[February 12, 2015] |
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Time Inc. Reports Fourth Quarter and Full Year 2014 Results
Time Inc. (NYSE:TIME) reported financial results for its fourth quarter
and full year ended December 31, 2014.
Time Inc.'s Chairman and CEO, Joe Ripp said, "Over the past year, we've
been fundamentally re-engineering the business, and re-positioning our
company for its return to growth. We have made significant progress
toward the transformation of the cost structure, and successfully
protected our margins and cash flows. We accelerated the growth and
monetization of our digital audiences. We also became a stand-alone
public company for the first time since January 1990. As we look
forward, we expect 2015 to be a pivotal year as we launch a portfolio of
growth initiatives. One of the unique sources of upside for Time Inc. is
the ability to extend our powerful brands into new revenue streams. We
are very excited by the opportunities provided by our brands."
Results Summary
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In millions (except per share amounts)
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Three Months Ended December 31,
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Year Ended December 31,
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2014
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2013
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2014
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2013
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GAAP Measures
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Revenues
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$
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895
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$
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966
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$
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3,281
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$
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3,354
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Operating income
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215
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100
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|
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180
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330
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Net income
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145
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66
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87
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201
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Diluted EPS
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1.32
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0.61
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0.80
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1.85
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Cash provided by operations
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111
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171
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281
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418
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Non-GAAP Measures
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Adjusted OIBDA
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203
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204
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524
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587
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Adjusted Net Income
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80
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110
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174
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286
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Adjusted Diluted EPS
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0.73
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1.02
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1.58
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2.64
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Free Cash Flow
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100
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156
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|
|
240
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384
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The company's Adjusted OIBDA, Adjusted Net Income, Adjusted Diluted EPS
and Free Cash Flow are non-GAAP financial measures. See "Use of Non-GAAP
Financial Measures" below and the reconciliation of these non-GAAP
financial measures to the most directly comparable GAAP measures in
Schedules I through IV attached hereto.
FOURTH QUARTER AND FULL YEAR RESULTS
Our results of operations for the fourth quarter and full year ended
December 31, 2014 as compared to the prior year were impacted by our
acquisition of Cozi Inc. and termination of the CNNMoney.com partnership
in the second quarter of 2014 and our sale of our Mexico-based
operations, Grupo Editorial Expansión ("GEX"), during the third quarter
of 2014. Our results for the full year ended December 31, 2014 were also
impacted by the acquisition of Time Inc. Affluent Media Group ("AMG")
(formerly known as American Express Publishing Corporation) in the
fourth quarter of 2013. We refer to the AMG acquisition, the Cozi Inc.
acquisition, the termination of the CNNMoney.com partnership and the
sale of GEX collectively as the "Corporate Transactions". The below
discussion includes analysis of our results of operations that
incorporate as well as exclude the impact of the Corporate Transactions.
Where we have excluded the impact of the Corporate Transactions, the
comparisons exclude the results of each business acquired or disposed
except for fiscal quarters in which a full quarter of results are
included in Time Inc.'s consolidated results for both 2014 and 2013.
Revenues for the fourth quarter of 2014 decreased $71
million or 7% versus the prior year to $895 million. Excluding the
impact of the Corporate Transactions, Revenues would have declined 4%.
For the full year 2014, Revenues decreased $73 million or 2% versus the
prior year to $3.28 billion. Excluding the impact of the Corporate
Transactions, Revenues would have declined 5%.
Advertising Revenues declined $44 million or 8% in the fourth
quarter of 2014 from the prior year to $496 million. Excluding the
impact of the Corporate Transactions, Advertising revenues would have
declined 2%.
For the full year 2014, Advertising revenues declined $32 million or 2%
from the prior year to $1.78 billion. Excluding the impact of the
Corporate Transactions, Advertising revenues would have declined 4%.
Print and Other Advertising Revenues decreased $46 million or 10%
in the fourth quarter of 2014 from the prior year to $409 million.
Excluding the impact of the Corporate Transactions, Print and other
advertising revenues would have declined 8% driven primarily by fewer
advertising pages sold. Among our core domestic advertising categories,
areas of relative strength were pharmaceutical and financial with
relative weakness in food/beverage, automotive and home.
For the full year 2014, Print and other advertising revenues decreased
$50 million or 3% from the prior year to $1.48 billion. Excluding the
impact of the Corporate Transactions, Print and other advertising
revenues would have declined 8% driven primarily by fewer advertising
pages sold.
Digital Advertising Revenues increased $2 million or 2% in the
fourth quarter from the prior year to $87 million. Excluding the impact
of the Corporate Transactions, Digital advertising revenues would have
increased 34% reflecting strong growth in mobile, video, and
programmatic. Time Inc. served 97.8 million multiplatform unique
visitors during December 2014 in the U.S., up 32% since December 2013
(excluding CNNMoney.com).
For the full year 2014, Digital advertising revenues increased $18
million or 6% from the prior year to $298 million. Excluding the impact
of the Corporate Transactions, Digital advertising revenues would have
increased 17%.
