America Online 2010 Annual Report Download - page 76

Table of Contents
AOL INC.
NOTES TO THE 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. AOL Properties also include co-branded websites owned by third parties for which certain criteria have
been met, including that the Internet traffic has been assigned to us. 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, which are referred to as the "Third Party Network."
The Spin-Off
On December 9, 2009, the Company completed its legal and structural separation from Time Warner Inc. ("Time Warner") via a spin-off (the "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. On December 10, 2009, AOL began trading on the New York Stock Exchange as
an independent, public company.
Basis of Presentation
The consolidated financial statements for 2009 and 2008 have been recast so that the basis of presentation is consistent with that of the consolidated
financial statements for 2010. This recast reflects the financial condition, results of operations and cash flows of Perfiliate Limited (doing business as buy.at)
as discontinued operations for all periods presented. The financial condition, results of operations and cash flows of the Company's ICQ operations ("ICQ")
are presented within continuing operations for all periods presented. See "Note 4" for additional information on ICQ.
Basis of Consolidation
The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash flows of AOL, all voting interest entities in
which AOL has a controlling voting interest ("subsidiaries"), and those variable interest entities for which AOL is the primary beneficiary in accordance with
the consolidation accounting guidance. Through the date of the spin-off, these financial statements present the historical consolidated results of operations,
financial position, and cash flows of the AOL business that now comprises the operations of the Company. Intercompany accounts and transactions between
consolidated companies have been eliminated in consolidation. Prior to the spin-off, AOL was a subsidiary of Time Warner. The financial information prior to
the spin-off may not necessarily reflect AOL's financial position, results of operations and cash flows in the future or what AOL's financial position, results of
operations and cash flows would have been had AOL been an independent, publicly-traded company.
Through the date of the spin-off, the consolidated financial statements include allocations of certain Time Warner corporate expenses. Management
believes the assumptions and methodologies underlying the allocation of general corporate overhead expenses are reasonable. However, such expenses may
not be indicative of the
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