SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 11, 2001
AOL TIME WARNER INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-15062 13-4099534
---------------------------- ----------- -------------------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
75 ROCKEFELLER PLAZA, NEW YORK, NY 10019
---------------------------------------------------
(Address of principal executive offices) (zip code)
(212) 484-8000
----------------------------------------------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
-------------------------------------------------------------
(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
This Form 8-K/A amends the current report on Form 8-K dated
January 11, 2001 (filed January 12, 2001) to include Item 7(b) Pro Forma
Financial Information, and related exhibits.
ITEM 5. OTHER EVENTS
AOL Time Warner is filing as Exhibit 99(a) the AOL Time Warner Consolidated
Balance Sheet as of December 31, 2000 and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(b) UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS:
(i) AOL Time Warner Inc.:
(A) Pro Forma Consolidated Condensed Balance Sheet as of
September 30, 2000;
(B) Notes to the Pro Forma Consolidated Condensed Balance Sheet;
(C) Pro Forma Consolidated Condensed Statement of Operations for the
three months ended September 30, 2000;
(D) Pro Forma Consolidated Condensed Statement of Operations for the
year ended June 30, 2000;
(E) Notes to the Pro Forma Consolidated Condensed Statement of
Operations;
(F) Pro Forma Consolidated Condensed Statement of Operations for the
nine months ended September 30, 2000;
(G) Pro Forma Consolidated Condensed Statement of Operations for the
year ended December 31, 1999; and
(H) Notes to the Pro Forma Consolidated Condensed Statements of
Operations.
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
On January 11, 2001 America Online, Inc. ("America Online") and Time
Warner Inc. ("Time Warner") completed their previously announced merger pursuant
to the Second Amended and Restated Agreement and Plan of Merger among the
companies and certain of their subsidiaries dated as of January 10, 2000
(the "merger"). The combined company is named AOL Time Warner Inc. ("AOL
Time Warner").
The following pro forma consolidated condensed financial statements are
presented to illustrate the effects of the merger on the historical financial
position and operating results of America Online and Time Warner. Because
America Online and Time Warner have different fiscal years, and the combined
company has adopted the calendar year-end of Time Warner, pro forma operating
results are presented on two different bases: (1) a June 30 fiscal-year basis,
which is consistent with America Online's historical fiscal year-end and (2) a
December 31 calendar-year basis, which is consistent with both Time Warner's
historical fiscal year-end and that of AOL Time Warner going forward. Management
believes that it is meaningful to present pro forma financial information based
on the calendar year-end of the combined company to facilitate an analysis of
the pro forma effects of the merger.
The following pro forma consolidated condensed balance sheet of AOL Time
Warner at September 30, 2000 gives effect to the merger as if it occurred as of
that date. On a June 30 fiscal-year basis, the pro forma consolidated condensed
statements of operations of AOL Time Warner for the three months ended September
30, 2000 and the year ended June 30, 2000 give effect to the merger as if it
occurred as of July 1, 1999. On a December 31 calendar-year basis, the pro forma
consolidated condensed statements of operations of AOL Time Warner for the nine
months ended September 30, 2000 and the year ended December 31, 1999 give effect
to the merger as if it occurred as of January 1, 1999.
The pro forma consolidated condensed financial statements have been derived
from, and should be read in conjunction with, the historical consolidated
financial statements, including the notes thereto, of each of America Online and
Time Warner. For America Online, those financial statements are included in
America Online's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2000, as adjusted by AOL Time Warner's Current Report on Form 8-K
dated January 18, 2001, and America Online's Annual Report on
Form 10-K for the
1
year ended June 30, 2000, as amended. For Time Warner,
those financial statements are included in Time Warner's Quarterly Report on
Form 10-Q for the quarter ended September 30, 2000 and its Annual Report on
Form 10-K for the year ended December 31, 1999, as amended, which are
incorporated herein by reference.
The pro forma consolidated condensed financial statements are presented for
informational purposes only and are not necessarily indicative of the financial
position or results of operations of AOL Time Warner that would have occurred
had the merger been consummated as of the dates indicated. In addition, the pro
forma consolidated condensed financial statements are not necessarily indicative
of the future financial condition or operating results of AOL Time Warner.
THE MERGER
The merger was structured as a stock-for-stock exchange. Prior to the
merger, America Online and Time Warner formed a new holding company called AOL
Time Warner and the new holding company formed two wholly owned subsidiaries.
Upon the closing of the transaction, one such subsidiary merged with and into
America Online and one such subsidiary merged with and into Time Warner. As a
result, America Online and Time Warner each became a wholly owned subsidiary of
AOL Time Warner. As part of the merger, each issued and then outstanding share
of each class of common stock of Time Warner was converted into 1.5 shares of an
identical series of common stock of AOL Time Warner. In addition, each issued
and then outstanding share of each class of preferred stock of Time Warner was
converted into one share of preferred stock of AOL Time Warner, with
substantially identical terms except that such shares are convertible into
approximately 6.25 shares of AOL Time Warner common stock. Lastly, each issued
and then outstanding share of common stock of America Online was converted into
one share of common stock of AOL Time Warner.
As a result of the merger, the former shareholders of America Online have
an approximate 55% interest in AOL Time Warner and the former shareholders of
Time Warner have an approximate 45% interest in AOL Time Warner, expressed
on a fully diluted basis. The merger will be accounted for by AOL Time Warner as
an acquisition of Time Warner under the purchase method of accounting for
business combinations.
PRO FORMA ADJUSTMENTS
Pro forma adjustments for the merger reflect:
o the issuance of approximately 2.0 billion shares of AOL Time Warner common
stock and AOL Time Warner Series LMCN-V common stock in exchange for all of
the 1.3 billion outstanding shares of Time Warner common stock and Series
LMCN-V common stock;
o the issuance of approximately 4.0 million shares of AOL Time Warner
preferred stock in exchange for all of the 4.0 million outstanding shares
of Time Warner preferred stock;
o the issuance of options to purchase approximately 191.3 million shares of
AOL Time Warner common stock in exchange for all of the outstanding options
to purchase 127.5 million shares of Time Warner common stock;
o the issuance of approximately 1.2 million shares of AOL Time Warner
restricted common stock in exchange for all of the approximately 800
thousand outstanding shares of Time Warner restricted common stock; and
o the incurrence of an additional $100 million of transaction costs by
America Online and Time Warner, including legal and investment banking
fees, that had not been recorded as of September 30, 2000.
