Time Warner Announces New 2006 Full-Year Business Outlook

Time Warner expects that its 2006 full-year growth rate inAdjusted Operating Income before Depreciation and Amortization, whichnow includes the expected impact of the acquisition of the assets ofAdelphia Communications Corporation, related transactions with ComcastCorporation, the consolidation of Court TV and the shutdown of The WBNetwork, will be in the low-double digits, off a base of $10.0 billionin 2005 (recast to reflect Time Warner Book Group, Turner South andcertain cable systems as discontinued operations).

This new full-year business outlook includes Management'sexpectation that the net impact(1) of the Adelphia and related Comcasttransactions will result in a low-single-digit increase in the 2006full-year Adjusted Operating Income before Depreciation andAmortization growth rate. Management also believes that the actionsrelated to AOL's business strategy announced today will not havea material impact on Time Warner's 2006 full-year business outlook.

The Company expects that it will convert between 35% to 45% of its2006 Adjusted Operating Income before Depreciation and Amortizationinto Free Cash Flow.

The outlook above does not include the impact of any future mergeror unidentified restructuring charges, as well as sales andacquisitions of operating assets that may occur from time to time dueto management decisions and changing business circumstances. TheCompany is currently unable to forecast precisely the timing and/ormagnitude of any such events. With the Company's adoption of FinancialAccounting Standards Statement 123R, "Share-Based Payment," effective January 1, 2006, this outlook reflects the impact ofexpensing stock options for both 2005 and 2006.

Use of Operating Income before Depreciation and Amortization,Adjusted Operating Income before Depreciation and Amortization andFree Cash Flow

The Company utilizes Operating Income before Depreciation andAmortization, among other measures, to evaluate the performance of itsbusinesses. The Company also evaluates the performance of itsbusinesses using Operating Income before Depreciation and Amortizationexcluding the impact of noncash impairments of goodwill, intangibleand fixed assets, as well as gains and losses on asset sales, andamounts related to securities litigation and government investigations(referred to herein as Adjusted Operating Income before Depreciationand Amortization). Both Operating Income before Depreciation andAmortization and Adjusted Operating Income before Depreciation andAmortization are considered important indicators of the operationalstrength of the Company's businesses. Operating Income beforeDepreciation and Amortization eliminates the uneven effect across allbusiness segments of considerable amounts of noncash depreciation oftangible assets and amortization of certain intangible assets thatwere recognized in business combinations. A limitation of thismeasure, however, is that it does not reflect the periodic costs ofcertain capitalized tangible and intangible assets used in generatingrevenues in the Company's businesses. Moreover, Adjusted OperatingIncome before Depreciation and Amortization does not reflect gains andlosses on asset sales or amounts related to securities litigation andgovernment investigations or any impairment charge related togoodwill, intangible assets and fixed assets. Management evaluates theinvestments in such tangible and intangible assets through otherfinancial measures, such as capital expenditure budgets, investmentspending levels and return on capital.

Free Cash Flow is Cash Provided by Operations (as defined by U.S.generally accepted accounting principles) plus payments related tosecurities litigation and government investigations (net of anyinsurance recoveries) and excess tax benefits from the exercise ofstock options, less cash flow attributable to discontinued operations,capital expenditures and product development costs, principal paymentson capital leases and partnership distributions, if any. The Companyuses Free Cash Flow to evaluate the performance of its businesses andthis measure is considered an important indicator of the Company'sliquidity, including its ability to reduce net debt, make strategicinvestments, pay dividends to common shareholders and repurchasestock. A limitation of this measure, however, is that it does notreflect payments made in connection with the securities litigation andgovernment investigations, which reduce liquidity.

Operating Income before Depreciation and Amortization, AdjustedOperating Income before Depreciation and Amortization and Free CashFlow should be considered in addition to, not as a substitute for, theCompany's Operating Income, Net Income and various cash flow measures(e.g., Cash Provided by Operations), as well as other measures offinancial performance and liquidity reported in accordance with U.S.generally accepted accounting principles.
(1) The net impact to Time Warner of the acquisition of assets from
Adelphia and related transactions with Comcast reflects the
acquisition of cable systems from Adelphia as well as certain
Comcast cable systems received as part of related exchanges,
offset in part by the transfer of certain Time Warner Cable
systems to Comcast in connection with the redemption of Comcast's
interests in both Time Warner Cable and Time Warner Entertainment
Company, L.P. The cable systems acquired from Adelphia and Comcast
are reflected as of August 1, 2006, but not in any prior periods.
The Time Warner Cable systems transferred to Comcast as part of
the redemption of Comcast's interests in Time Warner Cable and
Time Warner Entertainment Company, L.P. are reflected as
discontinued operations in both 2005 and 2006; thus, the actual
and expected results of such systems are excluded from the
business outlook.

About Time Warner Inc.

Time Warner Inc. is a leading media and entertainment company,whose businesses include interactive services, cable systems, filmedentertainment, television networks and publishing.

Information on Earnings Release and Conference Call

In a separate release issued today, Time Warner Inc. reported thefinancial results for its second quarter ended June 30, 2006.

The Company's earnings conference call can be heard live at 8:30am ET on Wednesday, August 2, 2006. To listen to the call, visitwww.timewarner.com/investors or AOL Keyword: IR.

Information on AOL's Business Strategy and Conference Call

Time Warner Inc. issued a separate release today regardingAOL's business strategy.

The Company's conference call to discuss AOL's business strategycan be heard live at 11:00 am ET on Wednesday, August 2, 2006. Tolisten to the call, visit www.timewarner.com/investors or AOL Keyword:IR.

