America Online 2009 Annual Report Download - page 87

Table of Contents
Lease of Office Space to Raytheon
In March 2009, the Company executed an agreement whereby the Company leased to Raytheon Company ("Raytheon") approximately 600,000 square
feet of its owned office space in Dulles, Virginia beginning in October 2009. The lease has an initial term of 10 years with aggregate lease payments of
approximately $102.0 million, and provides Raytheon with a series of five-year renewal options for up to an additional 20 years.
AOL-Google Alliance
During December 2005, AOL announced that it was expanding its strategic alliance with Google. As part of this alliance, on April 13, 2006, Time
Warner completed its issuance of a 5% equity interest in AOL to Google for $1,000 million in cash. On July 8, 2009, Time Warner repurchased Google's 5%
interest in AOL for $283.0 million, which amount included a payment in respect of Google's pro rata share of cash distributions to Time Warner by AOL
attributable to the period of Google's investment in AOL. Following this purchase, AOL became a 100%-owned subsidiary of Time Warner. Google continues
to provide paid text-based search advertising and contextual advertising on AOL Properties.
Acquisition of StudioNow, Inc.
On January 22, 2010, the Company completed the acquisition of StudioNow, Inc. ("StudioNow"), a provider of a proprietary digital platform that
allows clients to create, produce, manage and distribute professional quality videos at scale, for aggregate consideration of $36.5 million (of which $3.1
million is contingent on the future service of certain StudioNow employees). $15.0 million of the total consideration was paid through the issuance of
approximately 595,000 shares of AOL common stock. Of the remaining $21.5 million, $14.0 million was paid in cash at the close date and $7.5 million is due
in cash two years subsequent to the close date. The $3.1 million contingent on the future service of certain StudioNow employees is not included in the
purchase price allocation and will be recognized as compensation expense on a straight-line basis over two years. It is anticipated that a significant portion of
the remaining purchase price will be allocated to intangible assets and goodwill. The Company has not completed the allocation of the consideration
transferred to acquired identifiable assets and liabilities assumed.
This business was acquired to attract and engage more Internet users and drive high volumes of video content production through StudioNow's
platform, which, along with market conditions at the time of acquisition, contributed to a purchase price that is expected to result in the allocation of a
significant portion of the purchase price to goodwill.
Sale of buy.at
On February 26, 2010, the Company completed the sale of buy.at to Digital Window Limited for approximately $17.0 million in cash (subject to
working capital adjustments). The Company expects to record a pre-tax loss on this sale of approximately $15 to 20 million, based on the cash proceeds and
the carrying value of the net assets sold (including goodwill allocated to the sale). The results of operations of buy.at were not material to the Company's
consolidated financial statements.
NOTE 5—LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS
Capital Leases
Capital lease obligations consist of ($ in millions):
Weighted-Average
Interest Rate at
December 31, 2009 Maturities
Outstanding Amount
December 31, 2009 December 31, 2008
Capital lease obligations 5.67% 2010-2013 $ 73.9 $ 58.7
Amount due within one year (32.4) (25.0)
Total long-term capital lease obligations $ 41.5 $ 33.7
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