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Table of Contents
EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
and the amount of the loss can be reasonably estimated. When it is probable that a liability has been incurred and there is a range of expected loss for which no
amount in the range is more likely than any other amount, the Company accrues at the low end of the range. The Company reviews its accruals each reporting
period.
Restructuring, Acquisition and Integration-Related Costs
Restructuring, acquisition and integration-related costs are expensed in the period in which the costs are incurred and the services are received. Restructuring,
acquisition and integration-related costs consist of costs related to the Company's restructuring, acquisition and integration-related activities. Such costs include: 1)
integration-related costs, such as system conversions, rebranding costs and integration-related consulting and employee costs; 2) severance, retention and other
employee termination costs associated with restructuring, acquisition and integration activities and with certain voluntary employee separations; 3) facility-related
costs, such as lease termination and asset impairments; and 4) transaction-related costs, which are direct costs incurred to effect a business combination, such as
advisory, legal, accounting, valuation and other professional fees.
The Company recognizes a liability for costs associated with an exit or disposal activity when the liability is incurred. Facility exit and restructuring liabilities
include estimates for, among other things, severance payments and amounts due under lease obligations, net of estimated sublease income, if any. Key variables in
determining lease estimates include operating expenses due under lease arrangements, the timing and amounts of sublease rental payments, tenant improvement
costs and brokerage and other related costs. The Company periodically evaluates and, if necessary, adjusts its estimates based on currently-available information.
Such adjustments are classified as restructuring, acquisition and integration-related costs in the Consolidated Statements of Comprehensive Loss.
Post-Employment Benefits
Post-employment benefits primarily consist of the Company's severance plans. When the Company has either a formal severance plan or a history of consistently
providing severance benefits representing a substantive plan, the Company recognizes severance costs when they are both probable and reasonably estimable.
Interest Expense and Other, Net
Interest expense and other, net, is comprised of interest expense incurred on the Company's debt and capital leases; amortization of debt issuance costs, debt
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 Ended December 31,
2013
2014
2015
(in thousands)
Interest expense
$ 58,415
$ 56,382
$ 49,979
Interest income
(84)
(125)
—
Other, net
275
4
993
Interest expense and other, net
$ 58,606
$ 56,261
$ 50,972
Income Taxes
The Company recognizes deferred tax assets and liabilities for the estimated future tax consequences attributable to differences between the financial reporting and
tax bases of existing assets and liabilities. Deferred tax assets and liabilities are measured using tax rates in effect for the year in which the temporary differences
are expected to reverse. A valuation allowance is recorded to reduce the carrying amounts of deferred tax assets if it is "more-likely-than-not" that those assets will
not be realized. The Company considers many factors when assessing the likelihood of future realization, including the Company's recent cumulative earnings
experience by taxing jurisdiction, expectations of future taxable income, prudent and feasible tax planning strategies that are available, the carryforward periods
available to the Company for tax reporting purposes and other relevant factors.
The Company records a liability for unrecognized tax benefits resulting from uncertain tax positions taken or expected to be taken in a tax return. The Company
recognizes interest and penalties, if any, related to unrecognized tax benefits as income tax (provision) benefit in the Consolidated Statements of Comprehensive
Loss.
Discontinued Operations
69