Earthlink 2009 Annual Report Download - page 52

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Table of Contents
The following table presents summarized results of operations related to our discontinued operations for the years ended December 31,
2007 and 2008:
Loss from discontinued operations, net of tax, decreased $71.8 million from the year ended December 31, 2007 to the year ended
December 31, 2008. This was primarily due to a decrease in impairment and facility exit and restructuring costs, as well as a decrease in
operating costs and expenses as we discontinued our municipal wireless broadband operations during 2008.
Stock-Based Compensation
We measure stock-
based compensation cost for all stock awards at fair value on the date of grant and recognition of compensation over the
requisite service period for awards expected to vest. The fair value of our stock options is estimated using the Black-
Scholes valuation model,
and the fair value of restricted stock units is determined based on the number of shares granted and the quoted price of our common stock on the
date of grant. Such value is recognized as expense over the requisite service period, net of estimated forfeitures, using the straight-
line attribution
method. For performance-
based awards, we recognize expense over the requisite service period, net of estimated forfeitures, using the
accelerated attribution method when it is probable that the performance measure will be achieved. The estimate of awards that will ultimately
vest requires significant judgment, and to the extent actual results or updated estimates differ from management's current estimates, such
amounts will be recorded as a cumulative adjustment in the period estimates are revised. We consider many factors when estimating expected
forfeitures, including types of awards, employee class and historical employee attrition rates. Actual results, and future changes in estimates,
may differ substantially from our current estimates.
Stock-
based compensation expense was $19.6 million, $20.1 million and $13.2 million during the years ended December 31, 2007, 2008
and 2009, respectively. Stock-
based compensation expense is classified within the same operating expense line items as cash compensation paid
to employees. Stock-based compensation was allocated as follows for the years ended December 31, 2007, 2008 and 2009:
48
Year Ended December 31,
2007
2008
(in thousands)
Revenues
$
2,097
$
1,305
Operating costs and expenses
(33,871
)
(4,569
)
Impairment, facility exit and restructuring costs
(48,528
)
(6,326
)
Income tax benefit
—
1,084
Loss from discontinued operations, net of tax
$
(80,302
)
$
(8,506
)
Year Ended December 31,
2007
2008
2009
(in thousands)
Sales and marketing
$
3,826
$
5,713
$
3,633
Operations and customer support
7,007
9,829
6,544
General and administrative
8,720
4,591
3,054
$
19,553
$
20,133
$
13,231