Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 30, 2015 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | EARTHLINK HOLDINGS CORP. | |
Entity Central Index Key | 1,102,541 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 103,855,347 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 87,623 | $ 134,133 |
Accounts receivable, net of allowance of $6,211 and $3,862 as of December 31, 2014 and September 30, 2015, respectively | 82,864 | 92,616 |
Prepaid expenses | 17,120 | 13,761 |
Other current assets | 11,399 | 13,671 |
Total current assets | 199,006 | 254,181 |
Property and equipment, net | 372,948 | 404,713 |
Goodwill | 137,751 | 137,751 |
Other intangible assets, net | 41,617 | 91,490 |
Other long-term assets | 16,704 | 22,026 |
Total assets | 768,026 | 910,161 |
Current liabilities: | ||
Accounts payable | 18,527 | 23,726 |
Accrued payroll and related expenses | 38,988 | 50,197 |
Other accrued liabilities | 81,366 | 85,181 |
Deferred revenue | 41,765 | 43,940 |
Current portion of long-term debt and capital lease obligations | 16,565 | 1,537 |
Deferred income taxes, net | 650 | 751 |
Total current liabilities | 197,861 | 205,332 |
Long-term debt and capital lease obligations | 507,335 | 606,284 |
Long-term deferred income taxes, net | 3,080 | 2,448 |
Other long-term liabilities | 22,624 | 21,313 |
Total liabilities | 730,900 | 835,377 |
Stockholders' equity: | ||
Preferred stock, $0.01 par value, 100,000 shares authorized, 0 shares issued and outstanding as of December 31, 2013 and September 30, 2015 | 0 | 0 |
Common stock, $0.01 par value, 300,000 shares authorized, 198,623 and 200,144 shares issued as of December 31, 2014 and September 30, 2015, respectively, and 102,296 and 103,817 shares outstanding as of December 31, 2014 and September 30, 2015, respectively | 2,001 | 1,986 |
Additional paid-in capital | 2,028,637 | 2,035,382 |
Accumulated deficit | (1,248,655) | (1,217,727) |
Treasury stock, at cost, 96,327 shares as of December 31, 2014 and September 30, 2015 | (744,857) | (744,857) |
Total stockholders' equity | 37,126 | 74,784 |
Total liabilities and stockholders' equity | $ 768,026 | $ 910,161 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Allowance for Doubtful Accounts Receivable, Current | $ 3,862 | $ 6,211 |
Preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 100,000,000 | 100,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 200,144,000 | 198,623,000 |
Common stock, shares outstanding | 103,817,000 | 102,296,000 |
Treasury stock, shares | 96,327,000 | 96,327,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income Statement [Abstract] | ||||
Revenues | $ 270,904 | $ 297,745 | $ 837,015 | $ 892,423 |
Operating costs and expenses: | ||||
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 122,391 | 135,695 | 378,901 | 425,759 |
Selling, general and administrative (exclusive of depreciation and amortization shown separately below) | 90,775 | 105,948 | 280,382 | 317,030 |
Depreciation and amortization | 46,502 | 46,716 | 141,489 | 139,186 |
Impairment of long-lived assets | 0 | 589 | 0 | 11,360 |
Restructuring, acquisition and integration-related costs | 5,486 | 1,108 | 14,836 | 10,993 |
Total operating costs and expenses | 265,154 | 290,056 | 815,608 | 904,328 |
Income (loss) from operations | 5,750 | 7,689 | 21,407 | (11,905) |
Interest expense and other, net | (11,731) | (13,970) | (39,780) | (42,008) |
Loss on extinguishment of debt | (2,482) | 0 | (9,734) | 0 |
Loss from continuing operations before income taxes | (8,463) | (6,281) | (28,107) | (53,913) |
Income tax benefit (provision) | (2,060) | 4,329 | (2,821) | 3,592 |
Loss from continuing operations | (10,523) | (1,952) | (30,928) | (50,321) |
Gain from discontinued operations, net of tax | 0 | 0 | 0 | 61 |
Net loss | $ (10,523) | $ (1,952) | $ (30,928) | $ (50,260) |
Basic and Diluted Net Loss Per Share | ||||
Continuing Operations, Basic and Diluted (per share) | $ (0.10) | $ (0.02) | $ (0.30) | $ (0.49) |
Discontinued Operations, Basic and Diluted (per share) | 0 | 0 | 0 | 0 |
Basic and Diluted Net Loss Per Share | $ (0.10) | $ (0.02) | $ (0.30) | $ (0.49) |
Basic and Diluted Weighted Average Number of Shares Outstanding | 103,737 | 102,268 | 103,228 | 102,312 |
Dividends declared per share | $ 0.05 | $ 0.05 | $ 0.15 | $ 0.15 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (30,928) | $ (50,260) |
Adjustments to reconcile net loss to net cash provided by operating activities: | ||
Depreciation and amortization | 141,489 | 139,186 |
Impairment of long-lived assets | 0 | 11,360 |
Non-cash income taxes | 532 | (3,939) |
Stock-based compensation | 10,864 | 10,208 |
Amortization of debt discount and debt issuance costs | 2,872 | 3,067 |
Loss on extinguishment of debt | 9,734 | 0 |
Other operating activities | 571 | (33) |
(Increase) decrease in accounts receivable, net | 9,752 | (4,694) |
Increase in prepaid expenses and other assets | (1,019) | (616) |
Decrease in accounts payable and accrued and other liabilities | (15,628) | (1,032) |
Decrease in deferred revenue | (2,150) | (1,909) |
Net cash provided by operating activities | 126,089 | 101,338 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (60,413) | (74,239) |
Other investing activities | 0 | (86) |
Net cash used in investing activities | (60,413) | (74,153) |
Cash flows from financing activities: | ||
Proceeds from issuance of debt, net of issuance costs | 69,761 | 0 |
Repayment of debt and capital lease obligations | (162,475) | (1,102) |
Payment of dividends | (21,164) | (10,897) |
Repurchases of common stock | 0 | (2,210) |
Proceeds from exercises of stock options | 1,692 | 0 |
Net cash used in financing activities | (112,186) | (14,209) |
Net increase (decrease) in cash and cash equivalents | (46,510) | 12,976 |
Cash and cash equivalents, beginning of period | 134,133 | 116,636 |
