Spreadsheet: jeff_dasovich__14063__Timewar_Jeff Calculations
Sheet: Timewar

 | Exhibit 1 | History of Selected Acquisitions of Time, Inc.
 |  |  |  |  | Time's Stock Price
 | Date |  |  |  | Around
 | Announced | Company Acquired | Business | Price | Acquisition Announcement
 |  |  |  |  | Day Before | Day After
 | 1978-05-22 00:00:00 | Inland Container Corp. | Maker of containerboards, corrugated | $272 million | 47.75 | 44.875
 |  |  | containers
 | 1982-06-18 00:00:00 | Great American Reserve | Life and health insurance; spun off | $76 million | 29.125 | 28.625
 |  | Insurance Co. | with Inland Container in 1984
 | 1985-02-21 00:00:00 | Southern Progress Corp. | Magazine publisher, book marketer | $480 million | 49.625 | 48.5
 | 1985-12-09 00:00:00 | Group W Cable Inc. | Cable TV system; Time and Tele- | Cash and assumption of debt;
 |  |  | Communications own 25%-35% each | total $1.75 billion | 61.25 | 59.625
 | 1986-10-14 00:00:00 | Scott, Foresman & Co. | Textbook publisher | $520 million | 76.625 | 73.5
 | 1988-10-20 00:00:00 | Whittle Communications | Magazine publishing, advertiser- | $185 million | 118.75 | 116.875
 |  |  | supported TV
 | Source:  Compiled from Moody's Industrial Manual, The New York Times, Wall Street Journal, The Washington Post, Investment Dealers Digest, Inc.,
 | Interactive Data Corp., and CRSP daily stock files.
 |  |  | SCROLL DOWN FOR EXHIBIT 2. . .
 | Exhibit 2 | Time's Income Statement (in millions)
 |  |  |  | For Years Ended December 31
 |  | 1984 | 1985 | 1986 | 1987 | 1988
 | MAGAZINES
 | Revenues | 1321 | 1482 | 1576 | 1621 | 1752
 | Operating income | 188 | 176 | 162 | 283 | 287
 | Identifiable assets | 212 | 582 | 663 | 694 | 923
 | [NAME] (operating income/identifiable assets) | 0.89 | 0.3 | 0.24 | 0.41 | 0.31
 | ROS (operating income/revenues) | 0.14 | 0.12 | 0.1 | 0.17 | 0.16
 | BOOKS
 | Revenues | 491 | 552 | 663 | 954 | 891
 | Operating income | 65 | 85 | 73 | 88 | 104
 | Identifiable assets | 278 | 468 | 1151 | 1156 | 1225
 | [NAME] (operating income/identifiable assets) | 0.23 | 0.18 | 0.06 | 0.08 | 0.08
 | ROS (operating income/revenues) | 0.13 | 0.15 | 0.11 | 0.09 | 0.12
 | PROGRAMMING
 | Revenues | 745 | 786 | 886 | 904 | 1052
 | Operating income | 118 | 121 | 111 | 125 | 116
 | Identifiable assets | 481 | 665 | 824 | 1054 | 1095
 | [NAME] (operating income/identifiable assets) | 0.25 | 0.18 | 0.13 | 0.12 | 0.11
 | ROS (operating income/revenues) | 0.16 | 0.15 | 0.13 | 0.14 | 0.11
 | CABLE TELEVISION
 | Revenues | 510 | 584 | 637 | 714 | 812
 | Operating income | 83 | 97 | 118 | 150 | 176
 | Identifiable assets | 976 | 1024 | 1107 | 1195 | 1505
 | [NAME] (operating income/identifiable assets) | 0.09 | 0.09 | 0.11 | 0.13 | 0.12
 | ROS (operating income/revenues) | 0.16 | 0.17 | 0.19 | 0.21 | 0.22
 | CONSOLIDATED
 | Revenues | 3067 | 3404 | 3762 | 4193 | 4507
 | Operating income | 421 | 387 | 626 | 517 | 529
 | Identifiable assets | 2615 | 3072 | 4230 | 4424 | 4913
 | [NAME] (operating income/identifiable assets) | 0.16 | 0.13 | 0.15 | 0.12 | 0.11
 | ROS (operating income/revenues) | 0.14 | 0.11 | 0.17 | 0.12 | 0.12
 | Source:  Compiled from SEC filings (Time, Inc. 10Ks) and Time, Inc Annual Reports.
