America Online 2011 Annual Report Download - page 48

Table of Contents
AOL INC.
PART II—ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
of $43.0 million related to reduced headcount as a result of our 2009 restructuring initiatives, partially offset by an increase in equity-based compensation
expense of $17.9 million and an increase in recruiting expenses of $11.2 million including Patch. These decreases were partially offset by an increase in
marketing costs of $23.3 million primarily associated with our rebranding efforts and support of our new products and initiatives including Patch, an increase
in consulting costs of $8.2 million and an increase in other corporate costs of $6.5 million.
Amortization of Intangible Assets
Amortization of intangible assets results primarily from acquired intangible assets including acquired technology, customer relationships and trade
names. Amortization of intangible assets decreased for the year ended December 31, 2011, as compared to the same period in 2010. The decrease was
primarily due to a $78.3 million decline resulting from certain intangible assets being fully amortized in 2010 and early 2011, partially offset by an increase of
$25.0 million resulting from our 2010 and 2011 acquisitions.
Amortization of intangible assets increased for the year ended December 31, 2010, as compared to the same period in 2009, due to our reevaluation of
the useful lives of certain intangible assets in the fourth quarter of 2009 in connection with our restructuring initiatives, which resulted in incremental
amortization expense of $31.5 million for the year ended December 31, 2010 and $7.4 million for the year ended December 31, 2009. The increase for the
year ended December 31, 2010 was partially offset by a decline of $17.8 million due to certain intangible assets becoming fully amortized in 2009.
Amounts Related to Securities Litigation and Government Investigations, Net of Recoveries
Amounts related to securities litigation and government investigations, net of recoveries consist of legal settlement costs and legal and other
professional fees incurred by Time Warner prior to the spin-off related to the defense of various securities lawsuits involving us or our or Time Warner's
present or former officers and employees. While these amounts were historically incurred by Time Warner and reflected in Time Warner's financial results,
they have been reflected as an expense and a corresponding additional capital contribution by Time Warner in our consolidated financial statements for the
year ended December 31, 2009, as this year includes the period when we were a wholly-owned subsidiary of Time Warner and because these amounts involve
us. We recognized $27.9 million of expense related to these matters for the year ended December 31, 2009. Following the spin-off, these costs continue to be
incurred by Time Warner to the extent that proceeds from a settlement with insurers are available to pay those costs, and thereafter AOL has an obligation to
indemnify Time Warner for such costs to the extent they are associated with present or former officers and employees of AOL. We do not view our remaining
potential obligation related to this matter to be material.
Restructuring Costs
In connection with our restructuring initiatives, we incurred restructuring costs of $38.3 million for the year ended December 31, 2011 related to
organizational changes made in an effort to improve our ability to execute our strategy. These restructuring costs related to the acquisition of The Huffington
Post, a reassessment of our operations in India and actions in the United States to align our costs with our strategy, and were primarily related to involuntary
terminations of employees ranging from executives to line personnel.
We incurred restructuring costs of $33.8 million and $189.2 million for the years ended December 31, 2010 and 2009, respectively, related to voluntary
and involuntary employee terminations, facility closures and contract termination costs. The restructuring activities were completed in an effort to better align
our organizational structure and costs with our strategy.
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