Non-U.S. Holder is not a
controlled foreign corporation for United States tax purposes that is directly
or indirectly related to the Company through stock ownership and (iii) the
Non-U.S. Holder complies with applicable certification requirements.
Any capital gain realized on the sale, exchange, retirement or other
disposition of a Note by a Non-U.S. Holder will not be subject to United States
Federal income or withholding taxes unless such Non-U.S. Holder is an individual
who is present in the United States for 183 days or more in the taxable year of
such sale, exchange, retirement or other disposition and either (A) such
individual has a tax home (as defined in Section 911(d)(3) of the Internal
Revenue Code of 1986, as amended) in the United States in the taxable year of
such sale, exchange, retirement or other disposition or (B) the gain is
attributable to an office or other fixed place of business maintained by such
individual in the United States.
PURCHASERS OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS WITH RESPECT TO
THE POSSIBLE APPLICABILITY OF UNITED STATES FEDERAL INCOME, WITHHOLDING AND
OTHER TAXES UPON INCOME REALIZED IN RESPECT OF THE NOTES.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Any holder of the Notes may be subject to information reporting and backup
withholding at a rate of 31 percent on certain amounts paid to the holder unless
such holder provides proof of an applicable exemption or correct taxpayer
identification number, and otherwise complies with applicable requirements of
the backup withholding rules.
S-17
<PAGE>
UNDERWRITERS
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to each of the Underwriters named
below, and each of the Underwriters has severally and not jointly agreed to
purchase, the respective amounts of the Notes set forth opposite its name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME OF NOTES
- --------------------------------------------------------------------------- ----------------
<S> <C>
Morgan Stanley & Co. Incorporated.......................................... $166,668,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated....................................................... 166,666,000
Salomon Brothers Inc....................................................... 166,666,000
----------------
Total................................................................. $500,000,000
----------------
----------------
</TABLE>
The Underwriting Agreement provides that the obligation of the Underwriters
to pay for and accept delivery of the Notes is subject to the approval of
certain legal matters by their counsel and to certain other conditions. Under
the terms and conditions of the Underwriting Agreement, the Underwriters are
committed to take and pay for all of the Notes if any are taken.
The Company has been advised by the Underwriters that they initially
propose to offer the Notes in part directly to purchasers at the initial public
offering price set forth on the cover page of this Prospectus Supplement and in
part to certain securities dealers at such price less a concession of .40% of
the principal amount of the Notes. The Underwriters may allow, and such dealers
may reallow, a concession not to exceed .25% of the principal amount of the
Notes to certain brokers and dealers. After the initial offering of the Notes,
the offering price and other selling terms may from time to time be varied by
the Underwriters.
Subject to certain exceptions, the Company has agreed with the Underwriters
that, without the prior written consent of Morgan Stanley & Co. Incorporated,
until June 19, 1995, the closing date for the sale of the Notes offered hereby,
it will not, and will not permit TWE to, directly or indirectly offer, sell or
contract to sell, or announce the offering of, any debt securities designed to
be traded or distributed in the public or private securities markets.
Application will be made to list the Notes on the New York Stock Exchange.
The Underwriting Agreement provides that the Company will indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended, and will be required to contribute to
payments which the Underwriters may be required to make in respect thereof.
From time to time certain Underwriters have provided, and continue to
provide, investment banking services to the Company for which customary
compensation has been and will be received.
LEGAL OPINIONS
Certain legal matters will be passed upon for the Company by Cravath,
Swaine & Moore, New York, New York, and for the Underwriters by Shearman &
Sterling, New York, New York.
S-18
<PAGE>
PROSPECTUS
TIME WARNER INC.
Debt Securities
Convertible Debt Securities
Debt Securities with Common Stock Warrants
Time Warner Inc. (the 'Company') may offer from time to time its (i) notes,
debentures or other evidences of indebtedness ('Debt Securities'), which may be
(ii) convertible into shares of the Company's Common Stock, par value $1.00 per
share (the 'Common Stock'), or other securities or other property ('Convertible
Debt Securities') or (iii) may be accompanied by warrants ('Common Stock
Warrants') to purchase Common Stock ('Debt Securities with Common Stock
Warrants'), having an aggregate initial public offering price of $1,800,581,550
(including the U.S. dollar equivalent of securities for which the initial public
offering price is denominated in one or more foreign currencies or composite
currencies). The Debt Securities (including any Convertible Debt Securities),
Common Stock Warrants, and the Common Stock underlying any such Convertible Debt
Securities or Debt Securities with Common Stock Warrants (collectively, the
'Offered Securities') may be offered in one or more series in amounts, at prices
and on terms determined at the time of sale and set forth in a supplement to
this Prospectus (a 'Prospectus Supplement').
Unless otherwise specified in an accompanying Prospectus Supplement, the
Debt Securities will be senior securities of the Company, ranking equally with
all other unsubordinated and unsecured indebtedness of the Company.
The net proceeds from the sale of Offered Securities will be used to
repurchase, redeem or otherwise repay indebtedness of the Company, unless
otherwise set forth in the Prospectus Supplement. See 'Use of Proceeds'.
The specific terms of the Offered Securities in respect of which this
Prospectus is being delivered will be set forth in an accompanying Prospectus
Supplement, including, where applicable, (i) in the case of Debt Securities, the
specific designation, aggregate principal amount, currency, denomination,
maturity (which may be fixed or extendible), priority, interest rate or rates
(or manner of calculation thereof), if any, time of payment of interest, if any,
terms for any redemption or repayment at the option of the Company or the holder
or for any sinking fund payments, terms for any conversion or exchange
(including the terms relating to the adjustment thereof), the initial public
offering price and any other specific terms of such Debt Securities, and (ii) in
the case of Common Stock Warrants included in any Debt Securities with Common
Stock Warrants, the duration, offering price, exercise price, detachability and
any other specific terms thereof.
The Prospectus Supplement will also contain information, where applicable,
about certain United States Federal income tax considerations relating to, and
any listing on a securities exchange of, the Offered Securities covered by the
Prospectus Supplement.
The Debt Securities and Common Stock Warrants may be issued only in
registered form, including in the form of one or more global securities ('Global
Securities'), unless otherwise set forth in the Prospectus Supplement.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
The Offered Securities may be offered directly, through agents designated
from time to time or through dealers or underwriters. If any agents of the
Company or any dealers or underwriters are involved in the offering of the
Offered Securities in respect of which this Prospectus is being delivered, the
names of such agents, dealers or underwriters and any applicable commissions or
discounts will be set forth in the Prospectus Supplement. The net proceeds to
the Company from such sale will also be set forth in the Prospectus Supplement.
