America Online 2014 Annual Report Download - page 92

Download and view the complete annual report

Please find page 92 of the 2014 America Online annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 156

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156

AOL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash and Equivalents
Cash equivalents primarily consist of highly liquid short-term investments with an original maturity of three
months or less, which include money market accounts, U.S. treasury bills and time deposits that are readily
convertible into cash. Cash equivalents are carried at cost plus accrued interest, which approximates fair value.
These are included within cash and equivalents and fall within level one of the GAAP fair value hierarchy.
Restricted Cash
Restricted cash includes posted cash collateral for letters of credit related to certain of the Company’s lease
agreements. The collateral amounts are legally restricted as to withdrawal and use for a period in excess of
twelve months. Also included in restricted cash are security deposits held by the Company from lessees that are
restricted as to use. The Company had $9.0 million of restricted cash included in prepaid expenses and other
current assets and other long-term assets on the consolidated balance sheet as of December 31, 2014.
Allowance for Doubtful Accounts
AOL’s receivables consist primarily of two components, receivables from individual subscribers to AOL’s
subscription services and receivables from advertising customers. Management performs separate evaluations of
these components to determine if the balances will ultimately be fully collected considering management’s views
on trends in the overall aging of receivables as well as past collection experience. In addition, for certain
advertising receivables, management prepares an analysis of specific risks on a customer-by-customer basis.
Using this information, management reserves an amount that is expected to be uncollectible. Receivables are
written off when amounts are deemed to be uncollectible and internal collection efforts are closed.
Property and Equipment
Property and equipment are stated at cost. Depreciation, which includes amortization of capitalized software
costs and amortization of assets under capital leases, is provided on a straight-line basis over the estimated useful
lives of the assets. AOL evaluates the depreciation periods of property and equipment to determine whether
events or circumstances warrant revised estimates of useful lives. Depreciation expense, recorded in costs of
revenues and general and administrative expense, totaled $134.7 million, $128.9 million and $138.7 million for
the years ended December 31, 2014, 2013 and 2012, respectively. Costs related to leasehold improvements are
capitalized and amortized on a straight-line basis over the shorter of the economic useful life of the
improvements or the remaining lease term.
Property and equipment, including assets under capital lease, consist of ($ in millions):
December 31, Estimated
Useful Lives2014 2013
Land (a) ................................................... $ 38.1 $ 39.2 N/A
Buildings and building improvements .......................... 207.2 275.6 12 to 40 years
Capitalized internal-use software costs .......................... 449.1 434.6 1 to 5 years
Leasehold improvements ..................................... 106.5 108.6 Up to 16 years
Furniture, fixtures and other equipment ......................... 577.1 591.5 1 to 20 years
1,378.0 1,449.5
Less accumulated depreciation ................................ (914.1) (981.6)
Total ..................................................... $ 463.9 $ 467.9
(a) Land is not depreciated.
76