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EARTHLINK HOLDINGS CORP.
FORM 10-K
(Annual Report)
Filed 02/19/16 for the Period Ending 12/31/15
Address 1375 PEACHTREE STREET
SUITE 400
ATLANTA, GA 30309
Telephone 4048150770
CIK 0001102541
Symbol ELNK
SIC Code 7370 - Computer Programming, Data Processing, And
Industry Computer Services
Sector Technology
Fiscal Year 12/31
http://www.edgar-online.com
© Copyright 2016, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    ...-K (Annual Report) Filed 02/19/16 for the Period Ending 12/31/15 Address 1375 PEACHTREE STREET SUITE 400 ATLANTA, GA 30309 4048150770 0001102541 ELNK 7370 - Computer Programming, Data Processing, And Computer Services Technology 12/31 Telephone CIK Symbol SIC Code Industry Sector Fiscal Year http...

  • Page 2
    ... or other jurisdiction of incorporation or organization) (Address of principal executive offices) (Zip Code) 46-4228084 (I.R.S. Employer Identification No.) 1170 Peachtree St., Suite 900, Atlanta, Georgia 30309 (Registrant's telephone number, including area code) (404) 815-0770 _____ Securities...

  • Page 3
    ...Officers and Corporate Governance Item 11. Executive Compensation Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accounting Fees and Services...

  • Page 4
    ... customers. In 1996, we first expanded into the small to mid-sized business market by introducing business-class Internet access and web hosting services to businesses nationwide. In 2006, we expanded into the enterprise business market by acquiring a provider of managed IP-based network solutions...

  • Page 5
    ... range of data, voice and managed network services to small, often single-site business customers. 2015 Revenues $444,968 Percent 41% Small Business $297,039 27% Carrier/Transport Our Carrier/Transport segment provides transmission capacity and other data, voice and managed network services to...

  • Page 6
    ... of access types at speeds up to 1 gigabyte, e-mail account management and anti-virus protection. Voice Services . We offer a broad range of voice services to small business customers, including local, long-distance and toll free over traditional copper lines and hosted voice services. Data Services...

  • Page 7
    ...; cable service providers, such as Charter Communications, Inc., Comcast Corporation, Cox Communications, Inc. and Time Warner Cable, which have recently begun to compete and penetrate the market for larger business customers; wireless service providers; and asset-light network companies...

  • Page 8
    ... Comcast, Cox Communications, Inc. and Time Warner Cable; local and regional ISPs; established online services companies, such as AOL and the Microsoft Network; free or value-priced ISPs, such as United Online, Inc. which provides service under the brands Juno and NetZero; wireless Internet service...

  • Page 9
    ... an innovative portfolio of hosted and managed business-class communications solutions such as nationwide hosted PBX and SIP trunking services. Metaswitch's voice portal capabilities are also integrated into customer portals, offering our clients easy access to a ubiquitous, cross-platform, unified...

  • Page 10
    ... has interpreted to include bill and keep (a pricing arrangement under which each carrier terminates calls from the other at no charge); permit the resale of their services; permit users to retain their telephone numbers when changing carriers; and provide competing carriers access to poles, ducts...

  • Page 11
    ... by cable companies and wireline LECs pursuant to wholesale agreements with those providers. In an order released in March 2015, the FCC classified retail broadband Internet access services as telecommunications services subject to regulation under Title II of the Communications Act. That ruling is...

  • Page 12
    ... transmission facilities or private lines by wireline and wireless telecommunications carriers, Internet-based service providers and large enterprise end-users. We rely on the purchase of special access services for "last mile" access to many of our customers' locations. As a result, the price...

  • Page 13
    ... carrier must pay a USF contribution on its special access revenues, which these carriers as a matter of course pass through to the special access customer. This in turn increases our cost of purchasing special access service and using it as an input in providing broadband Internet access services...

  • Page 14
    ... as special access lines, that we seek to purchase at commercially acceptable prices. Since being granted relief by the FCC, CenturyLink has substantially increased the prices for the network elements that we use to provide services in eight central offices in the Omaha metropolitan statistical area...

  • Page 15
    ... will adopt policies that promote local telephone service competition. States also regulate in part the intrastate carrier access services of carriers like us. As an interexchange carrier ("IXC"), we are required to pay intrastate access charges to local exchange carriers when they originate...

