As filed with the Securities and Exchange Commission on February 11, 2003
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Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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Form S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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AOL TIME WARNER INC.
(Exact name of registrant as specified in its charter)
Delaware 13-4099534
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
75 Rockefeller Plaza
New York, NY 10019
(212) 484-8000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
Richard D. Parsons
Chief Executive Officer
AOL Time Warner Inc.
75 Rockefeller Plaza, New York, NY 10019
(212) 484-8000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
Paul T. Cappuccio, Esq. Peter S. Malloy, Esq.
Executive Vice President, Simpson Thacher & Bartlett
General Counsel and Secretary 425 Lexington Avenue
AOL Time Warner Inc. New York, NY 10017
75 Rockefeller Plaza (212) 455-2000
New York, NY 10019
(212) 484-8000
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Approximate date of commencement of proposed sale to public: From time to time
after the effective date of this registration statement as determined by
market conditions.
If the only securities being registered on this form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. | |
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, other than securities offered only in
connection with dividend or interest reinvestment plans, please check the
following box. |X|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering: | | _________
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: | | _________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. | |
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CALCULATION OF REGISTRATION FEE
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Title of Securities Proposed Maximum Aggregate Amount of
to be Registered Offering Price (1) Registration Fee (1)
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Common Stock, par value
$.01 per share........ $ 812,500,000 $74,750
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o). See Explanatory Note.
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The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement shall become
effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
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Explanatory Note
The common stock of AOL Time Warner registered for resale under this
registration statement will be issued to LineInvest Limited, which we also
refer to as the selling stockholder, at the closing of the purchase by AOL
Time Warner or its subsidiary, AOL Europe, of preferred shares of AOL Europe
held by the selling stockholder. AOL Europe issued the preferred shares to
certain affiliates of Vivendi Universal S.A. in April 2001 in exchange for
equity interests in AOL Europe's French interactive services unit that were
then owned by those affiliates. In connection with that issuance, AOL Europe
agreed, in certain circumstances, to repurchase, and AOL Time Warner agreed, in
certain circumstances, to purchase, the preferred shares of AOL Europe in
April 2003 for a fixed price of approximately $812,500,000.
In August 2001, each of Groupe Canal+ and Cegetel, both affiliates of
Vivendi Universal, sold their interests in the AOL Europe preferred shares,
together with the right to have them purchased, for cash to the selling
stockholder. The selling stockholder financed the purchase of these AOL Europe
preferred shares using amounts advanced to it by Bayerische Landesbank pursuant
to a loan agreement. As security for the loan, the selling stockholder agreed
to pledge as collateral the shares of AOL Time Warner's common stock to be
received by it in connection with the purchase of the AOL Europe preferred
shares. Pursuant to the terms of two swap agreements entered into between the
selling stockholder and each of Vivendi Universal and Cegetel, Vivendi
Universal and its affiliates, Groupe Canal+ and Cegetel, retain the financial
risk associated with the shares of the common stock held by the selling
stockholder. Bayerische Landesbank will provide certain management services to
the selling stockholder in connection with its holding and selling of our
common stock.
AOL Europe and AOL Time Warner have the right to pay the purchase
price for the AOL Europe preferred shares, in their discretion, in cash, in
shares of AOL Time Warner common stock or in a combination of both. The
portion of the purchase price to be satisfied in shares of AOL Time Warner
common stock has not been finally determined, and this registration statement
covers, and the filing fee is based on, an estimated number of shares
sufficient to satisfy the entire purchase price in shares of AOL Time Warner
common stock. At any time prior to the closing of the purchase of the
preferred shares, AOL Time Warner may reduce the amount of the purchase price
to be paid in shares, in which case this registration statement will be
amended to reduce the number of shares registered hereunder, or may determine
to pay the entire amount of the purchase price in cash, in which case this
registration statement will be withdrawn.
If AOL Time Warner determines to issue shares of AOL Time Warner
common stock in payment of all or part of the purchase price for the preferred
shares of AOL Europe, the value of the shares to be delivered will be based on
the average closing price on the New York Stock Exchange as of the close of
the regular trading session of shares of AOL Time Warner common stock for the
fifteen trading days ending on the second trading day preceding the closing of
the purchase of the AOL Europe preferred shares by AOL Europe and/or AOL Time
Warner. The actual number of shares of common stock to be issued and to be
beneficially owned by the selling stockholder and registered under this
registration statement will be set forth in the final prospectus to be filed
with the Securities and Exchange Commission pursuant to Rule 424(b).
For purposes of calculating the filing fee pursuant to Rule 457(o),
the proposed maximum aggregate offering price of approximately $812,500,000 is
the estimated value of the maximum number of shares to be delivered to the
selling stockholder upon the closing of the purchase of the AOL Europe preferred
shares as described above.
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The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an
offer to sell these securities and the selling stockholder is not soliciting
offers to buy these securities in any state or other jurisdiction where the
offer or sale of these securities is not permitted.
Subject to completion, dated February 11, 2003
P R O S P E C T U S
Shares
AOL TIME WARNER INC.
Common Stock
This prospectus relates to the resale of up to shares of our common
stock, par value $0.01 per share, that have been issued to LineInvest Limited,
which we also refer to as the selling stockholder, at the closing of our
purchase of preferred shares of our subsidiary, AOL Europe S.a r.l., held by
the selling stockholder. AOL Europe issued the preferred shares to certain
affiliates of Vivendi Universal S.A. in April 2001 in exchange for equity
interests in AOL Europe's French interactive services unit that were then owned
by those affiliates. In connection with that issuance, AOL Europe agreed, in
certain circumstances, to repurchase, and AOL Time Warner agreed, in certain
circumstances, to purchase, the preferred shares of AOL Europe in April 2003
for a fixed price of approximately $812,500,000. In August 2001, the Vivendi
Universal affiliates sold their interests in the AOL Europe preferred shares,
together with the right to have them purchased, for cash to the selling
stockholder.
The selling stockholder has advised us that the shares covered by this
prospectus may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market prices, at varying prices determined at the time of sale
and/or at negotiated prices. These sales may be effected at various times in
one or more transactions, which may include ordinary brokers' transactions,
transactions involving cross or block trades or otherwise on the New York
Stock Exchange, transactions in which brokers, dealers or underwriters
purchase the shares for resale, transactions "at the market" to or through
market makers of our common stock or into an existing market for our common
stock, and in other ways not involving market makers or established trading
markets, including direct sales of the shares to purchasers or sales through
agents, and hedging and similar transactions. We will not receive any proceeds
from the sales of our common stock by the selling stockholder. For additional
information on the methods of sale, you should refer to the section of this
prospectus entitled "Plan of Distribution."
There are limitations on the number of shares, manner of sale and pricing for
sales of shares of our common stock by the selling stockholder. For additional
information on these restrictions, you should refer to the section of this
prospectus entitled "Plan of Distribution."
Our common stock is listed on the New York Stock Exchange under the trading
symbol "AOL." On February 10, 2003, the last reported sale price of our common
stock on The New York Stock Exchange was $10.36.
See "Risk Factors" on page 5 and "Caution Regarding Forward-Looking
Statements" on page 8 to read about factors you should consider before
buying shares of our common stock.
Our principal executive offices are located at 75 Rockefeller Plaza, New York,
NY 10019, and our telephone number is (212) 484-8000.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
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The date of this prospectus is , 2003.
TABLE OF CONTENTS
Page
About This Prospectus.......................................................i
Where You Can Find More Information.........................................1
The Company.................................................................3
Recent Events...............................................................3
Risk Factors................................................................5
Caution Regarding Forward-Looking Statements................................8
Use of Proceeds............................................................12
Unaudited Condensed Pro Forma Financial Information........................13
Description of Common Stock................................................22
Selling Stockholder........................................................24
Plan of Distribution.......................................................26
Legal Opinion..............................................................28
Experts....................................................................28
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About This Prospectus
We may amend or supplement this prospectus from time to time by
filing amendments or supplements with the Securities and Exchange Commission.
