SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
March 22, 1996
TIME WARNER INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-8637 13-1388520
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
75 ROCKEFELLER PLAZA, NEW YORK, NY 10019
(Address of principal executive offices) (zip code)
(212) 484-8000
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
Time Warner Inc. ("Time Warner") and Time Warner Entertainment Company,
L.P. ("TWE"), in which Time Warner and certain of its wholly-owned subsidiaries
own a 74.49% residual equity interest and certain priority capital interests
senior thereto, have recently entered into, or intend to enter into, the
transactions described below:
(i) on February 1, 1996, Time Warner redeemed the remaining $1.2
billion principal amount of 8.75% Convertible Subordinated Debentures due 2015
(the "8.75% Convertible Debentures") for $1.28 billion, including redemption
premiums and accrued interest thereon (the "February 1996 Redemption"). In
addition, in September 1995, Time Warner redeemed approximately $1 billion
principal amount of 8.75% Convertible Debentures for $1.06 billion, including
redemption premiums and accrued interest thereon (the "September 1995
Redemption"). The September 1995 Redemption was financed with (1) approximately
$500 million of proceeds raised from the issuance of 7.75% ten-year notes (the
"7.75% Notes") in June 1995, (2) $363 million of net proceeds raised in August
1995 from the issuance of approximately 12.1 million Time Warner-obligated
mandatorily redeemable preferred securities of a subsidiary ("PERCS") that are
redeemable for cash or, at Time Warner's option, approximately 12.1 million
shares of Hasbro, Inc. common stock owned by Time Warner and that pay cash
distributions at a rate of 4% per annum and (3) available cash and equivalents
(the "1995 Convertible Debt Refinancing"). The February 1996 Redemption was
financed with (1) $557 million of net proceeds raised in December 1995 from the
issuance of Time Warner-obligated mandatorily redeemable preferred securities
of a subsidiary ("Preferred Trust Securities") that pay cash distributions at a
rate of 8-7/8% per annum and (2) proceeds raised from the $750 million issuance
of debentures in January 1996, consisting of (i) $400 million principal amount
of 6.85% thirty-year debentures, which are putable by the holders thereof in
year seven, (ii) $200 million principal amount of 8.3% forty-year discount
debentures, which do not pay cash interest for the first twenty years, (iii)
$166 million principal amount of 7.48% twelve-year debentures and (iv) $150
million principal amount of 8.05% twenty-year debentures (collectively referred
to herein as the "January 1996 Debentures" and when taken together with the
February 1996 Redemption, the "1996 Convertible Debt Refinancing"). The 1995
Convertible Debt Refinancing and the 1996 Convertible Debt Refinancing are
collectively referred to herein as the "Convertible Debt Refinancings";
(ii) on January 4, 1996 (as previously reported on the Form 8-K of
Time Warner dated January 4, 1996), Time Warner completed its acquisition of
Cablevision Industries Corporation ("CVI") and certain affiliated entities of
CVI (the "Gerry Companies"). CVI and the Gerry Companies owned cable television
systems serving approximately 1.3 million subscribers;
(iii) on October 2, 1995 and September 5, 1995 (as previously
reported on the Form 8-K of Time Warner dated August 31, 1995), Toshiba
Corporation ("Toshiba") and ITOCHU Corporation ("ITOCHU"), respectively, each
exchanged (1) their 5.61% pro rata equity interests in TWE, (2) their 6.25%
residual equity interests in TW Service Holding I, L.P. and TW Service Holding
II, L.P., each of which owned certain assets related to the TWE businesses (the
"Time Warner Service Partnerships") and (3) their options to increase their
interests in TWE under certain circumstances for, in the case of ITOCHU, 8
million shares of two series of new convertible preferred stock ("Series G
Preferred Stock" and "Series H Preferred Stock") of Time Warner and, in the
case of Toshiba, 7 million shares of new convertible preferred stock of Time
Warner ("Series I Preferred Stock") and $10 million in cash (the
"ITOCHU/Toshiba Transaction"). As a result of the ITOCHU/Toshiba Transaction,
Time Warner and certain of its wholly-owned subsidiaries collectively now own
74.49% of the pro rata priority capital and residual equity interests in TWE
and 100% of the senior and junior priority capital interests in TWE. A
subsidiary of U S WEST, Inc. owns the remaining 25.51% of the pro rata priority
capital and residual equity limited partnership interests in TWE;
(iv) on September 22, 1995 (as previously reported on the Form 8-K
of Time Warner dated September 22, 1995), Time Warner announced that it had
entered into an Agreement and Plan of Merger (the "Merger Agreement") which, as
amended, provides for the merger of each of Time Warner and Turner Broadcasting
System, Inc. ("T.S.") with separate subsidiaries of a holding company ("New
Time Warner"), which will combine, for financial reporting purposes,
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the
consolidated net assets and operating results of Time Warner and TBS (the "TBS
Transaction"). In connection therewith, the issued and outstanding shares of
each class of the capital stock of Time Warner will be converted into shares of
a substantially identical class of capital stock of New Time Warner. In
addition, Time Warner has agreed to enter into certain agreements and related
transactions with certain shareholders of TBS, including R. E. Turner and
Liberty Media Corporation ("LMC"), an affiliate of Tele-Communications, Inc.
The Merger Agreement and certain related agreements provide for the issuance by
New Time Warner of approximately 172.8 million shares of common stock, par
value $.01 per share (such holding company stock, or, prior to the formation of
such holding company, the existing Time Warner common stock, being referred to
herein as the "Common Stock") (including 50.6 million shares of a special class
of non-redeemable Common Stock to be issued to LMC, the "LMC Class Common
Stock"), in exchange for the outstanding TBS capital stock, the issuance of
approximately 13 million stock options to replace all outstanding TBS options
and the assumption of TBS' indebtedness (which approximated $2.5 billion at
December 31, 1995). As part of the TBS Transaction, LMC will receive an
additional five million shares of LMC Class Common Stock pursuant to a separate
option agreement (the "Option Agreement"), which, together with the 50.6
million shares received pursuant to the TBS Transaction, will be placed in a
voting trust or, in certain circumstances, exchanged for shares of another
special class of non-voting, non-redeemable common stock of New Time Warner;
(v) on August 15, 1995, Time Warner redeemed all of its $1.8 billion
principal amount of outstanding Redeemable Reset Notes due August 15, 2002 (the
"Reset Notes") in exchange for new securities (the "Reset Notes Refinancing"),
consisting of approximately $454 million aggregate principal amount of Floating
Rate Notes due August 15, 2000, approximately $272 million aggregate principal
amount of 7.975% Notes due August 15, 2004, approximately $545 million
aggregate principal amount of 8.11% Debentures due August 15, 2006, and
approximately $545 million aggregate principal amount of 8.18% Debentures due
August 15, 2007 (collectively, the "Exchange Securities");
(vi) on July 6, 1995 (as previously reported on the Form 8-K of Time
Warner dated July 6, 1995), Time Warner acquired KBLCOM Incorporated ("KBLCOM")
which owned cable television systems serving approximately 700,000 subscribers
and a 50% interest in Paragon Communications ("Paragon"), which owned cable
television systems serving an additional 972,000 subscribers. The other 50%
interest in Paragon was already owned by TWE;
(vii) on June 30, 1995, a wholly-owned subsidiary of Time Warner
("TWI Cable"), TWE and the TWE-Advance/Newhouse Partnership (as defined below)
executed a five-year revolving credit facility (the "New Credit Agreement").
The New Credit Agreement enabled such entities to refinance certain
indebtedness assumed in the Acquisitions (as defined below), to refinance TWE's
indebtedness under a pre-existing bank credit agreement and to finance the
ongoing working capital, capital expenditure and other corporate needs of each
borrower (the "Bank Refinancing"). The Convertible Debt Refinancings, the Reset
Notes Refinancing and the Bank Refinancing are referred to herein as the "Debt
Refinancings";
(viii) on June 23, 1995, (A) Six Flags Entertainment Corporation
("Six Flags") was recapitalized, (B) TWE sold 51% of its interest in Six Flags
to an investment group led by Boston Ventures and (C) TWE granted certain
licenses to Six Flags (collectively, the "Six Flags Transaction");
(ix) on May 2, 1995, Time Warner acquired Summit Communications
Group, Inc. ("Summit"), which owned cable television systems serving
approximately 162,000 subscribers (the "Summit Acquisition");
(x) on April 1, 1995 (as previously reported on the Form 8-K of Time
Warner dated April 1, 1995), TWE closed its transaction (the "TWE-A/N
Transaction") with the Advance/Newhouse Partnership ("Advance/Newhouse"),
pursuant to which TWE and Advance/Newhouse formed the Time Warner
Entertainment-Advance/Newhouse Partnership, a New York general partnership (the
"TWE-Advance/Newhouse Partnership"), and to which Advance/Newhouse and TWE
contributed cable television systems (or interests therein) serving
approximately 4.5 million subscribers, as well as certain foreign cable
investments and certain programming investments that included
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Advance/Newhouse's 10% interest in Primestar Partners, L.P. TWE owns a two-
thirds equity interest in the TWE-Advance/Newhouse Partnership and is the
managing partner and Advance/Newhouse owns a one-third equity interest; and
(xi) during 1995, TWE agreed to sell, or announced its intention to
sell, 17 of its unclustered cable television systems serving approximately
180,000 subscribers, of which certain of the transactions closed during 1995
and the remaining transactions are expected to close in 1996 (the "Unclustered
Cable Transactions").