 |  | SCROLL DOWN FOR EXHIBIT 3A. . .
 | Exhibit 3A | Consolidated Balance Sheet as of December 31, 1988
 |  | Time | Warner | Paramount
 |  | (in millions) | (in millions) | (in millions)
 | Assets
 | Current Assets:
 | Cash and equivalents | 121 | 229 | 616
 | Receivables | 506 | 940 | 668
 | Inventories | 299 | 459 | 416
 | Prepaid programming | 190 | na | na
 | Prepaid promotion | 205 | na | na
 | Other | na | 141 | 447
 | Total Current Assets | 1321 | 1769 | 2147
 | Investments | 740 | na | na
 | Net property, plant, and equipment | 1399 | 999 | 414
 | Goodwill and intangible assets | 986 | na | na
 | Deferred charges and other assets | na | 688 | na
 | Programming and other assets | 467 | 1143 | 2817
 | Total Assets | 4913 | 4599 | 5378
 | Liabilities and Shareholders Equity
 | Accounts payable and accrued expenses | 734 | 1489 | 964
 | Other | 171 | 44 | 117
 | Total Current Liabilities | 905 | 1533 | 1081
 | Unearned portion of paid subscriptions | 424 | na | na
 | Long-term debt | 1485 | 721 | 1390
 | Deferred income taxes | 511 | na | na
 | Other liabilities | 229 | na | 641
 | Accounts payable due after one year | na | 552 | na
 | Total Shareholders' Equity | 1359 | 1793 | 2266
 | Total Liability and Shareholders' Equity | 4913 | 4599 | 5378
 | Source:  Compiled from SEC filings (10Ks) and company annual reports.
 |  | SCROLL DOWN FOR EXHIBIT 3B. . .
 | Exhibit 3B | Consolidated Operating and Shareholder Information
 |  | Time | Warner | Paramount
 | Times interest earned(a) | 8.5 | 29 | 7.3
 | Debt ratio(b) | 0.17 | 0.07 | 0.18
 | Market-to-book(c) | 5.3 | 5.2 | 2.8
 | Stock price:
 | 6/6/1989 | 126 | 51.75 | 54
 | 52 weeks | 135 1/2 - 93 | 52 3/4 - 32 3/8 | 56 1/2 - 37 1/8
 | ß | 1.1 | 1.2 | 1.1
 | Debt rating | Aa3 | A3 | A2
 | Sources:  Compiled from [NAME], Moody's Industrial Manual, CRSP, 10Ks, and annual reports.
 | (a) (EBIT + Depreciation)/(Net Interest Expense) for fiscal year 1988.
 | (b) LT Debt/(LT Debt + Market Equity); Debt from fiscal year 1988, market equity as of June 6, 1989.
 | (c) (Stock price June 6, 1989)/((Book Value of Equity per Share 1988).
 |  | SCROLL DOWN FOR EXHIBIT 4. . .