Circulation Revenues, which are comprised of subscription,
newsstand and other circulation revenues, declined $25 million or 8% in
the fourth quarter of 2014 from the prior year to $288 million.
Excluding the impact of the Corporate Transactions, Circulation revenues
would have declined 8%.
For the full year 2014, Circulation revenues declined $34 million or 3%
from the prior year to $1.10 billion. Excluding the impact of the
Corporate Transactions, Circulation revenues would have declined 6%.
Subscription Revenues declined $14 million or 7% in the fourth
quarter from the prior year to $191 million. Excluding the impact of the
Corporate Transactions, Subscription revenues would have declined 6%.
These declines were principally driven by lower demand for print
subscriptions.
For the full year 2014, Subscription revenues declined $5 million or 1%
from the prior year to $716 million. Excluding the impact of the
Corporate Transactions, Subscription revenues would have declined 5%,
reflecting lower demand for print subscriptions.
Newsstand Revenues declined $12 million or 12% in the fourth
quarter from the prior year to $89 million. Excluding the impact of the
Corporate Transactions, Newsstand revenues would have declined 12%. The
decline in Newsstand revenues was primarily due to weaker demand, and
fewer special issues at People which impacted revenues by $2 million.
For the full year 2014, Newsstand revenues declined $33 million or 8%
from the prior year to $356 million. The impact of the Wholesaler
Transition(1) adversely impacted Newsstand revenues from
magazines by $14 million. The March 2014 price increase of People
magazine provided a benefit of approximately $10 million. And, the
weaker U.S. dollar relative to the British pound provided a benefit of
$12 million.
Other Revenues, which includes marketing and support services
provided to third parties, events, licensing and branded book
publishing, decreased $2 million or 2% in the fourth quarter of 2014
from the prior year to $111 million. Excluding the impact of the
Corporate Transactions, Other revenues would have remained flat.
For the full year 2014, Other revenues decreased $7 million or 2% from
the prior year to $411 million. Excluding the impact of the Corporate
Transactions, Other revenues would have decreased 8% primarily as a
result of the impact of the Wholesaler Transition of approximately $8
million on our bookazine business and the absence of the Fortune Global
Forum of approximately $11 million which was held in 2013 and occurs
every other year.
Revenues Summary
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In millions
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Three Months Ended December 31,
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Year Ended December 31,
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2014
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2013
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2014
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2013
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Print and other advertising
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$
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409
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$
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455
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$
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1,477
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$
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1,527
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Digital advertising
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87
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85
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298
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280
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Advertising revenues
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496
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540
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1,775
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1,807
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Subscription
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191
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205
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716
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721
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Newsstand
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89
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101
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356
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389
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Other circulation
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8
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7
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23
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19
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Circulation revenues
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288
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313
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1,095
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1,129
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Other revenues
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111
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113
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411
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418
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Revenues
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$
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895
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$
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966
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$
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3,281
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$
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3,354
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Costs of Revenues declined $56 million or 15% to $325 million in
the fourth quarter of 2014 versus the prior year. Excluding the impact
of the Corporate Transactions and a reclassification of $20 million from
Selling, general and administrative expenses to Costs of revenues in the
fourth quarter of 2013, Costs of revenues would have declined 7%.
Production costs decreased $48 million or 20% from the prior year to
$196 million. Excluding the impact of the Corporate Transactions and the
reclassification of $20 million from Selling, general and administrative
expenses to Production Costs in the fourth quarter of 2013, Production
costs would have declined 12% as lower volume of pages produced and
favorable paper and printing prices were partially offset by a postal
rate increase. Editorial costs decreased $14 million or 12% from the
prior year to $103 million. Excluding the impact of the Corporate
Transactions, Editorial costs would have decreased 6% due to editorial
cost savings from previously announced cost savings initiatives,
partially offset by digital investments. Other costs of revenues rose $6
million or 30% from the prior year to $26 million primarily driven by
digital investments.
For the full year 2014, Costs of revenues declined $41 million or 3%
versus the prior year to $1.28 billion. Excluding the impact of the
Corporate Transactions, Costs of revenues would have declined 5%.
Production costs decreased $37 million or 5% from the prior year to $742
million. Excluding the impact of the Corporate Transactions, Production
costs would have declined 8% as lower volume of pages produced and
favorable paper and printing prices were partially offset by a postal
rate increase. Editorial costs declined $8 million or 2% from the prior
year to $435 million. Excluding the impact of the Corporate
Transactions, Editorial costs would have decreased 3% due to editorial
cost savings from previously announced cost savings initiatives. Other
costs of revenues rose $4 million or 4% from the prior year to $104
million primarily due to digital investments.
__________________________
(1)
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On May 27, 2014, we announced the discontinuation of our
relationship with our second-largest wholesaler (the "Wholesaler
Transition"). As a result, our full year December 31, 2014 results
of operations reflect lower Newsstand revenues of approximately $14
million, lower Other revenues of approximately $8 million and higher
bad debt expense (included within Selling, general and
administrative expenses) of approximately $8 million for a total
adverse impact to Operating income of approximately $30 million.