Caution Concerning Forward-Looking Statements

This document includes certain forward-looking statements withinthe meaning of the Private Securities Litigation Reform Act of 1995.These statements are based on management's current expectations orbeliefs, and are subject to uncertainty and changes in circumstances.Actual results may vary materially from those expressed or implied bythe statements herein due to changes in economic, business,competitive, technological and/or regulatory factors, sales ofbusiness assets, and the potential impact of future decisions bymanagement that may result in merger and restructuring charges, aswell as the potential impact of any future impairment charges togoodwill or other intangible assets. More detailed information aboutthese factors may be found in filings by Time Warner Inc. with theSecurities and Exchange Commission, including its most recent AnnualReport on Form 10-K and Quarterly Report on Form 10-Q. Time Warner isunder no obligation to, and expressly disclaims any such obligationto, update or alter its forward-looking statements, whether as aresult of new information, future events, or otherwise.
TIME WARNER INC.
RECONCILIATION OF GUIDANCE
(In millions; Unaudited)

Estimated
Estimated Revised
Year Dis- Year
Ended continued Ended
December Operations December Reconciliation of
31, 2005 (1) (2) 31, 2005 2006 Guidance
------------ --------- -------- --------------------
Reconciliation of
Adjusted Operating
Income before
Depreciation and
Amortization to
Operating Income:

Time Warner Inc.
----------------
Adjusted Operating
Income before
Depreciation and Low double-digit
Amortization(3) $ 10,257 $ (290)$ 9,967 growth

Depreciation and Low double-digit to
Amortization (3,264) 127 (3,137) mid-teens growth

Impairment of
goodwill, intangible
and fixed No material
assets (24) - (24) impairment expected

Gains and losses Unable to
from asset sales 23 - 23 estimate(4)

Amounts related to
securities
litigation and
government Decrease in absolute
investigations(5) (2,865) - (2,865) Dollar amount
--------- --------- ---------

Increase in absolute
Operating Income $ 4,127 $ (163)$ 3,964 dollar amount
========= ========= =========

Free Cash Flow
conversion between
35% to 45% of
Adjusted Operating
Income before
Depreciation and
Free Cash Flow(6) $ 4,309 $ (153)$ 4,156 Amortization

Capital expenditures
and product
development costs
plus principal
payments on capital
leases (all from
continuing Increase in absolute
operations) 3,358 (141) 3,217 dollar amount

Excess tax benefits
from the exercise
of stock options(7) (88) - (88) Unable to estimate

Payments related to
securities
litigation and
government Decrease in absolute
investigations(8) (2,754) - (2,754) dollar amount(9)
--------- --------- ---------

Cash provided by
continuing
Cash provided by operations
continuing exceeding 85% of
operations 4,825 (294) 4,531 Operating Income

Cash provided by
discontinued Decrease in absolute
operations 52 294 346 dollar amount
--------- --------- ---------

Cash Provided by
Operations
Cash Provided by exceeding 85% of
Operations $ 4,877 $ - $ 4,877 Operating Income
========= ========= =========

Notes:
------
(1) The 2005 amounts presented have been recast to reflect the
adoption of Financial Accounting Standards Statement 123R,
"Share-Based Payment" ("FAS 123R"), discontinued operations
treatment of Time Warner Book Group and Turner South, and a change
in methodology for recognizing programming inventory costs at HBO.
For further information, please refer to the Company's quarterly
report on Form 10-Q for the period ended June 30, 2006.

(2) Amounts reflect the impact on 2005 results of certain cable
systems that are expected to be classified as discontinued
operations in connection with the cable system exchanges with
Comcast and the redemption of Comcast's interests in Time Warner
Cable and Time Warner Entertainment Company, L.P. These amounts
represent preliminary estimates that may change as the Company
finalizes its accounting for these transactions, although the
Company does not anticipate that any change in discontinued
operations will have a material impact on its guidance.

(3) Adjusted Operating Income before Depreciation and Amortization
excludes the impact of noncash impairments of goodwill, intangible
and fixed assets, as well as gains and losses on asset sales and
amounts related to the securities litigation and government
investigations.

(4) Year-to-date through June 30, 2006, the Company has recognized $22
million in gains from asset sales.

(5) In 2005, the Company established a $3.0 billion legal reserve
related to securities litigation and recognized $135 million of
insurance recoveries net of legal and professional expenses.

(6) Free Cash Flow is defined as Cash Provided by Operations (as
defined by U.S. generally accepted accounting principles) plus
payments related to securities litigation and government
investigations (net of any insurance recoveries) and excess tax
benefits from the exercise of stock options, less cash flow
attributable to discontinued operations, capital expenditures and
product development costs, principal payments on capital leases
and partnership distributions, if any.

(7) As a result of the adoption of FAS 123R, actual tax benefits from
the exercise of stock options that exceed those previously
estimated in determining stock compensation expense, "excess tax
benefits," are now required to be included in cash flows used by
financing activities rather than in cash provided by operations.
Because such tax benefits reduce the Company's cash taxes, the
Company also revised its definition of Free Cash Flow to add the
excess tax benefits from the exercise of stock options.

(8) In 2005, Free Cash Flow excluded payments of $2.404 billion for
the settlement of securities litigation, $300 million for the
settlement of the SEC investigation and $50 million in related
legal fees.

(9) Year-to-date through June 30, 2006, the Company has made $227
million in net payments related to securities litigation and
government investigations.