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Filed Pursuant to Rule 424(b)(3)
Registration No. 333-13279
PROSPECTUS
AMERICA ONLINE, INC.
572,221 SHARES OF COMMON STOCK
(PAR VALUE $.01 PER SHARE)
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The 572,221 shares of Common Stock of American Online, Inc., a Delaware
corporation (the "Company" or "America Online"), offered hereby are being sold
by the selling stockholders identified herein (the "Selling Stockholders"). Such
offers and sales may be made on one or more exchanges, in the over-the-counter
market, or otherwise, at prices and on terms then prevailing, or at prices
related to the then-current market price, or in negotiated transactions, or by
underwriters pursuant to an underwriting agreement in customary form, or in a
combination of any such methods of sale. The Selling Stockholders may also sell
such shares in accordance with Rule 144 under the Securities Act of 1933, as
amended (the "1933 Act"). The Selling Stockholders are identified and certain
information with respect to them is provided under the caption "Selling
Stockholders" herein, to which reference is made. The expenses of the
registration of the securities offered hereby, including fees of counsel for the
Company, will be paid by the Company. The following expenses will be borne by
the Selling Stockholders: underwriting discounts and selling commissions, if
any, and the fee of legal counsel, if any, for the Selling Stockholders. The
filing by the Company of this Prospectus in accordance with the requirements of
Form S-3 is not an admission that any person whose shares are included herein is
an "affiliate" of the Company.
The Selling Stockholders have advised the Company that they have not
engaged any person as an underwriter or selling agent for any of such shares,
but they may in the future elect to do so, and they will be responsible for
paying such a person or persons customary compensation for so acting. The
Selling Stockholders and any broker executing selling orders on behalf of any
Selling Stockholders may be deemed to be "underwriters" within the meaning of
the 1933 Act, in which event commissions received by any such broker may be
deemed to be underwriting commissions under the 1933 Act. The Company will not
receive any of the proceeds from the sale of the securities offered hereby. The
Common Stock is listed on the New York Stock Exchange ("NYSE") under the symbol
AOL. On October 7, 1996, the closing sale price of the Common Stock, as reported
by the NYSE, was $27.25 per share.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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No person is authorized in connection with any offering made hereby to give
any information or to make any representations other than as contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus is not
an offer to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for such person to make such an offer or
solicitation. Neither the delivery of this Prospectus nor any sales made
hereunder shall under any circumstances create any implication that the
information contained herein is correct as of any time subsequent to the date
hereof.
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THE DATE OF THIS PROSPECTUS IS OCTOBER 8, 1996.
<PAGE> 2
AVAILABLE INFORMATION
The Company is subject to certain informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "1934 Act"), and in
accordance therewith files reports and other information with the Securities and
Exchange Commission (the "Commission"). These reports, proxy statements and
other information can be inspected and copied at the public reference facilities
maintained by the Commission at Room 1024 of the Commission's office at 450
Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549, and at its regional
offices located at 7 World Trade Center, Suite 1300, New York, NY 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL 60661. Copies
of such reports, proxy statements and other information can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, DC 20549 at prescribed rates. The Commission also maintains a
Web site that contains reports, proxy and information statements and other
information regarding registrants (including America Online) that file
electronically with the Commission. The address of this site is
http://www.sec.gov. Additional updating information with respect to the
securities covered herein may be provided in the future to purchasers by means
of appendices to this Prospectus.
The Company has filed with the Commission in Washington, DC a registration
statement (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the 1933 Act with respect to the securities
offered or to be offered hereby. This Prospectus does not contain all of the
information included in the Registration Statement, certain items of which are
omitted in accordance with the rules and regulations of the Commission. For
further information about the Company and the securities offered hereby,
reference is made to the Registration Statement and the exhibits thereto.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996, filed pursuant to Section 13 or 15(d) of the 1934 Act (File
Number 0-19836).
(b) The description of the Company's capital stock which is contained
in a registration statement on Form 8-A under the 1934 Act, including any
amendments or reports filed for the purpose of updating such description.
All reports and other documents subsequently filed by the Company with the
Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act, prior
to the filing of a post-effective amendment which indicates that all securities
covered by this Prospectus have been sold or which deregisters all such
securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of the filing of such
reports and documents.