  • Page 16
    ... the Public Reference Room by calling the SEC at (202) 9428090. Our annual reports, current reports, proxy statements and other documents filed with the SEC can also be found on the SEC web site at www.sec.gov. We also make available free of charge on or through our web site (www.earthlink.net) our...

  • Page 17
    ... voice and data products for small business customers to focus on managed network, security and cloud services to larger multi-location businesses. There can be no assurance that our strategy will be successful. The market for managed network, security and cloud services is still relatively new...

  • Page 18
    ... markets and volatility in our stock price could also negatively impact our ability to make acquisitions. Future acquisitions may result in significant costs and expenses and charges to earnings, including those related to severance, employee benefit costs, retention costs for executive officers...

  • Page 19
    ... Inc., Comcast Corporation, Cox Communications, Inc. and Time Warner Cable; wireless service providers; and asset-light network companies. We also compete with various other service providers for our managed network, security and cloud services, including managed hosting and cloud providers, managed...

  • Page 20
    ... FCC actions include removal of local switching and other network elements from the list of elements that the incumbent carriers must provide on an unbundled basis at TELRIC cost-based rates, the grant of broad pricing flexibility to incumbents for their special access services in many areas, and...

  • Page 21
    ...for Time Warner Cable and Bright House Networks or our other partners to provide us with new customers and these partners may market their own services rather than ours. In addition, mergers and consolidation in the industry, including the proposed merger of Charter Communications, Inc., Time Warner...

  • Page 22
    ..., Comcast, Cox Communications, Inc. and Time Warner Cable; local and regional ISPs; established online services companies, such as AOL and the Microsoft Network; free or value-priced ISPs, such as United Online, Inc. which provides service under the brands Juno and NetZero; wireless Internet service...

  • Page 23
    ... by cable companies and wireline LECs pursuant to wholesale agreements with those providers. In an order released in March 2015, the FCC classified retail broadband Internet access services as telecommunications services subject to regulation under Title II of the Communications Act. That ruling is...

  • Page 24
    ... and delivering services; providing customers with direct access to our information systems so that they can manage the services that they purchase from us, generally through on-line customer portals; and billing for services. We acquired several companies over the past few years with multiple...

  • Page 25
    ...our growth services. In addition, our business customers may not be able to obtain adequate access to credit, which could affect their ability to make timely payments to us. One or more of these circumstances could cause our revenues to decline, churn to increase, allowance for doubtful accounts and...

  • Page 26
    ...customer service and technical support, web hosting services, certain billing and collection services and E911 service for our VoIP services and our Consumer Services segment relies primarily on one customer service and technical support vendor. We may have to increase the price we pay or find a new...

  • Page 27
    ...company, with subsequent annual limitations on the use of our net operating losses, this could discourage a change in control. Risks Related to Our Liquidity and Financial Resources Our indebtedness could adversely affect our financial health and limit our ability to react to changes in our business...

  • Page 28
    ... additional capital to support our business growth, including the need to develop new services and products, enhance our operating infrastructure or acquire complementary businesses and technologies. We may also require substantial capital to maintain, upgrade and enhance our network facilities and...

  • Page 29
    ... the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders' flexibility in obtaining a judicial forum for disputes with us or our directors, officers or employees. Our bylaws provide that, unless we consent...

  • Page 30
    ... administrative office in Arab, Alabama and Anniston, Alabama. Data centers. As of December 31, 2015, we operated seven data centers. We own a data center facility in Atlanta, Georgia and we leased data center facilities in Marlboro, Massachusetts; Rochester, New York; Columbia, South Carolina; San...

  • Page 31
    ...sale price of our common stock on the NASDAQ Global Market on January 29, 2016 was $5.92 per share. Holders. There were 1,209 holders of record of our common stock on January 29, 2016. Dividends. We began paying quarterly cash dividends in 2009. During each of the years ended December 31, 2013, 2014...

  • Page 32
    ...line graph presents our total return to stockholders from December 31, 2010 to December 31, 2015...2010 in our common stock and each index and also assumes dividend reinvestment. December 31, 2010 December 31, 2011 December 31, 2012 December 31, 2013 December 31, 2014 December 31, 2015 EarthLink...

