<PAGE>
<PAGE>
________________________________________________________________________________
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):
AUGUST 8, 1996
------------------------
TIME WARNER INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------
<TABLE>
<S> <C> <C>
DELAWARE 1-8637 13-1388520
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
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)
________________________________________________________________________________
<PAGE>
<PAGE>
ITEM 5. OTHER EVENTS.
Time Warner Inc. ('Time Warner') and Time Warner Entertainment Company,
L.P. ('TWE'), a partnership in which Time Warner and certain of its wholly-owned
subsidiaries own general and limited partnership interests in 74.49% of the pro
rata priority capital ('Series A Capital') and residual equity capital
('Residual Capital') of TWE and 100% of the senior priority capital ('Senior
Capital') and junior priority capital ('Series B Capital') of TWE, have
completed, or have entered into, the transactions described below:
(i) on July 17, 1996, Time Warner announced that it had reached an
agreement in principle with the staff of the Federal Trade Commission (the
'FTC') and certain shareholders of Turner Broadcasting System, Inc. ('TBS')
which resulted in a renegotiation of certain terms of the Agreement and
Plan of Merger, as amended, (the 'TBS Merger Agreement') between Time
Warner and TBS and certain related agreements and transactions between Time
Warner and certain shareholders of TBS, including R.E. Turner and Liberty
Media Corporation ('LMC'), a subsidiary of Tele-Communications, Inc.
('TCI'). The amendments to the TBS Merger Agreement and to the related
agreements (collectively, the 'Amended TBS Merger Agreements') continue to
provide for the merger of each of Time Warner and TBS with separate
subsidiaries of a holding company ('New Time Warner'), that will combine,
for financial reporting purposes, 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. The Amended TBS Merger
Agreements provide for the issuance by New Time Warner of approximately
173.3 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 with de minimis voting rights to be received by
LMC, the 'LMC Class Common Stock'), in exchange for the outstanding TBS
capital stock, the issuance of approximately 14 million stock options to
replace all outstanding TBS options and the assumption of TBS's
indebtedness (which approximated $2.6 billion at June 30, 1996). As part of
the TBS Transaction, LMC and its affiliates will receive an additional five
million shares of LMC Class Common Stock and $67 million of consideration
payable, at the election of Time Warner, in cash or additional shares of
LMC Class Common Stock, pursuant to an amended related option and
non-competition agreement (the 'SSSI Option and Non-Competition Agreement')
that will provide, if Time Warner exercises, for Southern Satellite
Systems, Inc., a subsidiary of LMC, to provide certain satellite uplink and
distribution services for WTBS, a broadcast television station owned by
TBS, in the event WTBS is converted to a copyright-paid cable television
programming service.
(ii) on April 11, 1996, Time Warner issued 1.6 million shares of
10 1/4% Series K exchangeable preferred stock ('Series K Preferred Stock')
for approximately $1.55 billion of net proceeds. Such proceeds were used by
Time Warner to redeem all $250 million principal amount of its outstanding
8.75% Debentures due 2017 (the '8.75% Debentures') for $265 million
(including redemption premiums and accrued interest thereon of $15 million)
and to reduce indebtedness of TWI Cable Inc. ('TWI Cable'), a wholly-owned
subsidiary of Time Warner, under the New Credit Agreement (as defined
hereinafter) by approximately $1.3 billion. The issuance of the Series K
Preferred Stock and the use of the proceeds therefrom to reduce outstanding
indebtedness of Time Warner are referred to herein as the 'Series K
Refinancing';
(iii) 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 in June
1995 from the issuance of 7.75% notes due 2005 (the '7.75% Notes'), (2)
$363 million of net proceeds raised in August 1995 from the issuance of
approximately
1
<PAGE>
<PAGE>
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% debentures due 2026, which are
redeemable at the option of the holders thereof in 2003, (ii) $200 million
principal amount of 8.3% discount debentures due 2036, which do not pay
cash interest until 2016, (iii) $166 million principal amount of 7.48%
debentures due 2008 and (iv) $150 million principal amount of 8.05%
debentures due 2016 (collectively referred to herein as the 'January 1996
Debentures'). The issuance of the Preferred Trust Securities and the
January 1996 Debentures, together with the February 1996 Redemption are
collectively referred to herein as 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';
(iv) 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') (the 'CVI Acquisition'). CVI and
the Gerry Companies owned cable television systems serving approximately
1.3 million subscribers;
(v) 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 TWE's Series A Capital and Residual Capital
and 100% of TWE's Senior Capital and Series B Capital. A subsidiary of U S
WEST, Inc. ('U S WEST') owns the remaining 25.51% of TWE's Series A Capital
and Residual Capital;
(vi) on August 15, 1995, Time Warner redeemed all of its $1.8 billion
principal amount of outstanding Redeemable Reset Notes due 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 2000, approximately $272 million aggregate
principal amount of 7.975% Notes due 2004, approximately $545 million
aggregate principal amount of 8.11% Debentures due 2006, and approximately
$545 million aggregate principal amount of 8.18% Debentures due 2007
(collectively, the 'Exchange Securities');
(vii) 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 'KBLCOM Acquisition'). The other 50% interest in
Paragon was already owned by TWE;
(viii) on June 30, 1995, 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
2
<PAGE>
<PAGE>
Refinancing'). The Series K Refinancing, the Convertible Debt Refinancings,
the Reset Notes Refinancing and the Bank Refinancing are referred to herein
as the 'Debt Refinancings';
(ix) 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');
(x) 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');
(xi) 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
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
(xii) during 1995, TWE entered into agreements 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, which are
not material, have closed or 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'.
