NEW YORK -- Time Warner Inc. (NYSE:TWX) today reported financial results for its second quarter ended June 30, 2010. Chairman and Chief Executive Officer Jeff Bewkes said: "Time Warner delivered another quarter of strong financial and operating performance. Our revenue increased at its highest rate in two years, driving 15% growth in Adjusted Operating Income."
Mr. Bewkes continued: "Our investments in high-quality content across the company continue to pay off. Turner's original programming strategy contributed to the quarter's strong advertising growth and helped to generate pricing gains at the high end of the recent 2010-2011 upfront. HBO achieved impressive audience growth for its returning shows, and it has more original series in development than at any time in its history. Last week, Warner Bros. became the only studio in history whose films surpassed $1 billion at the domestic box office for ten straight years, while its TV production business extended its streak as the #1 provider of broadcast network programming. In addition, Time Inc. widened its lead in overall domestic print advertising share through the first six months of 2010. At the same time, we strengthened our balance sheet and returned to stockholders more than $1.5 billion in dividends and share repurchases for the year through June."
In the quarter, Revenues grew 8% from the same period in 2009 to $6.4 billion, reflecting increases at the Networks and Filmed Entertainment segments. Adjusted Operating Income rose 15% to $1.2 billion, due to growth at the Networks and Publishing segments. Adjusted Operating Income margins reached 19% versus 18% in last year's second quarter. Operating Income increased 19% to $1.2 billion, while Operating Income margins were 19% compared to 17% in the prior year quarter.
The Company posted Adjusted Diluted Income per Common Share from Continuing Operations ("Adjusted EPS") of $0.50 versus $0.37 in the prior year quarter. Diluted Income per Common Share from Continuing Operations was $0.49 for the three months ended June 30, 2010, compared to $0.36 in last year's second quarter.
For the first six months of 2010, Cash Provided by Operations from Continuing Operations reached $1.4 billion, and Free Cash Flow totaled $1.2 billion. As of June 30, 2010, Net Debt increased to $12.3 billion from $11.5 billion at the end of 2009, due mainly to share repurchases and dividends, as well as investment and acquisition spending, offset by the generation of Free Cash Flow.
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.
FILMED ENTERTAINMENT (Warner Bros.)
Revenues increased 8% ($183 million) to $2.5 billion, led by stronger theatrical performances, including Clash of the Titans and Sex and the City 2. Also contributing to this growth were higher television license fees, benefitting from a greater number of new series, timing of deliveries and the TNT availability of The Closer, as well as improved video games revenues, driven by the release of LEGO Harry Potter: Years 1-4.
Adjusted Operating Income declined 2% ($3 million) to $173 million, as higher revenues and lower restructuring costs ($28 million) were more than offset by higher theatrical and television film costs, as well as print and advertising costs. The prior year quarter benefitted from the effect of improved home video catalog returns of approximately $30 million. Operating Income grew 21% ($30 million) to $173 million. Last year's second quarter included a $33 million loss on the sale of Warner Bros.' Italian cinema assets.