  • Page 33
    ...financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. Year Ended December 31, 2011 (1) 2012 2013 2014 2015 (in thousands, except per share amounts) Statement of operations data: Revenues Operating costs and expenses (2)(3) Income (loss) from operations Income...

  • Page 34
    ...31, 2011, including STS Telecom, Inc., Logical Solutions and Business Vitals, LLC, among others, and our CenterBeam, Inc. transaction completed during the year ended December 31, 2013. (2) Operating costs and expenses for the year ended December 31, 2013 includes a non-cash impairment charge of $255...

  • Page 35
    ...Consumer Services. Our Business Services segment provided a broad range of data, voice and managed network services to retail and wholesale business customers. Our Consumer Services segment provided nationwide Internet access and related value-added services to residential customers. During 2015, we...

  • Page 36
    ...-site business customers. Carrier/Transport . Our Carrier/Transport segment provides transmission capacity and other data, voice and managed network services to telecommunications carriers and large enterprises. Consumer Services . Our Consumer Services segment provides nationwide Internet access...

  • Page 37
    ... access, competition from cable, DSL and wireless providers and limited sales and marketing activities. In addition, we have implemented, and expect to continue to implement, targeted price increases, which could negatively impact our churn rates. However, we are focused on customer retention...

  • Page 38
    ... of Operations The following table presents statement of operations data for the years ended December 31, 2013, 2014 and 2015 : Year Ended December 31, 2013 2014 (in thousands) 2015 Revenues Operating costs and expenses: Cost of revenues (exclusive of depreciation and amortization shown separately...

  • Page 39
    ... data, voice and managed network services provided to business customers; (2) wholesale services, which includes the sale of transmission capacity and other services to telecommunications carriers and large enterprises; and (3) other services, which primarily consists of web hosting. Revenues...

  • Page 40
    ... from 2013 to 2014. Partially offset by an increase in value-added services due to price increases in our premium email only subscription product. • • Cost of revenues Cost of revenues for our business services primarily consists of the cost of connecting customers to our networks via leased...

  • Page 41
    ... sales and marketing, customer service, network operations, information technology, regulatory, billing and collections, corporate administration, and legal and accounting. Such costs include salaries and related employee costs (including stockbased compensation), outsourced labor, professional fees...

  • Page 42
    ...definite-lived intangible assets acquired in purchases of businesses and purchases of customer bases from other companies. The following table presents our depreciation and amortization expense for the years ended December 31, 2013, 2014 and 2015 : Year Ended December 31, 2013 2014 2015 2014 vs 2013...

  • Page 43
    ... and integration-related costs for the years ended December 31, 2013, 2014 and 2015 : Year Ended December 31, 2013 2014 2015 2014 vs 2013 $ Change (dollars in thousands) % Change 2015 vs 2014 $ Change % Change Integration-related costs Severance, retention and other employee costs Facility-related...

  • Page 44
    ... marketable securities; and other miscellaneous income and expense items. The following table presents our interest expense and other, net, for the years ended December 31, 2013, 2014 and 2015 : Year Ended December 31, 2013 2014 2015 2014 vs 2013 $ Change (dollars in thousands) % Change 2015 vs 2014...

  • Page 45
    ... through earnings. For more information about our income taxes, refer to Note 12 to our Consolidated Financial Statements. Loss from discontinued operations, net of tax The operating results of the our telecom systems business acquired as part of ITC^DeltaCom have been separately presented as...

  • Page 46
    ... in our new segment structure during 2015. Management determined that it is impracticable to restate financial information prior to 2015 to conform to the new reportable segment structure due to the level of effort required to segment customers that terminated service prior to 2015 and identify...

  • Page 47
    ... Business Services operating income was relatively flat during the years ended December 31, 2013 and 2014 due to efforts to protect our revenue base, such as targeted price increases and re-terms, and efforts to manage cost of revenues and operating expenses. Revenues for traditional voice and data...

  • Page 48
    ... and Capital Resources The following table presents summarized cash flow data for the years ended December 31, 2013, 2014 and 2015 : Year Ended December 31, 2013 2014 2015 2014 vs 2013 $ Change (dollars in thousands) % Change 2015 vs 2014 $ Change % Change Net cash provided by operating activities...