------------------------
THE DATE OF THIS PROSPECTUS IS JUNE 7, 1995.
<PAGE>
IN CONNECTION WITH THE OFFERING OF CERTAIN SECURITIES, THE UNDERWRITERS MAY
OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE
OF THE OFFERED SECURITIES OFFERED HEREBY OR OTHER SECURITIES OF THE COMPANY AT
LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
------------------------
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the 'Exchange Act'), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the 'Commission'). Reports, proxy statements
and other information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
regional offices located at Seven World Trade Center, 13th Floor, New York, New
York 10048; and Northwestern Atrium Center, 500 West Madison Street (Suite
1400), Chicago, Illinois 60661; and copies of such material may be obtained from
the Public Reference Section of the Commission, Washington, D.C. 20549, at
prescribed rates. Such reports, proxy statements and other information may also
be inspected at the offices of the New York Stock Exchange, Inc. ('NYSE'), 20
Broad Street, New York, New York, and the Pacific Stock Exchange ('PSE'), 301
Pine Street, San Francisco, California, on which one or more of the Company's
securities are listed.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
'Securities Act'). This Prospectus omits certain of the information contained in
the Registration Statement in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company and the Offered
Securities. Statements contained herein concerning the provisions of any
document are not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the Registration Statement
or otherwise filed with the Commission. Each such statement is qualified in its
entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The Company incorporates herein by reference the following documents filed
with the Commission (File No. 1-8637) pursuant to the Exchange Act:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.
(b) The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995.
(c) The Company's Current Reports on Form 8-K dated January 26, 1995,
February 6, 1995, April 1, 1995 and May 30, 1995.
(d) The description of the Company's Common Stock contained in Item 4
of the Company's Registration Statement on Form 8B filed with the
Commission on December 8, 1983, pursuant to Section 12(b) of the Exchange
Act, as amended from time to time.
(e) The description of the rights issued to stockholders of the
Company pursuant to the Rights Agreement, dated as of January 20, 1994,
between the Company and Chemical Bank, as Rights Agent, contained in Item 1
of the Company's Registration Statement on Form 8-A filed with the
Commission on January 24, 1994.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Offered
Securities shall be deemed to be incorporated herein by reference and to be a
part hereof from the date of filing of such documents.
2
<PAGE>
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus or any Prospectus Supplement to the extent that
a statement contained herein or in any other subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus or any Prospectus Supplement.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus and the accompanying Prospectus
Supplement are delivered, upon the written or oral request of such person, a
copy of any or all the documents incorporated herein by reference, other than
exhibits to such documents unless such exhibits are specifically incorporated by
reference in such documents, and any other documents specifically identified
herein as incorporated by reference into the Registration Statement to which
this Prospectus relates or into such other documents. Requests should be
addressed to: Shareholder Relations, Time Warner Inc., 75 Rockefeller Plaza, New
York, New York 10019; telephone: (212) 484-6971.
TIME WARNER INC.
The Company was incorporated in the State of Delaware in August 1983 and is
the successor to a New York corporation that was originally organized in 1922.
The Company changed its name from Time Incorporated following its acquisition of
59.3% of the common stock of Warner Communications Inc. ('WCI') in July 1989.
WCI became a wholly owned subsidiary of the Company in January 1990 upon the
completion of the merger of WCI and a subsidiary of the Company. As used in this
Prospectus, the term the 'Company' refers to Time Warner Inc. and its
subsidiaries and divisions, and includes, unless the context otherwise
indicates, Time Warner Entertainment Company, L.P. ('TWE').
The Company is the largest media and entertainment company in the world.
Its businesses are carried on in three principal groups: Publishing, Music and
Entertainment. The Publishing group consists principally of the publication and
distribution of magazines and books; the Music group consists principally of the
production and distribution of recorded music and the ownership and
administration of music copyrights; and the Entertainment group consists
principally of the production and distribution of motion pictures and television
programming, the distribution of videocassettes, the ownership and operation of
retail stores and theme parks, the production and distribution of pay television
and cable programming, and the operation of cable television systems. These
businesses are conducted throughout the world through numerous wholly owned, and
in certain cases less than wholly owned, subsidiaries and affiliates.
TWE was formed as a Delaware limited partnership in 1992 and owns and
operates substantially all of the Entertainment group businesses, and certain
other businesses, previously owned and operated by the Company. Certain wholly
owned subsidiaries of the Company (the 'Time Warner General Partners')
collectively own 63.27% pro rata priority capital and residual equity interests
in TWE and wholly owned subsidiaries of ITOCHU Corporation, Toshiba Corporation
and U S West, Inc. own pro rata priority capital and residual equity interests
in TWE of 5.61%, 5.61% and 25.51%, respectively. In addition, the Time Warner
General Partners own priority capital interests senior and junior to the pro
rata priority capital interests.
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries and TWE. The Company's ability to service its
indebtedness, including the Debt Securities, is dependent primarily upon the
earnings of its subsidiaries and TWE and the distribution or other payment of
such earnings to the Company. See 'Holding Company Structure'.
The Company's principal executive offices are located at 75 Rockefeller
Plaza, New York, New York 10019, and its telephone number is (212) 484-8000.
RECENT DEVELOPMENTS
As summarized below and more fully described in the Company's Current
Report on Form 8-K dated May 30, 1995, the Company has recently entered into or
consummated a number of transactions to acquire, operate or dispose of cable
television systems and certain other assets. These transactions
3
<PAGE>
will, among other things, result in the acquisition of cable systems by
subsidiaries of the Company serving approximately 2.2 million subscribers and a
50% interest in Paragon Communications ('Paragon'), which serves 967,000
subscribers (the other 50% interest in Paragon is already owned by TWE).