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Selling, General and Administrative Expenses ("SG&A")
decreased $13 million or 3% in the fourth quarter of 2014 from the
prior year to $368 million. Excluding the impact of the Corporate
Transactions and a reclassification of $20 million from SG&A to Cost of
revenues in the fourth quarter of 2013, SG&A would have declined 5%.
Benefits realized from previously announced cost savings initiatives
were partially offset by an increase of $5 million in stock-based
compensation costs due to the absence of equity grants to most of our
employees in the prior year and by $5 million in public company costs.
For the full year 2014, SG&A increased $38 million or 3% from
the prior year to $1.48 billion. Excluding the impact of the Corporate
Transactions, SG&A would have decreased 2%. The decrease was primarily
driven by benefits realized from previously announced cost savings
initiatives, partially offset by an increase of $13 million in
stock-based compensation costs due to the absence of equity grants to
most of our employees in the prior year and by $20 million in public
company costs. The Wholesaler Transition adversely impacted SG&A
expenses by approximately $8 million.
Gain on Operating Assets was $85 million for the three months
ended December 31, 2014 and $87 million for the year ended December 31,
2014 primarily as a result of the sales of our real estate properties in
Birmingham, Alabama and Menlo Park, California.
Restructuring and Severance Costs were $28 million for the
quarter ended December 31, 2014, primarily from a new restructuring
initiative aimed at headcount reductions and other centralization
efforts. Restructuring and severance costs were $192 million for the
year ended December 31, 2014.
Operating Income of $215 million for the quarter ended
December 31, 2014 represented an increase of $115 million from the prior
year. Operating income in the fourth quarter of 2014 benefited from the
sale of certain real estate holdings while Operating income in the
fourth quarter of 2013 was adversely impacted by asset impairments.
Operating income for the year ended December 31, 2014 decreased to $180
million primarily due to lower revenues.
As a result of the planned relocation of our corporate headquarters, we
have accelerated the depreciation on our current tenant improvements at
1271 Avenue of the Americas. The accelerated depreciation charge
impacted the three months ended December 31, 2014 by $6 million and the
year ended December 31, 2014 by $16 million. We incurred amortization
expense of $20 million and $12 million for the three months ended
December 31, 2014 and 2013, respectively, and $78 million and $42
million for the years ended December 31, 2014 and 2013, respectively.
The increase in amortization expense was primarily related to the
classification of certain previously defined indefinite-lived
intangibles to finite lives of 17 years effective January 1, 2014.
Adjusted OIBDA of $203 million for the quarter ended December 31,
2014 represented a decrease of $1 million from the prior year. Adjusted
OIBDA for the year ended December 31, 2014 was $524 million,
representing a decrease of $63 million from the prior year. The decrease
was primarily due to lower Operating income. Adjusted OIBDA for the year
ended December 31, 2014 excludes $7 million for certain
transaction-related expenses incurred in the first through third
quarters of the year.
Net Income was $145 million in the quarter ended December 31,
2014 compared to Net income of $66 million in the prior year. Adjusted
net income was $80 million in the fourth quarter ended December 31, 2014
compared to $110 million in the prior year. Adjusted diluted EPS was
$0.73 versus $1.02 in the prior year.
For the full year 2014, Net income was $87 million compared to $201
million for the prior year. Adjusted net income was $174 million for
2014 compared to $286 million for the prior year. Adjusted diluted EPS
was $1.58 for 2014 versus $2.64 for the prior year.
Free Cash Flow was $100 million for the quarter ended
December 31, 2014 versus the prior year of $156 million. For the year
ended December 31, 2014, Free Cash Flow was $240 million.
On December 15, 2014 we paid a dividend of $21 million or $0.19 per
share to stockholders of record as of the close of business on November
28, 2014. On February 12, 2015, our Board of Directors declared a
dividend of $0.19 per share to stockholders of record as of the close of
business on February 27, 2015, payable on March 13, 2015.
OUTLOOK
Our outlook for 2015 is as follows:
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$ in millions
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Full Year 2015
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2014 Actual
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Outlook Range
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Revenues
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(2.2%)
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(3%)
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to
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(6%)
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Revenues - excluding Corporate Transactions
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(5.3%)
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(1.5%)
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to
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(4.5%)
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Impact of 2014 Wholesaler Transition
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($22)
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70 bps
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Forecasted impact of stronger USD(1)
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-
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(120) bps
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Adjusted OIBDA
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$524
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$440
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to
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$490
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Impact of 2014 Wholesaler Transition
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($30)
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-
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One-time real estate expense
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-
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($45)
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Investment spending, net
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-
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($45)
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Capital expenditures
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$41
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$210
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to
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$220
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Real estate related
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$9
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$140
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to
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$150
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Core & growth
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$32
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$70
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(1) Assumes USD to GBP exchange rate of 1.50.
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The company's Adjusted OIBDA is a non-GAAP financial measure. See "Use
of Non-GAAP Financial Measures" below and the reconciliation of this
non-GAAP financial measure to the most directly comparable GAAP measure
in Schedule V attached hereto.
CONFERENCE CALL WEBCAST
The company's conference call can be heard live at 8:30 am EST on
Thursday, February 12, 2015.