No pro forma adjustments are necessary to reflect the merger of America
Online into a separate wholly owned subsidiary of AOL Time Warner because
America Online's net assets will be recorded at their historical cost basis and
the exchange ratio for America Online common stock is one to one.
2
MERGER BENEFITS
Management expects that the strategic benefits of the merger will result in
incremental revenue and cost-savings opportunities for the combined company.
Those opportunities include, but are not limited to, the ability to
cross-promote the combined company's products and services and the ability to
offer consumers expanded broadband and online services. However, such
incremental revenues or cost savings have not been reflected in the accompanying
pro forma consolidated condensed statements of operations of AOL Time Warner.
PURCHASE ACCOUNTING
Under the purchase method of accounting, the estimated cost of
approximately $147 billion to acquire Time Warner, including transaction costs,
will be allocated to its underlying net assets in proportion to their respective
fair values. Any excess of the purchase price over the estimated fair value of
the net assets acquired will be recorded as goodwill. As more fully described in
the notes to the pro forma consolidated condensed financial statements, a
preliminary allocation of the excess of the purchase price, including
transaction costs, over the book value of the net assets to be acquired has been
made to goodwill and other intangible assets, including film libraries, cable
television franchises, music catalogues and music copyrights. At this time, the
work needed to provide the basis for estimating these fair values and related
amortization periods has not been completed. It is expected that the final
allocation of the excess of purchase price over the book value of the net assets
acquired will not differ materially from the amounts included herein.
AOL Time Warner will periodically review the carrying value of the goodwill
resulting from acquired businesses to determine whether an impairment may exist.
AOL Time Warner will consider relevant cash flow information, including
estimated future operating results, trends and other available information, in
assessing whether the carrying value of goodwill can be recovered. If it is
determined that the carrying value of goodwill will not be recovered from
the undiscounted future cash flows of acquired businesses, the carrying
value of such goodwill would be considered impaired and reduced by
a charge to operations in the amount of the impairment. An impairment charge
is measured as any deficiency in the amount of estimated undiscounted cash
flows of acquired businesses available to recover the carrying value related
to goodwill.
OTHER PRO FORMA CONSIDERATIONS
AOL Europe
America Online has a 50-50 joint venture with Bertelsmann AG
("Bertelsmann") called AOL Europe, which provides online services in several
European countries. In March 2000, America Online and Bertelsmann announced a
restructuring of AOL Europe in which America Online may be required to purchase
Bertelsmann's 50% interest in AOL Europe for consideration ranging from $6.75
billion to $8.25 billion pursuant to certain put and call arrangements between
the parties, as described more fully in America Online's Annual Report on
Form 10-K for the year ended June 30, 2000. Should America Online acquire this
interest, the purchase price will be payable, at America Online's option, in
cash, stock or a combination of cash and stock.
The operations of AOL Europe are not material to AOL Time Warner's pro
forma revenues and net loss. Accordingly, the primary financial impact of this
potential acquisition is expected to be (i) incremental noncash amortization
charges of $1-1.5 billion per year relating to intangible assets to be
recognized in connection with the purchase price allocation and (ii) incremental
financing costs and/or share dilution depending upon the ultimate purchase price
and form of consideration.
Revenue Classification Changes
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
101"), which, as amended, was effective for AOL Time Warner in the fourth
quarter of 2000. SAB 101 clarifies certain existing accounting principles for
the timing of revenue recognition and the classification of revenues in
financial statements. While AOL Time Warner's existing revenue recognition
policies are consistent with the provisions of SAB 101, the new rules will
result in some reclassifications between revenues and costs. As such, the
accompanying pro forma consolidated condensed financial statements also
3
have been adjusted to reflect the anticipated effect of AOL Time Warner
adopting SAB 101 in the fourth quarter of 2000. This effect consists of
a reduction of both revenues and costs in equal amounts.
Stock-Based Compensation
AOL Time Warner will account for its stock option plans in accordance with
APB Opinion No. 25, Accounting for Stock Issued to Employees ("APB 25") and FASB
Interpretation No. 44, Accounting for Certain Transactions involving Stock
Compensation ("FIN 44").
FIN 44 requires the intrinsic value of the unvested awards at the merger
consummation date to be allocated to deferred compensation and recognized as
noncash compensation cost over the remaining future vesting period. Because the
ultimate amount to be allocated to deferred compensation will be based on the
stock price of America Online common stock and the number of Time Warner's
unvested employee stock options and restricted stock awards on the merger
consummation date, AOL Time Warner's pro forma net loss is subject to changes in
America Online's stock price until the merger consummation date. The
accompanying pro forma consolidated condensed statements of operations base the
deferred compensation charge on the $53.65 stock price of America Online as of
September 30, 2000, the date of the pro forma consolidated condensed balance
sheet. Since the closing price of America Online's stock on January 11, 2001,
the date that the merger closed, was $47.23, there will be a $1.6 million
reduction in noncash compensation costs per year ($960 thousand after-tax)
compared to that included herein, which will decrease the pro forma net loss of
AOL Time Warner.
