Time Warner reports full year earnings, now without Time Inc.
Revenue rose 3 percent for the full year, but fell slightly in the final quarter of the year, with operating income down 10 percent to $1.6 billion due to restructuring, severance charges
NEW YORK, NY – February 11, 2015 — Time Warner Inc. today reported financial results for its fourth quarter and full year ended December 31, 2014.
Chairman and Chief Executive Officer Jeff Bewkes said:
“We had another very successful year in 2014, with solid revenue growth and robust 18% Adjusted EPS growth – our sixth consecutive year of at least high teens Adjusted EPS growth. Our financial performance reflects the strength of our position as the world’s leading video content company. For the year, three of Turner’s networks – TBS, TNT and Adult Swim – ranked among ad-supported cable’s top 10 networks in primetime among adults 18-49. TNT was home to 6 of the top 15 original series on ad-supported cable in 2014, more than any other network, including the three most watched new series, The Last Ship, The Librarians, and Murder in the First. CNN strengthened its programming and in 2014 had an average total day monthly reach of almost 77 million total viewers, the highest of any cable news network. HBO also had another outstanding year, airing its most-watched original series ever – Game of Thrones – and its most-watched freshman series, True Detective. HBO’s strong performance was reflected in its 19 Primetime Emmy Awards – the most of any network for the thirteenth consecutive year – and in its highest growth in domestic subscribers in over three decades. Together Warner Bros. and HBO received 13 Academy Award nominations, including Best Picture for American Sniper, which set box office records last month. In television production, Warner Bros. is airing more than 60 series for the 2014-2015 television season, including the most primetime series on broadcast networks of any studio for the 11th time in the past 12 seasons. Warner Bros. also successfully mined its rich DC library with Gotham and The Flash emerging as two of the season’s bona fide freshman hits.”
Mr. Bewkes added: “Last year we also returned $6.6 billion to shareholders through share repurchases and dividends. We’re committed to building on our strong record of providing direct returns to shareholders, evidenced by the 10% increase in our dividend approved by our Board, which is the sixth straight year we’ve raised the dividend by double-digits.”
Full-Year Company Results (see note below)
Full-year revenues increased 3% from 2013 to $27.4 billion due to growth across all divisions. Adjusted Operating Income declined 6% from 2013 to $5.8 billion primarily due to charges at Turner related to its decision to no longer air certain programming and restructuring and severance charges across all segments. Operating Income decreased 5% from 2013 to $6.0 billion.
The Company posted 2014 Adjusted Diluted Income per Common Share from Continuing Operations (“Adjusted EPS”) of $4.15, up 18% from $3.51 in the prior year. Adjusted EPS included a net tax benefit of $639 million primarily related to the reversal of certain tax reserves as a result of an audit settlement. Excluding the tax matters, programming charges at Turner and restructuring and severance charges in the third and fourth quarters, Adjusted EPS would have been $4.05. Diluted Income per Common Share from Continuing Operations was $4.41 in 2014 compared to $3.56 in 2013.
In 2014, Cash Provided by Operations from Continuing Operations reached $3.7 billion and Free Cash Flow totaled $3.5 billion. As of December 31, 2014, Net Debt was $19.9 billion, up from $18.3 billion at the end of 2013, due to share repurchases, dividends and investments and acquisitions, partially offset by the generation of Free Cash Flow, cash received from Time Inc. in connection with the spin-off and proceeds from the sale of the Company’s space in Time Warner Center.
Fourth-Quarter Company Results
Revenues declined 1% to $7.5 billion in the fourth quarter of 2014 due to declines at Warner Bros., partially offset by increases at Home Box Office and Turner. Adjusted Operating Income decreased 10% to $1.6 billion primarily due to restructuring and severance charges across all segments and charges at Turner related to its decision to no longer air certain programming. Operating Income decreased 20% to $1.4 billion. This included a $173 million foreign currency charge related to the remeasurement of net monetary assets denominated in Venezuelan currency resulting from a change in the foreign currency exchange rate used by the Company from the official rate to the SICAD 2 exchange rate.
In the fourth quarter, the Company posted Adjusted EPS of $0.98 versus $1.07 for the year-ago quarter. Excluding the programming charges at Turner and restructuring and severance charges, Adjusted EPS would have been $1.14. Diluted Income per Common Share from Continuing Operations was $0.84 for the three months ended December 31, 2014 compared to $1.01 for last year’s fourth quarter.
Refer to “Use of Non-GAAP Financial Measures” in this release for a discussion of the non-GAAP financial measures used in this release and the reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures.
Stock Repurchase Program Update
From January 1, 2014 through February 6, 2015, the Company repurchased approximately 80 million shares of common stock for approximately $5.8 billion. These amounts reflect the purchase of approximately 12 million shares of common stock for approximately $948 million since the amounts reported in the Company’s third quarter earnings release issued on November 5, 2014. At February 6, 2015, approximately $4.2 billion remained available for repurchases under the Company’s stock repurchase program.
Regular Quarterly Dividend
On February 10, 2015, the Company’s Board of Directors increased the Company’s regular quarterly dividend by 10% to $0.35 per share.
1 On June 6, 2014, the Company completed the legal and structural separation of Time Inc. from the Company. Accordingly, the Company has recast its financial information to present the financial condition and results of operations of its former Time Inc. segment as discontinued operations for all periods presented.