To access a live audio webcast of the conference call, visit the Events
and Presentations section of invest.timeinc.com.
The earnings press release and management presentation will be available
on our website at invest.timeinc.com.
USE OF NON-GAAP FINANCIAL MEASURES
Time Inc. utilizes Adjusted Operating Income Before Depreciation and
Amortization ("Adjusted OIBDA"), among other measures, to evaluate the
performance of its business. Adjusted OIBDA is defined as Operating
Income less Depreciation and Amortization and adjusted for impairments
of Goodwill, intangibles, fixed asset and investments; Restructuring and
severance costs; gains and losses on operating assets; pension plan
settlements and/or curtailments; and Other costs related to mergers,
acquisitions, investments and dispositions.
Adjusted Net Income is net income adjusted for impairments of Goodwill,
intangibles, fixed assets and investments; Restructuring and severance
costs; gains and losses on operating assets; pension plan settlements
and/or curtailments; Other costs related to mergers, acquisitions,
investments and dispositions; as well as the impact of income taxes on
the above items. Similarly, Adjusted Diluted EPS is diluted net income
per common share from continuing operations excluding the above items.
Free Cash Flow is defined as cash provided by (used in) operations less
capital expenditures. The company uses Free Cash Flow to evaluate its
business and this measure is considered an important indicator of the
company's liquidity, including its ability to reduce net debt, make
strategic investments, and pay dividends to common stockholders.
We believe that the presentation of Adjusted OIBDA, Adjusted Net Income,
Adjusted Diluted EPS and Free Cash Flow helps investors analyze
underlying trends in our business, evaluate the performance of our
business both on an absolute basis and relative to our peers and the
broader market, provides useful information to both management and
investors by excluding certain items that may not be indicative of our
core operating results and operational strength of our business and
helps investors evaluate our ability to service our debt.
Some limitations of Adjusted OIBDA, Adjusted Net Income, Adjusted
Diluted EPS and Free Cash Flow are that they do not reflect certain
charges that affect the operating results of the company's business and
they involve judgment as to whether items affect fundamental operating
performance.
A general limitation of these measures is that they are not prepared in
accordance with U.S. generally accepted accounting principles ("GAAP")
and may not be comparable to similarly titled measures of other
companies due to differences in methods of calculation and excluded
items. Adjusted OIBDA, Adjusted Net Income, Adjusted Diluted EPS and
Free Cash Flow should be considered in addition to, not as a substitute
for, the company's Operating income (loss), Net income (loss), diluted
net income per common share from continuing operations and various cash
flow measures (e.g., cash provided by (used in) operations), as well as
other measures of financial performance and liquidity reported in
accordance with U.S. GAAP.
Certain prior year amounts have been reclassified to conform to the
current year presentation.
The pro forma share information presented herein for the three months
and year ended December 31, 2013 gives effect to the issuance of 108.94
million common shares of the company in connection with the spin-off of
the company from Time Warner as if it had occurred at the beginning of
each period presented prior to the Spin-Off on June 6, 2014.
ABOUT TIME INC.
Time Inc. (NYSE:TIME) is one of the world's leading media companies,
with a monthly global print audience of over 120 million and worldwide
digital properties that attract more than 120 million visitors each
month, including over 40 websites. Our influential brands include
People, Sports Illustrated, InStyle, Time, Real Simple, Southern Living,
Entertainment Weekly, Travel + Leisure, Cooking Light, Fortune and Food
& Wine, as well as more than 50 diverse titles in the United Kingdom
such as Decanter and Horse & Hound. Time Inc. is home to celebrated
events and franchises including the Fortune 500, Time 100, People's
Sexiest Man Alive, Sports Illustrated's Sportsman of the Year, the Food
& Wine Classic in Aspen, the Essence Festival and the biennial Fortune
Global Forum. Hundreds of thousands of people attended our live media
events in 2014. We also provide content marketing, targeted local print
and digital advertising programs, branded book publishing and marketing
and support services, including subscription sales services for
magazines and other products, retail distribution and marketing services
and customer service and fulfillment services, for ourselves and
third-party clients, including other magazine publishers.
CAUTION CONCERNING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements
are based on management's current expectations or beliefs, 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,
strategic and/or regulatory factors and other factors affecting the
operation of Time Inc.'s businesses. More detailed information about
these factors may be found in filings by Time Inc. with the Securities
and Exchange Commission, including its Registration Statement on Form 10
as amended on May 8, 2014 and its subsequently filed Quarterly Reports
on Form 10-Q and Current Reports on Form 8-K. Time Inc. is under no
obligation to, and expressly disclaims any such obligation to, update or
alter its forward-looking statements, whether as a result of new
information, future events, or otherwise.
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TIME INC.