4
AOL TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 2000
(IN MILLIONS, UNAUDITED)
AOL
TIME PRO FORMA TIME WARNER
AOL(a) WARNER(b) ADJUSTMENTS(c) PRO FORMA
------- --------- -------------- ------------
ASSETS
Cash and equivalents........................................... $ 2,039 $ 601 $ -- $ 2,640
Other current assets........................................... 2,307 7,408 (84) 9,631
------- ------- -------- --------
Total current assets...................................... 4,346 8,009 (84) 12,271
Noncurrent inventories and film costs, including film libraries -- 4,857 1,132 5,989
Investments.................................................... 4,627 1,822 4,100 10,549
Property, plant and equipment.................................. 1,026 9,761 65 10,852
Music catalogues and copyrights................................ -- 713 1,787 2,500
Cable television and sports franchises......................... -- 8,087 23,613 31,700
Brands and trademarks.......................................... -- -- 10,000 10,000
Goodwill and other intangible assets........................... 786 15,264 112,421 128,471
Other assets................................................... 441 1,567 200 2,208
------- ------- -------- --------
Total assets.............................................. $11,226 $50,080 $153,234 $214,540
======= ======= ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Total current liabilities...................................... $ 2,307 $ 9,402 $ 93 $ 11,802
Long-term debt and other obligations(1)........................ 1,646 19,784 -- 21,430
Deferred income taxes.......................................... -- 3,299 12,835 16,134
Other long-term liabilities.................................... 435 4,545 (53) 4,927
Minority interests............................................. -- 3,227 -- 3,227
SHAREHOLDERS' EQUITY
Series LMCN-V common stock..................................... -- 1 -- 1
Common stock................................................... 23 12 6 41
Paid-in capital................................................ 4,799 14,939 135,224 154,962
Accumulated earnings (deficit)................................. 1,691 (4,970) 4,970 1,691
Accumulated other comprehensive income (loss).................. 325 (159) 159 325
------- ------- -------- --------
Total shareholders' equity................................ 6,838 9,823 140,359 157,020
------- ------- -------- --------
Total liabilities and shareholders' equity................ $11,226 $50,080 $153,234 $214,540
======= ======= ======== ========
-------------------
(1) For Time Warner, includes $1.115 billion of borrowings against future stock
option proceeds and $575 million of mandatorily redeemable preferred
securities of subsidiaries.
See accompanying notes.
5
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
(UNAUDITED)
(a) Reflects the historical financial position of America Online at
September 30, 2000, as reported in AOL Time Warner's Current Report
on Form 8-K dated January 18, 2001.
(b) Reflects the historical financial position of Time Warner at
September 30, 2000.
(c) Pro forma adjustments to record the merger as of September 30, 2000
reflect:
o an increase in equity of $134.687 billion relating to the issuance of
1.988 billion shares of AOL Time Warner common stock (including the
issuance of 171.2 million shares relating to the conversion of
114.1 million outstanding shares of Time Warner's Series LMCN-V common
stock into an identical class of common stock of AOL Time Warner Series
LMCN-V common stock), $0.01 par value per share, in exchange for
approximately 1.325 billion outstanding shares of Time Warner common
stock, based on an exchange ratio of 1.5 to 1. The AOL Time Warner
common stock to be issued was valued based on a price per share of
$67.75, which is the average market price of the America Online common
stock for a few days before and after the date the merger was announced;
o an increase in equity of $1.701 billion relating to the issuance of
approximately 4.018 million shares of AOL Time Warner preferred stock,
$0.10 par value per share, in exchange for all outstanding shares of
Time Warner preferred stock. The shares of AOL Time Warner preferred
stock to be issued, which will each be convertible into 6.24792 shares
of AOL Time Warner common stock, were valued based on their common
equivalent value of $423.30 per share;
o an increase in equity of $10.088 billion relating to the issuance of
options to purchase 191.321 million shares of AOL Time Warner common
stock in exchange for all of the 127.547 million outstanding options
to purchase shares of Time Warner common stock, based on a
weighted-average fair value of $52.73 for all options. The fair value
of the options was determined using the Black-Scholes option-pricing
model and was based on the following weighted-average assumptions:
expected volatility--46.3%; expected lives--5 years; a risk-free
interest rate--6.46%; and expected dividend yield--0%;
o an increase in equity of $81 million relating to the issuance of 1.2
million shares of AOL Time Warner restricted common stock in exchange
for all 800 thousand shares of restricted common stock of Time Warner,
based on the $67.75 fair value of AOL Time Warner common stock;
o a reduction in equity of $45 million relating to a reclassification of a
portion of the value of the purchase consideration resulting from the
issuance of unvested AOL Time Warner stock options and restricted
shares of common stock to deferred compensation, a contra-equity
account. In accordance with FIN 44, the determination of deferred
compensation was based on the product of the intrinsic value of these
stock compensation awards and the portion of the awards that was
unvested as of the merger date. The weighted-average intrinsic value of
the awards was based on the difference between the $78.33 fair value of
Time Warner common stock as of September 30, 2000, and the
weighted-average price to employees to acquire the underlying shares of
AOL Time Warner common stock. The amount of deferred compensation
established in connection with the merger is comparable in amount to
that recorded in Time Warner's historical balance sheet;
o a reduction of $3.670 billion in deferred income tax liabilities and a
corresponding increase in paid-in capital relating to the elimination of
America Online's deferred tax valuation allowance against stock
option-related tax benefits that will become realizable as a direct
result of the merger;
o a decrease in stockholders' equity of $9.823 billion relating to the
elimination of Time Warner's historical shareholders' equity;
6
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET--(CONTINUED)
(UNAUDITED)
o a decrease in other current assets of $84 million and a corresponding
increase to goodwill related to the reclassification of transaction
costs capitalized by America Online in connection with the acquisition
of Time Warner;
o an increase in accrued expenses of approximately $100 million and a
corresponding increase to goodwill principally relating to the accrual
of remaining transaction costs expected to be incurred by America
Online and Time Warner, including legal and investment banking fees;
o the elimination of approximately $25.532 billion of Time Warner's
pre-existing goodwill and other intangible assets; and
o the preliminary allocation of the excess of the $146.696 billion
purchase price, including transaction costs, over the book value of
the net assets acquired, as set forth below:
CALCULATION OF PURCHASE PRICE: (IN MILLIONS)
Common stock............................................................... $134,687
Preferred stock............................................................ 1,701
Restricted stock........................................................... 81
Stock options.............................................................. 10,088
Accrued transaction costs, including $84 million capitalized by
America Online as of September 30, 2000................................. 184
Allocation of value to deferred compensation relating to unvested stock
options and restricted stock............................................ (45)
--------
Total purchase price.................................................. $146,696
========
ALLOCATION OF PURCHASE PRICE: (IN MILLIONS)
Assets:
Carrying value of Time Warner's historical assets...................... $ 50,080
Eliminate Time Warner's historical goodwill and other intangible assets (25,532)
Write-up of film and television libraries.............................. 2,600
Write-up of investments................................................ 4,100
Net write-up of property, plant and equipment, net (including $170
million allocated to land)........................................ 65
Write-up of music catalogues and copyrights............................ 2,500
Write-up of cable television and sports franchises..................... 31,700
Write-up of brands and trademarks...................................... 10,000
Write-up of new goodwill and other intangible assets................... 127,685
Write-up of other assets............................................... 200
Liabilities and Equity:
Carrying value of Time Warner's historical liabilities................. (40,257)
Increase in deferred income tax liabilities............................ (16,505)
Decrease in current and noncurrent liabilities due to the elimination
of a deferred gain on a sales-leaseback transaction................. 60
--------
Total purchase price.............................................. $146,696
========
Time Warner's other assets and liabilities have not been adjusted because
their cost approximates fair value in all material respects.
