Time Warner (TWX) Updates Guidance, Sees Net Loss in 2008 Reflecting Impairment Change
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Time Warner Inc. (NYSE: TWX) updated its 2008 business outlook for certain financial measures.
When the Company last provided its outlook on November 5, 2008, it expected 2008 Adjusted Operating Income before Depreciation and Amortization to grow around 5%, off a 2007 base of $12.9 billion. Several items are now expected to be recorded in the fourth quarter of 2008 that will reduce the full year's financial results. These items total about $370 million to $380 million on a pretax basis and consequently lower the expected growth rate in 2008 Adjusted Operating Income before Depreciation and Amortization by approximately three percentage points.
In addition to these items, the economic environment has proved somewhat more challenging than the Company previously expected, particularly for the advertising businesses at the AOL and Publishing segments, further reducing the expected growth rate in 2008 Adjusted Operating Income before Depreciation and Amortization by about one percentage point.
Taking into account these items and operating trends, Time Warner now anticipates that growth in 2008 Adjusted Operating Income before Depreciation and Amortization will be around 1%, off a 2007 base of $12.9 billion.
Time Warner also anticipates incurring a non-cash impairment charge on certain of its goodwill and identifiable intangible assets in the fourth quarter of 2008. The Company is continuing its review of the valuation of these assets, but currently expects the charge will total around $25 billion (before any tax considerations) related to goodwill and identifiable intangible assets at the Cable, Publishing and AOL segments. Due to this impairment charge, the Company expects that it will have an Operating Loss in 2008 as compared to Operating Income of $8.9 billion in 2007.
Also reflecting this impairment charge, Time Warner now expects to incur a net loss in 2008, compared to its prior outlook, as provided on November 5, 2008, of Earnings per Diluted Share from Continuing Operations in the range of $1.04 to $1.07.
The Company is finalizing its 2008 financial results, but currently it still expects 2008 full-year Free Cash Flow will total around $5.5 billion, consistent with the outlook provided on November 5, 2008. Relating this to the most comparable GAAP measure, the Company expects an increase in Cash Provided by Operations for 2008 compared to $8.5 billion in 2007.
When the Company last provided its outlook on November 5, 2008, it expected 2008 Adjusted Operating Income before Depreciation and Amortization to grow around 5%, off a 2007 base of $12.9 billion. Several items are now expected to be recorded in the fourth quarter of 2008 that will reduce the full year's financial results. These items total about $370 million to $380 million on a pretax basis and consequently lower the expected growth rate in 2008 Adjusted Operating Income before Depreciation and Amortization by approximately three percentage points.
In addition to these items, the economic environment has proved somewhat more challenging than the Company previously expected, particularly for the advertising businesses at the AOL and Publishing segments, further reducing the expected growth rate in 2008 Adjusted Operating Income before Depreciation and Amortization by about one percentage point.
Taking into account these items and operating trends, Time Warner now anticipates that growth in 2008 Adjusted Operating Income before Depreciation and Amortization will be around 1%, off a 2007 base of $12.9 billion.
Time Warner also anticipates incurring a non-cash impairment charge on certain of its goodwill and identifiable intangible assets in the fourth quarter of 2008. The Company is continuing its review of the valuation of these assets, but currently expects the charge will total around $25 billion (before any tax considerations) related to goodwill and identifiable intangible assets at the Cable, Publishing and AOL segments. Due to this impairment charge, the Company expects that it will have an Operating Loss in 2008 as compared to Operating Income of $8.9 billion in 2007.
Also reflecting this impairment charge, Time Warner now expects to incur a net loss in 2008, compared to its prior outlook, as provided on November 5, 2008, of Earnings per Diluted Share from Continuing Operations in the range of $1.04 to $1.07.
The Company is finalizing its 2008 financial results, but currently it still expects 2008 full-year Free Cash Flow will total around $5.5 billion, consistent with the outlook provided on November 5, 2008. Relating this to the most comparable GAAP measure, the Company expects an increase in Cash Provided by Operations for 2008 compared to $8.5 billion in 2007.
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