3
<PAGE>
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following pro forma consolidated condensed balance sheet of Time Warner
at June 30, 1996 gives effect to the TBS Transaction as if it occurred at such
date. The following pro forma consolidated condensed statement of operations of
Time Warner for the six months ended June 30, 1996 gives effect to the TBS
Transaction, the Series K Refinancing and the 1996 Convertible Debt Refinancing
as if the transactions occurred at the beginning of 1995. The ITOCHU/Toshiba
Transaction, the Acquisitions, the 1995 Convertible Debt Refinancing, the Reset
Notes Refinancing, the Bank Refinancing, the TWE-A/N Transaction, the Asset Sale
Transactions and, with respect to the balance sheet only, the Series K
Refinancing and the 1996 Convertible Debt Refinancing, are already reflected in
the historical financial statements of Time Warner as of and for the six months
ended June 30, 1996. The pro forma consolidated condensed statement of
operations of Time Warner for the year ended December 31, 1995 gives effect to
the TBS Transaction, the Series K Refinancing, the ITOCHU/Toshiba Transaction,
the Acquisitions, the Debt Refinancings, the Asset Sale Transactions and the
TWE-A/N Transaction, in each case as if the transactions occurred at the
beginning of such period.
The following pro forma consolidated condensed statement of operations of
the Time Warner Entertainment Group (the 'Entertainment Group'), principally
consisting of TWE, for the year ended December 31, 1995 gives effect to the
TWE-A/N Transaction, the Debt Refinancings, the consolidation of Paragon and the
Asset Sale Transactions, in each case as if the transactions occurred at the
beginning of such period. Pro forma consolidated condensed financial statements
as of and for the six months ended June 30, 1996 have not been included herein
since all such transactions consummated by TWE are reflected, in all material
respects, in the historical financial statements of the Entertainment Group as
of and for the six months ended June 30, 1996.
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 Quarterly
Report on Form 10-Q for the six months ended June 30, 1996 and 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 six months ended June 30, 1996 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 and are incorporated herein by reference), (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, (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 have been previously filed in connection with
Time Warner's Current Report on Form 8-K dated August 14, 1995 and are
incorporated herein by reference and (5) CVI, which was acquired on January 4,
1996 and consequently, such pro forma financial statements have been derived
from the audited consolidated financial statements for such entity for the year
ended December 31, 1995, which are incorporated herein by reference from its
Annual Report on Form 10-K for the year ended December 31, 1995. Historical
financial statements of TBS are incorporated herein by
4
<PAGE>
<PAGE>
reference from its Annual Report to Shareholders incorporated by reference into
its Annual Report on Form 10-K for the year ended December 31, 1995 and its
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 1996.
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.
TBS TRANSACTION
The Amended TBS Merger Agreements reflect certain changes to the TBS
Transaction as originally contemplated in the initial TBS Merger Agreement,
including, but not limited to (i) changes in the consideration to be received by
LMC from voting LMC Class Common Stock to non-voting LMC Class Common Stock
(except for certain de minimis voting rights), (ii) limitations on the level of
TCI's and its affiliates' economic ownership in Time Warner, (iii) substantial
changes to a related proposed agreement between TBS and a subsidiary of TCI that
would have amended and extended through the year 2015 an existing affiliation
agreement to cover the carriage of all TBS programming services by
TCI-affiliated cable systems, which resulted in an agreement that will preserve
the existing affiliation agreement and will provide for a new five-year
affiliation agreement covering Headline News and WTBS, a broadcast television
station owned by TBS, in the event WTBS is converted to a copyright-paid cable
television programming service and (iv) an increase in the consideration to be
paid to LMC and its affiliates, payable at Time Warner's election in stock or
cash, in connection with obtaining the SSSI Option and Non-Competition
Agreement. Accordingly, the accompanying pro forma consolidated condensed
financial statements have been revised to give effect to all material terms of
the Amended Merger Agreements.
Pro forma adjustments for the TBS Transaction reflect (1) the issuance of
approximately 173.3 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 and its affiliates and
the payment of $67 million in cash in connection with the SSSI Option and
Non-Competition Agreement, (3) the issuance of approximately 14 million stock
options to replace all outstanding TBS options, (4) the assumption of
approximately $2.6 billion of indebtedness, including $273 million of
convertible debt securities and (5) the payment of approximately $95 million for
transaction costs and other related liabilities. 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) New Time Warner's pro forma shareholders'
equity at June 30, 1996 would be increased by approximately $186 million to
reflect the issuance of approximately 5.6 million additional shares of Common
Stock, (2) New Time Warner's pro forma indebtedness at June 30, 1996 would be
reduced by $273 million and (3) New Time Warner's pro forma loss before
extraordinary item and loss before extraordinary item per common share for the
six months ended June 30, 1996 and the year ended December 31, 1995 would be
reduced by $6 million and $.01 per common share and $11 million and $.03 per
common share, respectively.
