America Online 2014 Annual Report Download - page 119

AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
At December 31, 2014, of the remaining liability of $5.9 million, $5.6 million was classified as a current
liability within accrued expenses and other current liabilities, with the remaining $0.3 million classified within
other long-term liabilities on the consolidated balance sheets. Amounts classified as long-term are expected to be
paid through 2017.
NOTE 10—COMMITMENTS AND CONTINGENCIES
Commitments
AOL’s net rent expense was $47.6 million, $39.8 million and $41.6 million for the years ended
December 31, 2014, 2013 and 2012, respectively, and is included in costs of revenues and general and
administrative expense on the consolidated statements of comprehensive income. The Company has long-term
lease commitments for office space and network-related facilities in various locations around the world, a
number of which have renewal options at market rates to be determined prior to the renewal option being
exercised. In addition, certain leases have rent escalation clauses with either fixed scheduled rent increases or
rent increases based on the Consumer Price Index.
The minimum rental commitments under long-term operating leases during the next five years and
thereafter are as follows (in millions):
Gross operating
lease
commitments
Sublease
income
Net operating
lease
commitments
2015 ..................................................... $ 48.2 $ 9.6 $ 38.6
2016 ..................................................... 44.0 9.9 34.1
2017 ..................................................... 37.3 4.9 32.4
2018 ..................................................... 31.5 — 31.5
2019 ..................................................... 22.7 — 22.7
Thereafter ................................................. 62.0 — 62.0
Total (a) ................................................... $ 245.7 $ 24.4 $ 221.3
(a) Included in the above table are approximately $146.9 million of payments associated with the lease of the
Company’s corporate headquarters in New York. AOL has leased its corporate headquarters for an initial
lease term that ends in February 2023, with the option to extend the lease for an additional five years.
Monthly rental payments to the landlord under this lease escalate by approximately 7% after the end of the
fifth year and tenth year of the lease term. Included in the above table are approximately $20.9 million of
payments associated with a leased building in California. AOL has leased this space for an initial lease term
that ends in June 2017 with no renewal options. Rent was abated for the first nine months of the lease term
with partial rent abatement for an additional three months. Only operating expenses were paid during the
rent abatement period.
AOL has commitments under certain software licensing, TAC, business analysis, royalty and other
agreements aggregating approximately $70.5 million at December 31, 2014, which are payable principally over a
three-year period, as follows (in millions):
2015 ............................................................................... $ 37.2
2016-2017 .......................................................................... 32.9
2018-2019 .......................................................................... 0.3
Thereafter .......................................................................... 0.1
Total (a) ............................................................................. $ 70.5
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