FORM 10-Q
                                        
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549


(Mark One)

[X]  Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934

              For the quarterly period ended:    September 30, 1997
                                        
                                       OR

[ ]  Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934

             For the transition period from                      to

                             Commission File Number:
                                     0-19836
                                        
                              America Online, Inc.
             (Exact name of registrant as specified in its charter)

       Delaware                                     54-1322110
  (State or other jurisdiction of              (I.R.S. Employer
   incorporation or organization)               Identification No.)

                   22000 AOL Way, Dulles, Virginia 20166-9323
              (Address of principal executive offices and zip code)

Registrant's telephone number, including area code:    (703) 448-8700

Former name, former address, and former year, if changed since last report:  Not
applicable

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

               Yes           X               No

Indicate the number of shares outstanding of each of the Issuer's classes of
Common Stock, as of the latest practicable date.

Title of each class
Common stock $.01 par value
    Shares outstanding on October 31, 1997                 102,910,389


                              AMERICA ONLINE, INC.
                                        
                                      INDEX
                                                            Page

PART I.   FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

          Consolidated Balance Sheets-September 30, 1997
          and June 30, 1997                                 3

          Consolidated Statements of Operations-Three
          months ended September 30, 1997 and 1996          4

          Consolidated Statements of Cash Flows-Three
          months ended September 30, 1997 and 1996          5

          Notes to Consolidated Financial Statements        6

Item 2. Management's Discussion and Analysis of Financial Condition
        and Results of Operations                          12


PART II.  OTHER INFORMATION

Item 1. Legal Proceedings                                  23

Item 6. Exhibits and Reports on Form 8-K                   23

Signatures                                                 24


[CAPTION]
AMERICA ONLINE, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands, except share data)
<TABLE>

                                                       September 30,   June 30,
                                                            1997         1997
ASSETS                                                  (Unaudited)   
                                                                               
Current assets:                                                                
<S>                                                    <C>            <C>
  Cash and cash equivalents                                  $178,646  $124,340
  Short-term investments                                          255       268
  Trade accounts receivable                                    68,286    65,306
  Other receivables                                            28,021    26,093
  Prepaid expenses and other current assets                    98,363   107,466
     Total current assets                                     373,571   323,473
                                                                               
Property and equipment at cost, net                           265,306   233,129
                                                                               
Other assets:                                                                  
  Restricted cash                                              50,000    50,000
  Product development costs, net                               77,553    72,498
  License rights, net                                          17,439    16,777
  Other assets including available-for-sale securities        135,087    84,618
  Deferred income taxes                                        44,011    24,410
  Goodwill, net                                                40,629    41,783
                                                           $1,003,596  $846,688
                                                                               
LIABILITIES AND STOCKHOLDERS' EQUITY                                           
                                                                               
Current liabilities:                                                           
  Trade accounts payable                                      $77,226   $69,703
  Other accrued expenses and liabilities                      297,071   297,298
  Deferred revenue                                            159,192   166,007
  Accrued personnel costs                                      22,334    20,008
  Current portion of long-term debt                             1,890     1,454
     Total current liabilities                                557,713   554,470
                                                                               
Long-term liabilities:                                                         
  Notes payable                                                77,358    50,000
  Deferred income taxes                                        44,011    24,410
  Deferred revenue                                             86,632    86,040
  Minority interests                                              732     2,674
  Other liabilities                                               959     1,060
    Total liabilities                                         767,405   718,654
                                                                               
Stockholders' equity:                                                          
  Preferred stock, $.01 par value; 5,000,000 shares                            
    authorized, 1,000 shares issued and outstanding                            
    at September 30, 1997 and June 30, 1997                         1         1
  Common stock, $.01 par value, 300,000,000 shares                             
    authorized, 102,157,066 and 100,188,971 shares                             
    issued and outstanding at September 30, 1997                               
    and June 30, 1997, respectively                             1,022     1,002
  Unrealized gain on available-for-sale securities             29,771    16,924
  Additional paid-in capital                                  693,347   617,221
  Accumulated deficit                                       (487,950) (507,114)
    Total stockholders' equity                                236,191   128,034
                                                           $1,003,596  $846,688
See accompanying notes.                                                        
</TABLE>

[CAPTION]
AMERICA ONLINE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
<TABLE>

                                               Three months ended September 30,
                                                      1997        1996
                                                        (Unaudited)
Revenues:                                                                
                                                                         
<S>                                              <C>            <C>
  Online service revenues                             $434,167   $311,132
                                                                         
  Other revenues                                        87,471     38,850
                                                                         
    Total revenues                                     521,638    349,982
                                                                         
Costs and expenses:                                                      
                                                                         
  Cost of revenues                                     327,001    201,154
                                                                         
  Marketing:                                                             
    Marketing                                           97,802     79,143
    Write-off of deferred subscriber                                     
    acquisition costs                                        -    385,221
                                                                         
  Product development                                   15,815     18,584
                                                                         
  General and administrative                            54,311     20,104
                                                                         
  Restructuring charge                                  (1,306)         -
                                                                         
  Amortization of goodwill                               1,676      1,920
                                                                         
    Total costs and expenses                           495,299    706,126
                                                                         
Income (loss) from operations                           26,339   (356,144)
                                                                         
Other income                                             5,327      2,455
                                                                         
Income (loss) before provision for income taxes         31,666   (353,689)
                                                                         
Provision for income taxes                             (12,502)         -
                                                                         
Net income (loss)                                      $19,164 $ (353,689)
                                                                         
                                                                         
Earnings (loss)  per share:                              $0.16 $    (3.80)
                                                                         
Weighted average shares outstanding                    118,880     93,169
                                                                         
See accompanying notes.                                                  
</TABLE>

[CAPTION]
AMERICA ONLINE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>

                                              Three months ended September 30,
                                                      1997          1996
                                                         (Unaudited)
                                                                            
