Time Inc. - FORM 8-K - EX-99.2 - EXHIBIT 99.2

Attached files

file	filename
EX-99.1 - EXHIBIT 99.1 - Time Inc.	exhibit9914q14pr.htm
EX-99.3 - EXHIBIT 99.3 - Time Inc.	a4q14epspresentation2015.htm
8-K - 8-K - Time Inc.	a8k12312014earningsrelease.htm

Exhibit 99.2

TIME INC.

2014 TRENDING SCHEDULES

BASIS OF PRESENTATION

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 ("OIBDA") 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.

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 OIBDA, Adjusted OIBDA, 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 OIBDA, Adjusted OIBDA, 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 and may not be comparable to similarly titled measures of other companies due to differences in methods of calculation and excluded items. OIBDA, Adjusted OIBDA, and Free Cash Flow should be considered in addition to, not as a substitute for, the company’s Operating income (loss), Net income (loss) 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. generally accepted accounting principles.

Certain prior period amounts have been reclassified to conform to the current period presentation.

The pro forma share information presented herein 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 through the date of the spin-off, June 6, 2014.

TIME INC.

2014 TRENDING SCHEDULES

CONSOLIDATED AND COMBINED BALANCE SHEETS

(In millions, except share amounts; Unaudited)



	2012												2013												2014
	March 31			June 30			September 30			December 31			March 31			June 30			September 30			December 31			March 31			June 30			September 30			December 31
ASSETS
Current assets
Cash and cash equivalents	$	94		$	116		$	88		$	81		$	70		$	69		$	63		$	46		$	51		$	204		$	325		$	519
Receivables, less allowances	507			497			468			588			530			520			502			489			414			383			407			488
Inventories, net of reserves	94			89			94			83			98			99			71			56			63			62			59			48
Deferred tax assets	100			89			85			82			82			82			82			75			75			98			99			84
Prepaid expenses and other current assets	70			71			67			52			73			84			96			97			133			113			125			113
Assets held for sale	—			—			—			—			—			—			—			—			—			51			4			4
Total current assets	865			862			802			886			853			854			814			763			736			911			1,019			1,256
Property, plant and equipment, net	620			599			588			576			544			529			521			534			494			475			442			369
Intangible assets subject to amortization, net	501			491			483			638			627			617			608			582			1,150			1,130			1,108			1,085
Intangible assets not subject to amortization	800			799			799			637			636			636			637			586			—			—			—			—
Goodwill	3,142			3,134			3,145			3,150			3,123			3,123			3,132			3,162			3,174			3,163			3,143			3,117
Other assets	46			48			50			48			45			45			44			47			72			78			88			73
Total assets	$	5,974		$	5,933		$	5,867		$	5,935		$	5,828		$	5,804		$	5,756		$	5,674		$	5,626		$	5,757		$	5,800		$	5,900
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	425		$	472		$	462		$	531		$	454		$	495		$	514		$	534		$	499		$	564		$	596		$	621
Deferred revenue	535			510			494			485			509			486			463			449			468			437			438			458
Current portion of long-term debt	—			—			—			—			—			—			—			—			—			7			7			7
Liabilities held for sale	—			—			—			—			—			—			—			—			—			12			—			—
Total current liabilities	960			982			956			1,016			963			981			977			983			967			1,020			1,041			1,086
Long-term debt	34			35			35			36			36			37			37			38			38			1,370			1,369			1,368
Deferred tax liabilities	292			292			305			313			306			315			326			313			298			296			291			313
Deferred revenue	151			145			141			137			140			133			128			135			129			122			118			94
Other noncurrent liabilities	143			134			138			149			146			135			130			163			213			191			188			168
Commitments and contingencies
Stockholders' Equity
Common stock, $0.01 par value, 400 million shares authorized	—			—			—			—			—			—			—			—			—			1			1			1
Preferred stock, $0.01 par value, 40 million shares authorized; none issued	—			—			—			—			—			—			—			—			—			—			—			—
Additional paid-in-capital	—			—			—			—			—			—			—			—			—			12,654			12,669			12,665
Time Warner investment	4,523			4,498			4,430			4,429			4,431			4,392			4,332			4,158			4,079			—			—			—
Accumulated deficit	—			—			—			—			—			—			—			—			—			(9,819		)	(9,771		)	(9,626		)
Accumulated other comprehensive loss, net	(129		)	(153		)	(138		)	(145		)	(194		)	(189		)	(174		)	(116		)	(98		)	(78		)	(106		)	(169		)
Total stockholders' equity	4,394			4,345			4,292			4,284			4,237			4,203			4,158			4,042			3,981			2,758			2,793			2,871
Total liabilities and stockholders' equity	$	5,974		$	5,933		$	5,867		$	5,935		$	5,828		$	5,804		$	5,756		$	5,674		$	5,626		$	5,757		$	5,800		$	5,900

