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AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The rights will expire on August 27, 2015, or such earlier time as the Company’s Board determines that the
Company has no remaining designated tax attributes as of the beginning of a taxable year. The TAPP was
approved by the stockholders at the annual meeting of stockholders on May 3, 2013. As of December 31, 2014,
no event occurred that caused the Company to believe it was appropriate to invoke an action under the TAPP.
Thus, the TAPP did not have a material impact on the Company’s financial statements as of and for the year
ended December 31, 2014.
Accelerated Stock Repurchase Agreement
On August 26, 2012, the Company entered into a fixed dollar collared accelerated stock repurchase
agreement with Barclay’s Capital Inc. (“Barclays”), as agent for Barclays Bank PLC, effective August 27, 2012
(the “ASR Agreement”). Under the ASR Agreement, on August 30, 2012, the Company paid $654.1 million
from cash on hand to Barclays to repurchase outstanding shares of common stock. The consideration paid to
Barclays to repurchase shares included $54.1 million in contemplation of a cash dividend announced by the
Company on August 27, 2012 (the “Special Cash Dividend”) and discussed further below, which was calculated
as the present value of the Special Cash Dividend with respect to those shares deliverable under the ASR
Agreement prior to the ex-dividend date of December 3, 2012. No shares were repurchased under the ASR
Agreement during 2013.
On April 22, 2013, the repurchase program under the ASR Agreement was completed. Since the final
volume-weighted average price of the Company’s stock was above the adjusted cap price established under the
ASR Agreement, no additional shares were delivered upon completion of the program. The total amount of
shares repurchased by the Company under the ASR Agreement was 18.4 million shares at a cap price of $32.69.
The remaining $33.9 million recorded within APIC under the ASR Agreement was reclassified to treasury stock
during the second quarter of 2013. The $654.1 million is reflected within treasury stock on the Company’s
consolidated balance sheet as of December 31, 2013.
Special Cash Dividend
On August 26, 2012, AOL declared the Special Cash Dividend of $5.15 per share to be paid to shareholders
of record at the close of business on December 5, 2012. The total amount of the Special Cash Dividend paid to
shareholders on December 14, 2012 was $434.4 million with an offsetting reduction to retained earnings on the
Company’s consolidated balance sheets. In connection with the payment of the Special Cash Dividend and in
accordance with and pursuant to the Company’s Amended and Restated 2010 Stock Incentive Plan (“2010 SIP”),
the Company made an equitable adjustment to outstanding stock options, such that both the fair value and
intrinsic value of employee awards immediately following the Special Cash Dividend were essentially unchanged
from the fair value and intrinsic value prior to the Special Cash Dividend. This dividend was treated as a return
of capital for tax purposes. In addition to the amount paid on December 14, 2012, individuals who hold RSUs
and performance stock units (“PSUs”) will be paid out dividend equivalents in cash as the respective RSUs and
PSUs vest. The Company did not record any incremental compensation expense in connection with the
adjustment of stock options or payment of dividend equivalents on RSUs and PSUs given that the adjustments
were made pursuant to an existing anti-dilution provision included in the Company’s 2010 SIP, and the
adjustments were made so that the holders of the awards were in the same economic position after the equity
restructuring as before.
Dutch Auction Tender Offer
On June 28, 2012, AOL announced a $400.0 million modified Dutch auction tender offer. The tender offer
began on the date of the announcement, June 28, 2012, and expired on August 2, 2012. Through the Dutch tender
offer, AOL’s shareholders had the opportunity to tender some or all of their shares at a price within the range of
98