Copied from an original at The History Center, Diboll, Texas. www.TheHistoryCenterOnline.com 2013:023 TIME INCORPORATED 1981 ANNUAL REPORT Copied from an original at The History Center, Diboll, Texas. www.TheHistoryCenterOnline.com 2013:023 TIME INCORPORATED A diversified company in the publishing, forest products, and video fields PUBLISHING FOREST PRODUCTS VIDEO Magazines Temple-Eastex American Television and Time Inland Container Communications Sports illustrated Lumbermen's Investment Corp. Home Box Office People AFCO Industries WOTV Fortune Temple Associates Time-Life Video Life Eastex Packaging Money Georgia Kraft (50%) Discover Books Time-Life Books Book-of-the-Month Club Little, Brown Other Activities Selling Areas-Marketing, Inc. (SAMI) Pioneer Press © 1982 Time Inc. All rights reserved. Copied from an original at The History Center, Diboll, Texas. www.TheHistoryCenterOnline.com 2013:023 FINANCIAL Total Revenues HIGHLIGHTS $Billions 3.3 1981 1980 (in thousands except fo r per share data) Revenues . .. $3,296,382 $2,800,013 Income from Continuing Operations ......... 184,568 162,073 Net Income ...... .... 148,821 141,203 Capital Expenditures 404,000 261,000 1.2 Per Share: Income from Continuing Operations ....... $ 3.02 $ 2.88 Net Income ......... 2.43 2.51 iliill72 73 74 75 76 77 78 79 80 81 Dividends per common share ............ .95 .8825 Price Range (Common Stock) 26%-413/s 19-3l9/16 Common shares Net Income outstanding (000) 49,765 46,561 The number of common shareholders of record as of $Millions February 1, 1982, was 13,557. TABLE OF CONTENTS Letter to Shareholders . 2 1981: A Journalistic Retrospective .............. 6 Review of Operations . 8 Executive Appointments ...................... 34 iii72 73 74 I75 76 77 78 79 80 81 Management's Discussion and Analysis ......... 36 Financial Statements ......................... 43 Officers and Operating Executives ............. 56 Copied from an original at The History Center, Diboll, Texas. www.TheHistoryCenterOnline.com 2013:023 LETTER TO SHAREHOLDERS uring the 1970's, Time Inc. not only D expanded its publishing activities but also made tremendous strides in diversifying its operations, ending the decade as a truly broad-based communications and natural resource company. Last year, as the new dec­ ade began, the benefits of this diversification program were becoming evident. We were able to report record earnings in a recession­ ary year, despite the fact that several of our operations had disappointing earnings. In further pursuit of our diversification program, we undertook record capital expenditures last year, with a large share of the outlay going to the Video Group, pri­ marily for the expansion of cable television operations. We also felt it was in our share­ holders' best interest to discontinue two activ­ ities-Time-Life Films, which produced feature motion pictures and television pro­ grams, and The Washington Star, our daily newspaper in Washington, D.C. We are now a participant in three major industries: publishing, video, and forest prod­ ucts. Last year Time Inc. subsidiaries in all three of these fields contributed to the Com­ than two million subscribers for an increase pany's growth in revenues and profits, and of nearly 40 percent and a universe of more a surprising number of operating divisions than 8.5 million homes. turned in record performances, despite the Cinemax, a second pay service launched in state of the economy. 1980, performed even more spectacularly. By the end of 1981, after less than 18 months, Video Cinemax was serving more than a million Our fastest growing operation in recent years subscribers in over 600 cable systems. has been the Video Group. Time Inc. compa­ Having taken an early lead in the cable and nies now rank No. 1 in both the cable and the pay-TV businesses, we are now actively pay-television businesses. American Televi­ exploring other opportunities in the video sion and Communications Corp. (ATC) is the field. Last summer, for example, we acquired largest cable television system operating com­ a one-third interest in the USA Network, an pany, while Home Box Office (HBO) is the advertiser-supported cable program service largest pay-TV programming service. Both of that reaches about 10 million homes. Our these companies grew impressively in 1981, equal partners in this venture are two major ATC increasing its subscriber count to more entertainment companies, Paramount and than 1. 