SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
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   Salomon Smith Barney's opinion was necessarily based on the information made
available to it, and financial, stock market and other conditions and
circumstances existing and disclosed to Salomon Smith Barney as of the date of
its opinion.
 
   In preparing its opinion, Salomon Smith Barney performed a variety of
financial and comparative analyses. The following is a summary of the material
financial analyses performed by Salomon Smith Barney in connection with the
preparation of its opinion. These analyses were presented to the board of
directors of America Online at its meeting on January 9, 2000. The following
summary of the material financial analyses contains information in tabular
format. In order fully to understand the financial analyses used by Salomon
Smith Barney, the tables must be read in conjunction with the text of each
summary. The tables alone do not constitute a complete description of the
financial analyses.
   
   Historical Stock Price Performance. Salomon Smith Barney reviewed the
relationship between movements of the America Online common stock, the Time
Warner common stock and the Standard & Poor's 400 Composite Index for the
period from and including January 7, 1999 through January 7, 2000, the average
closing prices for the Time Warner common stock and the America Online common
stock over various periods during the 3-year period ended January 7, 2000 as
set forth in the table below, and the trading volume and price history of the
America Outline common stock and the Time Warner common stock for the period
from and including January 7, 1999 through January 7, 2000.     
 

<TABLE>   
<CAPTION>
   Period                                Average Share Price Average Share Price
   (prior to January 7, 2000)             of America Online    of Time Warner
   --------------------------            ------------------- -------------------
   <S>                                   <C>                 <C>
   January 7, 2000......................       $73.75              $64.75
   1 Week...............................       $75.34              $67.50
   1 Month..............................       $81.88              $67.45
   3 Months.............................       $74.03              $65.35
   6 Months.............................       $62.02              $65.99
   1 Year...............................       $58.78              $66.95
   3 Years..............................       $22.56              $43.46
</TABLE>
    
 
   Implied Historical Exchange Ratio Analysis. Salomon Smith Barney reviewed
the implied historical exchange ratio between the America Online common stock
and the Time Warner common stock determined by dividing the average and the
volume weighted average, respectively, prices per share of Time Warner common
stock by the average and the volume weighted average, respectively, prices per
share of America Online Common Stock over various periods during the three-year
period ended January 7, 2000. This review indicated the following implied
historical exchange ratios:
 

<TABLE>
<CAPTION>
                                                     Implied Exchange Ratios
                                                 -------------------------------
   Period ending                                   Average     Volume Weighted
   January 7, 2000                               Share Price Average Share Price
   ---------------                               ----------- -------------------
   <S>                                           <C>         <C>
   1 Week.......................................    0.896x          0.888x
   1 Month......................................    0.824           0.806
   3 Months.....................................    0.883           0.887
   6 Months.....................................    1.064           1.083
   1 Year.......................................    1.139           1.159
   3 Years......................................    1.926           1.595
</TABLE>

 
   Implied Exchange Ratio Analysis. Salomon Smith Barney derived a range of
values for Time Warner and America Online by utilizing a sum-of-the-parts
valuation analysis which separately values distinct assets and businesses of a
company by applying various valuation methodologies to those assets and
businesses and uses the derived valuations to arrive at a range of values for
the consolidated entity. Salomon Smith Barney then
 
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