As
filed with the Securities and Exchange Commission on April 6, 2009
Registration
No. 333-
SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C.
20549
Form S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
Time
Warner Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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13-4099534
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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One
Time Warner Center
New
York, NY 10019-8016
(212)
484 8000
(Address,
including zip code, and telephone number,
including
area code, of registrant’s principal executive offices)
________
Home
Box Office, Inc.
(Exact
name of registrant as specified in its charter)
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Delaware
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05-0545061
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(State
or other jurisdiction of
incorporation
or organization)
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(I.R.S.
Employer
Identification
No.)
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1100
Avenue of the Americas
New
York, NY 10036-6712
(212)
512-1000
(Address,
including zip code, and telephone number,
including
area code, of registrant’s principal executive offices)
_________
Paul
T. Cappuccio
Executive
Vice President
and
General Counsel
Time
Warner Inc.
One
Time Warner Center
New
York, NY 10019-8016
(212)
484-8000
(Name,
address, including zip code, and telephone number,
including
area code, of agent for service)
Copies
to:
Eric
L. Schiele
Cravath,
Swaine & Moore LLP
Worldwide
Plaza
825
Eighth Avenue
New
York, NY 10019-7415
(212) 474-1000
Approximate date of commencement of
proposed sale to the public: As soon as practicable following
the effective date of this Registration Statement.
If the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box.
o
If any of the securities being
registered on this Form are to be offered on a delayed or continuous basis
pursuant to Rule 415 under the Securities Act of 1933, other than
securities offered only in connection with dividend or interest reinvestment
plans, check the following box. x
If this Form is filed to register
additional securities for an offering pursuant to Rule 462(b) under the
Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. o
If this Form is a post-effective
amendment filed pursuant to Rule 462(c) under the Securities Act, check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
o
If this Form is a registration
statement pursuant to General Instruction I.D. or a post-effective
amendment thereto that shall become effective upon filing with the Commission
pursuant to Rule 462(e) under the Securities Act, check the following
box. x
If this Form is a post-effective
amendment to a registration statement filed pursuant to General
Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act,
check the following box. o
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule
12b-2 of the Exchange Act.
Large accelerated
filer x Accelerated
filer o
Non-accelerated
filer o
Smaller reporting company o
CALCULATION OF REGISTRATION FEE
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Title
of Each Class of
Securities
to be Registered
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Amount
to be
Registered
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Proposed
Maximum
Offering
Price
per Unit(2)
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Proposed
Maximum
Aggregate
Offering
Price(2)
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Amount
of
Registration
Fee(2)
|
|
Guarantee
by Home Box Office, Inc. of debt securities issued under
the
Indentures (as defined in the prospectus)(1) |
$12,330,818,000(2)
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100%(2)
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$12,330,818,000(2)
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$688,060(2)
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(1)
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This
registration statement relates solely to an offer of a guarantee by Home
Box Office, Inc., to be issued under the circumstances described in the
prospectus, of the Securities (as defined in the prospectus) in return for
the consent of the holders of the Securities to certain amendments to the
Indentures (in addition to the Consent Payment (as defined in the
prospectus) payable by Time Warner Inc.).
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(2)
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The
registration fee has been calculated in accordance with Rule 457 of
the Securities Act of 1933, as amended. For purposes of this calculation,
the maximum aggregate offering price, which is estimated solely for the
purpose of calculating the registration fee, is the aggregate book value
of the Securities (as defined in the prospectus) that would be amended and
receive the guarantee registered hereby, which is
$12,330,818,000.
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Prospectus
Time
Warner Inc. and Home Box Office, Inc.
Home
Box Office Offer to Guarantee to Holders of the Following Series of Debt
Securities:
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Issuer/ Indenture
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Debt Security Description
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CUSIP No.
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Aggregate Principal
Amount Outstanding |
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Historic
TW Inc. #
(1992
HTW Indenture*)
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9.125%
Debentures due 2013
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887315AK5
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$1,000,000,000
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|||
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Historic
TW Inc. #
(1993
HTW Indenture*)
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8.05%
Debentures due 2016
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887315BA6
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$150,000,000
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7.25%
Debentures due 2017
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887315BJ7
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$500,000,000
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9.15%
Debentures due 2023
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887315AM1
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$602,337,000
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7.57%
Debentures due 2024
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887315BH1
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$450,000,000
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6.85%
Debentures due 2026
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887315BB4
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$28,481,000
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6.95%
Debentures due 2028
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887315BM0
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$500,000,000
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8.30%
Discount Debentures due 2036
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887315AZ2
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$200,000,0001
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Historic
TW Inc.
(1998
HTW Indenture*)
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6.875%
Debentures due 2018
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887315AY5
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$600,000,000
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6.625%
Debentures due 2029
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887315BN8
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$1,000,000,000
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Turner
Broadcasting System, Inc.
(1993
TBS Indenture*)
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8.375%
Senior Notes due 2013
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900262AR7
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$300,000,000
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||
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Time
Warner Inc.
(2001
TWX Indenture*)
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6.75%
Notes due 2011
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00184AAB1
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$1,000,000,000
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6.875%
Notes due 2012
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00184AAF2
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$2,000,000,000
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7.625%
Debentures due 2031
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00184AAC9
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$2,000,000,000
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7.70%
Debentures due 2032
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00184AAG0
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$2,000,000,000
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# In its
capacity as successor to Time Warner Companies, Inc.
* As
defined herein.
1 The face
value of this series of debentures is $200,000,000. As of April 2,
2009, the accreted principal amount outstanding of this series of debentures was
approximately $106,306,000.
The Consent Solicitation and the
offer to issue the HBO Guarantee will expire at 5:00 p.m.,
New York City time, on April 15, 2009, unless extended.
New York City time, on April 15, 2009, unless extended.
Home Box
Office, Inc. is offering to issue a guarantee of the full and punctual payment
of all the monetary obligations and the full and punctual performance within
applicable grace periods of all other obligations (including obligations to the
trustee) of Historic TW Inc. as issuer or guarantor, as applicable, under the
Indentures (as defined below), in its own capacity and as successor to Time
Warner Companies, Inc. as described in more detail herein (the “HBO
Guarantee”). The HBO Guarantee will be issued only with
respect to each series of securities described above (the “Securities”) for which the
Requisite Consent (as defined below) has been received and the Proposed
Amendments (as defined below) have been adopted, and only in connection with the
conveyance or transfer by AOL LLC of its properties and assets substantially as
an entirety as described in more detail herein. The HBO Guarantee is
being offered in conjunction with the solicitation of consents by Time Warner
Inc. from Holders (as defined below) of the Securities to amend certain
provisions of the Indentures, upon the terms and subject to the conditions set
forth in the consent solicitation statement to be filed as a free writing
prospectus with the Securities and Exchange Commission (the “Commission”) on the date
hereof together with the related consent letter.
THIS PROSPECTUS AND THE RELATED CONSENT
SOLICITATION STATEMENT AND CONSENT LETTER HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE FAIRNESS OR MERITS OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR UPON THE ACCURACY OR ADEQUACY OF
THE INFORMATION CONTAINED IN THIS PROSPECTUS AND THE RELATED CONSENT
SOLICITATION STATEMENT AND CONSENT LETTER. ANY REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
Neither the Securities nor any
guarantees thereof are listed on any securities exchange. See “Risk Factors” on
page 1 of this prospectus for certain risks to be
considered.
The Solicitation Agents for the Consent
Solicitation are:
Banc of
America Securities
LLC
Citi Deutsche Bank Securities
Inc.
The date
of this prospectus is April 6, 2009
Page
This document contains or incorporates
by reference “forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, particularly statements anticipating
future growth in revenues, Operating Income (Loss) before Depreciation and
Amortization and cash from operations. Words such as “anticipates,” “estimates,”
“expects,” “projects,” “intends,” “plans,” “believes” and words and terms of
similar substance used in connection with any discussion of future operating or
financial performance identify forward-looking statements. These forward-looking
statements are based on management’s current expectations and beliefs about
future events. As with any projection or forecast, they are inherently
susceptible to uncertainty and changes in circumstances, and Time Warner is
under no obligation to, and expressly disclaims any obligation to, update or
alter its forward-looking statements whether as a result of such changes, new
information, subsequent events or otherwise.
Various
factors could adversely affect our operations, business or financial results or
our business segments in the future and cause our actual results to differ
materially from those contained in the forward-looking statements, including
those factors discussed in detail in Item 1A, “Risk Factors,” in Part I of Time
Warner’s Annual Report on Form 10-K for the year ended December 31, 2008, filed
with the Commission on February 20, 2009 (the “2008 Form 10-K”), and our
other filings made from time to time with the Commission. In addition, Time
Warner operates in highly competitive, consumer and technology-driven and
rapidly changing media, entertainment and interactive services businesses. These
businesses are affected by government regulation, economic, strategic, political
and social conditions, consumer response to new and existing products and
services, technological developments and, particularly in view of new
technologies, the continued ability to protect intellectual property rights. Our
actual results could differ materially from management’s expectations because of
changes in such factors.
Further, for us generally, lower than
expected valuations associated with the cash flows and revenues at our segments
may result in our inability to realize the value of recorded intangibles and
goodwill at those segments. In addition, achieving our financial objectives,
including growth in operations, maintaining financial ratios and a strong
balance sheet, could be adversely affected by the factors discussed or
referenced under the heading “Risk Factors” below.
You should carefully consider the
specific risks discussed or incorporated by reference in this prospectus. You
should also consider the risks, uncertainties and assumptions discussed under
the caption “Risk Factors,” in Item IA of Part I of the 2008 Form 10-K, as well
as:
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●
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a
longer than anticipated continuation of the current economic slowdown or
further deterioration in the
economy;
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●
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decreased
liquidity in the capital markets, including any reduction in the ability
to access the capital markets for debt securities or bank
financings;
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the
impact of terrorist acts and
hostilities;
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changes
in our plans, strategies and
intentions;
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●
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the
impacts of significant acquisitions, dispositions and other similar
transactions; and
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●
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the
failure to meet earnings
expectations.
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Home Box Office, Inc., a Delaware
corporation (“Home Box
Office”), is offering to issue a guarantee of the full and punctual
payment of all the monetary obligations and the full and punctual performance
within applicable grace periods of all other obligations (including obligations
to the trustee) of Historic TW Inc., a Delaware corporation (“Historic TW”), as (a) issuer
under the 1998 HTW Indenture, the 1993 HTW Indenture and the 1992 HTW Indenture,
and (b) guarantor under the 2001 TWX Indenture and the 1993 TBS Indenture, in
its own capacity and as successor to Time Warner Companies, Inc. (“TWCI”), with respect to each
series of Securities. The HBO Guarantee will be issued only with respect to each
series of Securities with respect to which the Requisite Consent has been
received and the Proposed Amendments have been adopted pursuant to the execution
and delivery of the relevant Supplemental Indenture (as defined below), and only
in connection with the conveyance or transfer by AOL LLC of its properties and
assets substantially as an entirety as described in more detail herein. The
date, if any, on which Home Box Office issues the HBO Guarantee in accordance
with the terms set forth herein is referred to herein as the “HBO Guarantee Issue
Date”.
Time Warner is either the issuer or a
guarantor of each series of Securities.
The HBO Guarantee is being offered in
conjunction with the solicitation (the “Consent Solicitation”) of
consents (“Consents”) by
Time Warner Inc., a Delaware corporation (“Time Warner”), from Holders of
the Securities to amend certain provisions of each of the indentures described
below (the “Indentures”)
under which the Securities were issued, upon the terms and subject to the
conditions set forth in the consent solicitation statement (as it may be amended
or supplemented from time to time, the “Consent Solicitation
Statement”) to be filed as a free writing prospectus with the Commission
on the date hereof together with the related consent letter (the “Consent Letter”).
Neither Time Warner nor Home Box Office
will receive any cash proceeds in connection with this offering. This offering
is made solely by Time Warner and Home Box Office.
The Indentures pursuant to which the
Securities were issued are:
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1.
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Indenture
dated as of April 19, 2001, as amended and supplemented as of the date
hereof, among Time Warner as issuer, AOL LLC, Historic TW (including in
its capacity as successor to TWCI) and Turner Broadcasting System, Inc., a
Georgia corporation (“TBS”), as guarantors,
and The Bank of New York Mellon, as Trustee (the “2001 TWX
Indenture”);
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2.
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Indenture
dated as of June 1, 1998, as amended and supplemented as of the date
hereof, among Historic TW as issuer, Time Warner, AOL LLC, Historic TW (in
its capacity as successor to TWCI) and TBS as guarantors, and
The Bank of New York Mellon, as Trustee (the “1998 HTW
Indenture”);
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3.
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Indenture
dated as of January 15, 1993, as amended and supplemented as of the date
hereof, among Historic TW (in its capacity as successor to TWCI) as
issuer, Time Warner, AOL LLC, Historic TW (in its own capacity and not as
successor to TWCI) and TBS as guarantors, and The Bank of New York Mellon,
as Trustee (the “1993 HTW
Indenture”);
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4.
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Indenture
dated as of October 15, 1992, as amended and supplemented as of the date
hereof, among Historic TW (in its capacity as successor to TWCI) as
issuer, Time Warner, AOL LLC, Historic TW (in its own capacity and not as
successor to TWCI) and TBS as guarantors, and The Bank of New York Mellon,
as Trustee (the “1992 HTW
Indenture”); and
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5.