  • Page 49
    ... net cash generated from sales and maturities of marketable securities, net of purchases, during the year ended December 31, 2013. The decrease in capital expenditures during the year ended December 31, 2014 was due to additional cash used in 2013 to expand our fiber network and upgrade our network...

  • Page 50
    ... us to make capital expenditures to develop or acquire new equipment or technology in order to replace aging or obsolete equipment. • • Investments in our growth products and services. We expect to invest cash in sales and marketing efforts and other resources required to support our strategy...

  • Page 51
    ... through maturity and commitment fees and borrowing costs under our senior secured revolving credit facility. (3) Purchase commitments represent non-cancellable contractual obligations for services and equipment; minimum commitments under network access agreements with several carriers; and certain...

  • Page 52
    ... financial measure reported under GAAP for the years ended December 31, 2013, 2014 and 2015 : Year Ended December 31, 2013 2014 (in thousands) 2015 Net loss Interest expense and other, net Income tax provision (benefit) Depreciation and amortization Stock-based compensation expense Impairment...

  • Page 53
    ... activities for the years ended December 31, 2013, 2014 and 2015 : Year Ended December 31, 2013 2014 (in thousands) 2015 Net cash provided by operating activities Income tax provision (benefit) Non-cash income taxes Interest expense and other, net Amortization of debt discount, premium and issuance...

  • Page 54
    ...of our general sales credit and customer dispute credit reserves contain uncertainties because they require management to make assumptions and apply judgment about the amount and timing of unknown billing errors and disputes. We have not made any material changes in the accounting methodology we use...

  • Page 55
    ... associated with these billing disputes. The reserves are reviewed on a monthly basis, but are subject to changes in estimates and management judgment as new information becomes available. Income Taxes We recognize deferred tax assets and liabilities using tax rates in effect for the years in which...

  • Page 56
    ... on weighting of the income and market approaches. For our fiscal year 2014 and 2015 annual goodwill impairment tests, we only The first step of the impairment test involves comparing the used the income approach. For our fiscal year 2013 annual estimated fair value of our reporting units with the...

  • Page 57
    ... impairment charges for our long-lived assets during the past three years. During the year ended December 31, 2015, we recorded additional amortization expense of $5.7 million as a result of a change in estimate in December 2014 for the estimated useful lives of certain customer relationships. We...

  • Page 58
    ... to provide these services; (11) that if we are unable to interconnect with AT&T, Verizon and other incumbent carriers on acceptable terms, our ability to offer competitively priced local telephone services will be adversely affected; (12) that the continued decline in switched access and reciprocal...

  • Page 59
    ... prices in less active markets. The carrying amount of our senior secured revolving credit facility approximated its fair value as of December 31, 2015 . The following table presents the fair value of our outstanding indebtedness, excluding capital lease obligations, as of December 31, 2014 and 2015...

  • Page 60
    ... Data. EARTHLINK HOLDINGS CORP. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Reports of Independent Registered Public Accounting Firm Consolidated Balance Sheets as of December 31, 201 4 and 2015 Consolidated Statements of Comprehensive Loss for the years ended December 31, 2013, 2014 and 2015...

  • Page 61
    ...years in the period ended December 31, 2015, in conformity with U.S. generally accepted accounting principles. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), EarthLink Holdings Corp.'s internal control over financial reporting...

  • Page 62
    ...over financial reporting as of December 31, 2015, based on the COSO criteria. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of EarthLink Holdings Corp. as of December 31, 2014 and 2015, and the...

  • Page 63
    .... CONSOLIDATED BALANCE SHEETS December 31, 2014 December 31, 2015 (in thousands, except per share data) ASSETS Current assets: Cash and cash equivalents Accounts receivable, net of allowance of $6,211 and $3,537 as of December 31, 2014 and 2015, respectively Prepaid expenses Other current assets...

  • Page 64
    ... HOLDINGS CORP. CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Year Ended December 31, 2013 2014 (in thousands, except per share data) 2015 Revenues Operating costs and expenses: Cost of revenues (exclusive of depreciation and amortization shown separately below) Selling, general and administrative...