The Unclustered Cable Transactions and the Six Flags Transaction are
referred to herein as the "Asset Sale Transactions"; the Summit Acquisition,
KBLCOM Acquisition and CVI Acquisition are referred to herein as the
"Acquisitions"; the Acquisitions and the TWE-A/N Transaction are referred to
herein as the "Cable Transactions" and the TBS Transaction, the ITOCHU/Toshiba
Transaction, the Asset Sale Transactions, the Cable Transactions and the Debt
Refinancings are referred to herein as the "Transactions".
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following pro forma consolidated condensed balance sheets of Time
Warner and the Time Warner Entertainment Group (the "Entertainment Group"),
principally consisting of TWE, at December 31, 1995 give effect to the
Unclustered Cable Transactions and, with respect to the balance sheet of Time
Warner only, also give effect to the 1996 Convertible Debt Refinancing, the TBS
Transaction and the CVI Acquisition, in each case as if such transactions
occurred at such date. The Summit Acquisition, the KBLCOM Acquisition, the Bank
Refinancing, the Reset Notes Refinancing, the 1995 Convertible Debt
Refinancing, the Six Flags Transaction, the TWE-A/N Transaction and the
ITOCHU/Toshiba Transaction are already reflected in the respective historical
balance sheets of Time Warner and the Entertainment Group as of December 31,
1995. The following pro forma consolidated condensed statements of operations
of Time Warner and the Entertainment Group for the year ended December 31, 1995
give effect to the Asset Sale Transactions, the TWE-A/N Transaction and the
Debt Refinancings and, with respect to the statement of operations of Time
Warner only, also give effect to the TBS Transaction, the ITOCHU/Toshiba
Transaction and the Acquisitions, in each case as if the transactions occurred
at the beginning of such period. The pro forma consolidated condensed financial
statements should be read in conjunction with the historical financial
statements of Time Warner and TWE, including the notes thereto, which are
contained in the Time Warner Annual Report on Form 10-K for the year ended
December 31, 1995, as well as the historical financial statements of (i) Vision
Cable Division of Vision Cable Communications Inc. and Subsidiaries and
Newhouse Broadcasting Cable Division of Newhouse Broadcasting Corporation and
Subsidiaries (which entities contributed substantially all of their assets to
Advance/Newhouse prior to the closing of the TWE-A/N Transaction), (ii) CVI,
(iii) KBLCOM, (iv) Summit and (v) TBS.
The pro forma consolidated condensed financial statements have been
derived from the historical financial statements of the respective entities as
of and for the year ended December 31, 1995, except in the case of (1) the
Newhouse Broadcasting Cable Division of Newhouse Broadcasting Corporation and
Subsidiaries, which entities have different fiscal years and were contributed
to the TWE-Advance/Newhouse Partnership on April 1, 1995; consequently, such
pro forma financial statements have been derived from the unaudited combined
financial statements of such entities for the three months ended January 31,
1995, (2) the Vision Cable Division of Vision Cable Communications Inc. and
Subsidiaries which were contributed to the TWE-Advance/Newhouse Partnership on
April 1, 1995 and consequently, such pro forma financial statements have been
derived from the unaudited combined financial statements of such entities for
the three months ended March 31, 1995 (which financial statements, in the case
of (1) and (2) have been previously filed in connection with Time Warner's
Current Report on Form 8-K dated May 30, 1995), (3) Summit, which was acquired
on May 2, 1995 and consequently, such pro forma financial statements have been
derived from the unaudited consolidated financial statements for such entity
for the four months ended May 2, 1995 and (4) KBLCOM, which was acquired on
July 6, 1995 and consequently, such pro forma financial statements have been
derived from the unaudited consolidated financial statements for such entity
for the six months ended June 30, 1995, which has been previously filed in
connection with Time Warner's Current Reports on Form 8-K dated August 14,
1995. Historical financial statements are incorporated herein by reference with
respect to the financial statements of TBS and CVI from their respective Annual
Reports on Form 10-K for the year ended December 31, 1995.
The pro forma consolidated condensed financial statements are presented
for informational purposes only and are not necessarily indicative of the
financial position or operating results that would have occurred if the
Transactions had been consummated as of the dates indicated, nor are they
necessarily indicative of future financial conditions or operating results.
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TBS TRANSACTION
Pro forma adjustments for the TBS Transaction reflect (1) the issuance of
approximately 172.8 million shares of Common Stock, including 50.6 million
shares of LMC Class Common Stock to be issued to LMC, in exchange for the
outstanding TBS capital stock, (2) the issuance of an additional 5 million
shares of LMC Class Common Stock to be received by LMC in connection with the
Option Agreement, (3) the issuance of approximately 13 million stock options to
replace all outstanding TBS options and (4) the assumption or incurrence of
approximately $2.5 billion of indebtedness, including $264 million of
convertible debt securities. The convertible debt securities may be converted
at the option of the holders into an additional 7.4 million shares of TBS Class
B Common Stock prior to the consummation of the Merger. Should such conversion
occur, (1) Time Warner's pro forma shareholders' equity at December 31, 1995
would be increased by approximately $225 million to reflect the issuance of
approximately 5.6 million additional shares of Common Stock, (2) Time Warner's
pro forma indebtedness at December 31, 1995 would be reduced by $264 million
and (3) Time Warner's pro forma loss before extraordinary item and loss before
extraordinary item per common share for the year ended December 31, 1995 would
be reduced by $11 million and $.03 per common share, respectively.
The TBS Transaction will be accounted for by the purchase method of
accounting for business combinations and, accordingly, the estimated cost to
acquire such assets will be allocated to the underlying net assets in
proportion to their respective fair values. The valuations and other studies
which will provide the basis for such an allocation have not been completed. As
more fully described in the notes to the pro forma consolidated condensed
financial statements, a preliminary allocation of the excess of cost over the
book value of the net assets to be acquired has been made to goodwill.
The TBS Transaction is subject to customary closing conditions, including
the approval of the shareholders of TBS and of Time Warner, all necessary
approvals of the Federal Communications Commission and appropriate antitrust
approvals. There can be no assurance that all these approvals can be obtained
or, in the case of governmental approvals, if obtained, will not be conditioned
upon changes to the terms of the Merger Agreement or the related agreements.
ITOCHU/TOSHIBA TRANSACTION
Pro forma adjustments for the ITOCHU/Toshiba Transaction reflect the
exchange by each of ITOCHU and Toshiba of (1) its 5.61% pro rata priority
capital and residual equity interests in TWE, (2) its 6.25% residual equity
interests in the Time Warner Service Partnerships and (3) its option to
increase its interests in TWE under certain circumstances, for an aggregate 15
million shares of convertible preferred stock (Series G Preferred Stock, Series
H Preferred Stock and Series I Preferred Stock) and $10 million in cash. The
ITOCHU/Toshiba Transaction was accounted for by the purchase method of
accounting for business combinations and, accordingly, the cost to acquire each
of ITOCHU and Toshiba's respective interests in TWE and the Time Warner Service
Partnerships has been allocated to Time Warner's investment in the
Entertainment Group.
Each share of the Series G Preferred Stock, Series H Preferred Stock and
Series I Preferred Stock issued in connection with the ITOCHU/Toshiba
Transaction (i) is convertible, immediately with respect to the Series G
Preferred Stock and Series I Preferred Stock and after five years (or earlier
under certain circumstances) with respect to the Series H Preferred Stock, into
an aggregate 31.2 million shares of Common Stock at a conversion price of $48
per share (based on its $100 per share liquidation value) and (ii) receives for
four years 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 each share
may be converted. To the extent that any of the Series G Preferred Stock,
Series H Preferred Stock or Series I Preferred Stock remains outstanding at the
end of the period in which the minimum $3.75 per share dividend is to be paid,
the holders thereafter will receive dividends equal to the dividends paid on
shares of Common Stock multiplied by the number of shares of Common Stock into
which their shares of such series of preferred stock are convertible.
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CABLE TRANSACTIONS
TWE consolidates the TWE-Advance/Newhouse Partnership and the one-third
equity interest owned by Advance/Newhouse is reflected in the Entertainment
Group's historical financial statements as minority interest. In accordance
with the partnership agreement for the TWE-Advance/Newhouse Partnership,
Advance/Newhouse may require TWE to purchase its equity interest for fair
market value at specified intervals following the death of both of its
principal shareholders. Following the third anniversary of the closing of the
TWE-A/N Transaction, either partner can initiate a dissolution in which TWE
would receive two-thirds and Advance/Newhouse would receive one-third of the
partnership's net assets. The assets contributed by TWE and Advance/Newhouse to
the TWE-Advance/Newhouse Partnership were recorded at their predecessor's
historical cost. No gain was recognized by TWE upon the capitalization of the
TWE-Advance/Newhouse Partnership.
As a result of the Acquisitions, Time Warner has acquired cable television
systems that served approximately 2.2 million subscribers and a 50% interest in
Paragon, which owned cable television systems serving an additional 972,000
subscribers (the other 50% interest is already owned by TWE). As described
below, in order to consummate the Acquisitions, Time Warner issued
approximately 5.5 million shares of Common Stock and approximately $2.1 billion
aggregate liquidation value of new series of convertible preferred stock, and
assumed or incurred, directly or indirectly, approximately $3.3 billion of
debt.