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Indenture
dated as of May 15, 1993, as amended and supplemented as of the date
hereof, among TBS as issuer, Time Warner, AOL LLC and Historic TW
(including in its capacity as successor to TWCI) as guarantors, and The
Bank of New York Mellon, as Trustee (the “1993 TBS
Indenture”).
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The
expiration date for the Consent Solicitation and the offer of the HBO Guarantee
is 5:00 p.m., New York City time, on April 15, 2009, unless extended
under the Consent Solicitation in accordance with the Consent Solicitation
Statement (the “Expiration Date”).
Time Warner is a leading media and
entertainment company. Time Warner classifies its businesses into the following
four reporting segments:
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●
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AOL,
consisting principally of interactive consumer and advertising
services;
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●
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Filmed
Entertainment, consisting principally of feature film, television and home
video production and distribution;
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●
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Networks,
consisting principally of cable television networks that provide
programming; and
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●
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Publishing,
consisting principally of magazine
publishing.
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At December 31, 2008, Time Warner
had a total of approximately 87,000 employees.
Time Warner completed the legal and
structural separation of Time Warner Cable Inc. (together with its subsidiaries,
“TWC”) in the first
quarter of 2009 and, as of 8:00 p.m. on March 12, 2009, no longer consolidates
TWC’s operations for purposes of its own financial reporting.
The following chart shows a summary of
the corporate organization of Time Warner and its direct and indirect ownership
interests in its principal subsidiaries. This chart reflects the separation of
TWC and does not show all subsidiaries, including certain intermediary
subsidiaries. It is included in order to help illustrate the current issuers and
guarantors under each of the Indentures, which are printed in bold. A further
description of the issuers, guarantors and the guarantee structure under the
Indentures is included under “Time Warner” in the Consent Solicitation
Statement.
Time
Warner Inc. 100% 100% Historic TW Inc. TW AOL Holdings Inc. 2.5% 100% 100% 100%
92.5% Home Box Office, Inc. Warner Bros. Entertainment Inc. Turner Broadcasting
System, Inc. AOL Holdings LLC 5% Google Inc. 100% 100% Time Inc. AOL
LLC
Time Warner’s principal executive
office is located at One Time Warner Center, New York, New York 10019-8016,
telephone (212) 484-8000.
Home Box Office is an indirect, wholly
owned subsidiary of Historic TW, which in turn is a wholly owned subsidiary of
Time Warner.
As of the date hereof, Home Box Office
is not an obligor under any Indenture and does not guarantee the debt under any
of Time Warner’s credit facilities. With respect to any Consenting Series (as
defined herein) in respect of which a Supplemental Indenture is executed, and
prior to, or concurrently with, the conveyance or transfer by AOL LLC of its
properties and assets substantially as an entirety without compliance with the
conditions contained in the Covenant (as defined herein) as currently in effect,
Time Warner will cause Home Box Office to guarantee the full and punctual
payment of all the monetary obligations and the full and punctual performance
within applicable grace periods of all other obligations (including obligations
to the trustee) of Historic TW under the relevant Indenture relating to such
Consenting Series, as described herein.
Home Box Office operates the “HBO” and
“Cinemax” premium pay television services, with the HBO service ranking as the
most widely distributed premium pay television service in the United States. HBO
and Cinemax had approximately 40.9 million domestic subscriptions as of December
31, 2008. Both HBO and Cinemax are made available in high definition on a number
of multiplex channels. Home Box Office also offers “HBO On Demand” and “Cinemax
On Demand”, subscription products that enable certain multi-channel video
customers who subscribe to the HBO and Cinemax services to view programs at a
time of their choice.
A major portion of the programming on
HBO and Cinemax consists of recently released, uncut and uncensored theatrical
motion pictures. It has been the practice of Home Box Office to negotiate
licensing agreements of varying duration with major motion picture studios and
independent producers and distributors in order to ensure continued access to
such films. These agreements typically grant pay television exhibition rights to
recently released and certain older films owned by the particular studio,
producer or distributor in exchange for negotiated fees, which may be a function
of, among other things, the box office performances of the films.
HBO is also defined by its
award-winning original dramatic and comedy series, such as True Blood, The Sopranos, Entourage and
Curb Your Enthusiasm,
as well as movies, mini-series, boxing matches and sports news programs, comedy
specials, family programming and documentaries. In 2008, among other awards, HBO
won 26 Primetime Emmys®, the most of any network, as well as eight Sports
Emmys®.
Home Box Office and its subsidiaries
also generate revenues from the exploitation of Home Box Office’s original
programming through multiple distribution outlets. HBO Services Inc., a wholly
owned subsidiary of Home Box Office, markets a variety of Home Box Office’s
original programming on DVD. Home Box Office licenses its original series, such
as The Sopranos and
Sex and the City, to
basic cable channels and has also licensed Sex and the City in
syndication. The Home Box Office-produced show Everybody Loves Raymond, which aired
for nine seasons on broadcast television, is currently in syndication as well.
The content produced by Home Box Office is also distributed by Apple Inc.
through its online iTunes stores in the United States and the United Kingdom as
well as on various mobile telephone platforms.
In addition, through three television
joint ventures, HBO-branded services are distributed in more than 50 countries
in Latin America, Asia and Central Europe, with Warner Communications Inc.
(which is a wholly owned subsidiary of Time Warner but not a subsidiary of Home
Box Office) owning the interests in the Latin America and Asia joint ventures
and Home Box Office owning the interest in the Central European joint
venture.
The following table sets forth selected
financial data for Home Box Office (excluding its subsidiaries, except to the
extent its equity in such subsidiaries is reflected in Total Assets) for the
year ended December 31, 2008. The following information should be
read together with Time Warner’s consolidated financial statements and the notes
related to those statements, and “Management’s Discussion and Analysis of
Results of Operations and Financial Condition” in Time Warner’s Annual Report on
Form 10-K for the year ended December 31, 2008, which are incorporated by
reference into this prospectus, and the condensed consolidating financial
statements included on page F-1 of this prospectus. The information
set forth below is not necessarily indicative of the results of future
operations.
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Year
Ended
December
31, 2008
(millions)
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|||
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Revenue
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$ 3,703
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Depreciation
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40
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||
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Amortization
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2
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||
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Operating
Income
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1,166
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||
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Total
Assets (at period end)
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11,0831
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||
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Total
Liabilities (at period end)
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660
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1
Includes $7.3 billion of goodwill and $1.4 billion of intangible
assets.
Home Box Office’s principal executive
office is located at 1100 Avenue of the Americas, New York, New York 10036-6712,
telephone (212) 512-1000.
AOL LLC is a wholly owned subsidiary of
AOL Holdings LLC, a Delaware limited liability company (“AOL Holdings”). Time Warner
directly and indirectly holds 95% of the equity interests in AOL Holdings, with
Google Inc. (“Google”)
owning the remaining 5%. AOL LLC is a guarantor under all the
Indentures.
AOL LLC (together with its
subsidiaries, “AOL”)
operates a global web services business, which is comprised of its Platform-A,
MediaGlow and People Networks business units (the “Global Web Services
Business”). Platform A sells advertising services worldwide on both the
AOL Network and third-party Internet sites, referred to as the “Third Party
Network”. MediaGlow and People Networks develop and operate the “AOL Network”,
which includes a leading network of web brands, free client software and
services and a social media network for Internet consumers. In addition, AOL
operates one of the largest Internet access subscription services in the United
States (the “Access Services
Business”).
AOL has transitioned from a business
that was primarily focused on generating subscription revenues to one that is
focused on attracting and engaging Internet consumers and providing advertising
services on both the AOL Network and the Third Party Network. In addition to
growing its Global Web Services Business, AOL is focused on managing its
declining subscriber base and related cost structure in its Access Services
Business.
In late January 2009, Google exercised
its right to request that AOL Holdings LLC (the immediate parent company of AOL
LLC) register Google’s 5% equity interest for sale in an initial public
offering. Time Warner has the right, but not the obligation, to purchase
Google’s equity interest in AOL Holdings LLC for cash or shares of Time Warner
common stock based on the appraised fair market value of the equity interest in
lieu of conducting an initial public offering. Time Warner has not yet
determined in which manner it will proceed.
On March 12, 2009, Time Warner
announced that it has hired Timothy Armstrong, formerly Senior Vice President of
Google, to serve as Chairman and Chief Executive Officer of AOL LLC, effective
in early April 2009. While at Google, Mr. Armstrong was a member of its
Operating Committee and served as the president of Google’s Americas
Operations.
Time Warner continues to review its
strategic alternatives with respect to AOL, and Mr. Armstrong will have a key
role in this review. These alternatives include spinning off to Time Warner’s
stockholders the Global Web Services Business or the Access Services Business or
both (separately or together), acquisitions of interests in related businesses,
entering into joint ventures and other potential combinations, dispositions
involving either or both of the Global Web Services Business and the Access
Services Business and operating the two businesses as a single division or
separate divisions on an on-going basis. Although the Board of
Directors of Time Warner has not made any decision, Time Warner currently
anticipates, subject to the factors described below, that it would initiate a
process to spin off one or more parts of the businesses of AOL LLC to Time
Warner’s stockholders, in one or a series of transactions. Based on
the results of this review, future market conditions or the availability of more
favorable strategic opportunities that may arise before a transaction is
completed, however, Time Warner may decide to pursue an alternative other than a
spin-off with respect to either or both of AOL’s businesses. Time
Warner currently has no agreement or understanding to sell or otherwise transfer
AOL LLC’s properties and assets substantially as an entirety or with respect to
either of its businesses.
Time Warner believes that a variety of
transactions, including a spin-off of either or both the Global Web Services
Business and the Access Services Business, or the sale or merger of either or
both businesses, could be implemented without the adoption of the Proposed
Amendments, including transactions that would not require transfer or assumption
of the AOL LLC guarantee by the successor entity. The Proposed
Amendments simplify the execution of the strategic options available to Time
Warner.
In the event that the Proposed
Amendments are not adopted pursuant to the Consent Solicitation with respect to
any or all series of Securities, Time Warner will retain the ability to
implement strategic alternatives with respect to AOL LLC in accordance with the
terms of the Indentures for such non-Consenting Series, including but not
limited to (i) transferring or conveying the assets and properties of AOL LLC
substantially as an entirety by way of a spin-off or sale with the successor
entity assuming the guarantee obligations of AOL LLC in accordance with the
relevant Indentures, (ii) transferring, including by way of a spin-off or sale,
one or more portions of the properties or assets of AOL LLC, such as a transfer
of one of the Global Web Services Business and the Access Services Business, or
separate transfers of both businesses, or (iii) merging AOL LLC with Time Warner
or another subsidiary of Time Warner with the successor entity assuming the
guarantee obligations of AOL LLC in accordance with the relevant Indentures, and
thereafter transferring or conveying the assets and properties of AOL LLC in
part or substantially as an entirety by way of a spin-off or sale, with Time
Warner or the applicable subsidiary retaining the guarantee. In the event that
such a strategic alternative is undertaken in accordance with the relevant
Indentures and without the adoption of the Proposed Amendments in respect of a
non-Consenting Series of Securities, no HBO Guarantee will be issued, and no
Consent Payment will be made, in connection therewith with respect to such
non-Consenting Series.
The
following table sets forth selected financial data for AOL LLC (excluding its
subsidiaries, except to the extent its equity in such subsidiaries is reflected
in Total Assets) for the year ended December 31, 2008. The following
information should be read together with Time Warner’s consolidated financial
statements and notes related to those statements, and “Management’s Discussion
and Analysis of Results of Operations and Financial Condition” in
Time Warner’s Annual Report on Form 10-K for the year ended December 31, 2008,
which are incorporated by reference into this prospectus. The
information set forth below is not necessarily indicative of the results of
future operations.
|
Year
Ended
December
31, 2008
(millions)
|
||||
|
Revenue
|
$ |
2,727
|
||
|
Depreciation
|
235 | |||
|
Amortization
|
16 | |||
|
Operating
Income (Loss)
|
1,072 | |||
|
Total
Assets (at period end)
|
6,3141 | |||
|
Total
Liabilities (at period end)
|
758 | |||
1 Includes a $5.3 billion investment in subsidiaries and a $0.9 billion
deferred tax asset related
to equity awards.
Under the Indentures, AOL LLC is
currently restricted from conveying or transferring its properties and assets
substantially as an entirety, unless certain conditions are met, including that
the transferee assumes the guarantee of such guarantor (the “Covenant”). With a view to
providing Time Warner with greater flexibility in considering strategic
alternatives with respect to AOL LLC, as described in more detail under “AOL
LLC” above, Time Warner is soliciting Consents to amend the Indentures to
provide that AOL LLC may convey or transfer its properties and assets
substantially as an entirety without complying with the conditions contained in
the Covenant as currently in effect (but subject to the concurrent or prior
issuance of the HBO Guarantee, as discussed below), unless such conveyance or
transfer constitutes a conveyance or transfer of the properties and assets of
the issuer and the guarantors (under the relevant Indenture) and their
respective subsidiaries, taken as a whole, substantially as an entirety (the
“Proposed
Amendments”). The effect of the adoption of the Proposed
Amendments would be that the Covenant would not apply to a conveyance or
transfer by AOL LLC unless it resulted in or constituted a conveyance or
transfer of the properties and assets of Time Warner and its subsidiaries, taken
as a whole, substantially as an entirety. The Supplemental Indentures
will require Time Warner to cause the HBO Guarantee to be issued under the
circumstances described herein.
