Earthlink 2011 Annual Report Download - page 71

Table of Contents
Share Repurchase Program
The Board of Directors has authorized a total of $750.0 million to repurchase our common stock under our share repurchase program. As of
December 31, 2011, we had utilized approximately $651.1 million pursuant to the authorizations and had $98.9 million available under the
current authorization. We may repurchase our common stock from time to time in compliance with the Securities and Exchange Commission's
regulations and other legal requirements, and subject to market conditions and other factors. The share repurchase program does not require us to
acquire any specific number of shares and may be terminated by the Board of Directors at any time.
Non-GAAP Financial Measures
In addition to our financial information presented in accordance with U.S. generally accepted accounting principles ("GAAP"),
management uses certain "non-
GAAP financial measures" within the meaning of the SEC Regulation G, to clarify and enhance understanding of
past performance and prospects for the future. Generally, a non-
GAAP financial measure is a numerical measure of a company's operating
performance, financial position or cash flows that excludes or includes amounts that are included in or excluded from the most directly
comparable measure calculated and presented in accordance with GAAP. Set forth below is a discussion of the presentation and use of Adjusted
EBITDA and Operating Cash Flow, the non-GAAP financial measures used by management.
Adjusted EBITDA is defined as net income before interest expense and other, net, income taxes, depreciation and amortization, stock-
based
compensation, impairment of goodwill and intangible assets, and restructuring and acquisition-
related costs. Operating Cash Flow is defined as
net income before interest expense and other, net, income taxes, depreciation and amortization, stock-
based compensation, impairment of
goodwill and intangible assets, and restructuring and acquisition-related costs, less cash used for purchases of property and equipment.
These non-
GAAP financial measures are commonly used in the industry and are presented because management believes they provide
relevant and useful information to investors. Management uses these non-
GAAP financial measures to evaluate the performance of its business
and to assess its ability to fund capital expenditures, fund growth, service debt and determine bonuses. Management believes that excluding the
effects of certain non-cash and non-
operating items enables investors to better understand and analyze the current period's results and provides a
better measure of comparability.
There are limitations to using these non-
GAAP financial measures. Adjusted EBITDA and Operating Cash Flow are not indicative of cash
provided or used by operating activities and may differ from comparable information provided by other companies. Adjusted EBITDA and
Operating Cash Flow should not be considered in isolation, as an alternative to, or more meaningful than measures of financial performance
determined in accordance with U.S. GAAP.
The following table presents a reconciliation of Adjusted EBITDA to the most closely related financial measure reported under GAAP for
the years ended December 31, 2009, 2010 and 2011:
65
Year Ended December 31,
2009 2010 2011
(in thousands)
Net income
$
287,118
$
81,480
$
34,567
Interest expense and other, net
21,125
23,409
70,640
Income tax benefit (provision)
(126,085
)
56,804
19,902
Depreciation and amortization
23,962
23,390
160,083
Stock
-
based compensation expense
13,231
9,959
13,466
Impairment of goodwill and intangible assets
24,145
1,711
—
Restructuring and acquisition
-
related costs
5,615
22,368
32,068
Adjusted EBITDA
$
249,111
$
219,121
$
330,726