Earthlink 2002 Annual Report Download - page 62

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summarizes the status of the restructuring and exit costs and the related reserves for the PeoplePC Plan as of and for the year ended
December 31, 2002:
F-21
Phoenix Call Center
On October 30, 2002, EarthLink announced it would close its Phoenix, Arizona call center facility as a result of an opportunity to
consolidate operations and reduce overall costs. The plan for the closure of the Phoenix facility called for the elimination of approximately 259
positions. In connection with the closing, EarthLink recorded facility exit costs of $3.5 million. These costs included approximately
$1.7 million for employee, personnel and related costs; $0.5 million for real estate and telecommunications contract termination costs; and
approximately $1.3 million in asset write-downs. As of December 31, 2002, EarthLink had eliminated all 259 positions and had accrued but
unpaid severance related to the eliminated positions of $0.3 million. The following table summarizes the status of the exit costs associated with
the closure of the Phoenix call center facility as of and for the year ended December 31, 2002:
4. Goodwill and Intangible Assets
The Company adopted SFAS No. 142 on January 1, 2002, which required the Company to complete a transitional impairment evaluation
of its goodwill and other indefinite life intangible assets and an assessment of whether there was an indication that goodwill and other
indefinite life intangible assets were impaired as of the date of adoption. To the extent an indication existed that goodwill and other indefinite
life intangible assets may be impaired, the Company was required to measure the impairment loss, if any. Any transitional impairment loss
would be recognized as a cumulative effect of a change in accounting principle in the Company's Consolidated Statements of Operations.
As of January 1, 2002, the Company had approximately $77.0 million of unamortized goodwill and other indefinite life intangible assets
subject to the transition provisions of SFAS No. 142. The Company completed its transitional impairment assessment in the second quarter of
2002, and the assessment indicated there was no impairment.
Pursuant to SFAS No. 142, the Company performs an impairment test annually during the fourth quarter of its fiscal year or when events
Purchase
Related
Costs
Non-Cash
Items
Payments
Balance
December 31,
2002
(in thousands)
Restructuring and exit costs included in costs to purchase
PeoplePC:
Write
-
off duplicative and abandoned software
$
2,136
$
(2,136
)
$
—
$
—
Severance costs
769
—
(
578
)
191
International operations exit costs
Write
-
off abandoned assets
576
(576
)
—
—
Non
-
cancelable leases
1,196
—
(
600
)
596
Total international exit costs
1,772
(576
)
(600
)
596
$
4,677
$
(2,712
)
$
(1,178
)
$
787
Facility
Exit
Costs
Non-Cash
Items
Payments
Balance
December 31,
2002
(in thousands)
Phoenix call center facility exit costs:
Severance and personnel related costs
$
1,724
$
—
$
(
1,428
)
$
296
Real estate and telecommunications contract termination
costs
486
—
(
486
)
—
Write
-
off abandoned and disposed assets
1,282
(1,282
)
—
—
$
3,492
$
(1,282
)
$
(1,914
)
$
296