SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
TIME WARNER INC.
(Name of Issuer)
Common Stock, par value $0.01 per share
(Title of Class of Securities)
887315109
(CUSIP Number)
Sheila A. Clark, Esq.
Senior Vice President, Legal,
America Online, Inc.
22000 AOL Way
Dulles, Virginia 20166-9323
(703) 265-1000
Copy to:
Richard I. Beattie, Esq.
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
(212) 455-2000
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
January 10, 2000
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box
o.
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1. I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
America Online, Inc.
54-1322110
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2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP: (a) [ ]
(b) [ ]
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3. SEC USE ONLY:
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4. SOURCE OF FUNDS:
WC, 00
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5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) o
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6. CITIZENSHIP OR PLACE OF ORGANIZATION:
Delaware
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NUMBER OF SHARES 7. SOLE VOTING POWER
233,263,204(1) (see Item 3 herein)
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BENEFICIALLY OWNED BY 8. SHARED VOTING POWER
105,052,854(1) (see Item 3 herein)
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EACH REPORTING 9. SOLE DISPOSITIVE POWER
233,263,204 (see Item 3 herein)
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PERSON WITH 10. SHARED DISPOSITIVE POWER
0
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11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
338,316,0581
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12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)EXCLUDES CERTAIN SHARES:|X|
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13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
28.9%
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14. TYPE OF REPORTING PERSON:
CO
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(1) America Online, Inc. has the right, subject to certain conditions, to
purchase 233,263,204 shares of Time Warner Common Stock (as defined below) upon
exercise of an option granted to America Online, Inc. pursuant to a Stock Option
Agreement dated as of January 10, 2000, between Time Warner Inc. and America
Online, Inc.. America Online, Inc. has also entered into a Voting Agreement,
dated January 10, 2000 with certain stockholders of Time Warner Inc., which
provides that signatory stockholders will vote their shares of Time Warner
Common Stock in favor of a proposal to adopt the Merger Agreement (as defined
below). The option is not currently exercisable and America Online, Inc. does
not have any rights as a stockholder of Time Warner pursuant to this Stock
Option Agreement, including the right to dispose (or to direct the disposition
of) any shares of Time Warner Common Stock that may be purchased upon exercise
of the option or pursuant to said Voting Agreement. Accordingly, America Online,
Inc. expressly disclaims beneficial ownership of all shares subject to said
agreements. The aggregate amount of Time Warner Common Stock beneficially owned
by America Online, Inc. excludes beneficial ownership by directors and executive
officers (such holdings are disclosed fully herein).
Item 1. Security and Issuer.
This statement on Schedule 13D (this "Schedule 13D") relates to the
common stock, par value $0.01 per share (the "Time Warner Common Stock"), of
Time Warner Inc., a Delaware corporation ("Time Warner"). The address of the
principal executive office of Time Warner is 75 Rockefeller Plaza, New York, NY
10019.
Item 2. Identity and Background.
This Schedule 13D is filed by America Online, Inc., a Delaware
corporation ("America Online" or the "Reporting Person"). The address of the
principal executive office of America Online is 22000 AOL Way, Dulles, Virginia
20166-9323. America Online is the world's leader in branded interactive services
and content.
To the best of America Online's knowledge as of the date hereof, the
name, business address, present principal occupation or employment and
citizenship of each executive officer and director of America Online, and the
name, principal business and address of any corporation or other organization in
which such employment is conducted is set forth in Schedule I hereto. The
information contained in Schedule I is incorporated herein by reference.
During the last five years, neither America Online nor, to the best of
America Online's knowledge, any of the executive officers or directors of
America Online listed in Schedule I hereto, has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or has been a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, Federal or State securities laws or finding any
violation with respect to such laws.