  • Page 65
    ... stock units Change in dividends payable on restricted stock units Stock-based compensation expense Return of One Communications escrow shares Change in deferred tax asset Repurchases of common stock Unrealized holding losses, net of tax Net loss Balance as of December 31, 2013 Vesting of restricted...

  • Page 66
    ...in deferred revenue Net cash provided by operating activities Cash flows from investing activities: Purchases of property and equipment Purchases of marketable securities Sales and maturities of marketable securities Purchase of business, net of cash acquired Purchase of customer relationships Other...

  • Page 67
    ... managed network, security and cloud services provider to business and residential customers in the United States. The Company provides a broad range of data, voice and managed network services to retail and wholesale business customers. The Company also provides nationwide Internet access and...

  • Page 68
    ...excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the acquisition method of accounting. The Company does not amortize goodwill. The Company tests its goodwill annually during the fourth quarter of its fiscal year or when...

  • Page 69
    ... assets consist of customer relationships, developed technology and software, trade names and other assets acquired in conjunction with the purchases of businesses or purchases of assets from other companies. When management determines material intangible assets are acquired in conjunction with...

  • Page 70
    ... data, voice and managed network services provided to business customers; (2) wholesale services, which includes the sale of transmission capacity and other services to telecommunications carriers and large enterprises; and (3) other services, which primarily consists of web hosting. Revenues...

  • Page 71
    ...sales and marketing, customer service, network operations, information technology, regulatory, billing and collections, corporate administration, and legal and accounting. Such costs include salaries and related employee costs (including stock-based compensation), outsourced labor, professional fees...

  • Page 72
    ...premiums and debt discounts; interest earned on the Company's cash, cash equivalents and marketable securities; and other miscellaneous income and expense items. The following table presents the Company's interest expense and other, net, during the years ended December 31, 2013, 2014 and 2015 : Year...

  • Page 73
    ... 31, 2014 and 2015 , no customer accounted for more than 10% of gross accounts receivable. Supply Risk . The Company's business depends on the availability, capacity, affordability, reliability and security of third-party network service providers. Only a small number of providers offer the network...

  • Page 74
    ... or services. The new standard requires significantly expanded disclosures about revenue contract assets and liabilities. In August 2015, the FASB issued guidance that deferred the effective date by one year. The standard is now required to be adopted by public business entities in annual periods...

  • Page 75
    ... On July 1, 2013, the Company acquired substantially all of the assets of CenterBeam, Inc. ("CenterBeam"), a privately-held information technology managed service provider delivering cloud computing and hosted IT services to mid-sized businesses. The fair value of consideration transferred was $23...

  • Page 76
    ... to the newly formed reportable segments: Enterprise/ Mid-Market Small Business Carrier/ Transport Business Services Consumer Services Total (in thousands) Balance as of December 31, 2014 Goodwill Accumulated impairment loss Change in reportable segments Goodwill Accumulated impairment loss...

  • Page 77
    ... units for evaluating goodwill: Enterprise/Mid-Market, Small Business, Carrier/Transport and Consumer Services. Each of these reporting units constitute a business for which discrete financial information is available and segment management regularly reviews the operating results. As a result of...

  • Page 78
    ... 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, 2013, 2014 and 2015 . 6. Other...

  • Page 79
    ... principal amount of its Senior Notes at a redemption price of 104.438% of the principal amount thereof, or $73.1 million , plus accrued and unpaid interest. In August 2015, the Company repurchased $30.0 million outstanding principal of its Senior Notes in the open market for $31.5 million , plus...

  • Page 80
    ... stated interest rate, the original issue discount and the transaction fees. In September 2011, in accordance with the registration rights granted to the original purchasers of the Senior Notes, the Company completed an exchange offer of the privately placed Senior Notes for new 8.875% Senior Notes...

  • Page 81
    ... of ITC^DeltaCom in December 2010, EarthLink assumed ITC^DeltaCom's outstanding $325.0 million aggregate principal amount of 10.5% senior secured notes due April 2016 (the "ITC^DeltaCom Notes"). The ITC^DeltaCom Notes accrued interest at a rate of 10.5% per year. In May 2013, the Company commenced...

  • Page 82
    ... to 1.0 in order to repurchase common stock and to make dividend payments in excess of the $0.05 per share regular quarterly dividend. As of December 31, 2015 , the Company was in compliance with these covenants. Financial Information Under Rule 3-10 of Regulation S-X The Company's Senior Notes and...

