Earthlink 2008 Annual Report Download - page 67

Table of Contents
EARTHLINK, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
EarthLink, Inc. ("EarthLink" or the "Company") is an Internet service provider ("ISP"), providing nationwide Internet access and related
value-added services to individual and business customers. The Company's primary service offerings are dial-up and high-
speed Internet access
services and related value-added services, such as search, advertising and ancillary services sold as add-
on features to the Company's Internet
access services. In addition, through the Company's wholly-
owned subsidiary, New Edge Networks ("New Edge"), the Company builds and
manages private IP-based wide area networks for businesses and communications carriers.
The Company operates two reportable segments, Consumer Services and Business Services. The Company's Consumer Services segment
provides Internet access and related value-added services to individual customers. These services include dial-up and high-
speed Internet access
and voice services, among others. The Company's Business Services segment provides integrated communications services and related value-
added services to businesses and communications carriers. These services include managed private IP-
based wide area networks, dedicated
Internet access and web hosting, among others. For further information concerning the Company's business segments, see Note 19, "Segment
Information."
2. Summary of Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements include the accounts of EarthLink and all wholly-
owned subsidiaries. All intercompany transactions
and balances have been eliminated.
Discontinued Operations
In accordance with Statement of Financial Accounting Standards ("SFAS") No. 144 "Accounting for the Impairment or Disposal of Long-
Lived Assets", the Company reflected its municipal wireless broadband results of operations as discontinued operations for all periods presented.
See Note 4, "Discontinued Operations," for further discussion.
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities in the consolidated financial statements and accompanying footnotes. Actual results could differ from those estimates. On an
ongoing basis, the Company evaluates its estimates, including, but not limited to, those related to the allowance for doubtful accounts; the use,
recoverability, and/or realizability of certain assets, including deferred tax assets; useful lives of intangible assets and property and equipment;
the fair values of assets acquired and liabilities assumed in acquisitions of businesses, including acquired intangible assets; facility exit and
restructuring liabilities; fair values of investments; stock-based compensation; contingent liabilities and long-
lived asset impairments. The
Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable.
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