Cash flows from operating activities:                                       
<S>                                               <C>           <C>
  Net income (loss)                                     $19,164   $ (353,689)
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
      Write-off of deferred subscriber                     
         acquisition costs                                   -       385,221
      Non-cash restructuring charges                     (1,306)           -
      Depreciation and amortization                      25,522       12,673
      Amortization of subscriber acquisition                 
         costs                                                -       59,189
      Compensatory stock options                         20,141            -
      Deferred income taxes                              12,502            -
      Changes in assets and liabilities:                                    
        Trade accounts receivable                        (3,049)       8,631
        Other receivables                                (1,151)     (12,682)
        Prepaid expenses and other current assets         9,155          195
        Deferred subscriber acquisition costs                 -     (130,229)
        Other assets                                    (19,374)      (2,862)
        Trade accounts payable                            7,926        8,670
        Accrued personnel costs                           2,349       (7,179)
        Other accrued expenses and liabilities           13,472        2,224
        Deferred revenue                                 (6,223)       7,643
        Other liabilities                                  (101)        (155)
                                                                            
        Total adjustments                                59,863      331,339
                                                                            
Net cash provided by (used in) operating activities      79,027      (22,350)
                                                                            
Cash flows from investing activities:                                       
  Purchase of property and equipment                    (65,507)     (14,505)
  Product development costs                             (13,203)     (15,505)
  Other investing activities                               (429)        (844)
                                                                            
Net cash used in investing activities                   (79,139)     (30,854)
                                                                            
Cash flows from financing activities:                                       
  Proceeds from issuance of preferred stock in               
      subsidiary                                              -       15,000
  Proceeds from issuance of common stock                 25,264       11,529
  Proceeds (payments) on long-term debt                     803         (284)
  Proceeds from note payable                             28,500            -
  Payments under capital lease obligations                 (149)        (308)
                                                                            
Net cash provided by financing activities                54,418       25,937
                                                                            
Net increase (decrease) in cash and cash               
    equivalents                                          54,306      (27,267)
Cash and cash equivalents at beginning of period        124,340      118,421
                                                                            
Cash and cash equivalents at end of period              178,646       91,154
                                                                            
Supplemental cash flow information                                          
  Cash paid during the period for:                                          
    Interest                                             $1,033         $424
    Income taxes                                              -            -
                                                                            
See accompanying notes.                                                     
</TABLE>


                              AMERICA ONLINE, INC.
                                        
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Note 1.  Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements,
which  include the accounts of America Online, Inc. (the "Company") and its
wholly and majority owned subsidiaries, have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting only of normal
recurring accruals (with the exception of the adjustment discussed in Note 2 of
the Notes to Consolidated Financial Statements), considered necessary for a fair
presentation, have been included in the accompanying unaudited financial
statements. All significant intercompany transactions and balances have been
eliminated in consolidation. Certain amounts in prior years' consolidated
financial statements have been reclassified to conform to the current year
presentation.  Operating results for the three months ended September 30, 1997
are not necessarily indicative of the results that may be expected for the full
year ending June 30, 1998. For further information, refer to the consolidated
financial statements and notes thereto, included in the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 1997.
     
     In January 1997, the Securities and Exchange Commission issued new rules
requiring disclosure of the Company's accounting policies for derivatives and
market risk disclosure.  The Company does not have any derivative financial
instruments as of September 30, 1997, and believes that the interest rate risk
associated with its borrowings and market risk associated with its available-
for-sale securities are not material to the results of operations or financial
position of the Company.

Note 2.  Change in Accounting Estimate

     As a result of a change in accounting estimate, the Company recorded a
charge of $385.2 million  as of September 30, 1996, representing the balance of
deferred subscriber acquisition costs as of that date.  The Company had
previously deferred the cost of certain marketing activities, to comply with the
criteria of Statement of Position 93-7 "Reporting on Advertising Costs", and
then amortized those costs over a period determined by calculating the ratio of
current revenues related to direct response advertising versus the total
expected revenues related to this advertising, or twenty-four months, whichever
was shorter. The Company's changing business model, which includes flat-rate
pricing for its online service, is expected to increasingly reduce its reliance
on online service subscriber revenues for the generation of revenues and
profits.  This changing business model, coupled with a lack of historical
experience with flat-rate pricing, created uncertainties regarding the level of
expected future economic benefits from online service subscriber revenues (See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations").  As a result, the Company believed it no longer had an adequate
accounting basis to support recognizing deferred subscriber acquisition costs as
an asset.

Note  3.  Restructuring Charge
     
     In connection with a restructuring plan adopted in the second quarter of
fiscal 1997, the Company recorded a $48.6 million restructuring charge
associated with the Company's change in business model, the reorganization of
the Company into three operating units, the termination of approximately 300
employees, and the shutdown of certain operating divisions and subsidiaries.  As
of September 30, 1997, substantially all of the restructuring activities have
been completed and the Company reversed $1.3 million of the original
restructuring accrual.
     
Note 4.  Income Taxes

     The effective income tax rate varied from the federal statutory tax rate as
follows:
     
<TABLE>

                                          Three months ended
                                            September 30,
                                         1997          1996
                                                  
<S>                                  <C>          <C>
Statutory rate                          35.0%          35.0%
State income taxes - net of federal                      
       income tax benefit                3.0            3.0
Valuation allowance on net deferred                      
       tax benefit                         -          (38.0)
Other                                    1.5              -
Effective tax rate                      39.5%             -
</TABLE>


     As of September 30, 1997, the Company had available net operating loss
carryforwards of approximately $878.2 million for tax purposes, which will be
available, subject to certain annual limitations, to offset future taxable
income.  If not used, these loss carryforwards will expire between 2001 and
2012.  To the extent that net operating loss carryforwards, when realized,
relate to stock option deductions, the resulting benefits will be credited to
stockholders' equity.
     
