Earthlink 2013 Annual Report Download - page 72

Table of Contents
EARTHLINK HOLDINGS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Organization
Change in Organizational Structure
On December 31, 2013, through the creation of a new holding company structure (the “Holding Company Reorganization”),
EarthLink,
Inc. merged into EarthLink, LLC, which became a wholly-
owned subsidiary of a new publicly traded parent company, EarthLink Holdings
Corp. As the Holding Company Reorganization occurred at the parent company level, the remainder of EarthLink, Inc.'s subsidiaries, operations
and customers were not affected. Accordingly, the historical financial statements reflect the effect of the reorganization for all periods presented.
The Holding Company Reorganization was effected under Section 251(g) of the Delaware General Corporation Law which provides for
the formation of a holding company structure without a stockholder vote. EarthLink, Inc. merged with and into EarthLink, LLC, a Delaware
limited liability company and a direct, wholly-
owned subsidiary of EarthLink Holdings Corp., with EarthLink, LLC surviving the merger as a
direct, wholly-
owned subsidiary of EarthLink Holdings Corp. At the effective time of the merger and in connection with the Holding Company
Reorganization, all of the shares of common stock of the EarthLink, Inc. were converted into the same number of shares of common stock of
EarthLink Holdings Corp. The directors and executive officers of EarthLink Holdings Corp. immediately after completion of the Holding
Company Reorganization are comprised of the same persons who were directors of and executive officers of EarthLink, Inc. immediately prior
to the Holding Company Reorganization.
Following the Holding Company Reorganization, EarthLink Holdings Corp. became the primary obligor on the Company's outstanding
debt obligations and EarthLink, LLC became a guarantor and a restricted subsidiary.
Description of Business
EarthLink Holdings Corp. (“EarthLink” or the “Company”),
together with its consolidated subsidiaries, is a leading communications
and IT services provider to business and residential customers in the United States. The Company operates two
reportable segments, Business
Services and Consumer Services. The Company’
s Business Services segment provides a broad range of data, voice and IT services to retail and
wholesale business customers. The Company’s Consumer Services segment provides nationwide Internet access and related value-
added
services to residential customers. The Company operates an extensive network including more than 28,000 route fiber miles, 90
metro fiber rings
and eight enterprise-class data centers that provide d ata and voice IP service coverage across more than 90 percent
of the United States. For
further information concerning the Company’s reportable segments, see Note 19, “Segment Information.”
2. Summary of Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements of EarthLink include the accounts of its wholly-
owned subsidiaries. All significant intercompany
transactions have been eliminated.
Discontinued Operations
The operating results of the Company's telecom systems business acquired as part of ITC^DeltaCom, Inc. ("ITC^DeltaCom") have
been separately presented as discontinued operations for all periods presented. See Note 6, "Discontinued Operations," for further discussion.
Reclassifications
Certain amounts in the prior year financial statements have been reclassified to conform to the current year presentation. Specifically,
certain deferred tax asset and liability amounts disclosed in Note 15, "Income Taxes," as of December 31, 2012 were reclassified to conform to
the current year presentation.
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