 | Exhibit 4 | Attributes of Major Companies Involved in Entertainment Industry
 |  |  |  |  |  |  |  |  |  |  |  | Market Value
 |  | Film | Size of |  |  |  |  |  |  |  | Entertainment | Debt + Equity
 |  | and TV | Film | Cable | Film |  | Home | TV | Cable |  | Revenue | (year end
 | Company | Production | Library | Programming | Distribution | Theaters | Video | Stations | Systems | Other | FY 1988 | 1988)
 | Time |  |  | HBO |  |  |  |  | ATC 82% | Magazines, | 1934 | 8081
 |  |  |  | TBS 14% |  |  |  |  | 3.9 million | book
 |  |  |  | Cinemax, |  |  |  |  | subscribers | publishing
 |  |  |  | Movietime 22%
 | Warner | Yes | 1400 | TBS 11% | Worldwide | Cinamerica | Yes | BHC | Warner | Recorded | 4067 | 7752
 |  |  |  |  |  | 0.5 |  | 0.425 | Cable | music, book
 |  |  |  |  |  |  |  |  | 1.5 million | publishing,
 |  |  |  |  |  |  |  |  | subscribers | comics
 | Paramount | Yes | 820 | USA 50% | Domestic; | Cinamerica | Yes | 5 TV |  | Book | 1862 | 6749
 |  |  |  | MSG | international | 0.5 |  | stations |  | publishing
 |  |  |  |  | through United
 |  |  |  |  | International | Cinema |  |  |  | Financial
 |  |  |  |  | Pictures, 33% | International |  |  |  | services
 |  |  |  |  |  | Corp. 50%
 | MCA | Yes | 3000 | USA 50% | Domestic; | Cineplex | Yes | WWOR-NY |  | Theme parks, | 2290 | 5274
 |  |  | + |  | international | Odeon 50% |  |  |  | publishing,
 |  |  |  |  | through United | Cinema |  |  |  | recorded
 |  |  |  |  | International | International |  |  |  | music
 |  |  |  |  | Pictures 33% | Corp. 49%
 | Columbia Pictures | Yes | 2700 |  | Worldwide | Loews, USA | RCA/Columbia |  |  |  | 1146 | 3054
 | Disney | Yes | 610 | Disney | Worldwide |  |  | KHJ-TV in |  | Theme parks, | 3438 | 10608
 |  |  |  | Sky 50% |  |  |  | Los Angeles |  | consumer
 |  |  |  |  |  |  |  |  |  | products
 |  | SCROLL DOWN FOR EXHIBIT 4 (continued). . .
 | Exhibit 4 (continued)
 |  |  |  |  |  |  |  |  |  |  |  | Market Value
 |  | Film | Size of |  |  |  |  |  |  |  | Entertainment | Debt + Equity
 |  | and TV | Film | Cable | Film |  | Home | TV | Cable |  | Revenue | (year end
 | Company | Production | Library | Programming | Distribution | Theaters | Video | Stations | Systems | Other | FY 1988 | 1988)
 | News Corp. | 20th | 2500 | Sky 50% | Worldwide |  | Yes | 7 TV |  | Book, | 1265 | 6579
 |  | Century |  |  |  |  |  | stations |  | magazine and
 |  | Fox |  |  |  |  |  | Fox |  | newspapers
 |  |  |  |  |  |  |  |  |  | Aircraft
 |  |  |  |  |  |  |  |  |  | Finance Co.
 |  |  |  |  |  |  |  |  |  | 0.49
 | MGM/UA | Yes | 1034 |  | Domestic— |  | Yes |  |  |  | 675 | 1516
 |  |  |  |  | international
 |  |  |  |  | through United
 |  |  |  |  | International
 |  |  |  |  | Pictures 33%
 | GE | TV only |  | CNBC 50% |  |  |  | NBC |  |  | 3638 | 44121
 |  |  |  | after 4/89 |  |  |  | 7 affiliates
 | Capital Cities/ABC | TV only |  | ESPN other |  |  |  | ABC |  |  | 3750 | 7770
 |  |  |  | interests |  |  |  | 8 affiliates
 | CBS, Inc. | TV only |  |  |  |  |  | CBS |  |  | 2778 | 4997
 |  |  |  |  |  |  |  | 5 affiliates
 | Tele-Communications, Inc. |  |  | Interests |  | Yes |  |  | 8 million |  | 2143 | 10085
 |  |  |  |  |  |  |  |  | subscribers
 | Orion Pictures | Yes | Large |  |  |  |  |  |  |  | 395 | 680
 | Turner Broadcasting | No | Owns | CNN |  |  |  | WTBS |  |  | 807 | 3384
 |  |  | MGM | TBS
 |  |  | library | TNT
 | Viacom |  |  | NTV, Nick, | Large in TV | Yes |  | 4 | Large |  | 1259 | 4813
 |  |  |  | other interests | distribution
 | Source:  Compiled from analyst reports (Baliz and Zorn Inc Report on Time Inc., 11/21/88, Wertheim Schroder & Co. Industry Report, 3/1/89, Drexel Industry Report, 10/17/89), S.E.C. filings (10-Ks).
