Earthlink 2008 Annual Report Download - page 30

Table of Contents
(2)
During the year ended December 31, 2008, EarthLink released approximately $65.6 million of its valuation allowance related to deferred
tax assets. These deferred tax assets related primarily to net operating loss carryforwards which the Company determined, in accordance
with SFAS No. 109, it will more likely than not be able to utilize due to the generation of sufficient taxable income in the future. Of the
total valuation allowance release, $56.1 million was recorded as an income tax benefit in the Statement of Operations and $9.5 million
related to acquired net operating losses and reduced goodwill on the Consolidated Balance Sheet
(3)
In November 2007, management concluded that its municipal wireless broadband operations were no longer consistent with the
Company's strategic direction and the Company's Board of Directors authorized management to pursue the divestiture of the Company's
municipal wireless broadband assets. As a result of that decision, the Company classified the municipal wireless broadband assets as held
for sale and presented the municipal wireless broadband operations as discontinued operations for all periods presented.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.
The following discussion of our financial condition and results of operations should be read in conjunction with the consolidated financial
statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
Safe Harbor Statement
The Management's Discussion and Analysis and other portions of this Annual Report include "forward-
looking" statements (rather than
historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described. Although we
believe that the expectations expressed in these forward-
looking statements are reasonable, we cannot promise that our expectations will turn out
to be correct. Our actual results could be materially different from and worse than our expectations. With respect to such forward-
looking
statements, we seek the protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include, without limitation
(1) that the continued decline of our consumer access subscribers, combined with the change in mix of our consumer access subscriber base from
narrowband to broadband, will adversely affect our results of operations; (2) that we face significant competition which could reduce our
profitability; (3) that adverse economic conditions may harm our business; (4) that as a result of our continuing review of our business, we may
have to undertake further restructuring plans that would require additional charges, including incurring facility exit and restructuring charges;
(5) that if we do not continue to innovate and provide products and services that are useful to subscribers, we may not remain competitive, and
our revenues and operating results could suffer; (6) that we may be unsuccessful in making and integrating acquisitions and investments into our
business, which could result in operating difficulties, losses and other adverse consequences; (7) that our business is dependent on the
availability of third-
party telecommunications service providers; (8) that our commercial and alliance arrangements may not be renewed, which
could adversely affect our results of operations; (9) that our business may suffer if third parties used for customer service and technical support
and certain billing services are unable to provide these services or terminate their relationships with us; (10) that service interruptions or
impediments could harm our business; (11) that government regulations could adversely affect our business or force us to change our business
practices; (12) that privacy concerns relating to our business could damage our reputation and deter current and potential users from using our
services; (13) that we may not be able to protect our intellectual property; (14) that we may be accused of infringing upon the intellectual
property rights of third parties, which is costly to defend and could limit our ability to use certain technologies in the future; (15) that we could
face substantial liabilities if we are unable to successfully defend against legal actions; (16) that our business depends on effective business
support systems, processes and personnel; (17) that we may be unable to hire and retain sufficient qualified personnel, and the loss of any of our
key executive officers could adversely affect us; (18) that our VoIP business exposes us to certain risks that could cause us to lose customers,
expose us to significant liability or otherwise harm our business; (19) that we may be required to recognize additional impairment charges on our
goodwill and intangible assets, which would adversely
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