TIME INC.

2014 TRENDING SCHEDULES

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS

(In millions, except per share amounts; Unaudited)



	Three Months Ended											Year Ended		Three Months Ended										Year Ended			Three Months Ended												Year Ended
	3/31/2012			6/30/2012		9/30/2012			12/31/2012			12/31/2012		3/31/2013			6/30/2013		9/30/2013		12/31/2013			12/31/2013			3/31/2014			6/30/2014			9/30/2014			12/31/2014			12/31/2014
Revenues
Advertising
Print and other advertising	$	332		$	411	$	371		$	449		$	1,563	$	322		$	382	$	368	$	455		$	1,527		$	318		$	387		$	363		$	409		$	1,477
Digital advertising	51			61		66			78			256		67			66		62		85			280			72			74			65			87			298
Total Advertising	383			472		437			527			1,819		389			448		430		540			1,807			390			461			428			496			1,775
Circulation
Subscription	179			180		179			210			748		166			174		176		205			721			180			171			174			191			716
Newsstand	107			108		115			117			447		88			95		105		101			389			86			83			98			89			356
Other circulation	3			4		3			5			15		4			4		4		7			19			4			4			7			8			23
Total Circulation	289			292		297			332			1,210		258			273		285		313			1,129			270			258			279			288			1,095
Other	101			94		104			108			407		90			112		103		113			418			85			101			114			111			411
Total revenues	773			858		838			967			3,436		737			833		818		966			3,354			745			820			821			895			3,281
Operating expenses
Costs of revenues
Production costs	184			202		192			217			795		171			182		182		244			779			175			191			180			196			742
Editorial costs	118			118		113			118			467		110			107		109		117			443			108			111			113			103			435
Other	16			17		30			19			82		19			30		31		20			100			23			26			29			26			104
Total Costs of revenues	318			337		335			354			1,344		300			319		322		381			1,322			306			328			322			325			1,281
Selling, general and administrative expenses	379			379		340			378			1,476		361			359		345		381			1,446			375			384			357			368			1,484
Amortization of intangible assets	9			9		9			9			36		10			10		10		12			42			19			20			19			20			78
Restructuring and severance costs	6			12		6			3			27		53			1		4		5			63			115			55			(6		)	28			192
Asset impairments	—			—		—			6			6		—			—		—		79			79			26			—			—			—			26
Goodwill impairment	—			—		—			—			—		—			—		—		—			—			—			26			—			—			26
Depreciation	23			24		22			22			91		22			20		22		21			85			24			28			25			24			101
(Gain) loss on operating assets	42			—		(1		)	(5		)	36		—			—		—		(13		)	(13		)	—			—			(2		)	(85		)	(87		)
Total operating expenses	777			761		711			767			3,016		746			709		703		866			3,024			865			841			715			680			3,101
Operating income (loss)	(4		)	97		127			200			420		(9		)	124		115		100			330			(120		)	(21		)	106			215			180
Interest expense, net	1			—		1			1			3		1			—		1		1			3			1			11			19			20			51
Other expense (income), net	2			1		—			—			3		—			3		—		(2		)	1			(5		)	1			3			7			6
Income (loss) before income taxes	(7		)	96		126			199			414		(10		)	121		114		101			326			(116		)	(33		)	84			188			123
Income tax provision (benefit)	4			34		42			71			151		(2		)	46		46		35			125			(42		)	(1		)	36			43			36
Net income (loss)	$	(11	)	$	62	$	84		$	128		$	263	$	(8	)	$	75	$	68	$	66		$	201		$	(74	)	$	(32	)	$	48		$	145		$	87
Basic net income (loss) per common share	$	(0.10	)	$	0.57	$	0.77		$	1.17		$	2.41	$	(0.07	)	$	0.69	$	0.62	$	0.61		$	1.85		$	(0.68	)	$	(0.30	)	$	0.44		$	1.33		$	0.80
Diluted net income (loss) per common share	$	(0.10	)	$	0.57	$	0.77		$	1.17		$	2.41	$	(0.07	)	$	0.69	$	0.62	$	0.61		$	1.85		$	(0.68	)	$	(0.30	)	$	0.44		$	1.32		$	0.80
Weighted average basic common shares outstanding⁽¹⁾	108.94			108.94		108.94			108.94			108.94		108.94			108.94		108.94		108.94			108.94			108.94			108.97			109.15			109.13			109.10
Weighted average diluted common shares outstanding⁽¹⁾	108.94			108.94		108.94			108.94			108.94		108.94			108.94		108.94		108.94			108.94			108.94			108.97			109.74			110.01			109.52

