AOL Restructuring Charge Estimated at $965 Million

AOL Time Warner Inc. estimated that the cost of reorganizing its businesses after merging will be about $965 million, with more than half from job cuts, a Securities and Exchange Commission filing showed.

About $565 million of the costs pertain to eliminating jobs and about $400 million to lease and contract termination costs, the world’s largest media and Internet company said.

AOL Time Warner, formed from America Online Inc.’s $124-billion acquisition of Time Warner Inc., is reducing its work force and selling assets to meet its goal for $11 billion in cash flow this year. Since the merger, the company has eliminated 2,400 jobs, or 2.8% of its 85,000 workers.

AOL “plans to consolidate certain operations and exit other under-performing operations,” the company said in the filing.

The CNN cable TV network, AOL Internet service, New Line film distributor and Warner Music Group record company have all been affected by the job cuts.

Last month, the New York-based company reported its first-quarter loss narrowed to $1.37 billion from $1.46 billion a year earlier as it added subscribers for online and cable TV services and cut costs.

AOL Time Warner Chief Executive Gerald Levin said in an interview at that time that AOL Time Warner is on track to reach its goal of more than $40 billion in sales and $11 billion in cash flow this year. The company defines cash flow as earnings before interest, taxes, depreciation, amortization and other items.

Levin also reaffirmed the company’s 2001 revenue and cash flow goals at an upbeat annual shareholder meeting Thursday at New York’s Apollo Theater.

The company is betting that ticket sales of movies it will release this year, such as “Harry Potter and the Sorcerer’s Stone,” which opens Nov. 16, and signing up more subscribers to its Internet service will fuel revenue growth.

AOL Time Warner shares rose 78 cents to close at $53.82 on the New York Stock Exchange.