Time Warner: Time Inc. Layoffs Could Cost Us More Than $100 Million
Time Inc. still hasn’t informed its staff about who is staying and who is going in the upcoming mass firings at Time Warner’s magazine unit. But it has released a bit more detail to Wall Street: It will record between $100 million and $125 million in restructuring charges “related principally” to the sackings this quarter.
(UPDATE: More detail on who’s going and who’s staying will be unveiled starting next week, says a Time Inc. official)
That will bring total restructuring charges to somewhere between $280 million and $310 million for the year at Time Warner (TWX), the company said this morning–most of the other charges related to the shuttering of New Line Cinema earlier this year. And those charges will knock down previous guidance the company had offered:
Its 2008 full-year Free Cash Flow will total around $5.5 billion. This compares to the prior outlook for Free Cash Flow of at or above $4.5 billion, as updated on April 30, 2008.
Its 2008 full-year growth rate in Adjusted Operating Income before Depreciation and Amortization will be around 5%, off a base of $12.9 billion in 2007. This compares to the outlook provided on February 6, 2008 of a range of 7% to 9%, which did not include any potential restructuring charges. The $280 million to $310 million of aggregate restructuring charges have the net effect of decreasing the expected 2008 full-year growth rate in Adjusted Operating Income before Depreciation and Amortization by more than 2 percentage points.
Its 2008 full-year Earnings per Diluted Share from Continuing Operations will be in the range of $1.04 to $1.07. This compares to the prior outlook of $1.07 to $1.11, first provided on February 6, 2008. In addition to the restructuring charges, this outlook for Earnings per Diluted Share from Continuing Operations includes certain items affecting comparability, which were also not expected when Time Warner first provided its 2008 full-year outlook, such as gains and losses on asset sales, asset impairments and costs expected to be incurred in conjunction with the Time Warner Cable separation. These items, in the aggregate, have the effect of reducing the current year outlook for Earnings per Diluted Share from Continuing Operations by $0.04 per diluted common share.