The Company will provide without charge to each person to whom this
Prospectus is delivered, on the written or oral request of such person, a copy
of any or all documents incorporated by reference herein, other than exhibits to
such documents (unless such exhibits are specifically incorporated by reference
therein). Requests for such copies should be directed to: Sheila A. Clark,
Deputy General Counsel of the Company, 22000 AOL Way, Dulles, Virginia
20166-9323, telephone number (703) 448-8700.
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TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION............................................. 2
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE................. 2
RISK FACTORS...................................................... 4
THE COMPANY....................................................... 9
SELLING STOCKHOLDERS.............................................. 10
PLAN OF DISTRIBUTION.............................................. 11
LEGALITY OF COMMON STOCK.......................................... 11
EXPERTS........................................................... 11
3
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RISK FACTORS
An investment in the shares being offered by this Prospectus involves a
high degree of risk. In addition to the other information contained in this
Prospectus or incorporated herein by reference, prospective investors should
carefully consider the following risk factors before purchasing the shares
offered hereby. This Prospectus contains and incorporates by reference
forward-looking statements within the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. Reference is made in particular to the
discussion set forth under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1996 (the "Form 10-K"), and under "Business"
in the Form 10-K, incorporated in this Prospectus by reference. Such statements
are based on current expectations that involve a number of uncertainties
including those set forth in the risk factors below. Actual results could differ
materially from those projected in the forward-looking statements.
COMPETITION
The online services and Internet markets are highly competitive. The
Company believes that existing competitors, which include, among others,
commercial online services such as CompuServe Corporation ("CompuServe") and
Prodigy Services Company ("Prodigy"), Internet-based services, including, among
others, the Microsoft Network, and Internet service providers, including various
national and local independent Internet service providers as well as long
distance and regional telephone companies, including, among others, AT&T Corp.
("AT&T"), MCI Communications Corporation and various regional Bell operating
companies, are likely to enhance their service offerings. In addition, new
competitors, including Internet directory services and various media and
telecommunications companies, have entered or announced plans to enter the
online services and Internet markets, resulting in greater competition for the
Company. Many of the direct competitors and possible future competitors referred
to above have significantly greater financial, technical, marketing and
personnel resources than the Company. Increased competition could require price
reductions and increased spending on marketing and product development, limit
the Company's opportunities to enter into and/or renew agreements with content
providers and distribution partners, limit its ability to develop new products
and services, limit its ability to continue to grow its subscriber bases and
result in increased attrition in the Company's membership. Any of the foregoing
events could have an adverse impact on revenues and result in an increase in
costs as a percentage of revenues. These factors may have a material adverse
effect on the Company's financial condition and operating results. In addition,
in response to increased competition, the Company may adopt additional
strategies designed to continue the growth in its subscriber base, such as new
marketing programs and promotional offers and implementation of new pricing
programs. Such strategies may result in an increase in costs as a percentage of
revenue. Although the Company has established relationships with certain of its
competitors, including Microsoft Corp. ("Microsoft"), Netscape Communications
Corporation ("Netscape"), and AT&T, to increase its exposure and presence in the
market, there can be no assurance that the Company will benefit from the
relationships.
SUBSCRIBER ATTRITION RATES
Subscriber attrition rates of the Company have been increasing. The Company
recently adopted a value pricing plan directed at heavier users of the AOL
service (the "Value Plan") which provides for 20 hours of online service for
$19.95, and also announced efforts to improve customer service and internal
infrastructure to retain customers that the Company has attracted. However,
there can be no assurance that these efforts will be successful. Further, these
proposed plans will lead to increased costs, and the Value Plan will lead to
reduced revenues from the Company's heaviest users.
NETWORK CAPACITY AND OPERATIONS
Due to the rapid growth in subscriber demand, the Company and its data
communications access providers have experienced difficulty at certain times in
providing adequate server and network capacity. As a result, members have from
time to time encountered difficulty in accessing and using the America Online
service. There can be no assurance that the Company will be able to expand
server and network capacity at a
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rate sufficient to satisfy increasing subscriber demands, and the failure to do
so could have a material adverse effect on the Company's business. The Company
currently relies on several companies, particularly U.S. Sprint, to provide data
communications access to its service. Any damage or failure that causes
interruptions in U.S. Sprint's operations could have a material adverse effect
on the Company's business.