The pro forma consolidated condensed financial statements reflect an
assumption that Time Warner will elect to satisfy a portion of the consideration
to be paid to LMC and its affiliates in connection with the SSSI Option and
Non-Competition Agreement in cash, rather than in additional shares of LMC Class
Common Stock. Should Time Warner elect otherwise, the effect on New Time
Warner's pro forma financial condition and operating results would not be
material.
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.
5
<PAGE>
<PAGE>
Time Warner expects to realize certain revenue enhancements and cost
reductions as a result of strategic and cost-saving initiatives relating to the
integration of the operations of TBS into Time Warner's and TWE's operating
structure; however, such incremental revenues and cost savings have not been
reflected in the pro forma consolidated condensed statements of operations of
Time Warner because these initiatives have not been finalized at this time.
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 final approval of the
FTC.
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.
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
6
<PAGE>
<PAGE>
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 3.2 million shares of a new
series of convertible preferred stock (the 'Series E Preferred Stock') and
approximately 3.1 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 13.2 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.
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, with respect to the CVI
Acquisition, 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
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
historical consolidated statements of operations of Time Warner and the
Entertainment Group for the six months ended June 30, 1996 and the pro forma
consolidated condensed statements of operations of Time Warner and the
Entertainment Group for the year ended December 31, 1995 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 statement of operations
of Time Warner for the year ended December 31, 1995 also reflects 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.
7
<PAGE>
<PAGE>
DEBT REFINANCINGS
In the aggregate, proceeds of $8.856 billion were raised in connection with
the Debt Refinancings. Such proceeds were used, together with approximately $171
million of available cash and equivalents, to repay or redeem $8.812 billion of
indebtedness, plus redemption premiums and accrued interest thereon of $165
million and financing costs of $50 million.
Pro forma adjustments for the Debt Refinancings in the six months ended
June 30, 1996 and the year ended December 31, 1995 reflect proceeds of (1)
$1.552 billion received from the issuance of the Series K Preferred Stock and
(2) approximately $750 million received from the issuance of the January 1996
Debentures, which have a weighted average interest rate of 7.3%, and the use of
(1) $721 million of such proceeds, together with $557 million of net proceeds
received from the issuance of the Preferred Trust Securities (8 7/8% yield) in
December 1995, to finance the 1996 Convertible Debt Refinancing ($1.226 billion
principal amount, plus redemption premiums and accrued interest thereon of $52
million), (2) $265 million to redeem all of Time Warner's outstanding 8.75%
Debentures ($250 million principal amount, plus redemption premiums and accrued
interest thereon of $15 million) and (3) approximately $1.287 billion to reduce
outstanding indebtedness of TWI Cable under the New Credit Agreement.
Pro forma adjustments for the year ended December 31, 1995 also reflect
additional aggregate proceeds received of $6.554 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) and (4) the receipt of $557 million of net proceeds from the
issuance of the Preferred Trust Securities (8 7/8% yield) and additional
repayments of $6.197 billion consisting of (1) $1.184 billion of indebtedness
assumed in the CVI Acquisition (plus redemption premiums thereon of $16
million), (2) $1.086 billion of indebtedness assumed or incurred in the KBLCOM
Acquisition (plus redemption premiums and accrued interest thereon of $19
million), (3) $204 million of Paragon indebtedness, funded equally by Time
Warner and TWE, (4) $2.575 billion of indebtedness of TWE under a pre-existing
bank credit agreement, (5) $1 billion principal amount of the 8.75% Convertible
Debentures (plus redemption premiums and accrued interest thereon of $63
million) and (6) $50 million to pay for financing costs.
In addition to the $8.856 billion of refinancings described above, $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 Debt Refinancings also reflect the noncash
redemption of $1.8 billion principal amount of outstanding Reset Notes (8.7%
yield) in exchange 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 six months ended June
30, 1996 and the year ended December 31, 1995, LIBOR has been assumed to be 5.5%
and 6% per annum, respectively, and accordingly, the pro forma consolidated
condensed statements of operations reflect interest on borrowings under the New
Credit Agreement at estimated rates of (i) 6.375% and 6.875% per annum,
respectively, for TWI Cable and (ii) 6% and 6.5% per annum, respectively, 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 $4.136
billion of net borrowings under the New Credit Agreement would have the
approximate effect of increasing Time Warner's annual interest expense and net
loss by $2 million and $3 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.
ASSET SALE TRANSACTIONS
The Asset Sale Transactions for the year ended December 31, 1995 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
8
<PAGE>
<PAGE>
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 $965 million is already reflected in TWE's historical balance
sheet at June 30, 1996. 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. The
effects of the sale of certain of the unclustered cable television systems that
have closed or are expected to close in 1996 are not material to the pro forma
financial condition and results of operations of either the Entertainment Group
or Time Warner and, accordingly, have not been reflected in the pro forma
consolidated financial statements as of and for the six months ended June 30,
1996 included herein.
