This is a summary of the fourth quarter fiscal 2006 earnings call as conducted by Time Warner Inc (TWX) on January 31, 2007
Management
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Chairman and CEO: Dick Parsons
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President and Chief Operating Officer: Jeff Bewkes
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CFO: Wayne Pace
Key Investors Issues:
- Revenues climbed 8% to $12.5 billion, from $11.4 billion in 2005.
- Income was up 35% to $1.75 billion or 44 cents a share.
- It bought back 912 million shares of common stock for $16.4 billion.
Full Year 2006 Highlights:
- Revenues rose 4% over 2005 to $44.2 billion, reflecting increases at the Company''s Cable and Networks segments.
- Adjusted Operating Income before Depreciation and Amortization climbed to $11.1 billion, up 11% from $10 billion in the prior year.
- Diluted Income per Common Share before Discontinued Operations and Cumulative Effect of Accounting Change was $1.21 for the year ended December 31, 2006, compared to 54 cents in 2005.
Fourth Quarter Highlights:
Revenues rose 8% inform $11.4 billion in 2005 to $12.5 billion, driven by increases at the Cable and Networks segments.
- Adjusted operating income rose 13% to $3 billion, benefiting from increases at the Cable, Networks and Publishing segments.
- Operating income grew 4% to $2.1 billion, reflecting the increase in adjusted operating income and higher gains on asset sales offset partially by incremental costs from securities litigation and government investigations.
- Net income grew 34.6% to $1.75 billion or 44 cents a share, from $1.3 billion or 28 cents a share in 2006, reflecting the increase in adjusted operating income and higher gains on asset sales partially offset by costs associated with securities litigation and government investigations.
From the inception of its stock repurchase program, the Company has repurchased about 912 million shares of common stock for $16.4 billion.
- At existing price levels, the Company expects to complete its $20 billion program in the first half of 2007.
- The firm gained $769 million on the sales of AOL''s Internet access businesses in the U.K. and France offset partly by $13 million of noncash impairments at AOL.
Segment Highlights:
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AOL revenues decreased 8% ($156 million) to $1.9 billion, while adjusted operating income declined 10% ($34 million) to $302 million.
- Operating income increased to $913 million from $170 million, due primarily to the pretax gain of $769 million on the sales of AOL''s Internet access businesses in the U.K. and France, offset partly by lower adjusted operating income before depreciation and amortization.
- AOL had 111 million average monthly domestic unique visitors and 44 billion domestic page views, according to comScore Media Metrix, which translates into 133 average monthly page views per unique visitor.
As at year end, AOL service had 13.2 million U.S. access subscribers, a decline of 2.0 million from the prior quarter and 6.3 million from the year-ago quarter, reflecting subscriber losses due in part to AOL’s strategy to prioritize its advertising business.
- The sales of AOL’s Internet access businesses in France and the U.K. were completed on October 31, 2006, and December 29, 2006, respectively.
- The sale of AOL’s Internet access business in Germany is expected to close in the first quarter of 2007.
Time Warner Cable revenues rose 58% ($1.3 billion) to $3.7 billion resulting in operating income growing 46% to $1.3 billion.
- The current and prior year quarters included $13 million and $9 million, respectively, of merger-related and restructuring charges.
- Operating Income increased 26% ($129 million) to $633 million, as growth in Operating Income was offset partly by higher depreciation ($225 million) and amortization ($56 million) expenses.
- A subsidiary of Time Warner Cable acquired cable systems from Adelphia Communications Corporation.
Subsidiaries of Time Warner Cable and Comcast Corporation exchanged 5 cable systems and Comcast’s interests in Time Warner Cable and one of its subsidiaries were redeemed.
- Time Warner Cable added 675,000 revenue generating units, including 636,000 in its Legacy Systems.
- A total of 6.2 million customers subscribed to two or more primary products (video, high-speed data and voice), representing 42% of customer relationships.
- The Legacy Systems gained 29,000 basic video subscribers and this gain was more than offset by a reduction of 52,000 in the Acquired Systems, resulting in a net reduction of 23,000 basic video subscribers.
Filmed Entertainmentrevenues declined 15% ($531 million) to $3.1 billion leading to a39% drop in adjusted operating income to $240 million.
- The prior year quarter reflected restructuring charges of $33 million.
- Operating income declined 48% ($141 million) to $155 million, due largely to lower adjusted operating income before depreciation and amortization.
Networks revenues rose 10% ($251 million) to $2.7 billion and operating income before depreciation and amortization climbed 12% ($90 million) to $861 million.
- Operating income grew 11% ($77 million) to $778 million, reflecting the increase in operating income before depreciation and amortization, offset in part by higher depreciation expense ($13 million).
Publishing revenues declined 1% ($8 million) to $1.5 billion and adjusted operating income before depreciation and amortization was up 3% ($13 million) to $427 million as the current year quarter reflected lower restructuring charges ($20 million).
- Operating income rose 6% ($23 million) to $384 million, driven by the increase in adjusted operating income before depreciation and amortization.
Key questions and answers from the fourth quarter fiscal 2006 earnings call as conducted by Time Warner Inc on January 31, 2007
