To: BGR who wrote (60013 ) 6/2/1999 3:32:00 PM From: Glenn D. Rudolph Respond to of 164684
S&P affirms America Online <AOL.N> ratings ( PRESS RELEASE PROVIDED BY STANDARD & POOR'S ) NEW YORK, June 2 - Standard & Poor's today assigned its preliminary double-'B'-plus/double-'B'-minus/single-'B'-plus rating to America Online Inc.'s $4.5 billion universal shelf registration. In addition, Standard & Poor's also affirmed its outstanding ratings on AOL. (See list below.) The outlook is stable. The ratings reflect the Dulles, Va.-based company's strong position in the evolving Internet environment, which offsets its currently robust financial profile. The company has a substantial, growing recurring revenue base from its on-line services, which at $3 billion is nearly 10 times larger than its nearest competitor. AOL earns about 20% of its revenues from higher margin nonsubscription revenue sources, including advertising and electronic commerce. Still, the company must deal with the challenges of managing rapid growth and a broad array of strategic initiatives in a rapidly changing, competitive Internet services environment. Furthermore, AOL faces the prospect of competition from cable television-based access, which could weaken the company's market position if open access is not granted. The company must also integrate Netscape's business-oriented operations. Proceeds from the new filing plus $450 million unsold securities from a previous shelf registration will be used for general corporate purposes including working capital, capital expenditures, acquisitions and the repayment of outstanding debt. OUTLOOK: STABLE AOL's ratings are constrained by the challenges posed by competing access technologies and a short record of consistent operating performance in the dynamic and evolving Internet access market. The rating is supported by the recurring subscription revenue stream and its leading market position, Standard & Poor's said. -- CreditWire OUTSTANDING RATINGS AFFIRMED Rating Corporate credit rating BB+ Subordinated debt BB- Bank loan BB+ REUTERS Rtr 11:47 06-02-99