 |  | SCROLL DOWN FOR EXHIBIT 5. . .
 | Exhibit 5 | Warner Communication's Income Statement (in millions)
 |  |  | For Years Ended December 31
 |  | 1984 | 1985 | 1986 | 1987 | 1988
 | FILMED ENTERTAINMENT
 | Revenues | 1090 | 1201 | 1251 | 1355 | 1571
 | Operating income | 150 | 160 | 172 | 176 | 207
 | Identifiable assets | 779 | 950 | 1077 | 1193 | 1536
 | [NAME] (operating income/identifiable assets) | 0.19 | 0.17 | 0.16 | 0.15 | 0.13
 | ROS (operating income/revenue) | 0.14 | 0.13 | 0.14 | 0.13 | 0.13
 | MUSIC
 | Revenues | 818 | 912 | 1139 | 1530 | 2040
 | Operating income | 90 | 112 | 151 | 213 | 319
 | Identifiable assets | 384 | 398 | 453 | 998 | 1290
 | [NAME] (operating income/identifiable assets) | 0.23 | 0.28 | 0.33 | 0.21 | 0.25
 | ROS (operating income/revenue) | 0.11 | 0.12 | 0.13 | 0.14 | 0.16
 | CABLE TV
 | Revenues | 363 | 296 | 326 | 387 | 456
 | Operating income | -106 | -9 | 16 | 42 | 72
 | Identifiable assets | 213 | 300 | 753 | 794 | 994
 | [NAME] (operating income/identifiable assets) | -0.5 | -0.03 | 0.02 | 0.05 | 0.07
 | ROS (operating income/revenue) | -0.29 | -0.03 | 0.05 | 0.11 | 0.16
 | PUBLISHING
 | Revenues | 115 | 122 | 133 | 130 | 139
 | Operating income | 11 | 14 | 12 | 11 | 11
 | Identifiable assets | 27 | 50 | 55 | 59 | 98
 | [NAME] (operating income/identifiable assets) | 0.41 | 0.28 | 0.22 | 0.19 | 0.11
 | ROS (operating income/revenue) | 0.1 | 0.11 | 0.09 | 0.08 | 0.08
 | LORIMAR(a)
 | Revenues | 334 | 466 | 571 | 637 | 525
 | Operating income | 150 | 67 | 36 | -39 | -362
 | ROS (operating income/revenue) | 0.45 | 0.14 | 0.06 | -0.06 | -0.69
 | CONSOLIDATED(b)
 | Revenues | 2023 | 2235 | 2848 | 3404 | 4206
 | Cost of revenues | 1438 | 1599 | 2043 | 2413 | 2926
 | Division selling, G&A, interest, other | 516 | 235 | 508 | 572 | 740
 | Income before taxes | 69 | 401 | 297 | 419 | 540
 | Provision for income taxes | 56 | 207 | 67 | 91 | 118
 | Income from continuing operations | 13 | 194 | 230 | 328 | 422
 | Extraordinary items, net | -599 |  | 22
 | Net income | -586 | 194 | 252 | 328 | 422
 | Source:  Compiled from SEC filings (Warner Communication's 10K's), annual reports, and Paramount Communications, Inc and KDS Acquisition Corp v. Time, Inc.
 | Consolidated Civil Action No 10670.  [NAME].
 | (a) Warner acquired Lorimar-Telepictures in January 1989.
