SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
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             PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
 
   The following pro forma consolidated condensed financial statements are
presented to illustrate the effects of the merger on the historical financial
position and operating results of America Online and Time Warner. Because
America Online and Time Warner have different fiscal years, and the combined
company will adopt the calendar year-end of Time Warner, pro forma operating
results are presented on two different bases: (1) a June 30 fiscal-year basis,
which is consistent with America Online's historical fiscal year-end and (2) a
December 31 calendar-year basis, which is consistent with both Time Warner's
historical fiscal year-end and that of AOL Time Warner going forward.
Management believes that it is meaningful to present pro forma financial
information based on the calendar year-end of the combined company to
facilitate an analysis of the pro forma effects of the merger.
   
   The following pro forma consolidated condensed balance sheet of AOL Time
Warner at December 31, 1999 gives effect to the merger as if it occurred as of
that date. On a June 30 fiscal-year basis, the pro forma consolidated condensed
statements of operations of AOL Time Warner for the six months ended December
31, 1999 and the year ended June 30, 1999 give effect to the merger as if it
occurred as of July 1, 1998. On a December 31 calendar-year basis, the pro
forma consolidated condensed statements of operations of AOL Time Warner for
the year ended December 31, 1999 give effect to the merger as if it occurred as
of January 1, 1999. In addition, the pro forma consolidated condensed statement
of operations of AOL Time Warner for the year ended June 30, 1999 also gives
effect to Time Warner's consolidation of the operating results of the
entertainment group, which were formerly accounted for under the equity method
of accounting, as described more fully in Time Warner's Current Report on Form
8-K dated August 3, 1999, which is incorporated in this joint proxy statement-
prospectus by reference.     
   
   The pro forma consolidated condensed financial statements have been derived
from, and should be read in conjunction with, the historical consolidated
financial statements, including the notes thereto, of each of America Online,
Time Warner and TWE. For America Online, those financial statements are
included in America Online's Quarterly Report on Form 10-Q for the quarter
ended December 31, 1999 and its Annual Report on Form 10-K for the year ended
June 30, 1999, which are incorporated in this joint proxy statement-prospectus
by reference, and which have been adjusted for a 2-for-1 common stock split in
November 1999. For Time Warner and TWE, those financial statements are included
in Time Warner's Annual Report on Form 10-K for the year ended December 31,
1999, which is incorporated in this joint proxy statement-prospectus by
reference.     
 
   The pro forma consolidated condensed financial statements are presented for
informational purposes only and are not necessarily indicative of the financial
position or results of operations of AOL Time Warner that would have occurred
had the merger been consummated as of the dates indicated. In addition, the pro
forma consolidated condensed financial statements are not necessarily
indicative of the future financial condition or operating results of AOL Time
Warner.
 
The Merger
 
   The merger will be structured as a stock-for-stock exchange and is described
under the "Merger--Structure of the Merger and Conversion of America Online and
Time Warner Stock."
   
   As a result of the merger, we anticipate that the former stockholders of
America Online will have an approximate 55% interest in AOL Time Warner and
that the former stockholders of Time Warner will have an approximate 45%
interest in AOL Time Warner, expressed on a fully diluted basis. The merger is
expected to be accounted for by AOL Time Warner as an acquisition of Time
Warner under the purchase method of accounting for business combinations.     
 
 
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