Upon the terms and subject to the
conditions set forth in the Consent Solicitation Statement and the Consent
Letter, Time Warner is offering holders of the Securities a consent payment
equal to $5.00 for each $1,000 principal amount of Securities held (the “Consent Payment”), in addition
to the HBO Guarantee.
Only those registered holders of
Securities (“Holders”)
as of April 2, 2009 (the “Record Date”) will be eligible
to deliver a Consent and, upon the terms and subject to the conditions set forth
in the Consent Solicitation Statement and in the Consent Letter, receive Consent
Payments. The Consent Solicitation Statement and the Consent Letter will be sent
to all Holders as of the Record Date, and such holders should return their
consent to D.F. King & Co., Inc., the information and tabulation agent for
the Consent Solicitation (the “Information and Tabulation
Agent”), in accordance with the instructions in the Consent
Letter. Holders whose Consents are not received prior to
April 15, 2009 (unless extended in accordance with the Consent Solicitation
Statement), will not be entitled to receive any Consent Payment.
Adoption of the Proposed Amendments
with respect to each series of Securities requires, pursuant to the applicable
Indenture, the consent of Holders who hold not less than a majority in aggregate
principal amount of such Securities outstanding as of the Record Date, either
voting by series or together as a single class with the Holders of all other
Securities issued under the applicable Indenture, in each case as set forth in
the Consent Solicitation Statement. The requisite consent in respect of any
series of Securities is referred to herein as the “Requisite
Consent”.
If the Requisite Consent in respect of
any series of Securities is obtained and the supplemental indenture relating to
such series of Securities giving effect to the Proposed Amendments (each, a
“Supplemental
Indenture”, and collectively, the “Supplemental Indentures”) is
executed and delivered by the parties thereto (each such series of Securities
being referred to herein as a “Consenting Series”), all
Holders of such Consenting Series, including the non-consenting Holders, will be
bound by the Proposed Amendments to the relevant Indenture and shall, on and
after the HBO Guarantee Issue Date, be entitled to all rights and privileges
under the HBO Guarantee, but only the consenting Holders will be entitled to
receive the applicable Consent Payment.
Subject to Time Warner’s right to
terminate the Consent Solicitation with respect to any or all series of
Securities in accordance with the terms set forth in the Consent Solicitation
Statement, Time Warner currently intends to execute and deliver a Supplemental
Indenture in respect of each series of Securities promptly following the receipt
of the Requisite Consent for such series. Consents in respect of any series of
Securities shall be deemed accepted by Time Warner upon execution and delivery
of the Supplemental Indenture in respect of such series. Consent Payments will
be paid promptly following the execution of the Supplemental Indenture with
respect to such series of Securities.
Holders whose Consents are not received
by the Information and Tabulation Agent on or prior to the Expiration Date will
not be entitled to receive a Consent Payment in respect of such
Consents. Under no circumstances will Time Warner make any Consent
Payment to a Holder who does not properly deliver a Consent in accordance with
the terms of the Consent Solicitation Statement and the Consent
Letter. In addition, under no circumstances will Time Warner make any
Consent Payment with respect to any series of Securities to any Holder
delivering a Consent with respect to such series unless and until (i) the
Requisite Consent in respect of such series has been received and (ii) a
Supplemental Indenture adopting the Proposed Amendments with respect to such
series of Securities has been executed and delivered.
Consents with respect to any series of
Securities can be revoked only in accordance with the procedures set forth in
the Consent Solicitation Statement. Consents will become irrevocable upon the
earlier of (i) 5:00 p.m., New York City time, on April 15, 2009, and (ii)
the time at which the Requisite Consent for such series of Securities has been
received.
The transfer of Securities after the
Record Date will NOT have the effect of revoking any Consent theretofore
properly received by the Information and Tabulation Agent. Each Consent properly
received by the Information and Tabulation Agent will be counted unless revoked
in accordance with the Consent Solicitation Statement. The Consent Payment will
be paid to Holders as of the Record Date only, notwithstanding any subsequent
transfer of the Securities to which such Consents relate.
Time Warner reserves the right to
extend the Expiration Date, including on a daily basis, in respect of any or all
series of Securities, at any time in its sole discretion.
The Consent Solicitation may be
terminated with respect to any or all series of Securities at any time
(including after the Expiration Date but prior to the execution and delivery of
a Supplemental Indenture with respect to a series of Securities) in the sole
discretion of Time Warner, whether or not the Requisite Consent in respect of
any series of Securities has been received. If the Consent
Solicitation in respect of any series of Securities is so terminated by Time
Warner, no Consent Payments in respect of such series of Securities will be
made, irrespective of whether the Requisite Consent with respect to such series
of Securities was received, and the Proposed Amendments will not be adopted and
the HBO Guarantee will not be issued with respect to such series of
Securities.
Regardless of whether the Proposed
Amendments become operative, the Securities will continue to be outstanding in
accordance with all other terms of the Securities and the relevant Indentures.
The changes included in the Proposed Amendments will not alter the relevant
issuer’s obligation to pay the principal or interest on the Securities, the
guarantors’ (other than AOL LLC’s) obligations under the Indentures or alter the
stated interest rate or maturity date provisions of the Securities of the
Consenting Series.
The above is intended to be a summary
of the Consent Solicitation only, and does not contain all of the information
related to the Consent Solicitation. You should read the more detailed
information in the Consent Solicitation Statement and the Consent Letter, which
have been filed as a free writing prospectus with the Commission.
With respect to any series of
Securities with respect to which the Proposed Amendments are adopted as
described above, in order for AOL LLC to be able to convey or transfer its
properties and assets substantially as an entirety without complying with the
conditions contained in the Covenant as currently in effect, Time Warner will be
required to, prior to or concurrently with such transfer, cause Home Box Office
to guarantee the full and punctual payment of all the monetary obligations and
the full and punctual performance within applicable grace periods of all other
obligations (including obligations to the trustee) of Historic TW (in its own
capacity and as successor to TWCI) under the relevant Indenture.
The issuance of the HBO Guarantee with
respect to the Consenting Series under the circumstances described herein will
be effected by execution and delivery of further supplements to the applicable
Indentures (the “HBO Guarantee
Supplements”).
If the Requisite Consent in respect of
any series of Securities is not obtained or a Supplemental Indenture in respect
of such series of Securities is not executed and delivered, the HBO Guarantee
will not become issuable with respect to such series and the Holders of such
series will not be eligible to exercise the rights and privileges under the HBO
Guarantee if and when it is issued in respect of any other Consenting Series of
Securities in accordance with the terms hereof.
The HBO Guarantee (if issued) with
respect to any series of Securities will be:
|
|
●
|
a
senior, unsecured obligation, equal in right of payment with all of Home
Box Office’s existing and future senior, unsecured
debt;
|
|
|
●
|
effectively
junior to Home Box Office’s obligations secured by liens, to the extent of
the value of the assets securing those obligations;
and
|
|
|
●
|
senior
in right of payment to Home Box Office’s subordinated debt, if
any.
|
As a result of the inclusion of Home
Box Office as a guarantor under the relevant Indentures upon the execution and
delivery of the HBO Guarantee Supplements with respect to the Consenting Series
of Securities on the HBO Guarantee Issue Date, Home Box Office will become
subject to the guarantor merger clause of the applicable Indentures that will
require any successor to Home Box Office, including in the event Home Box Office
merges with any other entity or conveys or transfers its properties and assets
substantially as an entirety, to assume its guarantee.
The maximum aggregate liability of Home
Box Office under the HBO Guarantee shall not exceed the maximum amount that can
be guaranteed by Home Box Office without rendering the HBO Guarantee voidable
under applicable law relating to fraudulent conveyance or fraudulent transfer or
similar laws affecting the rights of creditors generally.
Time Warner reserves the right to delay
the issuance of the HBO Guarantee to comply with any applicable
law.
The Proposed Amendments will be adopted
by execution and delivery of the Supplemental Indentures by the relevant
signatories thereto. Subject to its right to terminate the Consent
Solicitation with respect to any or all series of Securities in accordance with
the terms of the Consent Solicitation Statement, Time Warner currently intends
to execute and deliver the Supplemental Indentures in respect of each series of
Securities promptly following receipt of the Requisite Consent with respect to
such series. The forms of the Supplemental Indentures are included as Exhibits
4.1, 4.2, 4.3, 4.4 and 4.5 to this prospectus.
The HBO Guarantee in respect of each
series of Securities will be issued on the HBO Guarantee Issue Date under the
circumstances described above by execution and delivery of the HBO Guarantee
Supplements by the relevant signatories thereto. The forms of the HBO Guarantee
Supplements are included as Annex A to each of Exhibits 4.1, 4.2, 4.3, 4.4 and
4.5 to this prospectus.
The following is a summary discussion
of certain U.S. Federal income tax consequences of adoption of the Proposed
Amendments (and, if applicable, the subsequent issue of the HBO Guarantee) for
U.S. Holders and Non-U.S. Holders (as defined below). This summary is
based upon currently existing provisions of the Internal Revenue Code of 1986,
as amended (the “Code”),
U.S. Treasury Regulations promulgated thereunder (the “Treasury Regulations”), and
administrative and judicial interpretations thereof, all as in effect on the
date hereof and all of which are subject to change, possibly with retroactive
effect.
The summary does not attempt to address
the U.S. Federal income tax consequences for all Holders, some of which may be
subject to special rules (for example, banks and certain other financial
institutions, real estate investment trusts, regulated investment companies,
U.S. expatriates, life insurance companies, tax-exempt entities and dealers in
securities or currencies). This summary assumes that the Securities
are held as “capital assets” within the meaning of Section 1221 of the
Code. No ruling has been or will be sought from the Internal Revenue
Service (the “Service”)
regarding any matter discussed below. Accordingly, no assurance can
be given that the Service will not challenge any of the U.S. Federal income tax
consequences described below or that any such challenge, if made, would not be
sustained by a court.
As used in this discussion, the term
“U.S. Holder” means a
beneficial owner of Securities that is, or is treated as, for U.S. Federal
income tax purposes:
|
|
●
|
an
individual who is a citizen or resident of the United
States;
|
|
|
●
|
a
corporation (including any entity treated as a corporation for U.S.
Federal income tax purposes) created or organized in or under the laws of
the United States, any state thereof or the District of
Columbia;
|
|
|
●
|
an
estate, the income of which is subject to U.S. Federal income taxation
regardless of its source; or
|
|
|
●
|
a
trust if (A) a court within the United States is able to exercise primary
jurisdiction over its administration and one or more U.S. persons have
authority to control all of its substantial decisions, or (B) the trust
has a valid election in effect under the applicable Treasury Regulations
to be treated as a U.S. person.
|
If a partnership (including any entity
treated as a partnership for U.S. Federal income tax purposes) is a beneficial
owner of Securities, the treatment of a partner in the partnership will
generally depend on the status of the partner and on the activities of the
partnership. Partnerships holding Securities and the partners therein
should consult their tax advisors regarding the tax consequences of adoption of
the Proposed Amendments.
The term “Non-U.S. Holder” means a
beneficial owner of Securities that is neither a U.S. Holder nor a partnership
for U.S. Federal income tax purposes.
U.S.
Holders
We believe that the only U.S. Federal
income tax consequence of the adoption of the Proposed Amendments (and, if
applicable, the subsequent issuance of the HBO Guarantee) should be that the
full amount of the Consent Payment will be subject to tax as ordinary income to
those U.S. Holders who receive it.
Holders are urged to consult their own
tax advisors regarding the potential tax consequences of the adoption of the
Proposed Amendments (and, if applicable, the subsequent issuance of the HBO
Guarantee) to them.
A U.S. Holder may, under certain
circumstances, be subject to backup withholding, currently imposed at a rate of
28%, with respect to the Consent Payment, unless that U.S. Holder (i) is a
corporation or is otherwise exempt and, when required, demonstrates this fact or
(ii) provides a correct taxpayer identification number, certifies as to no loss
of exemption from backup withholding and otherwise complies with applicable
requirements of the backup withholding rules. The amount of any backup
withholding from a Consent Payment will be allowed as a credit against such U.S.
Holder’s Federal income tax liability and may entitle such U.S. Holder to a
refund, provided that the required information is furnished in a timely manner
to the IRS.
Non-U.S.
Holders
A Consent Payment received by a
Non-U.S. Holder generally will be subject to U.S. Federal withholding tax
imposed at a rate of 30% unless an exemption from withholding is applicable, for
instance, because the Consent Payment is effectively connected with a trade or
business carried on by the Non-U.S. Holder in the United States or because an
income tax treaty applies. To claim an exemption from this
withholding, the Non-U.S. Holder must deliver to us (or any other person who is
otherwise required to withhold U.S. Federal income tax) a properly executed
Service Form W-8ECI or, as applicable, Service Form W-8BEN claiming such
exemption.
If the Consent Payment is effectively
connected with a trade or business carried on by the Non-U.S. Holder in the
United States, the Consent Payment, although exempt from U.S. Federal
withholding tax, will generally be subject to regular U.S. Federal income tax.
In addition corporate Non-U.S. Holders receiving a Consent Payment that is
effectively connected with the conduct of a trade or business within the United
States may be subject to an additional “branch profits” tax at a 30% rate or a
lower rate if specified by an applicable income tax treaty.
Other
Tax Considerations
There may be other U.S. Federal, state,
local or foreign tax considerations applicable to the particular circumstances
of a Holder. Accordingly, all Holders should consult with their own
tax advisors as to any particular tax consequences to them of the Consent
Payment.