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CONSOLIDATED AND COMBINED BALANCE SHEETS
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(Unaudited; in millions, except share amounts)
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December 31,
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December 31,
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2014
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2013
|
ASSETS
|
|
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|
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Current assets
|
|
|
|
|
|
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Cash and cash equivalents
|
|
$
|
519
|
|
|
$
|
46
|
|
Receivables, less allowances of $255 and $281
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|
488
|
|
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489
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Inventories, net of reserves
|
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48
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|
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56
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|
Deferred tax assets
|
|
84
|
|
|
75
|
|
Prepaid expenses and other current assets
|
|
117
|
|
|
97
|
|
Total current assets
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1,256
|
|
|
763
|
|
|
|
|
|
|
|
|
Property, plant and equipment, net
|
|
369
|
|
|
534
|
|
Intangible assets subject to amortization, net
|
|
1,085
|
|
|
582
|
|
Intangible assets not subject to amortization
|
|
-
|
|
|
586
|
|
Goodwill
|
|
3,117
|
|
|
3,162
|
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Other assets
|
|
73
|
|
|
47
|
|
Total assets
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$
|
5,900
|
|
|
$
|
5,674
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
621
|
|
|
$
|
534
|
|
Deferred revenue
|
|
458
|
|
|
449
|
|
Current portion of long-term debt
|
|
7
|
|
|
-
|
|
Total current liabilities
|
|
1,086
|
|
|
983
|
|
|
|
|
|
|
|
|
Long-term debt
|
|
1,368
|
|
|
38
|
|
Deferred tax liabilities
|
|
313
|
|
|
313
|
|
Deferred revenue
|
|
94
|
|
|
135
|
|
Other noncurrent liabilities
|
|
168
|
|
|
163
|
|
|
|
|
|
|
|
|
Stockholders' Equity
|
|
|
|
|
|
|
Common stock, $0.01 par value, 400 million shares authorized; 109.05
million
|
|
|
|
|
|
|
shares issued and outstanding at December 31, 2014
|
|
1
|
|
|
-
|
|
Preferred stock, $0.01 par value, 40 million shares authorized; none
issued
|
|
-
|
|
|
-
|
|
Additional paid-in-capital
|
|
12,665
|
|
|
-
|
|
Time Warner investment
|
|
-
|
|
|
4,158
|
|
Accumulated deficit
|
|
(9,626
|
)
|
|
-
|
|
Accumulated other comprehensive loss, net
|
|
(169
|
)
|
|
(116
|
)
|
Total stockholders' equity
|
|
2,871
|
|
|
4,042
|
|
Total liabilities and stockholders' equity
|
|
$
|
5,900
|
|
|
$
|
5,674
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIME INC.
|
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS
|
(Unaudited; in millions, except per share amounts)
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
|
Year Ended December 31,
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
|
2013
|
Revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advertising:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Print and other advertising
|
|
$
|
409
|
|
|
$
|
455
|
|
|
|
$
|
|
1,477
|
|
|
|
$
|
|
1,527
|
|
Digital advertising
|
|
87
|
|
|
85
|
|
|
|
298
|
|
|
|
280
|
|
Total Advertising
|
|
496
|
|
|
540
|
|
|
|
1,775
|
|
|
|
1,807
|
|
Circulation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subscription
|
|
191
|
|
|
205
|
|
|
|
716
|
|
|
|
721
|
|
Newsstand
|
|
89
|
|
|
101
|
|
|
|
356
|
|
|
|
389
|
|
Other circulation
|
|
8
|
|
|
7
|
|
|
|
23
|
|
|
|
19
|
|
Total Circulation
|
|
288
|
|
|
313
|
|
|
|
1,095
|
|
|
|
1,129
|
|
Other
|
|
111
|
|
|
113
|
|
|
|
411
|
|
|
|
418
|
|
Total Revenues
|
|
895
|
|
|
966
|
|
|
|
3,281
|
|
|
|
3,354
|
|
Costs of revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production costs
|
|
196
|
|
|
244
|
|
|
|
742
|
|
|
|
779
|
|
Editorial costs
|
|
103
|
|
|
117
|
|
|
|
435
|
|
|
|
443
|
|
Other
|
|
26
|
|
|
20
|
|
|
|
104
|
|
|
|
100
|
|
Total costs of revenues
|
|
325
|
|
|
381
|
|
|
|
1,281
|
|
|
|
1,322
|
|
Selling, general and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
expenses
|
|
368
|
|
|
381
|
|
|
|
1,484
|
|
|
|
1,446
|
|
Amortization of intangible assets
|
|
20
|
|
|
12
|
|
|
|
78
|
|
|
|
42
|
|
Restructuring and severance costs
|
|
28
|
|
|
5
|
|
|
|
192
|
|
|
|
63
|
|
Asset impairments
|
|
-
|
|
|
79
|
|
|
|
26
|
|
|
|
79
|
|
Goodwill impairment
|
|
-
|
|
|
-
|
|
|
|
26
|
|
|
|
-
|
|
Depreciation
|
|
24
|
|
|
21
|
|
|
|
101
|
|
|
|
85
|
|
(Gain) loss on operating assets
|
|
(85
|
)
|
|
(13
|
)
|
|
|
(87
|
)
|
|
|
(13
|
)
|
Operating income
|
|
215
|
|
|
100
|
|
|
|
180
|
|
|
|
330
|
|
Interest expense, net
|
|
20
|
|
|
1
|
|
|
|
51
|
|
|
|
3
|
|
Other expense, net
|
|
7
|
|
|
(2
|
)
|
|
|
6
|
|
|
|
1
|
|
Income before income taxes
|
|
188
|
|
|
101
|
|
|
|
123
|
|
|
|
326
|
|
Income tax provision
|
|
43
|
|
|
35
|
|
|
|
36
|
|
|
|
125
|
|
Net income
|
|
$
|
145
|
|
|
$
|
66
|
|
|
|
$
|
|
87
|
|
|
|
$
|
|
201
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share information attributable to
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Time Inc. common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share
|
|
$
|
1.33
|
|
|
$
|
0.61
|
|
|
|
$
|
|
0.80
|
|
|
|
$
|
|
1.85
|
|
Weighted average basic common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
109.13
|
|
|
108.94
|
|
|
|
109.10
|
|
|
|
108.94
|
|
Diluted net income per common share
|
|
$
|
1.32
|
|
|
$
|
0.61
|
|
|
|
$
|
|
0.80
|
|
|
|
$
|
|
1.85
|
|
Weighted average diluted common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
outstanding
|
|
110.01
|
|
|
108.94
|
|
|
|
109.52
|
|
|
|
108.94
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TIME INC.
