Earthlink 2004 Annual Report Download - page 46

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During the first quarter of 2003, we executed a plan to streamline our contact center facilities. In connection with the 2003 Plan, we closed
contact centers in Dallas, Texas; Sacramento, California; Pasadena, California; and Seattle, Washington during the months of February and
March 2003. The closure of the four contact centers resulted in the termination of 1,220 employees and a net reduction of 920 employees,
primarily customer support personnel. In connection with the 2003 Plan, we recorded facility exit costs of approximately $36.6 million,
including approximately $10.7 million for employee, personnel and related costs; $18.2 million for real estate and telecommunications costs;
and $7.7 million in asset disposals.
Interest income and other, net
Interest income and other, net, decreased 61% from $12.6 million during the year ended December 31, 2002 to $5.0 million during the
year ended December 31, 2003 due to a decrease in our average cash and marketable securities balances and a decrease in investment yields.
Our cash and investment balances decreased as a result of the repurchase of 14.8 million shares of our common stock during the year ended
December 31, 2003 for $90.2 million, capital expenditures and the purchases of subscriber bases from several companies, which was partially
offset by an increase in cash provided by operations. Our weighted average investment yields decreased from approximately 2.6% during the
year ended December 31, 2002 to approximately 1.6% during the year ended December 31, 2003 as the U.S. Federal Reserve Bank reduced
interest rates.
Facility Exit Costs
During the years ended December 31, 2003 and 2004, we executed plans to streamline our contact center facilities. Under the 2003 Plan,
we closed contact centers in Dallas, Texas; Sacramento, California; Pasadena, California; and Seattle, Washington. The closure of the four
contact centers resulted in the termination of 1,220 employees and a net reduction of 920 employees, primarily customer support personnel.
Under the 2004 Plan, EarthLink closed contact center operations in Harrisburg, Pennsylvania; Roseville, California; San Jose, California; and
Pasadena, California; and reduced contact center operations in Atlanta, Georgia. Approximately 1,140 employees were directly impacted,
primarily customer support personnel.
As of December 31, 2004, we had paid all telecommunications service termination costs and employee and personnel related costs related
to the 2003 Plan and had paid all telecommunications service termination costs and substantially all employee and personnel related costs
related to the 2004 Plan. We realized reduced costs in 2003 and 2004 as a result of completing the 2003 Plan and 2004 Plan. We expect to incur
future cash outflows for real estate obligations through 2010 related to the 2003 Plan and through 2008 related to the 2004 Plan. Please see
“Liquidity and Capital Resources” below for a discussion of our plans for funding expected future cash payments.
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