9
<PAGE>
<PAGE>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
JUNE 30, 1996
(MILLIONS, UNAUDITED)
<TABLE>
<CAPTION>
TBS TRANSACTION
------------------------------- NEW
TIME WARNER TBS PRO FORMA TIME WARNER
HISTORICAL HISTORICAL(a) ADJUSTMENTS(b) PRO FORMA
----------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
ASSETS
Cash and equivalents................................. $ 482 $ 119 $ -- $ 601
Other current assets................................. 2,742 1,292 (174) 3,860
----------- ------ ------ -----------
Total current assets................................. 3,224 1,411 (174) 4,461
Investments in and amounts due to and from
Entertainment Group................................ 5,945 -- -- 5,945
Other investments.................................... 2,507 -- (539) 1,968
Noncurrent inventories............................... -- 2,042 -- 2,042
Property, plant and equipment........................ 1,481 368 -- 1,849
Cable television franchises.......................... 3,970 -- -- 3,970
Goodwill............................................. 5,825 260 6,428 12,513
Other assets......................................... 1,556 407 -- 1,963
----------- ------ ------ -----------
Total assets......................................... $24,508 $ 4,488 $5,715 $34,711
----------- ------ ------ -----------
----------- ------ ------ -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities............................ $ 2,762 $ 822 $ -- $ 3,584
Long-term debt....................................... 9,928 2,600 162 12,690
Borrowings against future stock option proceeds...... 225 -- -- 225
Deferred income taxes................................ 3,983 421 -- 4,404
Other long-term liabilities.......................... 1,232 174 -- 1,406
Company-obligated mandatorily redeemable preferred
securities of subsidiaries(1)...................... 949 -- -- 949
Series K exchangeable preferred stock................ 1,586 -- -- 1,586
Shareholders' equity:
Preferred stock.................................. 36 -- (32) 4
Common stock..................................... 387 -- (381) 6
Paid-in capital.................................. 5,866 -- 6,437 12,303
Unrealized gains on certain marketable
securities..................................... 177 -- -- 177
TBS shareholders' equity......................... -- 471 (471) --
Accumulated deficit.............................. (2,623) -- -- (2,623)
----------- ------ ------ -----------
Total shareholders' equity........................... 3,843 471 5,553 9,867
----------- ------ ------ -----------
Total liabilities and shareholders' equity........... $24,508 $ 4,488 $5,715 $34,711
----------- ------ ------ -----------
----------- ------ ------ -----------
</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.
10
<PAGE>
<PAGE>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(MILLIONS, EXCEPT PER SHARE AMOUNTS; UNAUDITED)
<TABLE>
<CAPTION>
TBS TRANSACTION
------------------------------ NEW
TIME WARNER DEBT PRE-TBS TBS PRO FORMA TIME WARNER
HISTORICAL REFINANCINGS(c) PRO FORMA HISTORICAL(d) ADJUSTMENTS(e) PRO FORMA
----------- --------------- --------- ------------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues......................... $ 4,207 $ -- $ 4,207 $ 1,675 $ -- $ 5,882
Cost of revenues*................ 2,525 -- 2,525 1,101 97 3,723
Selling, general and
administrative*................ 1,357 1,357 474 -- 1,831
----------- ----- --------- ------ --- -----------
Operating expenses............... 3,882 -- 3,882 1,575 97 5,554
----------- ----- --------- ------ --- -----------
Business segment operating income
(loss)......................... 325 -- 325 100 (97) 328
Equity in pretax income of
Entertainment Group............ 209 -- 209 -- -- 209
Interest and other, net.......... (578) 38 (540) (97) 10 (627)
Corporate expenses............... (36) -- (36) -- -- (36)
----------- ----- --------- ------ --- -----------
Income (loss) before income
taxes.......................... (80) 38 (42) 3 (87) (126)
Income tax (provision) benefit... (44) (16) (60) (2) 6 (56)
----------- ----- --------- ------ --- -----------
Income (loss) before
extraordinary item............. (124) 22 (102) 1 (81) (182)
Preferred dividend
requirements................... (104) (51) (155) -- -- (155)
----------- ----- --------- ------ --- -----------
Income (loss) before
extraordinary item applicable
to common shares............... $ (228) $ (29) $ (257) $ 1 $(81) $ (337)
----------- ----- --------- ------ --- -----------
----------- ----- --------- ------ --- -----------
Loss before extraordinary item
per common share............... $ (.58) $(.08) $ (.66) $ (.59)
----------- ----- --------- -----------
----------- ----- --------- -----------
Average common shares............ 390.6 390.6 568.9
----------- --------- -----------
----------- --------- -----------
- ------------
* Includes depreciation and
amortization expense of:......... $ 452 $ -- $ 452 $ 92 $ 79 $ 623
----------- ----- --------- ------ --- -----------
----------- ----- --------- ------ --- -----------
</TABLE>
See accompanying notes.