|
CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS
|
Year Ended December 31,
|
(Unaudited; in millions)
|
|
|
|
|
|
|
|
|
|
|
2014
|
|
|
2013
|
OPERATING ACTIVITIES
|
|
|
|
|
|
|
|
Net income
|
|
$
|
87
|
|
|
|
$
|
201
|
|
Adjustments to reconcile net income to cash provided by operations:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
179
|
|
|
|
127
|
|
Amortization of deferred financing costs and discounts on
indebtedness
|
|
3
|
|
|
|
-
|
|
Asset impairments
|
|
26
|
|
|
|
79
|
|
Goodwill impairment
|
|
26
|
|
|
|
-
|
|
Gain on sale of operating assets
|
|
(87
|
)
|
|
|
-
|
|
Loss on equity method of investee companies, net of cash
distributions
|
|
12
|
|
|
|
2
|
|
Share-based compensation expense relating to equity classified awards
|
|
35
|
|
|
|
18
|
|
Deferred income taxes
|
|
(23
|
)
|
|
|
28
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
Receivables
|
|
(19
|
)
|
|
|
67
|
|
Inventories
|
|
9
|
|
|
|
32
|
|
Prepaid expenses and other current assets
|
|
(36
|
)
|
|
|
(27
|
)
|
Accounts payable and accrued liabilities
|
|
35
|
|
|
|
(94
|
)
|
Other, net
|
|
34
|
|
|
|
(15
|
)
|
Cash provided by operations
|
|
281
|
|
|
|
418
|
|
|
|
|
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
|
|
|
|
Investments and acquisitions, net of cash acquired
|
|
(38
|
)
|
|
|
10
|
|
Capital expenditures
|
|
(41
|
)
|
|
|
(34
|
)
|
Proceeds from dispositions
|
|
176
|
|
|
|
1
|
|
Cash provided by (used in) investing activities
|
|
97
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
|
|
|
|
Proceeds from the issuance of debt
|
|
1,377
|
|
|
|
-
|
|
Financing costs
|
|
(13
|
)
|
|
|
-
|
|
Principal payments on Term Loan
|
|
(4
|
)
|
|
|
-
|
|
Excess tax benefits from share-based compensation arrangements
|
|
-
|
|
|
|
34
|
|
Dividends paid
|
|
(21
|
)
|
|
|
-
|
|
Transfer to Time Warner in connection with Spin-Off
|
|
(1,400
|
)
|
|
|
-
|
|
Net transfers from (to) Time Warner
|
|
159
|
|
|
|
(464
|
)
|
Cash provided by (used in) financing activities
|
|
98
|
|
|
|
(430
|
)
|
Effect of exchange rate changes on Cash and cash equivalents
|
|
(3
|
)
|
|
|
-
|
|
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
|
473
|
|
|
|
(35
|
)
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
|
46
|
|
|
|
81
|
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
|
$
|
519
|
|
|
|
$
|
46
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION
|
|
|
|
|
|
|
|
Income Taxes Paid
|
|
$
|
(41
|
)
|
|
|
$
|
(8
|
)
|
Income Tax Refunds Received
|
|
$
|
1
|
|
|
|
$
|
1
|
|
Cash Paid for Interest
|
|
$
|
(34
|
)
|
|
|
$
|
-
|
|
|
|
|
|
|
|
Schedule I
|
|
|
TIME INC.