7
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET--(CONTINUED)
(UNAUDITED)
A reconciliation of the above adjustments to reflect the merger is set
forth below:
ELIMINATION OF
ISSUANCE OF TIME WARNER'S
COMMON STOCK, ELIMINATION OF ELIMINATION OF HISTORICAL
PREFERRED STOCK, ACCRUED AOL'S DEFERRED TIME WARNER'S GOODWILL AND ALLOCATION OF TOTAL
RESTRICTED STOCK TRANSACTION TAX VALUATION HISTORICAL OTHER INTANGIBLE PURCHASE PRO FORMA
AND STOCK OPTIONS COSTS ALLOWANCE EQUITY ASSETS PRICE ADJUSTMENTS
----------------- ----- --------- ------ ------ ----- -----------
(IN MILLIONS)
Other current assets....... $ - $(84) $ - $ - $ - $ - $ (84)
Noncurrent inventories and
film costs............. - - - - (1,468) 2,600 1,132
Investments................. - - - - - 4,100 4,100
Property, plant and
equipment.............. - - - - - 65 65
Music catalogues and
copyrights............. - - - - (713) 2,500 1,787
Cable television and sports
franchises............. - - - - (8,087) 31,700 23,613
Brands and trademarks....... - - - - - 10,000 10,000
Goodwill and other
intangible assets...... - 184 - - (15,264) 127,501 112,421
Other assets................ - - - - - 200 200
Total current liabilities... - 100 - - - (7) 93
Deferred income taxes....... - - (3,670) - - 16,505 12,835
Other long-term liabilities. - - - - - (53) (53)
Series LMCN-V common stock.. 1 - - (1) - - -
Common stock................ 18 - - (12) - - 6
Paid-in capital............. 146,493 - 3,670 (14,939) - - 135,224
Accumulated earnings
(deficit).............. - - - 4,970 - - 4,970
Accumulated other
comprehensive income
(loss)................. - - - 159 - - 159
8
AOL TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS, UNAUDITED)
PRO FORMA ADJUSTMENTS
---------------------
CONFORMING PURCHASE AOL
TIME RECLASSIFICA- PRICE ADJUST- TIME WARNER
AOL (d) WARNER (e) TIONS (f) MENTS (g) SAB 101(h) PRO FORMA
------- ---------- --------- --------- ---------- ---------
Revenues.................................... $1,975 $ 6,873 $ (1) $ -- $ (89) $ 8,758
Cost of revenues............................ (988) (3,744) (51) 13 89 (4,681)
Selling, general and administrative......... (479) (1,853) (79) (11) -- (2,422)
Amortization of goodwill and other
intangible assets......................... (26) (339) -- (1,393) -- (1,758)
Merger-related costs........................ -- -- (52) -- (52)
------ ------- ----- ------- ----- -------
Operating income (loss)..................... 482 937 (183) (1,391) -- (155)
Interest expense, net....................... 80 (443) 10 -- -- (353)
Other income (expense), net................. 9 (198) 127 (88) -- (150)
Corporate expenses.......................... -- (46) 46 -- -- --
Minority interest........................... -- (77) -- -- -- (77)
------ ------- ----- ------- ----- -------
Income (loss) before income taxes........... 571 173 -- (1,479) -- (735)
Income tax benefit (provision).............. (227) (85) -- 145 -- (167)
------ ------- ----- ------- ----- -------
Net income (loss)........................... 344 88 -- (1,334) -- (902)
Preferred dividend requirements............. -- (3) -- -- -- (3)
------ ------- ----- ------- ----- -------
Net income (loss) applicable to
common shares................................ $344 $ 85 $ -- $(1,334) $ -- $ (905)
====== ======= ===== ======= ===== =======
Net income (loss) per common share:
Basic.................................... $0.15 $0.06 $(0.21)
====== ======= =======
Diluted.................................. $0.13 $0.06 $(0.21)
====== ======= =======
Average common shares:
Basic.................................... 2,325 1,324 4,311
====== ======= =======
Diluted.................................. 2,600 1,324 4,311
====== ======= =======
EBITDA(i)................................... $ 592 $ 1,607 $(180) $ (11) $ -- $2,008
====== ======= ===== ====== ===== =======
See accompanying notes.