Four directors of America Online have legal or beneficial ownership of
Time Warner Common Stock, described as follows: (i) General Colin Powell has
reported that he owns options to purchase 320,000 shares of Time Warner Common
Stock; (ii) Robert Pittman has reported ownership of 60,000 shares of Time
Warner Common Stock and 1,280 shares of Time Warner Common Stock in the name of
the Pittman Family Foundation; (iii) James Barksdale has reported joint
ownership with his spouse of 1,500 shares of Time Warner Common Stock, ownership
by his son of 4,000 shares of Time Warner Common Stock, 3,400 shares of Time
Warner Common Stock owned by the Jim & Sally Barksdale Unitrust (dated February
9, 1996, James L. and Sally M. Barksdale, Trustees) and 800 shares of Time
Warner Common Stock by the Pickwick Group, L.P., James L. and Sarah M.
Barksdale, sole general partners; and (iv) Daniel F. Akerson has reported joint
ownership of 2,000 shares of Time Warner Common Stock with his spouse (1,000 of
such shares were purchased on December 21, 1999) through a portfolio manager at
U.S. Trust, which has discretionary authority. Two executive officers of America
Online have legal or beneficial ownership of Time Warner Common Stock, described
as follows: (i) Kenneth B. Lerer has reported joint ownership with his spouse of
2,200 shares of Time Warner Common Stock and (ii) Kenneth J. Novack has reported
ownership of 500 shares of Time Warner Common Stock in the name of the Novack
Family Foundation.
Item 3. Source and Amount of Funds or Other Consideration.
America Online and Time Warner entered into an Agreement and Plan of
Merger dated as of January 10, 2000 (the "Merger Agreement"). Pursuant to the
Merger Agreement, (i) a Delaware corporation ("America Online Merger Sub") will
merge (the "America Online Merger") with and into America Online, with America
Online as the surviving corporation and (ii) another Delaware corporation ("Time
Warner Merger Sub") will merge (the "Time Warner Merger" and, together with
America Online Merger, the "Mergers") with and into Time Warner, with Time
Warner as the surviving corporation, such that America Online and Time Warner
will each be a wholly owned subsidiary of a Delaware corporation, which will be
named AOL Time Warner Inc. ("Holdco"). Pursuant to the terms of the Merger
Agreement, each issued and outstanding share of common stock of America Online
("America Online Common Stock") not owned or held by America Online will be
exchanged for one share of common stock, par value $0.01 per share, of Holdco
("Holdco Common Stock"), and, in addition to other capital stock of Time Warner,
all of which will be exchanged for capital stock of Holdco, each share issued
and outstanding share of Time Warner Common Stock not owned or held by Time
Warner will be exchanged for 1.5 shares of Holdco Common Stock.
In order to facilitate the consummation of the transactions
contemplated by the Merger Agreement and in consideration thereof, America
Online entered into a Stock Option Agreement (the "Option Agreement"), dated as
of January 10, 2000, with Time Warner. Pursuant to the Option Agreement, Time
Warner granted to America Online an irrevocable option (the "Option") to
purchase up to 233,263,204 shares of Time Warner Common Stock, subject to
adjustment as described below, at a purchase price per share equal to $110.63
per share. The number of shares of Time Warner Common Stock subject to the
Option will automatically adjust to remain equal to 19.9% of the Time Warner
Common Stock issued and outstanding. The Option is not currently exercisable and
may only be exercised under certain circumstances described in the Option
Agreement and outlined in this Schedule 13D. If the Option were to become
exercisable, the purchase price required to purchase all shares of Time Warner
Common Stock subject to the Option would be $25,805,908,258.52. The Option may
be exercised for cash or pursuant to a cashless exercise in accordance with its
terms. America Online anticipates that any funds to be paid by it upon exercise
of the Option would be provided from cash on hand and cash available from
external sources, including proceeds from debt or equity issuances. America
Online did not pay additional consideration to Time Warner in connection with
Time Warner entering into the Option Agreement and granting the Option, but
America Online granted a reciprocal option to Time Warner to purchase up to
19.9% of the issued and outstanding America Online Common Stock at a price of
$73.75 per share, subject to similar terms and conditions in the Option
Agreement.
In order to further facilitate the consummation of the transactions
contemplated by the Merger Agreement and in consideration thereof, America
Online also entered into a Voting Agreement (the "Voting Agreement"), dated as
of January 10, 2000, with certain stockholders of Time Warner named therein
(collectively, the "Stockholders") whereby the Stockholders agreed to vote all
of the shares of Time Warner Common Stock beneficially owned by them in favor of
the approval and adoption of the Merger Agreement, the Time Warner Merger and
any other action required in furtherance thereof. America Online did not pay
additional consideration to any Stockholder in connection with the execution and
delivery of the Voting Agreement.
