AOL Inc. (NYSE: AOL) released first quarter 2011 results
today.
“Today represents an important milestone in the turnaround of
AOL as global display revenue grew for the first time since Q4
2007,” said Tim Armstrong, Chairman and CEO. “I am proud of the
work completed thus far and we remain focused on accelerating our
momentum through continued execution of our strategy to become the
premier digital content company.”
Summary
Results In millions (except per share amounts)
Q1 2011 Q1 2010 Change
Revenue Advertising $ 313.7 $ 354.3 -11 % Subscription 215.4
282.7 -24 % Other 22.3 27.3 -18 % Total
revenues $ 551.4 $ 664.3 -17 % Adjusted operating income
before depreciation and amortization (OIBDA) (1) $ 99.1 $ 231.3 -57
% Restructuring costs $ 27.8 $ 23.4 19 % Operating
income (loss) $ (11.8 ) $ 80.7 NM Net income $ 4.7 $ 34.7 -86 %
Diluted EPS from continuing operations $ 0.04 $ 0.39 -90 %
Cash provided (used) by continuing operations $ (9.3 ) $
162.9 NM Free Cash Flow (1) $ (41.5 ) $ 125.1 NM
(1) See Page 9 for a reconciliation of Adjusted
OIBDA and Free Cash Flow to the GAAP financial measures the Company
considers most comparable.
Q1 Noteworthy Items:
- AOL grew video viewers rapidly moving
into second position in comScore in March, StyleList moved into
first position in comScore’s style, beauty, and fashion category in
March, Patch grew users rapidly year-over-year and sequentially
according to comScore, most AOL properties were redesigned to
accommodate the Project Devil advertising format which, along with
Pictela, won an IAB “Rising Star” award and this week Hearst
Magazines became the first third party publisher to adopt the
format on its properties.
- AOL continued to strengthen its brand
portfolio, talent pool and technology, closing the acquisitions of
goviral and The Huffington Post and aligning all of its content
under the newly formed AOL Huffington Post Media Group with Arianna
Huffington as Editor-in-Chief.
- Global display revenue grew 4%, marking
the first quarter of year-over-year growth since Q4 2007. Domestic
display grew 11% in Q1 2011 or 6% excluding acquisitions, driven by
improved yield management of AOL properties.
- Advertising revenue was essentially
flat after excluding the $41.8 million impact of AOL’s 2010
initiatives to optimize its product offerings. These initiatives
are discussed further on page 2.
- Subscription revenue declines reflect a
22% decline in access subscribers year-over-year, while monthly
average churn of 2.5% continues the trend of meaningful
year-over-year improvement.
- We changed our definition of Adjusted
OIBDA to exclude restructuring costs and equity-based compensation
in order to present a measure we believe is more indicative of our
core operating performance and better aligns us with the industry
and analyst community.
- Net income and Adjusted OIBDA declines
reflect the decline in revenue, increased investment in Patch, $9
million of transaction-related expenses primarily related to the
goviral and The Huffington Post acquisitions and $8.4 million in
incentive compensation expense related to acquisitions made in 2010
and in Q1 2011.
- Net income also includes $27.8 million
in restructuring expenses related to The Huffington Post
acquisition and the reassessment of our operations in India.
- At March 31, 2011, AOL had $381.8
million of cash. Q1 2011 cash used by continuing operations was
$9.3 million, while Free Cash Flow was a $41.5 million outflow,
reflecting lower operating income, the impact of full year 2010
employee bonus payments in Q1 2011 and the payment of transaction
related expenses.
DISCUSSION OF RESULTS
Revenue
Q1 2011
Q1 2010 Change
(In millions)
Advertising revenue Display $ 130.5 $ 125.6 4 %
Display - domestic 122.0 109.8 11 % Display - international 8.5
15.8 -46 % Search and contextual 95.8 120.7
-21 % AOL Properties 226.3 246.3 -8 % Third Party Network
87.4 108.0 -19 % Total advertising revenue
313.7 354.3 -11 % Subscription revenue 215.4 282.7 -24 %
Other revenue 22.3 27.3 -18 %
Total revenue $ 551.4 $
664.3 -17 %
Advertising revenue declined $40.6 million versus Q1 2010.