To understand the terms of the securities offered by this prospectus, you
should carefully read this entire prospectus, including any amendments or
supplements. You should also read the documents referred to under the heading
"Where You Can Find More Information" below for information about us and our
financial statements.
i
Where You Can Find More Information
This prospectus incorporates documents by reference that are not
presented in or delivered with this prospectus. This is known as
"incorporation by reference." The following documents, which have been filed
by us with the Securities and Exchange Commission (File No. 001-15062), are
incorporated by reference into this prospectus:
o our Annual Report on Form 10-K for the fiscal year ended
December 31, 2001 (filed on March 25, 2002), as amended by
Amendment No. 1 on Form 10-K/A dated March 26, 2002 (filed
on March 26, 2002), Amendment No. 2 on Form 10-K/A dated
June 27, 2002 (filed on June 28, 2002) and Amendment No. 3
on Form 10-K/A dated January 28, 2003 (filed on January 28,
2003);
o our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2002 (filed on May 6, 2002), as amended by
Amendment No. 1 on Form 10-Q/A dated January 28, 2003
(filed on January 28, 2003);
o our Quarterly Report on Form 10-Q for the quarter ended
June 30, 2002 (filed on August 14, 2002), as amended by
Amendment No. 1 on Form 10-Q/A dated January 28, 2003 (filed
on January 28, 2003);
o our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2002 (filed on November 14, 2002);
o our current report on Form 8-K, dated June 24, 2002 (filed on
June 24, 2002);
o our current report on Form 8-K, dated July 8, 2002 (filed on
July 11, 2002);
o our current report on Form 8-K, dated August 21, 2002 (filed
on August 21, 2002);
o our current report on Form 8-K, dated October 23, 2002 (Item
5 only) (filed on October 23, 2002);
o our current report on Form 8-K, dated December 31, 2002
(filed on January 14, 2003);
o our current report on Form 8-K, dated January 12, 2003 (filed
on January 14, 2003);
o our current report on Form 8-K, dated January 16, 2003 (filed
on January 23, 2003); and
o our current report on Form 8-K, dated January 11, 2001
(filed on January 12, 2001), and amended on January 25,
2001, February 9, 2001 and March 30, 2001, in which it is
reported that our common stock is deemed registered pursuant
to Rule 12g-3(c) under the Securities Exchange Act of 1934.
In addition, all documents filed by us pursuant to Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of
this prospectus and prior to the termination of
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the offering made hereby are incorporated by reference into, and are deemed to
be a part of, this prospectus from the date of filing of those documents.
You should rely only on the information contained in, or incorporated
by reference into, this document or that information to which we have
referred you. We have not authorized anyone to provide you with any additional
information.
Any statement contained in a document incorporated or deemed to be
incorporated by reference into this prospectus will be deemed to be modified
or superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or any other subsequently filed document that is
or is deemed to be incorporated by reference into this prospectus modifies or
supersedes the statement. Any statement so modified or superseded will not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
The documents incorporated by reference into this prospectus are
available from us upon request. We will provide a copy of any and all of the
information that is incorporated by reference in this prospectus to any
person, without charge, upon written or oral request. If exhibits to the
documents incorporated by reference in this prospectus are not themselves
specifically incorporated by reference in this prospectus, then the exhibits
will not be provided.
Requests for any of these documents should be directed to:
AOL Time Warner Inc.
75 Rockefeller Plaza
New York, New York 10019
Attention: Investor Relations
Telephone: 1-866-AOL-INFO
e-mail: aoltimewarnerir@aol.com
We file reports, proxy statements and other information with the SEC.
Copies of these reports, proxy statements and other information may be
inspected and copied at the public reference facilities maintained by the SEC
at 450 Fifth Street, N.W., Washington, D.C. 20549. Copies of these materials
can also be obtained from the Public Reference Room of the SEC by mail at
prescribed rates. For more information about the public reference facilities
of the SEC, you can call the SEC at 1-800-SEC-0330. The SEC also maintains a
website that contains the information that we have filed with them. The
address of the SEC's website is http://www.sec.gov. In addition, information
about us may also be inspected at the New York Stock Exchange, 20 Broad
Street, New York, New York 10005.
This prospectus does not constitute an offer to sell, or a solicitation of an
offer to purchase, the securities offered by this prospectus. Neither the
delivery of this prospectus nor any distribution of securities pursuant to
this prospectus shall, under any circumstances, create any implication that
there has been no change in the information set forth or incorporated into
this prospectus by reference or in our affairs since the date of this
prospectus.
2
The Company
AOL Time Warner
We are the world's leading media and entertainment company, whose
businesses include interactive services, cable systems, filmed entertainment,
television networks, music and publishing. We classify our businesses into the
following fundamental areas:
o America Online, consisting principally of interactive
services such as the AOL and CompuServe services, Web
properties such as Netscape, Moviefone and MapQuest,
instant messaging services such as AOL Instant Messenger
and ICQ, Internet technologies and electronic commerce
services;
o cable, consisting principally of interests in cable television
systems, including Time Warner Cable;
o filmed entertainment, consisting principally of interests in filmed
entertainment and television production, including Warner Bros. and
New Line Cinema;
o networks, consisting principally of interests in cable
television and broadcast network programming, including WTBS
Superstation, TNT, Cartoon Network, CNN News Group, Home Box
Office and The WB Television Network;
o music, consisting principally of interests in recorded music, music
publishing, and DVD manufacturing including Warner Music
Group and such labels as Atlantic, Elektra, Rhino, Warner Bros.
Records and Warner Music International; and
o publishing, consisting principally of interests in magazine
publishing, book publishing and direct marketing, including
Time, People and Sports Illustrated magazines, Warner Books
and Little, Brown and Company.
As a result of the January 2001 merger between America Online, Inc.
and Time Warner Inc., we are a holding company with two wholly owned
subsidiaries, America Online and Time Warner. The business of our company is
the combined businesses previously conducted by America Online and Time
Warner.
Recent Events
Restructuring of Time Warner Entertainment Company, L.P.
On August 20, 2002, we entered into an agreement with AT&T Corp.,
Comcast Corporation and various other parties for the restructuring of Time
Warner Entertainment Company, L.P., which we refer to in this prospectus as
"TWE." Prior to the TWE restructuring, a majority of our filmed entertainment
and cable television businesses and a portion of our television networks
business were held through TWE. Prior to the TWE restructuring, we held
approximately 72.36% of TWE's pro rata priority and residual equity capital
and 100% of TWE's junior priority capital, and Comcast held the remaining
27.64% pro rata priority and residual equity capital.
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In the TWE restructuring, which closed on , 2003, all of
TWE's interest in the filmed entertainment and television networks businesses
was transferred to us. Also as part of the TWE restructuring, we acquired a
controlling interest in MOTH Holdings, Inc., a subsidiary of Comcast that held
a portion of Comcast's interest in TWE. All of our cable businesses held
outside of TWE and most of our interest in TWE were transferred to MOTH
Holdings, which was renamed "Time Warner Cable Inc." As a result of the TWE
restructuring, Time Warner Cable and its subsidiaries hold all of our cable
television business. We own 89.3% of the voting power of Time Warner Cable and
an approximate 79% economic interest in the business of Time Warner Cable and
consolidate the results of Time Warner Cable for accounting purposes. Comcast
indirectly holds the remaining approximately 21% economic interest in the
business of Time Warner Cable. Immediately prior to our acquisition of MOTH
Holdings, MOTH Holdings borrowed and paid $2.1 billion in cash to another wholly
owned subsidiary of Comcast in repayment of its pre-existing note to that
subsidiary. In connection with the TWE restructuring, TWE Holdings II Trust, a
wholly owned indirect subsidiary of Comcast, received shares of our common
stock in exchange for stock in Time Warner Cable.
Restatement of Financial Results
We have been conducting an internal review of certain advertising
and commerce transactions at our AOL segment under the direction of our Chief
Financial Officer. In connection with this internal review, the financial
results for each of the quarters ended September 30, 2000 through June 30,
2002 have been restated and the consolidated restated financial statements
covering the period were filed with the SEC on January 28, 2003.
Based on the substantial work done to date, we do not expect any
further restatements as a result of our internal review. However, the SEC and
the Department of Justice are investigating our financial reporting and
disclosure practices. We will continue our efforts to cooperate with the
investigations. We are unable to predict the outcome of these investigations.
This section provides a summary of our businesses and may not contain all the
information that is important to investors. You should read it together with
the more detailed information and financial information referred to or
incorporated by reference in this prospectus.
4
Risk Factors
You should consider carefully the risks described below, as well as those
identified in our other filings with the SEC. If the events discussed in these
risk factors occur, our business, financial condition, results of operations
or cash flows could be materially adversely affected. In such case, the market
price of our common stock could decline.
Our America Online business may be adversely affected by competitive
market conditions and may not be able to execute its business strategy. Our
America Online business has recently announced its strategy to revitalize the
business and respond to the changing competitive environment. The strategic
plan focuses on improving the products and services it offers consumers, and
includes the following primary components:
o continuing to focus on the profitability of members using narrowband
Internet access;
o managing the migration of members to broadband and multiband by
improving the broadband and multiband product;
o focusing on the member experience with new features, content,
community and customer service;
o growing non-subscription revenues by stabilizing and expanding its
advertising business, developing premium services such as online
games and voice services, and identifying and developing commerce
marketplaces such as online liquidations of goods;
o taking steps to continue to reduce losses at the international
businesses and working to bring them to profitability; and
o continuing cost management.
America Online is in the beginning stages of implementation of the strategy.