8 million, and HBO adding more 2 Copied from an original at The History Center, Diboll, Texas. www.TheHistoryCenterOnline.com 2013:023 (from the left) J. Richard Munro, president and chief execu tive officer; Clifford J. Grum, executive vice president; Ralph P. Davidson, chairman of the board . MCA. Not only does the USA Network give both ATC and HBO in the coming decade. us a strong entree to the television advertis­ For the past ten years ATC has concentrated ing market, it may also eventually serve as on acquiring and developing cable franchises. a vehicle for going down yet another video In the next ten it will continue these efforts, profit path-marketing programs on a pay­ but more emphasis will be placed on market­ per-view basis. ing new and additional services to an We are experimenting with many non­ expanding base of cable customers. HBO will entertainment applications of cable, such as continue its innovative ways and strive to home security systems, energy controls, stay in the forefront of the pay-TV program­ shopping by cable, electronic banking and ming industry. ticket buying. One such service that we will Five years ago, it is worth recalling, Time begin field-testing this year is a form of tele­ Inc.'s video operations were still in the devel­ text in which thousands of "pages" of useful opmental stage and barely breaking even. textual and graphic information, ranging In 1981, Video caught up with our other from hard news to leisure guides, will be major groups as a contributor to operating made available to subscribers on a call-up income, and in 1982 it will probably become basis. the largest profit source of all. We also anticipate further growth from 3 Copied from an original at The History Center, Diboll, Texas. www.TheHistoryCenterOnline.com 2013:023 Publishing but Time-Life Books had a very bad year. Our magazines had an exceptionally good TLB, one of the world's largest marketers of year in 1981. Their operating profits rose 81 books by mail, was seriously affected by the percent to a record $102 million on revenues recessionary economy, the adverse impact of $870 million. of currency exchange rates on its foreign Our advertising revenues should continue sales, which now account for more than half to grow as magazines are increasingly recog­ its revenues, and by the fact that a major new nized as the most cost-efficient method of series introduced during the year did not promoting the sale of a wide variety of con­ sell as well initially as expected. While we are sumer products. As the television dial offers not happy about the current hiatus in our an ever larger and more varied menu of Books Group's growth, we are reassessing programs, there will be more fractionating of the marketing and editorial policies of this the television audience, including more view­ major subsidiary and feel confident the pres­ ership of pay channels without any advertis­ ent downtrend in its earnings will be ing. Commercial television will no longer reversed. offer the concentration of viewers it does today. Forest Products Magazine advertising will increasingly be Our Forest Products Group turned in a perceived as a better buy. Magazines gener­ remarkably strong performance in 1981, par­ ally have already benefited from this trend ticularly in view of the virtual collapse of and Time Inc.'s have fared particularly well. the U.S. housing market. Our building prod­ Today nearly one of every five magazine dol­ ucts operations actually showed a small profit lars goes to Time Inc.'s publications. in 1981 as compared with a loss the previous The continuing circulation growth of our year, and our two paper operations did magazines is a reflection of their enduring exceptionally well. vitality. Our flagship magazine, Time, shows The Forest Products Group as a whole, no signs of aging; one issue of Time last consequently, turned in profits of $107 mil­ year carried over $10 million of advertising, lion in 1981 on revenues of $1.2 billion. The an all-time record for any weekly magazine. group's profits were up a healthy 22 percent We have raised both the single copy and sub­ and set a new record. scription prices of all our publications in The compensating effect of product diversi­ recent years and our readers have accepted fication should continue to serve the Forest these higher prices. Our circulation revenues Products Group well when some markets consequently have risen even faster than soften and others remain strong. There was a our advertising revenues, and subscription continuing strong demand for paper during renewals remain strong. the first three quarters of 1981, for example, The Magazine Group's bravura perform­ enabling our Pulp and Paperboard Division ance last year more than made up for a sharp to turn out a record tonnage of product. decline in the earnings of our Books Group. Inland Container, one of the largest pro­ Little, Brown had a good year in 1981 and ducers of containerboard and corrug?ted con- Book-of-the-Month Club did extremely well, 4 Copied from an original at The History Center, Diboll, Texas. www.TheHistoryCenterOnline.com 2013:023 tainers in the country, enjoyed another record subscribe to the theory that the telecommuni­ year in production, revenues, and operating cations revolution is just getting under way, profits. Inland has contributed larger operat­ and we intend to keep Time Inc.