 | (b) Does not include [NAME].
 |  | SCROLL DOWN FOR EXHIBIT 6. . .
 | Exhibit 6 | [NAME]) Income Statement (in millions)
 |  |  | For Years Ended December 31
 |  | 1984 | 1985 | 1986 | 1987 | 1988
 | ENTERTAINMENT
 | Revenues | 1266 | 1063 | 1154 | 1850 | 1862
 | Operating income | 109 | 69 | 129 | 297 | 252
 | ROS (operating income/revenue) | 0.09 | 0.06 | 0.11 | 0.16 | 0.14
 | PUBLISHING/INFORMATION
 | Revenues | 317 | 798 | 949 | 1074 | 1194
 | Operating income | 44 | 104 | 141 | 162 | 180
 | ROS (operating income/revenue) | 0.14 | 0.13 | 0.15 | 0.15 | 0.15
 | CONSUMER/COMMERCIAL FINANCE
 | Revenues | 1236 | 1460 | 1687 | 1778 | 2052
 | Operating income | 188 | 251 | 290 | 324 | 372
 | ROS (operating income/revenue) | 0.15 | 0.17 | 0.17 | 0.18 | 0.18
 | CONSOLIDATED
 | Revenues | 2819 | 3321 | 3790 | 4702 | 5108
 | Operating income | 283 | 358 | 496 | 722 | 748
 | Interest and other | -68 | -122 | -110 | -114 | -107
 | Earnings before income taxes | 215 | 236 | 386 | 608 | 641
 | Provision for income tax | 76 | 84 | 158 | 253 | 256
 | Earnings before extraordinary items | 139 | 152 | 228 | 355 | 385
 | Extraordinary items | 0 | 0 | 39 | 0 | 0
 | Earnings from discontinued operations | 99 | 96 | 0 | 0 | 0
 | Net earnings | 238 | 248 | 267 | 355 | 385
 | ROS (operating income/revenue) | 0.1 | 0.11 | 0.13 | 0.15 | 0.15
 | Identifiable assets | 4203 | 4064 | 4243 | 4928 | 5378
 | [NAME] (operating income/identifiable assets) | 0.07 | 0.09 | 0.12 | 0.15 | 0.14
 | Source:   Compiled from SEC filings (Gulf & Western 10Ks) and annual reports.
 | (a) Formerly Gulf & Western.
 |  | SCROLL DOWN FOR EXHIBIT 7. . .
 | Exhibit 7 | Board of Directors, Time Inc., 1989
 | Name and Year Appointed | Background |  | Comments
 | [NAME] (1979) | Chairman of the Board and CEO of |  | Also director of Temple-Inland
 |  | Borg-Warner Corporation
 | [NAME] (1978) | Chairman and CEO of the Henley |  | Also director of Ford
 |  | Group, Inc.
 | [NAME] (1984) | Chairman and CEO of Macy and |  | Also director of Chase Manhattan
 |  | Co., Inc.
 | [NAME] (1978) | Former chairman of Sonat Inc. |  | Also director of Temple-Inland.
 |  | (diversified natural resources company)
 |  |  |  | Not nominated to Time-Warner
 |  |  |  | board.  Resigned 6/11/89
 | [NAME] (1980) | President, CEO, and director of |  | Not nominated to Time-Warner
 |  | Temple-Inland Inc. |  | board.  Resigned 6/11/89
 | [NAME] (1975) | Former president of Radcliffe College
 | [NAME] (1978) | Chairman and CEO of Xerox Corporation |  | Also director of Chase Manhattan
 | [NAME] (1988)(a) | Vice Chairman of the Board.
 |  | Previously executive vice
 |  | president of Time Inc. for
 |  | corporate strategy, planning, and
 |  | administration
 | [NAME] (1967) | President of The Henry Luce |  | Controlled 4.2% of outstanding
 |  | Foundation, Inc. and son of the |  | Time stock
 |  | founder of Time Inc.
 | [NAME] (1988)(a) | Editor-in-chief of Time Inc.
