EarthLink Incorporated
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EarthLink to Announce Second Quarter 2008 Earnings
www.prnewswire.com
ATLANTA, July 8 /PRNewswire-FirstCall/ -- EarthLink (Nasdaq: ELNK) today announced it will host a conference call on Tuesday, July 29, 2008, at 8:30 a.m. EDT to discuss its second quarter 2008 financial results. The earnings press release will be issued at 7:00 a.m. EDT.
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/07-08-2008/0004845053&EDATE=
Virgin Mobile to Acquire Helio
www.phoneplusmag.com | Jun 27, 2008
Call it a tale of two business models: Successful MVNO Virgin Mobile USA Inc. will take over struggling MVNO Helio for $39 million, the companies announced on Friday. Like Virgin Mobile, Helio uses Sprint-Nextel Corp.
http://www.phoneplusmag.com/hotnews/mvno-virgin-mobile-to-acquire-helio.html
Virgin Mobile USA to acquire EarthLink's Helio
www.bizjournals.com | Jun 27, 2008
EarthLink Inc. and SK Telecom will sell their Helio joint venture to Virgin Mobile USA Inc. in a stock deal worth $39 million, the companies reported Friday. The sale is expected to close in the third quarter, Virgin Mobile (NYSE: VM) said.
http://www.bizjournals.com/atlanta/stories/2008/06/23/daily98.html?ana=from_rss
Last minute save keeps Philly Wi-Fi alive
www.rcrnews.com | Jun 18, 2008
A group of private equity investors has rescued the municipal Wi-Fi network in Philadelphia, the city announced yesterday. ... - Phil Carson
http://www.rcrnews.com/apps/pbcs.dll/article?AID=/20080618/FREE/445142313/1014/rss01
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Spammers plead guilty after EarthLink probe | Tech News on ZDNet
news.zdnet.com
Jared Cosgrave and Mohammed Haque pleaded guilty last week in a U.S. District Court in Southern Florida to charges of fraud and violation of the Can-Spam Act. Sentencing is scheduled for Nov. 16, and the two could get up to three years in jail and be given a fine of up to $250,000.
EarthLink succeeds with SAS
EarthLink has capitalized on the mantra that it’s cheaper to keep existing customers than acquire new ones. So when it decided to expand from a traditional ISP into new lines of business, it wanted to make sure that it kept its existing base of customers engaged.
VM: Agreement to Acquire Joint Venture of SK Telecom and EarthLink - Zibb.com
www.zibb.com
By Fain Hughes, fhughes@knobias.com Virgin Mobile USA, Inc. (VM) has entered into an agreement to acquire Helio, a joint venture between SK Telecom and EarthLink, Inc. (ELNK), providing highly advanced postpaid products and services with unique user applications. Under the terms of the agreement,
EarthLink to offer TiVo boxes with DSL | CNET News.com
news.com.com
Customers who sign up for EarthLink's DSL (digital subscriber line) Internet access will be offered a TiVo Series 2 device and TiVo's service, with rebates on the cost of the DVR, according to an EarthLink representative.
News from Zibb.com
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EarthLink appoints two new board members - Zibb.com
May 12, 2008 (Datamonitor via COMTEX) --
EarthLink, an internet service provider, has appointed Susan Bowick and David Koretz to its board of directors.
Ms Bowick will serve on EarthLink's leadership and compensation committee and its corporate governance and nominating committee. Mr Koretz will serve on the company's audit committee, and its corporate governance and nominating committee.
EarthLink also announced the retirement of Linwood Lacy from the board of directors. Mr Lacy served on the board of EarthLink (and its predecessor EarthLink Network) since 1996 and served as chairperson of the leadership and compensation committee since 2000.
Ms Bowick is a member of the board of directors of Comverse Technology, where she serves as the chairperson of the compensation committee and a member of the audit committee.
Ms Bowick has served as a consultant to several global technology companies, including the joint venture of Nokia Corporation and Siemens. From 1977 to 2004, Ms Bowick served in various executive positions with Hewlett-Packard Company, most recently as executive vice president, human resources and workforce development.
