America Online 2009 Annual Report Download - page 71

Table of Contents
AOL Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—DESCRIPTION OF BUSINESS, BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
AOL Inc. ("AOL" or the "Company") is a leading global web services company with an extensive suite of brands and offerings and a substantial
audience. AOL's business spans online content, products and services that it offers to consumers, publishers and advertisers. AOL is focused on attracting and
engaging consumers and providing valuable online advertising services on both its owned and operated properties and third-party websites. AOL generates
advertising revenues from the owned and operated content, products and services, which are referred to as "AOL Properties", through the sale of display
advertising and search and contextual advertising. A valuable distribution channel for AOL Properties is through the AOL-brand subscription access service,
which is offered to consumers in the United States for a monthly fee. AOL also generates advertising revenues through the sale of advertising on third-party
websites and on digital devices, which are collectively referred to as the "Third Party Network."
The Spin-Off
On December 9, 2009, the separation of AOL from Time Warner was completed pursuant to a Separation and Distribution Agreement (the "Separation
Agreement") dated as of November 16, 2009 between AOL and Time Warner. In accordance with the Separation Agreement, on November 16, 2009, Time
Warner declared a pro rata dividend of the shares of AOL's common stock owned by Time Warner to Time Warner shareholders. On the distribution date of
December 9, 2009, 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, which resulted in the complete legal and structural separation of the two
companies (also referred to herein as the "spin-off"). Fractional shares of AOL common stock were not distributed to Time Warner shareholders. Instead, the
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 New York Stock Exchange as an independent, public company.
Prior to the spin-off, AOL reorganized its corporate structure. On July 8, 2009, Time Warner completed the purchase of Google Inc.'s ("Google") 5%
interest in AOL. Following this purchase, AOL Holdings LLC, which was formed in Delaware in 2006, became a wholly-owned subsidiary of Time Warner.
On November 2, 2009, AOL Holdings LLC was converted into a Delaware corporation named AOL Inc. Prior to the spin-off, substantially all of the assets
and liabilities (other than guarantees of indebtedness of Time Warner and other non-AOL affiliates of Time Warner) of AOL LLC, then AOL's wholly-owned
subsidiary that held, directly or indirectly, all of the AOL business, were transferred to and assumed by AOL. Following this transfer and assumption of
substantially all of AOL LLC's assets and liabilities, ownership of AOL LLC was retained by Time Warner.
In connection with the spin-off, the Company entered into the Separation Agreement and several other related agreements which govern the ongoing
relationship between the two companies. See "Note 13: Related Party Transactions" for further information on the ongoing relationship with Time Warner.
On December 9, 2009, the Company entered into a secured credit agreement (the "Credit Agreement") among the Company, as borrower, the lenders
party thereto (the "Lenders"), Bank of America, N.A., as administrative agent (the "Administrative Agent") and the other financial institutions party thereto
for a 364-day $250.0 million senior secured revolving credit facility (the "Revolving Credit Facility"). See "Note 5: Long-Term Debt and Other Financing
Arrangements" for additional information regarding the Revolving Credit Facility.
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