In fiscal 1995, the Company launched AOLnet, a proprietary TCP/IP network
that is owned by the Company. The Company is building AOLnet in order to
increase its network capacity, provide its members with more reliable, higher
speed access and reduce the costs of data communication. The Company relies on
U.S. Sprint and others, as well as its subsidiary, ANS CO + RE Systems, Inc.
("ANS") to build out this network. The buildout of AOLnet requires a substantial
investment in telecommunications equipment, which the Company is financing
primarily through leasing. Any failure on the part of U.S. Sprint or other
providers could materially affect the AOLnet buildout. There can be no assurance
that the Company will be successful in building out AOLnet or that demand will
develop for the capacity it will provide.
The Company's operations are dependent on its ability to protect its
computer equipment and the information stored in its data centers against damage
by fire, power loss, telecommunications failures, unauthorized intrusions and
other events. The Company believes it has taken prudent measures to reduce the
risk of interruption in its operations. However, there can be no assurance that
these measures are sufficient. Any damage or failure that causes interruptions
in the Company's operations could have a material adverse effect on its
business. While the Company carries property and business interruption insurance
to cover its computer operations, the coverage may not be adequate to compensate
for losses that may occur.
PRESSURES ON OPERATING MARGINS
One of the Company's goals is to increase market share by rapidly growing
its subscriber base. To achieve this goal, the Company has aggressively promoted
its service offerings and has implemented pricing changes and other strategies
designed to facilitate subscriber growth. The costs associated with the rapid
growth in its subscriber base and investments in customer support have placed,
and will continue to place, pressures on the Company's operating margins. In
addition, the buildout of AOLnet is expected to place pressures on the Company's
operating margins.
As part of its marketing strategy, the Company generally provides new
subscribers with up to fifteen hours of access to its online service on a trial
basis at no charge and waives the first month's membership fees. The Company
also recently introduced the Value Plan, which it hopes will attract additional
subscribers. The Company expects that the Value Plan will result in an increased
number of hours of usage relative to revenues. In a period of rapid subscriber
growth, the Company incurs significant data communications charges in the first
month of a subscriber's membership which do not generate corresponding service
revenues. In addition, new subscribers generally require substantially more
customer support than longer-standing subscribers. This results in higher labor
and long-distance telephone costs to the Company as well as investments in
customer support infrastructure. At the same time, the Company is building its
own data communication network, AOLnet, to complement its existing network
carriers. During the buildout of AOLnet, the Company will experience cost
inefficiencies as it switches its members over to what it anticipates will be
the lower cost AOLnet services.
The Company may adopt additional strategies designed to continue the growth
in its subscriber base, such as new marketing programs and promotional offers
and implementation of new pricing programs. Such strategies may result in an
increase in costs as a percentage of revenues. In addition, an acceleration in
the growth of its subscriber base, changes in usage patterns among members or
continuing investments in content may also increase costs as a percentage of
revenues. As a result, the Company does not believe its operating margins have
stabilized. There can be no assurance that the Company's operating margins will
not be adversely affected in the future by such strategies or other conditions.
SEASONALITY
In April 1996, the Company began to see the effects of seasonality in both
member acquisitions and in the amount of time spent by customers using its
services. The Company may have experienced the effects of
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seasonality in previous periods, but the effects, if any, were not discernible
due to the masking effect resulting from the Company's substantial growth rates
in those periods. The Company expects that seasonality will have an effect in
the future. Member acquisition is expected to be highest in the second and third
fiscal quarters, when sales of new computers and computer software are highest
due to the holiday season. Customer usage is expected to be lower in the summer
months due largely to extended day light hours and competing outdoor leisure
activities.
MANAGING A RAPIDLY GROWING AND CHANGING BUSINESS
The Company continues to experience major changes in its operations
resulting from rapid expansion of its business and other factors which have
placed significant demands on its administrative, operational and financial
resources. The Company's future performance will depend in part on its ability
to manage its growth and to adapt its administrative, operational and financial
control systems to the needs of the expanded entity. The failure of management
to anticipate, respond to and manage changing business conditions could have a
material adverse effect on the Company's business and results of operations.