References to, and descriptions of, the Merger Agreement, the Option
Agreement and the Voting Agreement as set forth above in this Item 3 are
qualified in their entirety by reference to the copies of the Merger Agreement,
the Option Agreement and the Voting Agreement included as Exhibits 1, 2 and 3,
respectively, to this Schedule 13D, and are incorporated in this Item 3 in their
entirety where such references and descriptions appear.
Item 4. Purpose of the Transaction.
The information set forth or incorporated by reference in Items 2 and 3
is hereby incorporated herein by reference.
Upon consummation of the Mergers as contemplated by the Merger
Agreement (a) the Restated Certificate of Incorporation and Bylaws of Time
Warner will be the Certificate of Incorporation and Bylaws of the surviving
corporation of the Time Warner Merger, (b) the officers and directors of Time
Warner Merger Sub shall be the officers and directors of the surviving
corporation of the Time Warner Merger, and (c) each share of Time Warner Capital
Stock (as defined in the Merger Agreement) held by Time Warner will cease to be
outstanding and shall be canceled. It is also expected that the shares of Time
Warner Common Stock will become eligible for termination of registration
pursuant to the Securities Exchange Act of 1934, as amended.
The Mergers are subject to customary closing conditions, including the
adoption of the Merger Agreement by both America Online's stockholders and Time
Warner's stockholders, the expiration of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, the receipt of
any other required regulatory approvals, and the satisfaction or waiver of
certain other conditions as more fully described in the Merger Agreement. There
can be no assurance that the required approvals will be obtained in a timely
fashion, if at all, or, in the case of regulatory approvals, if obtained, will
not contain certain conditions.
Pursuant to the terms and subject to the conditions set forth in the
Option Agreement, America Online may exercise the Option, in whole or in part,
at any time, or from time to time, after America Online becomes entitled to
receive, pursuant to the Merger Agreement, the Time Warner Termination Fee (as
defined in Section 8.2(b) of the Merger Agreement).
The Option will terminate upon the earliest of: (i) the effective time
of the Mergers, (ii) written notice of termination of the Option Agreement by
America Online to Time Warner, (iii) 12 months after the date America Online
becomes entitled to the Time Warner Termination Fee, or (iv) the date of
termination of the Merger Agreement, unless America Online has the right to
receive the Time Warner Termination Fee, in which case the Option will not
terminate until the later of (x) 15 business days following the time the Time
Warner Termination Fee becomes unconditionally payable and (y) the expiration of
the period in which America Online has such right to receive the Time Warner
Termination Fee.
Notwithstanding the termination of the Option, America Online is
entitled to purchase those shares subject to the Option with respect to which it
may have exercised the Option by delivery of an Option Notice (as defined in the
Merger Agreement) prior to the Expiration Date, and the termination of the
Option will not affect any rights under the Option Agreement which by their
terms do not terminate or expire prior to or at the Expiration Date.
Upon the occurrence of certain events set forth in the Option
Agreement, Time Warner is required to repurchase the Option and the shares of
Common Stock issued pursuant to the Option to America Online. In addition, the
Option Agreement grants certain registration rights to America Online with
respect to the shares of Common Stock subject to the Option.
The Option is not currently exercisable, and until the Option becomes
exercisable and is exercised, America Online does not have any right to vote (or
to direct the vote of) or dispose (or to direct the disposition of) any shares
of Time Warner Common Stock that may be purchased upon exercise of the Option.
Accordingly, America Online expressly disclaims beneficial ownership of all such
shares.
Pursuant to the terms of the Voting Agreement, the Stockholders have
agreed, among other things, (i) to vote all of the shares of Time Warner Common
Stock beneficially owned by them in favor of the approval and adoption of the
Merger Agreement, the Time Warner Merger and any other action required in
furtherance thereof and (ii) with certain exceptions, not to sell, transfer,
pledge, encumber, assign or otherwise dispose of such shares, unless the
transferee party agrees to be bound by the Voting Agreement. The Voting
Agreement terminates upon the earlier to occur of the completion of the Mergers
or the termination of the Merger Agreement. The name of each Stockholder and the
number of outstanding shares of Time Warner Common Stock held by each
Stockholder and subject to the Voting Agreement are set forth on the signature
pages thereto and are incorporated herein by reference.
