Time Warner Provides 2006 Full-Year Business Outlook

Time Warner announced that it expects its 2006 full-year growthrate in Adjusted Operating Income before Depreciation and Amortizationto be in the high-single digits, off a base of $10.3 billion in 2005(restated to reflect the impact of expensing stock options).

In addition, the Company said that it expects to convert between35% to 45% of its 2006 Adjusted Operating Income before Depreciationand Amortization into Free Cash Flow.

The outlook above does not include the impact of any future mergerand restructuring charges and sales and acquisitions of operatingassets that may occur from time to time due to management decisionsand changing business circumstances. The Company is currently unableto forecast precisely the timing and/or the magnitude of any suchevents.

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

During the fourth quarter of 2005, the Company revised itsdefinitions of Adjusted Operating Income before Depreciation andAmortization and Free Cash Flow to exclude all of the amountsassociated with the securities litigation and SEC/DOJ governmentinvestigations. In addition to legal reserves that have beenpreviously excluded, Adjusted Operating Income before Depreciation andAmortization now excludes legal and professional expenses andinsurance recoveries related to the securities litigation andgovernment investigations. Similarly, in addition to payments relatedto securities litigation that have been previously excluded, Free CashFlow now excludes legal and professional expenses and insurancerecoveries related to the securities litigation and governmentinvestigations and payments for settlements related to the governmentinvestigations. These revised definitions have been applied for allperiods presented.

In addition, in connection with the adoption of FAS 123R, theCompany has revised the definition of Free Cash Flow to add backexcess tax benefits from the exercise of stock options beginning in2006, which under FAS 123R are no longer included in cash provided byoperations.

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), less cash flow attributable to discontinuedoperations, capital expenditures and product development costs,principal payments on capital leases and partnership distributions, ifany. In connection with the adoption of FAS 123R, the Company hasrevised the definition of Free Cash Flow to add back excess taxbenefits from the exercise of stock options beginning in 2006. TheCompany uses Free Cash Flow to evaluate the performance of itsbusinesses and this measure is considered an important indicator ofthe Company's liquidity, including its ability to reduce net debt,make strategic investments, pay dividends to common shareholders andrepurchase stock. A limitation of this measure, however, is that itdoes not reflect payments made in connection with the securitieslitigation and government 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.

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 full year and fourth quarter ended December31, 2005.

The Company's earnings conference call can be heard live at 8:30am ET on Wednesday, February 1, 2006. To listen to the call, visitwww.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)

Year Ended
December 31, 2005
---------------------
FAS 123R Reconciliation of 2006
Historical Adjusted (2) Guidance
---------- ------------ ----------------------
Reconciliation of
Adjusted Operating
Income before
Depreciation and
Amortization to
Operating Income: (1)

Time Warner Inc.
----------------
Adjusted Operating
Income before
Depreciation and
Amortization $ 10,662 $ 10,343 High single digit growth

Depreciation and Low to high single digit
Amortization (3,277) (3,277) growth

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

Gains and losses from
asset sales 23 23 Unable to estimate

Amounts related to
securities litigation
and government Decrease in absolute
investigations (3) (2,865) (2,865) Dollar amount
-------- --------

Increase in absolute
Operating Income $ 4,519 $ 4,200 dollar amount
======== ========

Free Cash Flow
conversion between 35%
to 45% of Adjusted
Operating Income before
Depreciation and
Free Cash Flow (4) $ 4,365 $ 4,365 Amortization

Capital expenditures and
product development
costs plus principal
payments on capital
leases (all from Increase in absolute
continuing operations) 3,364 3,364 dollar amount

Excess tax benefits from
the exercise of stock
options (4) N/A (88) Unable to estimate

Payments related to
securities litigation
and government Decrease in absolute
investigations (5) (2,754) (2,754) dollar amount
-------- --------

Cash provided by
continuing operations
Cash provided by exceeding 85% of
continuing operations 4,975 4,887 Operating Income

Cash used by Decrease in absolute
discontinued operations (10) (10) dollar amount
-------- --------

Cash Provided by
Cash Provided by Operations exceeding
Operations $ 4,965 $ 4,877 85% of Operating Income
======== ========

Notes:
------

(1) 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.

(2) The 2005 amounts presented in this column have been restated to
reflect the impact on Adjusted Operating Income before Depreciation
and Amortization of stock option expense ($319 million) associated
with the adoption of Financial Accounting Standards Statement 123R,
"Share-Based Payment". As part of the 2005 restatement, excess tax
benefits from the exercise of stock options are now required to be
included in cash flows used by financing activities rather than in
cash provided by operations. Since such tax benefits reduce the
Company's cash taxes, the Company has revised its definition of Free
Cash Flow to add back excess tax benefits from the exercise of stock
options.

(3) 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.

(4) 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), less cash flow
attributable to discontinued operations, capital expenditures and
product development costs, principal payments on capital leases and
partnership distributions, if any. In connection with the adoption of
FAS 123R, the Company has revised the definition of Free Cash Flow to
add back excess tax benefits from the exercise of stock options, which
under FAS 123R are no longer included in cash provided by operations.

(5) 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.