America Online 2014 Annual Report Download - page 45

Additionally, existing laws such as the Internet Tax Freedom Act (“ITFA”), which exempts internet access from
taxation by all but a few states and which has been extended until October 1, 2015, could expire, thereby
imposing additional tax collection and remittance obligations that, in turn, may require significant resources to
implement. There can be no assurance that our tax positions will not be challenged by relevant tax authorities or
that we would be successful in any such challenge. Several taxing jurisdictions have sought to increase revenue
by imposing new taxes on advertising generally, and internet advertising specifically, or by increasing general
business taxes. Imposing new taxes on advertising or internet advertising would adversely affect us. Other states
have sought to expand the definition of “nexus” for the purpose of taxing goods and services sold over the
internet. If enacted, these new taxes would adversely affect our consumers and, as a result, could adversely affect
our business.
We may not be able to utilize our tax attributes to offset future U.S. taxable income.
We believe that we have valuable tax attributes that are significant assets of the Company. Unless otherwise
restricted, we can utilize these tax assets in certain circumstances to offset future U.S. taxable income, including
in connection with capital gains that may be generated from a potential asset sale. Our ability to use the tax assets
could be limited and the timing of the usage of the tax assets could be substantially delayed if we experience an
“ownership change,” as defined in Section 382 of the Internal Revenue Code. A company generally experiences
an “ownership change” for tax purposes if the percentage of stock owned by its 5% stockholders (as defined for
tax purposes) increases by more than 50 percentage points over a rolling three-year period. To help protect
shareholder value and preserve our ability to use the tax assets, our Board of Directors (the “Board”) adopted a
Tax Asset Protection Plan (the “TAPP”) to act as a deterrent to any person acquiring beneficial ownership of
4.9% or more of our outstanding common stock without the approval of the Board. Notwithstanding the adoption
of the TAPP, we cannot eliminate the possibility that an “ownership change” will occur. The amount by which
our ownership may change in the future could, for example, be affected by purchases and sales of stock by
stockholders and repurchases of stock by us, should we choose to do so. If the TAPP is not effective in
preventing an ownership change our ability to use the tax assets to offset taxable income may be reduced or
eliminated. Even if the TAPP is effective in preventing an ownership change, we will only be able to utilize these
tax assets to the extent we generate taxable income and the taxing authorities do not challenge the amount of our
tax assets or otherwise make an adverse determination regarding our ability to use these assets, and therefore we
are not able to guarantee that the tax assets will be valuable to us in the future.
Risks Relating to our Common Stock and the Securities Market
Our stock price may fluctuate significantly.
Our stock price has fluctuated significantly over the last two years and may fluctuate significantly in the
future depending on many factors, some of which may be beyond our control, including:
• actual or anticipated fluctuations in our operating results due to factors related to our business;
• success or failure of our business strategy;
• our quarterly or annual earnings, or those of other companies in our industry;
• our ability to obtain financing as needed;
• announcements by us or our competitors of significant acquisitions or dispositions;
• changes in accounting standards, policies, guidance, interpretations or principles;
• changes in earnings estimates by securities analysts or our ability to meet those estimates;
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