Each of these initiatives requires sustained management focus, organization
and coordination over time, as well as success in building relationships with
third parties and success in anticipating and keeping up with technological
developments and consumer preferences. The results of the strategy and
implementation will not be known for some time in the future. If America
Online is unable to implement the strategy successfully or properly react to
changes in market conditions, our financial condition, results of operations
and cash flows could be adversely affected. Successful implementation of the
strategy may require material increases in costs and expenses, and some of the
new strategy components, if successful, may result in lower profit margins
(for example, broadband members generally generate lower profit margins than
narrowband members).
America Online faces increased competition from other providers of
Internet services, including providers of broadband access such as cable and
telephone companies who have greater access to and control of the methods used
to provide Internet services to users. To be successful in its broadband
strategy, America Online will need to maintain and further its existing
arrangements with certain cable and telephone companies, as well as develop
successful business relationships with additional large broadband access
providers. As more people switch to broadband, especially as offered by other
providers, America Online will need to develop a compelling broadband product
to attract members who are willing to pay additional amounts for the content
and functionality provided by America Online. Since many of the premium
services will be provided via broadband, a successful premium services
strategy may be linked to success with our broadband strategies. It is also
unclear how successful America Online will be in promoting and selling its new
premium services to members generally. In addition, other Internet
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service providers may have more resources to devote to development and
marketing of their services, or may be able to offer low-priced alternatives
to the AOL service. Further, changes in the current regulatory environment may
adversely impact America Online's ability to provide broadband services at
competitive prices.
Ongoing investigations by the Securities and Exchange Commission and
the Department of Justice and pending shareholder litigation could affect our
operations. The Securities and Exchange Commission (the "SEC") and the
Department of Justice (the "DOJ") are investigating our financial reporting
and disclosure practices. As of February 6, 2003, there were thirty-seven
putative class action and shareholder derivative lawsuits alleging violations
of federal and state securities laws as well as purported breaches of
fiduciary duties pending against us, certain of our current and former
executives, past and present members of our Board of Directors and, in certain
instances, America Online. There is also one action making allegations of
ERISA violations. The complaints purport to be made on behalf of certain of
our shareholders and allege, among other things, that AOL Time Warner made
material misrepresentations and/or omissions of material facts in violation of
Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"),
Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. As
noted, there are also related derivative actions and one related ERISA action.
We are unable to predict the outcome of the SEC and DOJ investigations and the
pending shareholder litigation. We are incurring expenses as a result of the
SEC and DOJ investigations and the shareholder litigation pending against us,
and any costs associated with judgments in or settlements of these matters
could adversely affect our financial condition and results of operations.
An inability to achieve our debt-reduction goals could adversely
affect our common stock price. We have announced a goal of decreasing our
total consolidated debt (net of cash) over the period ending December 2004. If
we are unable to achieve this goal, including by using free cash flow,
completing the planned initial public offering of our cable business, selling
non-core assets and using other de-leveraging initiatives, the price of our
common stock could be adversely affected.
Technological developments may adversely affect our competitive
position and limit our ability to protect our valuable intellectual property
rights. Our businesses operate in the highly competitive, consumer-driven and
rapidly changing media and entertainment industries. These businesses, as well
as the industries generally, are to a large extent dependent on technological
developments, including access to and selection and viability of new
technologies, and are subject to potential pressure from competitors as a
result of their technological developments. For example:
o Our cable business may be adversely affected by more aggressive than
expected competition from alternate technologies such as satellite
and DSL; by the failure to choose technologies appropriately; by the
failure of new equipment, such as digital set-top boxes or digital
video recorders, or services, such as digital cable, high-speed data
services and video-on-demand, to appeal to enough consumers or to be
available at prices consumers are willing to pay, to function as
expected and to be delivered in a timely fashion;
o Our America Online business may be adversely affected by
competitors' abilities to more quickly develop new technologies,
including more compelling features/functionalities and premium
services for Internet users; and by the
6
uncertainty of the costs for obtaining rights under patents that may
cover technologies and methods used to deliver new services;
o Our filmed entertainment and television network businesses may be
adversely affected by the fragmentation of consumer leisure and
entertainment time caused by a greater number of choices resulting
from technological developments, the impact of personal video
recorder or other technologies that have "ad-stripping" functions,
and technological developments that facilitate the piracy of our
copyrighted works; and
o Our music business may be adversely affected by technological
developments, such as Internet peer-to-peer file sharing, that
facilitate the piracy of music; by our inability to enforce our
intellectual property rights in digital environments; and by our
failure to develop a successful business model applicable to a
digital online environment.
7
Caution Regarding Forward-Looking Statements
The SEC encourages companies to disclose forward-looking information
so that investors can better understand a company's future prospects and make
informed investment decisions. This prospectus contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, particularly statements anticipating future growth in revenues,
EBITDA and cash flow. Words such as "anticipates," "estimates," "expects,"
"projects," "intends," "plans," "believes" and words and terms of similar
substance used in connection with any discussion of future operating or
financial performance identify forward-looking statements. These statements
may be either made directly in this prospectus or made a part of this
prospectus by incorporation by reference to other documents filed by us with
the SEC. Those forward-looking statements are based on management's present
expectations and beliefs about future events. As with any projection or
forecast, they are inherently susceptible to uncertainty and changes in
circumstances, and we are under no obligation to, and expressly disclaim any
obligation to, update or alter our forward-looking statements whether as a
result of such changes, new information, future events or otherwise.
We operate in highly competitive, consumer-driven and rapidly
changing media, entertainment and Internet businesses. These businesses are
affected by government regulation, economic, strategic, political and social
conditions, consumer response to new and existing products and services,
technological developments and, particularly in view of new technologies, the
continued ability to protect intellectual property rights. Our actual results
could differ materially from management's expectations because of changes in
such factors. Other factors and risks could adversely affect our operations,
business or financial results or our business segments in the future and could
also cause actual results to differ from those contained in the
forward-looking statements, including those identified under "Risk Factors"
and in our other filings with the SEC and the following:
For our America Online businesses:
o the ability to successfully implement a new strategy;
o the ability to develop new products and services to remain
competitive;
o the ability to develop, adopt or have access to new technologies;
o the ability to successfully implement our broadband and multiband
strategy;
o the ability to have access to distribution channels controlled by
third parties;
o the ability to retain and grow our subscriber base profitably;
o the ability to provide adequate server, network and system capacity;
o the risk of unanticipated increased costs for network services,
including increased costs and business disruption resulting from the
financial difficulties being experienced by a number of AOL's
network service providers, such as WorldCom;
o increased competition from providers of Internet services, including
providers of broadband access;
o the ability to attract more traditional advertisers to the online
advertising medium;
o the ability to maintain or renew existing advertising or marketing
commitments, including the ability to renew or replace large
multi-period advertising arrangements with similar commitments or
with shorter term advertising sales;
o the risk that the online advertising market will not improve at all
or at a rate comparable to improvements in the general advertising
market;
8
o the ability to maintain or enter into new electronic commerce,
marketing or content arrangements;
o the risks from changes in U.S. and international regulatory
environments affecting interactive services; and
o the ability to reduce losses at our international businesses and
bring them to profitability.
For our cable business:
o more aggressive than expected competition from new technologies and
other types of video programming distributors, including satellite
and DSL;
o increases in government regulation of basic cable or equipment rates
or other terms of service, such as "digital must-carry," open access
or common carrier requirements; government regulation of other
services, such as broadband cable modem service;
o increased difficulty in obtaining franchise renewals;
o the failure of new equipment, such as digital set-top boxes or
digital video recorders, or services, such as digital cable,
high-speed data services or video-on-demand, to appeal to enough
consumers or to be available at prices consumers are willing to pay,
to function as expected and to be delivered in a timely fashion;
o theft of service from interception of cable transmissions;
o fluctuations in spending levels by advertisers and consumers; and
o greater than expected increases in programming or other costs.
For our filmed entertainment businesses:
o our ability to continue to attract and select desirable talent and
scripts at manageable costs;
o general increases in production costs;
o fragmentation of consumer leisure and entertainment time and its
possible negative effects on the broadcast and cable networks, which
are significant customers of these businesses;
o continued popularity of merchandising;
o the uncertain impact of technological developments that may
facilitate piracy of our copyrighted works;
o our ability to develop a successful business model for delivery of
feature films in a digital online environment;
o risks associated with foreign currency exchange rates;
o with respect to feature films, the increasing marketing costs
associated with theatrical film releases in a highly competitive
marketplace;
o with respect to television programming, a decrease in demand for
television programming provided by non-affiliated producers; and
o with respect to home video, the ability to maintain relationships
with significant customers in the rental and sell-through markets.
