SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
<PAGE>
 
   
   The implied exchange ratios which were derived from the above valuation
ranges per share are set forth in the table below.     
 

<TABLE>
<CAPTION>
                                              Implied Exchange Ratios
                                         ------------------------------------
                                         "No Synergies"    "100% Synergies"
                                            Scenario           Scenario
                                         ----------------  ------------------
Valuation Methodology                      Low     High      Low       High
---------------------                    -------  -------  --------  --------
<S>                                      <C>      <C>      <C>       <C>
Time Warner public market valuation to
 America Online public market
 valuation..............................   0.511x   1.792x    0.667x    2.260x
Time Warner discounted cash flow to
 America Online discounted cash flow....   0.666x   1.535x    0.865x    1.952x
Time Warner discounted cash flow to
 America Online public market
 valuation..............................   0.524x   1.719x    0.680x    2.187x
Time Warner private market valuation to
 America Online public market
 valuation..............................   0.612x   2.032x    0.612x    2.032x
</TABLE>

 
   The low implied exchange ratios in these ranges were determined by dividing
the low Time Warner share value that had been calculated using the indicated
valuation methodology by the high America Online share value that had been
calculated using the indicated valuation methodology. Similarly, the high
implied exchange ratios in these ranges were determined by dividing the high
Time Warner share value that had been calculated using the indicated valuation
methodology range by the low America Online share value that had been
calculated using the indicated valuation methodology.
 
 Time Warner Valuation
 
   Salomon Smith Barney derived a valuation for Time Warner by performing
financial analysis with respect to the following consolidated and non-
consolidated assets and businesses of Time Warner:
 
  .  cable systems business;
 
  .  cable networks business;
 
  .  filmed entertainment business;
 
  .  publishing business;
 
  .  music business;
 
  .  WB network business; and
 
  .  non-consolidated investments of Time Warner, including:
 
    .  equity interest in the Road Runner joint venture;
 
    .  equity interest in cable joint ventures;
 
    .  equity interest in Time Warner Telecom Inc.;
 
    .  Comedy Central and Court TV business;
 
    .  Internet assets; and
 
    .  equity interests in other businesses.
 
   Minority Interest. Part of Time Warner's cable, cable networks and filmed
entertainment businesses is held by TWE. In connection with deriving the public
and private market and discounted cash flow valuations of Time Warner's
interest in TWE, Salomon Smith Barney excluded the equity values in TWE of the
other partners of TWE. Salomon Smith Barney derived an implied value for TWE
using the same sum-of-the parts valuation methodology as for Time Warner but
applied a 20% minority discount to reflect the other partners' minority
interests.
 
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