SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 
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Excite, Inc. In fiscal 1998, America Online incurred special charges of $94
million for acquired in-process research and development, $17 million related
to settlements and $75 million related to a merger and restructuring. In fiscal
1997, America Online incurred special charges of $385 million related to the
write-off of previously capitalized deferred subscriber acquisition costs, $49
million related to a restructuring, $24 million for contract terminations, $24
million for a legal settlement and $9 million related to acquired in-process
research and development. In fiscal 1996, America Online incurred special
charges of $17 million for acquired in-process research and development, $8
million in merger related costs and $8 million for the settlement of a class
action lawsuit. In fiscal 1995, America Online incurred special charges of $2
million for merger related costs and $50 million for acquired in-process
research and development.
   
   To assess meaningfully underlying operating trends from period to period,
America Online's management believes that the results of operations for each
period should be analyzed after excluding the effects of these significant
nonrecurring items. Where noted, the following summary adjusts America Online's
historical operating results to exclude the impact of these unusual items.
However, unusual items may occur in any period. Accordingly, investors and
other financial statement users should consider the types of events and
transactions for which adjustments have been made.     
 

<TABLE>   
<CAPTION>
                             Six Months
                               Ended
                            December 31,         Year Ended June 30,
                            -------------  -----------------------------------
                             1999   1998    1999    1998   1997   1996   1995
                            ------  -----  -------  -----  -----  -----  -----
                                           (in millions)
<S>                         <C>     <C>    <C>      <C>    <C>    <C>    <C>
Other selected data:
Cash provided by operating
 activities................ $  796  $ 298  $ 1,099  $ 437  $ 131  $   2  $  18
Cash used in investing
 activities................   (617)  (133)  (1,776)  (531)  (367)  (261)  (104)
Cash provided by financing
 activities................  1,469    689      887    580    250    373     89
Business segment operating
 income (as adjusted)......    632    233      649    123     45    111     18
Earnings before interest,
 taxes, depreciation and
 amortization (EBITDA)  (as
 adjusted)(/1/)............    742    335      866    265     95    131     22
</TABLE>
    
--------
(/1/) EBITDA is defined as net income plus: (a) provision/(benefit) for income
      taxes, (b) interest, (c) depreciation and amortization and (d) special
      items. For the fiscal years ended on or before June 30, 1997, EBITDA does
      not add back the amortization of subscriber acquisition costs. America
      Online considers EBITDA to be an important indicator of the operational
      strength and performance of its business, including its ability to
      provide cash flows to service its debt and fund capital expenditures.
      EBITDA, however, should not be considered an alternative to operating or
      net income as an indicator of America Online's performance, or as an
      alternative to cash flows from operating activities as a measure of
      liquidity, in each case determined in accordance with generally accepted
      accounting principles. In addition, this definition of EBITDA may not be
      comparable to similarly titled measures reported by other companies.
 
      Ratio of Earnings to Combined Fixed Charges and Preferred Dividends
   
   The following table sets forth the ratio of earnings to combined fixed
charges and preferred dividends for the six months ended December 31, 1999 and
for each of the last five fiscal years.     
 

<TABLE>   
<CAPTION>
                                 Six Months Ended   Year Ended June 30,
                                   December 31,   ---------------------------
                                       1999       1999  1998  1997 1996  1995
                                 ---------------- ----  ----  ---- ----  ----
<S>                              <C>              <C>   <C>   <C>  <C>   <C>
Ratio of earnings to combined
 fixed charges and
 preferred dividends............       8.44x      7.72x 0.25x --   5.06x --
</TABLE>
    
 
   For purposes of computing the ratio of earnings to combined fixed charges
and preferred dividends, earnings represent earnings from continuing operations
before income taxes plus interest expense on indebtedness, amortization of debt
discount and the portion of rent expense deemed representative of an interest
factor. Fixed charges include interest on indebtedness (whether expensed or
capitalized), amortization of debt discount and the portion of rent expense
deemed representative of an interest factor. For the years ended June 30, 1997
and 1995, the deficiency of earnings to combined fixed charges and preferred
dividends totaled $420 million and $36 million, respectively.
 
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