Earthlink 2015 Annual Report Download - page 48

Table of Contents
(d) 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.
(e) 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.
Consumer Services Operating Results
The following table presents operating results for our Consumer Services segment for the years ended December 31, 2013, 2014 and 2015 :
Year Ended December 31,
2014 vs 2013
2015 vs 2014
2013
2014
2015
$ Change
% Change
$ Change
% Change
(dollars in thousands)
Revenues $ 276,379
$ 245,964
$ 219,340
$ (30,415)
(11)%
$ (26,624)
(11)%
Segment operating income 131,259
114,436
110,747
(16,823)
(13)%
(3,689)
(3)%
The decreases in Consumer Services operating income during the years ended December 31, 2014 and 2015 compared to the prior years were primarily due to
limited sales and marketing activities, the continued maturation of the market for Internet access and competitive pressures in the industry. The decreases were
partially offset by targeted price increases and decreases in operating expenses as our consumer subscriber base has decreased and become longer-tenured. Our
longer tenured customers require less customer service and technical support and have a lower frequency of non-payment. The decrease in Consumer Services
operating income during the year ended December 31, 2015 was also partially offset by the allocation of certain expenses historically recorded in our Consumer
Services segment to our legacy Business Services segment and to corporate expenses.
Liquidity 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,
2014 vs 2013
2015 vs 2014
2013
2014
2015
$ Change
% Change
$ Change
% Change
(dollars in thousands)
Net cash provided by operating
activities $ 124,156
$ 139,995
$ 167,448
$ 15,839
13%
$ 27,453
20%
Net cash used in investing activities (112,500)
(102,777)
(87,468)
9,723
9%
15,309
(15)%
Net cash used in financing activities (52,641)
(19,721)
(122,817)
32,920
63%
(103,096)
523%
Net (decrease) increase in cash and
cash equivalents $ (40,985)
$ 17,497
$ (42,837)
$ 58,482
143%
$ (60,334)
(345)%
Operating activities
The increase in cash provided by operating activities during the year ended December 31, 2014 compared to the prior year was primarily due to reduced payables
resulting from favorable disputes with vendors, improved collection efforts on accounts receivables, lower payments for acquisition and integration-related costs
and a decrease in cash interest paid. The increase in cash provided by operating activities during the year ended December 31, 2015 compared to the prior year was
primarily due to lower operating costs and expenses and lower interest payments during the year ended December 31, 2015 compared to the prior year due to
operating efficiencies and cost savings initiatives and lower outstanding debt, offset by lower revenues.
Investing activities
The decrease in net cash used in investing activities during the year ended December 31, 2014 compared to the prior year was primarily due to a $40.8 million
decrease in capital expenditures and a $16.8 million decrease in cash used for acquisitions, partially
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