THE PRECEDING DISCUSSION OF CERTAIN
U.S. FEDERAL INCOME TAX CONSEQUENCES IS INCLUDED HEREIN FOR GENERAL INFORMATION
ONLY AND DOES NOT CONSTITUTE AND IS NOT A SUBSTITUTE FOR PROFESSIONAL TAX
ADVICE. EACH HOLDER SHOULD CONSULT A TAX ADVISOR AS TO THE U.S. FEDERAL, STATE,
LOCAL AND FOREIGN TAX CONSEQUENCES OF THE ADOPTION OF THE PROPOSED AMENDMENTS
AND THE CONSENT PAYMENT.
The ratio of earnings to fixed charges
for Time Warner are set forth below for the periods indicated. The
definition of earnings also applies to Time Warner’s unconsolidated 50% owned
affiliated companies, referred to on Exhibit 12.1 as “Adjustment for
partially owned subsidiaries and 50% owned companies”.
For purposes of computing the ratio of
earnings to fixed charges, earnings were calculated by adding:
|
(i)
|
pretax income;
|
| (ii) |
interest expense;
|
| (iii) |
minority interest in the income of
majority-owned subsidiaries that have fixed charges;
and
|
| (iv) | the amount of undistributed losses (earnings) of Time Warner’s less than 50%-owned companies. |
Fixed charges consist of interest
expense.
|
Year
Ended December 31,
|
|||||
|
2008(1)
|
2007
|
2006
|
2005
|
2004
|
|
|
Ratio
of earnings to fixed charges
|
—
|
3.5x
|
3.9x
|
3.0x
|
3.2x
|
(1) For the ratio of earnings
to fixed charges to equal 1.00, earnings, as adjusted, must increase by $18.588
billion.
Neither Time Warner nor Home Box Office
will receive any cash proceeds from the offer or issuance of the HBO
Guarantee.
This offering is being conducted by
Home Box Office and Time Warner in connection with the Consent Solicitation, as
described in more detail under the heading “The Consent Solicitation” and in the
Consent Solicitation Statement.
We have retained Banc of America
Securities LLC, Citigroup Global Markets Inc. and Deutsche Bank Securities Inc.
to act as the solicitation agents for the Consent Solicitation (the “Solicitation Agents”). We have
agreed to pay the Solicitation Agents customary fees and, subject to certain
limitations, reimburse them for their reasonable out-of-pocket expenses. We have
also agreed to indemnify the Solicitation Agents for certain liabilities that
may arise in connection with the Consent Solicitation, including liabilities
under the Securities Act of 1933 (the “Securities Act”).
The Solicitation Agents and certain of
their affiliates have provided, are providing, and may in the future provide,
certain commercial banking, financial advisory and investment banking services
in the ordinary course of business for us, the guarantors and certain of our
affiliates, for which they have or will receive customary fees.
Home Box Office is not required to file
periodic reports and other information under the Securities Exchange Act of 1934
(the “Exchange Act”).
Instead, information with respect to Home Box Office is provided, to the extent
required by the Exchange Act, in the required filings made by Time Warner. Time
Warner files annual, quarterly and current reports, proxy statements and other
information with the Commission. You may obtain such Commission filings from the
Commission’s Website at http://www.sec.gov.
You can also read and copy these materials at the Commission’s public reference
room at 100 F Street, N.E., Washington, D.C. 20549. You can obtain information
about the operation of the Commission’s public reference room by calling the
Commission at 1-800-SEC-0330. You can also obtain information about Time Warner
at the offices of the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
This prospectus constitutes a part of a
registration statement filed by Time Warner and Home Box Office with the
Commission under the Securities Act. This prospectus omits certain of the
information contained in the registration statement in accordance with the rules
and regulations of the Commission. Reference is hereby made to the registration
statement and related exhibits for further information with respect to Time
Warner and Home Box Office.
The Indentures are filed as exhibits to
certain of Time Warner’s periodic reports, and the forms of the Supplemental
Indentures and the HBO Guarantee Supplements are filed as exhibits to the
registration statement of which this prospectus forms a part. Statements made in
this prospectus concerning the provisions of any Indenture, Supplemental
Indenture, HBO Guarantee Supplement or of any other contract, agreement or other
document are not necessarily complete. With respect to each such statement
concerning an Indenture, Supplemental Indenture or HBO Guarantee Supplement or
other contract, agreement or document filed or furnished with the Commission,
reference is made to such filing for a more complete description of the matter
involved, and each such statement is qualified in its entirety by such
reference.
Copies of the Consent Solicitation
Statement or the Consent Letter may be obtained from the Commission’s Website at
http://www.sec.gov
or, at no cost, by writing to the Information and Tabulation Agent at D. F. King
& Co., Inc., 48 Wall Street, 22nd Floor, New York, New York 10005, or
calling collect (for banks and brokers) 212-269-5550 or toll-free (for all
others) 1-800-758-5880, or writing to Time Warner at the following address: Time
Warner Inc., Attn: Investor Relations, One Time Warner Center, New York, New
York 10019-8016, or calling toll-free 1-866-INFO-TWX.
The following documents have been filed
by Time Warner with the Commission and are incorporated by reference into this
prospectus:
|
|
●
|
Annual
report on Form 10-K for the year ended December 31, 2008 (filed with the
Commission on February 20, 2009), and including portions of the proxy
statement to be filed in connection with the 2009 annual meeting of
stockholders to the extent specifically incorporated by reference therein;
and
|
|
|
●
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Current
reports on Form 8-K filed on February 27, 2009, March 13, 2009, March 18,
2009, March 23, 2009, March 26, 2009, March 30, 2009 and April 6,
2009.
|
All documents and reports that we file
with the Commission (other than any portion of such filings that are furnished
under applicable Commission rules rather than filed) under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act from the date of this prospectus until
the termination of the offering under this prospectus shall be deemed to be
incorporated in this prospectus by reference. The information contained on Time
Warner’s Website (http://www.timewarner.com) is not incorporated into this
prospectus.
You may request a copy of these
filings, other than an exhibit to these filings unless we have specifically
included or incorporated that exhibit by reference into the filing, from the
Commission as described under “Where You Can Find More Information” or, at no
cost, by writing or telephoning Time Warner at the following address: Time
Warner Inc., Attn: Investor Relations, One Time Warner Center, New York, New
York 10019-8016, Telephone: 1-866-INFO-TWX.
You should rely only on the information
contained or incorporated by reference in this prospectus or to which we have
referred you herein. We have not authorized any person, including any salesman
or broker, to provide information other than that provided or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of the HBO Guarantee in any
jurisdiction where the offer is not permitted. You should assume that the
information in this prospectus is accurate only as of the date on its cover page
and that any information we have incorporated by reference is accurate only as
of the date of the document incorporated by reference.
Any statement contained in a document
incorporated or deemed to be incorporated by reference into this prospectus will
be deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or any other subsequently
filed document that is deemed to be incorporated by reference into this
prospectus modifies or supersedes the statement. Any statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
The validity of the HBO Guarantee will
be passed upon for us by Cravath, Swaine & Moore LLP, Worldwide Plaza, 825
Eighth Avenue, New York, New York 10019-8016.
The consolidated financial statements,
financial statement schedule and supplementary information of Time Warner and
its subsidiaries included in Time Warner’s Annual Report on Form 10-K for
the year ended December 31, 2008 and the condensed consolidating financial
statements included herein have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in their report
thereon included herein. Time Warner’s effectiveness of internal control over
financial reporting as of December 31, 2008 has also been
audited by Ernst & Young LLP, as set forth in their report thereon
included in Time Warner’s Annual Report on Form 10-K for the year ended
December 31, 2008 and incorporated herein by reference. Such financial
statements, schedule and supplementary information, accompanying condensed
consolidating financial statements and Time Warner management’s assessment of
the effectiveness of internal control over financial reporting as of December
31, 2008 are either included in this prospectus or incorporated herein by
reference in reliance upon such reports given upon the authority of such firm as
experts in accounting and auditing.
TIME
WARNER INC.
The
Board of Directors and Shareholders of
Time
Warner Inc.
We have
audited the consolidated balance sheet of Time Warner Inc. (“Time Warner”) as of
December 31, 2008 and 2007, and the related consolidated statements of
operations, cash flows and shareholders’ equity for each of the three years in
the period ended December 31, 2008 (not included herein). Our audits
also included the Supplementary Information, Financial Statement Schedule II
(not included herein) and the accompanying Condensed Consolidating Financial
Statements. The Time Warner Financial Statements, Supplementary
Information, Financial Statement Schedule II and the accompanying Condensed
Consolidating Financial Statements are the responsibility of Time Warner’s
management. Our responsibility is to express an opinion on these
financial statements, financial statement schedule, supplementary information
and condensed consolidating financial statements based on our
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the consolidated financial position of Time Warner at
December 31, 2008 and 2007, and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
2008, in conformity with U.S. generally accepted accounting principles. Also, in
our opinion, the related Financial Statement Schedule II, the Supplementary
Information and the accompanying Condensed Consolidating Financial Statements,
when considered in relation to the basic financial statements taken as a whole,
present fairly in all material respects the information set forth
therein.
As of
January 1, 2007, Time Warner adopted Emerging Issues Task Force Issue No. 06-02,
Accounting for Sabbatical Leave and Other Similar Benefits, and Financial
Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in
Income Taxes — an interpretation of FASB Statement No. 109. As
discussed in Note 1 to the consolidated financial statements, as of January 1,
2008, Time Warner adopted Emerging Issues Task Force (“EITF”) Issue 06-10, Deferred Compensation and
Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life
Insurance Arrangements and EITF Issue No. 06-04, Deferred Compensation and
Postretirement Benefits Aspects of Endorsement Split-Dollar Life Insurance
Arrangements.
We also
have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Time Warner’s internal control over financial
reporting as of December 31, 2008, based on criteria established in Internal
Control — Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 19,
2009 (not included herein) expressed an unqualified opinion
thereon.
Ernst & Young
LLP
New York,
New York
February
19, 2009
(except
as to the accompanying
Condensed
Consolidating Financial Statements
as to
which the date is April 3, 2009)
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS
TIME
WARNER INC.
Overview
The Securities and Exchange
Commission’s rules require that condensed consolidating financial information be
provided for wholly owned subsidiaries that have guaranteed debt issued where
each such guarantee is full and unconditional. Set forth below are condensed
consolidating financial statements presenting the financial position, results of
operations and cash flows of (i) Time Warner Inc. (the “Parent Company”), (ii)
Historic TW Inc., Home Box Office, Inc. (“HBO”), and Turner Broadcasting
System, Inc., each a wholly owned subsidiary of the Parent Company, on a
combined basis (collectively, the “Guarantor Subsidiaries”),
(iii) the direct and indirect non-guarantor subsidiaries of the Parent Company
(the “Non-Guarantor
Subsidiaries”) on a combined basis and (iv) the eliminations necessary to
arrive at the information for Time Warner Inc. on a consolidated
basis.
There are no legal or regulatory
restrictions on the Parent Company’s ability to obtain funds from any of its
wholly owned subsidiaries through dividends, loans or advances.
These condensed consolidating financial
statements should be read in conjunction with the consolidated financial
statements of Time Warner Inc. and do not reflect Time Warner Cable, Inc., which
was separated from the Parent Company on March 12, 2009, as a discontinued
operation.
On April 6, 2009, the Parent
Company initiated a solicitation of consents (the “Consent Solicitation”) from
the holders of the debt securities issued under certain Indentures (the “Securities”) to adopt proposed
amendments to each Indenture that provide that certain restrictive covenants
will not apply (subject to the concurrent or prior issuance of the guarantee by
HBO discussed below) to a conveyance or transfer by AOL LLC, a subsidiary of the
Parent Company, of its properties and assets substantially as an entirety unless
such conveyance or transfer constitutes a conveyance or transfer of the
properties and assets of the issuer and the guarantors under the relevant
Indenture and their respective subsidiaries, taken as a whole, substantially as
an entirety. As a result of the Consent Solicitation, subject to the
receipt of the requisite consents from the holders of the Securities and the
proposed amendments to the Indentures becoming effective, and in connection with
the conveyance or transfer of AOL LLC’s properties and assets substantially as
an entirety, HBO will issue a guarantee of the obligations of Historic TW Inc.,
whether as issuer or guarantor, under the Indentures and the
Securities. Such guarantee will be issued by HBO only in connection
with such a transaction. Accordingly, for purposes of this
presentation, the consolidating financial information herein reflects HBO as a
Guarantor Subsidiary and does not reflect the historical financial information
of AOL LLC in the Guarantor data and information. Instead, the
historical financial information of AOL LLC is reflected in the data and
information regarding the Non-Guarantor Subsidiaries. If the HBO
guarantee is issued, HBO, together with the other Guarantor Subsidiaries, will
fully and unconditionally, jointly and severally, guarantee the Securities on an
unsecured basis.
Basis
of Presentation
In presenting the condensed
consolidating financial statements, the equity method of accounting has been
applied to (i) the Parent Company’s interests in the Guarantor Subsidiaries and
(ii) the Guarantor Subsidiaries’ interests in the Non-Guarantor Subsidiaries,
where applicable, even though all such subsidiaries meet the requirements to be
consolidated under U.S. generally accepted accounting principles. All
intercompany balances and transactions between the Parent Company, the Guarantor
Subsidiaries and the Non-Guarantor Subsidiaries have been eliminated, as shown
in the column “Eliminations.”