Initiatives implemented by AOL in 2010 negatively impacted
advertising revenue by $41.8 million and comprised: $25.9 million
in lower Third Party Network revenue associated with European
shutdowns and the de-emphasis of low margin search engine campaign
management and lead generation affiliate products; $8.2 million in
lower international display revenue related to reduced operations
in Germany and France and the absence of revenue from Bebo and ICQ
which we sold in 2010; and $7.7 million in lower search and
contextual revenue reflecting the absence of revenue from ICQ, our
de-emphasis of contextual products and fewer queries in Germany and
France where we have reduced operations.
Apart from the impacts of AOL-implemented initiatives,
advertising revenue was essentially flat, reflecting declines in
search and contextual revenue, partially offset by growth in
display revenue and increases in Third Party Network revenue.
Search and contextual revenue declines of $17.3 million include
$12.3 million related to fewer domestic queries, due to lower
search traffic on AOL Properties and a 22% year-over-year decrease
in domestic AOL-brand access subscribers, as well as a $7.1 million
impact from fewer international queries. Domestic display revenue
grew $7.0 million reflecting improved pricing and a higher sell
through rate, particularly in Telecom, Personal Finance and Auto
categories. Q1 2011 domestic display revenue includes approximately
$5.2 million in revenue primarily related to the acquisitions of
TheHuffingtonPost.com, Inc. (“The Huffington Post”) and TechCrunch,
Inc. Third Party Network revenue increased $5.3 million, primarily
related to the acquisitions of 5 Minutes Ltd. (“5min Media ”) and
goviral A/S (“goviral”).
Subscription revenue declines primarily reflect the 22% decline
in domestic AOL-brand access subscribers noted above and a 2%
decline in average revenue per subscriber. Monthly average churn
for the period was 2.5%, as compared to 3.0% in the prior year
period, and the average paid tenure of our domestic AOL-brand
access subscribers has increased to 10.3 years this period from 9.1
years in the prior year period.
Other revenue declines primarily reflect lower mobile carrier
revenues.
Profitability
Operating income and Adjusted OIBDA declines reflect the lower
revenue discussed above and increased costs of revenues due
primarily to increased investment in Patch, $9 million in deal
related expenses primarily associated with the acquisitions of
goviral and The Huffington Post and $8.4 million of incentive
compensation expense associated with acquisitions made in 2010 and
Q1 2011. Cost of revenue increases were partially offset by a $17.8
million decline in traffic acquisition costs reflecting lower
partner revenue share in Europe associated with the cessation of
operations or reduced operations in certain countries. Operating
income also reflects a $47.9 million decrease in depreciation and
amortization in Q1 2011 versus Q1 2010, primarily due to a
re-evaluation of the useful lives of certain intangible assets,
which resulted in incremental amortization expense of $32.9 million
in Q1 2010.
Tax
The Company had a pre-tax loss from continuing operations of
$11.2 million and a related income tax benefit of $15.9 million,
resulting in an effective tax rate of 142.0% for the three months
ended March 31, 2011, as compared to an effective tax rate of 47.2%
for the three months ended March 31, 2010. The effective tax rate
for the three months ended March 31, 2011 differed from the
statutory U.S. federal income tax rate of 35.0% and the effective
tax rate for the three months ended March 31, 2010 primarily due to
$7.1 million of income tax benefit associated with an anticipated
worthless stock deduction in connection with the sale of a
subsidiary during the quarter and $8.2 million in favorable
adjustments related to escrow disbursements from prior acquisitions
for which we have now concluded we will be able to recognize a tax
benefit.
Cash Flow
Q1 2011 cash used by continuing operations was $9.3 million
while Free Cash Flow was a $41.5 million outflow. Cash provided by
continuing operations and Free Cash Flow declined versus Q1 2010,
primarily reflecting the decline in operating income and timing of
operating cash payments and receipts. The most significant items
impacting the latter were full year employee bonus payments in Q1
2011 versus the prior year when half of 2009’s employee bonus plan
was paid out in 2009 and the other half was paid out in Q1 2010,
partially offset by less restructuring costs paid out in Q1 2011
than Q1 2010.
