SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 24, 2002
AOL TIME WARNER INC.
(Exact name of registrant as specified in its charter)
DELAWARE 1-15062 13-4099534
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
75 ROCKEFELLER PLAZA, NEW YORK, NEW YORK 10019
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(Address of principal executive offices) (zip code)
212 484-8000
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(Registrant's telephone number, including area code)
NOT APPLICABLE
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(Former Name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS.
On June 24, 2002 Time Warner Entertainment Company, L.P., a
Delaware limited partnership ("TWE"), Paragon Communications ("Paragon"), a
Colorado general partnership and a wholly owned subsidiary of AOL Time Warner
Inc. ("AOLTW"), and Advance/Newhouse Partnership, a New York general partnership
("Advance/Newhouse"), entered into a binding letter agreement (the "Letter
Agreement") pursuant to which the parties agreed to a restructuring of Time
Warner Entertainment - Advance/Newhouse Partnership, a New York general
partnership ("TWEAN"), which currently owns cable television systems serving
approximately 7 million subscribers. The Letter Agreement provides that cable
television systems serving approximately 2.1 million subscribers primarily
located in the State of Florida and certain related and other assets and the
liabilities associated with them (the "Designated Assets") will be contributed
(the "Contribution") to a newly formed wholly-owned subsidiary (the
"Subsidiary") of TWEAN, and Advance/Newhouse's entire partnership interest in
TWEAN will be converted into a partnership interest tracking the economic
performance of the Subsidiary. TWE's partnership interest in TWEAN will
accordingly track the economic performance of the assets of TWEAN other than the
Designated Assets. In the restructuring, Advance/Newhouse will give up its
indirect equity interest in the "Road Runner" high-speed cable modem Internet
service business.
The Letter Agreement provides that Advance/Newhouse will enter
into a management agreement with the Subsidiary that will give Advance/Newhouse
authority for overall supervision of the operations, policies and decisions of
the Subsidiary, subject to certain exceptions, including incurring indebtedness
of the Subsidiary in excess of certain agreed upon thresholds. The Letter
Agreement contemplates that Time Warner Cable will continue to manage
programming and the purchasing of hardware and software for the Subsidiary and
that TWE will provide services to the Subsidiary, at the election of
Advance/Newhouse, including engineering, marketing and consumer research
services. As part of the transactions, the systems Advance/Newhouse will manage
will continue to carry the AOL Broadband high speed service through at least the
end of 2003. Advance/Newhouse has also agreed to continue to carry the "Road
Runner" high-speed service on those systems but may terminate that arrangement
on six months' notice.
As a result of the transactions contemplated by the Letter
Agreement, the financial results of the Designated Assets will no longer be
consolidated with the financial results of AOLTW or TWE, and the financial
results of the "Road Runner" high-speed service business will become
consolidated with the financial results of each of AOLTW and TWE.
The Letter Agreement provides that either TWE or
Advance/Newhouse will be permitted to cause the distribution of the Designated
Assets to Advance/Newhouse in complete redemption of its entire partnership
interest in TWEAN (the "Distribution").
As part of the transactions, Advance/Newhouse's "put rights"
for its interests in TWEAN will be eliminated. TWE will continue to have rights
of first offer in respect of the Designated Assets, including after the
Distribution,
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and Advance/Newhouse will no longer have rights of first offer in respect of
TWEAN's cable assets. With some exceptions, until the Distribution,
opportunities to acquire cable systems (other than multiple-system operators) in
the Subsidiary's Designated Market Area ("DMA") will be allocated to the
Subsidiary, and those in the DMA of Time Warner Cable will be allocated to Time
Warner Cable.
Consummation of the transactions are subject to various
customary conditions, including: (i) the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, (ii) the
receipt of certain local cable television franchise consents and (iii) the
receipt of certain approvals from the Federal Communications Commission.
On June 24, 2002, Time Warner Cable and Advance/Newhouse
issued a joint press release announcing the execution of the Letter Agreement, a
copy of which is filed as Exhibit 99.1 hereto and which is incorporated herein
by reference.
This report includes certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on the current expectations or beliefs of AOLTW's and
TWE's management and are subject to uncertainty and changes in circumstances.
Actual results may vary materially from those expressed or implied by the
statements herein due to changes in economic, business, competitive,
technological and/or regulatory factors, and factors affecting the integration
of the businesses of AOL Time Warner Inc. More detailed information about these
factors may be found in filings by AOLTW and TWE with the Securities and
Exchange Commission, including their most recent annual reports on Form 10-K and
quarterly reports on Form 10-Q. AOLTW and TWE are under no obligation to, and
expressly disclaim any such obligation to, update or alter their forward-looking
statements, whether as a result of new information, future events, or otherwise.
ITEM 7. EXHIBITS.
EXHIBIT DESCRIPTION
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99.1 Joint Press Release, dated June 24, 2002, issued by Time
Warner Cable and Advance/Newhouse.
99.2 Letter Agreement, dated June 24, 2002, among TWE, Paragon,
Advance/Newhouse and AOLTW.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AOL TIME WARNER INC.
By: /s/ Wayne H. Pace
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Name: Wayne H. Pace
Title: Executive Vice President and
Chief Financial Officer
Date: June 24, 2002
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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99.1 Joint Press Release, dated June 24, 2002, issued by Time
Warner Cable and Advance/Newhouse.
99.2 Letter Agreement, dated June 24, 2002, among TWE, Paragon,
Advance/Newhouse and AOLTW.