Continues to Deliver Strong Results on Improved Cost Structure, Raises
Guidance on Full Year Income from Continuing Operations, Free Cash Flow and
Adjusted EBITDA
ATLANTA, July 29 /PRNewswire-FirstCall/ -- EarthLink, Inc. (Nasdaq:
ELNK) today announced financial results for its second quarter ended June
30, 2008. Highlights for the quarter include:
-- Income from continuing operations of $57.7 million, or $0.51 per share
-- Net income of $53.3 million, or $0.48 per share
-- Adjusted EBITDA (a non-GAAP measure) of $80.5 million
-- Free cash flow (a non-GAAP measure) of $78.5 million
-- Increased full year Adjusted EBITDA (a non-GAAP measure) guidance to
$275 million - $290 million
"With our focus on customers' full internet access lifecycle, the
strength of the EarthLink brand and our aggressive cost management, we
delivered better than expected results across the board," said EarthLink's
chairman and chief executive officer Rolla P. Huff. "We are seeing
favorable trends in many areas of the business including better than
expected passive subscriber additions, lower customer churn from a more
tenured customer base and significantly reduced operational costs. As a
result, we are once again raising guidance for the full year."
"As our revised guidance also indicates, while we expect to see
continued improvements in the business, we do not expect them to be at the
magnitude of the prior quarters. We have successfully implemented the vast
majority of the larger scale cost reduction initiatives in the
restructuring activities initiated last August to optimize our business."
Financial and Operating Results
Revenue
Total company revenues were $245.6 million, a 21.2 percent decrease
compared to the second quarter 2007. This result was consistent with
management's expectations, strategy and prior public comments that the
company focus would be on loyalty and retention of its tenured Internet
access subscribers. While this focus on higher value, but fewer subscribers
resulted in a decline in revenues, these tenured users also demonstrated
significantly lower support cost profiles as compared to newer subscribers.
This contributed to the company generating significantly better operating
margins and free cash flow (a non-GAAP measure), as noted below.
Profitability and Other Financial Measures
EarthLink continues to focus its business on a more profitable and
tenured customer base. This allowed the company to realize a significant
decrease in sales and marketing, as well as back office support expenses.
EarthLink's sales and marketing expenses were reduced to $25.8 million in
the quarter, versus $75.8 million in the second quarter of 2007. Also
contributing to the year-over-year expense decrease were benefits realized
from our 2007 restructuring activities.
Operations and customer service expense decreased 43.8 percent to $33.6
million compared to the second quarter of 2007. With the strategic focus on
more tenured subscribers, EarthLink also benefited from lower bad debt and
billing expense. This contributed to a decline in general and
administrative expense to $23.8 million for the quarter, down 19.2 percent
compared to the second quarter of 2007.
EarthLink reported $57.7 million, or $0.51 per share, in income from
continuing operations in the second quarter of 2008, compared to a loss of
$(7.0) million, or $(0.06) per share, in the second quarter of 2007. The
significant improvement compared to the second quarter of 2007 was due to
the revised strategy and focus noted above as well as $40.1 million in
equity losses related to Helio that were recognized in the prior year
quarter.
EarthLink generated Adjusted EBITDA (a non-GAAP measure, see definition
in "Non-GAAP Measures" below) of $80.5 million for the second quarter of
2008, compared to $43.8 million in the second quarter of 2007. This
increase was the result of the significant improvement in income from
continuing operations noted above.
Net income was $53.3 million, or $0.48 per share, for the second
quarter of 2008, compared to a net loss of $(16.3) million, or $(0.13) per
share, for the second quarter of 2007. The company's second quarter 2008
results include a loss of ($4.4) million from discontinued operations for
the municipal Wi-Fi assets, compared to a loss of $(9.3) million during the
second quarter of 2007.
Balance Sheet and Cash Flow
Free cash flow (a non-GAAP measure, see definition in "Non-GAAP
Measures" below) was $78.5 million during the second quarter of 2008
compared to $29.6 million during the second quarter of 2007. This
improvement reflects the significant increase in Adjusted EBITDA in the
second quarter 2008, coupled with a $12.2 million decrease in capital
expenditures and subscriber acquisitions in the quarter compared to the
prior year quarter.