Acquisitions of goviral and The Huffington Post
On January 31, 2011, AOL completed the purchase of goviral for
$69.1 million, net of cash acquired. The Company also agreed to pay
up to $22.6 million to certain employees over the next two years
contingent on their future service to AOL. This $22.6 million
will be treated as compensation expense for accounting
purposes.
On March 4, 2011, AOL acquired The Huffington Post for $295.9
million, net of cash acquired. In addition, AOL incurred $8.7
million of restructuring charges associated with stock options that
vested on or shortly after the closing date as a result of the
termination of certain employees of The Huffington Post. As part of
the acquisition, unvested options held by employees of The
Huffington Post were converted into unvested AOL options. $3.9
million of the fair value of The Huffington Post options that were
converted was included in the purchase price, $8.1 million of the
fair value of such awards is expected to be recognized as
equity-based compensation expense over the remaining award vesting
periods, which for most employees is 24 months, and the remaining
$0.4 million of the fair value of such awards was recorded as a
restructuring charge.
ICQ
During the first quarter of 2011, we reached final agreement
with Mail.ru and the Committee on Foreign Investment in the United
States (‘‘CFIUS’’) regarding our ongoing transition obligations in
connection with the disposition of our ICQ operations. As part of
this agreement, we agreed to provide certain network infrastructure
and other operational services to the buyer at a level and for a
period in excess of our contractual obligations under the original
transaction agreements as well as other modifications to the
parties’ respective obligations under the transaction agreements.
As a result, we reassessed the estimated liability incurred in
connection with the ongoing obligations, and recorded a nominal
reduction to the gain on the sale in the first quarter of 2011. In
addition, we recorded $1.6 million as a reduction to the gain on
sale during the three months ended March 31, 2011 related to
professional fees incurred as a result of the negotiations with
Mail.ru and CFIUS. We do not expect that our ongoing transition
obligations will have a significant impact on our results of
operations.
OPERATING METRICS
Q1 2011 Q1
2010 % Change Subscriber Information
Domestic AOL-brand access subscribers (in thousands) (1) 3,621
4,656 -22 % Domestic average monthly subscription revenue per
AOL-brand access subscriber (ARPU) $ 17.96 $ 18.31 -2 % Domestic
AOL-brand access subscriber monthly average churn (2) 2.5 % 3.0 %
-17 % Unique Visitors (in millions) (3) Domestic
average monthly unique visitors to AOL Properties 112 112 0 %
Domestic average monthly unique visitors to the AOL
Huffington Post Media Group (HPMG) (4) 100 103 -3 % Domestic
average monthly unique visitors to AOL Advertising Network (5) 179
186 -4 %
(1)
Domestic AOL-brand access subscribers
include subscribers participating in introductory free-trial
periods and subscribers that are paying no monthly fees or reduced
monthly fees through member service and retention programs.
Individuals who have registered for our free offerings, including
subscribers who have migrated from paid subscription plans, are not
included in the AOL-brand access subscriber numbers presented
above. The average monthly subscription revenue per subscriber is
calculated as average monthly subscription revenue divided by the
average monthly subscribers for the applicable period.
(2)
Churn represents the number of subscribers
that terminate or cancel our services, factoring in new and
reactivated subscribers. Monthly average churn is calculated as the
monthly average of terminations plus cancellations divided by the
initial subscriber base plus any new registrations and
reactivations for the applicable period.
(3)
See “Unique Visitor Metrics” on page 9 of
this press release.
(4)
HPMG is a subset of AOL Properties and
excludes Mail, Instant Messaging and Ventures. See “Unique Visitor
Metrics” on page 9 of this press release for additional
information.
(5)
We also utilize unique visitors to
evaluate the reach of our total advertising network, which includes
both AOL Properties and the Third Party Network.
Webcast and Conference Call Information
AOL Inc. will host a conference call to discuss
first quarter 2011 financial results on Wednesday, May 4, 2011, at
8:00 am Eastern Time (ET). To access the call, parties in the
United States and Canada should call toll-free (866) 713-8307 and
international parties should call (617) 597-5307. Additionally, a
live webcast of the conference call, together with supplemental
financial information, can be accessed through the Company's
Investor Relations website at http://ir.aol.com. In
addition, an archive of the webcast can be accessed through the
link above for one year following the conference call, and an audio
replay of the call will be available for two weeks following the
conference call by calling (888) 286-8010 and international parties
should call (617) 801-6888. The access code for the replay is
46499943.