America Online does not have any right to dispose (or direct the
disposition of) any shares of Time Warner Common Stock pursuant to the Voting
Agreement. Accordingly, America Online expressly disclaims beneficial ownership
of all such shares.
References to, and descriptions of, the Merger Agreement, the Option
Agreement and the Voting Agreement as set forth above in this Item 4 are
qualified in their entirety by reference to the copies of the Merger Agreement,
the Option Agreement and the Voting Agreement included as Exhibits 1, 2 and 3,
respectively, to this Schedule 13D, and are incorporated in this Item 4 in their
entirety where such references and descriptions appear. Capitalized terms used
in Item 4 but not otherwise defined herein have the respective meanings assigned
to them in the Merger Agreement.
Item 5. Interest in Securities of Time Warner.
The information set forth or incorporated by reference in Items 2, 3
and 4 is hereby incorporated herein by reference.
The number of shares of Time Warner Common Stock covered by the Option
is 233,263,204 (representing approximately 19.9% of the shares of Time Warner
Common Stock issued and outstanding as of November 30, 1999, as represented by
Time Warner in the Merger Agreement).
The Option is not currently exercisable, and until the Option becomes
exercisable and is exercised, America Online does not have any right to vote (or
to direct the vote of) or dispose (or to direct the disposition of) any shares
of Time Warner Common Stock that may be purchased upon exercise of the Option.
Accordingly, America Online expressly disclaims beneficial ownership of all such
shares.
The number of shares of Common Stock covered by the Voting Agreement is
105,052,854 (representing approximately 9% of the voting power of shares of Time
Warner Common Stock outstanding as of November 30, 1999, as represented by Time
Warner in the Merger Agreement).
By virtue of the Voting Agreement, America Online may be deemed to
share with the Stockholders the power to vote shares of Time Warner Common Stock
subject to the Voting Agreement. However, America Online is not entitled to any
rights as a stockholder of Time Warner as to the shares of Time Warner Common
Stock covered by the Voting Agreement and expressly disclaims any beneficial
ownership of the shares of Time Warner Common Stock subject to the Voting
Agreement.
Other than as set forth in this Schedule 13D, to the best of America
Online's knowledge as of the date hereof (i) neither America Online nor any
subsidiary or affiliate of America Online nor any of America Online's executive
officers or directors, beneficially owns any shares of Time Warner Common Stock,
and (ii) there have been no transactions in the shares of Time Warner Common
Stock effected during the past 60 days by America Online, nor to the best of
America Online's knowledge, by any subsidiary or affiliate of America Online or
any of America Online's executive officers or directors.
No other person is known by America Online to have the right to receive
or the power to direct the receipt of dividends from, or the proceeds from the
sale of, the shares of Time Warner Common Stock obtainable by America Online
upon exercise of the Option.
Reference to, and descriptions of, the Merger Agreement, Option
Agreement and Voting Agreement as set forth in this Item 5 are qualified in
their entirety by reference to the copies of the Merger Agreement, the Option
Agreement and the Voting Agreement included as Exhibits 1, 2 and 3,
respectively, to this Schedule 13D, and incorporated in this Item 5 in their
entirety where such references and descriptions appear.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of Time Warner.
The information set forth, or incorporated by reference, in Items 3
through 5 is hereby incorporated herein by reference.
Copies of the Merger Agreement, the Option Agreement and the Voting
Agreement are included as Exhibits 1, 2 and 3, respectively, to this Schedule
13D. To the best of America Online's knowledge, except as described in this
Schedule 13D, there are at present no other contracts, arrangements,
understandings or relationships among the persons named in Item 2 above, and
between any such persons and any person, with respect to any securities of Time
Warner.
Item 7. Material to be Filed as Exhibits.
