America Online 2009 Annual Report Download - page 23

Table of Contents
financing in the future. Our ability to obtain future financing will depend on, among other things, our financial condition and results of operations as well as
the condition of the capital markets or other credit markets at the time we seek financing. Time Warner provided a guarantee of our revolving credit facility in
order to facilitate its arrangement in connection with the spin-off. However, Time Warner will not provide guarantees with respect to our future financings,
and without the benefit of such guarantee, we may not be able to obtain replacement or other future financing on terms acceptable to us in a timely manner, or
at all. Our ability to fund our working capital, capital expenditure and financing requirements in the future may be adversely affected if we are unable to
extend the credit facility beyond the 364-day term or obtain a new credit facility or other financing on acceptable terms. If we are unable to enter into the
necessary financing arrangements or sufficient funds are not available on acceptable terms when required, we may not have sufficient liquidity and our
business may be adversely affected.
The terms of our new revolving credit facility contain restrictive covenants which limit our business and financing activities.
The terms of our new revolving credit facility include customary covenants which impose restrictions on our business and financing activities, subject
to certain exceptions or the consent of our lenders and Time Warner as guarantor, including, among other things, limits on our ability to incur additional debt,
create liens, enter into merger, acquisition and divestiture transactions, pay dividends and engage in transactions with affiliates. The credit facility contains
certain customary affirmative covenants, including a requirement that we maintain a maximum consolidated leverage ratio and a minimum consolidated
interest coverage ratio, and customary events of default. Our ability to comply with these covenants may be adversely affected by events beyond our control,
including economic, financial and industry conditions. A breach of any of the credit facility covenants, including a failure to maintain a required ratio or meet
a required test, may result in an event of default. This may allow our lenders to declare all amounts outstanding under the credit facility, together with accrued
interest, to be immediately due and payable. If this occurs, we may not be able to refinance the accelerated indebtedness on acceptable terms, or at all, or
otherwise repay the accelerated indebtedness. In addition, we are restricted from extending, renewing or increasing our obligations under our new revolving
credit facility, and the documentation entered into in connection with the facility may not be amended, modified, waived or released, in each case, without the
consent of Time Warner, which may limit our ability to react to changes in financing needs or obtain relief from covenant restrictions in the event necessary.
If we cannot make our content, products and services available and attractive to consumers via devices other than personal computers, our ability to
attract consumers and maintain or increase their engagement could be adversely affected.
Global consumers are increasingly accessing and using the Internet through devices other than personal computers, such as digital devices (e.g.,
smartphones). In order for consumers to access and use our content, products and services via these devices, we must ensure that our content, products and
services are compatible with such devices. We also need to secure arrangements with device manufacturers and wireless carriers in order to have placement
on these devices. We must also ensure that our licensing arrangements with third-party content providers allow us to make this content available on these
devices. If we cannot effectively make our content, products and services available on these devices, fewer consumers may access and use our content,
products and services. In addition, we must develop and offer effective advertising solutions on these devices in order to generate advertising revenues from
the use of such devices by our consumers. If we are not able to attract and engage consumers via these devices or develop effective advertising solutions for
such devices, our business could be adversely affected.
We rely on legacy technology infrastructure and a failure to update or replace this technology infrastructure could adversely affect our business.
Significant portions of our content, products and services are dependent on technology infrastructure that was developed a number of years ago. In
addition, we incur significant costs operating our business with multiple
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