The Company (i) closed on May 2, 1995 its acquisition of Summit
Communications Group, Inc. ('Summit'); (ii) agreed on January 26, 1995 to
acquire KBLCOM Incorporated ('KBLCOM'), a subsidiary of Houston Industries
Incorporated; and (iii) agreed on February 6, 1995 to acquire Cablevision
Industries Corporation ('CVI') and related companies (collectively, the
'Acquisitions'). To acquire Summit, the Company issued approximately 1.55
million shares of Common Stock, and approximately 3.26 million shares of a new
convertible preferred stock ('Series C Preferred Stock') and assumed or incurred
$146 million of indebtedness. To acquire KBLCOM, the Company will issue one
million shares of Common Stock and 11 million shares of a new convertible
preferred stock ('Series D Preferred Stock') and assume or incur approximately
$1.3 billion of indebtedness, including $111 million of the Company's allocable
share of Paragon's indebtedness. To acquire CVI and its related companies, the
Company will issue 2.5 million shares of Common Stock and 6.5 million shares of
new convertible preferred stock (3.25 million shares of Series E Preferred Stock
and 3.25 million shares of Series F Preferred Stock) and assume or incur
approximately $2 billion of debt of CVI and its related companies.
On April 1, 1995 TWE and Advance/Newhouse Partnership ('Advance/Newhouse'),
a New York general partnership between Newhouse Broadcasting Corporation and a
wholly-owned subsidiary of Advance Publications, Inc., formed a New York general
partnership known as Time Warner Entertainment-Advance/Newhouse Partnership (the
'TWE-A/N Partnership'), in which TWE owns a two-thirds equity interest and is
the managing partner. The TWE-A/N Partnership was formed to own and operate
cable television systems (or interests therein) serving approximately 4.5
million subscribers and certain foreign cable investments and programming
investments (the 'TWE-A/N Transaction').
TWE (i) agreed on April 17, 1995, subject to certain conditions, to
recapitalize Six Flags Entertainment Corporation ('Six Flags'), sell 51% of its
interest therein and grant certain licenses to Six Flags and (ii) announced on
May 18, 1995 the sale of 15 of its unclustered cable television systems serving
approximately 144,000 subscribers (the 'Asset Sale Transactions').
The Company and TWE are currently in negotiations with an administrative
agent for a bank syndicate regarding a five-year revolving credit facility (the
'New Credit Agreement') expected to be executed in July 1995, pursuant to which
TWE, the TWE-A/N Partnership and a wholly owned subsidiary of the Company will
be borrowers. The New Credit Agreement will enable such entities to refinance
certain indebtedness assumed from the companies acquired or to be acquired in
the Acquisitions, to refinance existing indebtedness of TWE and to finance the
ongoing working capital, capital expenditure and other corporate needs of each
borrower (the '1995 Debt Refinancing').
For a discussion of the Acquisitions, the TWE-A/N Transaction, the Asset
Sale Transactions and the 1995 Debt Refinancing reference is made to the
Company's Current Report on Form 8-K dated May 30, 1995.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for the Company is set forth below
for the periods indicated. For periods in which earnings before fixed charges
were insufficient to cover fixed charges, the amount of coverage deficiency (in
millions), instead of the ratio, is disclosed. The historical ratios of earnings
to fixed charges for all periods after 1992 reflect the deconsolidation of the
Entertainment Group, principally TWE, effective January 1, 1993. The historical
ratios of earnings to fixed charges for 1992 and periods prior to such date have
not been changed; however, a ratio of earnings to fixed charges for 1992
retroactively reflecting the deconsolidation is presented as supplementary
information under the column heading 'restated' to facilitate comparative
analysis.
The historical ratio of earnings to fixed charges for 1993 reflects the
issuance of $6.1 billion of long-term debt and the use of $500 million of cash
and equivalents in 1993 for the exchange or redemption of preferred stock having
an aggregate liquidation preference of $6.4 billion. The historical ratio of
4
<PAGE>
earnings to fixed charges for 1992 reflects the capitalization of TWE on June
30, 1992 and associated refinancings, and the acquisition of the 18.7% minority
interest in American Television and Communications Corporation as of June 30,
1992, using the purchase method of accounting for business combinations.
The pro forma coverage deficiencies for the three months ended March 31,
1995 and the year ended December 31, 1994 give effect to the Acquisitions,
TWE-A/N Transaction, 1995 Debt Refinancing and Asset Sale Transactions as if
such transactions had occurred at the beginning of such periods. Such pro forma
information should be read in conjunction with the pro forma consolidated
condensed financial statements contained in the Company's Current Report on Form
8-K dated May 30, 1995 and incorporated herein by reference. Such pro forma
amounts are presented for informational purposes only and are not necessarily
indicative of the actual ratio or coverage deficiency that would have occurred
if such transactions had been consummated as of the dates indicated, nor are
they necessarily indicative of future results.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEARS ENDED DECEMBER 31,
- ------------------------ -------------------------------------------------------------------------------------------------
PRO FORMA HISTORICAL PRO FORMA HISTORICAL HISTORICAL RESTATED HISTORICAL HISTORICAL HISTORICAL
- --------- ---------- --------- ---------- ---------- -------- ---------- ---------- ----------
1995 1995 1994 1994 1993 1992 1992 1991 1990
- --------- ---------- --------- ---------- ---------- -------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (18) 1.0x $(73) 1.1x 1.1x 1.4x 1.4x 1.1x $(101)
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
were calculated by adding pretax income, interest expense, previously
capitalized interest amortized to expense, the portion of rents representative
of an interest factor, the Company's proportionate share of such items for its
partially-owned subsidiaries and 50%-owned companies, and undistributed losses
of less-than-50%-owned companies. Fixed charges consist of interest expense,
interest capitalized, the portion of rents representative of an interest factor
and the Company's proportionate share of such items for its partially-owned
subsidiaries and 50%-owned companies. Pro forma and historical fixed charges for
the three months ended March 31, 1995 and the year ended December 31, 1994
include noncash interest expense of $57 million and $219 million, respectively,
relating to the Company's Redeemable Reset Notes due 2002 and its Liquid Yield
Option Notes due 2012 and 2013.
USE OF PROCEEDS
Except as otherwise set forth in the Prospectus Supplement, the net
proceeds to the Company from the sale of Offered Securities will be used to
repurchase, redeem or otherwise repay indebtedness of the Company. Additional
information on the use of net proceeds from the sale of any particular Offered
Securities will be set forth in the Prospectus Supplement relating to such
Offered Securities.
DESCRIPTION OF THE DEBT SECURITIES
GENERAL
The following description of the terms of the Debt Securities sets forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of any Debt Securities
and the extent, if any, to which such general provisions will not apply to such
Debt Securities will be described in the Prospectus Supplement relating to such
Debt Securities.