 | [NAME] (1978)(a) | Chairman and CEO of Time Inc. |  | Also director of Genentech, IBM, Mobil
 | [NAME], Jr. (1963)(a) | President and chief operating |  | Also director of Bankers Trust, and Xerox
 |  | officer of Time Inc.
 | [NAME] (1984) | Former chairman and CEO of IBM |  | Also director of IBM and Xerox
 |  | Corporation
 | [NAME] (1979) | Former chairman of [NAME] |  | Also director of Temple-Inland
 |  | Companies, Inc. (a diversified retailer)
 |  |  |  | Resigned following Warner merger
 | [NAME] (1973) | Chairman of Temple-Inland Inc. |  | vote in March 1989.  Controlled
 |  |  |  | 1.1% of outstanding Time stock
 | [NAME], Jr. (1982) | Chairman and CEO of Teachers |  | Also director of Ford and NYSE.
 |  | Insurance and Annunity |  | Not nominated to Time-Warner
 |  | Association—College Retirement |  | board.  Resigned 6/11/89
 |  | Equities Fund
 | Sources:  Compiled from S.E.C. filings  (Time Inc., [NAME], May 22, 1989; Time Inc. 10-K, for fiscal year ending December 31, 1989), and Who's Who in Business.
 | (a) Also an officer of Time Inc.
 |  | SCROLL DOWN FOR EXHIBIT 8A. . .
 | Exhibit 8A | Warner Pro Forma Free Cash Flow by Segment ($ million)(a)
 |  | 1989 | 1990 | 1991 | 1992 | 1993 | 1994 | 1995 | 1996 | 1997 | 1998
 | Filmed entertainment | 104 | 118.6 | 139.7 | 164.8 | 180.1 | 196.2 | 213.7 | 232.9 | 253.8 | 276.5
 | Music/music publishing | 307.5 | 307.6 | 324.2 | 343.2 | 354.4 | 392.7 | 432.5 | 475.1 | 522 | 573.5
 | Cable TV | 42.1 | 151.5 | 181.5 | 205.8 | 233.7 | 266.7 | 298.8 | 327.6 | 355.7 | 386
 | Publishing | 15.2 | 8.8 | 8.9 | 9.5 | 10.1 | 10.8 | 11.6 | 12.4 | 13.3 | 14.2
 | [NAME] | 14 | 67.5 | 85 | 124.7 | 137.2 | 137.4 | 96.5 | 106.2 | 116.8 | 128.5
 | Total | 482.8 | 654 | 739.3 | 848 | 915.5 | 1003.8 | 1053.1 | 1154.2 | 1261.6 | 1378.7
 | (a) Free Cash Flow = Sales - Operating expenses - taxes + depreciation and amortization + deferred taxes - capital
 | expenditures - increase in film inventory - increase in working capital.
 |  | SCROLL DOWN FOR EXHIBIT 8B. . .
 | Exhibit 8B | Discounted Cash Flow Valuation of Warner Communications ($ millions)
 |  |  | Terminal Cash Flow Multiples(b)
 | Discount Rate | 9x | 10x | 11x | 12x
 | 0.1 | 5934 | 5934 | 5934 | 5934 | Present value of cash flows(a)
 |  | 8408 | 9342 | 10276 | 11210 | Present value of terminal cash flows
 |  | 14342 | 15276 | 16210 | 17144
 | 0.11 | 5696 | 5696 | 5696 | 5696 | Present value of cash flows
 |  | 7680 | 8533 | 10276 | 10240 | Present value of terminal cash flows
 |  | 13376 | 14230 | 15972 | 15936
 | 0.12 | 5473 | 5473 | 5473 | 5473 | Present value of cash flows
 |  | 7021 | 7801 | 8582 | 9362 | Present value of terminal cash flows
 |  | 12495 | 13275 | 14055 | 14835
 | 0.13 | 5265 | 5265 | 5265 | 5265 | Present value of cash flows
 |  | 6424 | 7138 | 7852 | 8565 | Present value of terminal cash flows
 |  | 11689 | 12402 | 13116 | 13830
 | (a) Casewriter's note:  present value of Exhibit 8A free cash flows.
