America Online 2009 Annual Report Download - page 57

Table of Contents
OPERATING ACTIVITIES
The following table presents cash provided by operations for the periods presented (in millions):
Years Ended December 31,
2009 2008 2007
Net income (loss) $ 248.5 $ (1,526.6) $ 1,395.4
Adjustments for non-cash and non-operating items:
Depreciation and amortization 406.2 477.2 498.6
Non-cash asset impairments 23.1 2,240.0 16.2
Gain on disposal of assets and consolidated businesses, net — (0.3) (682.6)
Non-cash equity-based compensation 12.5 19.6 32.3
Amounts related to securities litigation and government investigations, net of recoveries 27.9 20.8 171.4
Deferred income taxes (6.7) (49.5) 102.2
Adjustments relating to discontinued operations — — (186.7)
All other, net, including working capital changes 196.7 (247.6) (330.2)
Cash provided by operations $ 908.2 $ 933.6 $ 1,016.6
Cash provided by operations decreased by $25.4 million to $908.2 million for the year ended December 31, 2009, as compared to the year ended
December 31, 2008. Our operating income was $458.0 million for the year ended December 31, 2009, an increase of $1,625.7 million as compared to the year
ended December 31, 2008. Excluding the $2,207.0 million non-cash goodwill impairment charge in 2008, operating income decreased, driving the decrease in
cash provided by operations. The decrease in operating income was partially offset by an increase in cash provided by working capital, driven mainly by
lower employee bonus payments in 2009 and the restructuring charge incurred in 2009, the majority of which has not been paid as of the year ended
December 31, 2009 and is expected to be paid in 2010.
Cash provided by operations decreased by $83.0 million to $933.6 million for the year ended December 31, 2008 as compared to the year ended
December 31, 2007 driven by our decline in operating income. Our operating loss was $1,167.7 million for the year ended December 31, 2008, a decline of
$3,021.5 million as compared to the year ended December 31, 2007. Excluding the declines in operating income related to the $2,207.0 million non-cash
goodwill impairment charge in 2008 and the $668.2 million gain on the sale of our German access service business in 2007 (which is related to an investing
cash flow), and excluding the $150.6 million increase in operating income related to securities litigation and government investigations (which were non-cash
to us as Time Warner paid these amounts), operating income declined by $296.9 million, driving the decrease in cash provided by operations. This decline
was mostly offset by changes in working capital, driven by a number of factors. First, a portion of our $222.2 million restructuring charge incurred in 2006
was paid in 2007, and the majority of our restructuring charge incurred in 2007 was also paid in 2007, reducing cash provided by operations in 2007. Second,
the continued decline in domestic access subscribers and our strategic shift announced in 2006 led to a significant decline in deferred revenues (as we
typically collect cash in advance of providing service to customers) from December 31, 2006 to December 31, 2007, resulting in lower cash from operations
in 2007. Third, our advertising receivables increased in 2007 as our advertising business grew, and our advertising receivables declined in 2008 as a result of
the weak economic conditions. As a result, our cash from operations in 2008 benefited from sales of advertising in 2007.
The components of working capital are subject to fluctuations based on the timing of cash transactions. The changes in working capital between periods
primarily reflect changes in cash collected from subscribers and advertising customers and the timing of payments for accrued expenses and other liabilities.
Our cash paid for taxes (substantially all of which was paid to Time Warner under the tax matters agreement) was $216.8 million, $516.6 million and
$741.9 million for the years ended December 31, 2009, 2008 and 2007, respectively. The fluctuations in cash paid for taxes for the years ended December 31,
2009, 2008 and
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