America Online 2014 Annual Report Download - page 86

AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
generates advertising revenues on AOL Platforms through the sale of advertising on third party websites and
from advertising inventory on AOL Properties not sold directly to advertisers, as described above. AOL’s
advertising offerings on AOL Platforms consist primarily of the sale of display advertising (which includes video
advertising) and also include search advertising through sponsored listings.
Corporate and Other
Corporate and other primarily consists of broad corporate functions including legal, human resources,
accounting, analytics, finance, marketing and activities and costs not directly attributable or allocable to a
specific segment such as tax settlements and other general business costs. The corporate and other category also
includes the elimination of revenues resulting from transactions between the Brand Group, Membership Group
and AOL Platforms segments.
Basis of Presentation
Reclassifications
Advertising revenues and other revenues have been combined for all periods into a single advertising and
other revenues line on the consolidated statements of comprehensive income, given the immateriality of other
revenues to total revenues for all periods presented.
Basis of Consolidation
The consolidated financial statements include 100% of the assets, liabilities, revenues, expenses and cash
flows of AOL and all voting interest entities in which AOL has a controlling voting interest (“subsidiaries”) and
variable interest entities in which AOL is the primary beneficiary in accordance with the consolidation
accounting guidance. Intercompany accounts and transactions between consolidated companies have been
eliminated in consolidation. The consolidated balances of the Company’s variable interest entities are not
material to the Company’s consolidated financial statements for the periods presented.
The financial position and operating results of the majority of AOL’s foreign operations are consolidated
using the local currency as the functional currency. Local currency assets and liabilities are translated at the rates
of exchange on the balance sheet date, and local currency revenues and expenses are translated at average rates of
exchange during the period. Resulting translation gains or losses are included on the consolidated balance sheets
as a component of accumulated other comprehensive income (loss), net and on the consolidated statements of
comprehensive income as a component of other comprehensive income (loss), net of tax.
Redeemable Noncontrolling Interest
The noncontrolling interest in a joint venture between Mitsui & Company Ltd. and AOL (“Ad.com Japan”)
is classified outside of permanent equity on the Company’s consolidated balance sheets for the years ended
December 31, 2014 and 2013, due to a redemption right available to the noncontrolling interest holder in the
future. The noncontrolling interest holder’s right to redeem its stock is exercisable any time between July 1 and
July 30 of any year, commencing with July 1, 2014. This right was not exercised during July 2014. Net
income on the consolidated statements of comprehensive income reflects 100% of the results of Ad.com Japan
for the years ended December 31, 2014, 2013 and 2012 as the Company has a controlling financial interest in the
entity. Net income is subsequently adjusted to exclude AOL’s noncontrolling interests to arrive at net
income attributable to AOL Inc.
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