9
AOL TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 2000
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS, UNAUDITED)
PRO FORMA ADJUSTMENTS
---------------------------
CONFORMING PURCHASE AOL
TIME RECLASSIFICA- PRICE ADJUST- TIME WARNER
AOL (d) WARNER (e) TIONS (f) MENTS (g) SAB 101(h) PRO FORMA
------- ---------- --------- --------- ---------- ---------
Revenues.................................... $ 6,886 $ 28,355 $ (188) $ -- $(306) $ 34,747
Cost of revenues............................ (3,761) (15,469) 90 60 306 (18,774)
Selling, general and administrative......... (1,638) (7,842) (204) (30) -- (9,714)
Amortization of goodwill and
other intangible assets.................. (74) (1,326) 1 (5,604) -- (7,003)
Gain on sale or exchange of cable
systems and investments................... -- 1,497 (1,018) -- -- 479
Gain on sale of CanalSatellite.............. -- 97 (97) -- -- --
Write-down of retail store assets........... -- (106) -- -- -- (106)
Merger-related costs........................ (15) -- (77) -- -- (92)
------- -------- ------- ------- ----- --------
Operating income (loss)..................... 1,398 5,206 (1,493) (5,574) -- (463)
Interest expense, net....................... 216 (1,599) 47 -- -- (1,336)
Other income (expense), net................. 400 (908) 1,276 (350) -- 418
Corporate expenses.......................... -- (170) 170 -- -- --
Minority interest........................... -- (256) -- -- -- (256)
------- -------- ------- ------- ----- --------
Income (loss) before income taxes, extra-
ordinary loss on retirement of debt and
cumulative effect of accounting change.... 2,014 2,273 -- (5,924) -- (1,637)
Income tax benefit (provision).............. (782) (1,070) -- 577 -- (1,275)
------- -------- ------- ------- ----- --------
Income (loss) before extraordinary loss on
retirement of debt and cumulative effect
of accounting change...................... 1,232 1,203 -- (5,347) -- (2,912)
Preferred dividend requirements............. -- (24) -- -- -- (24)
------- -------- ------- ------- ----- --------
Income (loss) applicable to common shares
before extraordinary loss on retirement
of debt and cumulative effect of
accounting change......................... $ 1,232 $ 1,179 $ -- $(5,347) $ -- $(2,936)
======= ======== ======= ======= ===== =======
Income (loss) per common share before
extraordinary loss on retirement of debt
and cumulative effect of accounting change:
Basic.................................... $0.54 $0.91 $(0.69)
======= ======== =======
Diluted.................................. $0.48 $0.90 $(0.69)
======= ======== =======
Average common shares:
Basic.................................... 2,278 1,299 4,227
======= ======== =======
Diluted.................................. 2,603 1,397 4,227
======= ======== =======
EBITDA(i)................................... $ 1,761 $ 7,804 $(1,483) $ (30) $ -- $ 8,052
======= ======== ======= ======= ===== =======
See accompanying notes.
10
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS
(UNAUDITED)
(d) Reflects the historical operating results of America Online for the three
months ended September 30, 2000 (as reported in AOL Time Warner's Current
Report on Form 8-K dated January 18, 2001) and the year ended
June 30, 2000.
(e) Reflects the historical operating results of Time Warner for the three
months ended September 30, 2000 and the year ended June 30, 2000. In order
to conform Time Warner's fiscal year-end from a calendar year basis to
America Online's June 30 year-end, Time Warner's historical operating
results have been derived from the combination of Time Warner's quarterly
historical operating results for such periods. Finally, as described more
fully in its Current Report on Form 8-K dated April 19, 2000, which is
incorporated herein by reference, reclassifications have been made to Time
Warner's 1999 historical operating results to conform to Time Warner's year
2000 financial statement presentation.
(f) Certain reclassifications have been made to conform both America Online's
and Time Warner's historical financial statement presentations to the
combined financial statement presentation of AOL Time Warner. These
adjustments primarily include reclassifications of (i) income and losses
related to equity method investees from operating income to other income
(expense), net, (ii) gains and losses on the sale of investments from
operating income to other income (expense), net, (iii) corporate expenses
to selling, general and administrative costs which reduces operating income
and (iv) merger-related costs from other income (expense), net, to
operating income.
(g) Pro forma adjustments to record the merger for the three months ended
September 30, 2000 and the year ended June 30, 2000 reflect:
o decreases of $13 million and $60 million, respectively, in
depreciation expense included in cost of revenues. These adjustments
consist of (i) a decrease in depreciation expense of $17 million and
$69 million, respectively, relating to a write-down in the carrying
value of property, plant and equipment in the amount of $345 million,
which had a weighted-average useful life of 5 years and was being
depreciated on a straight-line basis, (ii) an increase in depreciation
expense of $2 million and $8 million, respectively, relating to a
write-up in the carrying value of property, plant and equipment in the
amount of $240 million, which had a weighted-average useful life of 30
years and was being depreciated on a straight-line basis and (iii) an
increase in depreciation expense of $2 million and $1 million,
respectively, relating to the conforming of Time Warner's depreciation
policies to America Online's policies;
o increases of $2 million and $7 million, respectively, in selling,
general and administrative expense relating to the elimination of the
periodic recognition of a $60 million deferred gain on a
sales-leaseback transaction which was eliminated in the purchase price
allocation;
o increases of $8 million and $19 million, respectively in selling,
general and administrative expenses relating to an increase in pension
expense. These adjustments are associated with the recognition of a
$150 million pension asset due to the elimination of Time Warner's
previously existing unrecognized gains in its pension plans;
o increases of $1 million and $4 million in selling, general and
administrative expenses relating to an increase in rent expense. These
adjustments result from the recognition of a $50 million asset due to
favorable lease arrangements that have a weighted-average remaining
lease term of 14 years;
o decreases of $339 million and $1.325 billion, respectively, in
amortization of goodwill and other intangible assets relating to the
elimination of Time Warner's amortization of pre-existing goodwill and
other intangible assets;
11
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS--(CONTINUED)
(UNAUDITED)
o increases of $1.732 billion and $6.929 billion, respectively, in
amortization of $174.485 billion of goodwill and other intangible
assets, as set forth below. These amounts are being amortized on a
straight-line basis:
WEIGHTED- THREE MONTHS YEAR
AVERAGE PURCHASE ENDED ENDED
USEFUL PRICE SEPTEMBER 30, JUNE 30,
LIFE ALLOCATION 2000 2000
-------- ---------- ------------ -------
(YEARS) (IN MILLIONS)
Film and television libraries................................. 16.8 $ 2,600 $ 39 $ 155
Music catalogues and copyrights............................... 20.0 2,500 31 125
Cable television and sports franchises........................ 25.0 31,700 317 1,268
Brands and trademarks......................................... 34.1 10,000 73 293
Subscriber lists.............................................. 5.0 350 18 70
Goodwill and other intangible assets.......................... 25.4 127,335 1,254 5,018
-------- ------ ------
Total......................................................... $174,485 $1,732 $6,929
======== ====== ======
o decreases of $88 million and $350 million, respectively, in other
income (expense), net, relating to the amortization of the $4.100
billion excess of the fair value of investments accounted for under
the equity method of accounting over their respective book value. The
excess cost of these investments is being amortized on a straight-line
basis over a weighted-average life of approximately 11.7 years; and
o increases of $145 million and $577 million, respectively, in income
tax benefits, provided at a 40% tax rate, on the aggregate pro forma
reduction in pretax income before goodwill amortization.