In connection with the Summit Acquisition, Time Warner issued
approximately 1.6 million shares of Common Stock and approximately 3.3 million
shares of a new series of convertible preferred stock (the "Series C Preferred
Stock") and assumed approximately $140 million of indebtedness. The Series C
Preferred Stock (i) is convertible into 6.8 million shares of Common Stock at a
conversion price of $48 per share (based on its $100 per share liquidation
value) and (ii) receives for five years 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 a share of Series C Preferred Stock may be converted.
In connection with the KBLCOM Acquisition, Time Warner issued one million
shares of Common Stock and 11 million shares of a new series of convertible
preferred stock (the "Series D Preferred Stock") and assumed or incurred
approximately $1.2 billion of indebtedness, including $102 million of Time
Warner's allocable share of Paragon's indebtedness. The Series D Preferred
Stock (i) is convertible into 22.9 million shares of Common Stock at a
conversion price of $48 per share (based on its $100 per share liquidation
value) and (ii) receives for four years 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 a share of Series D Preferred Stock may be converted.
In connection with the CVI Acquisition, Time Warner issued approximately
2.9 million shares of Common Stock, approximately 3.3 million shares of a new
series of convertible preferred stock (the "Series E Preferred Stock") and
approximately 3.2 million shares of another new series of convertible preferred
stock (the "Series F Preferred Stock") and assumed or incurred approximately $2
billion of indebtedness. The Series E Preferred Stock and Series F Preferred
Stock (i) are convertible into an aggregate of 13.5 million shares of Common
Stock at a conversion price of $48 per share (based on its $100 per share
liquidation value) and (ii) receive, for a period of five years with respect to
the Series E Preferred Stock and a period of four years with respect to the
Series 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
a share of Series E Preferred Stock or Series F Preferred Stock may be
converted.
To the extent that any of the Series C Preferred Stock, Series D Preferred
Stock, Series E Preferred Stock or Series F Preferred Stock remains outstanding
at the end of the period in which the minimum $3.75 per share dividend is to be
paid, the holders thereafter will receive dividends equal to the dividends paid
on shares of Common Stock multiplied by the number of shares into which their
shares of such series of preferred stock are convertible.
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The Acquisitions have been accounted for by the purchase method of
accounting for business combinations and, accordingly, the estimated cost to
acquire such assets has been allocated to the underlying net assets in
proportion to their respective fair values. The valuations and other studies
which will provide the basis for such an allocation have not been completed. As
more fully described in the notes to the pro forma consolidated condensed
financial statements, a preliminary allocation of the excess of cost over the
book value of the net assets acquired or to be acquired has been made for pro
forma purposes principally to investments and cable television franchises in
proportion to their estimated fair values.
In connection with the Cable Transactions, TWE entered into management
services agreements pursuant to which TWE is responsible for the management and
operations of the cable television systems owned by Time Warner and the TWE-
Advance/Newhouse Partnership, other than the cable television systems located
within the 14-state telephone service area of U S WEST, Inc. The pro forma
consolidated condensed statements of operations of Time Warner and the
Entertainment Group each reflect annual management fees to be paid by Time
Warner and the TWE-Advance/Newhouse Partnership to TWE, based on an allocation,
which management believes to be reasonable, of the corporate expenses of the
cable division of TWE in proportion to the respective number of cable
subscribers of Time Warner and the TWE-Advance/Newhouse Partnership to be
managed by TWE's cable division as a percentage of the aggregate number of
subscribers of all cable television systems to be managed by TWE's cable
division. As a result of TWE's management of the Time Warner and the TWE-
Advance/Newhouse Partnership-owned cable television systems, the pro forma
consolidated condensed statements of operations of Time Warner also reflect
certain reductions in corporate expenses of the acquired entities relating to
the closing of certain corporate and regional facilities and the termination of
related personnel as a direct result of the integration of the acquired
operations into Time Warner's and TWE's operating structure. Time Warner and
TWE expect to realize certain additional cost reductions as a result of other
cost-saving initiatives; however, such additional cost savings have not been
reflected in the pro forma consolidated condensed statements of operations of
Time Warner due to the preliminary nature of these initiatives at this time.
DEBT REFINANCINGS
The New Credit Agreement permits borrowings in an aggregate amount of up
to $8.3 billion. Borrowings are limited to $4 billion in the case of TWI Cable,
$5 billion in the case of the TWE-Advance/Newhouse Partnership and $8.3 billion
in the case of TWE, subject in each case to certain limitations and
adjustments. Such borrowings bear interest at specific rates for each of the
three borrowers, generally equal to LIBOR plus a margin initially ranging from
50 to 87.5 basis points, which margin will vary based on the credit rating or
financial leverage of the applicable borrower.
Pro forma adjustments for the Debt Refinancings reflect aggregate proceeds
received of approximately $7.304 billion, consisting of (1) borrowings of
$5.134 billion in the aggregate under the New Credit Agreement, (2)
approximately $500 million of proceeds received from the issuance of the 7.75%
Notes, (3) $363 million of net proceeds received from the issuance of the PERCS
(4% yield), (4) $557 million of net proceeds received from the issuance of the
Preferred Trust Securities (8-7/8% yield) and (5) approximately $750 million in
proceeds received from the issuance of the January 1996 Debentures, which have
a weighted average interest rate of 7.3%. Such proceeds, together with
approximately $171 million of available cash and equivalents, have been used:
(i) to repay or redeem (a) $1.184 billion of indebtedness assumed in the CVI
Acquisition (plus redemption premiums thereon of $16 million), (b) $1.086
billion of indebtedness assumed or incurred in the KBLCOM Acquisition (plus
redemption premiums and accrued interest thereon of $19 million) and (c) $204
million of Paragon indebtedness, funded equally by Time Warner and TWE, (ii) to
repay $2.575 billion of indebtedness of TWE under a pre-existing bank credit
agreement, (iii) to redeem approximately $2.226 billion principal amount of the
8.75% Convertible Debentures, plus redemption premiums and accrued interest
thereon of $115 million and (iv) to pay for $50 million of financing costs. In
addition to such $7.304 billion of refinancings, $289 million was borrowed
under the New Credit Agreement, consisting of $211 million to consummate the
CVI Acquisition and $78 million to pay for transaction costs. Pro forma
adjustments for the 1995 Debt Refinancings also reflect the noncash redemption
of $1.8 billion principal amount of outstanding Reset Notes (8.7% yield) in
exchange
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for an equal amount of Exchange Securities at a weighted average
interest rate of 7.9% in the year ended December 31, 1995. Based on the average
LIBOR rates in effect during the year ended December 31, 1995, LIBOR has been
assumed to be 6%, and accordingly, the pro forma consolidated condensed
statements of operations reflect interest on borrowings under the New Credit
Agreement at estimated rates of (i) 6.875% per annum for TWI Cable and
(ii) 6.5% per annum for each of TWE and the TWE-Advance/Newhouse Partnership.
Each 12.5 basis point increase in the pro forma interest rate applicable to the
aggregate $5.423 billion of borrowings under the New Credit Agreement would
have the approximate effect of increasing Time Warner's annual interest expense
and net loss by $3 million and $4 million, respectively, and in the case of
borrowings by TWE and the TWE-Advance/Newhouse Partnership only, of increasing
TWE's annual interest expense and decreasing its net income by $3 million each.
The New Credit Agreement contains 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.
ASSET SALE TRANSACTIONS
The Asset Sale Transactions reflect the disposition by TWE on June 23,
1995 of 51% of its interest in Six Flags, the payment by Six Flags of certain
intercompany indebtedness and licensing fees to TWE in connection therewith,
and the sale and planned sale of certain unclustered cable television systems
for aggregate gross proceeds of approximately $1.18 billion. TWE has
deconsolidated Six Flags effective as of June 23, 1995 and accounts for its
remaining 49% interest in Six Flags under the equity method of accounting. As a
result of these transactions, TWE expects a cumulative debt reduction of
approximately $1.045 billion, of which approximately $875 million is already
reflected in TWE's historical balance sheet at December 31, 1995. TWE expects
to realize aggregate income of approximately $375 million as a result of the
Asset Sale Transactions, of which a portion of such income was deferred by TWE
principally as a result of its guarantee of certain third-party, zero-coupon
indebtedness of Six Flags due in 1999. Income to be realized on the Asset Sale
Transactions that have not closed as of December 31, 1995 has not been
reflected in the pro forma consolidated condensed statements of operations of
the Entertainment Group included herein.