Mr Koretz is the president and CEO of BlueTie, a provider of web-based applications and monetization platforms for businesses, software developers, and service providers worldwide. Mr Koretz serves as a member of the board of directors of several privately-held companies.
http://www.datamonitor.com
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Tags: ceo consultant corporate executive human resources internet service provider president software technology web
EarthLink Schedules July 29 Earnings Call - Zibb.com
(financialwire.net via COMTEX) --
July 8, 2008 (FinancialWire) EarthLink (NASDAQ: ELNK) (Current Market Cap: US$899.83 Mil.) will host a conference call on July 29 at 8: 30 a.m. ET to discuss its second quarter 2008 financial results. The earnings will be released at 7 a.m. ET that day.
The call will be available via dial-in or webcast from the company's site. A dial-in replay will be available through midnight on August 5. The webcast will be archived on the company's site.
Atlanta-based EarthLink is an internet service provider offering dial-up, high-speed, voice, web hosting and wireless services.
FinancialWire" is a fully independent, proprietary news wire service of Investrend Information (a division of Investrend Communications, Inc.). FinancialWire" news is written by professional journalists, dedicated to pure journalistic standards. FinancialWire" does not receive or accept any compensation from any individual or subject company (or representative thereof) for its news or opinions. All FinancialWire" news is available at http://www.financialwire.net . Please address any inquiries to feedback@financialwire.net .
Free annual reports for companies mentioned in the news are available at http://investrend.ar.wilink.com/?level=279 .
http://www.financialwire.net
Tags: communications conference earnings financial results hosting internet service provider market nasdaq standards web wireless
Companies: Earthlink Inc (ELNK)
EarthLink to Announce Second Quarter 2008 Earnings - Zibb.com
ATLANTA, July 8, 2008 /PRNewswire-FirstCall via COMTEX/ --
EarthLink (Nasdaq: ELNK) today announced it will host a conference call on Tuesday, July 29, 2008, at 8:30 a.m. EDT to discuss its second quarter 2008 financial results. The earnings press release will be issued at 7:00 a.m. EDT.
EarthLink's Chairman and Chief Executive Officer, Rolla Huff and Chief Financial Officer, Kevin Dotts will lead the call.
Investors in the U.S. and Canada interested in participating in the conference call may dial (800) 706-0730 and reference the EarthLink call. Other international investors may dial (706) 634-5173 and also reference the EarthLink call. EarthLink recommends dialing into the call approximately 10 minutes prior to the scheduled start time.
Investors also will have the opportunity to listen to a live Webcast of the conference call via the Internet at the following site: http://ir.earthlink.net/index.cfm
A taped replay will be available beginning at 11:30 a.m. EDT on July 29, through midnight on August 5, by dialing (800) 642-1687. International callers should dial (706) 645-9291. The replay confirmation code is 54998017.
The Webcast of this call will be archived on our site at: http://ir.earthlink.net/events.cfm
About EarthLink
"EarthLink. We revolve around you(TM)." As the nation's next generation Internet service provider, Atlanta-based EarthLink has earned an award-winning reputation for outstanding customer service and its suite of online products and services. EarthLink offers what every user should expect from their Internet experience: high-quality connectivity, minimal online intrusions and customizable features. Whether it's dial-up, high-speed, voice, web hosting, wireless or "EarthLink Extras" like home networking or security, EarthLink connects people to the power and possibilities of the Internet. Learn more about EarthLink by calling (800) EARTHLINK or visiting EarthLink's Web site at www.EarthLink.net
SOURCE EarthLink
http://www.earthlink.net
Tags: canada ceo conference earnings financial results hosting internet internet service provider nasdaq online products security web wireless
Companies: Earthlink Inc (ELNK)
EarthLink Announces First Quarter Results - Zibb.com
ATLANTA, April 24, 2008 /PRNewswire-FirstCall via COMTEX/ --
EarthLink, Inc. (Nasdaq: ELNK) today announced financial results for its first quarter ended March 31, 2008. Highlights for the quarter include:
-- Income from continuing operations of $57.8 million, or $0.52 per share
-- Net income of $54.4 million, or $0.49 per share
-- Adjusted EBITDA (a non-GAAP measure) of $82.1 million
-- Free cash flow (a non-GAAP measure) of $81.7 million
-- Increased full year adjusted EBITDA (a non-GAAP measure) guidance to
$245 million - $260 million
"Clearly, we are very pleased with our first quarter results. Our performance in the quarter is a testament to the hard work and dedication of our employees who put our commitments to customers and shareholders above everything else," said Rolla P. Huff, EarthLink's chairman and chief executive officer. "As a result of the stability we are seeing in the churn rates of our tenured customers, as well as our better than expected expense optimization across every part of the company, we are increasing our guidance for full year Adjusted EBITDA, free cash flow and income from continuing operations," continued Huff.
