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Table of Contents
network and security services. In July 2011, we acquired Business Vitals, LLC., a privately-
held company that provides national managed IT
security and professional services. In September 2011, we acquired the xDefenders assets of Synergy Global Solutions, Inc., a managed IT
security provider. In December 2011, we acquired an IT Solutions Center and application service from Synergy Global Solutions, Inc. We
believe these transactions will further establish EarthLink as a leading network, communications and IT services provider.
Debt securities and credit facility. In May 2011, we issued $300.0 million aggregate principal amount of 8
7
/
8
% senior notes due 2019.
We also entered into a $150.0 million senior secured revolving credit facility. No amounts were outstanding under the senior secured revolving
credit facility as of December 31, 2011. In November 2011, we redeemed or repurchased all of our outstanding $255.8 million convertible senior
notes due November 15, 2026. The new debt securities and credit facility were entered into in anticipation of the redemption of our convertible
senior notes and opportunities to grow our business, including potential future strategic transactions.
Results of operations.
We generated revenues of $1.3 billion during the year ended December 31, 2011, an increase from $0.6 billion
during the year ended December 31, 2010, primarily due to the inclusion of revenues from our acquired businesses. Net income was
$34.6 million during the year ended December 31, 2011, a decrease from $81.5 million during the year ended December 31, 2010, and Adjusted
EBITDA (a non-GAAP measure, see Non-
GAAP Financial Measures in "Management's Discussion and Analysis" in Item 7 of Part II) was
$330.7 million during the year ended December 31, 2011, an increase from $219.1 million during the year ended December 31, 2010. The
increase in Adjusted EBITDA was primarily due to inclusion of Adjusted EBITDA generated from our acquired businesses. The decrease in net
income was primarily due to depreciation and amortization expense resulting from property and equipment and intangible assets obtained in our
acquisitions and an increase in interest expense resulting from acquired and new debt securities.
Business Strategy
Since December 2010, we have significantly expanded our business and revenues through acquisitions, including two large integrated
communication services providers and several new product and service capabilities. In December 2011, we launched a nationwide suite of
business voice, data and Internet solutions. In addition to leveraging our regional fiber network and nationwide network reach to provide a broad
range of communications services, we are deploying a wide array of cloud, managed security and IT support services. Our strategy for growth is
for EarthLink to serve as an IT services company for businesses with IT and network security needs. We want our business to be more than a
traditional telecommunications company. We believe we are positioning EarthLink to be a trusted managed communications and IT services
partner. The key elements of our business strategy are as follows:
Offer a complete package of managed communications and IT services.
We provide a nationwide suite of business voice, data and
Internet solutions using a blend of access technologies to meet our customer's specific needs. We recently expanded our IT services capabilities,
including hosted VoIP, virtual computing and managed IT and cloud security. We are focused on continuing to broaden our suite of products and
services to offer a complete package of network connectivity and IT services and to design and implement solutions to address the evolving
business and infrastructure needs of our customers.
Add new customer relationships.
We are focused on adding new customers through new and existing channels, leveraging distribution
channels and positioning our business to take advantage of important trends in the markets for our products and services. We believe we have a
unique, comprehensive solution to offer business customers. We are upgrading and evolving our go to market strategy. This includes investment
to improve the quality of our sales force, investment in alternative sales motions, both inside sales and through partner relationships, and
investment in the EarthLink brand. We recently restructured our sales and account management around customer size and complexity. We
believe this model aligns our
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