In addition, pro forma net income (loss) per common share has been adjusted
to reflect the issuance of additional shares of AOL Time Warner common
stock in the merger, based on Time Warner's historical weighted-average
shares outstanding for the periods presented and an exchange ratio of 1.5
to 1. Because the effect of stock options and other convertible securities
would be antidilutive to AOL Time Warner, dilutive per share amounts on a
pro forma basis are the same as basic per share amounts.
(h) Pro forma adjustments reflect decreases in revenues and costs of $89
million for the three months ended September 30, 2000 and $306 million for
the year ended June 30, 2000 resulting from applying the provisions of SAB
101. The new rules result in some reclassifications between revenues and
costs in equal amounts.
(i) EBITDA consists of operating income (loss) before depreciation and
amortization. AOL Time Warner considers EBITDA an important indicator of
the operational strength and performance of its businesses, including the
ability to provide cash flows to service debt and fund capital
expenditures. EBITDA, however, should not be considered an alternative to
operating or net income as an indicator of the performance of AOL Time
Warner, or as an alternative to cash flows from operating activities as a
measure of liquidity, in each case determined in accordance with generally
accepted accounting principles. This definition of EBITDA may not be
comparable to similarly titled measures reported by other companies.
12
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS--(CONTINUED)
(UNAUDITED)
Pro forma EBITDA for AOL Time Warner includes a number of significant and
nonrecurring items. Set forth below for each period is a reconciliation of
pro forma EBITDA to a normalized measure of pro forma EBITDA that excludes
the effect of the significant and nonrecurring items.
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, JUNE 30,
2000 2000
------------- ----------
(IN MILLIONS)
Pro forma EBITDA.................................................... $2,008 $8,052
====== ======
Increase (decrease) in pro forma EBITDA............................. $ (52) $ 281
====== ======
Adjusted EBITDA..................................................... $2,060 $7,771
====== ======
The increase (decrease) in pro forma EBITDA includes the following
significant and nonrecurring items:
THREE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, JUNE 30,
2000 2000
------------- ----------
(IN MILLIONS)
Items related to America Online include:
Merger-related costs............................................ $-- $ (15)
Items related to Time Warner include:
Merger-related costs............................................ (52) (77)
Gain on sale or exchange of cable systems....................... -- 479
Write-down of retail store assets............................... -- (106)
----- -----
Increase (decrease) in pro forma EBITDA............................. $ (52) $ 281
===== =====
The items above related to America Online are described more fully in
America Online's Annual Report on Form 10-K for the year ended June 30,
2000. The above items related to Time Warner are described more fully
in Time Warner's Quarterly Report on Form 10-Q for the nine months ended
September 30, 2000 and Annual Report on Form 10-K for the year ended
December 31, 1999, as amended. These filings are incorporated herein by
reference.
13
AOL TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2000
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS, UNAUDITED)
PRO FORMA ADJUSTMENTS
---------------------
TIME CONFORMING PURCHASE AOL
WARNER RECLASSIFICA- PRICE ADJUST- TIME WARNER
AOL (j) (k) TIONS (l) ADJUST (m) SAB 101(n) PRO FORMA
------- ------ ------------ ------------- ---------- -----------
Revenues ................................ $ 5,751 $ 20,517 $ (9) $ -- $(277) $ 25,982
Cost of revenues ........................ (2,976) (11,118) (14) 37 277 (13,794)
Selling, general and administrative ..... (1,387) (5,687) (290) (33) -- (7,397)
Amortization of goodwill and other
intangible assets ..................... (64) (1,003) -- (4,194) -- (5,261)
Gain on sale or exchange of cable systems
and investments ....................... -- 21 7 -- -- 28
Merger-related costs .................... (10) -- (129) -- -- (139)
------- -------- ------- ------- ----- --------
Operating income (loss) ................. 1,314 2,730 (435) (4,190) -- (581)
Interest expense, net.................... 210 (1,265) 34 -- -- (1,021)
Other income (expense), net.............. 297 (830) 268 (263) -- (528)
Corporate expenses ...................... -- (133) 133 -- -- --
Minority interest ....................... -- (188) -- -- -- (188)
------- -------- ------- ------- ----- --------
Income (loss) before income taxes and
cumulative effect of accounting change 1,821 314 -- (4,453) -- (2,318)
Income tax benefit (provision) .......... (706) (252) -- 438 -- (520)
------- -------- ------- ------- ----- --------
Income (loss) before cumulative effect of
accounting change ..................... 1,115 62 -- (4,015) -- (2,838)
Preferred dividend requirements ......... -- (11) -- -- -- (11)
------- -------- ------- ------- ----- --------
Income (loss) applicable to common shares
before cumulative effect of accounting
change ................................ $ 1,115 $ 51 $ -- $(4,015) $ -- $ (2,849)
======= ======== ======= ======= ===== ========
Income (loss) per common share before
cumulative effect of accounting change:
Basic ................................ $0.48 $0.04 $(0.66)
======= ======= =======
Diluted .............................. $0.43 $0.04 $(0.66)
======= ======= =======
Average common shares:
Basic ................................ 2,312 1,315 4,285
======= ======= =======
Diluted .............................. 2,602 1,315 4,285
======= ======= =======
EBITDA(o) ............................... $ 1,630 $ 4,690 $ (425) $ (33) $ -- $ 5,862
======= ======== ======= ======= ===== ========
See accompanying notes.