11
<PAGE>
<PAGE>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(MILLIONS, EXCEPT PER SHARE AMOUNTS; UNAUDITED)
<TABLE>
<CAPTION>
SUBTOTAL TBS TRANSACTION
TIME WARNER ------------------------------- NEW
PRE-TBS TBS PRO FORMA TIME WARNER
PRO FORMA HISTORICAL(d) ADJUSTMENTS(e) PRO FORMA
----------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
Revenues............................................. $ 8,742 $ 3,437 $ -- $12,179
Cost of revenues*.................................... 5,236 2,166 206 7,608
Selling, general and administrative*................. 2,850 889 -- 3,739
----------- ------ ----- -----------
Operating expenses................................... 8,086 3,055 206 11,347
----------- ------ ----- -----------
Business segment operating income (loss)............. 656 382 (206) 832
Equity in pretax income of Entertainment Group....... 286 -- -- 286
Interest and other, net.............................. (926) (209) (7) (1,142)
Corporate expenses................................... (74) -- -- (74)
----------- ------ ----- -----------
Income (loss) before income taxes.................... (58) 173 (213) (98)
Income tax (provision) benefit....................... (132) (70) 26 (176)
----------- ------ ----- -----------
Income (loss) before extraordinary item.............. (190) 103 (187) (274)
Preferred dividend requirements...................... (316) -- -- (316)
----------- ------ ----- -----------
Income (loss) before extraordinary item applicable to
common shares...................................... $ (506) $ 103 $ (187) $ (590)
----------- ------ ----- -----------
----------- ------ ----- -----------
Loss before extraordinary item per common share...... $ (1.30) $ (1.04)
----------- -----------
----------- -----------
Average common shares................................ 387.7 566.0
----------- -----------
----------- -----------
- ------------
* Includes depreciation and amortization expense
of:.................................................. $ 935 $ 189 $ 159 $ 1,283
----------- ------ ----- -----------
----------- ------ ----- -----------
</TABLE>
See accompanying notes.
12
<PAGE>
<PAGE>
TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(MILLIONS, EXCEPT PER SHARE AMOUNTS; UNAUDITED)
<TABLE>
<CAPTION>
TIME WARNER SUMMIT KBLCOM CVI DEBT TWE
HISTORICAL ACQUISITION(f) ACQUISITION(g) ACQUISITION(h) REFINANCINGS(c) TRANSACTIONS(i)
----------- -------------- -------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Revenues..................... $ 8,067 $ 22 $139 $ 514 $ -- $ --
Cost of revenues*............ 4,682 15 110 429 -- --
Selling, general and
administrative*............ 2,688 7 49 106 -- --
----------- ----- ----- ----- ----- ---
Operating expenses........... 7,370 22 159 535 -- --
----------- ----- ----- ----- ----- ---
Business segment operating
income (loss).............. 697 -- (20) (21) -- --
Equity in pretax income of
Entertainment Group........ 256 -- -- -- 13 17
Interest and other, net...... (877) (5) (46) (136) 167 --
Corporate expenses........... (74) -- -- -- -- --
----------- ----- ----- ----- ----- ---
Income (loss) before income
taxes...................... 2 (5) (66) (157) 180 17
Income tax (provision)
benefit.................... (126) 1 24 38 (74) (6)
----------- ----- ----- ----- ----- ---
Income (loss) before
extraordinary item......... (124) (4) (42) (119) 106 11
Preferred dividend
requirements............... (52) (4) (21) (24) (173) --
----------- ----- ----- ----- ----- ---
Income (loss) before
extraordinary item
applicable to common
shares..................... $ (176) $ (8) $(63) $ (143) $ (67) $ 11
----------- ----- ----- ----- ----- ---
----------- ----- ----- ----- ----- ---
Income (loss) before
extraordinary item per
common share............... $ (.46) $ (.02) $(.17) $ (.36) $(.17) $ .03
----------- ----- ----- ----- ----- ---
----------- ----- ----- ----- ----- ---
Average common shares........ 383.8 .5 .5 2.9 -- --
----------- ----- ----- ----- ----- ---
----------- ----- ----- ----- ----- ---
- ------------
* Includes depreciation and
amortization expense of:..... $ 559 $ 11 $ 84 $ 281 $ -- $ --
----------- ----- ----- ----- ----- ---
----------- ----- ----- ----- ----- ---
<CAPTION>
SUBTOTAL
ITOCHU/ TIME WARNER
TOSHIBA PRE-TBS
TRANSACTION(j) PRO FORMA
--------------- -----------
<S> <C> <C>
Revenues..................... $ -- $ 8,742
Cost of revenues*............ -- 5,236
Selling, general and
administrative*............ -- 2,850
----- -----------
Operating expenses........... -- 8,086
----- -----------
Business segment operating
income (loss).............. -- 656
Equity in pretax income of
Entertainment Group........ -- 286
Interest and other, net...... (29) (926)
Corporate expenses........... -- (74)
----- -----------
Income (loss) before income
taxes...................... (29) (58)
Income tax (provision)
benefit.................... 11 (132)
----- -----------
Income (loss) before
extraordinary item......... (18) (190)
Preferred dividend
requirements............... (42) (316)
----- -----------
Income (loss) before
extraordinary item
applicable to common
shares..................... $ (60) $ (506)
----- -----------
----- -----------
Income (loss) before
extraordinary item per
common share............... $(.15) $ (1.30)
----- -----------
----- -----------
Average common shares........ -- 387.7
----- -----------
----- -----------
* Includes depreciation and
amortization expense of:..... $ -- $ 935
----- -----------
----- -----------
</TABLE>
See accompanying notes.