Financial and Operating Results
Revenue
As part of the restructuring analysis that was done during the third quarter of 2007, EarthLink determined that the increase in early life churn profiles of many newly acquired narrowband customers meant that we were no longer generating a positive financial return on our sales and marketing investments. EarthLink significantly reduced these activities, which historically have been primarily to replace customer churn. This change allows the narrowband subscriber base to decline to a more sustainable customer level while generating significantly higher cash returns. As a result of these expected subscriber declines, total company revenues were $263.1 million, an 18.8 percent decrease compared to the first quarter 2007.
Profitability and Other Financial Measures
EarthLink realized $57.8 million, or $0.52 per share, in income from continuing operations in the first quarter of 2008, compared to $(22.4) million, or $(0.18) per share, in the first quarter of 2007. The significant improvement was primarily the result of a decrease in expense related to acquiring and supporting new customers that, because of early life churn, were no longer providing a positive shareholder return. Additionally, EarthLink realized a reduction in equity method losses compared to the first quarter of 2007, which were partially offset by an increase in the company's income tax provision in the first quarter of 2008.
EarthLink generated Adjusted EBITDA (a non-GAAP measure, see definition in "Non-GAAP Measures" below) of $82.1 million for the first quarter of 2008, compared to $23.6 million in the first quarter of 2007. This increase was the result of the significant improvement in income from continuing operations noted above.
Net income was $54.4 million, or $0.49 per share, for the first quarter of 2008, compared to a net loss of $(30.0) million, or $(0.24) per share, for the first quarter of 2007. Our first quarter 2008 results include a loss of ($3.4) million from our discontinued operations for the municipal Wi-Fi assets, compared to a loss of $(7.6) million during the first quarter of 2007.
Subsequent to the end of the first quarter of 2008, EarthLink reached agreements with the cities of Corpus Christi, TX and Milpitas, CA to transfer ownership of our municipal Wi-Fi assets to those respective cities. Additionally, EarthLink will terminate municipal Wi-Fi service in New Orleans, LA and remove its network from the market.
Balance Sheet and Cash Flow
Free cash flow (a non-GAAP measure, see definition in "Non-GAAP Measures" below) was $81.7 million during the first quarter of 2008 compared to $8.0 million during the first quarter of 2007. The improvement was the result of the significant increase in Adjusted EBITDA in the first quarter 2008, coupled with a $15.2 million decrease in capital expenditures and subscriber base acquisitions in the quarter compared to the first quarter of 2007.
The company repurchased 1.3 million shares of its outstanding common stock for $9.1 million in the first quarter of 2008 and had $191.9 million remaining under its share repurchase program as of the end of the quarter.
EarthLink ended the first quarter with $320.0 million in cash and marketable securities, an increase of $31.4 million from December 31, 2007. Additionally, in April 2008, as a result of Platinum Equity's acquisition of Covad, EarthLink received $50.8 million in complete repayment of our debt investment in Covad. The Company will receive an additional $6.3 million in May 2008 in payment of our equity investment in Covad.
Non-GAAP Measures
Adjusted EBITDA is defined as income (loss) from continuing operations before interest income and other, net, income taxes, depreciation and amortization, stock-based compensation expense under SFAS No. 123( R ), net losses of equity affiliate, gain (loss) on investments in other companies, net, and facility exit, restructuring and other costs.
Free cash flow is defined as income from continuing operations before interest income and other, net, income taxes, facility exit, restructuring and other costs, stock-based compensation expense under SFAS No. 123( R ), net losses of equity affiliate, gain (loss) on investments in other companies, net, and depreciation and amortization, less cash used for purchases of property and equipment and purchases of subscriber bases.
Adjusted EBITDA and free cash flow are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with U.S. generally accepted accounting principles. Please refer to the Consolidated Financial Highlights for a reconciliation of these non-GAAP financial performance measures to the most comparable measures reported in accordance with U.S. generally accepted accounting principles and Footnote 3 of the Consolidated Financial Highlights for a discussion of the presentation, comparability and use of such financial performance measures.