14
AOL TIME WARNER INC.
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS, UNAUDITED)
PRO FORMA ADJUSTMENTS
---------------------
TIME CONFORMING PURCHASE AOL
WARNER RECLASSIFICA- PRICE ADJUST- TIME WARNER
AOL (j) (k) TIONS (l) ADJUST (m) SAB 101(n) PRO FORMA
------- ------ ------------ ------------- ---------- -----------
Revenues................................... $ 5,753 $27,333 $ (332) $ -- $ (229) $ 32,525
Cost of revenues........................... (3,353) (14,943) 71 71 229 (17,925)
Selling, general and administrative........ (1,390) (7,513) (68) (14) -- (8,985)
Amortization of goodwill and other
intangible assets........................ (68) (1,279) 3 (5,653) -- (6,997)
Gain on sale or exchange of cable systems
and investments.......................... -- 2,247 (1,090) -- -- 1,157
Gain on early termination of video
distribution agreement................... -- 215 -- -- -- 215
Gain on sale of interest in CanalSatellite. -- 97 (97) -- -- --
Write-down of retail store assets.......... -- (106) -- -- -- (106)
Merger-related costs....................... (123) -- -- -- -- (123)
------- -------- ------- ------- ------ -------
Operating income (loss).................... 819 6,051 (1,513) (5,596) -- (239)
Interest expense, net...................... 139 (1,512) 40 -- -- (1,333)
Other income (expense), net................ 676 (401) 1,310 (350) -- 1,235
Corporate expenses......................... -- (163) 163 -- -- --
Minority interest.......................... -- (475) -- -- -- (475)
------- -------- ------- ------- ------ -------
Income (loss) before income taxes.......... 1,634 3,500 -- (5,946) -- (812)
Income tax benefit (provision)............. (607) (1,540) -- 577 -- (1,570)
------- -------- ------- ------- ------ -------
Income (loss) before extraordinary loss on
retirement of debt ...................... 1,027 1,960 -- (5,369) -- (2,382)
Preferred dividend requirements............ -- (52) -- -- -- (52)
------- -------- ------- ------- ------ -------
Income (loss) applicable to common
shares before extraordinary loss
on retirement of debt.................. $ 1,027 $ 1,908 $ -- $(5,369) $ -- $(2,434)
======= ======== ======= ======= ====== =======
Income (loss) per common share before
extraordinary loss on retirement of debt:
Basic................................. $0.47 $ 1.51 $(0.59)
======= ======== =======
Diluted............................... $0.40 $ 1.43 $(0.59)
======= ======== =======
Average common shares:
Basic................................. 2,199 1,267 4,099
======= ======== =======
Diluted............................... 2,599 1,398 4,099
======= ======== =======
EBITDA(o).................................. $1,135 $8,561 $(1,507) $ (14) $ -- $ 8,175
======= ======== ======= ======= ====== =======
See accompanying notes.
15
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS--(CONTINUED)
(UNAUDITED)
(j) Reflects the historical operating results of America Online for the nine
months ended September 30, 2000 and the year ended December 31, 1999. In
order to conform America Online's fiscal year end of June 30 to a
calendar-year basis, these operating results have been derived from the
combination of America Online's quarterly historical operating results for
such periods.
(k) Reflects the historical operating results of Time Warner for the nine
months ended September 30, 2000 and the year ended December 31, 1999. As
described more fully in its Current Report on Form 8-K dated April 19,
2000, which is incorporated herein by reference, reclassifications have
been made to Time Warner's 1999 historical operating results to conform to
Time Warner's year 2000 financial statement presentation.
(l) Certain reclassifications have been made to conform both America Online's
and Time Warner's historical financial statement presentations to the
combined financial statement presentation of AOL Time Warner. These
adjustments primarily include reclassifications of (i) income and losses
related to equity method investees from operating income to other income
(expense), net, (ii) gains and losses on the sale of investments from
operating income to other income (expense), net, (iii) corporate expenses
to selling, general and administrative costs which reduces operating
income and (iv) merger-related costs from other income (expense), net, to
operating income.
(m) Pro forma adjustments to record the merger for the nine months ended
September 30, 2000 and the year ended December 31, 1999 reflect:
o decreases of $37 million and $71 million, respectively, in
depreciation expense included in cost of revenues. These adjustments
consist of (i) a decrease in depreciation expense of $52 million and
$69 million, respectively, relating to a write-down in the carrying
value of property, plant and equipment in the amount of $345 million,
which had a weighted-average useful life of 5 years and was being
depreciated on a straight-line basis, (ii) an increase in depreciation
expense of $6 million and $8 million, respectively, relating to a
write-up in the carrying value of property, plant and equipment in the
amount of $240 million, which had a weighted-average useful life of 30
years and was being depreciated on a straight-line basis and (iii) an
increase in depreciation expense of $9 million and a decrease of $10
million, respectively, relating to the conforming of Time Warner's
depreciation policies to America Online's policies;
o increases of $5 million and $7 million, respectively, in selling,
general and administrative expense relating to the elimination of the
periodic recognition of a $60 million deferred gain on a
sales-leaseback transaction which was eliminated in the purchase price
allocation;
o increases of $25 million and $3 million, respectively, in selling,
general and administrative expenses relating to an increase in pension
expense. These adjustments are associated with the recognition of a
$150 million pension asset due to the elimination of Time Warner's
previously existing unrecognized gains in its pension plans;
o increases of $3 million and $4 million, respectively, in selling,
general and administrative expenses relating to an increase in rent
expense. These adjustments result from the recognition of a $50
million asset due to favorable lease arrangements that have a
weighted-average remaining lease term of 14 years;
o decreases of $1.003 billion and $1.276 billion, respectively, in
amortization of goodwill and other intangible assets relating to the
elimination of Time Warner's amortization of pre-existing goodwill and
other intangible assets;
o increases of $5.197 billion and $6.929 billion, respectively, in
amortization of $174.485 billion of goodwill and other intangible
assets, as set forth below. These amounts are being amortized on a
straight-line basis:
16
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS--(CONTINUED)
(UNAUDITED)
WEIGHTED- NINE MONTHS YEAR
AVERAGE PURCHASE ENDED ENDED
USEFUL PRICE SEPTEMBER 30, DECEMBER 31,
LIFE ALLOCATION 2000 1999
------- ---------- ---- ----
(YEARS) (IN MILLIONS)
Film and television libraries.......................... 16.8 $ 2,600 $ 116 $ 155
Music catalogues and copyrights........................ 20.0 2,500 94 125
Cable television and sports franchises................. 25.0 31,700 951 1,268
Brands and trademarks.................................. 34.1 10,000 220 293
Subscriber lists....................................... 5.0 350 52 70
Goodwill and other intangible assets................... 25.4 127,335 3,764 5,018
-------- ------ ------
Total.................................................. $174,485 $5,197 $6,929
======== ====== ======
o decreases of $263 million and $350 million, respectively, in other
income (expense), net, relating to the amortization of the $4.100
billion excess of the fair value of investments accounted for under
the equity method of accounting over their respective book value. The
excess cost of these investments is being amortized on a straight-line
basis over a weighted-average life of approximately 11.7 years; and
o increases of $438 million and $577 million, respectively, in income
tax benefits, provided at a 40% tax rate, on the aggregate pro forma
reduction in pretax income before goodwill amortization.