For our network businesses:
o greater than expected news gathering, programming or production
costs;
o public or cable operator resistance to price increases and the
negative impact on premium programmers of increases in basic cable
rates;
9
o increased regulation of distribution agreements;
o the sensitivity of network advertising to economic cyclicality and
to new media technologies;
o the negative impact of consolidation among cable and satellite
distributors;
o piracy of our content by means of interception of cable and
satellite transmissions or Internet peer-to-peer file sharing;
o the impact of personal video recorder "ad-stripping" functions on
advertising sales and network branding;
o the development of new technologies that alter the role of
programming networks and services; and
o greater than expected fragmentation of consumer viewership due to an
increased number of programming services or the increased popularity
of alternatives to television.
For our music business:
o our ability to continue to attract and select desirable talent at
manageable costs; the popular demand for particular artists and
albums; the timely completion of albums by major artists;
o our ability to continue to enforce our intellectual property rights
in digital environments; piracy of music by means of Internet
peer-to-peer file sharing;
o our ability to develop a successful business model applicable to a
digital online environment;
o the potential repeal of Subsection (6) of California Labor Code
Section 2855 regarding the maximum length of personal service
contracts;
o risks associated with foreign currency exchange rates;
o our ability to utilize DVD manufacturing capacity fully and to
maintain current DVD manufacturing pricing; and
o the overall strength of global music sales.
For our print media and publishing businesses:
o fluctuations in spending levels by advertisers and consumers;
o unanticipated increases in paper, postal and distribution costs,
including costs resulting from financial pressure on the U.S. Postal
Service;
o increased costs and business disruption resulting from instability
in the newsstand distribution channel;
o the introduction and increased popularity of alternative
technologies for the provision of news and information; and
o the ability to continue to develop new sources of circulation.
For our company generally, our overall financial strategy, including
growth in operations, maintaining our financial ratios and a strong balance
sheet, could be adversely affected by decreased liquidity in the capital
markets, including any reduction in our ability to access either the capital
markets for debt securities or bank financings, failure to meet earnings
expectations, significant acquisitions or other transactions, economic
slowdowns, the risk of war, increased expenses as a result of the SEC and
Department of Justice investigations and the shareholder litigation pending
against us, as well as the risk of costs associated with judgments in or
settlements of such matters, and changes in our plans, strategies and
intentions. In addition, lower
10
than expected valuations associated with the cash flows and revenues at our
segments may result in our inability to realize the value of recorded
intangibles and goodwill at those segments.
11
Use of Proceeds
We will not receive any proceeds from the sales of our common stock
by the selling stockholder. All proceeds from the sale of these shares will be
for the account of the selling stockholder.
12
Unaudited Condensed Pro Forma Financial Information
The accompanying unaudited pro forma financial information gives
effect to (i) the Time Warner Entertainment Company, L.P. restructuring
and (ii) the repurchase of the AOL Europe preferred shares.
Time Warner Entertainment Company, L.P. Restructuring
On August 20, 2002, AOL Time Warner Inc. (the "Company" or "AOLTW")
entered into an agreement with AT&T Corp. ("AT&T") and Comcast Corporation
(formerly named AT&T Comcast Corporation) ("Comcast") for the restructuring of
Time Warner Entertainment Company L.P. ("TWE"). Prior to the TWE
restructuring, a majority of the Company's interests in cable television
systems ("TWE Cable") and all of its interests in Warner Bros., Home Box
Office ("HBO"), The WB Network, Comedy Central and Court TV (collectively the
"Content Businesses") were held through TWE. Prior to the TWE restructuring
the Company held approximately 72.4% of TWE's pro rata priority and residual
equity capital and 100% of TWE's junior priority capital and Comcast (Comcast
recently acquired AT&T's interest in TWE) held the remaining 27.6% pro rata
priority and residual equity capital. In addition, AOLTW held a 100% interest
in certain other cable systems ("TWI Cable").
The following reflects the ownership interests in TWI Cable and TWE
Cable prior to the TWE restructuring:
________________ ____________
AOLTW Comast
________________ ____________
/ | \ /
100%/ | \ 27.6%
---------- ---------- \ Series A
TWI Cable Non-TWE \ 72.4% Preferred &
Non-Cable Series A Common
---------- Businesses Preferred & /
---------- Common and /
100% of \ /
the Series ----------
B Preferred TWE
----------
/ \
/ \
--------- -----------
TWE Cable TWE Content
--------- -----------
In connection with the TWE restructuring:
o AOLTW will assume complete ownership of TWE's Content Businesses,
including Warner Bros., HBO, The WB Network and TWE's interests in
Comedy Central and Court TV.
o All of AOLTW's cable assets, consisting of both TWI Cable and TWE
Cable, will be owned by a new subsidiary of AOLTW to be called Time
Warner Cable Inc. ("Time Warner Cable") except that AOLTW will also
own a direct interest in TWE Cable.
13
The following reflects the ownership interests in TWI Cable assets and
TWE Cable after the TWE restructuring (all subscriber numbers are as of December
31, 2002 and exclude subscribers of unconsolidated entities):
___________ ____________
AOLTW Comast
___________ ____________
/ \ \ / /
/ \ \ / /
/ \ \ / /
__________ \ \ 82.1% _________________ 17.9%/ /
Non-Cable \ ----- Time Warner Cable ----- /
Businesses \ /
__________ \ _________________ /
\ | \ /
\ | 94.3% 4.7%
\ 100% | \ /
\ --------- \ /
\ TWI Cable \ /
\ Assets \ /
\ 1.6M Subs \ /
\ --------- -----------
\ TWE Cable
--------------- 7.7M Subs
1.0% and -----------
$2.4 billion
preferred
interest
Immediately prior to the closing of the TWE restructuring, a wholly
owned subsidiary of Comcast will receive $2.1 billion in cash. In connection
with the TWE restructuring, a wholly owned subsidiary of Comcast will receive
AOLTW common stock valued at $1.5 billion at the time of closing in exchange
for stock in Time Warner Cable and an approximate 21% economic interest in the
business of Time Warner Cable which reflects Comcast's 17.9% interest in Time
Warner Cable and its 4.7% direct interest in TWE Cable.
Upon completion of the TWE restructuring, AOLTW will have a
controlling voting interest in Time Warner Cable and consolidate Time Warner
Cable's financial results for accounting purposes.
Repurchase of AOL Europe Preferred Shares
Our subsidiary, AOL Europe, issued preferred shares to certain
affiliates of Vivendi Universal in April 2001 in exchange for Vivendi
Universal's 55% indirect equity interest in AOL Europe's French interactive
services unit. The Company expects that it will purchase, in whole or in part,
or AOL Europe will repurchase, in whole or in part, such AOL Europe preferred
shares in April 2003 for approximately $812.5 million.
AOLTW and AOL Europe have the right to purchase the AOL Europe
preferred shares in cash or in shares of AOLTW common stock or in a
combination of both. The portion of the purchase price to be satisfied in
shares of AOL Time Warner common stock has not been finally determined,
however, the pro forma financial information contained in this prospectus is
based on an estimated number of shares sufficient to satisfy the entire
purchase price in shares of AOLTW common stock. At any time prior to the
closing of the purchase of the preferred shares, AOLTW may reduce the amount of
the purchase price to be paid in shares or may decide to pay the entire amount
of the purchase price in cash.
14
Pro Forma Adjustments
TWE Restructuring
The accompanying unaudited condensed pro forma financial information
is presented to illustrate the effects of the TWE restructuring and reflects
the following:
o Time Warner Cable's incurrence of $2.1 billion of debt;
o The Company's issuance of common stock valued at $1.5 billion;
o The Company's acquisition of Comcast's interest in the Content
Businesses. For accounting purposes, the acquisition of Comcast's
interest in the Content Businesses represents a purchase of a minority
interest that will be accounted for pursuant to Financial Accounting
Standards No. 141 "Business Combinations" ("FAS 141");
o The Company's increase in its economic ownership interest in TWE Cable
from 72.4% to 78.4%. The attainment of this additional economic
interest of approximately 6% in TWE Cable will be accounted for as a
purchase business combination pursuant to FAS 141. The 78.4% interest
is calculated as: 82.1% of Time Warner Cable times 94.3% of TWE Cable
plus 1% of TWE Cable which will be directly owned; and
o The Company's decrease in its economic ownership interest in the TWI
Cable assets from 100% to 82.1%. The disposal of an approximate
17.9% interest in the TWI Cable assets will be accounted for pursuant
to Financial Accounting Standards No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("FAS 144").
As a result of the above transactions, the Company will have an
effective 79% economic interest in the business of Time Warner Cable, which
reflects an 82.1% indirect interest in the TWI Cable assets and its 1% direct
and 77.4% (82.1% times 94.3%) indirect interests in TWE Cable. The 79%
economic interest in Time Warner Cable is calculated with each interest
weighted based on the relative number of cable subscribers in each entity as
compared to the total Time Warner Cable subscribers as follows: ((1.6 million
TWI Cable subscribers / 9.3 million total Time Warner Cable subscribers) times
82.1%) plus ((7.7 million TWE Cable subscribers / 9.3 million total Time
Warner Cable subscribers) times 82.1% times 94.3%) plus ((7.7 million
subscribers/9.3 million total Time Warner Cable subscribers) times 1%).
