America Online 2009 Annual Report Download - page 40

Table of Contents
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our results of operations and financial condition together with our audited consolidated financial
statements and the notes thereto included elsewhere in this Annual Report as well as the discussion in the "Item 1—Business" section. This discussion
contains forward-looking statements that involve risks and uncertainties. The forward-looking statements are not historical facts, but rather are based on
current expectations, estimates, assumptions and projections about our industry, business and future financial results. Our actual results could differ
materially from the results contemplated by these forward-looking statements due to a number of factors, including those discussed in "Item 1A—Risk
Factors" and "Cautionary Statement Concerning Forward-Looking Statements."
Introduction
Management's discussion and analysis of financial condition and results of operations ("MD&A") is a supplement to the accompanying consolidated
financial statements and provides additional information on our business, recent developments, results of operations, liquidity and capital resources and
critical accounting policies. MD&A is organized as follows:
• Overview. This section provides a general description of our business, as well as recent developments we believe are important in understanding
the results of operations and financial condition or in understanding anticipated future trends.
• Results of operations. This section provides an analysis of our results of operations for the three years ended December 31, 2009.
• Liquidity and capital resources. This section provides a discussion of our current financial condition and an analysis of our cash flows for the
three years ended December 31, 2009. This section also provides a discussion of our contractual obligations and commitments, off-balance sheet
arrangements and customer credit risk that existed at December 31, 2009. Included in this section is a discussion of the amount of financial
capacity available to fund our future commitments and ongoing operating activities.
• Critical accounting policies. This section identifies and summarizes those accounting policies that are considered important to our results of
operations and financial condition and require significant judgment and estimates on the part of management.
Overview
The Spin-Off
On December 9, 2009, we completed our legal and structural separation from Time Warner via a spin-off. In the spin-off, Time Warner shareholders of
record as of 5 p.m. on November 27, 2009, the record date for the distribution, received one share of AOL common stock for every eleven shares of Time
Warner common stock held. Fractional shares of AOL common stock were aggregated and sold in the open market, with the net proceeds distributed pro rata
in the form of cash payments to Time Warner shareholders who would otherwise be entitled to receive a fractional share of AOL common stock. On
December 10, 2009, AOL began trading on the NYSE as an independent, public company.
In connection with the separation, we entered into the Separation Agreement and several other related agreements which govern the ongoing
relationship between us and Time Warner. See "Note 13: Related Party Transactions" in our accompanying consolidated financial statements for further
information on our ongoing relationship with Time Warner.
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