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TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBER 31, 1995
(MILLIONS, UNAUDITED)
<TABLE>
<CAPTION>
Subtotal
Time Warner TBS Transaction New
Time Warner CVI Debt TWE Pre-TBS TBS Pro Forma Time Warner
Historical Acquisition(a) Transactions(c) Historical Adjustments Pro Forma
Refinancings(b) Pro Forma (d) (e)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A S S E T S
Cash and equivalents $ 628 $22 $29 $78 $ 757 $ 85 $ - $ 842
Other current assets 3,092 65 - - 3,157 1,308 (156) 4,309
Total current assets 3,720 87 29 78 3,914 1,393 (156) 5,151
Cash and equivalents segregated for
redemption of long-term debt 557 - (557) - - - - -
Investments in and amounts due to
and from Entertainment Group 5,734 - - 85 5,819 - - 5,819
Other investments 2,389 41 - - 2,430 - (541) 1,889
Noncurrent inventories - - - - - 1,937 - 1,937
Property, plant and equipment 1,119 353 - - 1,472 358 - 1,830
Goodwill 5,213 688 - - 5,901 265 7,587 13,753
Cable television franchises 1,696 2,390 - - 4,086 - - 4,086
Other assets 1,704 - - - 1,704 442 - 2,146
Total assets $22,132 $3,559 $ (528) $ 163 $25,326 $4,395 $6,890 $36,611
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities $ 3,027 $ 128 $ (26) $ 78 $3,207 $ 840 $ - $ 4,047
Long-term debt 9,907 1,977 (476) - 11,408 2,480 66 13,954
Deferred income taxes 3,420 731 - (12) 4,139 422 - 4,561
Other long-term liabilities 1,162 30 - - 1,192 215 - 1,407
Company-obligated mandatorily
redeemable preferred
securities of subsidiary {(1)} 949 - - - 949 - - 949
Shareholders' equity:
Preferred stock 30 6 - - 36 - - 36
Common stock 388 3 - - 391 - (385) 6
Paid-in capital 5,422 684 - - 6,106 - 7,647 13,753
Unrealized gains on certain
marketable securities 116 - - - 116 - - 116
TBS shareholders' equity - - - - - 438 (438) -
Accumulated deficit (2,289) - (26) 97 (2,218) - - (2,218)
Total shareholders' equity 3,667 693 (26) 97 4,431 438 6,824 11,693
Total liabilities and
shareholders' equity $22,132 $3,559 $ (528) $ 163 $25,326 $4,395 $6,890 $36,611
</TABLE>
_______________
{1} Includes $374 million of preferred securities that are redeemable for cash
or, at Time Warner's option, approximately 12.1 million shares of Hasbro,
Inc. common stock owned by Time Warner.
See accompanying notes.
<PAGE>
Page 11
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(MILLIONS, UNAUDITED)
<TABLE>
<CAPTION>
Subtotal
Time Warner TBS Transaction New
Pre-TBS TBS Pro Forma Time Warner
Pro Forma Historical(f) Adjustments(g) Pro Forma
<S> <C> <C> <C> <C>
Revenues $8,742 $3,437 $ - $12,179
Cost of revenues* 5,236 2,166 235 7,637
Selling, general and administrative* 2,850 889 - 3,739
Operating expenses 8,086 3,055 235 11,376
Business segment operating income (loss) 656 382 (235) 803
Equity in pretax income of Entertainment Group 286 - - 286
Interest and other, net (1,037) (209) (3) (1,249)
Corporate expenses (74) - - (74)
Income (loss) before income taxes (169) 173 (238) (234)
Income tax (provision) benefit (86) (70) 24 (132)
Income (loss) before extraordinary item (255) 103 (214) (366)
Preferred dividend requirements (143) - - (143)
Income (loss) before extraordinary item applicable
to common shares $(398) $ 103 $(214) $(509)
Income (loss) before extraordinary item per $(1.02) $(.90)
common shares
Average common shares 387.7 565.5
_______________
* Includes depreciation and amortization expense of: $ 935 $ 189 $188 $1,312
</TABLE>
See accompanying notes.
<PAGE>
Page 12
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(MILLIONS, UNAUDITED)
<TABLE>
<CAPTION>
Subtotal
ITOCHU/ Time Warner
Time Warner Summit KBLCOM CVI Debt TWE Toshiba Pre-TBS
Historical Acquisition Acquisition Acquisition Refinancings Transaction Transaction Pro Forma
(h) (i) (j) (k) (l) (m)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues $8,067 $ 22 $ 139 $ 514 $ - $ - $ - $8,742
Cost of revenues* 4,682 15 110 429 - - - 5,236
Selling, general and
administrative* 2,688 7 49 106 - - - 2,850
Operating expenses 7,370 22 159 535 - - - 8,086
Business segment operating
income (loss) 697 - (20) (21) - - - 656
Equity in pretax income of
Entertainment Group 256 - - - 13 17 - 286
Interest and other, net (877) (5) (46) (136) 56 - (29) (1,037)
Corporate expenses (74) - - - - - - (74)
Income (loss) before
income taxes 2 (5) (66) (157) 69 17 (29) (169)
Income tax (provision)
benefit (126) 1 24 38 (28) (6) 11 (86)
Income (loss) before extra-
ordinary item (124) (4) (42) (119) 41 11 (18) (255)
Preferred dividend
requirements (52) (4) (21) (24) - - (42) (143)
Income (loss) before
extraordinary item applicable
to common shares $(176) $ (8) $ (63) $ (143) $ 41 $ 11 $ (60) $(398)
Income (loss) before extra-
ordinary item per
common share $(.46) $(.02) $(.17) $(.36) $ .11 $ .03 $ (.15) $(1.02)
Average common shares 383.8 .5 .5 2.9 - - - 387.7
_______________
* Includes depreciation and
amortization expense of: $ 559 $ 11 $ 84 $ 281 $ - $ - $ - $935
</TABLE>
See accompanying notes.
<PAGE>
Page 13
TIME WARNER INC.
NOTES TO THE TIME WARNER PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(a)Reflects the historical assets and liabilities of CVI and the Gerry
Companies as of December 31, 1995, including $1.684 billion of indebtedness
that will be assumed in the acquisition, as well as certain pro forma
adjustments directly related to the CVI Acquisition. The pro forma
adjustments reflect (1) total consideration paid by Time Warner valued at
$904 million, consisting of (i) the issuance by Time Warner of
2,905,884 shares of its common stock, 3.25 million shares of Series E
preferred stock and 3,226,792 shares of Series F preferred stock, valued at
an aggregate amount of $693 million and (ii) the incurrence of $211 million
of indebtedness to consummate the CVI Acquisition, (2) the incurrence of $66
million of additional indebtedness to pay for transaction costs and other
related liabilities, (3) the exclusion of approximately $200 million of net
assets of CVI and the Gerry Companies that have not been assumed by Time
Warner, including $238 million of pre-existing goodwill, (4) the allocation
of the excess of the purchase price over the book value of the net assets
acquired of $2.045 billion to cable television franchises in the amount of
$2.061 billion and to debt in the amount of $16 million, based on the
estimated fair value of such assets and liabilities, (5) an increase of $688
million in deferred income tax liabilities and goodwill, resulting from the
fact that the tax basis of certain of the acquired assets has not been
adjusted as a result of the CVI Acquisition and (6) the elimination of the
historical stockholders' equity of CVI and the Gerry Companies.
(b)Pro forma adjustments reflect (1) borrowings of $1.2 billion under the New
Credit Agreement which have been used to repay or redeem $1.184 billion of
indebtedness assumed in the CVI Acquisition, plus redemption premiums
thereon of $16 million, (2) the issuance of the January 1996 Debentures for
approximately $750 million of proceeds, (3) the use of $721 million of such
proceeds, together with $557 million of available cash and equivalents
related to the issuance of the Preferred Trust Securities, to redeem in
February 1996 $1.226 billion principal amount of 8.75% Convertible
Debentures and to pay $52 million of redemption premiums and accrued
interest thereon, (4) a decrease in shareholders' equity to reflect the $43
million of redemption premiums paid by Time Warner in connection with the
February 1996 Redemption, net of $17 million of related tax benefits and (5)
a $9 million decrease in current liabilities due to the accrued interest
paid by Time Warner in connection with such redemption.
(c)Pro forma adjustments reflect the effect on Time Warner's financial position
from TWE's Asset Sale Transactions as more fully described in the notes to
the Entertainment Group pro forma consolidated condensed financial
statements contained elsewhere herein. The effect on each of Time Warner's
and the Entertainment Group's financial position of the Six Flags
Transaction is already reflected in each company's historical balance sheet
as of December 31, 1995. Pro forma adjustments to record the Unclustered
Cable Transactions as of December 31, 1995 reflect (1) an increase in Time
Warner's investment in and amounts due to and from the Entertainment Group
and shareholders' equity of approximately $163 million with respect to the
aggregate income to be recorded by TWE on the sale of certain unclustered
cable systems which have not closed as of December 31, 1995, (2) a decrease
in shareholders' equity of $66 million with respect to income taxes provided
by Time Warner on such income, (3) a decrease in Time Warner's investment in
and amounts due to and from the Entertainment Group and an increase in cash
of $78 million with respect to the receipt from TWE of tax-related
distributions to reimburse Time Warner for the payment of income taxes on
its allocable share of the taxable income arising from the Unclustered Cable
Transactions in accordance with the terms of the TWE Partnership Agreement
and (4) an increase in current liabilities of $78 million with respect to
the previously-unrecorded, related current income tax payable due as a
result of the transactions, of which $12 million has been reclassified from
Time Warner's previously-provided deferred income tax liability.
(d)Reflects the historical financial position of TBS at December 31, 1995,
including $2.480 billion of long-term indebtedness that will be assumed
pursuant to the TBS Transaction.
<PAGE>
Page 14
(e)Pro forma adjustments to record the TBS Transaction reflect (1) a
reclassification in shareholders' equity from common stock to paid-in
capital to reflect the reduction in the par value of common stock from $1.00
per share to $.01 per share, (2) the February 1996 conversion by TBS of
approximately $29 million of its convertible subordinated debentures of a
wholly-owned subsidiary into TBS common stock representing approximately 1.2
million equivalent shares of Time Warner Common Stock (the "February 1996
Conversion"), (3) the issuance of (i) 172.8 million shares of Common Stock,
including 1.2 million shares related to the February 1996 Conversion and
50.6 million shares of LMC Class Common Stock to be received by LMC, in
exchange for the outstanding TBS capital stock, (ii) an additional 5 million
shares of LMC Class Common Stock to be received by LMC in connection with
the Option Agreement and (iii) approximately 13 million stock options to
replace all outstanding TBS stock options, valued at an aggregate of $7.262
billion for pro forma purposes based on a Common Stock price of $39.75 per
share, (4) the writeoff of approximately $265 million of pre-existing
goodwill of TBS and approximately $156 million of TBS inventory to conform
TBS' accounting policy with respect to the capitalization and amortization
of film exploitation costs to Time Warner's accounting policy, (5) the
incurrence of $95 million of additional indebtedness for the payment of
transaction costs and other related liabilities, (6) the allocation of the
excess of the purchase price over the book value of the net assets acquired
of $7.852 billion to goodwill and (7) the elimination of (i) Time Warner's
historical investment in TBS in the amount of $541 million and (ii) TBS'
historical stockholders' equity in the amount of $438 million.