AOL Europe Preferred Shares Repurchase
The accompanying unaudited condensed pro forma financial information
is presented to illustrate the effects of the repurchase of the AOL Europe
preferred shares and reflects the issuance of approximately 63.8 million shares
of AOLTW common stock to purchase the AOL Europe preferred shares for
approximately $812.5 million or $12.74 per share.
Unaudited Condensed Pro Forma Financial Information
The unaudited condensed pro forma balance sheet as of September 30,
2002 is presented as if the TWE restructuring and the repurchase of the AOL
Europe preferred shares had occurred on September 30, 2002. The unaudited
condensed pro
15
forma statement of operations for the nine months ended September 30, 2002 and
for the year ended December 31, 2001 are presented as if the TWE restructuring
and the repurchase of the AOL Europe preferred shares had occurred on
January 1, 2001.
The unaudited condensed pro forma financial information has been
derived from and should be read in conjunction with the historical financial
statements, including the notes thereto, of AOLTW. Such financial statements
are included in an amendment on Form 10-K/A (filed on January 28, 2003) to the
Company's Annual Report on Form 10-K for the year ended December 31, 2001 and
the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 2002.
The unaudited condensed pro forma financial information is presented
for illustrative purposes only and is not necessarily indicative of the
financial position or results of operations that would have been achieved had
the TWE restructuring or the repurchase of the AOL Europe preferred shares been
consummated as of the dates indicated. In addition, the unaudited condensed pro
forma financial information is not necessarily indicative of the future
financial condition or operating results of AOLTW. In the opinion of
management, all adjustments necessary for a fair presentation of the unaudited
condensed pro forma information have been made.
In accordance with Article 11 of Regulation S-X of the Securities Act
of 1934, the unaudited condensed pro forma financial information is presented
on a continuing operations basis and thus excludes the effect of discontinued
operations and the cumulative effect of adopting new accounting standards, as
more fully described in the previously filed financial statements noted above.
In particular, AOLTW discontinued certain cable operations and recorded a
$54.2 billion goodwill impairment charge upon the adoption of Financial
Accounting Standards No. 142, which was accounted for as a cumulative effect
of a change in accounting principle. In addition, the unaudited condensed pro
forma financial information does not reflect events and transactions occurring
subsequent to September 30, 2002, including the Company's $45.5 billion
impairment charge related to goodwill and other intangible assets recorded in
the fourth quarter of 2002.
16
AOL Time Warner
Unaudited Pro Forma Balance Sheet
As of September 30, 2002
(Dollars in Millions)
Unaudited
Pro Forma
Historical Adjustments Adjusted
---------- ----------- --------
ASSETS
Current assets:
Cash and equivalents $ 2,349 $ 2,349
Receivables, net 4,858 4,858
Inventories 1,731 1,731
Prepaid expenses and other current assets 1,876 1,876
------- -------
Total Current Assets 10,814 10,814
------- -------
Noncurrent inventories and film costs 3,344 3,344
Investment, including available for sale
securities 5,002 5,002
PP&E, net 11,763 11,763
Intangible assets subject to amortization 7,162 7,162
Intangible assets not subject to amortization 38,300 1,500 2 42,400
2.600 3
Goodwill 81,688 800 2 84,128
1,640 4
Other assets 2,815 2,815
------- ----- -------
Total Assets $160,888 6,540 $167,428
======= ===== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 1,918 $ 1,918
Participations payable 1,498 1,498
Royalties and programming costs payable 1,635 1,635
Deferred revenue 1,550 1,550
Debt due within one year 89 89
Other current liabilities 6,312 6,312
------- -------
Total Current Liabilities 13,002 13,002
------- -------
Long term debt 28,244 2,100 1 30,344
Deferred income taxes 10,975 1,640 4 12,615
Deferred revenue 1,038 1,038
Other liabilities 4,694 4,694
Minority interests 4,917 1,000 1 5,405
(2,300)2
2,600 3
(812)9
------- ----- -------
Total Long-term liabilities 49,868 4,228 54,096
------- ----- -------
Total Liabilities 62,870 4,228 67,098
------- ----- -------
Shareholders' equity 98,018 1,500 1 100,330
812 9
------- ----- -------
Total Liabilities and Shareholders'
Equity $160,888 6,540 $167,428
======= ===== =======
See attached notes
17
AOL Time Warner
Unaudited Pro Forma Statement of Operations
For the Nine Months Ended September 30, 2002
(Dollars in millions, except per share amounts)
Pro Forma
Historical Adjustments Adjusted
---------- ----------- --------
Revenues:
Subscriptions $ 14,032 - $ 14,032
Advertising and commerce 5,518 - 5,518
Content and other 10,091 - 10,091
------ ------
Total revenues 29,641 29,641
------ ------
Costs of revenues (17,787) - (17,787)
Selling, general and administrative (7,258) - (7,258)
Amortization of goodwill and other
intangible assets (520) - (520)
Merger and restructuring costs (184) - (184)
------ ------ ------
Operating income 3,892 - 3,892
------ ------ -----
Interest expense, net (1,306) (35) 5 (1,341)
Other expense, net (1,837) - (1,837)
Minority interest expense, net of tax (139) (23) 6 (139)
23 9
------ ------ -----
Income from continuing operations before
taxes 610 (58) 575
Income tax provision (279) 14 7 (265)
------ ----- -----
Income from continuing operations $ 331 (44) $ 310
====== ===== =====
Basic / Diluted income per share from
continuing operations $0.07 $0.07
====== =====
Average basic common shares 4,449.2 105.9 8 4,618.9
63.8 10
======= ===== =======
Average diluted common shares 4,523.1 105.9 8 4,692.8
63.8 10
======= ===== =======
See attached notes
18
AOL Time Warner
Unaudited Pro Forma Statement of Operations
For the Twelve Months Ended December 31, 2001
(Dollars in millions, except per share amounts)
Unaudited
Pro Forma
Historical Adjustments Adjusted
---------- ----------- ---------
Revenues:
Subscriptions $ 15,657 - $ 15,657
Advertising and commerce 8,260 - 8,260
Content and other 13,307 - 13,307
------ ------
Total revenues 37,224 - 37,224
Costs of revenues (20,591) - (20,591)
Selling, general and administrative (9,079) - (9,079)
Amortization of goodwill and other intangible assets (7,186) - (7,186)
Merger and restructuring costs (250) - (250)
------- ------- -------
Operating income 118 - 118
Interest expense, net (1,353) (47) 5 (1,400)
Other expense, net (3,567) - (3,567)
Minority interest income (expense), net of tax 46 (236) 6 (190)
------- ------ -------
Loss from continuing operations before taxes (4,756) (283) (5,039)
Income tax provision (139) 19 7 (120)
------- ------ -------
Loss from continuing operations $ (4,895) (264) $ (5,159)
======= ====== ======
Basic / Diluted loss per share from continuing operations ($1.11) ($1.14)
======= ======
Average basic and diluted common shares 4,429.1 105.9 8 4,535.0
======= ====== =======
See attached notes
19
Notes to the Unaudited Condensed Pro Forma Financial Information
Overview
TWE Restructuring
As noted above, the TWE restructuring will result in the acquisition
of the 27.6% interest of the Content Businesses not already owned by the
Company and the acquisition of an additional 6% economic interest in TWE
Cable, each of which will be accounted for as a purchase business combination.
In addition, the TWE restructuring reflects the Company's indirect disposition
of a 17.9% interest in the TWI Cable assets.
In connection with the Company's acquisition of additional interests
in TWE Cable and the Content Businesses, a preliminary allocation of the
excess of the purchase price over the fair value of the net assets acquired
has been allocated to goodwill and cable franchise licenses. The cable
franchise licenses and goodwill will not be amortized but rather tested for
impairment on an annual basis. The Company has not completed its purchase
price allocation, accordingly, the final purchase price allocation may differ
from the preliminary estimates included herein.
1. To record the purchase consideration paid by AOLTW in the TWE
Restructuring as follows (dollars in millions):
Description Amount
------------------------------------------------------------------ -------
Debt incurred at Time Warner Cable $2,100
Issuance of AOLTW common stock to a wholly owned subsidiary of
Comcast in exchange for stock in Time Warner Cable 1,500
Estimated value of the 17.9% interest in the TWI Cable assets
transferred to Comcast 1,000
------
Total estimated purchase consideration $4,600
======
2. To eliminate the historical minority interests (at book value) associated
with the 27.6% of the TWE Content Businesses and 6% of the TWE Cable
business acquired by AOLTW and to allocate the purchase consideration
paid in excess of the historical minority interest to cable franchise
license intangibles and goodwill as follows (dollars in millions):
Description Amount
---------------------------------------------------------------- -------
Elimination of minority interest $2,300
Cable franchise license intangibles 1,500
Goodwill 800
------
Total preliminary purchase price allocation $4,600
======
20
3. To record a step-up in basis (e.g., adjustment to fair value) on the 17.9%
minority interest Comcast retained indirectly in TWE Cable. This $2.6
billion adjustment will be reflected as an increase in cable franchise
license intangibles and a corresponding increase in minority interest.