     Deferred income taxes arise because of differences in the treatment of
income and expense items for financial reporting and income tax purposes.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.  Significant components
of the Company's deferred tax liabilities and assets as of September 30, 1997
and 1996 are as follows:

<TABLE>

                                                       September 30,
(In thousands)                                       1997            1996
  Deferred tax liabilities:                                      
<S>                                            <C>               <C>
   Capitalized software costs                  $    25,765       $ 18,662
   Unrealized gain on available-for-sale                         
          securities                                18,246              -
       Net deferred tax liabilities            $    44,011       $ 18,662
                                                                 
  Deferred tax assets:                                           
    Net operating loss carryfoward             $   333,726       $178,158
    Other                                            7,288              -
      Total deferred tax assets                    341,014        178,158
    Valuation allowance for deferred assets       (297,003)      (159,496)
    Net deferred tax assets                    $    44,001       $ 18,662
</TABLE>


Note 5.  Legal Proceedings

     The Company is involved in various legal proceedings, including pending
litigation.  In February 1997, a class action lawsuit (Orman v. America Online,
Inc., et al.) was filed against the Company, its officers and directors and its
outside auditors alleging violations of the federal securities laws between
August 10, 1995 and October 29, 1996.  In July 1997, the court dismissed the
complaint, finding that the allegations of the complaint were not sufficiently
specific.  The plaintiffs filed an amended complaint in September 1997, this
time naming only the Company, its Chief Executive Officer and its Chief
Financial Officer as defendants.  The court has declined to dismiss the amended
complaint and the case will now be litigated.  A shareholder derivative suit
related to the Orman lawsuit has also been filed in Delaware chancery court
against certain current and former directors of the Company.  The Company
believes that it has valid defenses to all litigation pending against it,
including the Orman case, and all cases against the Company are, and will
continue to be, vigorously defended.  Management is unable to make a meaningful
estimate of the amount or range of loss that could result from an unfavorable
outcome of all pending litigation.  It is possible that the Company's operating
results or cash flows in a particular quarter or annual period or its financial
position could be materially affected by an ultimate unfavorable outcome of
certain pending litigation.   Management believes, however, that the ultimate
outcome of all pending litigation should not have a material adverse effect on
the Company's financial position.

Note 6.  Note Payable

     During September 1997, the Company borrowed $28.5 million in a refinancing
of one of its office buildings.  The note is collateralized by the Company's
office building and carries interest at a fixed rate of 7.46%.  The note
amortizes on a straight-line basis over a term of 25 years and if not paid in
full at the end of 10 years the interest rate, from that point forward, is
subject to adjustment.

Note 7.  Earnings (Loss) per Share

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share."  SFAS
No. 128 establishes a different method of computing net income per share than is
currently required under the provisions of Accounting Principles Board Opinion
No. 15.  Under SFAS No. 128, the Company will be required to present both basic
net income (loss) per share and diluted net income (loss) per share.  Basic net
income (loss) per share would have been $0.19 and ($3.80) for the three months
ended September 30, 1997 and 1996, respectively.  The impact of SFAS No. 128 on
the calculation of diluted net income per share for the aforementioned periods
would not have been material.  The Company plans to adopt SFAS No. 128 in its
fiscal quarter ending December 31, 1997 and at that time all historical net
income (loss) per share data presented will be restated to conform to the
provisions of SFAS No. 128.
     
Note  8.  Business Developments

     On September 8, 1997, the Company announced that, in exchange for its ANS
Communications, Inc. ("ANS") subsidiary, it will acquire CompuServe Corp.'s
("CompuServe") worldwide online services business from WorldCom, Inc.
("WorldCom") and receive approximately $175 million in cash (the "Purchase and
Sale").  Upon completion of the Purchase and Sale, the Company's European
partner, Bertelsmann AG, will pay an additional $75 million to the Company and
each company will invest $25 million in an expanded joint venture to operate
CompuServe's European online service.  The Company will generate approximately
$225 million in cash as a result of the aforementioned transactions.  The
Company also agreed that it will, upon closing of the Purchase and Sale, enter
into a five year network services agreement with WorldCom which will provide the
Company with significantly expanded network capacity for the Company's online
service at favorable prices.  In connection with these transactions, the Company
expects to realize a gain of $300 million to $400 million, which will be
recognized over the five year term of the network services agreement with
WorldCom.  The Company announced on November 10, 1997, that the Antitrust
Division of the U.S. Department of Justice has advised the Company that it is
permitting the statutory waiting period required for the AOL-WorldCom, Inc. -
ANS Communications, Inc. - CompuServe transactions to expire without seeking
additional information.  On November 11, 1997, the Company was informed that the
German Federal Cartel Office would not object to the consummation of the
transactions.  The transactions outlined above are subject to certain closing
conditions, including CompuServe shareholder approval, but are expected to close
on or before March 1, 1998.

     At September 30, 1997, ANS had assets of $101.8 million (including $4.9
million in intercompany receivables), liabilities of $54.0 million and
stockholder's equity of $47.8 million.  The major components of assets were
$32.4 million in goodwill and $31.4 million in property and equipment.  The
major components of liabilities were $33.8 million in other accrued expenses and
liabilities and $13.6 million in trade accounts payable.  For the quarter ended
September 30, 1997, ANS' third party revenues (excluding intercompany revenues)
totaled $9.6 million and are included in other revenues in the Consolidated
Statements of Operations.

Note  9.  Subsequent Event

     On November 12, 1997, the Company offered for sale $350 million of 4%
Convertible Subordinated Notes due November 15, 2002 (not including $50 million
principal amount of notes subject to an over-allotment option).  The notes are
convertible into the Company's common stock at a conversion rate of 9.5797
shares of common stock for each $1,000 principal amount of the notes (equivalent
to a conversion price of $104.3875 per share), subject to adjustment in certain
events.  The Company expects to close the sale and receive the proceeds on
November 17, 1997, subject to certain closing conditions.

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations Overview

     The following information should be read in conjunction with the
consolidated financial statements and the notes thereto included in Item 1 of
this Quarterly Report, and the consolidated financial statements and the notes
thereto and Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in the Company's Annual Report on Form 10-K for
the year ended June 30, 1997.

     The Company generates two types of revenues, online service revenues and
other revenues.  Online service revenues are generated by customers subscribing
to the Company's online services.  Other revenues are non-subscription based and
are generated from the Company's base of subscribers as well as businesses.
Other revenues include electronic commerce and advertising revenues, which
consist of the sale of merchandise, advertising and related revenues, and
transaction fees associated with electronic commerce, as well as other revenues,
which consist primarily of data network service revenues.

