Earthlink 2003 Annual Report Download - page 18

(1)
Total operating costs and expenses
1,601,458
129
1,517,442
112
1,468,894
105
Loss from operations
(356,530
)
(29
)
(160,021
)
(12
)
(66,964
)
(5
)
Write-off of equity investments in other companies (4)
(10,000
) — (
650
) — (
202
) —
Interest income and other, net
25,469
2
12,638
1
4,972
—
Net loss
(341,061
)
(27
)
(148,033
)
(11
)
(62,194
)
(5
)
Deductions for accretion dividends
(29,880
)
(3
)
(19,987
)
(1
)
(4,586
)
—
Net loss attributable to common stockholders
$
(370,941
)
(30
) $
(168,020
)
(12
) $
(66,780
)
(5
)
Cash flow data:
Cash provided by operating activities $
47,388
$
18,958
$
101,728
Cash used in investing activities $
(287,986
) $
(36,437
) $
(45,171
)
Cash used in financing activities
$
(10,119
)
$
(24,485
)
$
(88,882
)
Member data:
Narrowband subscribers
4,203
4,035
3,984
Broadband subscribers
471
779
1,061
Web hosting accounts
169
173
161
Total subscribers at end of year (5)
4,843
4,987
5,206
Member activity:
Subscribers at beginning of year
4,690
4,843
4,987
Gross organic subscriber additions
2,202
2,043
2,706
Acquired subscribers (5)
428
316
76
Adjustment (6) — — (
152
)
Churn
(2,477
)
(2,215
)
(2,411
)
Subscribers at end of year (5)
4,843
4,987
5,206
Average monthly subscriber churn
4.3%
3.8%
4.0%
Employee data:
Number of employees at year end (7)
6,736
5,106
3,335
Represents the amortization of intangible assets (other than software) acquired in the acquisitions of other companies and subscriber bases.
19
(2)
In 2002, facility exit costs resulted from closing our Phoenix contact center facility. In connection with the closing of the facility, we incurred approximately $3.5 million of costs,
including $1.7 million for employee, personnel and related costs; $0.5 million for real estate and telecommunications service termination costs; and $1.3 million in asset write-
downs.
In 2003, facility exit costs resulted from closing contact center facilities in Dallas, Texas; Sacramento, California; Pasadena, California; and Seattle, Washington. In connection with
the closing of these facilities, we incurred approximately $36.6 million of costs, including $10.7 million for employee, personnel and related costs; $18.2 million for real estate and
telecommunications service termination costs; and $7.7 million in asset write-downs.
(3)
In February 2001, we renegotiated our commercial and governance arrangements with Sprint and our exclusive marketing and co-branding arrangements with Sprint were
terminated. Accordingly, we recorded a non-cash charge of approximately $11.3 million to write-off unamortized assets related to the marketing and co-
branding arrangements with
Sprint.
(4)
We have made equity investments in a number of other companies. Management regularly evaluates the recoverability of its equity investments in other companies based on the
performance and the financial position of those companies as well as other evidence of market value. The write-off of equity investments in other companies represents losses
incurred to write those investments down to their estimated realizable value. The company's equity investments include an investment in eCompanies Venture Group, L.P.,
("EVG"), a limited partnership formed to invest in domestic emerging Internet-related companies. Sky Dayton, EarthLink's Chairman of the Board of Directors, is a founding
partner in EVG. EVG also has an affiliation with eCompanies, LLC ("eCompanies"). Sky Dayton is a founder and director of eCompanies. The write-offs of equity investments
included charges of $6.0 million, $0.6 million and $0.2 million during the years ended December 31, 2001, 2002 and 2003, respectively, to write-down EarthLink's investment in
EVG.
(5)
The amount of acquired subscribers reported for the year ended December 31, 2002 does not include approximately 518,000 Membership Customers that purchased a Membership
Package prior to the date of our acquisition of PeoplePC, and the reported amount of subscribers as of December 31, 2002 and 2003 excludes approximately 487,000 and 160,000
Membership Customers (including 99,000 international Membership Customers), respectively, that purchased Membership Packages prior to the acquisition date that we continued
to provide service to as of December 31, 2002 and 2003. We have excluded these Membership Customers because they prepaid for service for periods of up to four years prior to
the date of our acquisition of PeoplePC.
(6)
Due to the reduction in revenue per subscriber during the transition period under our arrangement with Charter Communications ("Charter"), EarthLink excluded approximately
152,000 Charter wholesale broadband subscribers from its total paying subscriber count as of the third quarter of 2003. See discussion below under "Broadband access revenues"
for more information.
(7)
Represents full-time equivalents.