ACCESS TO CONTENT PROVIDERS
As competition in the online services market intensifies, it may become
more difficult or expensive to secure and retain content and/or content
providers. The Company generally pays royalties to its content providers under
short-term renewable agreements. While no single content provider accounts for
more than one percent of usage of the Company's America Online service, and the
Company does not believe that any single content provider is material to its
operations, there can be no assurance that the loss of a number of content
providers or significantly increased costs to maintain certain content providers
would not have a material adverse effect on the Company's business.
ACQUISITIONS
Since the beginning of fiscal 1995, the Company has acquired or merged with
BookLink Technologies, Inc., Redgate Communications Corporation, ANS, NaviSoft,
Inc., Medior, Inc., Wide Area Information Servers, Inc., Global Network
Navigator, Inc., Ubique, Ltd. ("Ubique"), the Johnson-Grace Company and The
ImagiNation Network, Inc. ("INN"). Acquisitions which the Company makes involve
risks, including successful integration and management of acquired technology,
operations and personnel. The integration of acquired businesses may also lead
to the loss of key employees of the acquired companies and diversion of
management attention from other ongoing business concerns. In addition,
acquisitions may result in significant charges for in-process research and
development or other matters. Any of these factors could have a material adverse
effect on the Company's business or financial condition.
NEW BUSINESSES AND INTERNATIONAL VENTURES
The Company pursues new products and services to diversify its sources of
revenue and leverage its technological and other competencies. There can be no
assurance that the Company will be able to successfully develop, or achieve
commercial acceptance for, these new products and services.
Through its division America Online Enterprises, the Company has begun to
offer tools and services to enterprises seeking private networks and to use the
America Online service and the Internet as a medium for communications and
commerce. The market for products and services for commercial use of online
services and the Internet has only recently begun to develop, is rapidly
evolving, and is characterized by an increasing number of competitors. Demand
for and market acceptance of new products and services are subject to a high
degree of uncertainty. Moreover, critical issues concerning commercial
activities via the Internet, including security, reliability, cost, ease of use
and access, remain unresolved and may adversely impact the growth and
development of the enterprise market.
The Company has begun to offer online services internationally in Canada
and, through a joint venture with Bertelsmann AG, in Germany, the United
Kingdom, and France, and recently entered into a joint venture with Mitsui & Co.
and Nihon Keizai Shimbun Inc. to offer online services in Japan. There can be no
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assurance that the Company or its partners will be able to successfully market,
sell and deliver its services in these markets. In addition, there are certain
significant risks inherent in doing business on an international level, such as
laws governing content that differ greatly from those in the U.S., unexpected
changes in regulatory requirements, political risks, export restrictions, export
controls relating to encryption technology, tariffs and other trade barriers,
fluctuations in currency exchange rates, issues regarding intellectual property
and potentially adverse tax consequences, any or all of which could impact the
Company's international operations.
CHANGING TECHNOLOGIES
As online services evolve, the Company will be required to offer
technological advances such as improved data compression and delivery of voice
and full-motion video. Currently, online services are accessed primarily by
personal computers via modem. As online services become accessible by
screen-based telephones, television or other consumer electronic devices, and
become commercially deliverable over other wired conduits such as coaxial and
fiber optic cable, the Company may have to develop new technology or modify its
existing technology to keep pace with these developments. Pursuit of these
technological advances will require substantial expenditures, and there can be
no assurance that the Company will succeed in adapting its online service
business to alternate access devices and conduits.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES
In the United States, the Company is not currently subject to direct
regulation other than federal and state regulation applicable to businesses
generally. However, changes in the regulatory environment relating to the
telecommunications and media industry could have an adverse effect on the
Company's business. A portion of the recently enacted Communications Decency Act
of 1996 (the "Decency Act") generally makes it illegal for persons to knowingly
use an interactive computer service to send or display "indecent" communications
to minors or to knowingly and intentionally permit a telecommunications facility
controlled by such person to be used for such purposes, subject to certain
express defenses. The Decency Act has been challenged in federal court on
constitutional grounds, but the Company cannot predict whether the Decency Act
will be upheld or if it will be interpreted in such a manner as would result in
a material liability being imposed on the Company. Other laws make it illegal to
traffic by computer in obscene or child pornographic materials. Although the
Company does not believe that its activities violate these laws, it cannot
predict how a court would interpret these laws and what duties might be imposed
on the Company. Other legislative proposals from international, federal, and
state government bodies in the areas of content regulation, intellectual
property, privacy rights and state tax issues could impose additional
regulations and obligations upon all online and Internet service providers. The
Company cannot predict the likelihood that any such legislation will pass, nor
the financial impact, if any, the resulting regulation may have.
