America Online 2014 Annual Report Download - page 105

AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Future minimum capital lease payments at December 31, 2014 are as follows (in millions):
2015 .............................................................................. $ 59.3
2016 .............................................................................. 46.0
2017 .............................................................................. 37.3
2018 .............................................................................. 12.4
2019 .............................................................................. —
Total ............................................................................. 155.0
Amount representing interest .......................................................... (9.9)
Present value of minimum lease payments ................................................ 145.1
Current portion ..................................................................... (54.0)
Total long-term portion ............................................................... $ 91.1
Interest Expense
Interest expense was $15.9 million, $6.5 million and $5.9 million for the years ended December 31, 2014,
2013 and 2012, respectively, and is included in interest and other income (expense), net on the consolidated
statements of comprehensive income. The weighted-average interest rate on AOL’s capital lease obligations was
4.56% and 5.30% at December 31, 2014 and 2013, respectively. The weighted-average rate on capital lease
obligations due within one year was 4.74% at December 31, 2014.
Revolving Credit Facility
On July 1, 2013, AOL entered into a $250 million Credit Facility Agreement. Under the terms of the Credit
Facility Agreement, AOL may request an increase in the commitments of up to an additional $250 million with
commitments from either new lenders or increased commitments from existing lenders, subject to the satisfaction
of certain conditions. The Credit Facility Agreement is guaranteed by all of AOL’s material domestic
subsidiaries, as defined in the Credit Facility Agreement, and substantially all of the property and assets of AOL
have been pledged as collateral, subject to customary exceptions.
Interest on borrowings under the Credit Facility Agreement is payable at rates per annum equal to, at the
option of AOL: (1) a fluctuating base rate equal to JPMorgan’s adjusted base rate (“ABR”) plus the applicable
margin, or (2) a periodic fixed rate equal to the Eurodollar rate plus the applicable margin. The ABR will be the
highest of (i) the federal funds rate plus 0.5%, (ii) JPMorgan’s publicly announced prime rate and (iii) one-month
LIBOR plus 1.0%. The applicable margin relating to any Eurodollar loan is 2.0% and the applicable margin
relating to any ABR loan is 1.0%. AOL is required to pay a commitment fee of 0.5% per annum based on the
unused portion of the commitments under the Credit Facility Agreement.
The Credit Facility Agreement contains various affirmative, negative and financial covenants. Financial
covenants in the agreement include a ratio of debt (net of unrestricted cash up to an agreed cap) to EBITDA (as
defined in the Credit Facility Agreement, “EBITDA”) and a ratio of EBITDA to interest expense. The debt to
EBITDA ratio must not exceed a specified maximum. The EBITDA to interest expense ratio requires the
Company to meet or exceed a specified minimum. Each of the above ratios is tested at the end of each fiscal
quarter and measured on a rolling four-quarter basis. To date, the Company is in compliance with its covenants
under the Credit Facility Agreement.
Any amounts outstanding under the Credit Facility Agreement will be due and payable on July 1, 2018, and
the commitments thereunder will terminate on such date. The Company intends to use borrowings under the
Credit Facility Agreement for general corporate purposes.
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