The Debt Securities will be issued from time to time in series under an
Indenture dated as of January 15, 1993 (the 'Indenture'), between the Company
and Chemical Bank (the 'Trustee'), as Trustee. The statements set forth below
are brief summaries of certain provisions contained in the Indenture, which
summaries do not purport to be complete and are qualified in their entirety by
reference to the Indenture, a copy of which is an exhibit to the Registration
Statement of which this Prospectus is a part. Numerical references in
parentheses below are to articles or sections of the Indenture. Wherever defined
terms are used but not defined herein, such terms shall have the meanings
assigned to them in the Indenture, it being intended that such referenced
articles and sections of the Indenture and such defined terms shall be
incorporated herein by reference.
5
<PAGE>
The Indenture does not limit the amount of Debt Securities which may be
issued thereunder and Debt Securities may be issued thereunder up to the
aggregate principal amount which may be authorized from time to time by the
Company. Any such limit applicable to a particular series will be specified in
the Prospectus Supplement relating to that series.
Reference is made to the Prospectus Supplement for the following terms of
each series of Debt Securities in respect to which this Prospectus is being
delivered: (i) the designation, date, aggregate principal amount, currency or
currency unit of payment and authorized denominations of such Debt Securities;
(ii) initial public offering price or prices of the Convertible Debt Securities
or Debt Securities with Common Stock Warrants and any discounts or commissions
paid to underwriters, dealers or agents in connection therewith; (iii) the date
or dates on which such Debt Securities will mature (which may be fixed or
extendible); (iv) the rate or rates (or manner of calculation thereof), if any,
per annum at which such Debt Securities will bear interest; (v) the dates, if
any, on which such interest will be payable; (vi) the terms, if any, on which
such Debt Securities may be converted into or exchanged for Common Stock or
other securities or property, any specific terms relating to the adjustment
thereof and the period during which such Debt Securities may be so converted or
exchanged; (vii) the terms of any mandatory or optional redemption (including
any sinking, purchase or analogous fund) and any purchase at the option of
holders (including whether any such purchase may be paid in cash, Common Stock
or other securities or property); (viii) whether such Debt Securities are to be
issued in the form of Global Securities and, if so, the identity of the
Depository with respect to such Global Securities; and (ix) any other specific
terms.
Unless otherwise set forth in the Prospectus Supplement, interest on
outstanding Debt Securities will be paid to holders of record on the date which
is 15 days prior to the date such interest is to be paid. Unless otherwise
specified in the Prospectus Supplement, Debt Securities will be issued in fully
registered form only and in denominations of $1,000 and integral multiples
thereof. Unless otherwise specified in the Prospectus Supplement, the principal
amount of the Debt Securities will be payable at the corporate trust office of
the Trustee in New York, New York. The Debt Securities may be presented for
transfer or exchange at such office unless otherwise specified in the Prospectus
Supplement, subject to the limitations provided in the Indenture, without any
service charge, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charges payable in connection therewith. (Section
305)
RANKING
Unless otherwise specified in a Prospectus Supplement for a particular
series of Debt Securities, all series of Debt Securities will be senior
indebtedness of the Company and will be direct, unsecured obligations of the
Company, ranking on a parity with all other unsecured and unsubordinated
indebtedness of the Company. The Company is a holding company and the Debt
Securities will be effectively subordinated to all existing and future
liabilities, including indebtedness, of the Company's subsidiaries. See 'Holding
Company Structure'.
COVENANTS OF THE COMPANY
LIMITATION ON MERGER, CONSOLIDATION AND CERTAIN SALES OF ASSETS. The
Indenture provides that the Company will not merge or consolidate with or into,
or convey or transfer its property substantially as an entirety to, any person
unless (a) the successor is organized and existing under the laws of the United
States or any State or the District of Columbia, (b) the successor assumes the
Company's obligations under the Indenture and the Debt Securities issued under
the Indenture on the same terms and conditions and (c) immediately after giving
effect to such transaction, there is no default under the Indenture. (Section
801)
Any additional covenants pertaining to a series of Debt Securities will be
set forth in a Prospectus Supplement relating to such series of Debt Securities.
Other than as may be specified in a Prospectus Supplement relating to a series
of Debt Securities, the Indenture as it pertains to Convertible Debt Securities
or Debt Securities with Common Stock Warrants does not contain any covenants or
other
6
<PAGE>
provisions designed to afford holders of the Debt Securities protection in the
event of a recapitalization or highly leveraged transaction involving the
Company.
DEFEASANCE
The Indenture provides that the Company, at its option, (a) will be
Discharged from any and all obligations in respect of any series of Debt
Securities (except in each case for certain obligations to register the transfer
or exchange of Debt Securities, replace stolen, lost or mutilated Debt
Securities, maintain paying agencies and hold moneys for payment in trust) or
(b) need not comply with the covenant described above under 'Limitation on
Merger, Consolidation and Certain Sales of Assets' and any other restrictive
covenant described in a Prospectus Supplement relating to such series of Debt
Securities, and certain Events of Default (other than those arising out of the
failure to pay interest or principal on the Debt Securities of a particular
series and certain events of bankruptcy, insolvency and reorganization) will no
longer constitute Events of Default with respect to such series of Debt
Securities, in each case if the Company deposits with the applicable Trustee, in
trust, money or the equivalent in securities of the government which issued the
currency in which the Debt Securities are denominated or government agencies
backed by the full faith and credit of such government, or a combination
thereof, which through the payment of interest thereon and principal thereof in
accordance with their terms will provide money in an amount sufficient to pay
all the principal (including any mandatory sinking fund payments) of, and
interest on, such series on the dates such payments are due in accordance with
the terms of such series. To exercise any such option, the Company is required,
among other things, to deliver to the Trustee an opinion of counsel to the
effect that (i) the deposit and related defeasance would not cause the holders
of such series to recognize income, gain or loss for Federal income tax purposes
and, in the case of a Discharge pursuant to clause (a), accompanied by a ruling
to such effect received from or published by the United States Internal Revenue
Service and (ii) the creation of the defeasance trust will not violate the
Investment Company Act of 1940. In addition, the Company is required to deliver
to the Trustee an Officers' Certificate stating that such deposit was not made
by the Company with the intent of preferring the holders over other creditors of
the Company or with the intent of defeating, hindering, delaying or defrauding
creditors of the Company or others. (Article 4)
EVENTS OF DEFAULT, NOTICE AND WAIVER
The Indenture provides that, if an Event of Default specified therein with
respect to any series of Debt Securities issued thereunder shall have happened
and be continuing, either the Trustee thereunder or the holders of 25% in
aggregate principal amount of the outstanding Debt Securities of such series (or
25% in aggregate principal amount of all outstanding Debt Securities under the
Indenture, in the case of certain Events of Default affecting all series of Debt
Securities under the Indenture) may declare the principal of all the Debt
Securities of such series to be due and payable. (Section 502)
Events of Default in respect of any series are defined in the Indenture as
being: (i) default for 30 days in payment of any interest installment with
respect to such series; (ii) default in payment of principal of, or premium, if
any, on, or any sinking fund or analogous payment with respect to, Debt
Securities of such series when due at their stated maturity, by declaration or
acceleration, when called for redemption or otherwise; (iii) default for 90 days
after notice to the Company by the Trustee thereunder or by holders of 25% in
aggregate principal amount of the outstanding Debt Securities of such series in
the performance of any covenant in such Indenture with respect to Debt
Securities of such series; (iv) failure to pay when due, upon final maturity or
upon acceleration, the principal amount of any indebtedness for money borrowed
of the Company in excess of $50 million, if such indebtedness is not discharged,
or such acceleration annulled, within 60 days after written notice; and (v)
certain events of bankruptcy, insolvency and reorganization with respect to the
Company or any subsidiary which is organized under the laws of the United States
or any political subdivision thereof in which the Company's loans, advances or
other investments in such subsidiary exceed 10% of the Company's consolidated
net worth. (Section 501 and Form of the Senior Security)
7
<PAGE>
Any additions, deletions or other changes to the Events of Default which
will be applicable to a series of Debt Securities will be described in the
Prospectus Supplement relating to such series of Debt Securities.