The Parent Company’s accounting bases
in all subsidiaries, including goodwill and identified intangible assets, have
been “pushed down” to the applicable subsidiaries. Interest income (expense) is
determined based on third-party debt and the relevant intercompany amounts
within the respective legal entity.
All direct and indirect domestic
subsidiaries are included in Time Warner Inc.’s consolidated U.S. tax return. In
the condensed consolidating financial statements, tax expense has been allocated
based on each such subsidiary’s relative pretax income to the consolidated
pretax income. With respect to the use of certain consolidated tax attributes
(principally operating and capital loss carryforwards), such benefits have been
allocated to the respective subsidiary that generated the taxable income
permitting such use (i.e., pro-rata based on where the income was generated).
For example, to the extent a Non-Guarantor Subsidiary generated a gain on the
sale of a business for which the Parent Company utilized tax attributes to
offset such gain, the tax attribute benefit would be allocated to that
Non-Guarantor Subsidiary. Deferred taxes of the Parent Company, the Guarantor
Subsidiaries and the Non-Guarantor Subsidiaries have been allocated based upon
the temporary differences between the carrying amounts of the respective assets
and liabilities of the applicable entities.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS -
(Continued)
Corporate overhead expenses have been
reflected as expenses of the Parent Company and have not been allocated to the
Guarantor Subsidiaries or the Non-Guarantor Subsidiaries. Certain transfers of
cash between subsidiaries and their parent companies are reflected as cash flows
from investing and financing activities in the accompanying condensed
consolidating statements of cash flows. All other intercompany activity,
including intercompany dividends, is reflected in cash flows from operations and
has been separately identified in the statement of cash flows.
TING FINANCIAL
STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS -
(Continued)
Consolidating
Balance Sheet
December
31, 2008
|
Parent Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Time
Warner
Consolidated
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||
|
Current
assets
|
||||||||||||||||||||
|
Cash
and equivalents
|
$ | 469 | $ | 103 | $ | 6,110 | $ | — | $ | 6,682 | ||||||||||
|
Receivables,
net
|
67 | 575 | 5,553 | — | 6,195 | |||||||||||||||
|
Inventories
|
— | 553 | 1,436 | — | 1,989 | |||||||||||||||
|
Prepaid
expenses and other current assets
|
220 | 107 | 649 | — | 976 | |||||||||||||||
|
Deferred
income taxes
|
760 | 597 | 598 | (1,195 | ) | 760 | ||||||||||||||
|
Total
current assets
|
1,516 | 1,935 | 14,346 | (1,195 | ) | 16,602 | ||||||||||||||
|
Noncurrent
inventories and film costs
|
— | 1,732 | 3,584 | (124 | ) | 5,192 | ||||||||||||||
|
Investments
in amounts due from consolidated subsidiaries
|
67,184 | 46,164 | 11,178 | (124,526 | ) | — | ||||||||||||||
|
Investments,
including available-for-sale securities
|
68 | 382 | 1,941 | (461 | ) | 1,930 | ||||||||||||||
|
Property,
plant and equipment, net
|
406 | 499 | 17,528 | — | 18,433 | |||||||||||||||
|
Intangible
assets subject to amortization, net
|
— | 2 | 4,055 | — | 4,057 | |||||||||||||||
|
Intangible
assets not subject to amortization
|
— | 2,009 | 29,813 | — | 31,822 | |||||||||||||||
|
Goodwill
|
— | 9,879 | 24,651 | — | 34,530 | |||||||||||||||
|
Other
assets
|
105 | 100 | 1,125 | — | 1,330 | |||||||||||||||
|
Total
assets
|
$ | 69,279 | $ | 62,702 | $ | 108,221 | $ | (126,306 | ) | $ | 113,896 | |||||||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||||||||||||||
|
Current
liabilities
|
||||||||||||||||||||
|
Accounts
payable
|
$ | 7 | $ | 19 | $ | 1,315 | $ | — | $ | 1,341 | ||||||||||
|
Participations
payable
|
— | 117 | 2,405 | — | 2,522 | |||||||||||||||
|
Royalties
and programming costs payable
|
— | 138 | 1,127 | — | 1,265 | |||||||||||||||
|
Deferred
revenue
|
— | 8 | 1,177 | (16 | ) | 1,169 | ||||||||||||||
|
Debt
due within one year
|
2,000 | 13 | 54 | — | 2,067 | |||||||||||||||
|
Other
current liabilities
|
458 | 756 | 4,491 | (95 | ) | 5,610 | ||||||||||||||
|
Current
liabilities of discontinued operations
|
— | — | 2 | — | 2 | |||||||||||||||
|
Total
current liabilities
|
2,465 | 1,051 | 10,571 | (111 | ) | 13,976 | ||||||||||||||
|
Long-term
debt
|
14,465 | 5,350 | 17,801 | — | 37,616 | |||||||||||||||
|
Mandatorily
redeemable preferred membership units issued by a
subsidiary
|
— | — | 300 | — | 300 | |||||||||||||||
|
Debt
due (from) to affiliates
|
(847 | ) | — | 847 | — | — | ||||||||||||||
|
Deferred
income taxes
|
8,756 | 10,777 | 10,577 | (21,354 | ) | 8,756 | ||||||||||||||
|
Deferred
revenue
|
— | — | 396 | (113 | ) | 283 | ||||||||||||||
|
Other
liabilities
|
2,152 | 2,345 | 4,960 | (2,199 | ) | 7,258 | ||||||||||||||
|
Minority
interests
|
— | — | 3,558 | (139 | ) | 3,419 | ||||||||||||||
|
Shareholders’
equity
|
||||||||||||||||||||
|
Due
to Time Warner and subsidiaries
|
— | (15,308 | ) | (30,717 | ) | 46,025 | — | |||||||||||||
|
Other
shareholders’ equity
|
42,288 | 58,487 | 89,928 | (148,415 | ) | 42,288 | ||||||||||||||
|
Total
shareholders’ equity
|
42,288 | 43,179 | 59,211 | (102,390 | ) | 42,288 | ||||||||||||||
|
Total
liabilities and shareholders’ equity
|
$ | 69,279 | $ | 62,702 | $ | 108,221 | $ | (126,306 | ) | $ | 113,896 | |||||||||
TING FINANCIAL STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS - (Continued)
Consolidating
Balance Sheet
December
31, 2007
|
Parent Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Time
Warner
Consolidated
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||
|
ASSETS
|
||||||||||||||||||||
|
Current
assets
|
||||||||||||||||||||
|
Cash
and equivalents
|
$ | 586 | $ | 53 | $ | 877 | $ | — | $ | 1,516 | ||||||||||
|
Receivables,
net
|
32 | 586 | 6,678 | — | 7,296 | |||||||||||||||
|
Inventories
|
— | 522 | 1,583 | — | 2,105 | |||||||||||||||
|
Prepaid
expenses and other current assets
|
135 | 112 | 587 | — | 834 | |||||||||||||||
|
Deferred
income taxes
|
700 | 454 | 484 | (938 | ) | 700 | ||||||||||||||
|
Total
current assets
|
1,453 | 1,727 | 10,209 | (938 | ) | 12,451 | ||||||||||||||
|
Noncurrent
inventories and film costs
|
— | 1,831 | 3,584 | (111 | ) | 5,304 | ||||||||||||||
|
Investments
in amounts due from consolidated subsidiaries
|
88,720 | 66,711 | 11,185 | (166,616 | ) | — | ||||||||||||||
|
Investments,
including available-for-sale securities
|
57 | 520 | 1,857 | (471 | ) | 1,963 | ||||||||||||||
|
Property,
plant and equipment, net
|
434 | 455 | 17,159 | — | 18,048 | |||||||||||||||
|
Intangible
assets subject to amortization, net
|
1 | 4 | 5,162 | — | 5,167 | |||||||||||||||
|
Intangible
assets not subject to amortization
|
— | 2,007 | 45,213 | — | 47,220 | |||||||||||||||
|
Goodwill
|
— | 9,882 | 31,867 | — | 41,749 | |||||||||||||||
|
Other
assets
|
117 | 298 | 1,513 | — | 1,928 | |||||||||||||||
|
Total
assets
|
$ | 90,782 | $ | 83,435 | $ | 127,749 | $ | (168,136 | ) | $ | 133,830 | |||||||||
|
LIABILITIES
AND SHAREHOLDERS’ EQUITY
|
||||||||||||||||||||
|
Current
liabilities
|
||||||||||||||||||||
|
Accounts
payable
|
$ | 4 | $ | 58 | $ | 1,408 | $ | — | $ | 1,470 | ||||||||||
|
Participations
payable
|
— | 132 | 2,415 | — | 2,547 | |||||||||||||||
|
Royalties
and programming costs payable
|
— | 160 | 1,093 | — | 1,253 | |||||||||||||||
|
Deferred
revenue
|
— | 4 | 1,177 | (3 | ) | 1,178 | ||||||||||||||
|
Debt
due within one year
|
— | 8 | 118 | — | 126 | |||||||||||||||
|
Other
current liabilities
|
522 | 457 | 4,722 | (90 | ) | 5,611 | ||||||||||||||
|
Current
liabilities of discontinued operations
|
— | — | 8 | — | 8 | |||||||||||||||
|
Total
current liabilities
|
526 | 819 | 10,941 | (93 | ) | 12,193 | ||||||||||||||
|
Long-term
debt
|
17,840 | 5,510 | 13,654 | — | 37,004 | |||||||||||||||
|
Mandatorily
redeemable preferred membership units issued by a
subsidiary
|
— | — | 300 | — | 300 | |||||||||||||||
|
Debt
due (from) to affiliates
|
(1,866 | ) | 735 | 1,131 | — | — | ||||||||||||||
|
Deferred
income taxes
|
13,951 | 16,031 | 15,907 | (31,938 | ) | 13,951 | ||||||||||||||
|
Deferred
revenue
|
— | — | 634 | (112 | ) | 522 | ||||||||||||||
|
Other
liabilities
|
1,795 | 2,084 | 5,120 | (1,997 | ) | 7,002 | ||||||||||||||
|
Minority
interests
|
— | — | 4,501 | (179 | ) | 4,322 | ||||||||||||||
|
Shareholders’
equity
|
||||||||||||||||||||
|
Due
to Time Warner and subsidiaries
|
— | (12,698 | ) | (30,530 | ) | 43,228 | — | |||||||||||||
|
Other
shareholders’ equity
|
58,536 | 70,954 | 106,091 | (177,045 | ) | 58,536 | ||||||||||||||
|
Total
shareholders’ equity
|
58,536 | 58,256 | 75,561 | (133,817 | ) | 58,536 | ||||||||||||||
|
Total
liabilities and shareholders’ equity
|
$ | 90,782 | $ | 83,435 | $ | 127,749 | $ | (168,136 | ) | $ | 133,830 | |||||||||
TING FINANCIAL STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS -
(Continued)
Consolidating
Statement of Operations
For
The Year Ended December 31, 2008
|
Parent Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Time
Warner
Consolidated
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||
|
Revenues
|
$ | — | $ | 5,048 | $ | 42,821 | $ | (885 | ) | $ | 46,984 | |||||||||
|
Costs
of revenues
|
— | (2,637 | ) | (25,534 | ) | 882 | (27,289 | ) | ||||||||||||
|
Selling,
general and administrative
|
(322 | ) | (1,096 | ) | (8,748 | ) | 3 | (10,163 | ) | |||||||||||
|
Amortization
of intangible assets
|
— | (2 | ) | (782 | ) | — | (784 | ) | ||||||||||||
|
Amounts
related to securities litigation and government
investigations
|
(21 | ) | — | — | — | (21 | ) | |||||||||||||
|
Merger-related,
restructuring and shutdown costs
|
(12 | ) | 3 | (350 | ) | — | (359 | ) | ||||||||||||
|
Asset
impairments
|
— | — | (24,309 | ) | — | (24,309 | ) | |||||||||||||
|
Loss
on disposal of assets, net
|
— | — | (16 | ) | — | (16 | ) | |||||||||||||
|
Operating
income (loss)
|
(355 | ) | 1,316 | (16,918 | ) | — | (15,957 | ) | ||||||||||||
|
Equity
in pretax income (loss) of consolidated subsidiaries
|
(15,316 | ) | (14,752 | ) | 1,435 | 28,633 | — | |||||||||||||
|
Interest
expense, net
|
(980 | ) | (917 | ) | (353 | ) | — | (2,250 | ) | |||||||||||
|
Other
income (loss), net
|
2 | 27 | (428 | ) | (17 | ) | (416 | ) | ||||||||||||
|
Minority
interest income, net
|
— | — | 2,001 | (27 | ) | 1,974 | ||||||||||||||
|
Income
(loss) from continuing operations before income taxes
|
(16,649 | ) | (14,326 | ) | (14,263 | ) | 28,589 | (16,649 | ) | |||||||||||
|
Income
tax benefit (provision)
|
3,247 | 3,036 | 2,432 | (5,468 | ) | 3,247 | ||||||||||||||
|
Net
income (loss)
|
$ | (13,402 | ) | $ | (11,290 | ) | $ | (11,831 | ) | $ | 23,121 | $ | (13,402 | ) | ||||||
TING FINANCIAL STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS -
(Continued)
Consolidating
Statement of Operations
For
The Year Ended December 31, 2007
|
Parent Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Time
Warner
Consolidated
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||
|
Revenues
|
$ | — | $ | 4,840 | $ | 42,452 | $ | (810 | ) | $ | 46,482 | |||||||||
|
Costs
of revenues
|
— | (2,651 | ) | (25,583 | ) | 808 | (27,426 | ) | ||||||||||||
|
Selling,
general and administrative
|
(382 | ) | (741 | ) | (8,532 | ) | 2 | (9,653 | ) | |||||||||||
|
Amortization
of intangible assets
|