EarthLink ended the second quarter with $441.6 million in cash and
marketable securities, an increase of $121.6 million from March 31, 2008.
Non-GAAP Measures
Adjusted EBITDA is defined as income (loss) from continuing operations
before interest income (expense) 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 (expense) 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. During the first six months of 2008, EarthLink's reputation for
world-class customer service contributed to higher than expected passive
subscriber additions and better than expected improvements in average
monthly customer churn. Additionally, efforts to improve the company's cost
structure have surpassed original expectations. As a result of these
favorable developments but recognizing that the magnitude of cost
improvements will be lower in the remainder of 2008, management now expects
to generate income from continuing operations of $180 million to $195
million, Adjusted EBITDA of $275 million to $290 million, and free cash
flow of $250 million to $270 million for the full year 2008.
Conference Call for Analysts and Investors
Investors in the U.S. and Canada interested in participating in the
conference call on July 29, 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 replay will be available beginning at 10:30 a.m. EDT on July 29, 2008
through midnight on August 5, 2008 by dialing 1-800-642-1687. International
callers should dial 1-706-645-9291. The replay confirmation code is
54998017.
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, 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 http://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 the use of our net operating losses and certain other
tax attributes could be limited in the future; (22) that our stock price
has been volatile historically and may continue to be volatile; (23) that
our indebtedness could adversely affect our financial health and limit our
ability to react to changes in our industry; (24) that the convertible
notes hedge and warrant transactions may affect the value of our common
stock; and (25) 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 Six Months Ended
June 30, June 30,
2007 2008 2007 2008
Revenues:
Access and service $278,719 $220,041 $568,474 $454,890
Value-added services 33,147 25,562 67,539 53,787
Total revenues 311,866 245,603 636,013 508,677
Operating costs and expenses:
Service and equipment costs 108,599 91,917 218,390 188,709
Sales incentives 5,110 571 9,714 1,330
Total cost of revenues 113,709 92,488 228,104 190,039
Sales and marketing 75,800 25,806 175,069 56,722
Operations and customer support 59,892 33,642 119,964 72,866
General and administrative 29,431 23,768 72,692 48,694
Amortization of intangible
assets 3,542 3,987 7,038 8,000
Facility exit, restructuring and
other costs (1) - 2,061 - 3,091
Total operating costs and
expenses 282,374 181,752 602,867 379,412
Income from operations 29,492 63,851 33,146 129,265
Net losses of equity affiliate (40,054) - (69,400) -
Gain on investments in other
companies, net 210 1,325 210 1,325
Interest income (expense) and
other, net 3,597 (760) 7,100 856
Income (loss) from continuing
operations before income
taxes (6,755) 64,416 (28,944) 131,446
Income tax provision (226) (6,725) (395) (15,999)
Income (loss) from continuing
operations (6,981) 57,691 (29,339) 115,447
Loss from discontinued
operations (2) (9,309) (4,365) (16,913) (7,757)
Net income (loss) $(16,290) $53,326 $(46,252) $107,690
Basic net income (loss) per share
Continuing operations $(0.06) $0.52 $(0.24) $1.05
Discontinued operations (0.08) (0.04) (0.14) (0.07)
Basic net income (loss) per
share $(0.13) $0.48 $(0.38) $0.98
Basic weighted average common
shares outstanding 123,257 110,033 123,159 109,762
Diluted net income (loss) per
share
Continuing operations $(0.06) $0.51 $(0.24) $1.04
Discontinued operations (0.08) (0.04) (0.14) (0.07)
Diluted net income (loss) per
share $(0.13) $0.48 $(0.38) $0.97
Diluted weighted average common
shares outstanding 123,257 112,256 123,159 111,277
EARTHLINK, INC.