The Indenture provides that the Trustee thereunder will, within 90 days
after the occurrence of a default with respect to the Debt Securities of any
series, give to the holders of the Debt Securities of such series notice of all
uncured and unwaived defaults known to it; provided that, except in the case of
default in the payment of principal of, premium, if any, or interest, if any, on
any of the Debt Securities of such series, the Trustee thereunder will be
protected in withholding such notice if it in good faith determines that the
withholding of such notice is in the interests of the holders of the Debt
Securities of such series. The term 'default' for the purpose of this provision
means the happening of any of the Events of Default specified above, except that
any grace period or notice requirement is eliminated. (Section 602)
The Indenture contains provisions entitling the Trustee, subject to the
duty of the Trustee during an Event of Default to act with the required standard
of care, to be indemnified by the holders of the Debt Securities before
proceeding to exercise any right or power under the Indenture at the request of
holders of the Debt Securities. (Section 603)
The Indenture provides that the holders of a majority in aggregate
principal amount of the outstanding Debt Securities of any series may direct the
time, method and place of conducting proceedings for remedies available to the
Trustee or exercising any trust or power conferred on the Trustee in respect of
such series. (Section 512)
The Indenture includes a covenant that the Company will file annually with
the Trustee a certificate of no default or specifying any default that exists.
(Section 1004)
In certain cases, the holders of a majority in principal amount of the
outstanding Debt Securities of any series may on behalf of the holders of all
Debt Securities of such series waive any past default or Event of Default with
respect to the Debt Securities of such series or compliance with certain
provisions of the Indenture, except, among other things, a default not
theretofore cured in payment of the principal of, or premium, if any, or
interest, if any, on any of the Debt Securities of such series. (Sections 513
and 1009)
MODIFICATION OF THE INDENTURE
The Company and the Trustee may, without the consent of the holders of the
Debt Securities, enter into indentures supplemental to the Indenture for, among
others, one or more of the following purposes: (i) to evidence the succession of
another Person to the Company, and the assumption by such successor of the
Company's obligations under the Indenture and the Securities of any series; (ii)
to add covenants of the Company, or surrender any rights of the Company, for the
benefit of the holders of Securities of any or all series; (iii) to cure any
ambiguity, or correct any inconsistency in the Indenture; (iv) to evidence and
provide for the acceptance of any successor Trustee with respect to one or more
series of Securities or to facilitate the administration of the trusts
thereunder by one or more trustees in accordance with the Indenture; (v) to
establish the form or terms of any series of securities; and (vi) to provide any
additional Events of Default. (Section 901)
The Indenture contains provisions permitting the Company and the Trustee
thereunder, with the consent of the holders of a majority in principal amount of
the outstanding Debt Securities of each series to be affected, to execute
supplemental indentures adding any provisions to or changing or eliminating any
of the provisions of the Indenture or modifying the rights of the holders of the
Debt Securities of such series to be affected, except that no such supplemental
indenture may, without the consent of the holders of affected Debt Securities,
among other things, change the fixed maturity of any Debt Securities, or reduce
the principal amount thereof, or reduce the rate or extend the time of payment
of interest thereon, or reduce the number of shares of Common Stock to be
delivered by the Company in respect of a conversion of Convertible Debt
Securities or reduce the aforesaid percentage of Debt Securities of any series
the consent of the holders of which is required for any such supplemental
indenture. (Section 902)
8
<PAGE>
THE TRUSTEE
Chemical Bank is the Trustee under the Indenture. The Trustee is a
depository for funds and performs other services for, and transacts other
banking business with, the Company and its subsidiaries in the normal course of
business.
GOVERNING LAW
The Indenture will be governed by, and construed in accordance with, the
laws of the State of New York.
DESCRIPTION OF COMMON STOCK WARRANTS
The Company may issue Common Stock Warrants as part of a unit comprising
Debt Securities with Common Stock Warrants that may be detachable or
nondetachable from such Debt Securities. Each series of Common Stock Warrants
will be issued under a separate warrant agreement (a 'Warrant Agreement') to be
entered into between the Company and a bank or trust company, as warrant agent
(the 'Warrant Agent'), all as set forth in the Prospectus Supplement relating to
the particular issue of Common Stock Warrants. The Warrant Agent will act solely
as an agent for the Company in connection with the Warrant Certificates and will
not assume any obligation or relationship of agency or trust for or with any
holders of Warrant Certificates or beneficial owners of Common Stock Warrants. A
copy of the form of Warrant Agreement, including the form of Warrant Certificate
representing the Common Stock Warrants, is filed as an exhibit to the
Registration Statement of which this Prospectus is a part. The following summary
of certain provisions of the Common Stock Warrants does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
all of the provisions of the Warrant Agreement.
