SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
<PAGE>
 
   Historical Share Price Performance. Morgan Stanley reviewed the price
performance and trading volumes of the common stock of each of Time Warner and
America Online from January 7, 1999 through January 7, 2000. The table below
shows the twelve-month high and low closing prices during that period, compared
with a closing price on January 7, 2000 of $64.75 per share for the Time Warner
common stock and $73.75 per share for the America Online common stock:
 

<TABLE>
<CAPTION>
                                                 January 7, 1999 January 7, 1999
                                                     through         through
                                                 January 7, 2000 January 7, 2000
                                                      High             Low
                                                 --------------- ---------------
   <S>                                           <C>             <C>
   Time Warner..................................     $78.25          $58.50
   America Online...............................     $93.81          $35.11
</TABLE>

 
 
   Morgan Stanley then compared the price performance of the Time Warner common
stock from January 7, 1999 through January 7, 2000 with that of the S&P 500
Index and of a group of selected media and entertainment companies and the
price performance of the America Online common stock over the same period with
that of the Nasdaq Composite Index and of a group of selected Internet
companies.
 
   The group of selected media and entertainment companies included CBS
Corporation, Comcast Corporation, Viacom, Inc., News Corp. Ltd., Cablevision
Systems Corporation, Cox Communications Inc., The Seagram Company Ltd., The
Walt Disney Company and Fox Corporation. The group of selected Internet
companies included CNET, Inc., Yahoo! Inc., Lycos, Inc., eBay Inc., Excite,
Inc. and Amazon.com, Inc. Morgan Stanley selected CNET, Excite, Lycos and
Yahoo! because they are publicly traded companies with Internet portal
operations that, for purposes of this analysis, may be considered similar to
those of America Online. Morgan Stanley also selected Amazon.com and eBay
because they are publicly traded companies that are leaders in e-commerce
retail and because their leading positions in this market may be considered,
for purposes of this analysis, similar to America Online. None of the companies
utilized in this analysis as a comparison is identical to Time Warner or
America Online.
 
   This analysis showed that the closing market prices during the period from
January 7, 1999 through January 7, 2000 appreciated as follows:
 

<TABLE>
<CAPTION>
                                                                    Appreciation
                                                                    ------------
   <S>                                                              <C>
   Time Warner.....................................................      6.3%
   S&P 500 Index...................................................     13.5%
   Group of selected media and entertainment companies:
     Mean..........................................................     43.1%
<CAPTION>
                                                                    Appreciation
                                                                    ------------
   <S>                                                              <C>
   America Online..................................................     97.5%
   Nasdaq Composite Index..........................................     66.9%
   Group of selected Internet companies:
     Mean..........................................................    104.2%
</TABLE>

   
   Comparable Companies Analysis.  Morgan Stanley calculated aggregate value,
i.e., equity value adjusted for capital structure, to EBITDA multiples for Time
Warner for fiscal years 1999 through 2001 based on publicly available Morgan
Stanley research estimates. Morgan Stanley then compared the EBITDA multiples
obtained for Time Warner with multiples obtained for a group of selected media
and entertainment companies. Morgan Stanley calculated aggregate value to
revenue multiples for America Online for fiscal years 1999 through 2001 based
on publicly available Morgan Stanley research estimates. Morgan Stanley then
compared the revenue multiples obtained for America Online with multiples
obtained for a group of selected Internet companies.     
 
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