4. To record deferred taxes based on a 40% statutory rate on the cable
franchise license intangible assets recorded in entries two and three
with a corresponding increase in goodwill.
5. To record the increase in interest expense as a result of the incurrence
of $2.1 billion in debt at Time Warner Cable. A 2.22% interest rate was
assumed in calculating interest expense. This reflects the one month LIBOR
rate plus a 7/8% spread which represents the borrowing rate the Company
expects to obtain for the $2.1 billion in debt. A 1/8 percent variance in
interest rates will change interest expense by $2.6 million and $2.0
million for the twelve months ended December 31, 2001 and the nine months
ended September 30, 2002, respectively.
6. To record the change in minority interest income (expense) as a result of
Comcast's 17.9% ownership interest in Time Warner Cable and its 4.7%
ownership interest in TWE Cable.
7. To record the income tax impact as a result of adjustment five. A 40%
statutory tax rate was assumed.
8. To reflect an assumed number of shares of AOLTW common stock that will be
issued in the TWE restructuring to a wholly owned subsidiary of
Comcast in exchange for stock in Time Warner Cable at a $14.16 per share
price, which is based upon the formula set forth in the TWE restructuring
agreement, calculated as if the TWE restructuring occurred on February 7,
2003.
Repurchase of AOL Europe Preferred Shares
9. To reflect the repurchase of the AOL Europe preferred shares for
approximately $812.5 million, which will result in the elimination of the
associated minority interest and minority interest expense.
10. To reflect an assumed number of shares of AOLTW common stock that
AOLTW will issue at a $12.74 per share price to repurchase all of the AOL
Europe preferred shares with AOLTW common stock. This price is based
upon the formula set forth in a transaction agreement and put agreement,
pursuant to which AOLTW or an affiliate of AOLTW will purchase the AOL
Europe preferred shares in exchange, in whole or in part, for shares of
AOLTW common stock. This price is calculated as if the purchase occurred on
February 11, 2003. AOL Europe was not a consolidated entity of AOLTW in
2001 and therefore there will be no impact on the 2001 statement of
operations.
21
Description of Common Stock
The following description of the terms of our common stock sets forth
certain general terms and provisions of our common stock. This section also
summarizes relevant provisions of the Delaware General Corporation Law, which
we refer to as "Delaware law." The terms of our certificate of incorporation
and by-laws, as well as the terms of Delaware law, are more detailed than the
general information provided below. Therefore, you should carefully consider
the actual provisions of these documents.
Authorized and Outstanding Shares
We have the authority to issue:
o 25,000,000,000 shares of common stock, par value $0.01 per share;
o 1,800,000,000 shares of series common stock, par value $0.01
per share, which are issuable in series, of which
210,000,000 shares are designated as AOL Time Warner series
LMC common stock and 210,000,000 shares are designated as
AOL Time Warner series LMCN-V common stock; and
o 750,000,000 shares of preferred stock, par value $0.10 per share,
which are issuable in series on terms to be determined by our
board of directors.
As of , 2003:
o approximately shares of our common stock were outstanding;
o approximately 171,186,000 shares of AOL Time Warner series
LMCN-V common stock were outstanding, which are convertible
into an equal number of shares of common stock under
specified circumstances that are not currently present and
which have substantially the same rights as shares of our
common stock, except that they have limited voting rights
and are non-redeemable;
o no shares of AOL Time Warner series LMC common stock were
outstanding; and
o no shares of our preferred stock were outstanding.
Rights of Our Common Stock
Preemptive Rights. The holders of our common stock do not have
preemptive rights to purchase or subscribe for any stock or other securities
of ours.
Voting Rights. Each outstanding share of our common stock is entitled
to one vote per share.
Dividends. Holders of our common stock are entitled to receive
dividends or other distributions when and if declared by our board of
directors. The right of our board of directors to
22
declare dividends, however, is subject to any rights of the holders of other
classes of our capital stock and the availability of sufficient funds under
Delaware law to pay dividends.
Liquidation Rights. In the event of the liquidation of our company,
subject to the rights, if any, of the holders of other classes of our capital
stock, the holders of our common stock are entitled to receive any of our
assets available for distribution to our stockholders ratably in proportion to
the number of shares held by them.
Regulatory Restrictions. Outstanding shares of our common stock may
be redeemed by action of our board of directors to the extent necessary to
prevent the loss of any governmental license or franchise, the holding of
which is conditioned upon stockholders possessing prescribed qualifications.
Listing
We list our common stock on the New York Stock Exchange under the
symbol "AOL."
23
Selling Stockholder
The shares of our common stock to which this prospectus relates are
being registered for re-offers and resales by the selling stockholder named
below. We have registered the shares to permit the selling stockholder and
future transferees who agree to be bound by the transaction agreements
relating to the shares held by the selling stockholder to resell the shares
when they deem appropriate. We refer to all of these possible sellers as the
"selling stockholder" in this prospectus. The selling stockholder may resell
all, a portion or none of its shares at any time.
The following table sets forth information regarding the beneficial
ownership of the common stock by the selling stockholder as of , 2003.
Number of shares of
Number of shares of our common stock
Number of our common stock owned beneficially
shares of our beneficially owned after the sale of all
Selling common stock that may be sold the stock that may be
Stockholder beneficially owned hereunder sold hereunder
----------- ------------------ -------------------- ---------------------
LineInvest
Limited(1) (2) 0
--------------------------------------------------------
(1) LineInvest, an Irish limited liability company, is a special purpose
entity formed for the purpose of the transactions described below
under "Relationships with the Selling Stockholder."
(2) In connection with a repurchase of securities of an affiliate of
ours, the selling stockholder received shares of our common stock
valued at approximately $812,500,000. The $ price per share of
our common stock was determined by taking the average of the closing
sale prices per share of our common stock on the New York Stock
Exchange for each of the fifteen consecutive full trading days ending
on the second full trading day immediately prior to the date of the
closing of the transaction.
Relationships with the Selling Stockholder
In April of 2001, AOL Europe, the holding company for AOL's European
operations, acquired all the interests in AOL Europe's French interactive
services unit that were then owned by certain affiliates of Vivendi Universal
in exchange for preferred shares of AOL Europe. Pursuant to the transaction
agreements for this transaction, AOL Europe agreed, in certain circumstances,
to repurchase, and we agreed, in certain circumstances, to purchase the AOL
Europe preferred shares for a fixed price of approximately $812,500,000 in
April 2003.
In August 2001, each of Groupe Canal+ and Cegetel, both affiliates of
Vivendi Universal, sold their interests in the AOL Europe preferred shares,
together with the right to have them purchased, for cash to the selling
stockholder. The selling stockholder financed the purchase of these AOL Europe
preferred shares using amounts advanced to it by Bayerische Landesbank
pursuant to a loan agreement. As security for the loan, the selling
stockholder agreed to pledge as collateral the shares of our common stock to
be received by it in connection with the purchase of the AOL Europe preferred
shares. Pursuant to the terms of two swap agreements entered into between the
selling stockholder and each of Vivendi Universal and Cegetel, Vivendi
Universal and its affiliates, Groupe Canal+ and Cegetel, retain the financial
risk associated with the shares of our common stock held by the selling
stockholder. Bayerische Landesbank will provide certain management services to
the selling stockholder in connection with its holding and selling of our
common stock.
Under the transaction agreements pursuant to which we issued the
shares of our common stock to which this prospectus relates, we were required
to file a shelf registration statement (of
24
which this prospectus is a part) relating to resales of such common stock and
we are required, subject to customary suspension periods, to keep the
registration statement effective until the earlier of 180 days after the
delivery of the shares covered by this prospectus to the selling stockholder
(or, if later, the effectiveness date of this registration statement) and the
time the selling stockholder disposes of all the shares of our stock covered
by this registration statement. Shares of our common stock that are currently
held by the selling stockholder will no longer be subject to registration by
us if they are sold under this prospectus or otherwise disposed of or continue
to be held by the selling stockholder but are capable of being disposed of by
the selling stockholder pursuant to Rule 144 under the Securities Act.