Reference is made to the Prospectus Supplement relating to the particular
issue of Debt Securities with Common Stock Warrants for the terms of such Common
Stock Warrants, including, where applicable: (i) the number of shares of Common
Stock purchasable upon the exercise of such Common Stock Warrants, the price at
which such number of shares of Common Stock may be purchased upon such exercise
(or the method by which it can be determined) and any provisions for the
adjustment of such price and number of shares; (ii) the period or periods during
which or the date or dates on which the Common Stock Warrants shall be
exercisable; (iii) United States Federal income tax consequences applicable to
such Common Stock Warrants; and (iv) any other terms of such Common Stock
Warrants. Common Stock Warrants will be issued in registered form only, unless
otherwise specified in the applicable Prospectus Supplement.
Each Common Stock Warrant will entitle the holder thereof to purchase such
number of shares of Common Stock at such exercise price as shall be set forth
in, or calculable as described in, the applicable Prospectus Supplement, which
exercise price may be subject to adjustment upon the occurrence of certain
events as set forth in such Prospectus Supplement. After the close of business
on the expiration date specified in such Prospectus Supplement, unexercised
Common Stock Warrants will become void. The place or places where, and the
manner in which, Common Stock Warrants may be exercised shall be specified in
the Prospectus Supplement relating to such Common Stock Warrants. Prior to the
exercise of any Common Stock Warrants, holders of such Common Stock Warrants
will not have any of the rights of holders of Common Stock, including the right
to receive payments of dividends, if any, on the Common Stock purchasable upon
such exercise or to exercise any applicable right to vote.
DESCRIPTION OF COMMON STOCK
The following general summary of the Common Stock is qualified in its
entirety by reference to the Company's Restated Certificate of Incorporation, as
amended from time to time (the 'Certificate of Incorporation'), which is an
exhibit to the Registration Statement of which this Prospectus is a part.
The Company is authorized by the Certificate of Incorporation to issue
750,000,000 shares of Common Stock and 250,000,000 shares of Preferred Stock. On
April 30, 1995, 379,863,970 shares of Common Stock (excluding approximately 45.7
million shares of Common Stock held as treasury shares
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by the Company, as to which approximately 43.7 million were held by wholly owned
subsidiaries of the Company) were issued and outstanding and approximately 148
million shares were reserved for issuance upon exercise of outstanding stock
options and warrants and conversion of outstanding convertible securities. Also,
as of April 30, 1995, 962,068 shares of the Company's Series B Preferred Stock
were issued and outstanding. Upon consummation of the Acquisitions, the Company
will have outstanding approximately 5.1 million additional shares of Common
Stock and approximately 3.3 million shares of Series C Preferred Stock, 11
million shares of Series D Preferred Stock, 3.25 million shares of Series E
Preferred Stock and 3.25 million shares of Series F Preferred Stock. The Series
C, D, E, and F Preferred Stock to be outstanding after consummation of the
Acquisitions will be convertible in the aggregate into approximately 43.2
million shares of Common Stock. Each such series of Preferred Stock has a
liquidation value of $100 per share and will receive, for a period of five years
with respect to the Series C and E Preferred Stock and for a period of four
years with respect to the Series D and F Preferred Stock, an annual dividend per
share equal to the greater of $3.75 and an amount equal to the dividends paid on
the Common Stock into which such share of Preferred Stock may be converted. The
Series C, D, E and F Preferred Stock will be entitled to vote with the Common
Stock on matters submitted to a vote of stockholders and will have two votes per
share in any such matter. For a discussion of the series C, D, E and F Preferred
Stock reference is made to the Company's Current Report on Form 8-K dated May
30, 1995.
The holders of the Common Stock are entitled to receive dividends when, as
and if declared by the Board of Directors of the Company out of funds legally
available therefor, subject to the rights of any preferred stock at the time
outstanding.
The holders of the Common Stock are entitled to one vote for each share on
all matters voted on by stockholders, including elections of directors. The
holders of the Common Stock do not have any cumulative voting, conversion,
redemption or preemptive rights. In the event of dissolution, liquidation or
winding up of the Company, holders of the Common Stock will be entitled to share
ratably in any assets remaining after the satisfaction in full of the prior
rights of creditors, including holders of the Company's indebtedness, and the
aggregate liquidation preference of any preferred stock then outstanding.
Pursuant to the Company's Certificate of Incorporation, provided that full
dividends on all outstanding shares of any series of the Company's preferred
stock have been paid, outstanding shares of Common Stock may be redeemed by
action of the Company's Board of Directors to the extent necessary to prevent
the loss of any governmental license or franchise, the holding of which is
conditioned upon stockholders possessing prescribed qualifications.
The Common Stock is listed on the New York Stock Exchange, the Pacific
Stock Exchange and the International Stock Exchange of the United Kingdom and
the Republic of Ireland, Ltd. Chemical Bank is the transfer agent and registrar
for the Common Stock.
Each share of Common Stock of the Company has associated with it one right
(a 'Right') to purchase one one-thousandth of a share of Series A Participating
Cumulative Preferred Stock (or in certain cases other securities) of the
Company. The terms of the Rights are set forth in a Rights Agreement (the
'Rights Agreement') dated as of January 20, 1994, between the Company and
Chemical Bank, as Rights Agent. Prior to the occurrence of certain events,
including a determination by the Board of Directors following the public
disclosure of a tender or exchange offer for shares of Common Stock representing
15% or more of the outstanding shares of the Company's Common Stock, the Rights
will not be represented by separate certificates and will be transferable with
and only with the associated Common Stock.
Pursuant to the Rights Agreement, in the event that, among other things, a
third party acquires beneficial ownership of 15% or more of the outstanding
shares of the Company's Common Stock, each holder of Rights will be entitled to
purchase securities of the Company having a market value equal to twice the
purchase price thereof. In certain circumstances, including an acquisition
involving 50% or more of the assets or earning power of the Company, the Rights
will become exercisable to purchase common shares of the acquiror having a
market value equal to twice the purchase price thereof. In addition, Rights held
by an Acquiring Person (as defined in the Rights Agreement) will become null and
void, nontransferable and nonexercisable.
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The Rights Agreement provides that the Rights will not become exercisable
in the event of a Qualifying Offer. A 'Qualifying Offer' is defined as an
all-cash tender offer for all outstanding shares of the Company's Common Stock
that meets certain fairness requirements, including the provision of a written
opinion of a nationally recognized investment banking firm stating that the
price to be paid to stockholders pursuant to the offer is fair from a financial
point of view.
Subject to certain limitations, the Company may redeem the Rights in whole,
but not in part, at a price of $.01 per Right. The Rights will expire on January
20, 2004, unless earlier redeemed by the Company.
