AOL Information Statement
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November 19, 2009 Dear Time Warner Shareholder: We are pleased to inform you that on November 16, 2009, the board of directors of Time Warner Inc. approved the spin-off of AOL Holdings LLC, a wholly owned subsidiary of Time Warner, which will be converted into a corporation and renamed AOL Inc. prior to the spin-off. Upon completion of the spin-off, Time Warner shareholders will own 100% of the outstanding shares of common stock of AOL. We believe that this separation into two independent, publicly-traded companies is in the best interests of both Time Warner and AOL. The spin-off will be completed by way of a pro rata dividend of AOL shares held by Time Warner to our shareholders of record as of 5:00 p.m., New York City time, on November 27, 2009, the spin-off record date. Time Warner shareholders will be entitled to receive one share of AOL common stock for every eleven shares of Time Warner common stock they hold on the record date. The dividend will be issued in book-entry form only, which means that no physical stock certificates will be issued. No fractional shares of AOL common stock will be issued. If you would have been entitled to a fractional share of AOL common stock in the distribution, you will receive the net cash proceeds of such fractional share instead. The spin-off is subject to certain customary conditions. Shareholder approval of the spin-off is not required, and you will not need to take any action to receive shares of AOL common stock. Immediately following the spin-off, you will own shares of common stock of both Time Warner and AOL. Time Warner common stock will continue to trade on the New York Stock Exchange under the symbol “TWX.” AOL intends to list its common stock on the New York Stock Exchange under the symbol “AOL.” We expect the spin-off to be tax-free to the shareholders of Time Warner, except with respect to any cash received in lieu of fractional shares. The spin-off is conditioned on the receipt of an opinion of counsel confirming that the spin-off will not result in the recognition, for U.S. Federal income tax purposes, of gain or loss to Time Warner or its shareholders, except to the extent of cash received in lieu of fractional shares. Time Warner may waive receipt of the tax opinion as a condition to the spin-off. The enclosed Information Statement, which is being mailed to the shareholders of Time Warner, describes the spin-off and contains important information about AOL, including its historical consolidated financial statements. We look forward to your continued support. Sincerely, Jeff Bewkes Chairman and Chief Executive Officer Time Warner Inc. One Time Warner Center New York, NY 10019-8016 T 212.484.8000 www.timewarner.com November 19, 2009 Dear AOL Shareholder: It is my pleasure to welcome you as a shareholder of our company, AOL Inc. We are a leading global web services company with a substantial worldwide audience, a suite of powerful web brands and industry-leading products, and the largest advertising network in the United States. As an independent, publicly-traded company, we believe we can more effectively focus on our objectives and satisfy the strategic needs of our company. In connection with the distribution of our common stock by Time Warner, we intend to list our common stock on the New York Stock Exchange under the symbol “AOL.” I invite you to learn more about AOL by reviewing the enclosed Information Statement. We look forward to your continued support as a holder of AOL common stock. Sincerely, Tim Armstrong Chairman and Chief Executive Officer 770 Broadway New York, NY 10003 USA INFORMATION STATEMENT AOL Inc. 770 Broadway New York, New York 10003 Common Stock (par value $0.01) This Information Statement is being sent to you in connection with Time Warner Inc.’s spin-off of its wholly-owned subsidiary, AOL Inc. To effect the spin-off, Time Warner will distribute all of the shares of AOL common stock on a pro rata basis to the holders of Time Warner common stock. It is expected that the spin-off will be tax-free to Time Warner shareholders for U.S. Federal income tax purposes, except to the extent of cash received in lieu of fractional shares. Every eleven shares of Time Warner common stock outstanding as of 5:00 p.m., New York City time, on November 27, 2009, the record date for the spin-off, will entitle the holder thereof to receive one share of AOL common stock. The distribution of shares will be made in book-entry form. Time Warner will not distribute any fractional shares of AOL common stock. Instead, the distribution agent will aggregate fractional shares into whole shares, sell the whole shares in the open market at prevailing market prices and distribute the aggregate net cash proceeds from the sales pro rata to each holder who would otherwise have been entitled to receive a fractional share in the spin-off. The spin-off will be effective as of 11:59 p.m., New York City time, on December 9, 2009. Immediately after the spin-off becomes effective, we will be an independent, publicly-traded company. No vote or further action of Time Warner shareholders is required in connection with the spin-off. We are not asking you for a proxy and request that you do not send us a proxy. Time Warner shareholders will not be required to pay any consideration for the shares of AOL common stock they receive in the spin-off, and they will not be required to surrender or exchange shares of their Time Warner common stock or take any other action in connection with the spin-off. All of the outstanding shares of AOL common stock are currently owned by Time Warner. Accordingly, there is no current trading market for AOL common stock. We expect, however, that a limited trading market for AOL common stock, commonly known as a “when-issued” trading market, will develop as early as two trading days prior to the record date for the spin-off, and we expect “regular way” trading of AOL common stock will begin the first trading day after the distribution date. We intend to list AOL common stock on the New York Stock Exchange under the symbol “AOL.” In reviewing this Information Statement, you should carefully consider the matters described in the section entitled “Risk Factors” beginning on page 15 of this Information Statement. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities or determined if this Information Statement is truthful or complete. Any representation to the contrary is a criminal offense. This Information Statement is not an offer to sell, or a solicitation of an offer to buy, any securities. The date of this Information Statement is November 19, 2009. [THIS PAGE INTENTIONALLY LEFT BLANK] TABLE OF CONTENTS Page SUMMARY ............................................................................. 1 RISK FACTORS ......................................................................... 15 CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS ......................... 29 THE SPIN-OFF .......................................................................... 30 DIVIDEND POLICY ....................................................................... 38 CAPITALIZATION ........................................................................ 39 SELECTED HISTORICAL FINANCIAL DATA .................................................... 40 BUSINESS .............................................................................. 42 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ......................................................................... 55 MANAGEMENT .......................................................................... 86 EXECUTIVE COMPENSATION ............................................................... 93 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ....................... 150 CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS .................................. 153 DESCRIPTION OF OUR CAPITAL STOCK ...................................................... 162 WHERE YOU CAN FIND MORE INFORMATION ................................................. 167 INDEX TO FINANCIAL STATEMENTS ......................................................... F-1 i [THIS PAGE INTENTIONALLY LEFT BLANK] SUMMARY This summary highlights selected information from this Information Statement and provides an overview of our company, our separation from Time Warner and the distribution of our common stock by Time Warner to its shareholders. For a more complete understanding of our business and the separation and distribution, you should read the entire Information Statement carefully, particularly the discussion set forth under “Risk Factors” beginning on page 15 of this Information Statement, and our audited and unaudited historical consolidated financial statements and notes to those statements appearing elsewhere in this Information Statement. Unless the context otherwise requires, references in this Information Statement to (i) “AOL,” the “Company,” “we,” “our” and “us” refer to AOL Inc. and its consolidated subsidiaries, after giving effect to the reorganization, separation and distribution, and (ii) “Time Warner” refer to Time Warner Inc. and its consolidated subsidiaries, other than AOL. The transaction in which Time Warner will distribute to its shareholders all of the shares of our common stock is referred to in this Information Statement as the “distribution.” The transaction in which we will be separated from Time Warner is sometimes referred to in