FINANCIAL STATEMENTS
AOL Inc. Consolidated Statements of
Operations (Unaudited; in millions, except per share
amounts) Three Months Ended March 31, 2011
2010 Revenues: Advertising $ 313.7 $ 354.3
Subscription 215.4 282.7 Other 22.3 27.3
Total revenues 551.4 664.3 Costs of revenues 388.9 364.7
Selling, general and administrative 120.7 133.3 Amortization of
intangible assets 24.2 62.2 Restructuring costs 27.8 23.4 Loss on
disposal of consolidated businesses, net 1.6 –
Operating income (loss) (11.8 ) 80.7 Other income (loss),
net 0.6 (2.7 ) Income (loss) from continuing
operations before income taxes (11.2 ) 78.0 Income tax provision
(benefit) (15.9 ) 36.8 Income from continuing
operations 4.7 41.2 Discontinued operations, net of tax –
(6.5 ) Net income $ 4.7 $ 34.7
Per share information: Basic income per common share from
continuing operations $ 0.04 $ 0.39 Discontinued operations, net of
tax - (0.06 ) Basic net income per common
share $ 0.04 $ 0.33 Diluted income per common
share from continuing operations $ 0.04 $ 0.39 Discontinued
operations, net of tax - (0.07 ) Diluted net
income per common share $ 0.04 $ 0.32 Shares
used in computing basic income per common share 106.9
106.3 Shares used in computing diluted income
per common share 107.9 107.0
Depreciation expense by function: Costs
of revenues $ 38.6 $ 43.4 Selling, general and administrative
5.8 10.9 Total depreciation expense $
44.4 $ 54.3 Equity-based compensation by
function: Costs of revenues $ 3.4 $ 1.9 Selling, general and
administrative 7.0 7.8 Total
equity-based compensation $ 10.4 $ 9.7
Incentive compensation expense related to acquired companies by
function: (1) Costs of revenues $ 7.8 $ 0.3 Selling, general and
administrative 0.6 – Total incentive
compensation expense related to acquired companies $ 8.4 $
0.3 Traffic Acquisition Costs (included in costs of
revenues) $ 71.4 $ 89.2
(1) These amounts relate to incentive cash
compensation arrangements with employees of acquired companies made
at the time of acquisition. Incentive compensation amounts are
recorded as compensation expense over the future service period of
the employees of the acquired companies.
AOL Inc. Consolidated Balance Sheets
(In millions, except per share amounts) March
31, December 31, 2011 2010 Assets
(unaudited) Current assets: Cash and equivalents $ 381.8 $
801.8 Accounts receivable, net of allowances of $14.9 and $16.1,
respectively 304.9 307.7 Prepaid expenses and other current assets
53.1 46.8 Deferred income taxes 101.4 82.9
Total current assets 841.2 1,239.2 Property and equipment,
net 541.0 529.2 Goodwill 1,068.8 810.9 Intangible assets, net 199.9
99.6 Long-term deferred income taxes 256.1 258.4 Other long-term
assets 42.6 25.0 Total assets $ 2,949.6
$ 2,962.3
Liabilities and Equity Current
liabilities: Accounts payable $ 67.7 $ 80.0 Accrued compensation
and benefits 78.3 114.5 Accrued expenses and other current
liabilities 211.8 236.3 Deferred revenue 90.0 92.6 Current portion
of obligations under capital leases 38.7 35.2 Deferred income taxes
0.2 – Total current liabilities 486.7
558.6 Obligations under capital leases 59.9 50.9 Restructuring
liabilities 4.4 7.0 Deferred income taxes 11.3 – Other long-term
liabilities 70.3 58.9 Total liabilities
632.6 675.4 Stockholders' equity:
Common stock, $0.01 par value, 106.9 million and 106.7 million
shares issued and outstanding at March 31,
2011 and December 31,
2010, respectively
1.1 1.1 Additional paid-in capital 3,394.7 3,376.6 Accumulated
other comprehensive loss, net (280.6 ) (287.9 ) Accumulated deficit
(798.2 ) (802.9 ) Total stockholders' equity
2,317.0 2,286.9 Total liabilities and