     Currently, the Company's online service revenues are generated primarily
from subscribers paying a monthly membership fee.  Prior to December 1, 1996, a
significant portion of online service revenues were comprised of hourly charges
based on usage in excess of the number of hours of usage provided as part of the
monthly fee.  With the introduction of flat-rate pricing, as described below,
the portion of online service revenues which are generated from hourly charges
has decreased substantially.  The growth of the Company's online service
revenues, assuming such growth continues, is expected to be driven primarily by
growth in its subscriber base.  The growth of the subscriber base is dependent
upon the Company's ability to acquire and retain subscribers.

     Effective December 1, 1996, the Company began offering several pricing
alternatives to the AOL service aimed at providing price points for a wide range
of consumers.  These pricing alternatives are as follows:

*    A standard monthly membership fee of $19.95, with no additional hourly
  charges (the "Flat-Rate Plan").  Subscribers can also choose to prepay for one
  year in advance at the monthly rate of $17.95.

*    An alternative offering three hours for $4.95 per month, with additional
  time priced at $2.50 per hour.

*    An alternative offering of $9.95 per month for unlimited use - for those
  subscribers who already have an Internet connection and use this connection to
  access AOL.

     In July 1997, the Company introduced premium games services, for which
members pay $1.99 per hour (after any free hours offered under promotional
programs) in addition to the regular monthly membership fee and hourly usage
charges as set forth above.

     Prior to December 1, 1996, the Company's standard monthly membership fee
for its AOL service, which included five hours of service, was $9.95 per month,
with a $2.95 hourly fee for usage in excess of five hours per month.  Existing
members at December 1, 1996, could retain the $9.95 / five hour pricing upon
request.  For the period July 1, 1996 through November 30, 1996, the Company
also offered a pricing plan which included 20 hours of service for $19.95 per
month, with a $2.95 hourly fee for usage in excess of 20 hours per month (the
"Value Plan").  The Value Plan was discontinued upon  the availability of the
Flat-Rate Plan on December 1, 1996.

     As a result of the introduction of the Flat-Rate Plan as detailed above,
the Company's Internet service, Global Network Navigator ("GNN"), was
discontinued.  The Company had launched GNN in October 1995.
     
     Subsequent to the introduction of the Flat-Rate Plan, the Company
experienced a significant increase in average monthly subscriber usage, and an
attendant decrease in the average revenue per member-hour.  The Company also
experienced higher cost of revenues relative to total revenues.  The Company
plans to minimize the impact of the aforementioned changes by growing other
revenues as well as decreasing costs, on a relative basis (either on a per-hour
basis or as a percentage of total revenues), principally through network and
operating cost efficiencies.
     
     An important component of the Company's business strategy is an increasing
reliance on other revenue sources including the sale of merchandise, advertising
and related revenues, and transaction fees associated with electronic commerce.
The Company recognizes that this reliance on other revenue sources carries a
higher degree of business risk than do the other factors described below.
Another important factor in the Company's business strategy is the further
reduction of the costs of operating the Company's data network, on a per-hour
basis, through the continuing build-out and efficient traffic management of
AOLnet, the Company's TCP/IP network.  The Company also anticipates marketing
expenses as a percentage of revenues to be lower in fiscal 1998 than they were
in fiscal 1997 (absent the effects of capitalization and amortization),
primarily as a result of the improved value proposition offered by flat-rate
pricing, which is expected to provide improved subscriber acquisition and
retention rates, as compared to rates achieved prior to flat-rate pricing.  The
Company's marketing strategy is expected to place a greater emphasis on brand
advertising as well as cost-effective bundling agreements, whereby the Company's
product  is widely distributed with new personal computers, the Windows
operating system and other peripheral computer equipment.  Although the Company
will continue to market its products via direct mail programs, such programs are
expected to be more cost-efficient, as they will be directed to more narrowly
targeted consumer groups.
     
     The growth of other revenues is important to the Company's business
objectives, as they provide an important contribution to the Company's operating
margins. In the first quarter of fiscal 1998, other revenues represented
approximately 17% of total revenues, compared to approximately 11% in the first
quarter of fiscal 1997.  Among the Company's business objectives are increasing
the subscriber base and continuing to accelerate the change in its business
model into one in which increasingly more revenues are generated from sources
other than online service subscription revenues, such as advertising and
electronic commerce.  The Company expects that the growth in other revenues,
assuming such growth continues, will result in other revenues representing an
increasing portion of total revenues, and is anticipated to provide the Company
with the opportunity and flexibility to fund the costs associated with flat-rate
pricing as well as programs designed to grow the subscriber base and meet other
business objectives. Other revenues are generated primarily from electronic
commerce and advertising, and include the sale of merchandise by the Company
(principally computer hardware and software and AOL merchandise), as well as
fees received from the sale of advertising, fees received from companies who
market their products through the AOL service, and commission fees associated
with the Company's co-branded VISA credit card.  Advertising revenues are
expected to grow in importance as the Company attempts to leverage its large and
growing subscriber base.  The Company is able to offer its advertising partners
a variety of customized programs, which may include guaranteed numbers of
impressions and select sponsorship of particular online areas for designated
time periods.  In the past, electronic commerce revenues  earned from companies
who marketed their products on the AOL service were generally commission-based.
In the future, the Company anticipates that a higher proportion of these types
of revenues will be derived from fixed fees charged to these merchants, rather
than being based on transaction volumes.  As merchants realize the value of
reaching the Company's large subscriber base, the Company expects to earn
additional revenues by offering selected merchants exclusive rights to market
their particular class of goods or services within the Company's online service.
     
     The Company's operating margin declined in fiscal 1997, driven by the
impact of the Company's switch to flat-rate pricing in December 1996 and a
concomitant dramatic increase in member usage.  Average monthly subscriber usage
in the first quarter of fiscal 1997, the last quarter before the introduction of
flat-rate pricing, was approximately 7 hours.  In the first quarter of fiscal
year 1998, average monthly subscriber usage had increased to approximately 20
hours.  Due to the lack of historical operating experience under a flat-rate
pricing structure, the Company is unsure whether these usage statistics will
continue to trend upward.  If usage trends continue to increase, further
pressures on operating margins may result.  The impact of increased usage on
operating margins, if it occurs, could be offset, in whole or in part, by
increases in other revenues, increased data network operating efficiencies,
reductions in marketing and other operating expenses, pricing changes or other
factors.

