Earthlink 2002 Annual Report Download - page 60

3. Merger and Restructuring Charges and Facility Exit Costs
EarthLink Network and MindSpring Merger
During the three months ended March 31, 2000, EarthLink recognized approximately $34.0 million in merger related charges in
connection with the merger of EarthLink Network and MindSpring. These expenses were associated with fees for investment banking, legal
and accounting services, severance costs, acceleration of unamortized costs associated with a line of credit and convertible debt, and other
related charges in connection with the transaction. All of these costs were paid as of December 31, 2000. The following table summarizes the
status of the merger related charges as of and for the year ended December 31, 2000:
F-19
OneMain
Prior to being acquired by EarthLink, OneMain had acquired 27 ISPs and was working to consolidate the operating and administrative
functions of the acquired ISPs. As part of this consolidation, OneMain had developed a restructuring plan (the "OneMain Plan") and had
recognized a restructuring charge related to employee termination benefits and certain real estate contracts. The OneMain Plan called for the
net reduction of approximately 650 positions in operations and customer support, sales and marketing, and in general and administrative
departments. On September 12, 2000, EarthLink assumed OneMain's remaining restructuring liabilities of $5.4 million. As of December 31,
2001, all of the 650 employees had been terminated in accordance with the OneMain Plan.
EarthLink's acquisition of OneMain included costs related to a formal EarthLink plan (the "EarthLink Plan") to integrate OneMain's
operations into EarthLink's operations. The EarthLink Plan called for the net reduction of approximately 500 additional positions in operations
and customer support, sales and marketing, and in general and administrative departments. As of December 31, 2001, all of these positions had
been terminated as a result of the EarthLink Plan. These costs included $6.4 million related to employee termination benefits, $1.0 million
related to the consolidation of facilities, and $4.3 million related to the write-off of the duplicative OneMain accounting and management
information systems.
The following table summarizes the status of the restructuring costs and the related reserves for the OneMain and EarthLink Plans as of
and for the years ended December 31, 2000 and 2001:
Total revenues
$
1,111,228
$
1,336,081
$
1,411,879
Net loss
(564,955
)
(491,180
)
(178,183
)
Deductions for accretion dividends
(23,730
)
(29,880
)
(19,987
)
Net loss attributable to common stockholders
$
(588,685
)
$
(521,060
)
$
(198,170
)
Basic and diluted net loss per share
$
(4.44
)
$
(3.84
)
$
(1.31
)
Weighted average common shares
132,519
135,738
151,355
Merger and
Related
Charges
Non-Cash
Items Payments
Balance
December 31,
2000
(in thousands)
Costs incurred to effect the merger of EarthLink
Network and MindSpring:
Investment banking fees
$
16,411
$
—
$
(
16,411
)
$
—
Printing, filing, mailing, proxy solicitation,
legal, accounting and advisory fees
6,118
—
(
6,118
)
—
Acceleration of unamortized costs associated
with a line of credit and convertible debt
6,792
—
(
6,792
)
—
Severance costs and accelerated
compensation expense
2,716
(1,076
)
(1,640
)
—
Other
1,930
—
(
1,930
)
—
$
33,967
$
(1,076
)
$
(32,891
)
$
—