Business Outlook
These statements are forward-looking, and actual results may differ materially. See comments under "Cautionary Information Regarding Forward-Looking Statements" below. EarthLink undertakes no obligation to update these statements.
For the full year 2008, management is increasing its previously issued guidance. Management now expects to generate Adjusted EBITDA of $245 million to $260 million, income from continuing operations of $153 million to $163 million, and free cash flow of $215 million to $235 million.
Conference Call for Analysts and Investors
Investors in the U.S. and Canada interested in participating in the conference call on April 24, 2008 at 8:30 a.m. Eastern Daylight Time (EDT) may dial 1-800-706-0730 and reference the EarthLink call. Other international investors may dial 1-706-634-5173 and also reference the EarthLink call. EarthLink recommends dialing into the call approximately 10 minutes prior to the scheduled start time.
A taped replay will be available beginning at 10:30 a.m. EDT on April 24, 2008 through midnight on May 1, 2008 by dialing 1-800-642-1687. International callers should dial 1-706-645-9291. The replay confirmation code is 41005794.
The Webcast of this call will be archived on EarthLink's site at: http://ir.earthlink.net/events.cfm
About EarthLink
"EarthLink. We revolve around you(TM)." As the nation's next generation Internet service provider, Atlanta-based EarthLink has earned an award-winning reputation for outstanding customer service and its suite of online products and services. EarthLink offers what every user should expect from their Internet experience: high-quality connectivity, minimal online intrusions and customizable features. Whether it's dial-up, high-speed, voice, web hosting, wireless or "EarthLink Extras" like home networking or security, EarthLink connects people to the power and possibilities of the Internet. Learn more about EarthLink by calling (800) EARTHLINK or visiting EarthLink's Web site at www.EarthLink.net .
Cautionary Information Regarding Forward-Looking Statements
This press release includes "forward-looking" statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described. Although we believe that the expectations expressed in these forward-looking statements are reasonable, we cannot promise that our expectations will turn out to be correct. Our actual results could be materially different from and worse than our expectations. We disclaim any obligation to update any forward-looking statements contained herein, except as may be required pursuant to applicable law. With respect to forward-looking statements in this press release, the company seeks the protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include, without limitation, (1) that changes to our business strategy may reduce our revenues and profitability; (2) that the continued decline of our consumer access services revenues could adversely affect our profitability; (3) that prices for certain of our consumer access services have been decreasing, which could adversely affect our revenues and profitability; (4) that we might not realize the benefits we are seeking from the corporate restructuring plan announced in August 2007 and our corporate restructuring plan might have a negative effect on our efforts to maintain our subscribers and our relationships with our business partners; (5) that as a result of our continuing review of our business, we may have to undertake further restructuring plans that would require additional charges including incurring facility exit and restructuring charges; (6) that we face significant competition which could reduce our market share and reduce our profitability; (7) that we may be unsuccessful in making and integrating acquisitions and investments into our business, which could result in operating difficulties, losses and other adverse consequences; (8) that we may not be able to successfully manage the costs associated with delivering our broadband services, which could adversely affect our results of operations; (9) that companies may not provide access to us on a wholesale basis or on reasonable terms or prices, which could cause our operating results to suffer; (10) that if we do not continue to innovate and provide products and services that are useful to subscribers, we may not remain competitive, and our revenues and operating results could suffer; (11) that our commercial and alliance arrangements may be terminated or may not be as beneficial as anticipated, which could adversely affect our ability to retain or increase our subscriber base; (12) that our business may suffer if third parties used for technical and customer support and certain billing services are unable to provide these services, cannot expand to meet our needs or terminate their relationships with us; (13) that service interruptions or impediments could harm our business; (14) that government regulations could adversely affect our business or force us to change our business practices; (15) that we may not be able to protect our proprietary technologies; (16) that we may be accused of infringing upon the intellectual property rights of third parties, which is costly to defend and could limit our ability to use certain technologies in the future; (17) that we could face substantial liabilities if we are unable to successfully defend against legal actions; (18) that our business depends on the continued development of effective business support systems, processes and personnel; (19) that we may be unable to hire and retain sufficient qualified personnel, and the loss of any of our key executive officers could adversely affect us; (20) that our VoIP business exposes us to certain risks that could cause us to lose customers, expose us to significant liability or otherwise harm our business; (21) that we may not be able to sell our municipal Wi-Fi assets and that we may incur additional losses related to these operations; (22) that we may not realize the benefits we sought from our investments in the HELIO joint venture; (23) that the use of our net operating losses and certain other tax attributes could be limited in the future; (24) that our stock price has been volatile historically and may continue to be volatile; (25) that our indebtedness could adversely affect our financial health and limit our ability to react to changes in our industry; (26) that the convertible notes hedge and warrant transactions may affect the value of our common stock; and (27) that provisions of our second restated certificate of incorporation, amended and restated bylaws and other elements of our capital structure could limit our share price and delay a change of management. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management's expectations, are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2007.