The foregoing summary of certain terms of the Rights does not purport to be
complete and is subject to, and is qualified in its entirety by reference to,
the Rights Agreement, a copy of which is on file with the Commission.
GLOBAL SECURITIES
The Offered Securities (other than Common Stock) of a series may be issued
in whole or in part in the form of one or more Global Securities that will be
deposited with, or on behalf of, a depository (the 'Depository') identified in
the Prospectus Supplement relating to such series. Global Securities may be
issued only in fully registered form and in either temporary or permanent form.
Unless and until it is exchanged in whole or in part for the individual Offered
Securities represented thereby, a Global Security may not be transferred except
as a whole by the Depository for such Global Security to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by the Depository or any nominee of such
Depository to a successor Depository or any nominee of such successor.
The specific terms of the depository arrangement with respect to a series
of Offered Securities will be described in the Prospectus Supplement relating to
such series. Unless otherwise specified in the Prospectus Supplement, the
Company anticipates that the following provisions will apply to depository
arrangements.
Upon the issuance of a Global Security, the Depository for such Global
Security or its nominee will credit on its book-entry registration and transfer
system the respective principal amounts of the individual Offered Securities
represented by such Global Security to the accounts of persons that have
accounts with such Depository ('Participants'). Such accounts shall be
designated by the underwriters, dealers or agents with respect to such Offered
Securities or by the Company if such Offered Securities are offered and sold
directly by the Company. Ownership of beneficial interests in a Global Security
will be limited to Participants or persons that may hold interests through
Participants. Ownership of beneficial interests in such Global Security will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by the applicable Depository or its nominee (with respect to
interests of Participants) and records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such limits and such laws may impair the ability
to own, pledge or transfer beneficial interests in a Global Security.
So long as the Depository for a Global Security or its nominee is the
registered owner of such Global Security, such Depository or such nominee, as
the case may be, will be considered the sole owner or holder of the Offered
Securities represented by such Global Security for all purposes under the
Indenture or applicable Warrant Agreement. Except as provided below, owners of
beneficial interests in a Global Security will not be entitled to have any of
the individual Offered Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of any such Offered Securities of such series in definitive
form and will not be considered the owners or holders thereof under the
Indenture or applicable Warrant Agreement. Accordingly, each person owning a
beneficial interest in a Global Security must rely on the procedures of the
Depository for such Global Security and, if such person is not a Participant, on
the procedures of the Participant through which such person owns its interest,
to exercise any rights of a holder under the Indenture or applicable Warrant
Agreement. The Company understands that under existing industry practices, if
the Company requests any action of holders or if an owner of a beneficial
interest in a Global Security desires to give or take any action which a holder
is entitled to give or take under the Indenture or applicable Warrant Agreement,
the Depository for such Global Security would authorize
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the Participants holding the relevant beneficial interests to give or take such
action, and such Participants would authorize beneficial owners owning through
such Participants to give or take such action or would otherwise act upon the
instructions of beneficial owners holding through them.
Payments of principal of and any premium and any interest on individual
Offered Securities represented by a Global Security registered in the name of a
Depository or its nominee will be made to the Depository or its nominee, as the
case may be, as the registered owner of the Global Security representing such
Offered Securities. None of the Company, the Trustee, the Warrant Agent, any
paying agent or the registrar for such Offered Securities will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global
Security for such Offered Securities or for maintaining, supervising or
reviewing any records relating to such beneficial ownership interests.
The Company expects that the Depository for a series of Offered Securities
or its nominee, upon receipt of any payment of principal, premium or interest in
respect of a permanent Global Security representing any of such Offered
Securities, immediately will credit Participants' accounts with payments in
amounts proportionate to their respective beneficial interests in the principal
amount of such Global Security for such Offered Securities as shown on the
records of such Depository or its nominee. The Company also expects that
payments by Participants to owners of beneficial interests in such Global
Security held through such Participants will be governed by standing
instructions and customary practices, as is now the case with securities held
for the accounts of customers in bearer form or registered in 'street name'.
Such payments will be the responsibility of such Participants.
If a Depository for a series of Offered Securities is at any time
unwilling, unable or ineligible to continue as depository and a successor
depository is not appointed by the Company within 90 days, the Company will
issue individual Offered Securities of such series in exchange for the Global
Security representing such series of Offered Securities. In addition, the
Company may, at any time and in its sole discretion, subject to any limitations
described in the Prospectus Supplement relating to such Offered Securities,
determine not to have any Offered Securities of such series represented by one
or more Global Securities and, in such event, will issue individual Offered
Securities of such series in exchange for the Global Security or Securities
representing such series of Offered Securities. Individual Offered Securities of
such series so issued will be issued in denominations, unless otherwise
specified by the Company, of $1,000 and integral multiples thereof. Any Offered
Securities issued in definitive form in exchange for a Global Security will be
registered in such name or names as the Depository shall instruct the Trustee or
relevant Warrant Agent. It is expected that such instructions will be based upon
directions received by the Depository from Participants with respect to
ownership of beneficial interests in such Global Security.
HOLDING COMPANY STRUCTURE
The Company is a holding company and its assets consist primarily of
investments in its subsidiaries. A substantial portion of the consolidated
liabilities of the Company have been incurred by its subsidiaries. TWE, which is
not consolidated with the Company for financial reporting purposes, also has
substantial indebtedness and other liabilities. The Company's rights and the
rights of its creditors, including holders of Debt Securities, to participate in
the distribution of assets of any person in which the Company owns an equity
interest (including any subsidiary and TWE) upon such person's liquidation or
reorganization will be subject to prior claims of such person's creditors,
including trade creditors, except to the extent that the Company may itself be a
creditor with recognized claims against such person (in which case the claims of
the Company would still be subject to the prior claims of any secured creditor
of such person and of any holder of indebtedness of such person that is senior
to that held by the Company). Accordingly, the holders of Debt Securities may be
deemed to be effectively subordinated to such claims.
The Company's ability to service its indebtedness, including the Debt
Securities, and to pay dividends on its preferred stock and the Common Stock is
dependent primarily upon the earnings of its subsidiaries and TWE and the
distribution or other payment of such earnings to the Company. The TWE Agreement
of Limited Partnership and the bank credit facilities of TWE and certain
subsidiaries of the Company limit distributions and other transfers of funds to
the Company. Generally, distributions by TWE, other than tax distributions, are
subject to restricted payments limitations and availability
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under certain financial ratios applicable to TWE contained in its bank credit
facilities. As a result of the expected acquisition by subsidiaries of the
Company of certain cable systems, certain subsidiaries of the Company expect to
have outstanding indebtedness and bank credit facilities that will contain
limitations on the ability of such subsidiaries to make distributions or other
payments to the Company.