Reconciliation of Income (Loss) from Continuing Operations to Adjusted
EBITDA (3)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2008 2007 2008
Income (loss) from continuing
operations $(6,981) $57,691 $(29,339) $115,447
Provision for income taxes 226 6,725 395 15,999
Depreciation and amortization 11,397 9,989 23,486 20,470
Stock-based compensation expense 2,898 4,569 10,778 9,722
Net losses of equity affiliate 40,054 - 69,400 -
Gain on investments in other
companies, net (210) (1,325) (210) (1,325)
Interest income (expense) and other,
net (3,597) 760 (7,100) (856)
Facility exit, restructuring and
other costs (1) - 2,061 - 3,091
Adjusted EBITDA (3) $43,787 $80,470 $67,410 $162,548
Depreciation - cost of revenues $3,577 $2,859 $7,309 $5,891
Depreciation - other 4,278 3,143 9,139 6,579
Amortization of intangible assets 3,542 3,987 7,038 8,000
Depreciation and amortization $11,397 $9,989 $23,486 $20,470
EARTHLINK, INC.
Reconciliation of Income (Loss) From Continuing Operations to Free Cash
Flow (3)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2008 2007 2008
Income (loss) from continuing
operations $(6,981) $57,691 $(29,339) $115,447
Provision for income taxes 226 6,725 395 15,999
Depreciation and amortization 11,397 9,989 23,486 20,470
Stock-based compensation expense 2,898 4,569 10,778 9,722
Net losses of equity affiliate 40,054 - 69,400 -
Gain on investments in other
companies, net (210) (1,325) (210) (1,325)
Interest income (expense) and other,
net (3,597) 760 (7,100) (856)
Facility exit, restructuring and
other costs (1) - 2,061 - 3,091
Purchases of property and equipment (13,104) (1,980) (26,828) (2,258)
Purchases of subscriber bases (1,084) (10) (2,949) (127)
Free cash flow (3) $29,599 $78,480 $37,633 $160,163
EARTHLINK, INC.
Reconciliation of Guidance Provided in Non-GAAP Measures (3)
(in millions)
Year
Ending
December 31,
2008
Income from continuing operations $180 - $195
Depreciation 24
Amortization of intangible assets 17
Stock-based compensation expense 18
Income tax provision 30
Facility exit, restructuring and other costs (1) 8
Interest income and other, net (2)
Adjusted EBITDA (3) $275 - $290
Year
Ending
December 31,
2008
Income from continuing operations $180 - $195
Depreciation 24
Amortization of intangible assets 17
Stock-based compensation expense 18
Income tax provision 30
Facility exit, restructuring and other costs (1) 8
Interest income and other, net (2)
Purchases of property and equipment (20) - (25)
Free cash flow (3) $250 - $270
EARTHLINK, INC.
Supplemental Financial Data and Key Operating Metrics
June 30, Dec. 31, March 31, June 30,
2007 2007 2008 2008
Balance Sheet Data (in thousands)
Cash and marketable securities $383,367 $288,595 $320,023 $441,589
Long-term debt 258,750 258,750 258,750 258,750
Stockholders' equity 418,209 261,473 313,426 371,077
Employee Data
Number of employees at end of
period (4) 2,034 983 922 857
June 30, Dec. 31, March 31, June 30,
2007 2007 2008 2008
Subscriber Data (5)
Consumer services
Narrowband access
subscribers 3,039,000 2,624,000 2,368,000 2,130,000
Broadband access
subscribers (6) 1,091,000 1,059,000 1,026,000 988,000
Total consumer subscribers 4,130,000 3,683,000 3,394,000 3,118,000
Business services
Narrowband access
subscribers 31,000 27,000 25,000 24,000
Broadband access subscribers 70,000 66,000 65,000 63,000
Web hosting accounts 106,000 100,000 97,000 94,000
Total business subscribers 207,000 193,000 187,000 181,000
Total subscribers at end of
period 4,337,000 3,876,000 3,581,000 3,299,000
Three Months Ended Six Months Ended
June 30, June 30,
2007 2008 2007 2008
Subscriber Activity
Subscribers at beginning of
period 5,269,000 3,581,000 5,313,000 3,876,000
Gross organic subscriber
additions 467,000 162,000 1,135,000 415,000
Acquired subscribers 34,000 - 34,000 -
Adjustment (7) (753,000) - (753,000) -
Churn (680,000) (444,000) (1,392,000) (992,000)
Subscribers at end of period 4,337,000 3,299,000 4,337,000 3,299,000
Churn Rate (8) 4.9% 4.3% 4.7% 4.6%
Consumer Data
Average subscribers (9) 4,401,000 3,250,000 4,699,000 3,394,000
ARPU (10) $19.98 $20.64 $19.16 $20.50
Churn rate (8) 5.0% 4.4% 4.8% 4.7%
Business Data
Average subscribers (9) 211,000 184,000 214,000 187,000
ARPU (10) $76.04 $80.37 $74.67 $81.14
Churn rate (8) 2.7% 2.5% 2.7% 2.6%
EARTHLINK, INC.