13
<PAGE>
<PAGE>
TIME WARNER INC.
NOTES TO THE TIME WARNER PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS
(a) Reflects the historical financial position of TBS at June 30, 1996,
including $2.6 billion of long-term indebtedness that will be assumed
pursuant to the TBS Transaction.
(b) Pro forma adjustments to record the TBS Transaction reflect (1) a
reclassification in shareholders' equity from common stock and preferred
stock to paid-in capital to reflect the reduction in the par value, in the
case of common stock, from $1.00 per share to $.01 per share, and, in the
case of preferred stock, from $1.00 per share to $.10 per share, (2) the
issuance of (i) 173.3 million shares of Common Stock, including 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 and its affiliates in connection
with obtaining the SSSI Option and Non-Competition Agreement and (iii)
approximately 14 million stock options to replace all outstanding TBS stock
options, valued at an aggregate of $6.024 billion for pro forma purposes
based on a Common Stock price of $33.25 per share, (3) the writeoff of
approximately $260 million of pre-existing goodwill of TBS and approximately
$174 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, (4) the incurrence of $162 million of additional
indebtedness for the payment of (i) $67 million in connection with obtaining
the SSSI Option and Non-Competition Agreement and (ii) $95 million in
connection with transaction costs and other related liabilities, (5) the
allocation of the excess of the purchase price over the book value of the
net assets acquired of $6.688 billion to goodwill and (6) the elimination of
(i) Time Warner's historical investment in TBS in the amount of $539 million
and (ii) TBS' historical stockholders' equity in the amount of $471 million.
(c) Pro forma adjustments to record the Debt Refinancings for the six months
ended June 30, 1996 and the year ended December 31, 1995 reflect an increase
in noncash preferred dividend requirements of $51 million and $173 million,
respectively, relating to the payment of Series K Preferred Stock dividends,
at a rate of 10 1/4% per annum, payable quarterly. For purposes of Time
Warner's pro forma consolidated condensed financial statements, such
dividend requirements have been assumed to have been satisfied in-kind,
through the issuance of additional shares of Series K Preferred Stock with
an aggregate liquidation preference equal to the amount of such dividends.
Pro forma adjustments to record the Debt Refinancings for the six months
ended June 30, 1996 also reflect interest savings of $38 million resulting
from (1) the issuance of the January 1996 Debentures for approximately $750
million of proceeds and 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 $1.226 billion principal amount
of 8.75% Convertible Debentures for an aggregate redemption price of $1.278
billion, including redemption premiums and accrued interest thereon of $52
million and (2) the issuance of 1.6 million shares of Series K Preferred
Stock for approximately $1.552 billion of net proceeds and the use of (i)
$265 million of such proceeds to redeem all $250 million principal amount of
Time Warner's outstanding 8.75% Debentures (plus redemption premiums and
accrued interest thereon of $15 million) and (ii) the remaining $1.287
billion of such proceeds to reduce outstanding indebtedness of TWI Cable
under the New Credit Agreement.
Pro forma adjustments to record the Debt Refinancings for the year ended
December 31, 1995 also reflect savings in financing costs of $180 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 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
14
<PAGE>
<PAGE>
TIME WARNER INC.
NOTES TO THE TIME WARNER PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS -- (CONTINUED)
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, (3) the August
1995 noncash redemption of $1.8 billion principal amount of outstanding
Reset Notes in exchange for an equal amount of Exchange Securities and (4)
the issuance of 1.6 million shares of Series K Preferred Stock for
approximately $1.552 billion of net proceeds and the use of (i) $265 million
of such proceeds to redeem all $250 million principal amount of Time
Warner's outstanding 8.75% Debentures (plus redemption premiums and accrued
interest thereon of $15 million) and (ii) the remaining $1.287 billion of
such proceeds to reduce outstanding indebtedness of TWI Cable under the New
Credit Agreement, as set forth below (in millions).
All pro forma adjustments to record the Debt Refinancings for the six months
ended June 30, 1996 and 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.
15
<PAGE>
<PAGE>
TIME WARNER INC.
NOTES TO THE TIME WARNER PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS -- (CONTINUED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
JUNE 30, 1996 DECEMBER 31, 1995
------------------------------- -------------------------------
EQUITY IN PRETAX EQUITY IN PRETAX
INCOME OF INCOME OF
INTEREST AND ENTERTAINMENT INTEREST AND ENTERTAINMENT
OTHER, NET GROUP OTHER, NET GROUP
------------ ---------------- ------------ ----------------
INCREASE (DECREASE)
<S> <C> <C> <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 --
Repayment of $1.287 billion of TWI Cable indebtedness
under the New Credit Agreement....................... (23) -- (89) --
Redemption of $250 million principal amount of 8.75%
Debentures........................................... (8) -- (22) --
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%................................ 2 -- 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, consisting of $1
billion principal amount redeemed in September 1995
and $1.226 billion principal amount redeemed in
February 1996........................................ (9) -- (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...................... $(38) $ -- $ (167) $(13)
--- --- ----- ---
--- --- ----- ---
</TABLE>
Income taxes of $16 million and $74 million, respectively, have been
provided at a 41% tax rate on the aggregate net reduction in financing
costs.