— | (1 | ) | (673 | ) | — | (674 | ) | ||||||||||||
|
Amounts
related to securities litigation and government
investigations
|
(171 | ) | — | — | — | (171 | ) | |||||||||||||
|
Merger-related,
restructuring and shutdown costs
|
(10 | ) | (36 | ) | (216 | ) | — | (262 | ) | |||||||||||
|
Asset
impairments
|
— | — | (36 | ) | — | (36 | ) | |||||||||||||
|
Gain
on disposal of assets, net
|
— | — | 689 | — | 689 | |||||||||||||||
|
Operating
income (loss)
|
(563 | ) | 1,411 | 8,101 | — | 8,949 | ||||||||||||||
|
Equity
in pretax income of consolidated subsidiaries
|
7,998 | 5,616 | 1,391 | (15,005 | ) | — | ||||||||||||||
|
Interest
expense, net
|
(1,063 | ) | (1,137 | ) | (99 | ) | — | (2,299 | ) | |||||||||||
|
Other
income (expense), net
|
15 | (16 | ) | 197 | (51 | ) | 145 | |||||||||||||
|
Minority
interest expense, net
|
— | — | (462 | ) | 54 | (408 | ) | |||||||||||||
|
Income
from continuing operations before income taxes
|
6,387 | 5,874 | 9,128 | (15,002 | ) | 6,387 | ||||||||||||||
|
Income
tax provision
|
(2,336 | ) | (2,133 | ) | (3,408 | ) | 5,541 | (2,336 | ) | |||||||||||
|
Income
from continuing operations
|
4,051 | 3,741 | 5,720 | (9,461 | ) | 4,051 | ||||||||||||||
|
Discontinued
operations, net of tax
|
336 | 177 | 274 | (451 | ) | 336 | ||||||||||||||
|
Net
income
|
$ | 4,387 | $ | 3,918 | $ | 5,994 | $ | (9,912 | ) | $ | 4,387 | |||||||||
TING FINANCIAL STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS -
(Continued)
Consolidating
Statement of Operations
For
The Year Ended December 31, 2006
|
Parent Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Time
Warner
Consolidated
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||
|
Revenues
|
$ | — | $ | 4,745 | $ | 39,699 | $ | (754 | ) | $ | 43,690 | |||||||||
|
Costs
of revenues
|
— | (2,386 | ) | (23,239 | ) | 749 | (24,876 | ) | ||||||||||||
|
Selling,
general and administrative
|
(88 | ) | (842 | ) | (9,472 | ) | 5 | (10,397 | ) | |||||||||||
|
Amortization
of intangible assets
|
— | (4 | ) | (583 | ) | — | (587 | ) | ||||||||||||
|
Amounts
related to securities litigation and government
investigations
|
(705 | ) | — | — | — | (705 | ) | |||||||||||||
|
Merger-related,
restructuring and shut-down costs
|
(5 | ) | — | (395 | ) | — | (400 | ) | ||||||||||||
|
Asset
impairments
|
— | (1 | ) | (212 | ) | — | (213 | ) | ||||||||||||
|
Gains
on disposal of assets, net
|
20 | — | 771 | — | 791 | |||||||||||||||
|
Operating
income (loss)
|
(778 | ) | 1,512 | 6,569 | — | 7,303 | ||||||||||||||
|
Equity
in pretax income of consolidated subsidiaries
|
7,817 | 5,405 | 1,462 | (14,684 | ) | — | ||||||||||||||
|
Interest
income (expense), net
|
(674 | ) | (1,017 | ) | 17 | — | (1,674 | ) | ||||||||||||
|
Other
income, net
|
16 | 31 | 1,159 | (79 | ) | 1,127 | ||||||||||||||
|
Minority
interest expense, net
|
— | — | (417 | ) | 42 | (375 | ) | |||||||||||||
|
Income
from continuing operations before income taxes
|
6,381 | 5,931 | 8,790 | (14,721 | ) | 6,381 | ||||||||||||||
|
Income
tax provision
|
(1,308 | ) | (1,864 | ) | (2,471 | ) | 4,335 | (1,308 | ) | |||||||||||
|
Income
from continuing operations
|
5,073 | 4,067 | 6,319 | (10,386 | ) | 5,073 | ||||||||||||||
|
Discontinued
operations, net of tax
|
1,454 | 1,437 | 1,452 | (2,889 | ) | 1,454 | ||||||||||||||
|
Income
before cumulative effect of accounting change
|
6,527 | 5,504 | 7,771 | (13,275 | ) | 6,527 | ||||||||||||||
|
Cumulative
effect of accounting change, net of tax
|
25 | 2 | 2 | (4 | ) | 25 | ||||||||||||||
|
Net
income
|
$ | 6,552 | $ | 5,506 | $ | 7,773 | $ | (13,279 | ) | $ | 6,552 | |||||||||
TING FINANCIAL
STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS -
(Continued)
Consolidating
Statement of Cash Flows
For
The Year Ended December 31, 2008
|
Parent Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Time
Warner
Consolidated
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||
|
OPERATIONS
|
||||||||||||||||||||
|
Net
income (loss)
|
$ | (13,402 | ) | $ | (11,290 | ) | $ | (11,831 | ) | $ | 23,121 | $ | (13,402 | ) | ||||||
|
Adjustments
for noncash and nonoperating items:
|
||||||||||||||||||||
|
Depreciation
and amortization
|
43 | 117 | 4,430 | — | 4,590 | |||||||||||||||
|
Amortization
of film and television costs
|
— | 2,072 | 3,819 | — | 5,891 | |||||||||||||||
|
Asset
impairments
|
— | — | 24,309 | — | 24,309 | |||||||||||||||
|
(Gain)
loss on investments and other assets, net
|
(14 | ) | 3 | 445 | — | 434 | ||||||||||||||
|
Equity
in pretax (income) loss of consolidated subsidiaries
|
15,316 | 14,752 | (1,435 | ) | (28,633 | ) | — | |||||||||||||
|
Equity
in (income) losses of investee companies, net of cash
distributions
|
— | (41 | ) | 72 | — | 31 | ||||||||||||||
|
Equity-based
compensation
|
44 | 43 | 203 | — | 290 | |||||||||||||||
|
Minority
interests
|
— | — | (2,000 | ) | 26 | (1,974 | ) | |||||||||||||
|
Deferred
income taxes
|
(4,116 | ) | (4,149 | ) | (4,370 | ) | 8,519 | (4,116 | ) | |||||||||||
|
Changes
in operating assets and liabilities, net of acquisitions
|
892 | (1,185 | ) | (2,385 | ) | (3,029 | ) | (5,707 | ) | |||||||||||
|
Intercompany
activity
|
— | 5,059 | (5,059 | ) | — | — | ||||||||||||||
|
Adjustments
relating to discontinued operations
|
— | (1 | ) | (14 | ) | 1 | (14 | ) | ||||||||||||
|
Cash
provided (used) by operations
|
(1,237 | ) | 5,380 | 6,184 | 5 | 10,332 | ||||||||||||||
|
INVESTING
ACTIVITIES
|
||||||||||||||||||||
|
Investments
in available-for-sale securities
|
(9 | ) | — | (10 | ) | — | (19 | ) | ||||||||||||
|
Investments
and acquisitions, net of cash acquired
|
(98 | ) | (16 | ) | (2,324 | ) | — | (2,438 | ) | |||||||||||
|
Capital
expenditures and product development costs
|
(15 | ) | (145 | ) | (4,217 | ) | — | (4,377 | ) | |||||||||||
|
Investment
proceeds from available-for-sale securities
|
10 | — | 7 | — | 17 | |||||||||||||||
|
Advances
to parent and consolidated subsidiaries
|
2,944 | (439 | ) | 1,256 | (3,761 | ) | — | |||||||||||||
|
Other
investment proceeds
|
21 | 41 | 269 | — | 331 | |||||||||||||||
|
Cash
provided (used) by investing activities
|
2,853 | (559 | ) | (5,019 | ) | (3,761 | ) | (6,486 | ) | |||||||||||
|
FINANCING
ACTIVITIES
|
||||||||||||||||||||
|
Borrowings
|
33,170 | — | 7,196 | — | 40,366 | |||||||||||||||
|
Debt
repayments
|
(34,539 | ) | (166 | ) | (3,103 | ) | — | (37,808 | ) | |||||||||||
|
Proceeds
from exercise of stock options
|
134 | — | — | — | 134 | |||||||||||||||
|
Excess
tax benefit on stock options
|
3 | — | — | — | 3 | |||||||||||||||
|
Principal
payments on capital leases
|
— | (5 | ) | (38 | ) | — | (43 | ) | ||||||||||||
|
Repurchases
of common stock
|
(332 | ) | — | — | — | (332 | ) | |||||||||||||
|
Dividends
paid
|
(901 | ) | — | — | — | (901 | ) | |||||||||||||
|
Other
financing activities
|
(3 | ) | — | (96 | ) | — | (99 | ) | ||||||||||||
|
Change
in due to/from parent and investment in segment
|
735 | (4,600 | ) | 109 | 3,756 | — | ||||||||||||||
|
Cash
provided (used) by financing activities
|
(1,733 | ) | (4,771 | ) | 4,068 | 3,756 | 1,320 | |||||||||||||
|
INCREASE
(DECREASE) IN CASH AND EQUIVALENTS
|
(117 | ) | 50 | 5,233 | — | 5,166 | ||||||||||||||
|
CASH
AND EQUIVALENTS AT BEGINNING OF PERIOD
|
586 | 53 | 877 | — | 1,516 | |||||||||||||||
|
CASH
AND EQUIVALENTS AT END OF PERIOD
|
$ | 469 | $ | 103 | $ | 6,110 | $ | — | $ | 6,682 | ||||||||||
TING FINANCIAL STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS -
(Continued)
Consolidating
Statement of Cash Flows
For
The Year Ended December 31, 2007
|
Parent Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Time
Warner
Consolidated
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||
|
OPERATIONS
|
||||||||||||||||||||
|
Net
income
|
$ | 4,387 | $ | 3,918 | $ | 5,994 | $ | (9,912 | ) | $ | 4,387 | |||||||||
|
Adjustments
for noncash and nonoperating items:
|
||||||||||||||||||||
|
Depreciation
and amortization
|
44 | 104 | 4,264 | — | 4,412 | |||||||||||||||
|
Amortization
of film and television costs
|
— | 2,042 | 4,034 | — | 6,076 | |||||||||||||||
|
Asset
impairments
|
— | — | 36 | — | 36 | |||||||||||||||
|
Gain
on investments and other assets, net
|
(8 | ) | — | (901 | ) | — | (909 | ) | ||||||||||||
|
Equity
in pretax income of consolidated subsidiaries
|
(7,998 | ) | (5,616 | ) | (1,391 | ) | 15,005 | — | ||||||||||||
|
Equity
in (income) losses of investee companies, net of cash
distributions
|
— | (5 | ) | 68 | — | 63 | ||||||||||||||
|
Equity-based
compensation
|
50 | 38 | 198 | — | 286 | |||||||||||||||
|
Minority
interests
|
— | — | 462 | (54 | ) | 408 | ||||||||||||||
|
Deferred
income taxes
|
1,736 | 125 | 584 | (709 | ) | 1,736 | ||||||||||||||
|
Amounts
related to securities litigation and government
investigations
|
(741 | ) | — | — | — | (741 | ) | |||||||||||||
|
Changes
in operating assets and liabilities, net of acquisitions
|
1,099 | (887 | ) | (2,328 | ) | (4,850 | ) | (6,966 | ) | |||||||||||
|
Intercompany
activity
|
— | 1,852 | (1,852 | ) | — | — | ||||||||||||||
|
Adjustments
relating to discontinued operations
|
(336 | ) | (178 | ) | (250 | ) | 451 | (313 | ) | |||||||||||
|
Cash
provided (used) by operations
|
(1,767 | ) | 1,393 | 8,918 | (69 | ) | 8,475 | |||||||||||||
|
INVESTING
ACTIVITIES
|
||||||||||||||||||||
|
Investments
in available-for-sale securities
|
(7 | ) | — | (87 | ) | — | (94 | ) | ||||||||||||
|
Investments
and acquisitions, net of cash acquired
|
1 | (14 | ) | (1,500 | ) | — | (1,513 | ) | ||||||||||||
|
Investment
in a wireless joint venture
|
— | — | (33 | ) | — | (33 | ) | |||||||||||||
|
Investment
activities of discontinued operations
|
— | — | (26 | ) | — | (26 | ) | |||||||||||||
|
Capital
expenditures and product development costs
|
(2 | ) | (171 | ) | (4,257 | ) | — | (4,430 | ) | |||||||||||
|
Investment
proceeds from available-for-sale securities
|
10 | — | 26 | — | 36 | |||||||||||||||
|
Advances
to parent and consolidated subsidiaries
|
5,090 | 4,304 | 1,147 | (10,541 | ) | — | ||||||||||||||
|
Other
investment proceeds
|
(4 | ) | 29 | 2,016 | — | 2,041 | ||||||||||||||
|
Cash
provided (used) by investing activities
|
5,088 | 4,148 | (2,714 | ) | (10,541 | ) | (4,019 | ) | ||||||||||||
|
FINANCING
ACTIVITIES
|
||||||||||||||||||||
|
Borrowings
|
6,293 | — | 8,397 | — | 14,690 | |||||||||||||||
|
Debt
repayments
|
(2,722 | ) | (546 | ) | (9,255 | ) | — | (12,523 | ) | |||||||||||
|
Proceeds
from exercise of stock options
|
521 | — | — | — | 521 | |||||||||||||||
|
Excess
tax benefit on stock options
|
71 | — | 5 | — | 76 | |||||||||||||||
|
Principal
payments on capital leases
|
— | (8 | ) | (49 | ) | — | (57 | ) | ||||||||||||
|
Repurchases
of common stock
|
(6,231 | ) | — | — | — | (6,231 | ) | |||||||||||||
|
Dividends
paid
|
(871 | ) | — | — | — | (871 | ) | |||||||||||||
|
Other
financing activities
|
(3 | ) | — | (91 | ) | — | (94 | ) | ||||||||||||
|
Change
in due to/from parent and investment in segment
|
— | (5,016 | ) | (5,594 | ) | 10,610 | — | |||||||||||||
|
Cash
used by financing activities
|
(2,942 | ) | (5,570 | ) | (6,587 | ) | 10,610 | (4,489 | ) | |||||||||||
|
INCREASE
(DECREASE) IN CASH AND EQUIVALENTS
|
379 | (29 | ) | (383 | ) | — | (33 | ) | ||||||||||||
|
CASH
AND EQUIVALENTS AT BEGINNING OF PERIOD
|
207 | 82 | 1,260 | — | 1,549 | |||||||||||||||
|
CASH
AND EQUIVALENTS AT END OF PERIOD
|
$ | 586 | $ | 53 | $ | 877 | $ | — | $ | 1,516 | ||||||||||
TING FINANCIAL
STATEMENTS
TIME
WARNER INC.