Exhibit Description
1. Agreement and Plan of Merger, dated as of January 10, 2000, among
America Online, Inc. and Time Warner Inc. (filed as Exhibit 2.1 to
America Online's Current Report on Form 8-K dated January 10, 2000 and
incorporated herein by reference).
2. Stock Option Agreement, dated as of January 10, 2000, between America
Online, Inc. and Time Warner Inc. (filed as Exhibit 10.1 to America
Online's Current Report on Form 8-K dated January 10, 2000 and
incorporated herein by reference).
3. Voting Agreement, dated as of January 10, 2000, among America Online,
Inc. and the several stockholders of Time Warner Inc. named therein
(filed as Exhibit 10.3 to America Online's Current Report on Form 8-K
dated January 10, 2000 and incorporated herein by reference).
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
AMERICA ONLINE, INC.
By: /s/J. Michael Kelly
Name: J. Michael Kelly
Title: Senior Vice President, Chief Financial
Officer and Assistant Secretary
Dated: January 20, 2000
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
OF AMERICA ONLINE, INC.
The following table sets forth the name, business address and present
principal occupation or employment of each director and executive officer of
America Online. Except as indicated below, each such person is a U.S. citizen,
and the business address of each such person is 22000 AOL Way, Dulles, Virginia
20166-9323.
Board of Directors
Name and Title Present Principal Occupation
<TABLE>
<S> <C>
Stephen M. Case, Chief Executive Officer and Chairman of the Board;
Chairman of the Board America Online, Inc.
Daniel F. Akerson, Chairman of the Board;
Director NEXTLINK Communications, Inc.
James L. Barksdale, Managing Partner;
Director The Barksdale Group
Frank J. Caufield, General Partner;
Director Kleiner Perkins Caufield & Byers
Miles R. Gilburne, Former Senior Vice President, Corporate Development,
Director America Online, Inc.
General Alexander M. Haig, Jr., Chairman and President;
Director Worldwide Associates, Inc.
Dr. Thomas Middelhoff,* Chairman of the Board;
Director Bertelsmann AG
Robert W. Pittman, President and Chief Operating Officer;
Director America Online, Inc.
General Colin L. Powell, Chairman;
Director America's Promise: The Alliance for Youth
Franklin D. Raines, Chairman and Chief Executive Officer;
Director Fannie Mae
Marjorie M. Scardino, Chief Executive Officer;
Director Pearson PLC
*German Citizen
</TABLE>
Executive Officers Who Are Not Directors
Name Title and Present Principal Occupation
<TABLE>
<S> <C>
Paul T. Cappuccio Senior Vice President, General Counsel and Assistant Secretary;
America Online, Inc.
J. Michael Kelly Senior Vice President, Chief Financial Officer and Assistant
Secretary;
America Online, Inc.
Kenneth B. Lerer Senior Vice President;
America Online, Inc.
James F. MacGuidwin Vice President, Controller and Chief Accounting & Budget Officer;
America Online, Inc.
Kenneth J. Novack Vice Chairman;
America Online, Inc.
William J. Raduchel Senior Vice President and Chief Technology Officer;
America Online, Inc.
George Vradenburg, III Senior Vice President, Global and Strategic Policy;
America Online, Inc.
</TABLE>
The present principal occupation of each of the named executive
officers is the same as the named position(s) held with America Online, Inc..
EXHIBIT INDEX
Exhibit Description
1. Agreement and Plan of Merger, dated as of January 10, 2000, among
America Online, Inc. and Time Warner Inc. (filed as Exhibit 2.1 to
America Online's Current Report on Form 8-K dated January 10, 2000 and
incorporated herein by reference).
2. Stock Option Agreement, dated as of January 10, 2000, between America
Online, Inc. and Time Warner Inc. (filed as Exhibit 10.1 to America
Online's Current Report on Form 8-K dated January 10, 2000 and
incorporated herein by reference).
3. Voting Agreement, dated as of January 10, 2000, among America Online,
Inc. and the several stockholders of Time Warner Inc. named therein
(filed as Exhibit 10.3 to America Online's Current Report on Form 8-K
dated January 10, 2000 and incorporated herein by reference).