 | (b) Casewriter's note:  terminal value apparently based on multiples of 1988 EBIT, not 1988 free cash flow.
 | Source:  Compiled from Wasserstein Perella & Co, Inc and Shearson Lehman Hutton, Inc presentation at the March 3, 1989
 | Time Board of Director [NAME].
 | Presentation obtained from Paramount Communications, Inc and KDS Acquisition Corp v. Time, Inc.  Consolidated
 | Civil Action No. 10670.  [NAME].
 |  | SCROLL DOWN FOR EXHIBIT 9. . .
 | Exhibit 9 | Discounted Cash Flow Valuation of Warner Communications ($ millions)
 | Value of the firm(a) | $11,689-$13,116
 | Adjustments:
 | Add:
 | Investments | 1337.5
 | Cash and equivalents | 320.3
 | Overfunded pensions | 26.3
 | Less:
 | Short-term debt | 32.2
 | Long-term debt | 1230.3
 | Corporate overhead | 300
 | Total net adjustments | 71.6
 | Value of equity | $11,760-$13,188
 | Share of outstanding (fully diluted) | 183.5MM
 | Value per share | $64.08-$71.86
 | Source:  Compiled from Wasserstein Perella & Co, Inc and Shearson
 | Lehman Hutton, Inc presentation at the March 3, 1989 Time
 | Board of Director [NAME].
 | Presentation obtained from Paramount Communications, Inc and
 | KDS Acquisition Corp v. Time, Inc.  Consolidated Civil
 | Action No. 10670.  [NAME].
 | (a) Casewriter's note:  based on 13% discount rate.
 |  | SCROLL DOWN FOR EXHIBIT 10. . .
 | Exhibit 10 | Comparable Transaction Acquisition Analysis:  Premiums
 |  | Paid in Recent Acquisitions by Industry(a)
 |  | Number of | Average EBIT
 | Industry | Acquisitions | Multiple Paid
 | Film | 5 | 19
 | Music | 1 | 10
 | Publishing | 9 | 15
 | Source:  Compiled from Wasserstein Perella & Co, Inc and
 | Shearson Lehman Hutton, Inc. presentation at the
 | March 3, 1989 Time board of director meeting.
 | Presentation obtained from Paramount
 | Communications, Inc. and KDS Acquisition Corp v.
 | Time, Inc.  Consolidated Civil Action No. 10670.
 | Finkelstein Exhibit 7.
 | (a) Cable valued on multiples of projected cash flows instead of EBIT.
 |  | SCROLL DOWN FOR EXHIBIT 11. . .
 | Exhibit 11 | Initial Terms of Time-Warner Merger Agreement, March 3, 1989
 |  |  | Number of Shares | Share Ownership
 |  | Shares Outstanding | Issued in | in New Time-Warner
 |  | (March 1989) | Exchange for Warner | (#)        (%)
 | Time | 57 | 82.9 | 57 | 41
 | Warner | 178.3 | -- | 82.9 | 59
 |  | SCROLL DOWN FOR EXHIBIT 12. . .
 | Exhibit 12 | Terms of Paramount Communication's Offer for Time Inc., June 7, 1989
 |  |  | Paramount
 |  |  | Payment |  | After Debt Reduction
 |  | Before Acquisition | in Acquisition | After Acquisition | from Asset Sales(a)
 |  | ($ bil.)       (%) | ($ bil.) | ($ bil.)      (%) | ($ bil.)         (%)
 | All borrowed money | 1.7                           43 | 10.7 | 12.4                      84 | 8.9                          79
 | Net worth | 2.3                           57 |  | 2.3                        16 | 2.3                          21
 |  | 4 |  | 14.7 | 11.2
 | Sources:  Compiled from WSJ Index, Paramount SEC filings, Time/Warner/Paramount; [NAME]—company report by
 | E.A. Fruelich, June 22, 1989.
