Earthlink 2011 Annual Report Download - page 61

Download and view the complete annual report

Please find page 61 of the 2011 Earthlink annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 163

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163

Table of Contents
2011, including changes during the period attributable to costs incurred and charged to expense and costs paid or otherwise settled:
Legacy Restructuring Plans.
During the years ended December 31, 2003, 2004 and 2005, we executed a series of plans to restructure and
streamline our contact center operations and outsource certain internal functions (collectively referred to as "Legacy Plans"). The Legacy Plans
included facility exit costs, personnel-
related costs and asset disposals. We periodically evaluate and adjust our estimates for facility exit and
restructuring costs based on currently-
available information. During the year ended December 31, 2009, we recorded a reduction of $0.1 million
to facility exit and restructuring costs and during the year ended December 31, 2010, we recorded $0.3 million of facility exit and restructuring
costs as a result of changes in estimates for Legacy Plans. All costs related to the Legacy Plans have been paid or otherwise settled.
Acquisition-Related Costs. Acquisition-
related costs consist of external costs directly related to EarthLink's acquisitions, including
transaction related costs, such as advisory, legal, accounting, valuation and other professional fees; employee severance and retention costs; costs
to settle stock-based awards attributable to postcombination service in connection with the ITC^DeltaCom acquisition; facility-
related costs,
such as lease termination and asset impairments; and integration-
related costs, such as system conversion, rebranding costs and integration
related consulting and employee costs. Acquisition-
related costs are expensed in the period in which the costs are incurred and the services are
received and are included in restructuring and acquisition-related costs in the Consolidated Statement of Operations. Acquisition-
related costs
consisted of the following during the years ended December 31, 2009, 2010 and 2011:
We expect to incur additional integration costs related to our recent acquisitions. Once the businesses are integrated, we expect to realize
cost synergies from the combined businesses. However, we expect to incur upfront costs to gain these synergies. Such costs may include
severance and employee benefits, the elimination of duplicate facilities and contracts and costs to develop common operating platforms.
Interest expense and other, net
Interest expense and other, net, is comprised of interest expense incurred on our debt and capital leases, amortization of debt issuance costs,
debt premiums, and debt discounts; interest earned on our
55
Facilities Assets Total
(in thousands)
13,613
—
13,613
Accruals
355
(77
)
278
Payments
(6,697
)
77
(6,620
)
Non
-
cash charges
161
—
161
7,432
$
—
7,432
Year Ended December 31,
2009
2010
2011
(in thousands)
Transaction
-
related costs
—
10,164
5,756
Severance and retention costs
—
5,047
16,460
Costs to settle postcombination stock awards
—
5,742
—
Facility
-
related costs
—
—
5,530
Integration
-
related costs
—
—
4,044
Total acquisition
-
related costs
—
20,953
31,790