The largest business merger in U.S. history cost almost US$1 billion to complete, according to an annual report filed Wednesday by AOL Time Warner Inc. with the U.S. Securities and Exchange Commission.
In the 10-Q filing, AOL Time Warner said it incurred restructuring liabilities of approximately $965 million during the first quarter of 2001, most of which the company attributed to workforce reductions. Shortly after regulators approved the merger in January, the company cut more than 2,400 jobs spread through the organization, from the ISP (Internet service provider) America Online Inc., Time Inc. magazines, the CNN News Group Inc. and Warner Music Group Inc. divisions.
Of the $565 million the company incurred in layoff costs, AOL Time Warner has paid $40 million to its fired employees. The remaining $525 million remains on the books – certain employees can defer receipt of termination benefits for up to 24 months, according to the filing.
AOL Time Warner also took a $400 million hit to exit certain business activities, primarily related to lease and contract termination costs. Declaring plans to consolidate certain operations and exit other under-performing operations, the company specifically cited its Warner Brothers Studio Store operations and World Championship Wrestling. Of these expenses, $380 million of liabilities remain on the company’s balance sheets.
AOL Time Warner, in New York, can be contacted at http://www.aoltimewarner.com/.