Earthlink 2014 Annual Report Download - page 82

Table of Contents EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
identified two reporting units for evaluating goodwill for the 2014
annual impairment test, which were Business Services and Consumer
Services. Each of these reporting units constitutes a business for which discrete financial information is available and segment management
regularly reviews the operating results. The Company evaluates its reporting units on an annual basis.
The Company estimated the fair values of its reporting units based on the income approach. This models use significant unobservable inputs, or
Level 3 inputs, as defined by the fair value hierarchy. Under the income approach, the fair value of the reporting unit was estimated based on the
present value of estimated cash flows using a discounted cash flow method. The significant assumptions used in the discounted cash flow
method included internal forecasts and projections developed by management for planning purposes, available industry/market data, strategic
plans, discount rates and the growth rate to calculate the terminal value.
Definite
-Lived Intangible Assets . The Company did not record any impairment charges for its definite-
lived intangible assets during the years
ended December 31, 2012, 2013 and 2014 .
9. Other Accrued Liabilities
The Company's other accrued liabilities consisted of the following as of December 31, 2013 and 2014 :
10. Long-Term Debt and Capital Lease Obligations
The Company’s long-term debt and capital lease obligations consisted of the following as of December 31, 2013 and 2014 :
Senior Secured Notes due June 2020
General . In May 2013, the Company completed a private placement of $300.0 million aggregate principal amount of 7.375%
Senior Secured
Notes due 2020 (the
“Senior Secured Notes”). The Senior Secured Notes were issued at 100%
of their principal amount, resulting in gross
proceeds of approximately $300.0 million and net proceeds of $292.6 million after deducting transaction fees and expenses of $7.4 million
. The
transaction fees and expenses were recorded in other long-
term assets in the Consolidated Balance Sheet and are being amortized to interest
expense on a straight-
line basis over the life of the Senior Secured Notes. In August 2013, in accordance with the registration rights granted to
the original purchasers of the Senior Secured Notes, the Company completed an exchange offer of the privately placed Senior Secured Notes for
new 7.375%
Senior Secured Notes due 2020 registered with the Securities and Exchange Commission ("SEC") with substantially identical terms
to the original Senior Secured Notes.
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As of December 31, 2013
As of December 31, 2014
(in thousands)
Accrued taxes and surcharges
$
25,628
$
17,801
Accrued communications costs
23,602
25,917
Accrued interest
5,289
5,251
Accrued dividends
1,397
6,780
Amounts due to customers
9,890
9,565
Other
22,419
19,867
Total other accrued liabilities
$
88,225
$
85,181
As of December 31, 2013
As of December 31, 2014
(in thousands)
Senior secured notes due June 2020
$
300,000
$
300,000
Senior notes due May 2019
300,000
300,000
Unamortized discount on senior notes due May 2019
(7,762
)
(6,601
)
Capital lease obligations
15,693
14,422
Carrying value of debt and capital lease obligations
607,931
607,821
Less current portion of debt and capital lease obligations
(1,489
)
(1,537
)
Long-term debt and capital lease obligations
$
606,442
$
606,284