We are required to enter into underwriting agreements or other
customary agreements relating to the distribution of our common stock in a
permitted block sale, which may require us to participate in a due diligence
process and provide customary indemnification and closing documentation
(including comfort letters and opinions). Subject to limited exceptions, we
will not be required to enter into any underwriting or similar agreement,
cooperate in a due diligence process, furnish closing documents or provide
indemnification on more than two occasions. If the selling stockholder wishes
to sell its common stock in an underwritten public offering, the specific
underwriting arrangements will be disclosed in a supplement to this prospectus
filed with the SEC under Rule 424(b) under the Securities Act, or, if
appropriate, a post-effective amendment to the registration statement of which
this prospectus forms a part.
Our agreement with the selling stockholder contains customary
provisions regarding the suspension of the effectiveness of this registration
statement. In addition, subject to certain limitations, we have agreed to
indemnify the selling stockholder and its affiliates and their respective
directors and officers, each underwriter or broker-dealer or other selling
agent acting on behalf of the selling stockholder and each other person who
controls the selling stockholder or the underwriter, broker-dealer or selling
agent against certain liabilities, including specified liabilities under the
Securities Act, or to contribute with respect to payments which the selling
stockholder may be required to make in respect of such liabilities.
25
Plan of Distribution
The selling stockholder may sell the shares of common stock covered
by this prospectus from time to time in any legal manner selected by the
selling stockholder, including directly to purchasers or through underwriters,
broker-dealers or agents, who may receive compensation in the form of
discounts, concessions or commissions from the selling stockholder or the
purchasers. These discounts, concessions or commissions as to any particular
underwriter, broker-dealer or agent may be in excess of those customary in the
types of transactions involved. The selling stockholder will act independently
of us in making decisions with respect to the pricing, timing, manner and size
of each sale of the common stock covered by this prospectus.
The selling stockholder has advised us that the shares may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of sale, at prices related to the prevailing market prices, at varying
prices determined at the time of sale and/or at negotiated prices. These sales
may be effected at various times in one or more transactions, which may
include ordinary brokers' transactions, transactions involving cross or block
trades or otherwise on the New York Stock Exchange, transactions in which
brokers, dealers or underwriters purchase the shares for resale, transactions
"at the market" to or through market makers of our common stock or into an
existing market for our common stock, and in other ways not involving market
makers or established trading markets, including direct sales of the shares to
purchasers or sales through agents, and hedging and similar transactions as
described below. The selling stockholder, however, has agreed that, without
our consent, it will only sell the shares covered by this prospectus in the
manner provided below:
o sales of shares on the NYSE that do not exceed, on any single day,
10% of the average daily trading volume on the NYSE for our common
stock for the prior 30 trading days (excluding from such average all
shares sold in block trades as permitted below and certain other
sales to or approved by us); the selling stockholder will not sell
shares under this provision during at least two of each five
consecutive trading days;
o a block sale on the NYSE to a person that is not one of our
competitors in an amount greater than 10% of the average daily
trading volume on the NYSE for our common stock for the prior 30
trading days and at a purchase price per share no less than 90% of
the volume-weighted average trading price of our shares during the
last hour of trading on the preceding trading day, so long as the
selling stockholder makes no more than one of these block sales in
any 10-day trading period and provides us notice after the sale;
o sales pursuant to an offer or repurchase program by or for us or a
tender or exchange offer by, or business combination with, a third
party that has been approved by our board of directors;
o a sale that is not effected on any securities exchange or automated
quotation service, so long as the shares are not sold to one of our
competitors and the buyer agrees to be bound by these transfer
restrictions;
o a pledge to secure borrowed money to a qualifying financial
institution, so long as the financial institution agrees to be bound
by these transfer restrictions; or
26
o certain hedging transactions so long as hedged amounts are
consistent with the timing, volume and pricing limitations described
above and any resulting sale of our common stock, together with
other permitted sales of shares covered by this prospectus, does not
violate the timing, volume and pricing limitations described above.
Examples of hedging transactions include:
o transactions with a broker-dealer or affiliate of a broker-dealer or
other third party in connection with which that other party will
become a selling stockholder and engage in short sales of our common
stock under this prospectus, in which case the other party may use
shares of our common stock received from the selling stockholder to
close out any short positions;
o short sales of our common stock under this prospectus and using
shares of our common stock to close out any short position;
o options, forwards or other transactions that require the selling
stockholder to deliver, in a transaction exempt from registration
under the Securities Act, our common stock to a broker-dealer or an
affiliate of a broker-dealer or other third party who may then
become a selling stockholder and publicly resell or otherwise
transfer our common stock under this prospectus; or
o loans or pledges of our common stock to a broker-dealer or affiliate
of a broker-dealer or other third party who may then become a
selling stockholder and sell the loaned shares or, in an event of
default in the case of a pledge, become a selling stockholder and
sell the pledged shares, under this prospectus.
The selling stockholder has advised us that it has not entered into
any agreements, arrangements or understandings with any underwriter,
broker-dealer or agent regarding the sale of its shares of our common stock.
To the extent required, the shares to be sold, the name of the selling
stockholder, the respective purchase prices and public offering prices, the
names of any agent, dealer or underwriter, and any applicable commissions or
discounts with respect to a particular offer will be set forth in an
accompanying prospectus supplement filed with the SEC under Rule 424(b) under
the Securities Act or, if appropriate, a post-effective amendment to the
registration statement of which this prospectus is a part. The selling
stockholder may sell any or all of the shares of our common stock offered by
it pursuant to this prospectus. In addition, there can be no assurance that
the selling stockholder will not transfer, devise or gift the shares of common
stock by other means not described in this prospectus.
There can be no assurance that the selling stockholder will sell any
or all of the shares of common stock pursuant to this prospectus. In addition,
any securities covered by this prospectus that qualify for sale pursuant to
Rule 144 of the Securities Act may be sold under Rule 144 rather than pursuant
to this prospectus.
The aggregate proceeds to the selling stockholder from the sale of
the shares offered by it will be the purchase price of the shares less
discounts and commissions, if any. If the shares of common stock are sold
through underwriters or broker-dealers, the selling stockholder will be
responsible for underwriting discounts and commissions and/or agent's
commissions. We will not receive any of the proceeds from the sale of the
shares of common stock covered by this prospectus.
27
In order to comply with the securities laws of some states, if
applicable, the shares may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the
shares may not be sold unless they have been registered or qualified for sale
or any exemption from registration or qualification requirements is available
and is complied with.
The selling stockholder and any underwriters, broker-dealers or
agents that participate in the sale of the shares may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act. As a
result, any profits on the sale of the shares of common stock by the selling
stockholder and any discounts, commissions or concessions received by any such
broker-dealers or agents may be deemed to be underwriting discounts and
commissions under the Securities Act. If the selling stockholder is deemed to
be an "underwriter" within the meaning of Section 2(11) of the Securities Act,
it will be subject to the prospectus delivery requirements of the Securities
Act. The selling stockholder has acknowledged that it understands its
obligations to comply with the provisions of the Exchange Act and the rules
thereunder relating to stock manipulation, particularly Regulation M.
Subject to certain limitations, we have agreed to indemnify the
selling stockholder and its affiliates and their respective directors and
officers, each underwriter or broker-dealer or other selling agent acting on
behalf of the selling stockholder and each other person who controls the
selling stockholder or the underwriter, broker-dealer or selling agent against
certain liabilities, including specified liabilities under the Securities Act,
or to contribute with respect to payments which the selling stockholder may be
required to make in respect of such liabilities. Subject to certain
limitations, the selling stockholder has agreed to indemnify us for
liabilities arising under the Securities Act with respect to written
information furnished to us by it or to contribute with respect to payments
in connection with such liabilities.
We have agreed to pay all of the costs, fees and expenses incurred by
us incident to our registration of the resale of the selling stockholder's
common stock. We will not pay any legal fees or other expenses of the selling
stockholder or any commissions, fees and discounts of underwriters, brokers,
dealers and agents.
Our obligation to keep the registration statement to which this
prospectus relates effective is subject to specified, permitted exceptions. In
these cases, we may suspend offers and sales of the shares of common stock
pursuant to the registration statement to which this prospectus relates.
Legal Opinion
Simpson Thacher & Bartlett will pass upon the validity of the common
stock offered by this prospectus for us.