EARTHLINK, INC.
Unaudited Condensed Consolidated Statements Of Operations
(in thousands, except per share data)
Three Months Ended March 31,
2007 2008
Revenues:
Access and service $289,755 $234,849
Value-added services 34,392 28,225
Total revenues 324,147 263,074
Operating costs and expenses:
Service and equipment costs 109,791 96,792
Sales incentives 4,604 759
Total cost of revenues 114,395 97,551
Sales and marketing 99,269 30,916
Operations and customer support 60,072 39,224
General and administrative 43,261 24,926
Amortization of intangible assets 3,496 4,013
Facility exit, restructuring and
other costs (1) - 1,030
Total operating costs and expenses 320,493 197,660
Income from operations 3,654 65,414
Net losses of equity affiliate (29,346) -
Interest income and other, net 3,503 1,616
Income (loss) from continuing
operations before income taxes (22,189) 67,030
Income tax provision (169) (9,274)
Income (loss) from continuing
operations (22,358) 57,756
Loss from discontinued operations (2) (7,604) (3,392)
Net income (loss) $(29,962) $54,364
Basic net income (loss) per share
Continuing operations $(0.18) $0.53
Discontinued operations (0.06) (0.03)
Basic net income (loss) per share $(0.24) $0.50
Basic weighted average common
shares outstanding 123,058 109,493
Diluted net income (loss) per share
Continuing operations $(0.18) $0.52
Discontinued operations (0.06) (0.03)
Diluted net income (loss) per share $(0.24) $0.49
Diluted weighted average common
shares outstanding 123,058 110,300
EARTHLINK, INC.
Reconciliation of Income (Loss) from Continuing Operations to Adjusted
EBITDA (3)
(in thousands)
Three Months Ended March 31,
2007 2008
Income (loss) from continuing
operations $(22,358) $57,756
Provision for income taxes 169 9,274
Depreciation and amortization 12,089 10,482
Stock-based compensation expense 7,880 5,152
Net losses of equity affiliate 29,346 -
Interest income and other, net (3,503) (1,616)
Facility exit, restructuring and
other costs (1) - 1,030
Adjusted EBITDA (3) $23,623 $82,078
Depreciation - cost of revenues $4,860 $3,436
Depreciation - other 3,733 3,033
Amortization of intangible assets 3,496 4,013
Depreciation and amortization $12,089 $10,482
EARTHLINK, INC.
Reconciliation of Income (Loss) From Continuing Operations to Free
Cash Flow (3)
(in thousands)
Three Months Ended March 31,
2007 2008
Income (loss) from continuing
operations $(22,358) $57,756
Provision for income taxes 169 9,274
Depreciation and amortization 12,089 10,482
Stock-based compensation expense 7,880 5,152
Net losses of equity affiliate 29,346 -
Interest income and other, net (3,503) (1,616)
Facility exit, restructuring and
other costs (1) - 1,030
Purchases of property and equipment (13,724) (278)
Purchases of subscriber bases (1,865) (117)
Free cash flow (3) $8,034 $81,683
EARTHLINK, INC.
Reconciliation of Guidance Provided in Non-GAAP Measures (3)
(in millions)
Year
Ending
December 31,
2008
Income from continuing operations $153 - $163
Depreciation 27
Amortization of intangible assets 15
Stock-based compensation expense 20
Income tax provision 20 - 25
Facility exit, restructuring and
other costs (1) 12
Interest income and other, net (2)
Adjusted EBITDA (3) $245 - $260
Year
Ending
December 31,
2008
Income from continuing operations $153 - $163
Depreciation 27
Amortization of intangible assets 15
Stock-based compensation expense 20
Income tax provision 20 - 25
Facility exit, restructuring and
other costs (1) 12
Interest income and other, net (2)
Purchases of property and equipment (25) - (30)
Free cash flow (3) $215 - $235
EARTHLINK, INC.