Moreover, the applicability to online service and Internet access providers
of existing laws governing issues such as intellectual property ownership, libel
and personal privacy is uncertain. Recent events relating to the use of online
services for illegal activities has increased public focus and could lead to
increased pressure on legislatures to impose regulations on online service
providers such as the Company. The law relating to the liability of online
service companies and Internet access providers for information carried on or
disseminated through their systems is currently unsettled and has been the
subject of several recent private lawsuits. If similar actions were to be
initiated against the Company, costs incurred as a result of such actions could
have a material adverse effect on the Company's business.
RELIANCE ON KEY PERSONNEL
The Company's success depends in part upon the performance of its executive
officers and other key employees. The loss of the services of one or more of its
key personnel could have a material adverse effect on the Company. The Company
depends on its continued ability to attract and retain highly skilled and
qualified personnel. Competition for such personnel is intense, and there can be
no assurance that the Company will be successful in attracting and retaining
such personnel.
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VOLATILITY OF SHARE PRICE
The market price of the Company's Common Stock has a history of volatility.
Factors such as quarterly variations in financial results and membership growth
and usage, new pricing strategies, the announcement of technological
innovations, mergers, acquisitions, strategic partnerships or new product
offerings by the Company or its competitors, the entrance of new competitors
into the online services market and changes in content providers may have a
significant impact on the market price of the Common Stock. Moreover, the Common
Stock could experience price volatility based on market conditions. In
particular, a substantial short interest exists in the Company's Common Stock
which may tend to exacerbate volatility.
LITIGATION
The Company is a party to various litigations, investigations and
proceedings from time to time. The costs and other effects of litigation,
governmental investigations, legal and administrative cases and proceedings
(whether civil, such as environmental and product-related, or criminal),
settlements and investigations, claims and changes in those matters, and
developments or assertions by or against the Company relating to intellectual
property rights and intellectual property licenses could have a material adverse
effect on the Company in the future.
FUTURE SALES OF COMMON STOCK
Sales of substantial amounts of Common Stock in the public market could
adversely affect prevailing market prices of the Common Stock. Within 30 days of
the date hereof, holders of approximately 7,805,000 shares of America Online
Common Stock (outstanding or issuable upon exercise of certain rights) have
rights to require registration of their shares for resale. In addition, pursuant
to a stock purchase agreement, on or before February 15, 1997, the Company is
obligated to either pay in cash an amount estimated to be $15 million or issue
and register the resale of shares of the Company's Common Stock with an
estimated aggregate value of between $14.7 million and $14.8 million, at the
Company's discretion. Additional shares are subject to registration statements
on Form S-8 in connection with the Company's stock option plans. The sales of
any of the foregoing shares could have a material adverse effect on the
then-prevailing market price of Common Stock.
ANTI-TAKEOVER DEFENSE PROVISIONS
The Company's Restated Certificate of Incorporation and Restated By-laws
contain certain provisions that could have the effect of making it more
difficult for a third party to acquire, or of discouraging a third party from
attempting to acquire, control of the Company. Certain of such provisions allow
the Company to issue preferred stock with rights senior to those of its Common
Stock and impose various procedural and other requirements which could make it
more difficult for stockholders to effect certain corporate actions. In
addition, the Company has a stockholder rights plan pursuant to which holders of
Common Stock are entitled to one preferred share purchase right for each
outstanding share of Common Stock they hold, exercisable under certain defined
circumstances involving a potential change of control. The foregoing provisions
could limit the price that certain investors might be willing to pay in the
future for shares of Common Stock.
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THE COMPANY
America Online, Inc., including its subsidiaries ("America Online" or the
"Company"), is the global leader in the interactive services market, with nearly
$1.1 billion in revenue during fiscal 1996, and has led the development of a new
interactive medium. The Company has the largest subscriber base of any online
service provider, serving approximately 6.2 million members worldwide as of June
30, 1996, more than double the number of subscribers at the end of fiscal 1995.