In addition, pro forma net income (loss) per common share has been adjusted
to reflect the issuance of additional shares of AOL Time Warner common
stock in the merger, based on Time Warner's historical weighted-average
shares outstanding for the periods presented and an exchange ratio of 1.5
to 1. Because the effect of stock options and other convertible securities
would be antidilutive to AOL Time Warner, dilutive per share amounts on a
pro forma basis are the same as basic per share amounts.
(n) Pro forma adjustments reflect decreases in revenues and costs of $277
million for the nine months ended September 30, 2000 and $229 million for
the year ended December 31, 1999 resulting from applying the provisions of
SAB 101. The new rules result in some reclassifications between revenues
and costs in equal amounts.
(o) EBITDA consists of operating income (loss) before depreciation and
amortization. AOL Time Warner considers EBITDA an important indicator of
the operational strength and performance of its businesses, including the
ability to provide cash flows to service debt and fund capital
expenditures. EBITDA, however, should not be considered an alternative to
operating or net income as an indicator of the performance of AOL Time
Warner, or as an alternative to cash flows from operating activities as a
measure of liquidity, in each case determined in accordance with generally
accepted accounting principles. This definition of EBITDA may not be
comparable to similarly titled measures reported by other companies.
Pro forma EBITDA for AOL Time Warner includes a number of significant and
nonrecurring items. Set forth below is a reconciliation of pro forma EBITDA
to a normalized measure of pro forma EBITDA that excludes the effect of the
significant and nonrecurring items.
NINE MONTHS YEAR ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
2000 1999
------------------- ------------
(IN MILLIONS)
Pro forma EBITDA..................................... $5,862 $8,175
====== ======
Increase (decrease) in pro forma EBITDA.............. $ (111) $1,143
====== ======
Adjusted EBITDA...................................... $5,973 $7,032
====== ======
17
AOL TIME WARNER INC.
NOTES TO THE PRO FORMA CONSOLIDATED CONDENSED STATEMENTS
OF OPERATIONS--(CONTINUED)
(UNAUDITED)
The increase (decrease) in pro forma EBITDA includes the following
significant and nonrecurring items:
NINE MONTHS YEAR ENDED
ENDED SEPTEMBER 30, DECEMBER 31,
2000 1999
------------------- ------------
(IN MILLIONS)
Items related to America Online include:
Merger-related costs................................. $ (10) $ (123)
Items related to Time Warner include:
Merger-related costs................................. (129) -
Gain on sale or exchange of cable systems............ 28 1,157
Gain on early termination of long-term, home video
distribution agreement........................... - 215
Write-down of retail store assets.................... - (106)
----- ------
Increase (decrease) in pro forma EBITDA................ $(111) $1,143
===== ======
The items above related to America Online are described more fully in
America Online's Annual Report on Form 10-K for the year ended June
30, 2000. The above items related to Time Warner are described more fully
in Time Warner's Quarterly Report on Form 10-Q for the nine months ended
September 30, 2000 and Annual Report on Form 10-K for the year ended
December 31, 1999, as amended. These filings are incorporated herein by
reference.
18
(c) EXHIBITS:
(i) Exhibit 23.1 Consents of Ernst & Young LLP, Independent Auditors.
(ii) Exhibit 99(a): AOL Time Warner Inc. Consolidated Balance Sheet
as of December 31, 2000.
(iii) Exhibit 99(b): Financial Statements of Time Warner Inc.,
incorporated by reference from its (i) Annual Report on Form 10-K
for the year ended December 31, 1999, as amended, (ii) Quarterly
Report on Form 10-Q for the nine months ended September 30, 2000
and (iii) Current Report on Form 8-K dated April 19, 2000.
19
EXHIBIT INDEX
SEQUENTIAL
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBITS NUMBER
---- ----------------------- ------
23.1 Consents of Ernst & Young LLP, Independent Auditors. 22
99(a) AOL Time Warner Inc. Consolidated Balance Sheet as of December 31, 24
2000.
99(b) Financial Statements of Time Warner Inc., incorporated by *
reference from its (i) Annual Report on Form 10-K for the year
ended December 31, 1999, as amended, (ii) Quarterly Report on
Form 10-Q for the nine months ended September 30, 2000 and
(iii) Current Report on Form 8-K dated April 19, 2000.
---------------
* Incorporated by reference.
20
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.
AOL TIME WARNER INC.
By: /s/ J. Michael Kelly
--------------------------------
Name: J. Michael Kelly
Title: Executive Vice President and
Chief Financial Officer
Date: January 25, 2001
By: /s/ James W. Barge
--------------------------------
Name: James W. Barge
Title: Vice President and Controller
Date: January 25, 2001