TWX: Time Warner Reports Second Quarter Results

Time Warner Inc. (NYSE:TWX) today reported financial results for its second quarter ended June 30, 2006.

In making the announcement, Chairman and Chief Executive Officer Dick Parsons said: “We’re pleased with this quarter’s results, which put us firmly on track to achieve our full-year financial objectives. Especially significant was our generation of Free Cash Flow over the first half of the year, totaling more than $2.6 billion, or 49% of our Adjusted OIBDA. Our Cable, Filmed Entertainment and Networks segments delivered standout operating performances, while AOL posted a better-than-expected quarter. Key to these results were impressive strength in AOL's advertising revenues and across-the-board subscriber and profit growth at Time Warner Cable.”

Mr. Parsons added: “With the closing of the Adelphia-Comcast transaction, Time Warner Cable is now focused on integrating and upgrading the acquired systems and setting the stage for an aggressive deployment of Time Warner Cable's advanced digital video, high-speed data and Digital Phone services in the coming months. In addition, we’re continuing to return substantial value directly to our shareholders – including repurchasing 14% of our outstanding common stock for approximately $11.7 billion since starting the program last year.”

Company Results
In the quarter, Revenues rose 1% over the same period in 2005 to $10.7 billion, led by growth at the Cable and Networks segments.

Adjusted Operating Income before Depreciation and Amortization climbed 7% to $2.7 billion, reflecting double-digit increases at the Cable and Filmed Entertainment segments as well as a gain at the Networks segment. This growth was offset partly by declines at the Publishing and AOL segments. Operating Income rose to $1.8 billion from a prior year loss, reflecting primarily higher Adjusted Operating Income before Depreciation and Amortization and the absence of the $3 billion in legal reserves related to securities litigation recognized in the prior year quarter.

For the first six months, Cash Provided by Operations was $4.2 billion, and Free Cash Flow totaled $2.6 billion (reflecting a 49% conversion rate of Adjusted Operating Income before Depreciation and Amortization). As of June 30, Net Debt totaled $22.2 billion, up $6.1 billion from $16.1 billion at the end of 2005.

Diluted Income per Common Share before Discontinued Operations and Cumulative Effect of Accounting Change was $0.20 for the three months ended June 30, compared to a loss of $0.09 in last year’s second quarter. The current and prior year amounts included certain items affecting comparability that are described in detail in the Consolidated Reported Net Income and Per Share Results section below. Such items did not meaningfully affect the current year’s diluted common share results and decreased prior year results by $0.25 per diluted common share.


Stock Repurchase Program Update
From the inception of its stock repurchase program through August 1, 2006, the Company has repurchased approximately 675 million shares of common stock for approximately $11.7 billion. At existing price levels, the Company continues to expect that it will purchase approximately $15 billion of its common stock by the end of 2006, and the remainder of its $20 billion program in 2007.