CONDENSED CONSOLIDATING FINANCIAL
STATEMENTS -
(Continued)
Consolidating
Statement of Cash Flows
For
The Year Ended December 31, 2006
|
Parent Company
|
Guarantor
Subsidiaries
|
Non-Guarantor
Subsidiaries
|
Eliminations
|
Time
Warner
Consolidated
|
||||||||||||||||
|
(millions)
|
||||||||||||||||||||
|
OPERATIONS
|
||||||||||||||||||||
|
Net
income
|
$ | 6,552 | $ | 5,506 | $ | 7,773 | $ | (13,279 | ) | $ | 6,552 | |||||||||
|
Adjustments
for noncash and nonoperating items:
|
||||||||||||||||||||
|
Cumulative
effect of accounting change, net of tax
|
(25 | ) | (3 | ) | (2 | ) | 5 | (25 | ) | |||||||||||
|
Depreciation
and amortization
|
47 | 90 | 3,413 | — | 3,550 | |||||||||||||||
|
Amortization
of film and television costs
|
— | 1,759 | 4,328 | — | 6,087 | |||||||||||||||
|
Asset
impairments
|
— | 1 | 212 | — | 213 | |||||||||||||||
|
Gain
on investments and other assets, net
|
(9 | ) | (57 | ) | (1,756 | ) | — | (1,822 | ) | |||||||||||
|
Equity
in pretax income of consolidated subsidiaries
|
(7,816 | ) | (5,405 | ) | (1,463 | ) | 14,684 | — | ||||||||||||
|
Equity
in (income) losses of investee companies, net of cash
distributions
|
— | 2 | (66 | ) | — | (64 | ) | |||||||||||||
|
Equity-based
compensation
|
47 | 40 | 176 | — | 263 | |||||||||||||||
|
Minority
interests
|
— | — | 417 | (42 | ) | 375 | ||||||||||||||
|
Deferred
income taxes
|
1,101 | (31 | ) | 352 | (321 | ) | 1,101 | |||||||||||||
|
Amounts
related to securities litigation and government
investigations
|
361 | — | — | — | 361 | |||||||||||||||
|
Changes
in operating assets and liabilities, net of acquisitions
|
8,474 | 1,062 | (6,976 | ) | (9,270 | ) | (6,710 | ) | ||||||||||||
|
Intercompany
activity
|
— | 1,471 | (1,471 | ) | — | — | ||||||||||||||
|
Adjustments
relating to discontinued operations
|
(1,454 | ) | (1,436 | ) | (1,281 | ) | 2,888 | (1,283 | ) | |||||||||||
|
Cash
provided by operations
|
7,278 | 2,999 | 3,656 | (5,335 | ) | 8,598 | ||||||||||||||
|
INVESTING
ACTIVITIES
|
||||||||||||||||||||
|
Investments
in available-for-sale securities
|
(8 | ) | — | — | — | (8 | ) | |||||||||||||
|
Investments
and acquisitions, net of cash acquired
|
(4 | ) | (36 | ) | (12,263 | ) | — | (12,303 | ) | |||||||||||
|
Investment
in a wireless joint venture
|
— | — | (633 | ) | — | (633 | ) | |||||||||||||
|
Investment
activities of discontinued operations
|
— | — | 4 | — | 4 | |||||||||||||||
|
Capital
expenditures and product development costs
|
(9 | ) | (199 | ) | (3,868 | ) | — | (4,076 | ) | |||||||||||
|
Capital
expenditures from discontinued operations
|
— | — | (65 | ) | — | (65 | ) | |||||||||||||
|
Investment
proceeds from available-for-sale securities
|
1 | — | 43 | — | 44 | |||||||||||||||
|
Advances
to parent and consolidated subsidiaries
|
(3,259 | ) | 3,554 | 1,276 | (1,571 | ) | — | |||||||||||||
|
Other
investment proceeds
|
18 | 80 | 4,467 | — | 4,565 | |||||||||||||||
|
Cash
provided (used) by investing activities
|
(3,261 | ) | 3,399 | (11,039 | ) | (1,571 | ) | (12,472 | ) | |||||||||||
|
FINANCING
ACTIVITIES
|
||||||||||||||||||||
|
Borrowings
|
6,897 | — | 11,435 | — | 18,332 | |||||||||||||||
|
Debt
repayments
|
(1,616 | ) | (547 | ) | (1,488 | ) | — | (3,651 | ) | |||||||||||
|
Issuance
of mandatorily redeemable preferred membership units by a
subsidiary
|
— | — | 300 | — | 300 | |||||||||||||||
|
Proceeds
from exercise of stock options
|
698 | — | — | — | 698 | |||||||||||||||
|
Excess
tax benefit on stock options
|
116 | — | — | — | 116 | |||||||||||||||
|
Principal
payments on capital leases
|
— | (6 | ) | (80 | ) | — | (86 | ) | ||||||||||||
|
Repurchases
of common stock
|
(13,660 | ) | — | — | — | (13,660 | ) | |||||||||||||
|
Dividends
paid
|
(876 | ) | — | — | — | (876 | ) | |||||||||||||
|
Other
financing activities
|
(23 | ) | — | 53 | — | 30 | ||||||||||||||
|
Change
in due to/from parent and investment in segment
|
856 | (5,858 | ) | (1,904 | ) | 6,906 | — | |||||||||||||
|
Cash
provided (used) by financing activities
|
(7,608 | ) | (6,411 | ) | 8,316 | 6,906 | 1,203 | |||||||||||||
|
INCREASE
(DECREASE) IN CASH AND EQUIVALENTS
|
(3,591 | ) | (13 | ) | 933 | — | (2,671 | ) | ||||||||||||
|
CASH
AND EQUIVALENTS AT BEGINNING OF PERIOD
|
3,798 | 95 | 327 | — | 4,220 | |||||||||||||||
|
CASH
AND EQUIVALENTS AT END OF PERIOD
|
$ | 207 | 82 | $ | 1,260 | $ | — | $ | 1,549 | |||||||||||
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of
Issuance and Distribution.
The table below sets forth the various
expenses and costs to be incurred by Time Warner and Home Box Office in
connection with the offer of the HBO Guarantee. All the amounts shown are
estimated except the Commission’s registration fee.
|
Securities and
Exchange Commission registration fee
|
$ | 688,060 | ||
|
Agent
fees
|
15,300,000 | |||
|
Fees
and expenses of Trustee and counsel
|
20,000 | |||
|
Printing
expenses
|
15,000 | |||
|
Accounting fees
and expenses
|
400,000 | |||
|
Legal
fees and expenses
|
500,000 | |||
|
Miscellaneous
expenses
|
50,000 | |||
|
Total
expenses
|
$ | 16,973,060 |
Item 15. Indemnification
of Directors and Officers.
Under Delaware law, a corporation may
indemnify any individual made a party or threatened to be made a party to any
type of proceeding, other than an action by or in the right of the corporation,
because he or she is or was an officer, director, employee or agent of the
corporation or was serving at the request of the corporation as an officer,
director, employee or agent of another corporation or entity against expenses,
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with such proceeding: (a) if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation; or (b) in the case of a criminal
proceeding, he or she had no reasonable cause to believe that his or her conduct
was unlawful. A corporation may indemnify any individual made a party or
threatened to be made a party to any threatened, pending or completed action or
suit brought by or in the right of the corporation because he or she was an
officer, director, employee or agent of the corporation, or is or was serving at
the request of the corporation as a director, officer, employee or agent of
another corporation or other entity, against expenses actually and reasonably
incurred in connection with such action or suit if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the
best interests of the corporation, provided that such indemnification will be
denied if the individual is found liable to the corporation unless, in such a
case, the court determines the person is nonetheless entitled to indemnification
for such expenses. A corporation must indemnify a present or former director or
officer who successfully defends himself or herself in a proceeding to which he
or she was a party because he or she was a director or officer of the
corporation against expenses actually and reasonably incurred by him or her.
Expenses incurred by an officer or director, or any employees or agents as
deemed appropriate by the board of directors, in defending civil or criminal
proceedings may be paid by the corporation in advance of the final disposition
of such proceedings upon receipt of an undertaking by or on behalf of such
director, officer, employee or agent to repay such amount if it shall ultimately
be determined that he or she is not entitled to be indemnified by the
corporation. The Delaware law regarding indemnification and expense advancement
is not exclusive of any other rights which may be granted by Time Warner’s or
Home Box Office’s certificate of incorporation or bylaws, a vote of stockholders
or disinterested directors, agreement or otherwise.
Under Delaware law, termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that such person is prohibited from
being indemnified.
Delaware law permits a corporation to
adopt a provision in its certificate of incorporation eliminating or limiting
the personal liability of a director, but not an officer in his or her capacity
as such, to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except that such provision shall not limit the
liability of a director for (a) any breach of the director’s duty of
loyalty to the corporation or its stockholders, (b) acts or omissions not
in good faith or that involve intentional misconduct or a knowing violation of
law, (c) unlawful payment of dividends or stock purchases or redemptions or
(d) any transaction from which the director derived an improper personal
benefit.
Time
Warner
Article VI of Time Warner’s
by-laws requires indemnification, to the fullest extent permitted under Delaware
law or other applicable law, of any person who is or was a director or officer
of Time Warner and who is or was involved in any manner or threatened to be made
so involved in any threatened, pending or completed investigation, claim,
action, suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that such person is or was serving as a
director, officer, employee or agent of Time Warner or is or was serving at the
request of Time Warner as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against all
expenses (including attorney’s fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by such person in connection with
such proceeding; provided, however, that the foregoing shall not apply to a
director or officer with respect to a proceeding that was commenced by such
director or officer except under certain circumstances.
In addition, the Time Warner by-laws
provide that all reasonable expenses incurred by or on behalf of a director or
officer in connection with any investigation, claim, action, suit or proceeding
will be advanced to the director or officer by Time Warner upon the request of
the director or officer, which request, if required by law, will include an
undertaking by or on behalf of the director or officer to repay the amounts
advanced if ultimately it is determined that the director or officer was not
entitled to be indemnified against the expenses.
The indemnification rights provided in
Article VI of Time Warner’s by-laws are not exclusive of any other right to
which persons seeking indemnification may otherwise be entitled.
As permitted by Delaware law,
Article VI of Time Warner’s by-laws authorizes Time Warner to purchase and
maintain insurance to protect itself and any director, officer, employee and
agent against claims and liabilities that such persons may incur in such
capacities.
Article IX of Time Warner’s restated
certificate of incorporation provides that, to the fullest extent of Delaware
law, no Time Warner director shall be liable to Time Warner or its stockholders
for monetary damages for breach of fiduciary duty as a director.
Home
Box Office
Article VI of Home Box Office’s
by-laws requires indemnification, to the fullest extent permitted by applicable
law, of any person who is or was a director or officer of Home Box Office and
who is or was involved in any manner or threatened to be made a party or is
otherwise involved in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such person is or
was serving as a director, officer, employee or agent of Home Box Office or is
or was serving at the request of Home Box Office as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise or non-profit entity, including service with respect to
employee benefit plans, against all liability and loss suffered and expenses
(including attorney’s fees) reasonably incurred by such person in connection
with such proceeding.
In addition, Home Box Office’s by-laws
provide that it shall, to the fullest extent not prohibited by applicable law,
pay the expenses (including attorney’s fees) incurred by a director or officer
in defending any proceeding in advance of its final disposition, provided
however that, to the extent required by law, such payment or expense shall be
made only upon receipt of an undertaking by the director or officer to repay the
amounts advanced if ultimately it is determined that the director or officer was
not entitled to be indemnified against the expenses.