stockholders' equity $ 2,949.6 $ 2,962.3
AOL Inc. Consolidated Statements of Cash
Flows (Unaudited; in millions) Three Months
Ended March 31, 2011 2010
Operations Net income $ 4.7 $ 34.7 Less: Discontinued
operations, net of tax - (6.5 ) Net income
from continuing operations 4.7 41.2 Adjustments for non-cash and
non-operating items: Depreciation and amortization 68.6 116.5 Asset
impairments 1.5 1.4 Equity-based compensation 10.4 9.7 Other
non-cash adjustments 6.2 1.2 Deferred income taxes (15.6 ) (16.8 )
Changes in operating assets and liabilities, net of acquisitions
(85.1 ) 9.7 Cash provided (used) by continuing
operations (9.3 ) 162.9 Cash provided by discontinued operations
- 0.2
Cash provided (used) by
operations (9.3 ) 163.1
Investing Activities Investments and acquisitions,
net of cash acquired (369.7 ) (23.2 ) Proceeds from disposal of
assets and consolidated businesses, net 0.2 1.0 Capital
expenditures and product development costs (21.2 ) (29.5 )
Investment activities from discontinued operations - 16.4
Cash used by investing activities (390.7
) (35.3 ) Financing Activities
Principal payments on capital leases (11.0 ) (8.3 ) Cash
collateral securing letters of credit (12.3 ) -
Cash used by financing activities (23.3 )
(8.3 ) Effect of exchange rate changes on cash
and equivalents 3.3 (4.1 ) Increase (decrease) in cash and
equivalents (420.0 ) 115.4 Cash and equivalents at beginning
of period 801.8 147.0
Cash
and equivalents at end of period $
381.8 $
262.4
SUPPLEMENTAL INFORMATION – UNAUDITED
Items impacting comparability: The following table
represents certain items that impacted the comparability of net
income attributable to AOL Inc. for the three months ended March
31, 2011 and 2010 (In millions, except per share amounts):
Three Months Ended March 31, 2011
2010 Accelerated amortization of intangible assets
(1) $ – $ (32.9 ) Restructuring costs (27.8 ) (23.4 ) Equity-based
compensation expense (10.4 ) (9.7 ) Incentive compensation expense
related to acquired companies (2) (8.4 ) (0.3 )
Pre-tax impact (46.6 ) (66.3 ) Income tax
impact (3) 20.0 26.5 After-tax impact
(26.6 ) (39.8 ) Income tax benefit related to anticipated worthless
stock deduction 7.1 – Discontinued operations, net of tax (4)
– (6.5 ) After-tax impact of items impacting
comparability of net income $ (19.5 ) $ (46.3 ) Impact per
basic common share $ (0.18 ) $ (0.44 ) Impact per diluted
common share $ (0.18 ) $ (0.43 ) Effective tax rate (3) 47.9
% 40.0 %
(1)
Amortization of intangible assets for the
three months ended March 31, 2010 included the impact of the
reevaluation of the useful lives of certain intangible assets in
the fourth quarter of 2009 in connection with our restructuring
initiative.
(2)
These amounts relate to incentive cash
compensation arrangements with employees of acquired companies made
at the time of acquisition. Incentive compensation amounts are
recorded as compensation expense over the future service period of
the employees of the acquired companies. For tax purposes, a
portion of these costs are treated as additional basis in the
acquired entity and are not deductible, until disposition of the
acquired entity.
(3)
The income tax impact for the three months
ended March 31, 2011 was calculated based on AOL’s projected annual
effective tax rate. The income tax impact for the three months
ended March 31, 2010 was calculated based on AOL’s annual effective
tax rate, excluding the effect of the Bebo worthless stock
deduction and goodwill impairment charge.
(4)
Discontinued operations, net of tax
includes the results of operations of buy.at for the three months
ended March 31, 2010.