___________________


(1)	The pro forma share information presented herein 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 through the date of the spin-off, June 6, 2014.

TIME INC.

2014 TRENDING SCHEDULES

CONSOLIDATED AND COMBINED STATEMENTS OF CASH FLOWS

(In millions; Unaudited)



	2012												2013												2014
	Three Months Ended			Six Months Ended			Nine Months Ended			Year Ended			Three Months Ended			Six Months Ended			Nine Months Ended			Year Ended			Three Months Ended			Six Months Ended			Nine Months Ended			Year Ended
	March 31			June 30			September 30			December 31			March 31			June 30			September 30			December 31			March 31			June 30			September 30			December 31
OPERATING ACTIVITIES
Net income	$	(11	)	$	51		$	135		$	263		$	(8	)	$	67		$	135		$	201		$	(74	)	$	(106	)	$	(58	)	$	87
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization	32			65			96			127			32			62			94			127			43			91			135			179
Amortization of deferred financing costs and discounts on indebtedness	—			—			—			—			—			—			—			—			—			—			1			3
Asset impairments	—			—			—			6			—			—			—			79			26			26			26			26
Goodwill impairment	—			—			—			—			—			—			—			—			—			26			26			26
(Gain) loss on sale of operating assets	—			—			—			—			—			—			—			—			—			—			(2		)	(87		)
(Gain) loss on investments and other assets, net	42			42			41			36			—			—			—			—			1			—			—			—
Loss on equity method of investee companies, net of cash distributions	1			2			2			4			1			2			3			2			2			2			4			12
Share-based compensation expense relating to equity classified awards	16			25			32			39			7			9			13			18			2			10			25			35
Deferred income taxes	2			5			17			32			(5		)	3			13			28			(11		)	(11		)	(17		)	(23		)
Changes in operating assets and liabilities	(13		)	2			9			(46		)	(28		)	(25		)	(11		)	(37		)	11			42			30			23
Cash provided by (used in) operations	69			192			332			461			(1		)	118			247			418			—			80			170			281
INVESTING ACTIVITIES
Investments and acquisitions, net of cash acquired	(1		)	(6		)	(8		)	(8		)	(1		)	(2		)	(3		)	10			(12		)	(29		)	(29		)	(38		)
Capital expenditures	(6		)	(12		)	(20		)	(34		)	(6		)	(12		)	(19		)	(34		)	(7		)	(23		)	(30		)	(41		)
Proceeds from dispositions	15			15			16			16			—			—			—			1			—			—			41			176
Cash provided by (used in) investing activities	8			(3		)	(12		)	(26		)	(7		)	(14		)	(22		)	(23		)	(19		)	(52		)	(18		)	97
FINANCING ACTIVITIES
Proceeds from the issuance of debt	—			—			—			—			—			—			—			—			—			1,377			1,377			1,377
Financing costs	—			—			—			—			—			—			—			—			—			(13		)	(13		)	(13		)
Principal payments on Term Loan	—			—			—			—			—			—			—			—			—			—			(2		)	(4		)
Excess tax benefits from share-based compensation arrangements	12			12			11			16			18			26			30			34			12			—			—			—
Dividends paid	—			—			—			—			—			—			—			—			—			—			—			(21		)
Transfer to Time Warner in connection with Spin-Off	—			—			—			—			—			—			—			—			—			(1,400		)	(1,400		)	(1,400		)
Net transfers from (to) Time Warner	(90		)	(180		)	(338		)	(465		)	(21		)	(142		)	(273		)	(464		)	12			166			166			159
Cash provided by (used in) financing activities	(78		)	(168		)	(327		)	(449		)	(3		)	(116		)	(243		)	(430		)	24			130			128			98
Effect of exchange rate changes on Cash and cash equivalents	—			—			—			—			—			—			—			—			—			—			(1		)	(3		)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(1		)	21			(7		)	(14		)	(11		)	(12		)	(18		)	(35		)	5			158			279			473
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	95			95			95			95			81			81			81			81			46			46			46			46
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	94		$	116		$	88		$	81		$	70		$	69		$	63		$	46		$	51		$	204		$	325		$	519