 | (a) Assumes sale of The Associates for 3.5 billion, net of taxes.
 |  | SCROLL DOWN FOR EXHIBIT 14. . .
 | Exhibit 14 | Market Interest Rates
 | [NAME] March 1989
 | 1-year Treasury Bills | 0.0943
 | 7-year Treasury Bonds | 9.3
 | 10-year Treasury Bonds | 8.91
 | 30-year Treasury Bonds | 8.91
 | Corporate Bond Rates March 1989
 | (industrial average)
 | 10-year AAA | 0.0981
 | 10-year AA | 10.18
 | 10-year A | 10.59
 | 10-year BBB | 10.96
 | 10-year B | 12.01
 | 10-year B | 12.79
 | Source:  Compiled from S&P Security Price [NAME] (aka S&P
 | Statistical Service), 1992 and Interactive Data Service.
 |  | Scroll Down for Copyright...
 | Time Inc.'s Entry Into the Entertainment Industry (A)
 | Harvard Business School
 | Case Software 2-294-712
 | Copyright (c) 1993 by the President and Fellows of Harvard College.
 | Developed in conjunction with MicroMentor, Inc., Cambridge, MA.
 | This case was prepared as a basis for class discussion rather
 | than to illustrate either effective or ineffective handling of an
 | administrative situation.
 |  | SCROLL DOWN FOR LIST OF EXHIBITS...
 | WORKSHEET NAVIGATION
 | This worksheet contains the data from the following exhibits and answer formats:
 | Exhibit 1:  History of Selected Acquisitions of Time, Inc.
 | Exhibit 2:  Time's Income Statement (in millions)
 | Exhibit 3A:  Consolidated Balance Sheet as of December 31, 1988
 | Exhibit 3B:  Consolidated Operating and Shareholder Information
 | Exhibit 4:  Attributes of Major Companies Involved in Entertainment Industry
 | Exhibit 5:  Warner Communication's Income Statement (in millions)
 | Exhibit 6:  [NAME]) Income Statement (in millions)
 | Exhibit 7:  Board of Directors, Time Inc., 1989
 | Exhibit 8A:  Warner Pro Forma Free Cash Flow by Segment ($ million)(a)
 | Exhibit 8B:  Discounted Cash Flow Valuation of Warner Communications ($ millions)
 | Exhibit 9:  Discounted Cash Flow Valuation of Warner Communications ($ millions)
 | Exhibit 10:  Comparable Transaction Acquisition Analysis:  [NAME]
 | in Recent Acquisitions by Industry(a)
 | Exhibit 11:  Initial Terms of Time-Warner Merger Agreement, March 3, 1989
 | Exhibit 12:  Terms of Paramount Communication's Offer for Time Inc., June 7, 1989
 | Exhibit 14:  Market Interest Rates
 | The first exhibit is located in the [NAME] position.
 | To view each succeeding exhibit, use the SCROLL Bar to view the next exhibit
 | OPTIONAL NAVIGATIONAL TECHNIQUE
 | Each exhibit in this worksheet has been named using the <Formula>
 | <Define> <Name> commands in Excel.  This allows you to easily move
 | from one section of the worksheet to another.    Either of the following
 | techniques will allow you to move from one exhibit to another.
 | Click on <[NAME] in the menu bar, then select <Go to...> from pulldown menu
 | A dialog box will appear listing the exhibts
 | Click on the exhibit you wish to view, then click on <OK>.
 |  | OR
 | You may use the scroll bar or arrow keys to page down through the list
 | of exhibits if the one you wish to view is not immediately apparent.
 | SCROLL TO A1 TO GO TO FIRST EXHIBIT...
 | REVISION HISTORY
 | Date | Name |  | Explanation of Change
 | 1993-11-15 00:00:00 | [NAME] |  | Created Excel Spreadsheet
 |  |  |  | [NAME]