Supplemental Financial Data and Key Operating Metrics
March 31, December 31, March 31,
2007 2007 2008
Balance Sheet Data (in thousands)
Cash and marketable securities $367,356 $288,595 $320,023
Long-term debt 258,750 258,750 258,750
Stockholders' equity 432,296 261,473 313,426
Employee Data
Number of employees at end of period (4) 2,108 983 922
March 31, December 31, March 31,
2007 2007 2008
Subscriber Data (5)
Consumer services
Narrowband access subscribers 3,208,000 2,624,000 2,368,000
Broadband access subscribers (6) 1,847,000 1,059,000 1,026,000
Total consumer subscribers 5,055,000 3,683,000 3,394,000
Business services
Narrowband access subscribers 36,000 27,000 25,000
Broadband access subscribers 69,000 66,000 65,000
Web hosting accounts 109,000 100,000 97,000
Total business subscribers 214,000 193,000 187,000
Total subscribers at end of period 5,269,000 3,876,000 3,581,000
Three Months Ended March 31,
2007 2008
Subscriber Activity
Subscribers at beginning of period 5,313,000 3,876,000
Gross organic subscriber additions 668,000 253,000
Churn (712,000) (548,000)
Subscribers at end of period 5,269,000 3,581,000
Churn Rate (7) 4.5% 4.9%
Consumer Data
Average subscribers (8) 5,085,000 3,538,000
ARPU (9) $18.13 $20.38
Churn rate (7) 4.6% 5.0%
Business Data
Average subscribers (8) 217,000 190,000
ARPU (9) $73.32 $81.88
Churn rate (7) 2.7% 2.7%
EARTHLINK, INC.
Supplemental Schedule of Segment Information (10)
(in thousands)
Three Months Ended March 31,
2007 2008
Consumer Services
Revenues
Access and service $242,800 $188,971
Value-added services 33,593 27,373
Total revenues 276,393 216,344
Cost of revenues 84,353 71,173
Gross margin 192,040 145,171
Segment operating expenses 159,333 61,001
Segment income from operations $32,707 $84,170
Business Services
Revenues
Access and service $46,955 $45,878
Value-added services 799 852
Total revenues 47,754 46,730
Cost of revenues 30,042 26,378
Gross margin 17,712 20,352
Segment operating expenses 16,668 14,871
Segment income from operations $1,044 $5,481
Consolidated
Revenues
Access and service $289,755 $234,849
Value-added services 34,392 28,225
Total revenues 324,147 263,074
Cost of revenues 114,395 97,551
Gross margin 209,752 165,523
Direct segment operating expenses 176,001 75,872
Segment income from operations 33,751 89,651
Stock-based compensation expense 7,880 5,152
Amortization of intangible assets 3,496 4,013
Facility exit, restructuring and
other costs (1) - 1,030
Other operating expenses 18,721 14,042
Income from operations $3,654 $65,414
EARTHLINK, INC.
Footnotes to Consolidated Financial Highlights
1. Facility exit, restructuring and other costs consisted of the
following for the periods presented:
Three Months Ended
March 31,
2007 2008
(in thousands)
Facility exit and restructuring
costs for the 2007 Plan $- $1,093
Facility exit and restructuring
costs for Legacy Plans - (63)
$- $1,030
In August 2007, EarthLink adopted a restructuring plan (the "2007
Plan") to reduce costs and improve the efficiency of the Company's
operations. The Plan was the result of a comprehensive review of
operations within and across the Company's functions and businesses.
Under the Plan, the Company reduced its workforce by approximately 900
employees, consolidated its office facilities in Atlanta, Georgia and
Pasadena, California and closed office facilities in Orlando, Florida;
Knoxville, Tennessee; Harrisburg, Pennsylvania and San Francisco,
California. The Plan was primarily implemented during the later half
of 2007 and is expected to be completed during the first half of 2008.
As a result of the 2007 Plan, EarthLink recorded $1.1 million of
facility exit and restructuring costs during the first quarter of
2008.