AOL Inc. Reconciliation of Adjusted OIBDA
to Operating Income and Free Cash Flow to Cash Provided by
Continuing Operations (Unaudited; in millions)
Three Months Ended March 31, 2011 2010
Operating income (loss) $ (11.8) $ 80.7 Add:
Depreciation 44.4 54.3 Add: Amortization of intangible
assets 24.2 62.2 Add: Restructuring costs 27.8 23.4
Add: Equity-based compensation 10.4 9.7 Add: Asset
impairments 1.5 1.4 Add: Losses/(gains) on disposal of
consolidated businesses, net 1.6 - Add: Losses/(gains) on
asset sales 1.0 (0.4)
Adjusted
OIBDA $ 99.1 $ 231.3 Cash provided (used) by
continuing operations $ (9.3) $ 162.9 Less: Capital
expenditures and product development costs 21.2 29.5 Less:
Principal payments on capital leases 11.0 8.3
Free Cash Flow $ (41.5) $ 125.1
Note Regarding Non-GAAP Financial Measures
This press release and its attachments include the financial
measures Adjusted OIBDA and Free Cash Flow, both of which are
defined as non-GAAP financial measures by the Securities and
Exchange Commission (SEC). These measures may be different than
similarly-titled non-GAAP financial measures used by other
companies. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for the
financial information prepared and presented in accordance with
generally accepted accounting principles (GAAP). Explanations of
our non-GAAP financial measures are as follows:
Adjusted OIBDA. We define Adjusted OIBDA as
operating income before depreciation and amortization excluding the
impact of restructuring costs, non-cash equity-based compensation,
gains and losses on all disposals of assets (including those
recorded in costs of revenues) and non-cash asset impairments.
During the first quarter of 2011, we modified our definition of
Adjusted OIBDA to exclude the impacts of restructuring costs, which
we do not believe are indicative of our core operating performance,
and equity-based compensation, which will allow us to be more
closely aligned with the industry and analyst community. We
consider Adjusted OIBDA to be a useful metric for management and
investors to evaluate and compare the ongoing operating performance
of our business on a consistent basis across reporting periods, as
it eliminates the effect of non-cash items such as depreciation of
tangible assets, amortization of intangible assets that were
primarily recognized in business combinations and asset
impairments, as well as the effect of gains and losses on asset
sales, which we do not believe are indicative of our core operating
performance. A limitation of this measure, however, is that it does
not reflect the periodic costs of certain capitalized tangible and
intangible assets used in generating revenues in our business or
the current or future expected cash expenditures for restructuring
costs. The Adjusted OIBDA measure also does not include
equity-based compensation, which is and will remain a key element
of our overall long-term compensation package. Moreover, the
Adjusted OIBDA measures do not reflect gains and losses on asset
sales or impairment charges related to goodwill, intangible assets
and fixed assets which impact our operating performance. We
evaluate the investments in such tangible and intangible assets
through other financial measures, such as capital expenditure
budgets, investment spending levels and return on capital.
Free Cash Flow. We define Free Cash Flow as cash provided
by continuing operations, less capital expenditures and product
development costs and principal payments on capital leases. We
consider Free Cash Flow to be a liquidity measure that provides
useful information to management and investors about the amount of
cash generated by the continuing business that, after capital
expenditures and product development costs and principal payments
on capital leases, can be used for strategic opportunities,
including investing in our business, making strategic acquisitions,
and strengthening the balance sheet. Analysis of Free Cash Flow
also facilitates management's comparisons of our operating results
to competitors' operating results. A limitation on the use of this
metric is that Free Cash Flow does not represent the total increase
or decrease in cash for the period because it excludes certain
non-operating cash flows and the results of discontinued
operations.
Unique Visitor Metrics
We utilize unique visitor numbers to evaluate the performance of
AOL Properties. In addition, we utilize unique visitor numbers to
evaluate the reach of our total advertising network, which includes
both AOL Properties and the Third Party Network. Unique visitor
numbers provide an indication of our consumer reach. Although our
consumer reach does not correlate directly to advertising revenue,
we believe that our ability to broadly reach diverse demographic
and geographic audiences is attractive to brand advertisers seeking
to promote their brands to a variety of consumers without having to
partner with multiple content providers. The source for our unique
visitor information is a third party (comScore Media Metrix, or
“Media Metrix”). While we are familiar with the general
methodologies and processes that Media Metrix uses in estimating
unique visitors, we have not performed independent testing or
validation of Media Metrix’s data collection systems or proprietary
statistical models, and therefore we can provide no assurance as to
the accuracy of the information that Media Metrix provides.