16
<PAGE>
<PAGE>
TIME WARNER INC.
NOTES TO THE TIME WARNER PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS -- (CONTINUED)
(d) Reflects the historical operating results of TBS for the six months ended
June 30, 1996 and the year ended December 31, 1995, including certain
reclassifications to conform to Time Warner's financial statement
presentation.
(e) Pro forma adjustments to record the TBS Transaction for the six months ended
June 30, 1996 and the year ended December 31, 1995 reflect (1) the exclusion
of $7 million and $10 million, respectively, of merger costs directly
related to the TBS Transaction expensed by TBS in each respective period,
(2) an increase of $97 million and $206 million, respectively, in cost of
revenues consisting of (i) a $5 million and $8 million reduction,
respectively, of TBS' historical amortization of pre-existing goodwill, (ii)
a $84 million and $167 million increase, respectively, 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 $18 million and $47 million increase, respectively, 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 and $9 million, respectively, in interest expense on the $162
million of additional indebtedness for the payment of (i) $67 million
related to obtaining the SSSI Option and Non-Competition Agreement and (ii)
$95 million of transaction costs and other related liabilities, (4) a
decrease of $8 million and an increase of $8 million, respectively, 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 $6 million
and $26 million, respectively, in income tax expense as a result of income
taxes provided at a 41% tax rate.
(f) 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.
(g) 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 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
17
<PAGE>
<PAGE>
TIME WARNER INC.
NOTES TO THE TIME WARNER PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS -- (CONTINUED)
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.
(h) 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 in the amount of $2.061 billion and amortized on a
straight-line basis over a twenty-year period and (ii) goodwill in the
amount of $688 million 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.
(i) 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 for the year ended December 31, 1995.
Income taxes of $6 million have been provided in the year ended December 31,
1995 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.
(j) Pro forma adjustments to record the ITOCHU/Toshiba Transaction for the 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.
18
<PAGE>
<PAGE>
TIME WARNER ENTERTAINMENT GROUP
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(MILLIONS, UNAUDITED)
<TABLE>
<CAPTION>
ENTERTAINMENT CONSOLIDATION TWI-TWE
GROUP TWE-A/N OF DEBT MANAGEMENT
HISTORICAL TRANSACTION(a) PARAGON(b) REFINANCINGS(c) FEES(d)
------------- -------------- ------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Revenues............................... $ 9,629 $137 $ 179 $-- $ 20
Cost of revenues*...................... 6,639 51 147 -- --
Selling, general and administrative*... 1,998 56 31 -- --
------ ----- ----- --- ---
Operating expenses..................... 8,637 107 178 -- --
Business segment operating income
(loss)............................... 992 30 1 -- 20
Interest and other, net................ (539) -- (1) 13 --
Minority interest...................... (133) (27) -- -- --
Corporate expenses..................... (64) -- -- -- --
------ ----- ----- --- ---
Income (loss) before income taxes...... 256 3 -- 13 20
Income tax (provision) benefit......... (86) -- -- -- --
------ ----- ----- --- ---
Income (loss) before extraordinary
item................................. $ 170 $ 3 $ -- $13 $ 20
------ ----- ----- --- ---
------ ----- ----- --- ---
- ------------
* Includes depreciation and
amortization expense of:............. $ 1,060 $ 26 $ 36 $-- $ --
------ ----- ----- --- ---
------ ----- ----- --- ---
<CAPTION>
ENTERTAINMENT
ASSET SALE GROUP
TRANSACTIONS(e) PRO FORMA
--------------- -------------
<S> <C> <C>
Revenues............................... $(279) $ 9,686
Cost of revenues*...................... (209) 6,628
Selling, general and administrative*... (21) 2,064
----- ------
Operating expenses..................... (230) 8,692
Business segment operating income
(loss)............................... (49) 994
Interest and other, net................ 43 (484)
Minority interest...................... -- (160)
Corporate expenses..................... -- (64)
----- ------
Income (loss) before income taxes...... (6) 286
Income tax (provision) benefit......... 3 (83)
----- ------
Income (loss) before extraordinary
item................................. $ (3) $ 203
----- ------
----- ------
- ------------
* Includes depreciation and
amortization expense of:............. $ (44) $ 1,078
----- ------
----- ------
</TABLE>
See accompanying notes.
19
<PAGE>
<PAGE>
TIME WARNER INC.
NOTES TO THE ENTERTAINMENT GROUP
PRO FORMA CONSOLIDATED CONDENSED
STATEMENT OF OPERATIONS
(a) 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.
(b) 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.
(c) 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 below (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.
<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>
(d) 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.