(f)Reflects the historical operating results of TBS for the year ended December
31, 1995, including certain reclassifications to conform to Time Warner's
financial statement presentation.
(g)Pro forma adjustments to record the TBS Transaction for the year ended
December 31, 1995 reflect (1) the exclusion of $10 million of merger costs
directly related to the TBS Transaction, (2) an increase of $235 million in
cost of revenues consisting of (i) an $8 million reduction of TBS'
historical amortization of pre-existing goodwill, (ii) a $196 million
increase in amortization with respect to the excess cost to acquire TBS that
has been allocated to goodwill and amortized on a straight-line basis over a
forty-year period and (iii) a $47 million increase in the amortization of
capitalized film exploitation costs to conform TBS' accounting policy to
Time Warner's accounting policy (3) an increase of $5 million in interest
expense on the $95 million of additional indebtedness for the payment of
transaction costs and other related liabilities, (4) an increase of $8
million in interest and other, net due to the elimination of Time Warner's
historical equity accounting for its investment in TBS and (5) a decrease of
$24 million in income tax expense as a result of income tax benefits
provided at a 41% tax rate.
(h)Reflects the historical operating results of Summit for the four-month pre-
acquisition period ending May 2, 1995, as well as certain pro forma
adjustments directly related to the Summit Acquisition. The pro forma
adjustments reflect (1) the exclusion of an aggregate $15 million of net
income relating to (i) Summit's broadcasting operations that were sold by
Summit prior to the closing of the Summit Acquisition and (ii) reductions in
Summit's corporate expenses principally relating to the closure of Summit's
corporate facilities and the termination of related personnel as a direct
result of the integration of Summit's operations into Time Warner's and
TWE's operating structure, (2) an increase of $8 million in cost of revenues
with respect to the amortization of the excess cost to acquire Summit that
has been allocated to (i) cable television franchises in the amount of $372
million and amortized on a straight-line basis over a twenty-year period and
(ii) goodwill in the amount of $146 million and amortized on a straight-line
basis over a forty-year period, (3) an increase of $1 million in selling,
general and administrative expenses with respect to payments to be made to
TWE for its management of Summit's cable television systems, (4) a decrease
of $3 million in income tax expense as a result of income tax benefits
provided at a 41% tax rate on the additional amortization expense and
management fees to be paid to TWE and (5) an increase of $4 million in
preferred dividend requirements of the Series C Preferred Stock issued in
the Summit Acquisition.
(i)Reflects the historical operating results of KBLCOM for the six-month pre-
acquisition period ending July 6, 1995 as well as certain pro forma
adjustments directly related to the KBLCOM Acquisition. The pro forma
adjustments
<PAGE>
Page 15
reflect (1) the exclusion of an aggregate $19 million of net
losses relating to (i) interest costs on the portion of KBLCOM's
indebtedness that has not been assumed by Time Warner and (ii) reductions in
KBLCOM's corporate expenses principally relating to the closure of KBLCOM's
corporate and regional facilities and the termination of related personnel
as a direct result of the integration of KBLCOM's operations into Time
Warner's and TWE's operating structure, (2) an increase of $39 million in
cost of revenues consisting of a $7 million reduction of KBLCOM's historical
amortization of pre-existing goodwill and a $46 million increase in
amortization with respect to the excess cost to acquire KBLCOM that has been
allocated to (i) investments in the amount of $655 million and amortized on
a straight-line basis over a twenty-year period, (ii) cable television
franchises in the amount of $859 million and amortized on a straight-line
basis over a twenty-year period and (iii) goodwill in the amount of $586
million and amortized on a straight-line basis over a forty-year period, (3)
an increase of $4 million in selling, general and administrative expenses
with respect to payments to be made to TWE for its management of certain of
KBLCOM's cable television systems, (4) a decrease of $17 million in income
tax expense as a result of income tax benefits provided at a 41% tax rate on
the additional amortization expense and management fees to be paid to TWE
and (5) an increase of $21 million in preferred dividend requirements of the
Series D Preferred Stock issued in the KBLCOM Acquisition.
(j)Reflects the historical operating results of CVI and the Gerry Companies for
the year ended December 31, 1995, as well as certain pro forma adjustments
directly related to the CVI Acquisition. The pro forma adjustments reflect
(1) the exclusion of $97 million of net losses with respect to costs
directly related to the CVI Acquisition and reductions in the corporate
expenses of CVI and the Gerry Companies principally relating to the closing
of certain corporate and regional facilities and the termination of related
personnel as a direct result of the integration of the operations of CVI and
the Gerry Companies into Time Warner's and TWE's operating structure, (2) an
increase of $108 million in cost of revenues consisting of a $12 million
reduction of CVI's historical amortization of pre-existing goodwill and a
$120 million increase in amortization with respect to the excess cost to
acquire CVI and the Gerry Companies that has been allocated to (i) cable
television franchises and amortized on a straight-line basis over a twenty-
year period and (ii) goodwill and amortized on a straight-line basis over a
forty-year period, (3) an increase of $15 million in selling, general and
administrative expenses with respect to payments to be made to TWE for its
management of the cable television systems of CVI and the Gerry Companies,
(4) an increase of $19 million in interest expense on the $277 million of
borrowings under the New Credit Agreement, which were used to consummate the
CVI Acquisition and to pay for transaction costs and other related
liabilities, (5) a decrease of $57 million in income tax expense as a result
of income tax benefits provided at a 41% tax rate on the additional
amortization expense, interest expense and management fees to be paid to TWE
and (6) an increase of $24 million in preferred dividend requirements of the
Series E Preferred Stock and Series F Preferred Stock issued in the CVI
Acquisition.
(k)Pro forma adjustments to record the Debt Refinancings for the year ended
December 31, 1995 reflect savings in financing costs of $69 million from
(1) $5.134 billion of aggregate borrowings under the New Credit Agreement
which were used: (i) to repay or redeem $1.184 billion of indebtedness
assumed in the CVI Acquisition, plus redemption premiums thereon of $16
million, (ii) to refinance $1.086 billion of indebtedness assumed or
incurred in the KBLCOM Acquisition, plus redemption premiums and accrued
interest thereon of $19 million, (iii) to repay $204 million of Paragon
indebtedness, funded equally by Time Warner and TWE, (iv) to repay $2.575
billion of indebtedness of TWE under a pre-existing bank credit agreement
and (v) to pay for $50 million of financing costs, (2) the redemption of
$2.226 billion principal amount of 8.75% Convertible Debentures for an
aggregate redemption price of $2.341 billion, including redemption premiums
and accrued interest thereon of $115 million, using (i) proceeds from the
$750 million issuance of the January 1996 Debentures, (ii) $557 million of
net proceeds raised from the issuance of the Preferred Trust Securities in
December 1995, (iii) $363 million of net proceeds raised from the issuance
of the PERCS in August 1995, (iv) approximately $500 million of proceeds
raised from the issuance of the 7.75% Notes in June 1995 and (v)
approximately $171 million of available cash and equivalents and (3) the
<PAGE>
Page 16
August 1995 noncash redemption of $1.8 billion principal amount of
outstanding Reset Notes in exchange for an equal amount of Exchange
Securities, as set forth on the following page (in millions).
Except with respect to the refinancing of $1.184 billion of indebtedness
related to the CVI Acquisition and the 1996 Convertible Debt Refinancing,
neither of which had occurred as of December 31, 1995, all pro forma
adjustments to record the Debt Refinancings for the year ended December 31,
1995 reflect the incremental effect on Time Warner's operating results from
each refinancing that had closed during the period.
<PAGE>
Page 17
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
Equity in Pretax
Income of
Interest and Entertainment
Other, Net Group
<S> <C> <C>
Borrowings by TWI Cable, TWE and the
TWE-Advance/Newhouse Partnership in the amounts of
$1.218 billion, $2.702 billion, and $14 million, respectively,
under the New Credit Agreement, at estimated annual interest
rates of 6.875%, 6.5% and 6.5%, respectively, for the year ended
December 31, 1995 $ 42 $ 88
Pro forma borrowings by TWI Cable of $1.2 billion under the
New Credit Agreement to refinance CVI debt, at an estimated annual
interest rate of 6.875% for the year ended December 31, 1995 83 -
Pro forma issuance by Time Warner of $750 million of January 1996
Debentures in connection with the 1996 Convertible Debt Refinancing,
at a weighted average interest rate of 7.3% 55
Issuance by Time Warner of $575 million liquidation amount of
Preferred Trust Securities (8-7/8% yield) 47
Issuance by Time Warner of $500 million of 7.75% Notes
and approximately 12.1 million PERCS (4% yield) 28 -
Issuance by Time Warner of $1.8 billion of Exchange
Securities at a weighted average interest rate of 7.9%
for the year ended December 31, 1995 90 -
Repayment by TWE of $2.575 billion of indebtedness
under the pre-existing TWE bank credit agreement - (84)
Repayment by TWI Cable of $1.184 billion of indebtedness
assumed in the CVI Acquisition (87) -
Repayment by TWI Cable of $1.086 billion of indebtedness
assumed in the KBLCOM Acquisition (57) -
Repayment of $226 million of Paragon's indebtedness, of which
$102 million was funded by each of Time Warner and TWE, and the
remainder was funded by Paragon's available cash and equivalents - (9)
Redemption of $2.226 billion principal amount of
8.75% Convertible Debentures (169) -
Redemption of $1.8 billion of Time Warner's Reset Notes (8.7% yield) (93) -
Amortization of $29 million of deferred financing costs incurred by
Time Warner in connection with issuance of the PERCS and the
Preferred Trust Securities 4 -
Amortization of $11 million and $39 million of deferred financing
costs allocated to Time Warner and the Entertainment Group,
respectively, in connection with obtaining the New Credit
Agreement on a straight-line basis for a five-year period 1 4
Reduction of historical amortization of deferred financing costs
recorded with respect to the pre-existing TWE credit agreement - (12)
Net decrease in financing costs $(56) $(13)
</TABLE>
Income taxes of $28 million have been provided at a 41% tax
rate on the aggregate net reduction in financing costs.
