America Online 2014 Annual Report Download - page 61

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AOL INC.
PART II—ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General and Administrative
2014 vs 2013
General and administrative expenses decreased primarily due to declines in marketing costs resulting from
AOL’s continued efficiency efforts, partially offset by increased personnel costs related to recent acquisitions
and the impact of a prior year benefit to legal expenses of $6.3 million upon favorable resolution of a dispute
over amounts to be reimbursed to us from escrow related to a prior acquisition.
2013 vs 2012
General and administrative expenses decreased, including the impacts of legal and consulting costs incurred
in 2012 related to the patent transaction with Microsoft of $16.5 million and costs incurred related to the proxy
contest of $10.7 million, as well as a $6.3 million benefit in June 2013 related to favorable resolution of a dispute
previously discussed.
Additionally, general and administrative expenses decreased due to a decline in marketing related costs of
$27.6 million, a decline in personnel costs of $10.3 million as well as a decline in other general and
administrative expenses as a result of our continued cost reduction efforts.
Amortization of Intangible Assets
Amortization of intangible assets results primarily from acquired intangible assets including acquired
technology, customer relationships and trade names.
Amortization of intangible assets increased for the year ended December 31, 2014 compared to the prior
year period primarily due to increased intangible assets resulting from our 2013 and 2014 acquisitions.
Amortization of intangible assets increased for the year ended December 31, 2013 compared to the prior year
period primarily due to amortization of intangible assets acquired from Adap.tv.
Restructuring Costs
In connection with our restructuring initiatives, we incurred restructuring costs of $22.0 million, $41.3
million and $10.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. Restructuring
costs primarily relate to involuntary employee terminations. See “Note 9” in our accompanying consolidated
financial statements for further information regarding restructuring costs.
Goodwill Impairment Charge
Goodwill is tested annually for impairment during the fourth quarter or earlier upon the occurrence of
certain events or substantive changes in circumstances that indicate goodwill is more likely than not impaired.
We performed our annual goodwill impairment test during the fourth quarter of 2014 for each of our
reporting units. In each of these analyses, the estimated fair value of each reporting unit exceeded its respective
carrying value and therefore no goodwill impairment charges were recorded in 2014. See “Note 3” in our
accompanying consolidated financial statements for additional information on our goodwill impairment analyses.
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