We acquired The Huffington Post on March 4, 2011. Following the
acquisition of The Huffington Post, AOL aligned all of its content
under the newly formed HPMG, which is a subset of AOL Properties
and excludes Mail, Instant Messaging and Ventures. As a result of
this realignment and to reflect how management views the business,
we are disclosing domestic average monthly unique visitors to HPMG
for all periods presented and will no longer disclose domestic
average monthly unique visitors to AOL Media. The primary
differences between HPMG and AOL Media are that HPMG includes The
Huffington Post, AOL Search and Local.
Cautionary Statement Concerning Forward-Looking
Statements
This press release and our conference call at 8:00 a.m. Eastern
Time today may contain “forward-looking statements” within the
meaning of the Private Securities Litigation Reform Act of 1995
regarding business strategies, market potential, future financial
and operational performance and other matters. Words such as
“anticipates,” “estimates,” “expects,” “projects,” “forecasts,”
“intends,” “plans,” “will,” “believes” and words and terms of
similar substance used in connection with any discussion of future
operating or financial performance identify forward-looking
statements. These forward-looking statements are based on
management’s current expectations and beliefs about future events.
As with any projection or forecast, they are inherently susceptible
to uncertainty and changes in circumstances. Except as required by
law, we are under no obligation to, and expressly disclaim any
obligation to, update or alter any forward-looking statements
whether as a result of such changes, new information, subsequent
events or otherwise. Various factors could adversely affect our
operations, business or financial results in the future and cause
our actual results to differ materially from those contained in the
forward-looking statements, including those factors discussed in
detail in the “Risk Factors” section contained in our Annual Report
on Form 10-K for the year ended December 31, 2010 (the “Annual
Report”), filed with the Securities and Exchange Commission. In
addition, we operate a web services company in a highly
competitive, rapidly changing and consumer and technology-driven
industry. This industry is affected by government regulation,
economic, strategic, political and social conditions, consumer
response to new and existing products and services, technological
developments and, particularly in view of new technologies, the
continued ability to protect intellectual property rights. Our
actual results could differ materially from management’s
expectations because of changes in such factors. Further, lower
than expected market valuations associated with our cash flows and
revenues may result in our inability to realize the value of
recorded intangibles and goodwill. In addition, achieving our
business and financial objectives, including growth in operations
and maintenance of a strong balance sheet and liquidity position,
could be adversely affected by the factors discussed or referenced
under the “Risk Factors” section contained in the Quarterly Report
and the Annual Report as well as, among other things: 1) changes in
our plans, strategies and intentions; 2) the impact of significant
acquisitions, dispositions and other similar transactions; 3) our
ability to attract and retain key employees; 4) the success of any
cost reductions, restructuring actions or similar efforts,
including with respect to any associated savings, charges or other
amounts; 5) market adoption of new products and services; 6) the
failure to meet earnings expectations; 7) asset impairments; 8)
decreased liquidity in the capital markets; 9) our inability to
access the capital markets for debt securities or bank financings;
and 10) the impact of “cyber-warfare” or terrorist acts and
hostilities.
About AOL
AOL Inc. (NYSE: AOL) is a premier global media company with a
suite of brands and products serving consumers, advertisers and
publishers worldwide. The AOL Huffington Post Media Group is a
leading source of news, opinion, entertainment, community and
digital information comprised of a wide range of destination
websites, including AOL.com, The Huffington Post, TechCrunch,
Moviefone, Engadget, Patch, AOL Music, Stylelist and MapQuest. The
AOL Advertising.com Group includes Advertising.com, ADTECH,
goviral, Pictela, Video, and Content Solutions and serves a
combined content and advertising market at scale through video,
brand advertising, content and ad serving. AOL is focused on
engaging consumers and providing online advertising services and
solutions on both AOL Huffington Post Media Group destination
websites and third party websites, in addition to serving consumer
platforms including AOL Mail, AIM, about.me, and mobile
experiences. AOL also operates one of the largest Internet
subscription access services that serves as another distribution
channel for its consumer offerings.