<PAGE>
Page 18
(l)Pro forma adjustments for the year ended December 31, 1995 to record $17
million of increased income from Time Warner's equity in the pretax income
of the Entertainment Group reflect the aggregate effect on TWE's operating
results from (1) the TWE-A/N Transaction, (2) the fees to be earned by TWE
with respect to its management of certain of Time Warner's cable television
systems and (3) the Asset Sale Transactions, as more fully described in the
notes to the Entertainment Group pro forma consolidated condensed financial
statements contained elsewhere herein.
TWE's consolidation of Paragon, as more fully described in the notes to the
Entertainment Group pro forma consolidated condensed financial statements
contained elsewhere herein, has no pro forma effect on the net income of TWE
and, accordingly, the consolidation of Paragon has no effect on the pro
forma operating results of Time Warner.
Income taxes of $6 million have been provided at a 41% tax rate on the
aggregate increase in income from Time Warner's equity in the pretax income
of the Entertainment Group, adjusted for certain temporary differences.
(m)Pro forma adjustments to record the ITOCHU/Toshiba Transaction for year
ended December 31, 1995 reflect (1) an increase of $29 million in interest
and other, net, consisting of (i) an increase of $16 million with respect to
the amortization of the $417 million aggregate excess cost to acquire the
minority interests in TWE held by ITOCHU and Toshiba, which will be
amortized on a straight-line basis over a twenty-year period and (ii) an
increase of $13 million with respect to the elimination of historical
amortization related to Time Warner's excess interest in the net assets of
TWE over the net book value of its investment in TWE, which resulted from
the initial investments in TWE by ITOCHU and Toshiba, (2) a decrease of $11
million in income tax expense as a result of income tax benefits provided at
a 41% tax rate and (3) an increase of $42 million in preferred dividend
requirements of the preferred stock issued in the ITOCHU/Toshiba
Transaction.
<PAGE>
Page 19
TIME WARNER ENTERTAINMENT GROUP
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBER 31, 1995
(MILLIONS, UNAUDITED)
<TABLE>
<CAPTION>
ENTERTAINMENT ENTERTAINMENT
GROUP ASSET SALE GROUP
HISTORICAL TRANSACTIONS(A) PRO FORMA
<S> <C> <C> <C>
A S S E T S
Cash and equivalents $ 209 $ - $ 209
Other current assets 2,700 - 2,700
Total current assets 2,909 - 2,909
Noncurrent inventories 1,909 - 1,909
Loan receivable from Time Warner 400 - 400
Property, plant and equipment 5,208 (32) 5,176
Goodwill 4,119 - 4,119
Cable television franchises 3,360 (53) 3,307
Other assets 1,055 - 1,055
Total assets $18,960 $ (85) $18,875
LIABILITIES AND PARTNERS' CAPITAL
Total current liabilities $ 3,229 $ - $ 3,229
Long-term debt 6,137 (170) 5,967
Other long-term liabilities 866 - 866
Minority interests 726 - 726
Time Warner General Partners' senior priority capital 1,426 - 1,426
Partners' capital 6,576 85 6,661
Total liabilities and partners' capital $18,960 $ (85) $18,875
</TABLE>
See accompanying notes.
<PAGE>
Page 20
TIME WARNER ENTERTAINMENT GROUP
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(MILLIONS, UNAUDITED)
<TABLE>
<CAPTION>
ENTERTAINMENT CONSOLIDATION TWI-TWE ENTERTAINMENT
GROUP TWE-A/N OF DEBT MANAGEMENT ASSET SALE GROUP
HISTORICAL TRANSACTION(B) PARAGON(C) REFINANCINGS(D) FEES(E) TRANSACTIONS(F) PRO FORMA
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $9,629 $ 137 $ 179 $ - $ 20 $ (279) $9,686
Cost of revenues* 6,639 51 147 - - (209) 6,628
Selling, general and
administrative* 1,998 56 31 - - (21) 2,064
Operating expenses 8,637 107 178 - - (230) 8,692
Business segment
operating income (loss) 992 30 1 - 20 (49) 994
Interest and other, net (539) - (1) 13 - 43 (484)
Minority interest (133) (27) - - - - (160)
Corporate expenses (64) - - - - - (64)
Income (loss) before income taxes 256 3 - 13 20 (6) 286
Income tax (provision) benefit (86) - - - - 3 (83)
Income (loss) before extraordinary
item $ 170 $ 3 $ - $ 13 $ 20 $ (3) $ 203
_______________
* Includes depreciation and
amortization expense of: $1,060 $ 26 $ 36 $ - $ - $ (44) $1,078
</TABLE>
See accompanying notes.
<PAGE>
Page 21
TIME WARNER INC.
NOTES TO THE ENTERTAINMENT GROUP PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(a) Pro forma adjustments to record the Asset Sale Transactions as of
December 31, 1995 reflect (1) the receipt by TWE of approximately $248
million of aggregate gross proceeds with respect to the sale by TWE of
certain unclustered cable television systems which have not closed as of
December 31, 1995, (2) a reduction in debt of $170 million, resulting
from the use of the aggregate net proceeds received from the Unclustered
Cable Transactions, after related taxes, to repay indebtedness under the
New Credit Agreement, (3) a reduction in net assets with respect to the
cable television systems to be sold subsequent to December 31, 1995 and
(4) the payment of $78 million in tax-related distributions that will
reimburse Time Warner for the payment of income taxes on its allocable
share of the taxable income arising from the Unclustered Cable
Transactions in accordance with the terms of the TWE partnership
agreement. The effects of the Six Flags Transaction and the sale by TWE
of certain unclustered cable systems during 1995 are already reflected in
the historical balance sheet of the Entertainment Group as of December
31, 1995.
(b) Reflects the historical operating results of Advance/Newhouse for the
three months ended March 31, 1995 (and for the three months ended January
31, 1995 with respect to certain contributed businesses which have
different fiscal years), as well as certain pro forma adjustments
directly related thereto. The pro forma adjustments reflect (1) an
increase of $1 million in cost of revenues with respect to TWE's
amortization of transaction costs on a straight-line basis over a three-
year period and (2) an increase of $27 million in minority interest,
representing Advance/Newhouse's minority interest in the net income of
the TWE-Advance/Newhouse Partnership, including their one-third share of
$45 million of annual management fees to be paid by the partnership to
TWE.
(c) Pro forma adjustments reflect the consolidation of Paragon's operating
results as a result of TWE's control over the management of such entity
for the six month period prior to TWE's consolidation of Paragon
effective as of July 6, 1995, offset by Time Warner's minority share of
the net income of Paragon in the amount of $24 million.
(d) Pro forma adjustments to record the Debt Refinancings for the year ended
December 31, 1995 reflect lower interest costs of $13 million from (i)
$2.716 billion of aggregate borrowings under the New Credit Agreement,
which were used to refinance $2.677 billion of indebtedness (plus $39
million of related financing costs) and (ii) the repayment of $102
million of Paragon's indebtedness funded by Time Warner, as set forth on
the following page (in millions).
All pro forma adjustments to record the Debt Refinancings for the year
ended December 31, 1995 reflect the incremental effect on the
Entertainment Group's operating results from each refinancing that had
closed during the period.
<PAGE>
Page 22
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
Increase (Decrease)
<S> <C>
Borrowings by TWE and the TWE-Advance/Newhouse Partnership
in the amounts of $2.702 billion and $14 million, respectively, under
the New Credit Agreement, at estimated annual interest rates for each
borrower of 6.5% for the year ended December 31, 1995 $ 88
Repayment by TWE of $2.575 billion of indebtedness under the
pre-existing TWE bank credit agreement (84)
Repayment of $226 million of Paragon's indebtedness, of which $102
million was funded by each of TWE and Time Warner, and the remainder
was funded by Paragon's available cash and equivalents (9)
Amortization of an allocable $39 million of deferred financing
costs in connection with obtaining the New Credit
Agreement on a straight-line basis for a five-year period 4
Reduction of historical amortization of deferred financing costs
recorded with respect to the pre-existing TWE credit agreement (12)
Net decrease in interest costs $(13)
</TABLE>
(e)Pro forma adjustments for the year ended December 31, 1995 reflect fees to
be received from Time Warner in the amount of $20 million with respect to
TWE's management of certain of Time Warner's cable television systems.
