America Online 2009 Annual Report Download - page 98

Table of Contents
contracts that generally had maturities of three months to 18 months providing continuing coverage throughout the hedging period with all positions being
unwound prior to the spin-off. In the aggregate, the derivative instruments and hedging activities were not material to AOL. Time Warner managed the
foreign currency transactions directly and entered into foreign currency purchase and sale transactions directly with counterparties and allocated costs to AOL
related to these transactions. For the years ended December 31, 2009, 2008 and 2007, AOL recognized net gains (losses) of $10.8 million, ($20.4 million) and
$22.1 million, respectively, within other income, net related to foreign currency management activity performed by Time Warner on behalf of AOL. These
amounts were recognized upon the de-designation or settlement of foreign exchange contracts used in hedging relationships, including economic hedges. Such
amounts were largely offset by corresponding gains or losses from the respective transaction that was hedged and were generally recognized in income in the
same period that the hedged item or transaction affects income. Gains and losses from the ineffectiveness of hedging relationships, including ineffectiveness
as a result of the discontinuation of cash flow hedges for which it was probable that the originally forecasted transaction would no longer occur, were not
material for any period.
NOTE 11—COMMITMENTS AND CONTINGENCIES
Commitments
AOL's total rent expense from continuing operations amounted to $50.3 million, $55.9 million and $59.6 million for the years ended December 31,
2009, 2008 and 2007, respectively. The Company has long-term non-cancelable lease commitments for office space and operating equipment in various
locations around the world, a number of which have renewal options at market rates to be determined prior to the renewal option being exercised. In addition,
certain leases have rent escalation clauses with either fixed scheduled rent increases or rent increases based on the Consumer Price Index. The minimum rental
commitments under non-cancelable long-term operating leases during the next five years are as follows (in millions):
Gross operating
lease
commitments Sublease income
Net operating
lease
commitments
2010 $ 62.8 $ 5.4 $ 57.4
2011 55.2 4.7 50.5
2012 39.7 5.2 34.5
2013 33.1 0.6 32.5
2014 30.6 — 30.6
Thereafter 191.5 — 191.5
Total (a) $ 412.9 $ 15.9 $ 397.0
(a) Included in the above table are approximately $230.7 million of payments associated with the lease of our corporate headquarters in New York. We
have leased our corporate headquarters for a non-cancelable initial lease term that ends in February 2023, and we have the option to extend the lease for
an additional five years. Monthly rental payments to the landlord under this lease escalate by approximately 7% after each of the first five years and the
first ten years of the lease term.
AOL has commitments under certain network licensing, marketing, royalty and other agreements aggregating approximately $137.6 million at
December 31, 2009, which are payable principally over a three-year period, as follows (in millions):
2010 $ 96.8
2011-2012 32.9
2013-2014 7.0
Thereafter 0.9
Total (a) $ 137.6
(a) Includes amounts committed to Time Warner, as the Company no longer considers Time Warner a related party. See "Note 13: Related Party
Transactions" for further information.
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