     The Company competes in the highly competitive businesses of online and
Internet services, advertising and electronic commerce.  Internet service
providers and online services, including the Microsoft Network , Prodigy
Services Company, CompuServe Corporation and various national and local Internet
service providers, as well as long distance and regional telephone and cable
companies, including, among others, AT&T Corp., MCI Communications Corporation
and various regional Bell operating companies, @Home Network, and WebTV
currently compete with the Company for both subscribers and for advertising and
electronic commerce revenues.  The products and services offered by the Company
are thus available not only from other online service companies, but also from
web-based internet service providers using industry-standard browser and
navigational software, from telephone companies who may offer such services
directly to their customers as part of their telephone service and from
suppliers of operating systems who may incorporate functional equivalents to the
Company's services in their products.  The Company also competes for advertising
and electronic commerce revenues with major Web sites operated by search
services and other companies such as Yahoo! Inc., Netscape Communications
Corporation, Infoseek Corporation, CNET, Inc., Lycos, Inc., and Excite, Inc.,
with global media companies such as newspapers, radio and television stations
and content providers such as The Walt Disney Company and Time Warner, Inc. and
with direct marketing and telemarketing companies.  The Company has recently
entered into an agreement with WorldCom, Inc. to acquire CompuServe
Corporation's online services businesses, although there can be no assurance
that the acquisition will be consummated (see Note 8 of the Notes to
Consolidated Financial Statements).  Some of the present competitors and
potential future competitors of the Company may have greater financial,
technical, marketing and/or personnel resources than the Company.  The Company
believes the principal competitive factors in the online and Internet services
industries include, with respect to competition for subscribers, product
features and quality, ease of use, access to distribution channels, strategic
alliances, brand recognition, reliability and price, and with respect to
advertising and electronic commerce revenues, numbers of visitors to an online
or Internet site, duration and frequency of visits, and demographics of
visitors.  The Company believes that it currently competes effectively in these
areas. The competitive environment could have the following effects: require the
Company to implement new pricing programs that could result in lower prices and
increased spending on marketing, network capacity, content procurement 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 the Company's ability to
grow its subscriber base; result in increased attrition in the Company's
subscriber base; and negatively impact the Company's ability to meet its
business objective of changing its business model into one in which increasingly
more revenues and profits are generated from sources other than online service
subscription revenues, such as advertising and electronic commerce.  Any of the
foregoing events could have an impact on revenues and result in an increase in
costs as a percentage of revenues and may have a material adverse effect on the
Company's business, financial condition and operating results.

Results of Operations

Online Service Revenues

     For the three months ended September 30, 1997, online service revenues
increased from $311.1 million to $434.2 million, or 40%, over the three months
ended September 30, 1996. This increase was primarily attributable to a 39%
increase in the average number of AOL North American subscribers for the quarter
ended September 30, 1997, compared to the prior year comparable quarter, and a
3% increase in the average monthly online service revenue per AOL North American
subscriber. The average monthly online service revenue per AOL North American
subscriber increased from $16.86 in the three months ended September 30, 1996 to
$17.36 in the three months ended September 30, 1997.  This increase was
principally attributable to a reduction in bad debt associated with service
revenues in the quarter ended September 30, 1997.

Other Revenues

     For the three months ended September 30, 1997, other revenues, which
consist principally of electronic commerce and advertising revenues, as well as
data network service revenues, increased from $38.9 million to $87.5 million ,
or 125%, over the three months ended September 30, 1996.  This increase was
primarily attributable to an increase in advertising and electronic commerce
revenues, driven primarily by more advertising on the Company's online service
and increases in the sale of merchandise, primarily due to an expanded number of
products offered for sale to the Company's larger membership base.  Advertising
and electronic commerce transaction fees increased by 328%, from $10.2 million
in the three months ended September 30, 1996, to $43.7 million in the three
months ended September 30, 1997, of which $14.2 million relates to an agreement
with Tel-Save, Inc.  Merchandise sales increased by 39%, from $17.7 million
in the three months ended September 30, 1996, to $24.6 million in the three
months ended September 30, 1997.  At September 30, 1997, the Company's
advertising and electronic commerce backlog, representing the contract value of
advertising and electronic commerce agreements signed, less revenues already
recognized from these agreements, was approximately $224 million.

Cost of Revenues

     Cost of revenues includes network-related costs, consisting primarily of
data network costs, personnel and related costs associated with operating the
data centers, data network and providing customer support, host computer and
network equipment costs, the costs of merchandise sold, royalties paid to
information and service providers and product development amortization expense.
For the three months ended September 30, 1997, cost of revenues increased from
$201.2 million to $327.0 million, or 63%, over the three months ended September
30, 1996, and increased as a percentage of total revenues from 57.5% to 62.7%.

     The increase in cost of revenues for the three month period ended September
30, 1997 was primarily attributable to increases in data network costs, host
computer and network equipment costs, and personnel and related costs associated
with operating the data centers, data network and providing customer support.
Data network costs increased primarily as a result of the larger customer base
and more usage by customers.  Host computer and network equipment costs,
consisting of lease, depreciation and maintenance expenses, increased as a
result of additional host computer and network equipment, necessitated by the
larger customer base and more usage by customers.  Personnel and related costs
associated with operating the data centers, data network and providing customer
support increased primarily as a result of the requirements of supporting a
larger data network and a larger customer base.

     The increase in cost of revenues as a percentage of total revenues for the
three months ended September 30, 1997 was primarily attributable to increases in
host computer and network equipment costs and personnel and related costs
associated with operating the data centers, data network and providing customer
support, partially offset by a decrease in royalties paid to information and
service providers.

     The Company is building AOLnet, a TCP/IP data network, in order to increase
its network capacity, provide its members with higher speed access, and reduce
data network costs on a per hour basis.  As the Company rapidly builds AOLnet,
it plans to continue to manage a high percentage of its total traffic to this
network and to negotiate more favorable pricing based on volume discounts, which
would lead to a lower overall data network per hour cost.