(f)Pro forma adjustments to record a decrease of $3 million in net income from
the Asset Sale Transactions for the year ended December 31, 1995 reflect (1)
the deconsolidation of the operating results of Six Flags for the periods
prior to the consummation of the Six Flags Transaction in June 1995, (2) the
elimination of the operating results of the cable television systems sold or
to be sold and (3) a decrease in interest expense, representing interest
savings from the repayment by TWE of indebtedness under the New Credit
Agreement using the aggregate net proceeds received in these transactions.
TWE will realize aggregate income of approximately $375 million on these
transactions, of which a portion of such income has been deferred by TWE
principally as a result of its guarantee of third-party, zero-coupon
indebtedness of Six Flags due in 1999. Income to be realized on the
Unclustered Cable Transactions that have not closed as of December 31, 1995
has not been reflected in the pro forma consolidated condensed statements of
operations of the Entertainment Group included herein.
<PAGE>
Page 23
(b) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED:
(i) Newhouse Broadcasting Cable Division of Newhouse Broadcasting
Corporation and Subsidiaries (the documents listed in this paragraph (i)
being referred to as the "Financial Statements of Newhouse Broadcasting
Cable Division of Newhouse Broadcasting Corporation"):
(A) Unaudited Condensed Financial Statements as of
January 31, 1995 and for each of the six months ended January 31,
1994 and 1995; and
(B) Financial Statements as of July 31, 1993 and 1994 and for
each of the years ended July 31, 1992, 1993 and 1994, including the
report thereon of Ernst & Young LLP, independent auditors.
(ii) Vision Cable Division of Vision Cable Communications, Inc.
and Subsidiaries (the documents listed in this paragraph (ii) being
referred to as the "Financial Statements of Vision Cable Division of
Vision Cable Communications, Inc."):
(A) Unaudited Condensed Financial Statements as of March 31,
1995 and for each of the three months ended March 31, 1994 and
1995; and
(B) Financial Statements as of December 31, 1994 and for each
of the years ended December 31, 1993 and 1994, including the report
thereon of Ernst & Young LLP.
(iii) Cablevision Industries Corporation and Subsidiaries (the
documents listed in this paragraph (iii) being referred to as the
"Financial Statements of Cablevision Industries Corporation"):
(A) Consolidated Financial Statements as of and for the year
ended December 31, 1995, including the report thereon of Ernst &
Young LLP; and
(B) Consolidated Financial Statements as of December 31, 1994
and for each of the years ended December 31, 1993 and 1994,
including the report thereon of Arthur Andersen LLP.
(iv) Consolidated Financial Statements of Turner Broadcasting
System, Inc. as of December 31, 1994 and 1995 and for each of the years
ended December 31, 1993, 1994 and 1995, including the report thereon of
Price Waterhouse LLP (the "Financial Statements of Turner Broadcasting
System, Inc.").
(v) KBLCOM Incorporated (the documents listed in this
paragraph (v) being referred to as the "Financial Statements of KBLCOM
Incorporated"):
(A) Unaudited Consolidated Financial Statements as of June 30,
1995 and for each of the six months ended June 30, 1994 and 1995; and
(B) Consolidated Financial Statements as of December 31, 1993
and 1994 and for each of the years ended December 31, 1992, 1993
and 1994, including the report thereon of Deloitte & Touche LLP.
<PAGE>
Page 24
(c) PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS:
(i) Time Warner Inc.:
(A) Pro Forma Consolidated Condensed Balance Sheet as of
December 31, 1995;
(B) Pro Forma Consolidated Condensed Statement of Operations
for the year ended December 31, 1995; and
(C) Notes to Pro Forma Consolidated Condensed Financial
Statements.
(ii) Entertainment Group:
(A) Pro Forma Consolidated Condensed Balance Sheet as of
December 31, 1995;
(B) Pro Forma Consolidated Condensed Statement of Operations
for the year ended December 31, 1995; and
(C) Notes to Pro Forma Consolidated Condensed Financial
Statements.
(d) EXHIBITS:
(i) Exhibit 23(a): Consent of Ernst & Young LLP.
(ii) Exhibit 23(b): Consent of Arthur Andersen LLP.
(iii) Exhibit 23(c): Consent of Price Waterhouse LLP.
(iv) Exhibit 23(d): Consent of Deloitte & Touche LLP.
(v) Exhibit 99(a): Financial Statements of Newhouse Broadcasting
Cable Division of Newhouse Broadcasting Corporation (incorporated by
reference from Exhibit 99(b) of the Current Report on Form 8-K of Time
Warner Inc. dated May 30, 1995 and Exhibit 99(e) of the Current Report on
Form 8-K of Time Warner Inc. dated August 14, 1995).
(vi) Exhibit 99(b): Financial Statements of Vision Cable Division
of Vision Cable Communications, Inc. (incorporated by reference from
Exhibit 99(c) of the Current Report on Form 8-K of Time Warner Inc. dated
May 30, 1995 and Exhibit 99(d) of the Current Report on Form 8-K of Time
Warner Inc. dated August 14, 1995).
(vii) Exhibit 99(c): Financial Statements of Cablevision
Industries Corporation (incorporated by reference from pages 23 to 39 of
the Annual Report on Form 10-K for the year ended December 31, 1995 of
Cablevision Industries Corporation).
(viii) Exhibit 99(d): Financial Statements of Turner Broadcasting
System, Inc. (incorporated by reference from pages 31 to 53 of the Annual
Report to Shareholders incorporated by reference into the Annual
Report on Form 10-K for the year ended December 31, 1995 of Turner
Broadcasting System, Inc).
<PAGE>
Page 25
(ix) Exhibit 99(e): Financial Statements of KBLCOM Incorporated
(incorporated by reference from Exhibit 99(b) of the Current Report on
Form 8-K of Time Warner Inc. dated May 30, 1995 and Exhibit 99(c) of the
Current Report on Form 8-K of Time Warner Inc. dated August 14, 1995).
<PAGE>
Page 26
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of New York, State of
New York, on March 22, 1996.
TIME WARNER INC.
By: /S/ RICHARD J. BRESSLER
Name: Richard J. Bressler
Title: Senior Vice President
and Chief Financial
Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
EXHIBIT NO. DESCRIPTION OF EXHIBITS PAGE NUMBER
<S> <C> <C>
23(a) Consent of Ernst & Young LLP, Independent Auditors.
23(b) Consent of Arthur Andersen LLP, Independent Public
Accountants.
23(c) Consent of Price Waterhouse LLP, Independent
Accountants.
23(d) Consent of Deloitte & Touche LLP, Independent Auditors.
99(a) Financial Statements of Newhouse Broadcasting Cable *
Division of Newhouse Broadcasting Corporation
(incorporated by reference from Exhibit 99(b) of the
Current Report on Form 8-K of Time Warner Inc. dated
May 30, 1995 and Exhibit 99(e) of the Current Report on
Form 8-K of Time Warner Inc. dated August 14, 1995).
99(b) Financial Statements of Vision Cable Division of Vision *
Cable Communications, Inc. (incorporated by reference
from Exhibit 99(c) of the Current Report on Form 8-K of
Time Warner Inc. dated May 30, 1995 and Exhibit 99(d)
of the Current Report on Form 8-K of Time Warner Inc.
dated August 14, 1995).
99(c) Financial Statements of Cablevision Industries *
Corporation (incorporated by reference from pages 23 to
39 of the Annual Report on Form 10-K for the year ended
December 31, 1995 of Cablevision Industries
Corporation).
99(d) Financial Statements of Turner Broadcasting System, *
Inc. (incorporated by reference from pages 31 to 53 of
the Annual Report to Shareholders incorporated by
reference into the Annual Report on Form 10-K for the
year ended December 31, 1995 of Turner Broadcasting
System, Inc.).
99(e) Financial Statements of KBLCOM Incorporated *
(incorporated by reference from Exhibit 99(b) of the
Current Report on Form 8-K of Time Warner Inc. dated
May 30, 1995 and Exhibit 99(c) of the Current Report on
Form 8-K of Time Warner Inc. dated August 14, 1995).
</TABLE>
________________
* Incorporated by reference.