2. The Company has reflected its municipal wireless broadband results of
operations as discontinued operations for all periods presented. The
following is summarized results of operations related to the Company's
discontinued operations for the periods presented:
Three Months Ended
March 31,
2007 2008
(in thousands)
Revenues $259 $737
Operating costs and expenses (7,863) (2,180)
Impairment charges - (1,949)
Loss from discontinued operations $(7,604) $(3,392)
3. Adjusted EBITDA is defined as income (loss) from continuing operations
before interest income and other, net, income taxes, depreciation and
amortization, stock-based compensation under SFAS No. 123( R ), net
losses of equity affiliate, gain (loss) on investments in other
companies, net, and facility exit, restructuring and other costs.
Free cash flow is defined as income (loss) from continuing operations
before interest income and other, net, income taxes, depreciation and
amortization, stock-based compensation under SFAS No. 123( R ), net
losses of equity affiliate, gain (loss) on investments in other
companies, net, and facility exit, restructuring and other costs, less
cash used for purchases of property and equipment and purchases of
subscriber bases.
Adjusted EBITDA and free cash flow are non-GAAP measures and are not
determined in accordance with U.S. generally accepted accounting
principles. These financial performance measures are not indicative of
cash provided or used by operating activities and may differ from
comparable information provided by other companies, and they should
not be considered in isolation, as an alternative to, or more
meaningful than measures of financial performance determined in
accordance with U.S. generally accepted accounting principles. These
financial performance measures are commonly used in the industry and
are presented because EarthLink believes they provide relevant and
useful information to investors. EarthLink utilizes these financial
performance measures to assess its ability to meet future capital
expenditures and working capital requirements, to incur indebtedness
if necessary, and to fund continued growth. EarthLink also uses these
financial performance measures to evaluate the performance of its
business, for budget planning purposes and as factors in its employee
compensation programs. Since the elements of these financial
performance measures are determined using the accrual basis of
accounting and exclude the effects of certain capital, financing,
acquisition-related, and facility exit, restructuring and other costs,
investors should use them to analyze and compare companies on the
basis of current period operating performance.
4. Represents full-time equivalents.
5. Subscriber counts do not include nonpaying customers. Customers
receiving service under promotional programs that include periods of
free service at inception are not included in subscriber counts until
they become paying customers.
6. Paying customers who subscribe to EarthLink DSL and Home Phone service
are counted as both a broadband subscriber and a voice subscriber.
7. Churn rate is used to measure the rate at which subscribers
discontinue service on a voluntary or involuntary basis. Churn rate
is computed by dividing the average monthly number of subscribers that
discontinued service during the period by the average subscribers for
the period.
8. Average subscribers for the three month periods is calculated by
averaging the ending monthly subscribers or accounts for the four
months preceding and including the end of the quarterly period.
9. ARPU represents the average monthly revenue per user (subscriber).
ARPU is computed by dividing average monthly revenue for the period by
the average number of subscribers for the period. Average monthly
revenue used to calculate ARPU includes recurring service revenue as
well as nonrecurring revenues associated with equipment and other one-
time charges associated with initiating or discontinuing services.
10. EarthLink's business segments are strategic business units that are
managed based upon differences in customers, services and marketing
channels. EarthLink's Consumer Services segment is a provider of
integrated communications services and related value-added services to
individual customers. These services include dial-up Internet access,
high-speed Internet access and voice service, among others.
EarthLink's Business Services segment is a provider of integrated
communications services and related value-added services to businesses
and communications carriers. These services include managed data
networks, dedicated Internet access and web hosting, among others.
EarthLink evaluates performance of its operating segments based on
segment income from operations. Segment income from operations
includes revenues from external customers, related cost of revenues
and operating expenses directly attributable to the segment, which
include expenses over which segment managers have direct discretionary
control, such as advertising and marketing programs, customer support
expenses, site operations expenses, product development expenses,
certain technology and facilities expenses, billing operation and
provisions for doubtful accounts. Segment income from operations
excludes other income and expense items and certain expenses that
segment managers do not have discretionary control over. Costs
excluded from segment income from operations include various corporate
expenses (consisting of certain costs such as corporate management,
human resources, finance and legal), amortization of intangible
assets, stock-based compensation expense under SFAS No. 123( R ) and
facility exit and restructuring costs, as they are not evaluated in
the measurement of segment performance.
SOURCE EarthLink
http://www.earthlink.net
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Companies: Earthlink Inc (ELNK)
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