|
RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA
|
(Unaudited; in millions)
|
|
|
|
|
|
|
|
|
Three Months Ended December 31,
|
|
|
Year Ended December 31,
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
|
|
2013
|
Operating income
|
|
$
|
215
|
|
|
$
|
100
|
|
|
|
$
|
|
|
180
|
|
|
|
|
$
|
|
|
330
|
|
Depreciation
|
|
24
|
|
|
21
|
|
|
|
101
|
|
|
|
|
85
|
|
Amortization of intangible assets
|
|
20
|
|
|
12
|
|
|
|
78
|
|
|
|
|
42
|
|
OIBDA(1)
|
|
259
|
|
|
133
|
|
|
|
359
|
|
|
|
|
457
|
|
Asset impairments
|
|
-
|
|
|
79
|
|
|
|
26
|
|
|
|
|
79
|
|
Goodwill impairment
|
|
-
|
|
|
-
|
|
|
|
26
|
|
|
|
|
-
|
|
Restructuring and severance costs
|
|
28
|
|
|
5
|
|
|
|
192
|
|
|
|
|
63
|
|
(Gain) loss on operating assets
|
|
(85
|
)
|
|
(13
|
)
|
|
|
(87
|
)
|
|
|
|
(13
|
)
|
Pension settlements and curtailments(2)
|
|
1
|
|
|
-
|
|
|
|
1
|
|
|
|
|
-
|
|
Other costs(3)
|
|
-
|
|
|
-
|
|
|
|
7
|
|
|
|
|
1
|
|
Adjusted OIBDA(4)
|
|
$
|
203
|
|
|
$
|
204
|
|
|
|
$
|
|
|
524
|
|
|
|
|
$
|
|
|
587
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
______________
|
(1)
|
|
OIBDA is defined as Operating income (loss) less depreciation and
amortization.
|
|
|
|
(2)
|
|
Pension settlement charges in connection with our domestic pension
plan are included with Selling, general and administrative expenses
within the Statements of Operations.
|
|
|
|
(3)
|
|
Other costs during the year ended December 31, 2014, related to the
spin-off and transaction related costs for acquisitions and
dispositions during the period, are included within Selling, general
and administrative expenses within the Statements of Operations.
|
|
|
|
(4)
|
|
Adjusted OIBDA is defined as OIBDA adjusted for impairments of
Goodwill, intangibles, fixed assets and investment; Restructuring
and severance costs; gains and losses on operating assets; pension
plan settlements and/or curtailments and Other costs related to
mergers, acquisitions, investments and dispositions.
|
|
|
|
|
|
|
|
|
|
|
|
Schedule II
|
|
|
|
|
|
|
|
|
|
|
|
|
TIME INC.
|
RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED NET INCOME
|
(Unaudited; in millions)
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, 2014
|
|
|
Three Months Ended December 31, 2013
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact
|
|
Tax Impact
|
|
Net Impact
|
|
|
Gross Impact
|
|
Tax Impact
|
|
Net Impact
|
Net income
|
|
$
|
188
|
|
|
$
|
(43
|
)
|
|
$
|
145
|
|
|
|
$
|
101
|
|
|
$
|
(35
|
)
|
|
$
|
66
|
|
Asset impairments
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
79
|
|
|
(28
|
)
|
|
51
|
|
Goodwill impairment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Restructuring and severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs
|
|
28
|
|
|
(10
|
)
|
|
18
|
|
|
|
5
|
|
|
(4
|
)
|
|
1
|
|
(Gain) loss on operating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets
|
|
(85
|
)
|
|
1
|
|
|
(84
|
)
|
|
|
(13
|
)
|
|
5
|
|
|
(8
|
)
|
Pension settlements and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
curtailments
|
|
1
|
|
|
-
|
|
|
1
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other costs
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Adjusted Net Income (Loss)(1)
|
|
$
|
132
|
|
|
$
|
(52
|
)
|
|
$
|
80
|
|
|
|
$
|
172
|
|
|
$
|
(62
|
)
|
|
$
|
110
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, 2014
|
|
|
Year Ended December 31, 2013
|
|
|
Gross
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impact
|
|
Tax Impact
|
|
Net Impact
|
|
|
Gross Impact
|
|
Tax Impact
|
|
Net Impact
|
Net income
|
|
$
|
123
|
|
|
$
|
(36
|
)
|
|
$
|
87
|
|
|
|
$
|
326
|
|
|
$
|
(125
|
)
|
|
$
|
201
|
|
Asset impairments
|
|
26
|
|
|
(10
|
)
|
|
16
|
|
|
|
79
|
|
|
(28
|
)
|
|
51
|
|
Goodwill impairment
|
|
26
|
|
|
3
|
|
|
29
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Restructuring and severance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs
|
|
192
|
|
|
(71
|
)
|
|
121
|
|
|
|
63
|
|
|
(22
|
)
|
|
41
|
|
(Gain) loss on operating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
assets
|
|
(87
|
)
|
|
1
|
|
|
(86
|
)
|
|
|
(13
|
)
|
|
5
|
|
|
(8
|
)
|
Pension settlements and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
curtailments
|
|
1
|
|
|
-
|
|
|
1
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other costs
|
|
7
|
|
|
(1
|
)
|
|
6
|
|
|
|
1
|
|
|
-
|
|
|
1
|
|
Adjusted Net Income (Loss)(1)
|
|
$
|
288
|
|
|
$
|
(114
|
)
|
|
$
|
174
|
|
|
|
$
|
456
|
|
|
$
|
(170
|
)
|
|
$
|
286
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
______________
|
(1)
|
|
Adjusted Net Income is defined as Net income adjusted for
impairments of Goodwill, intangibles, fixed assets and investments;
Restructuring and severance costs; gains and losses on operating
assets; pension plan settlements and/or curtailments; Other costs
related to mergers, acquisitions, investments and dispositions; as
well as the impact of income taxes on the above items.