  • Page 83
    ..., and subject to market conditions and other factors. The share repurchase program does not require the Company to acquire any specific number of shares and may be terminated by the Board of Directors at any time. In addition, the agreements governing the Company's Senior Secured Notes and...

  • Page 84
    ... Notes and Senior Notes and the Company's Credit Agreement contain restrictions on the amount of dividends the Company can pay. 9. Stock-Based Compensation Stock-based compensation expense was $13.3 million , $12.6 million and $14.6 million during the years ended December 31, 2013, 2014 and 2015...

  • Page 85
    ... difference between the market value of Company's common stock at the time of exercise and the exercise price, multiplied by the number of stock options exercised. There were no stock option exercises during the years ended December 31, 2013 and 2014. As of December 31, 2015 , there was $0.4 million...

  • Page 86
    ... the years ended December 31, 2013 and 2014 was $1.19 per share and $1.48 per share, respectively. The dividend yield assumption was based on the Company's history of dividend payouts at the time of grant. The expected volatility was based on a combination of the Company's historical stock price and...

  • Page 87
    ... and $3.6 million of facilities-related costs primarily due to the closing of certain sales offices and other facilities. Restructuring costs for the years ended December 31, 2013, 2014 and 2015 are included in restructuring, acquisition and integration-related costs in the Consolidated Statements...

  • Page 88
    ... U.S. federal statutory tax rate and the Company's effective tax rate for financial statement purposes for the years ended December 31, 2013, 2014 and 2015 : Year Ended December 31, 2013 2014 (in thousands) 2015 Federal income tax benefit at statutory rate (35%) State income taxes, net of federal...

  • Page 89
    ... to the Company's state deferred income tax rates and the resulting impact on the re-measurement of deferred tax assets and liabilities recorded on the balance sheet as of December 31, 2014 decreased the effective tax rate by 5.1% . S tate tax expense for the year end December 31, 2015 increased the...

  • Page 90
    ... million were limited under Internal Revenue Code Section 382 in 2013, 2014 and 2015, respectively. As of December 31, 2014 and 2015, the Company had net NOLs for state income tax purposes totaling approximately $33.9 million and $32.6 million , respectively, which began to expire in 2015. Under the...

  • Page 91
    ... leases generally require the Company to pay operating costs, including property taxes, insurance and maintenance, and generally contain annual escalation provisions as well as renewal options. Total rent expense (including operating expenses) during the years ended December 31, 2013, 2014 and 2015...

  • Page 92
    ...considered probable and estimable. The Company recognized $7.9 million and $5.2 million of net favorable disputes related to its billings to other carriers during the years ended December 31, 2014 and 2015 , respectively, which are included in revenues in the Consolidated Statements of Comprehensive...

  • Page 93
    ... for sale. There were no other material long-lived asset impairments during the years ended December 31, 2013, 2014 and 2015 . Fair value of debt The estimated fair value of the Company's Senior Secured Notes and Senior Notes was determined based on Level 2 input using observable market prices in...

  • Page 94
    ... the year ended December 31, 2015. As a result, the Company now operates the following four reportable segments Enterprise/Mid-Market . The Company's Enterprise/Mid-Market segment provides a broad range of data, voice and managed network services to distributed multi-site business customers. Small...

  • Page 95
    ... information in the future. Segment information for the years ended December 31, 2013 and 2014 have not been restated to reflect the Company's new reportable segment structure. The Company began recording revenue and related cost of revenue transactions at the new segment level in 2015. Management...

  • Page 96
    ... HOLDINGS CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued) Year Ended December 31, 2013 2014 (in thousands) 2015 Business Services Revenues Cost of revenues (excluding depreciation and amortization) Gross margin Direct segment operating expenses Segment operating income Consumer...

  • Page 97
    ... data, voice and managed network services provided to business customers; (2) wholesale services, which includes the sale of transmission capacity and other services to telecommunications carriers and large enterprises; and (3) other services, which primarily consists of web hosting. Revenues...

  • Page 98
    ...sold certain assets related to its IT services product offerings. The primary purpose of the sale was to simplify operations and provide more flexibility to invest in new capabilities and services to drive growth in the Company's core business. The purchase price in the transaction was $29.0 million...