Supplemental Schedule of Segment Information (11)
(in thousands)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2008 2007 2008
Consumer Services
Revenues
Access and service $231,392 $176,280 $474,192 $365,251
Value-added services 32,386 24,917 65,979 52,290
Total revenues 263,778 201,197 540,171 417,541
Cost of revenues 84,276 67,331 168,629 138,503
Gross margin 179,502 133,866 371,542 279,038
Segment operating expenses 133,742 53,692 293,074 114,693
Segment income from operations $45,760 $80,174 $78,468 $164,345
Business Services
Revenues
Access and service $47,327 $43,761 $94,282 $89,639
Value-added services 761 645 1,560 1,497
Total revenues 48,088 44,406 95,842 91,136
Cost of revenues 29,433 25,157 59,475 51,536
Gross margin 18,655 19,249 36,367 39,600
Segment operating expenses 16,118 11,957 32,787 26,827
Segment income from operations $2,537 $7,292 $3,580 $12,773
Consolidated
Revenues
Access and service $278,719 $220,041 $568,474 $454,890
Value-added services 33,147 25,562 67,539 53,787
Total revenues 311,866 245,603 636,013 508,677
Cost of revenues 113,709 92,488 228,104 190,039
Gross margin 198,157 153,115 407,909 318,638
Direct segment operating
expenses 149,860 65,649 325,861 141,520
Segment income from operations 48,297 87,466 82,048 177,118
Stock-based compensation
expense 2,897 4,569 10,778 9,722
Amortization of intangible
assets 3,542 3,987 7,038 8,000
Facility exit, restructuring
and other costs (1) - 2,061 - 3,091
Other operating expenses 12,366 12,998 31,086 27,040
Income from operations $29,492 $63,851 $33,146 $129,265
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 Six Months Ended
June 30, June 30,
2007 2008 2007 2008
(in thousands)
Facility exit and restructuring
costs for the 2007 Plan $- $2,169 $- $3,262
Facility exit and restructuring
costs for Legacy Plans - (108) - (171)
$- $2,061 $- $3,091
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, closed
office facilities in Orlando, Florida; Knoxville, Tennessee; Harrisburg,
Pennsylvania and San Francisco, California and is consolidating its office
facilities in Atlanta, Georgia and Pasadena, California. The Plan was
primarily implemented during the later half of 2007 and is expected to be
completed during 2008. As a result of the 2007 Plan, EarthLink recorded
$2.3 million and $3.3 million of facility exit and restructuring costs
during the three and six months ended June 30, 2008, respectively.
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 Six Months Ended
June 30, June 30,
2007 2008 2007 2008
(in thousands)
Revenues $338 $551 $597 $1,288
Operating costs and expenses (9,647) (1,513) (17,510) (3,693)
Impairment and other costs - (4,004) - (5,953)
Income tax benefit - 601 - 601
Loss from discontinued
operations $(9,309) $(4,365) $(16,913) $(7,757)
3. Adjusted EBITDA is defined as income (loss) from continuing
operations before interest income (expense) 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 (expense) 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.
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. In April 2007, EarthLink's wholesale contract with Embarq expired.
As a result, EarthLink removed 753,000 EarthLink supported Embarq customers
from its broadband subscriber counts effective April 2007.
8. 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.
9. 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. Average
subscribers for the six month periods is calculated by averaging the ending
monthly subscribers or accounts for the seven months preceding and
including the end of the period.
10. 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.
11. 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, Inc.
 back to top
Related links:
http://www.earthlink.net
http://ir.earthlink.net/events.cfm
CONTACT:
Media, Michele Sadwick, +1-404-748-7255,
+1-404-769-8421 (mobile), sadwick@corp.earthlink.net, or
Investors, Michael Gallentine, +1-404-748-7153, +1-404-395-5155
(mobile), gallentineml@corp.earthlink.net
|