The Company generates revenues principally through membership and usage fees, as
well as increasingly from advertising and merchandise sales, transaction fees,
royalties and the provision of network and production services to enterprises.
The Company's mission is to lead the development of a new interactive
medium that transcends traditional boundaries between people and places to
create a new kind of interactive global community that holds the potential to
change the way people obtain information, communicate with one another, buy
products and services, and learn. To accomplish this mission, the Company's
strategy is to continue investment in the growth of its subscriber base, pursue
related business opportunities and alternative revenue models, provide a full
range of interactive services and maintain technological flexibility.
Through its flagship AOL service, the Company offers its members a broad
range of features including e-mail, online conferences, entertainment, software,
computing support, an extensive "newsstand" of electronic magazines and
newspapers, seamless access to the Internet, a broad array of original
programming and informative content. The Company focuses on maximizing the
interactive nature of its service by encouraging members to share information
and ideas and provides numerous tools for members to customize the AOL service
to best suit their individual needs.
Over the past fiscal year, America Online has expanded its range of
products and services. Through strategic alliances with partners and
competitors, America Online is seeking to leverage resources to reach new
markets and improve products and services. The Company began offering its online
services in Europe and Canada, and will soon offer them in Japan. In the fall of
1995, the Company introduced GNN, a stand-alone Internet access service. The
Company has launched Digital City, a local content and community programmer, and
formed AOL Enterprise, a unit designed to develop and market interactive
services for businesses. The Company has vastly increased the scope of AOLnet,
its proprietary data communication network, building the network during fiscal
1996 from 20,000 modems to 140,000 modems, resulting in increased network
capacity, higher speed access, and reduced data communication costs. The
portfolio of AOL networks has expanded to reach approximately 810 cities
worldwide with over 1400 local telephone numbers.
The Company has continued its investment in the development of engaging
content, through its own initiatives for original content, the creation of
original interactive content by entrepreneurs, and the provision of authoring
and production tools and services to assist individuals and businesses in
developing content for the AOL service and the Internet. AOL Productions, a
wholly-owned subsidiary, is a full featured multimedia production studio that
can handle all aspects of interactive content and design for the Company, its
advertisers and its media partners.
America Online was incorporated in Delaware on May 24, 1985. The Company's
principal executive offices are located at 22000 AOL Way, Dulles, Virginia
20166-9323. Its telephone number at that address is (703) 448-8700. Its Internet
address is AOL [email protected], and its America Online address is AOL IR.
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<TABLE>
SELLING STOCKHOLDERS
The table below sets forth certain information regarding the beneficial
ownership of Common Stock, as of September 25, 1996, by certain stockholders of
the Company who are offering shares of Common Stock pursuant to this Prospectus,
both before and after giving effect to this offering.
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED PRIOR TO OWNED AFTER
THE OFFERING(1)(2) SHARES TO BE THE OFFERING(1)(2)
------------------- SOLD IN THE -------------------
SELLING SHAREHOLDERS NUMBER PERCENT OFFERING NUMBER PERCENT
- -------------------- ------- ------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Ehud Shapiro(3)........................... 263,314 * 171,446 91,868 *
O'Reilly & Associates, Inc................ 78,650 * 78,650 -- --
William J. Razzouk(4)..................... 65,000 * 65,000 -- --
Euro-America-I L.P........................ 45,974 * 45,974 -- --
Manakin Investments B.V................... 43,392 * 43,392 -- --
Dale Dougherty............................ 40,982 * 40,982 -- --
Yeda Research and Development Co. Ltd..... 31,696 * 31,696 -- --
Timothy F. O'Reilly &..................... 30,982 * 30,982 -- --
Christina F. O'Reilly Trust
Irving S. Reed............................ 50,453 * 15,000 35,453 *
Jose Marcelino Camarena Bolanos........... 13,304 * 11,973 1,331 *
Juan Ricardo Perez Escamilla Costas....... 11,866 * 10,679 1,187 *
Sidney Wise............................... 7,191 * 6,471 720 *
Robert Zeckhauser......................... 6,113 * 5,501 612 *
Dalbert L. Brandon........................ 15,847 * 4,000 11,847 *
Octavio Camarena Villasenor............... 3,595 * 3,235 360 *
Fabio Aversa.............................. 864 * 864 -- --
Andrew Anker.............................. 864 * 864 -- --
Shimon Shapiro............................ 862 * 862 -- --
Dan Tolkowsky............................. 862 * 862 -- --
Avi Fischer(5)............................ 786 * 786 -- --
Jacques Vallee, Ph.D...................... 786 * 786 -- --
Mark A. Graves............................ 648 * 648 -- --
Gideon Tolkowsky.......................... 646 * 646 -- --
Peter Avildsen............................ 264 * 264 -- --
WS Investment Co. 95A..................... 220 * 220 -- --
Yadin Kaufmann............................ 214 * 214 -- --
Stephen N. Livingston..................... 48,508 * 200 48,308 *
Allen L. Morgan........................... 24 * 24 -- --
<FN>
- ---------------
* Represents beneficial ownership of less than 1% of the outstanding shares of
Common Stock.
