America Online 2014 Annual Report Download - page 54

AOL INC.
PART II—ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Revolving Credit Facility
On August 4, 2014, we repaid $30.0 million of borrowings under our Credit Facility Agreement. We repaid
the remaining $75.0 million outstanding on September 11, 2014, using a portion of the proceeds from the Notes
discussed below. As of December 31, 2014, and to date, we have no amounts outstanding under our Credit
Facility Agreement.
Convertible Senior Notes
On August 14, 2014, we issued $379.5 million aggregate principal amount of 0.75% convertible senior
notes due September 1, 2019 through a private placement. We sold the Notes under a purchase agreement, dated
August 13, 2014, with Goldman, Sachs & Co. (“Goldman Sachs”) and J.P. Morgan Securities LLC as
representatives of the several purchasers. The Notes were issued under an indenture, dated as of August 19, 2014
(the “Indenture”) between the Company and The Bank of New York Mellon, as trustee.
The net proceeds from our sale of the Notes were approximately $368.6 million, net of issuance costs of
$10.9 million. We used $40.0 million of the net proceeds from this offering to repurchase shares of our common
stock from the purchasers of Notes in this offering in privately negotiated transactions through Goldman Sachs as
our agent. These repurchases are part of the 2014 Stock Repurchase Program discussed above. We used $75.0
million of the net proceeds to repay borrowings under the Credit Facility Agreement discussed above. We used
$36.6 million of the net proceeds to pay the net cost of convertible note hedge and warrant transactions designed
to, among other things, offset our exposure to potential dilution and/or amounts we are required to pay on
conversion of the Notes. We expect to use the remaining net proceeds from the offering of the Notes for general
corporate purposes including, but not limited to, additional share repurchases, acquisitions or other strategic
transactions and working capital.
Acquisition of Vidible
On December 1, 2014, we acquired Vidible, Inc., a cross-device, programmatic video distribution platform
that offers self-service functionalities through a set of video tools and exchange capabilities, for a total purchase
price of $55.9 million, net of cash acquired. The integration of Vidible technology will further extend AOL’s
leadership position in video content management and syndication, as we intend to create the most comprehensive
set of video content management tools in the marketplace for creators and publishers.
Restructuring Costs
As part of our continuing effort to reduce our expenses and invest in areas of strategic focus, we incurred
restructuring costs of $22.0 million for the year ended December 31, 2014.
Key Metrics
Key indicators to understanding our operating results include:
• Advertising revenues, net of traffic acquisition costs;
• Unique visitors;
• Subscription revenue; and
• Our ability to manage our cost structure.
38