Free Cash Flow:
Cash provided by (used in) operations	$	69		$	192		$	332		$	461		$	(1	)	$	118		$	247		$	418		$	—		$	80		$	170		$	281
Less capital expenditures	(6		)	(12		)	(20		)	(34		)	(6		)	(12		)	(19		)	(34		)	(7		)	(23		)	(30		)	(41		)
Free Cash Flow⁽¹⁾	$	63		$	180		$	312		$	427		$	(7	)	$	106		$	228		$	384		$	(7	)	$	57		$	140		$	240

__________________


(1)	Free cash flow is defined as Cash provided by (used in) operations less Capital expenditures.

TIME INC.

2014 TRENDING SCHEDULES

RECONCILIATION OF OPERATING INCOME (LOSS) TO ADJUSTED OIBDA

(In millions; Unaudited)



	Three Months Ended											Year Ended		Three Months Ended										Year Ended			Three Months Ended												Year Ended
	3/31/2012			6/30/2012		9/30/2012			12/31/2012			12/31/2012		3/31/2013			6/30/2013		9/30/2013		12/31/2013			12/31/2013			3/31/2014			6/30/2014			9/30/2014			12/31/2014			12/31/2014
Operating income (loss)	$	(4	)	$	97	$	127		$	200		$	420	$	(9	)	$	124	$	115	$	100		$	330		$	(120	)	$	(21	)	$	106		$	215		$	180
Depreciation	23			24		22			22			91		22			20		22		21			85			24			28			25			24			101
Amortization of intangible assets	9			9		9			9			36		10			10		10		12			42			19			20			19			20			78
OIBDA⁽¹⁾	28			130		158			231			547		23			154		147		133			457			(77		)	27			150			259			359
Asset impairments	—			—		—			6			6		—			—		—		79			79			26			—			—			—			26
Goodwill impairment	—			—		—			—			—		—			—		—		—			—			—			26			—			—			26
Restructuring and severance costs	6			12		6			3			27		53			1		4		5			63			115			55			(6		)	28			192
(Gain) loss on operating assets	42			—		(1		)	(5		)	36		—			—		—		(13		)	(13		)	—			—			(2		)	(85		)	(87		)
Pension settlements and curtailments⁽²⁾	—			—		—			—			—		—			—		—		—			—			—			—			—			1			1
Other costs⁽³⁾	1			—		—			—			1		—			—		1		—			1			—			5			2			—			7
Adjusted OIBDA⁽⁴⁾	$	77		$	142	$	163		$	235		$	617	$	76		$	155	$	152	$	204		$	587		$	64		$	113		$	144		$	203		$	524

___________________


(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 within Selling, general and administrative expenses within the Statements of Operations.


(3)	Other costs are primarily transaction costs related to acquisitions and dispositions during the periods presented.


(4)	Adjusted OIBDA is defined as OIBDA adjusted for impairments of Goodwill, intangibles, fixed assets and investments; Restructuring and severance costs; gains or losses on operating assets; pension plan settlements and/or curtailments and Other costs related to mergers, acquisitions, investments and dispositions.

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