If a claim for indemnification
(following the final disposition of an action, suit or proceeding) or
advancement of expenses as provided for under Article VI of the Home Box Office
by-laws is not paid in full within sixty days of the written claim from the
director or officer being received by Home Box Office, the director or officer
may file a suit to recover the unpaid amount of such claim (wherein Home Box
Office shall have the burden of proving that the director or officer is not
entitled to the requested indemnification or advancement of expenses under
applicable law) and such director or officer shall, if successful in whole or in
part, also be entitled to be paid the expenses of prosecuting such
claim.
The indemnification rights provided in
Article VI of Home Box Office’s by-laws are not exclusive of any other
right to which persons seeking indemnification may otherwise be
entitled.
Home Box Office’s obligation, if any,
to indemnify or to advance expenses to a director or officer who was serving at
its request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust, enterprise or nonprofit entity shall be
reduced by any amount such director or officer may collect as indemnification or
advancement of expenses from such other corporation, partnership, joint venture,
trust, enterprise or nonprofit entity.
Item 16. Exhibits.
See “Index to Exhibits” attached to
this Registration Statement, which is incorporated herein by
reference.
Item 17. Undertakings.
(a) The undersigned registrants
hereby undertake:
(1) To file, during any period in
which offers or sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus
required by section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus
any facts or events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the maximum aggregate
offering price set forth in the “Calculation of Registration Fee” table in the
effective registration statement.
(iii) To include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement;
Provided, however, that
paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in reports filed with or furnished to the
Commission by the registrants pursuant to section 13 or section 15(d)
of the Exchange Act that are incorporated by reference in the registration
statement, or is contained in a form of prospectus filed pursuant to
Rule 424(b) that is part of the registration statement.
(2) That, for the purpose of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by
means of a post-effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
(4) That, for the purpose of
determining liability under the Securities Act to any purchaser, each prospectus
filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering shall be deemed to be part of and included in the registration
statement as of the date it is first used after effectiveness. Provided,
however, that no statement made in a registration statement or prospectus
that is part of the registration statement or made in a document incorporated or
deemed incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such first use, supersede or modify any statement
that was made in the registration statement or prospectus that was part of the
registration statement or made in any such document immediately prior to such
date of first use.
(5) That, for the purpose of
determining liability of the registrants under the Securities Act to any
purchaser in the initial distribution of the securities:
The undersigned registrants undertake
that in a primary offering of securities of the undersigned registrants pursuant
to this registration statement, regardless of the underwriting method used to
sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the undersigned
registrants will be sellers to the purchaser and will be considered to offer or
sell such securities to such purchaser:
(i) Any preliminary prospectus or
prospectus of the undersigned registrants relating to the offering required to
be filed pursuant to Rule 424;
(ii) Any free writing prospectus
relating to the offering prepared by or on behalf of the undersigned registrants
or used or referred to by the undersigned registrants;
(iii) The portion of any other
free writing prospectus relating to the offering containing material information
about the undersigned registrants or the securities provided by or on behalf of
the undersigned registrants; and
(iv) Any other communication that
is an offer in the offering made by the undersigned registrants to the
purchaser.
(b) The undersigned registrants
hereby undertake that, for purposes of determining any liability under the
Securities Act, each filing of the registrants’ annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan’s annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the registrants pursuant to the foregoing
provisions, or otherwise, the registrants have been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrants of expenses incurred or paid by a director,
officer or controlling person of the registrants in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrants will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
SIGNATURES
Pursuant to the requirements of the
Securities Act, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 6th day of April, 2009.
TIME WARNER,
INC.
By:
/s/ John K. Martin,
Jr.
Name: John K.
Martin, Jr.
Title:
Executive Vice President and Chief Financial Officer
Pursuant to the requirements of the
Securities Act of 1933, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
||
|
*
Jeffrey
L. Bewkes
|
Chairman
of the Board and Chief Executive Officer
and
Director (Principal Executive Officer)
|
April
6, 2009
|
||
|
*
John
K. Martin, Jr. |
Executive
Vice President and Chief Financial Officer
(Principal
Financial Officer)
|
April
6, 2009
|
||
|
*
Pascal
Desroches
|
Senior
Vice President and Controller
(Principal
Accounting Officer)
|
April
6, 2009
|
||
|
*
Herbert
M. Allison
|
Director
|
April
6, 2009
|
||
|
*
James
L. Barksdale
|
Director
|
April
6, 2009
|
||
|
*
Stephen
F. Bollenbach
|
Director
|
April 6,
2009
|
||
|
*
Frank
J. Caufield
|
Director
|
April 6,
2009
|
||
|
*
Robert
C. Clark
|
Director
|
April 6,
2009
|
||
|
*
Mathias
Döpfner
|
Director
|
April 6,
2009
|
||
|
*
Jessica
P. Einhorn
|
Director
|
April 6,
2009
|
||
|
*
Reuben
Mark
|
Director
|
April 6,
2009
|
||
|
*
Michael
A. Miles
|
Director
|
April 6,
2009
|
||
|
*
Kenneth
J. Novack
|
Director
|
April 6,
2009
|
||
|
*
Richard
D. Parsons
|
Director
|
April 6,
2009
|
||
|
*
Deborah
C. Wright
|
Director
|
April
6, 2009
|
By: /s/ John K.
Martin,
Jr.
Name: John K. Martin, Jr.
Attorney-In-Fact
* By John
K. Martin, Jr. as Attorney-in-Fact.
SIGNATURES
Pursuant to the requirements of the
Securities Act, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-3 and
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on the 6th day of April, 2009.
HOME BOX OFFICE,
INC.
By:
/s/ Robert S.
Roth
Name: Robert S.
Roth
Title:
Executive Vice President and Chief Financial Officer
Pursuant to the requirements of
the Securities Act of 1933, this registration statement has been signed by the
following persons in the capacities and on the dates indicated.
|
Signature
|
Title
|
Date
|
||
|
*
William
C. Nelson
|
Chairman
and Chief Executive Officer and Director
(Principal
Executive Officer)
|
April
6, 2009
|
||
|
*
Robert S.
Roth
|
Executive
Vice President and Chief Financial Officer
(Principal
Financial Officer)
|
April
6, 2009
|
||
|
*
Joseph
Tarulli
|
Senior
Vice President and Controller
(Principal
Accounting Officer)
|
April 6,
2009
|
||
|
*
Thomas
M. Woodbury
|
General
Counsel, Executive Vice President,
Networks
Business Affairs and Director
|
April 6,
2009
|
||
|
*
Jeffrey
L. Bewkes
|
Director
|
April 6,
2009
|
By: /s/ John K.
Martin,
Jr.
Name: John K.
Martin, Jr.
Attorney-In-Fact
* By John
K. Martin, Jr. as Attorney-in-Fact.
INDEX
TO EXHIBITS
|
Exhibit
Number
|
Description
of Exhibits
|
|
4.1*
|
Form
of the First Supplemental Indenture to the 2001 TWX
Indenture.
|
|
4.2*
|
Form
of the Second Supplemental Indenture to the 1998 HTW
Indenture.
|
|
4.3*
|
Form
of the Ninth Supplemental Indenture to the 1993 HTW
Indenture.
|
|
4.4*
|
Form
of the Sixth Supplemental Indenture to the 1992 HTW
Indenture.
|
| 4.5* | Form of the Sixth Supplemental Indenture to the 1993 TBS Indenture. |
|
4.6**
|
2001 TWX Indenture
(incorporated herein by reference to Exhibit 4 to Time Warner’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001 (File
No. 1-15062)).
|
|
4.7**
|
1998
HTW Indenture (incorporated herein by reference to Exhibit 4 to Historic
TW’s Quarterly Report on Form 10-Q for the quarter ended June 30, 1998
(File No. 1-12259)).
|
|
4.8**
|
First
Supplemental Indenture to 1998 HTW Indenture, dated January 11, 2001
(incorporated herein by reference to Exhibit 4.2 to Time Warner’s
Transition Report on Form 10-K for the period July 1, 2000 to December 31,
2000 (File No. 1-15062)).
|
|
4.9**
|
1993
HTW Indenture (incorporated herein by reference to Exhibit 4.11 to TWCI’s
Annual Report on Form 10-K for the fiscal year ended December 31, 1992
(File No. 1-8637)).
|
|
4.10**
|
First
Supplemental Indenture to 1993 HTW Indenture, dated June 15, 1993
(incorporated herein by reference to Exhibit 4 to TWCI’s Quarterly Report
on Form 10-Q for the quarter ended June 30, 1993 (File No.
1-8637)).
|
|
4.11**
|
Second
Supplemental Indenture to 1993 HTW Indenture, dated October 10, 1996
(incorporated herein by reference to Exhibit 4.1 to TWCI’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996 (File No.
1-8637)).
|
|
4.12**
|
Third
Supplemental Indenture to 1993 HTW Indenture, dated December 31, 1996
(incorporated herein by reference to Exhibit 4.10 to Historic TW’s Annual
Report on Form 10-K for the fiscal year ended December 31, 1996 (File No.
1-12259)).
|
|
4.13**
|
Fourth
Supplemental Indenture to 1993 HTW Indenture, dated December 17, 1997
(incorporated herein by reference to Exhibit 4.4 to Historic TW’s, TWCI’s
and TBS’s Registration Statement on Form S-4 (Registration Nos. 333-45703,
333-45703-02 and 333-45703-01) filed with the Commission on February 5,
1998).
|
|
4.14**
|
Fifth
Supplemental Indenture to 1993 HTW Indenture, dated January 12, 1998
(incorporated herein by reference to Exhibit 4.5 to Historic TW’s, TWCI’s
and TBS’s Registration Statement on Form S-4 (Registration Nos. 333-45703,
333-45703-02 and 333-45703-01) filed with the Commission on February 5,
1998).
|
|
4.15**
|
Sixth
Supplemental Indenture to 1993 HTW Indenture, dated March 17, 1998
(incorporated herein by reference to Exhibit 4.15 to Historic TW’s Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 (File No.
1-12259)).
|
|
4.16**
|
Seventh
Supplemental Indenture to 1993 HTW Indenture, dated January 11, 2001
(incorporated herein by reference to Exhibit 4.17 to Time Warner’s
Transition Report on Form 10-K for the period July 1, 2000 to December 31,
2000 (File No. 1-15062)).
|
|
4.17**
|
Eighth
Supplemental Indenture to 1993 HTW Indenture, dated February 23, 2009
(incorporated herein by reference to Exhibit 99.2 to Time Warner’s Current
Report on Form 8-K filed with the Commission on February 27,
2009).
|
|
4.18**
|
1992
HTW Indenture (incorporated herein by reference to Exhibit 4.10 to TWCI’s
Annual Report on Form 10-K for the year ended December 31, 1992 (File No.
1-8637)).
|
|
4.19**
|
First
Supplemental Indenture to 1992 HTW Indenture, dated December 15, 1992
(incorporated herein by reference to Exhibit 4.10 to TWCI’s Annual Report
on Form 10-K for the year ended December 31, 1992 (File No.
1-8637)).
|
|
4.20**
|
Second
Supplemental Indenture to 1992 HTW Indenture, dated January 15, 1993
(incorporated herein by reference to Exhibit 4.10 to TWCI’s Annual Report
on Form 10-K for the year ended December 31, 1992 (File No.
1-8637)).
|
|
4.21**
|
Third
Supplemental Indenture to 1992 HTW Indenture, dated October 10, 1996
(incorporated herein by reference to Exhibit 4.2 to TWCI’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996 (File No.
1-8637)).
|
|
4.22**
|
Fourth
Supplemental Indenture to 1992 HTW Indenture, dated January 11, 2001
(incorporated herein by reference to Exhibit 4.5 to Time Warner’s Annual
Report on Form 10-K for the year ended December 31,
2005).
|
|
4.23**
|
Fifth
Supplemental Indenture to 1992 HTW Indenture, dated February 23, 2009
(incorporated herein by reference to Exhibit 99.1 to Time Warner’s Current
Report on Form 8-K filed with the Commission on February 27,
2009).
|
|
4.24**
|
Form
of 1993 TBS Indenture (incorporated herein by reference to Exhibit 4(a) to
TBS’s Registration Statement on Form S-3 (Registration No. 33-62218) filed
with the Commission on May 6, 1993).
|
|
4.25*
|
First
Supplemental Indenture to 1993 TBS Indenture, dated October 10,
1996.
|
|
4.26*
|
Second
Supplemental Indenture to 1993 TBS Indenture, dated December 5,
1997.
|
|
4.27*
|
Third
Supplemental Indenture to 1993 TBS Indenture, dated March 17,
1998.
|
|
4.28*
|
Fourth
Supplemental Indenture to 1993 TBS Indenture, dated January 11,
2001.
|
|
4.29**
|
Fifth
Supplemental Indenture to 1993 TBS Indenture (incorporated herein by
reference to Exhibit 99.3 to Time Warner’s Current Report on Form 8-K
filed with the Commission on February 27, 2009).
|
|
5.1*
|
Opinion
of Cravath, Swaine & Moore LLP regarding validity
|
|
12.1*
|
Computation
of ratio of earnings to fixed charges
|
|
23.1*
|
Consent
of Independent Registered Public Accounting Firm
|
|
24.1*
|
Power
of attorney related to Time Warner
|
|
24.2*
|
Power
of attorney related to Home Box
Office
|
*Filed
herewith
**Previously
filed
II-7