Time Warner sets aside $500 million legal reserve for pending investigations of transactions
Wednesday, November 3rd 2004, 8:39 am
By: News On 6
NEW YORK (AP) _ Time Warner said Wednesday that it is setting aside a $500 million legal reserve because of pending government investigations and will restate its accounting for its stake in AOL Europe prior to 2002.
The accounting at the company's America Online has been the subject of a continuing investigation by the Securities and Exchange Commission, which found problems with the way AOL accounted for certain transactions.
Time Warner Inc., the world's largest media company, said that following a review, it concluded that it should have included the earnings figures from AOL Europe in its overall results after March 2000. That was when it entered an agreement with the German media company Bertelsmann under which it later acquired Bertelsmann's 80 percent interest in AOL Europe.
As a result, Time Warner will restate its consolidated earnings for 2000, 2001, and possibly 2002.
The company said it was continuing to cooperate with the SEC and also with investigators at the Department of Justice, and that it was possible that it may have to make other financial restatements later.
The announcement came as the company reported its third-quarter earnings.
For the three months ending Sept. 30, the company had net earnings of $499 million, or 11 cents per share, compared with $541 million, or 12 cents per share, a year earlier. Revenues rose to $9.97 billion from $9.50 billion.