AOL Lowers Short-term Forecasts

AOL Time Warner Inc. Monday warned cash earnings per share will be lower than previous expectations due to the attacks of Sept. 11, in addition to the advertising market slowdown.

The company said 2001 results would be affected by the advertising market’s continuing decline and additional expenses incurred by news-gathering operations and costs in its various businesses associated with the aftermath of the events of Sept. 11.

AOL now expects full-year 2001 EBITDA growth in the range of 20 percent, and revenue growth of 5 percent to 7 percent. It also said it expects free cash flow growth of at least 200 percent for 2001.

“No financial impact can compare to the terrible suffering and loss of life inflicted by the vicious attacks of Sept. 11,” said Gerald M. Levin, chief executive officer of AOL Time Warner. “The AOL Time Warner family is fully committed to continuing to do everything in our power to assist those who have been affect. Though our company’s actions are only a small part of a far greater effort, the importance of our core mission — to inform and connect — is clearer than ever. Our businesses — including CNN, Time Inc., AOL, NY 1, and Time Warner Cable — will keep fulfilling our mission whatever the circumstances and with whatever resources are necessary. The dedication and commitment of our employees would be hard to exaggerate. They are the heart and soul of this company.

AOL said that before Sept. 11, it had not yet seen an improvement in the overall advertising environment, and added that it deteriorated further following Sept. 11, impacting its networks, America Online, Publishing and Cable operations. Also, the company committed “substantial additional financial resources” to its news-gather operations.

However, the company also said that the future does not look bleak. AOL said the recurring aspect of its subscription businesses, together with its content businesses — which together constitute more than 75 percent of the company’s total revenue — should not be affected.

“The events of September 11 tested our country, and it’s tremendously reassuring to see how well Americans have come together, reaffirming our commitment to freedom and democracy,” said AOL Time Warner Chairman Steve Case. “The tragedy also created new challenges for all of us and, at AOL Time Warner, we will redouble our efforts to connect, inform and, wherever possible, serve the public interest. The bottom line is — despite this tragedy and the resulting economic affects — our unique mix of assets give us confidence that we can generate strong earnings growth next year and into the future.”

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