Experts
Ernst & Young LLP, independent auditors, audited the consolidated
restated financial statements, schedule and supplementary information of AOL
Time Warner and the consolidated financial statements and schedule of Time
Warner Entertainment Company, L.P. for the three years ended December 31,
2001, included in AOL Time Warner's Annual Report on Form 10-K for the fiscal
year ended December 31, 2001, as amended by Amendment No. 3 on Form 10-K/A, as
set forth in their report, which is incorporated by reference in this
prospectus and elsewhere in the registration statement. These consolidated
financial statements, schedules and supplementary
28
information are incorporated by reference in reliance on Ernst & Young LLP's
report, given on their authority as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited the
consolidated financial statements and schedule of Time Warner Telecom Inc. for
the three years ended December 31, 2001, included in the Annual Report on Form
10-K of Time Warner Telecom for the fiscal year ended December 31, 2001, which
is incorporated by reference in AOL Time Warner's Annual Report on Form 10-K
for the fiscal year ended December 31, 2001, as amended by amendments on Form
10-K/A, as set forth in their report, which is incorporated by reference in
this prospectus and elsewhere in the registration statement. These
consolidated financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
-------------------------
No person is authorized to give any information or to make any
representations other than those contained in this prospectus or any
accompanying prospectus supplement in connection with the offer made by this
prospectus or any prospectus supplement, and, if given or made, such other
information or representations must not be relied upon as having been
authorized by us, or by any underwriter, dealer or agent.
29
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following statement sets forth the estimated amounts of expenses,
other than underwriting discounts and commissions, to be borne by the
registrant in connection with the distribution of the offered securities. The
selling stockholder will not pay any of the following expenses.
Filing fee for Registration Statement...... $ 74,750
NYSE listing fee........................... $ 1,500*
Printing fees and expenses................. $ 5,000*
Accounting fees and expenses................. $ 20,000*
Legal fees and expenses...................... $100,000*
Miscellaneous................................ $ 3,750*
-------------
Total........................................ $205,000*
*Estimated and subject to future contingencies.
Item 15. Indemnification of Directors and Officers.
Section 145(a) of the General Corporation Law of the State of
Delaware ("Delaware Corporation Law") provides, in general, that a corporation
shall have the power to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation), because the
person is or was a director, officer, employee or agent of the corporation.
Such indemnity may be against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred,
including liabilities under the Securities Act, by the person in connection
with such action, suit or proceeding, if the person acted in good faith and in
a manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and if, with respect to any criminal action or
proceeding, the person did not have reasonable cause to believe the person's
conduct was unlawful.
Section 145(b) of the Delaware Corporation Law provides, in general,
that a corporation shall have the power to indemnify any person who was or is
a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor because the person is or was a director, officer,
employee or agent of the corporation, against any expenses (including
attorneys' fees) actually and reasonably incurred, including liabilities under
the Securities Act, by the person in connection with the defense or settlement
of such action or suit if the person acted in good faith and in a manner the
person reasonably believed to be in or not opposed to the best interests of
the corporation, except that no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the corporation (unless the Delaware Court of Chancery or the
court in which such proceeding was brought determines otherwise in accordance
with the Delaware Corporation Law).
Section 145(g) of the Delaware Corporation Law provides, in general,
that a corporation shall have the power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
the corporation against any liability asserted against the
person in any such capacity, or arising out of the person's status as such,
whether or not the corporation would have the power to indemnify the person
against such liability under the provisions of the Delaware Corporation Law.
Article VI of AOL Time Warner's by-laws requires indemnification to
the fullest extent permitted under Delaware law or other applicable law of any
person who is or was a director or officer of AOL Time Warner who is or was
involved or threatened to be made so involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative, by
reason of the fact that such person is or was serving as a director, officer,
employee or agent of AOL Time Warner or was serving at the request of AOL Time
Warner as a director, officer, employee or agent of any other enterprise;
provided, however, that the foregoing shall not apply to a director or officer
with respect to a proceeding that was commenced by such director or officer
unless under certain circumstances.
Article VI of AOL Time Warner's by-laws authorizes AOL Time Warner to
purchase and maintain insurance on behalf of its directors, officers,
employees and agents. AOL Time Warner's Directors' and Officers' Liability and
Reimbursement Insurance Policy is designed to reimburse the registrant for any
payments made pursuant to these indemnification provisions.
Section 102 of the Delaware Corporation Law authorizes a corporation
to limit or eliminate its directors' liability to the corporation or its
stockholders for monetary damages for breaches of fiduciary duties, other than
for (i) breaches of the duty of loyalty, (ii) acts or omissions not in good
faith or that involve intentional misconduct or knowing violations of law,
(iii) unlawful payments of dividends, stock purchases or redemptions, or (iv)
transactions from which a director derives an improper personal benefit. AOL
Time Warner's certificate of incorporation contains such a provision.
The foregoing statements are subject to the detailed provisions of
Sections 145 and 102 of the Delaware Corporation Law, AOL Time Warner's
certificate of incorporation and Article VI of the by-laws of AOL Time Warner.
Item 16. Exhibits
5 Opinion of Simpson Thacher & Bartlett regarding the legality of the
shares.*
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Ernst & Young LLP, Independent Auditors (with respect to Time
Warner Telecom Inc.).
23.3 Consent of Simpson Thacher & Bartlett (included in Exhibit 5).*
24.1 Powers of Attorney (included on the signature page of this Form S-3).
* -- To be filed by amendment
Item 17. Undertakings
A. Undertakings Pursuant to Rule 415
The undersigned registrant hereby undertakes:
(a) to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in
the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement; and
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in this
registration statement or any material change to such information in
this registration statement;
provided, however, that the undertakings set forth in clauses (a)(i) and
(a)(ii) do not apply if the information required to be included in a
post-effective amendment by those clauses is contained in periodic reports
filed with or furnished to the Commission by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement;
(b) that, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(c) to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. Undertaking Regarding Filings Incorporating Subsequent Exchange Act
Documents by Reference
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of any of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
C. Undertaking in Respect of Indemnification
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the provisions described in Item 15 above, or
otherwise, the registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
D. Undertaking in Respect of a Registration Statement Permitted by Rule 430A
Under the Securities Act of 1933
The undersigned registrant hereby undertakes that, (1) for purposes
of determining any liability under the Securities Act, the information omitted
from the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities
Act shall be deemed to be part of this registration statement as of the time
it was declared effective, and (2) for the purpose of determining any
liability under the Securities Act, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and has duly
caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on February 11, 2003.
AOL Time Warner Inc.
By:/s/ Wayne H. Pace
----------------------------------------
Name: Wayne H. Pace
Title: Executive Vice President and Chief
Financial Officer
Each of the undersigned directors and officers of AOL Time Warner Inc.
hereby severally constitutes and appoints Stephen M. Case, Richard D. Parsons,
Wayne H. Pace, Paul T. Cappuccio, Spencer B. Hays, James W. Barge, Pascal
Desroches, Brenda C. Karickhoff and Raymond G. Murphy, and each of them,
as attorneys-in-fact for the undersigned, in any and all capacities, with full
power of substitution, to sign any amendments to this registration statement
(including post-effective amendments), and to file the same with exhibits
thereto and other documents in connection therewith with the Securities and
Exchange Commission, granting unto said attorneys-in-fact, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that each said attorney-in-fact, or any of them, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed on February 11, 2003 by
the following persons in the capacities indicated.
Signatures Title
---------- -----
/s/ Stephen M. Case
-----------------------------------
(Stephen M. Case) Chairman of the Board
/s/ Richard D. Parsons
-----------------------------------
(Richard D. Parsons) Chief Executive Officer and Director
(principal executive officer)
/s/ Wayne H. Pace
-----------------------------------
(Wayne H. Pace) Executive Vice President and
Chief Financial Officer
(principal financial officer)
Signatures Title
---------- -----
/s/ James W. Barge
------------------------------------
(James W. Barge) Senior Vice President and Controller
(controller or principal
accounting officer)
/s/ Daniel F. Akerson
------------------------------------
(Daniel F. Akerson) Director
/s/ James L. Barksdale
------------------------------------
(James L. Barksdale) Director
/s/ Stephen F. Bollenbach
------------------------------------
(Stephen F. Bollenbach) Director
/s/ Frank J. Caufield
------------------------------------
(Frank J. Caufield) Director
/s/ Miles R. Gilburne
------------------------------------
(Miles R. Gilburne) Director
/s/ Carla A. Hills
------------------------------------
(Carla A. Hills) Director
/s/ Reuben Mark
------------------------------------
(Reuben Mark) Director
/s/ Michael A. Miles
------------------------------------
(Michael A. Miles) Director
/s/ Kenneth J. Novack
------------------------------------
(Kenneth J. Novack) Director
/s/ Franklin D. Raines
------------------------------------
(Franklin D. Raines) Director
------------------------------------
(R. E. Turner) Director
Signatures Title
---------- -----
/s/ Francis T. Vincent, Jr.
-------------------------------------
(Francis T. Vincent, Jr.) Director
EXHIBITS
5 Opinion of Simpson Thacher & Bartlett regarding the legality of the
shares.*
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Ernst & Young LLP, Independent Auditors (with respect to
Time Warner Telecom Inc.).
23.3 Consent of Simpson Thacher & Bartlett (included in Exhibit 5).*
24.1 Powers of Attorney (included on the signature page of this Form S-3).
* -- To be filed by amendment