|
|
Schedule III
|
|
|
TIME INC.
|
RECONCILIATION OF DILUTED EPS TO ADJUSTED DILUTED EPS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
December 31,
|
|
|
December 31,
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
|
|
2013
|
Diluted EPS
|
|
$
|
1.32
|
|
|
$
|
0.61
|
|
|
|
$
|
|
|
0.80
|
|
|
|
|
$
|
|
|
1.85
|
|
Asset impairments, net of tax per share
|
|
-
|
|
|
0.47
|
|
|
|
0.15
|
|
|
|
|
0.47
|
|
Goodwill impairment, net of tax per share
|
|
-
|
|
|
-
|
|
|
|
0.26
|
|
|
|
|
-
|
|
Restructuring and severance costs, net of tax per share
|
|
0.16
|
|
|
0.01
|
|
|
|
1.10
|
|
|
|
|
0.38
|
|
(Gain) loss on operating assets, net of tax per share
|
|
(0.76
|
)
|
|
(0.07
|
)
|
|
|
(0.79
|
)
|
|
|
|
(0.07
|
)
|
Pension settlements and curtailments
|
|
0.01
|
|
|
-
|
|
|
|
0.01
|
|
|
|
|
-
|
|
Other costs, net of tax per share
|
|
-
|
|
|
-
|
|
|
|
0.05
|
|
|
|
|
0.01
|
|
Adjusted Diluted EPS(1)
|
|
$
|
0.73
|
|
|
$
|
1.02
|
|
|
|
$
|
|
|
1.58
|
|
|
|
|
$
|
|
|
2.64
|
|
______________
|
(1)
|
|
Adjusted Diluted EPS is defined as Diluted EPS adjusted for
impairments of Goodwill, intangibles, fixed assets and investments;
Restructuring and severance costs; gains and losses on operating
assets; pension plan settlements and/or curtailments and Other costs
related to mergers, acquisitions, investments and dispositions; net
of the impact of income taxes.
|
|
|
|
|
|
|
Schedule IV
|
|
|
TIME INC.
|
RECONCILIATION OF CASH PROVIDED BY OPERATIONS TO FREE CASH FLOW
|
(Unaudited; in millions)
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Year Ended
|
|
|
December 31,
|
|
|
December 31,
|
|
|
2014
|
|
2013
|
|
|
2014
|
|
|
|
2013
|
Cash provided by operations
|
|
$
|
111
|
|
|
$
|
171
|
|
|
|
$
|
|
|
281
|
|
|
|
|
$
|
|
|
418
|
|
Less: Capital expenditures
|
|
(11
|
)
|
|
(15
|
)
|
|
|
(41
|
)
|
|
|
|
(34
|
)
|
Free Cash Flow(1)(2)
|
|
$
|
100
|
|
|
$
|
156
|
|
|
|
$
|
|
|
240
|
|
|
|
|
$
|
|
|
384
|
|
______________
|
(1)
|
|
Free Cash Flow is defined as Cash provided by (used in) operations,
less Capital expenditures.
|
|
(2)
|
|
Free Cash Flow for the year ended December 31, 2014 includes a $50
million one-time payment for settlement of a lease obligation.
|
|
|
|
|
|
|
|
Schedule V
|
|
|
|
|
|
|
|
|
|
|
TIME INC.
|
RECONCILIATION OF OPERATING INCOME TO ADJUSTED OIBDA - 2015
OUTLOOK
|
(Unaudited; in millions)
|
|
|
|
|
|
|
|
|
|
|
|
2015 Outlook
|
|
|
2014 Actual
|
|
Low
|
|
High
|
Operating income
|
|
$
|
180
|
|
$
|
85
|
|
$
|
100
|
Depreciation
|
|
101
|
|
100
|
|
110
|
Amortization
|
|
78
|
|
75
|
|
80
|
OIBDA(1)
|
|
$
|
359
|
|
$
|
260
|
|
$
|
290
|
Asset impairments, Goodwill impairment, Restructuring and severance
|
|
|
|
|
|
|
costs, gains/losses on operating assets, pension plan settlements
and/or
|
|
|
|
|
|
|
curtailments and Other costs related to mergers, acquisitions and
|
|
|
|
|
|
|
dispositions
|
|
165
|
|
180
|
|
200
|
Adjusted OIBDA(2)
|
|
$
|
524
|
|
$
|
440
|
|
$
|
490
|
______________
|
(1)
|
|
OIBDA is defined as Operating income (loss) less Depreciation and
Amortization.
|
|
|
|
(2)
|
|
Adjusted OIBDA is defined as OIBDA adjusted for impairments of
Goodwill, intangibles, fixed assets and investments; Restructuring
and severance costs; gains and losses on operating assets; pension
plan settlements and/or curtailments and Other costs related to
mergers, acquisitions, investments and dispositions.
|
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