(1) Unless otherwise noted, the persons named in the table, to the Company's
knowledge, have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, subject to the
information contained in the footnotes to this table. Assumes that each
Selling Shareholder will sell all of the shares of Common Stock offered by
him hereunder. See "Plan of Distribution."
(2) Based on 93,857,943 shares of Common Stock outstanding on September 25,
1996.
(3) Includes 13,262 shares held by Mr. Shapiro as nominee for Yozma Venture
Capital Ltd. which are being registered hereby. Mr. Shapiro is an employee
of the Company, and he is the President and a Director of Ubique Ltd., a
wholly owned subsidiary of the Company ("Ubique").
(4) Does not include 100,000 shares issuable upon exercise of options held by
Mr. Razzouk that are exercisable within 60 days. Mr. Razzouk's shares are
owned jointly with his wife. Until June 21, 1996, Mr. Razzouk was the
President and Chief Operating Officer and a Director of the Company.
(5) Mr. Fischer is a partner in the law firm of I. Fischer & Co., which serves
as legal counsel to Ubique.
</TABLE>
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PLAN OF DISTRIBUTION
The 572,221 shares of Common Stock of the Company offered hereby (the
"Shares") may be offered and sold from time to time by the Selling Stockholders,
or by pledgees, donees, transferees or other successors in interest. Such offers
and sales may be made from time to time on one or more exchanges, including the
NYSE, or in the over-the-counter market, or otherwise, at prices and on terms
then prevailing or at prices related to the then-current market price, or in
negotiated transactions. The Shares may be sold by one or more of the following:
(a) a block trade in which the broker or dealer so engaged will attempt to sell
the Shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account; (c) an exchange
distribution in accordance with the rules of such exchange; (d) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
(e) privately negotiated transactions; and (f) a combination of any such methods
of sale. In effecting sales, brokers or dealers engaged by the Selling
Stockholders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from Selling Stockholders or from
the purchasers in amounts to be negotiated immediately prior to the sale. The
Selling Stockholders may also sell the Shares in accordance with Rule 144 under
the 1933 Act.
The Company is required under the terms of agreements with the Selling
Stockholders to maintain the effectiveness of the registration of the Shares
being offered hereunder until the earlier of the date upon which the
registration of the Shares has been effective for thirty days or the date upon
which all of the Shares offered hereby have been sold.
The Selling Stockholders and any brokers participating in such sales may be
deemed to be underwriters within the meaning of the 1933 Act. There can be no
assurance that the Selling Stockholders will sell any or all of the Shares of
Common Stock offered hereunder.
All proceeds from any such sales will be the property of the Selling
Stockholders who will bear the expense of underwriting discounts and selling
commissions, if any, and their own legal fees.
LEGALITY OF COMMON STOCK
The validity of the issuance of the Shares of Common Stock offered hereby
is being passed upon for the Company by Mintz, Levin, Cohn, Ferris, Glovsky and
Popeo, P.C., Boston, Massachusetts ("Mintz Levin"). A member of Mintz Levin owns
200 shares, and options to purchase 61,000 shares (30,500 of which are held for
the account of Mintz Levin), of Common Stock. In addition, Kenneth J. Novack, a
member of Mintz Levin, is the Acting General Counsel of the Registrant.
EXPERTS
The consolidated financial statements of America Online, Inc., appearing in
its Annual Report (Form 10-K), as of June 30, 1996 and 1995 and for each of the
three years in the period ended June 30, 1996, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
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