  • Page 99
    ... or submitted under the Exchange Act, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and...

  • Page 100
    ...to compensation of our directors and executive officers will be set forth under the captions "Corporate Governance-Director Compensation" and "Executive Compensation" in our Proxy Statement referred to in Item 10 above or in a subsequent amendment to this Annual Report on Form 10-K. Such information...

  • Page 101
    ..." and "Executive Compensation-Certain Relationships and Related Transactions" in our Proxy Statement referred to in Item 10 above or in a subsequent amendment to this Annual Report on Form 10-K. Information regarding director independence is set forth under the caption "Corporate Governance-Director...

  • Page 102
    ... this Annual Report on Form 10-K (1) Financial Statements 1. Reports of Independent Registered Public Accounting Firm 2. Consolidated Balance Sheets as of December 31, 2014 and 2015 3. Consolidated Statements of Comprehensive Loss for the years ended December 31, 2013, 2014 and 2015 4. Consolidated...

  • Page 103
    ...2015 EarthLink Access Management Save-Sharing Executive Bonus Plan (incorporated by reference to Exhibit 10.4 of EarthLink Holding Corp.'s Report on Form 10-Q for the quarterly period ended March 31, 2015-File No. 001-15605). High-Speed Service Agreement between EarthLink, Inc. and Time Warner Cable...

  • Page 104
    ... EarthLink Shared Services, LLC (incorporated by reference to Exhibit 10.34 of EarthLink Holding Corp.'s Report on Form 10-K for the year ended December 31, 2013-File No. 001-15605). Subsidiaries of the Registrant. Consent of Ernst & Young LLP, an independent registered public accounting firm. Power...

  • Page 105
    ...Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. EARTHLINK HOLDINGS CORP. By: /s/ JOSEPH F. EAZOR Joseph F. Eazor, Chief Executive Officer...full power of substitution and resubstitution, for and in the name, ...

  • Page 106
    ... and Controller (principal accounting officer) Date: February 19, 2016 /s/ JULIE A. SHIMER PH.D Julie A. Shimer Ph.D., Chairman of the Board Date: February 19, 2016 /s/ SUSAN D. BOWICK Susan D. Bowick, Director Date: February 19, 2016 /s/ DAVID A. KORETZ David A. Koretz, Director Date...

  • Page 107
    ...the next annual shareholder meeting following the grant date, provided the director is serving as an independent director at that time. Unvested RSUs shall be forfeited if the director leaves the Board prior to such time. i. Note: Each RSU represents the right to receive one share of EarthLink stock...

  • Page 108

  • Page 109
    ... Corp. (MA) CTC Communications of Virginia, Inc. (VA) DeltaCom, LLC (AL) EarthLink Business Holdings, LLC (DE) EarthLink Business, LLC (DE) EarthLink Carrier, LLC (DE) EarthLink Managed Services, LLC (SC) EarthLink Shared Services, LLC (DE) EarthLink, LLC (DE) Lightship Telecom, LLC (DE) US Xchange...

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    ... statements of EarthLink Holdings Corp. and the effectiveness of internal control over financial reporting of EarthLink Holdings Corp. included in this Annual Report (Form 10-K) of EarthLink Holdings Corp. for the year ended December 31, 2015. /s/ Ernst & Young LLP Atlanta, Georgia February 19...

  • Page 111
    ... 31.1 CERTIFICATION OF CEO PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Joseph F. Eazor, certify that: 1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2015 of EarthLink Holdings...

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    ...31.2 CERTIFICATION OF CFO PURSUANT TO SECURITIES EXCHANGE ACT RULES 13a-14 AND 15d-14 AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Louis M. Alterman, certify that: 1. I have reviewed this annual report on Form 10-K for the year ended December 31, 2015 of EarthLink Holdings...

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    ... In connection with the Annual Report on Form 10-K of EarthLink Holdings Corp. (the "Company") for the year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Joseph F. Eazor, Chief Executive Officer of the Company, certify, pursuant to...

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    ... connection with the Annual Report on Form 10-K of EarthLink Holdings Corp. (the "Company") for the year ended December 31, 2015 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Louis M. Alterman, Chief Financial Officer of the Company, certify, pursuant to...