(e) 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. The effects of the sale of certain of
the unclustered cable television systems that have closed or are expected to
close in 1996 are not material to the pro forma financial condition and
results of operations of either the Entertainment Group or Time Warner and,
accordingly, have not been reflected in the pro forma consolidated financial
statements as of and for the six months ended June 30, 1996 included herein.
20
<PAGE>
<PAGE>
(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, 1995 and 1994; and
(B) Financial Statements as of July 31, 1994 and 1993 and for each of
the years ended July 31, 1994, 1993 and 1992, 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, 1995 and 1994; and
(B) Financial Statements as of December 31, 1994 and for each of the
years ended December 31, 1994 and 1993, 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, 1994 and 1993, including the report
thereon of Arthur Andersen LLP.
(iv) Turner Broadcasting System, Inc. (the documents listed in this
paragraph (iv) being referred to as the 'Financial Statements of Turner
Broadcasting System, Inc.'):
(A) Unaudited Consolidated Condensed Financial Statements as of June
30, 1996 and for each of the six months ended June 30, 1996 and 1995; and
(B) Consolidated Financial Statements as of December 31, 1995 and 1994
and for each of the years ended December 31, 1995, 1994 and 1993, including
the report thereon of Price Waterhouse LLP.
(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, 1995 and 1994; and
(B) Consolidated Financial Statements as of December 31, 1994 and 1993
and for each of the years ended December 31, 1994, 1993 and 1992, including
the report thereon of Deloitte & Touche LLP.
(c) PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS:
(i) Time Warner Inc.:
(A) Pro Forma Consolidated Condensed Balance Sheet as of June 30,
1996;
(B) Pro Forma Consolidated Condensed Statements of Operations for the
year ended December 31, 1995 and the six months ended June 30, 1996; and
(C) Notes to Pro Forma Consolidated Condensed Financial Statements.
(ii) Entertainment Group:
(A) Pro Forma Consolidated Condensed Statement of Operations for the
year ended December 31, 1995; and
(B) Notes to Pro Forma Consolidated Condensed Statement of Operations.
21
<PAGE>
<PAGE>
(d) EXHIBITS:
<TABLE>
<C> <S>
(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. and from pages 2 to 9 of the Quarterly Report on Form 10-Q for the six months ended
June 30, 1996 of Turner Broadcasting System, Inc.).
(ix) Exhibit 99(e): Financial Statements of KBLCOM Incorporated (incorporated by reference from
Exhibit 99(f) 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>
22
<PAGE>
<PAGE>
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 August 8, 1996.
TIME WARNER INC.
By: /S/ RICHARD J. BRESSLER
...................................
Name: Richard J. Bressler
Title: Senior Vice President
and Chief Financial Officer
<PAGE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBITS NUMBER
- ------- ------------------------------------------------------------------------------------------ ----------
<C> <S> <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. and from pages 2 to 9 of the Quarterly Report on Form 10-Q for the six months
ended June 30, 1996 of Turner Broadcasting System, Inc.
99(e) Financial Statements of KBLCOM Incorporated (incorporated by reference from Exhibit 99(f) *
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.
<PAGE>
<PAGE>
EXHIBIT 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
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 August 8, 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. Post-Effective Amendment No. 1 to 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, Post-Effective
Amendment No. 1 to Registration Statement No. 33-57667 on Form S-8
and Registration Statement No. 333-02383 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;
20. Post-Effective Amendment No. 2 to Registration Statement No.
33-62585 on Form S-3; and
21. Registration Statement No. 333-04493 on Form S-8.
ERNST & YOUNG LLP
New York, New York
August 8, 1996
<PAGE>
<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. Post-Effective Amendment No. 1 to 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, Post-Effective
Amendment No. 1 to Registration Statement No. 33-57667 on Form S-8
and Registration Statement No. 333-02383 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;
20. Post-Effective Amendment No. 2 to Registration Statement No.
33-62585 on Form S-3; and
21. Registration Statement No. 333-04493 on Form S-8.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
August 8, 1996
<PAGE>
<PAGE>
EXHIBIT 23(c)
CONSENT OF INDEPENDENT PUBLIC 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 August 8, 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. Post-Effective Amendment No. 1 to 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, Post-Effective
Amendment No. 1 to Registration Statement No. 33-57667 on Form S-8
and Registration Statement No. 333-02383 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;
20. Post-Effective Amendment No. 2 to Registration Statement No.
33-62585 on Form S-3; and
21. Registration Statement No. 333-04493 on Form S-8.
PRICE WATERHOUSE LLP
Atlanta, Georgia
August 8, 1996
<PAGE>
<PAGE>
EXHIBIT 23(d)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to the incorporation by reference of 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 August 8, 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. Post-Effective Amendment No. 1 to 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, Post-Effective
Amendment No. 1 to Registration Statement No. 33-57667 on Form S-8
and Registration Statement No. 333-02383 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;
20. Post-Effective Amendment No. 2 to Registration Statement No.
33-62585 on Form S-3; and
21. Registration Statement No. 333-04493 on Form S-8.
DELOITTE & TOUCHE LLP
Houston, Texas
August 8, 1996
