AOL Time Warner Wednesday revealed that the merger between America Online
Inc. and Time Warner — the largest merger in history — cost the company
nearly $1 billion in post-merger activities.
In a filing with the Securities and Exchange Commission Wednesday, the
company recorded a “restructuring liability” of $965 million, of which $565
million were from work force reductions and employee termination benefits.
The filing said cash payments will continue for some time, as some employees
had the option of deferring termination benefits for up to 24 months.
The company made termination payments of about $40 million in the first
quarter, and said the remaining liability of about $525 million was mostly
classified as a current liability in the balance sheet as of March 31.
The company also wrote off about $70 million — mostly related to the AOL
segment of the restructuring plans — in the first quarter. AOL Time Warner
said remaining costs connected to the restructuring plan were assumed in the
merger and were part of the cost to acquire Time Warner.
The remaining $400 million of the charge was primarily from lease and
contract termination costs, according to the filing. The company plans to
consolidate or exit under-performing operations like the Warner Brothers
Studio Store of its filmed entertainment business or the World Championship
Wrestling operations of its networks business.
The filing also left the door open for a broadening of the restructuring
plans if deemed necessary.