     On September 8, 1997, the Company announced that, in exchange for its ANS
Communications, Inc. ("ANS") subsidiary, it will acquire CompuServe Corp.'s
("CompuServe") worldwide online services business from WorldCom, Inc.
("WorldCom") and receive approximately $175 million in cash.  The Company also
agreed that it will, upon closing of the aforementioned transaction, enter into
a five year network services agreement with WorldCom which will provide the
Company with significantly expanded network capacity for the Company's online
service at favorable prices, and higher speed access as it becomes commercially
available (refer to Note 8 of the Notes to Consolidated Financial Statements).
ANS is an important component of the portfolio of suppliers which comprise
AOLnet, and, under the network services agreement with WorldCom, will continue
to be so in the future.  The network services agreement with WorldCom is
structured in such a manner that the Company anticipates its network costs will
be at a level no greater that the Company would expect to incur if it continued
to own ANS, thereby achieving a key benefit of ownership without the potential
risks associated with ownership.

Marketing and Write-off of Deferred Subscriber Acquisition Costs

     Marketing expenses include the costs to acquire and retain subscribers and
other general marketing costs.  For the three months ended September 30, 1997,
marketing expenses increased from $79.1 million to $97.8 million, or 24%, over
the three months ended September 30, 1996, and decreased as a percentage of
total revenues from 22.6% to 18.7%.

     The increase in marketing expenses for the three month period ended
September 30, 1997, was primarily attributable to an increase in subscriber
acquisition expenses, which were impacted by a change in accounting estimate at
September 30, 1996, that resulted in subscriber acquisition costs being
currently expensed for periods subsequent to the first quarter of fiscal 1997,
versus being capitalized and amortized over twenty-four months in the first
quarter of fiscal 1997 and prior.  The decrease in marketing expenses as a
percentage of total revenues for the three months ended September 30, 1997 was
primarily attributable to a decrease in subscriber acquisition expenses, as a
percentage of total revenues, partially offset by an increase in other general
marketing expenses, principally related to an increase in personnel costs.  As a
result of the aforementioned change in accounting estimate, the balance of
deferred subscriber acquisition costs as of September 30, 1996, totaling $385.2
million, was written off.  For additional information regarding this change,
refer to Note 2 of the Notes to Consolidated Financial Statements.

     For the three months ended September 30, 1997, marketing expenses, before
capitalization and amortization, decreased from $150.2 million to $97.8 million,
or 35%, over the three months ended September 30, 1996, and decreased as a
percentage of total revenues from 42.9% to 18.7%.  The decrease in marketing
expenses, for the three months ended September 30, 1997, before capitalization
and amortization, was primarily attributable to a decrease in subscriber
acquisition expenses, offset in part by an increase in other general marketing
expenses, principally related to an increase in personnel costs.  The decrease
in marketing expenses as a percentage of total revenues for the three months
ended September 30, 1997, before capitalization and amortization, was primarily
attributable to a decrease in subscriber acquisition expenses.

Product Development

     Product development costs include research and development expenses and
other product development costs. For the three months ended September 30, 1997,
product development costs decreased from $18.6 million to $15.8 million, or 15%,
over the three months ended September 30, 1996, and decreased as a percentage of
total revenues from 5.3% to 3.0%.  The decrease in product development costs was
primarily due to a relatively flat level of personnel expense in the two
quarterly periods, which was impacted by the terminations which took place in
the Company's second quarter fiscal 1997 restructuring, combined with an
increase in the overall percentage of product development costs capitalized.
The decrease in product development costs as a percentage of total revenues was
primarily a result of the decrease in product development costs as well as the
substantial growth in revenues.

General and Administrative

     For the three months ended September 30, 1997, general and administrative
expenses increased from $20.1 million to $54.3 million, or 170%, over the three
months ended September 30, 1996, and increased as a percentage of total revenues
from 5.7% to 10.4%. The increase in general and administrative costs, and such
costs as a percentage of total revenues, was primarily attributable to higher
personnel costs, which included compensatory stock option charges related to the
planned sale of ANS.  In addition, there were increases in professional fees,
principally related to legal matters, as well as facility related costs.

Amortization of Goodwill

     Goodwill is being amortized on a straight-line basis over periods ranging
from two to ten years.  For the three months ended September 30, 1997,
amortization of goodwill decreased from $1.9 million to $1.7 million for the
three months ended September 30, 1996.  The decrease in amortization of goodwill
in the three month period ended September 30, 1997 is primarily attributable to
a write-off of the goodwill associated with GNN, partially offset by goodwill
associated with various purchases of companies made by the Company subsequent to
the first quarter of fiscal 1997.  In connection with the fiscal 1997
restructuring charge (see Note 3 of the Notes to Consolidated Financial
Statements), the Company wrote-off approximately $8.2 million of capitalized
goodwill associated with GNN.

Restructuring Charge

     In connection with a restructuring plan adopted in the second quarter of
fiscal 1997, the Company recorded a $48.6 million restructuring charge
associated with the Company's change in business model, the reorganization of
the Company into three operating units, the termination of approximately 300
employees, and the shutdown of certain operating divisions and subsidiaries.  As
of September 30, 1997, substantially all of the restructuring activities have
been completed and the Company reversed $1.3 million of the original
restructuring accrual.

Other Income

     Other income consists primarily of investment income and non-operating
gains net of interest expense and non-operating charges.  The Company had other
income of $5.3 million and $2.5 million in the three months ended September 30,
1997 and 1996, respectively.  The increase in other income for the three months
ended September 30, 1997, was primarily attributable to the sale of certain
available-for-sale securities and the allocation of minority interest losses
partially offset by non-operating losses related to various investments.

Provision for Income Taxes

     The provision for income taxes was $12.5 million and $0 in the three months
ended September 30, 1997 and 1996, respectively.  For additional information
regarding income taxes, refer to Note 4 of the Notes to Consolidated Financial
Statements.

Net Income (Loss)

     Net income was $19.2 million in the three months ended September 30, 1997
compared to a net loss of $353.7 million in the three months ended September 30,
1996.  The net loss in the three months ended September 30, 1996 included $385.2
million for the write-off of deferred subscriber acquisition costs.