EXHIBIT 23(A)
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference of (i) our report
dated March 8, 1996, with respect to the consolidated financial statements and
schedule of Cablevision Industries Corporation and Subsidiaries ("Cablevision")
included in Cablevision's Annual Report on Form 10-K for the year ended
December 31, 1995, and (ii) our reports dated July 28, 1995, with respect to
the financial statements of Newhouse Broadcasting Cable Division of Newhouse
Broadcasting Corporation and Subsidiaries and Vision Cable Division of Vision
Cable Communications Inc. and Subsidiaries included in the Current Report on
Form 8-K of Time Warner Inc. ("Time Warner") dated August 14, 1995,
incorporated by reference in the Current Report on Form 8-K of Time Warner
dated March 22, 1996, in each of the following:
1. Post-Effective Amendment No. 2 to Registration Statements No. 33-11031
and No. 2-76753 on Form S-8;
2. Post-Effective Amendment No. 4 on Form S-3 to Registration Statement
No.2-75960 on Form S-16 and Post-Effective Amendment No. 1 on Form S-3 to
Registration Statement No. 33-58262 on Form S-3;
3. Registration Statements No. 33-20883 and No. 33-35945 on Form S-8;
4. Post-Effective Amendment No. 8 to Registration Statements No. 2-62477 and
No. 2-67216 on Form S-8;
5. Registration Statements No. 33-37929 and No. 33-47152 on Form S-8;
6. Post-Effective Amendment No. 2 to Registration Statement No. 33-16507 on
Form S-8 and Registration Statement No. 33-48381 on Form S-8;
7. Post-Effective Amendment No. 1 to Registration Statement No. 33-29247 on
Form S-8;
8. Registration Statement No. 33-33076 (the Prospectus constituting a part
thereof also applies to Registration Statements No. 33-29029 and No. 33-
29030) on Form S-8;
9. Amendment No. 1 to Registration Statement No. 33-33043 on Form S-8 and
Registration Statement No. 33-51471 on Form S-8;
10. Pre-Effective Amendment No. 1 to Registration Statement No. 33-29031 on
Form S-3;
11. Registration Statement No. 33-35317 on Form S-8;
12. Registration Statements No. 33-40859 and No. 33-48382 on Form S-8;
13. Registration Statement No. 33-47151 on Form S-8:
14. Post-Effective Amendment No. 2 to Registration Statement No. 33-57812 on
Form S-3;
15. Registration Statements No. 33-62774 and No. 33-51015 on Form S-8;
16. Post-Effective Amendment No. 1 to Registration Statement No. 33-50237 on
Form S-3;
<PAGE>
Page 2
17. Registration Statement No. 33-53213 on Form S-8 and Post-Effective
Amendment No. 1 to Registration Statement No. 33-57667 on Form S-8;
18. Registration Statement No. 33-61497 on Form S-8;
19. Amendment No. 1 to Registration Statement No. 33-61579 on Form S-3; and
20. Pre-Effective Amendment No. 2 to Registration Statement No. 33-62585 on
Form S-3.
Ernst & Young LLP
New York, New York
March 22, 1996
<PAGE>
EXHIBIT 23(B)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference of our reports dated March 1, 1995, with respect to Cablevision
Industries Corporation's Form 10-K for the year ended December 31, 1994, and
to all references to our Firm included in each of the following:
1. Post-Effective Amendment No. 2 to Registration Statements No. 33-11031
and No. 2-76753 on Form S-8;
2. Post-Effective Amendment No. 4 on Form S-3 to Registration Statement No.
2-75960 on Form S-16 and Post-Effective Amendment No. 1 on Form S-3 to
Registration Statement No. 33-58262 on Form S-3;
3. Registration Statements No. 33-20883 and No. 33-35945 on Form S-8;
4. Post-Effective Amendment No. 8 to Registration Statements No. 2-62477 and
No. 2-67216 on Form S-8;
5. Registration Statements No. 33-37929 and No. 33-47152 on Form S-8;
6. Post-Effective Amendment No. 2 to Registration Statement No. 33-16507 on
Form S-8 and Registration Statement No. 33-48381 on Form S-8;
7. Post-Effective Amendment No. 1 to Registration Statement No. 33-29247 on
Form S-8;
8. Registration Statement No. 33-33076 (the Prospectus constituting a part
thereof also applies to Registration Statements No. 33-29029 and No. 33-
29030) on Form S-8;
9. Amendment No. 1 to Registration Statement No. 33-33043 on Form S-8 and
Registration Statement No. 33-51471 on Form S-8;
10. Pre-Effective Amendment No. 1 to Registration Statement No. 33-29031 on
Form S-3;
11. Registration Statement No. 33-35317 on Form S-8;
12. Registration Statements No. 33-40859 and No. 33-48382 on Form S-8;
13. Registration Statement No. 33-47151 on Form S-8;
14. Post-Effective Amendment No. 2 to Registration Statement No. 33-57812 on
Form S-3;
15. Registration Statement No. 33-62774 and No. 33-51015 on Form S-8;
16. Post-Effective Amendment No. 1 to Registration Statement No. 33-50237 on
Form S-3;
17. Registration Statement No. 33-53213 on Form S-8 and Post-Effective
Amendment No. 1 to Registration Statement No. 33-57667 on Form S-8;
18. Registration Statement No. 33-61497 on Form S-8;
<PAGE>
Page 2
19. Amendment No. 1 to Registration Statement No. 33-61579 on Form S-3; and
20. Pre-Effective Amendment No. 2 to Registration Statement No. 33-62585 on
Form S-3.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
March 21, 1996
<PAGE>
EXHIBIT 23(C)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference of our report dated
February 5, 1996, which appears on page 53 of Turner Broadcasting System,
Inc.'s 1995 Annual Report to Shareholders, which is incorporated by reference
in Turner Broadcasting System, Inc,'s Annual Report on Form 10-K for the year
ended December 31, 1995 and which report has been incorporated by reference in
the Current Report on Form 8-K of Time Warner Inc. dated March 22, 1996, in
each of the following:
1. Post-Effective Amendment No. 2 to Registration Statements No. 33-
11031 and No. 2-76753 on Form S-8;
2. Post-Effective Amendment No. 4 on Form S-3 to Registration
Statement No. 2-75960 on Form S-16 and Post-Effective Amendment No.
1 on Form S-3 to Registration Statement No. 33-58262 on Form S-3;
3. Registration Statements No. 33-20883 and No. 33-35945 on Form S-8;
4. Post-Effective Amendment No. 8 to Registrations Statements No. 2-
62477 and No. 2-67216 on Form S-8;
5. Registration Statements No. 33-37929 and No. 33-47152 on Form S-8;
6. Post-Effective Amendment No. 2 to Registration Statement No. 33-
16507 on Form S-8 and Registration Statement No. 33-48381 on Form
S-8;
7. Post-Effective Amendment No. 1 to Registration Statement No. 33-
29247 on Form S-8;
8. Registration Statement No. 33-33076 (the Prospectus constituting a
part thereof also apples to Registration Statements No. 33-29029
and 33-29030) on Form S-8;
9. Amendment No. 1 to Registration Statement No. 33-33043 on Form S-8
and Registration Statement No. 33-51471 on Form S-8;
10. Pre-Effective Amendment No. 1 to Registration Statement No. 33-
29031 on Form S-3;
11. Registration Statement No. 33-35317 on Form S-8;
12. Registration Statements No. 33-40859 and No. 33-48382 on Form S-8;
13. Registration Statement No. 33-47151 on Form S-8;
14. Registration Statements No. 33-62774 and No. 33-51015 on Form S-8;
15. Post-Effective Amendment No. 2 Registration Statement No. 33-57812
on Form S-3;
16. Post-Effective Amendment No. 1 to Registration Statement No. 33-
50237 on Form S-3;
<PAGE>
Page 2
17. Registration Statement No. 33-53213 on Form S-8 and Post-Effective
Amendment No. 1 to Registration Statement No. 33-57667 on Form S-8;
18. Registration Statement No. 33-61497 on Form S-8;
19. Amendment No. 1 to Registration Statement No. 33-61579 on Form S-3;
and
20. Pre-Effective Amendment No. 2 to Registration Statement No. 33-
62585 on Form S-3.
PRICE WATERHOUSE LLP
ATLANTA, GEORGIA
MARCH 22, 1996
<PAGE>
EXHIBIT 23(D)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference by our report dated April 20,
1995, with respect to the consolidated financial statements of KBLCOM
Incorporated included in this Form 8-K of Time Warner Inc. dated March 22,
1996, in each of the following:
1. Post-Effective Amendment No. 2 to Registration Statements No. 33-11031
and No. 2-76753 on Form S-8;
2. Post-Effective Amendment No. 4 on Form S-3 to Registration Statement No.
2-75960 on Form S-16 and Post-Effective Amendment No. 1 on Form S-3 to
Registration Statement No. 33-58262 on Form S-3;
3. Registration Statements No. 33-20883 and No. 33-35945 on Form S-8:
4. Post-Effective Amendment No. 8 to Registration Statements No. 2-62477 and
No. 2-67216 on Form S-8;
5. Registration Statements No. 33-37929 and No. 33-47152 on Form S-8;
6. Post-Effective Amendment No. 2 to Registration Statement No. 33-16507 on
Form S-8 and Registration Statement No. 33-48381 on Form S-8;
7. Post-Effective Amendment No. 1 to Registration Statement No. 33-29247 on
Form S-8;
8. Registration Statement No. 33-33076 (the Prospectus constituting a part
thereof also applies to Registration Statements No. 33-29029 and No. 33-
29030) on Form S-8;
9. Amendment No. 1 to Registration Statement No. 33-33043 on Form S-8 and
Registration Statement No. 33-51471 on Form S-8;
10. Pre-Effective Amendment No. 1 to Registration Statement No. 33-29031 on
Form S-3;
11. Registration Statement No. 33-35317 on Form S-8;
12. Registration Statements No. 33-40859 and No. 33-48382 on Form S-8;
13. Registration Statement No. 33-47151 on Form S-8;
14. Post-Effective Amendment No. 2 to Registration Statement No. 33-57812 on
Form S-3;
15. Registration Statements No. 33-62774 and No. 33-51015 on Form S-8;
16. Post-Effective Amendment No. 1 to Registration Statement No. 33-50237 on
Form S-3;
17. Registration Statement No. 33-53213 on Form S-8 and Post-Effective
Amendment No. 1 to Registration Statement No. 33-57667 on Form S-8;
18. Registration Statement No. 33-61497 on Form S-8;
<PAGE>
Page 2
19. Amendment No. 1 to Registration Statement No. 33-61579 on Form S-3; and
20. Pre-Effective Amendment No. 2 to Registration Statement No. 33-62585 on
Form S-3.
DELOITTE & TOUCHE LLP
HOUSTON, TEXAS
MARCH 22, 1996