Additional information concerning the indebtedness of the Company and its
subsidiaries will be set forth in the Prospectus Supplement.
PLAN OF DISTRIBUTION
The Company may sell the Offered Securities to one or more underwriters or
dealers for public offering and sale by them or may sell the Offered Securities
to investors directly or through agents. The Prospectus Supplement with respect
to the Offered Securities offered thereby describes the terms of the offering of
such Offered Securities and the method of distribution of the Offered Securities
offered thereby and identifies any firms acting as underwriters, dealers or
agents in connection therewith.
The Offered Securities may be distributed from time to time in one or more
transactions at a fixed price or prices (which may be changed) or at prices
determined as specified in the Prospectus Supplement. In connection with the
sale of the Offered Securities, underwriters, dealers or agents may be deemed to
have received compensation from the Company in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of the
Offered Securities for whom they may act as agent. Underwriters may sell the
Offered Securities to or through dealers, and such dealers may receive
compensation in the form of discounts, concessions or commissions from the
underwriters or commissions from the purchasers for whom they may act as agent.
Certain of the underwriters, dealers or agents who participate in the
distribution of the Offered Securities may engage in other transactions with,
and perform other services for, the Company in the ordinary course of business.
Any underwriting compensation paid by the Company to underwriters or agents
in connection with the offering of the Offered Securities, and any discounts,
concessions or commissions allowed by underwriters to dealers, are set forth in
the Prospectus Supplement. Underwriters, dealers and agents participating in the
distribution of the Offered Securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
the resale of the Offered Securities may be deemed to be underwriting discounts
and commissions under the Securities Act. Underwriters and their controlling
persons, dealers and agents may be entitled, under agreements entered into with
the Company, to indemnification against and contribution toward certain civil
liabilities, including liabilities under the Securities Act.
LEGAL OPINIONS
Certain legal matters in connection with the Offered Securities will be
passed upon for the Company by Cravath, Swaine & Moore, Worldwide Plaza, 825
Eighth Avenue, New York, New York and for the Underwriters, if any, named in a
Prospectus Supplement, by Shearman & Sterling, 599 Lexington Avenue, New York,
New York.
EXPERTS
The consolidated financial statements of the Company and TWE appearing in
the Company's Annual Report on Form 10-K for the year ended December 31, 1994,
and the combined financial statements of the Time Warner Service Partnerships
incorporated by reference therein, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon set forth therein
and incorporated herein by reference. Such financial statements have been
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of Summit Communications Group, Inc. as of
December 31, 1993 and 1994, and for the three years ended December 31, 1994,
incorporated by reference in this Prospectus, have been audited by Deloitte &
Touche LLP, independent auditors, as set forth in their report thereon and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report and upon the authority of such
firm as experts in accounting and auditing.
The financial statements of Newhouse Broadcasting Cable Division of
Newhouse Broadcasting Corporation and subsidiaries as of July 31, 1993 and 1994,
and for the three years ended July 31, 1994,
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incorporated by reference in this Prospectus, have been audited by Paul Scherer
& Company LLP, independent auditors, as set forth in their report thereon and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report and upon the authority of such
firm as experts in accounting and auditing.
The financial statements of Vision Cable Division of Vision Cable
Communications, Inc. and subsidiaries as of December 31, 1993 and 1994, and for
the three years ended December 31, 1994, incorporated by reference in this
Prospectus, have been audited by Paul Scherer & Company LLP, independent
auditors, as set forth in their report thereon and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report and upon the authority of such firm as experts in
accounting and auditing.
The financial statements of Cablevision Industries Corporation as of
December 31, 1993 and 1994, and for the three years ended December 31, 1994,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent auditors, as set forth in their report thereon and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report and upon the authority of such
firm as experts in accounting and auditing.
The financial statements of Cablevision Industries Limited Partnership as
of December 31, 1993 and 1994, and for the three years ended December 31, 1994,
incorporated by reference in this Prospectus, have been audited by Arthur
Andersen LLP, independent auditors, as set forth in their report thereon and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report and upon the authority of such
firm as experts in accounting and auditing.
The financial statements of KBLCOM Incorporated as of December 31, 1993 and
1994, and for the three years ended December 31, 1994, incorporated by reference
in this Prospectus, have been audited by Deloitte & Touche LLP, independent
auditors, as set forth in their report thereon and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report and upon the authority of such firm as experts in
accounting and auditing.
The financial statements of Paragon Communications as of December 31, 1993
and 1994, and for the three years ended December 31, 1994, incorporated by
reference in this Prospectus, have been audited by Price Waterhouse LLP,
independent accountants, as set forth in their report thereon and incorporated
herein by reference. Such financial statements are incorporated herein by
reference in reliance upon such report and upon the authority of such firm as
experts in accounting and auditing.
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The following information is being disclosed pursuant to Florida law and is
accurate as of the date
of this Prospectus: A subsidiary of the Company pays royalties to Artex, S.A., a
corporation organized under the laws of Cuba, in connection with the
distribution in the United States of certain Cuban musical recordings. Current
information concerning this matter may be obtained from the State of Florida
Department of Banking & Finance, The Capital, Tallahassee, Florida 32399-0350,
904-488-9805.
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No person is authorized to give any information or to make any
representations other than those contained in this Prospectus or any
accompanying Prospectus Supplement in connection with the offer made by this
Prospectus or any Prospectus Supplement, and, if given or made, such other
information or representations must not be relied upon as having been authorized
by the Company or by any underwriter, dealer or agent. This Prospectus and any
Prospectus Supplement do not constitute an offer to sell or a solicitation of an
offer to buy any securities other than those to which they relate. Neither the
delivery of this Prospectus and any accompanying Prospectus Supplement nor any
sale of or offer to sell the Offered Securities offered hereby shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company or that the information herein is correct as of any time
after the date hereof. This Prospectus and any accompanying Prospectus
Supplement do not constitute an offer to sell or a solicitation of an offer to
buy any of the Offered Securities offered hereby in any state to any person to
whom it is unlawful to make such offer or solicitation in such state.
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STATEMENT OF DIFFERENCES
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The registered trademark symbol shall be expressed as ......... 'r'
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