Liquidity and Capital Resources

     The Company has financed its operations through cash generated from
operations and the sale of its capital stock.  The Company has financed its
investments in facilities and telecommunications equipment principally through
leasing.  Net cash provided by (used in) operating activities was $79.0 million
and ($22.4) million in the three months ended September 30, 1997 and 1996,
respectively.  Included in operating activities were expenditures for deferred
subscriber acquisition costs of $130.2 million in the three months ended
September 30, 1996.  Net cash used in investing activities was $79.1 million and
$30.9 million in the three months ended September 30, 1997 and 1996,
respectively.  Included in investing activities for the three months ended
September 30, 1997 was $65.5 million for the purchase of property and equipment.
Net cash provided by financing activities was $54.4 million and $25.9 million in
the three months ended September 30, 1997 and 1996, respectively.  Included in
financing activities for the three months ended September 30, 1997 were $28.5
million in proceeds from a note payable and $25.3 million in proceeds from the
sale of common stock pursuant to the exercise of employee stock options.  At
September 30, 1997, the Company had a working capital deficiency of $184.1
million, compared to a working capital deficiency of $231.0 million at June 30,
1997.  The improvement in working capital was primarily related to an increase
in cash and cash equivalents of $54.3 million.

     On November 12, 1997, the Company offered for sale $350 million of 4%
Convertible Subordinated Notes due November 15, 2002 (not including $50 million
principal amount of notes subject to an over-allotment option).  The notes are
convertible into the Company's common stock at a conversion rate of 9.5797
shares of common stock for each $1,000 principal amount of the notes (equivalent
to a conversion price of $104.3875 per share), subject to adjustment in certain
events.  The Company expects to close the sale and receive the proceeds on
November 17, 1997, subject to certain closing conditions.  In addition, the
Company is planning to close a credit facility in the second quarter of fiscal
1998 in the additional principal amount of $150 million.

     On September 8, 1997, the Company announced that, in exchange for its ANS
Communications, Inc. ("ANS") subsidiary, it will acquire CompuServe Corp.'s
("CompuServe") worldwide online services business from WorldCom, Inc.
("WorldCom") and receive approximately $175 million in cash (the "Purchase and
Sale").  Upon completion of the Purchase and Sale, the Company's European
partner, Bertelsmann AG, will pay an additional $75 million to the Company and
each company will invest $25 million in an expanded joint venture to operate
CompuServe's European online service.  The Company will generate approximately
$225 million in cash as a result of the aforementioned transactions.  The
Company also agreed that it will, upon closing of the Purchase and Sale, enter
into a five year network services agreement with WorldCom which will provide the
Company with significantly expanded network capacity for the Company's online
service at favorable prices.  In connection with these transactions, the Company
expects to realize a gain of $300 million to $400 million, which will be
recognized over the five year term of the network services agreement with
WorldCom.  The Company announced on November 10, 1997, that the Antitrust
Division of the U.S. Department of Justice has advised the Company that it is
permitting the statutory waiting period required for the AOL-WorldCom, Inc. -
ANS Communications, Inc. - CompuServe transactions to expire without seeking
additional information.  On November 11, 1997, the Company was informed that the
German Federal Cartel Office would not object to the consummation of the
transactions.  The transactions outlined above are subject to certain closing
conditions, including CompuServe shareholder approval, but are expected to close
on or before March 1, 1998.

     In May 1996, the Company entered into a joint venture with Mitsui & Co.,
(Mitsui) and Nihon Keizai Shimbun, Inc. (Nikkei) to offer interactive online
services in Japan.  In connection with the agreement, the Company received
approximately $28 million through the sale of convertible preferred stock to
Mitsui.  The preferred stock has an aggregate liquidation preference of
approximately $28 million and accrues dividends at a rate of 4% per annum.
Accrued dividends can be paid in the form of additional shares of preferred
stock.  During May 1998, the preferred stock, together with accrued but unpaid
dividends, automatically converts into shares of common stock based on the fair
market value of common stock at the time of conversion.

     The Company leases the majority of its facilities and equipment under non-
cancelable operating leases, and is building AOLnet, its data communications
network, as well as expanding its host server and data center capacity.  The
buildout of AOLnet and the expansion of host server and data center capacity
requires a substantial investment in telecommunications and server equipment, as
well as facilities.  The Company plans to continue making significant
investments in these areas.  The Company plans to fund these investments, which
are anticipated to be between $600 million and $800 million in fiscal 1998,
through a combination of leases, debt financing (see above) and cash purchases.

     The Company uses its working capital to finance ongoing operations and to
fund marketing and content programs and the development of its products and
services.  The Company plans to continue to invest in subscriber acquisition and
retention marketing and content programs to expand its subscriber base, as well
as in network, computing and support infrastructure.  Additionally, the Company
expects to use a portion of its cash for the acquisition and subsequent funding
of technologies, content, products or businesses complementary to the Company's
current business.  The Company anticipates that available cash and cash provided
by operating activities will be sufficient to fund its operations for the next
twelve months.

Seasonality

     In 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 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.  The growth
in the subscriber base 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.

Inflation

     The Company believes that inflation has not had a material effect on its
results of operations.

Forward-Looking Statements

     In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company wishes to caution readers that the
following important factors could cause the Company's actual results to differ
materially from those projected in forward-looking statements made by, or on
behalf of, the Company:

     Factors related to increased competition from existing and new competitors,
including price reductions and increased spending on marketing, network
capacity, content procurement and product development; limitations on the
Company's opportunities to enter into and/or renew agreements with content
providers and distribution partners; limitations on its ability to develop new
products and services; limitations on its ability to continue to grow its
subscriber base; increased subscriber acquisition costs; lower average monthly
revenue per subscriber, increased attrition in the Company's subscriber base and
a negative impact to the Company's ability to meet its business objective of
changing its business model into one in which increasingly more revenues and
profits are generated from sources other than online service subscription
revenues, such as advertising and electronic commerce.

     Factors related to the standard monthly membership fee (the Flat-Rate
Plan), and other new pricing alternatives, which became available December 1,
1996, including uncertainty of the following: the effect on average cost-per-
subscriber acquisition and retention costs;  the amount of time spent by members
using the AOL service under each pricing alternative; and the percentage of
members who sign up under each pricing alternative relative to their usage
patterns.

