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Table of Contents
AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 11—ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued expenses and other current liabilities consist of (in millions):
December 31,
2011 2010
TAC $ 43.6 $ 55.4
Costs of revenues (excluding TAC) 43.6 42.1
Taxes 23.5 24.7
General and administrative costs 20.7 20.1
Restructuring liabilities 11.6 29.2
Rent and facilities expense 8.6 5.5
Network and related costs 8.0 6.9
Member support services 4.0 4.8
Other accrued expenses 8.0 47.6
Total accrued expenses and other liabilities $ 171.6 $ 236.3
NOTE 12—RELATED PARTY TRANSACTIONS
Acquisition of Patch Media Corporation
On June 10, 2009, AOL purchased Patch, a news, information and community platform business dedicated to providing comprehensive local
information and services for individual towns and communities, for approximately $7.0 million in cash. Approximately $700,000 of the consideration was
held in an indemnity escrow account until the first anniversary of the closing.
At the time of closing, Timothy M. Armstrong, AOL's Chairman and Chief Executive Officer, held, indirectly, through Polar Capital (a private
investment company which he founded), economic interests in Patch that entitled him to receive approximately 75% of the transaction consideration.
Mr. Armstrong's original investment in Patch, made in December 2007 through Polar Capital, was approximately $4.5 million. In connection with the
transaction, Mr. Armstrong, through Polar Capital, waived his right to receive any transaction consideration in excess of his original $4.5 million investment,
opting to accept only the return of his initial investment in AOL common stock. In addition, Mr. Armstrong elected to return the $4.5 million (approximately
$450,000 of which was held in the indemnity escrow account for a year) that he was entitled to receive in connection with the transaction to AOL, to be held
by AOL until after the Company's separation from Time Warner in exchange for the subsequent issuance of AOL common stock. In exchange for the $4.5
million he was entitled to receive, during 2010, AOL issued to Polar Capital 194,857 shares of AOL common stock.
Transactions with Time Warner
Through the date of the spin-off, AOL had certain related party relationships with Time Warner and its subsidiaries. In connection with the separation,
AOL entered into the Separation Agreement and several other related agreements which govern the ongoing relationship between the two companies. The
Company does not consider Time Warner to be a related party subsequent to the spin-off. The most significant related party relationships and subsequent
relationships with Time Warner are discussed further below.
Administrative Services
Through the date of the spin-off, Time Warner performed certain administrative functions on behalf of AOL. Costs of these services that were allocated
or charged to AOL were based on either the actual costs
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