     Risks and uncertainties associated with the development of a new medium and
industry and a new and evolving business model, and the related fluctuations in
pricing, revenues, costs, products and services, the ability to anticipate
customer demands and to respond quickly and effectively to market opportunities.

     Risks related to the buildout of AOLnet and the expansion of host server
and data center capacity, including the inability to expand network, host server
and data center capacity at a rate and speed to sufficiently satisfy subscriber
demands, which accelerated substantially as a result of the introduction of 
flat-rate pricing; the failure of any of the Company's network providers; the 
failure to procure certain component parts required to expand AOLnet capacity, 
including modems, circuits, routers and local exchange carrier lines from local 
telephone companies; the failure to obtain the necessary financing for the 
buildout of AOLnet and the expansion of host server and data center capacity; 
and the risk that demand will not develop for the capacity AOLnet will provide.

     Any damage or failure to the Company's computer equipment and the
information stored in its data centers, such as damage by fire, power loss,
telecommunications failures, unauthorized intrusions and other events, that
causes interruptions in the Company's operations, or any interruptions or
service outages caused by software defects or server and network expansion.

     The Company's inability to manage its growth and to adapt its
administrative, operational, customer support and financial control systems to
the needs of the expanded entity and subscriber base; and the failure of
management to anticipate, respond to and manage changing business conditions.

     The failure of the Company or its partners to successfully market, sell and
deliver its services in international markets; and 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.

     The possibility of a moderating growth rate in the sale of new computers in
the U.S. and, to some extent, internationally; general or specific economic
conditions; the ability and willingness of purchasers to substitute other
services for AOL; the perceived absolute or relative overall value of these
services by the purchasers, including the features, quality and pricing compared
to other competitive services; smaller market or slowing of market growth for
such services.

     The amount and rate of growth in the Company's marketing and general and
administrative expenses; the implementation of new marketing programs and
promotional offers; the implementation of additional pricing programs; and the
impact of unusual items resulting from the Company's ongoing evaluation of its
business strategies, asset valuations and organizational structures.

     Difficulties or delays in the development, production, testing and
marketing of products, including, but not limited to, a failure to ship new
products and technologies when anticipated, including, but not limited to, new
client software and new features and functionality, and the failure to develop
new technology or modify existing technology to incorporate new standards and
protocols.

     The acquisition of businesses, fixed assets and other assets and
acquisition-related risks, including successful integration and management of
acquired technology, operations and personnel, the loss of key employees of the
acquired companies, and diversion of management attention from other ongoing
business concerns; the making or incurring of any expenditures and expenses,
including, but not limited to, depreciation and significant charges for in-
process research and development or other matters; and any revaluation of assets
or related expenses.

     The ability of the Company to diversify its sources of revenue through the
introduction of new products and services and through the development of new
revenue sources, such as electronic commerce and advertising.

     The effects of, and changes in, trade, monetary and fiscal policies, U.S.
and foreign laws and regulations, other activities of governments, agencies and
similar organizations, and social and economic conditions, such as trade
restrictions or prohibitions, inflation and monetary fluctuations, import and
other charges, or federal, state, local and other taxes.

     The loss of the services of executive officers and other key employees; and
the Company's continued ability to attract and retain highly skilled and
qualified personnel.

     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, judgments and
investigations, claims, and changes in those items, and developments or
assertions by or against the Company relating to intellectual property rights
and intellectual property licenses.

     Adoptions of new, or changes in, accounting policies, practices and
estimates and the application of such policies, practices and estimates.

     The effects of any activities of parties with which the Company has an
agreement or understanding, including any issues affecting any investment or
joint venture in which the Company has an investment; the amount, type and cost
of the financing which the Company has, and any changes to that financing.


PART II.    OTHER INFORMATION

Item 1.  Legal Proceedings

     The Company is involved in various legal proceedings, including pending
litigation.  In February 1997, a class action lawsuit (Orman v. America Online,
Inc., et al.) was filed against the Company, its officers and directors and its
outside auditors alleging violations of the federal securities laws between
August 10, 1995 and October 29, 1996.  In July 1997, the court dismissed the
complaint, finding that the allegations of the complaint were not sufficiently
specific.  The plaintiffs filed an amended complaint in September 1997, this
time naming only the Company, its Chief Executive Officer and its Chief
Financial Officer as defendants.  The court has declined to dismiss the amended
complaint and the case will now be litigated.  A shareholder derivative suit
related to the Orman lawsuit has also been filed in Delaware chancery court
against certain current and former directors of the Company.  The Company
believes that it has valid defenses to all litigation pending against it,
including the Orman case, and all cases against the Company are, and will
continue to be, vigorously defended.  Management is unable to make a meaningful
estimate of the amount or range of loss that could result from an unfavorable
outcome of all pending litigation.  It is possible that the Company's operating
results or cash flows in a particular quarter or annual period or its financial
position could be materially affected by an ultimate unfavorable outcome of
certain pending litigation.   Management believes, however, that the ultimate
outcome of all pending litigation should not have a material adverse effect on
the Company's financial position.

Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits

     Exhibit 10.1   Nondisclosure and Nonsolicitation Agreement with Bruce R.
                    Bond dated as of September 7, 1997

     (b)  Reports on Form 8-K

     Form      Item #    Description                        Filing Date
     Form 8-K  5, 7      Press Release announcing America   September 15, 1997
                         Online, Inc. to acquire Compuserve
                         Online Services, receive cash and
                         gain significant network commitments
                         in agreements with WorldCom, Inc.
                         and Bertelsmann AG
     
                              AMERICA ONLINE, INC.
                                        
                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                         AMERICA ONLINE, INC.


DATE: November 14, 1997         SIGNATURE:   /s/Stephen M. Case
                                             Stephen M. Case
                                             Chief Executive Officer




DATE: November 14, 1997         SIGNATURE:   /s/Lennert J. Leader
                                             Lennert J. Leader
                                             Chief Financial Officer
                                             (Principal Financial and 
                                              Accounting Officer)