Cash and cash equivalents, end of period | $ 87,623 | $ 129,612 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization EarthLink Holdings Corp. (“EarthLink” or the “Company”), together with its consolidated subsidiaries, is a leading managed network, security and cloud services provider to business and residential customers in the United States. The Company provides a broad range of data, voice and managed network services to retail and wholesale business customers. The Company also provides nationwide Internet access and related value-added services to residential customers. The Company operates an extensive network including more than 29,000 route fiber miles, 90 metro fiber rings and enterprise-class data centers that provide data and voice IP service coverage across more than 90 percent of the United States. Effective September 30, 2015, the Company operates four reportable segments that are aligned around distinct customer categories: Enterprise/Mid-Market, Small Business, Carrier/Transport and Consumer. For further information concerning the Company’s reportable segments, see Note 12, “Segment Information.” |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The condensed consolidated financial statements of EarthLink for the three and nine months ended September 30, 2014 and 2015 and the related footnote information are unaudited and have been prepared on a basis consistent with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission (the “SEC”) (the “Annual Report”). These financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto contained in the Annual Report. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) which management considers necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results anticipated for the entire year ending December 31, 2015 . Basis of Consolidation The accompanying condensed consolidated financial statements of EarthLink include the accounts of its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from those estimates. Long-Lived Assets The Company evaluates the recoverability of long-lived assets, including property and equipment and purchased definite-lived intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used or a significant adverse change that would indicate the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss, if any, based on the difference between the carrying amount and fair value. Long-lived assets held for sale are reported at the lower of cost or fair value less costs to sell. During the three and nine months ended September 30, 2014 , the Company recorded $0.6 million and $11.4 million , respectively, for impairment of long-lived assets, which consisted of impairment of work in progress for information technology projects not expected to be used. The impairment losses are classified within impairment of long-lived assets in the Condensed Consolidated Statements of Comprehensive Loss. 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. On August 2, 2013, the Company sold its telecom systems business. The Company has no significant continuing involvement in the operations or significant continuing direct cash flows. The telecom systems results of operations were previously included in the Company's Business Services segment. Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance on revenue from contracts with customers. The new guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard requires significantly expanded disclosures about revenue contract assets and liabilities. In August 2015, the FASB issued guidance that deferred the effective date by one year. The standard is now required to be adopted by public business entities in annual periods beginning on or after December 15, 2017, and interim periods within those annual periods, and may be applied on a full retrospective or modified retrospective approach. Early adoption at the original effective date is permitted. The Company is evaluating the impact of the implementation of this standard on its financial statements. In August 2014, the FASB issued authoritative guidance related to the disclosure of uncertainties about an entity's ability to continue as a going concern. The new guidance requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements and to provide related footnote disclosures if so. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements. In April 2015, the FASB issued authoritative guidance to simplify the presentation of debt issuance costs. The new guidance requires an entity to present debt issuance costs as a direct deduction from the related debt liability rather than as an asset. Entities would apply the new guidance retrospectively to all prior periods. The new standard is effective for financial statements issued for fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard will require the Company to reclassify its debt issuance costs from other long-term assets to a direct deduction of long-term debt and capital lease obligations in its Consolidated Balance Sheets. As of September 30, 2015 , the Company had $8.8 million of debt issuance costs. In April 2015, the FASB issued authoritative guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. Entities could apply the new guidance either prospectively or retrospectively to all prior periods. The new standard is effective for financial statements issued for fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements. |
Earnings per Share
Earnings per Share | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
Earnings per Share | Earnings per Share Basic net loss per share represents net loss divided by the weighted average number of common shares outstanding during the reported period. Diluted net loss per share reflects the potential dilution that could occur if securities or other contracts to issue common stock, including stock options and restricted stock units (collectively “Common Stock Equivalents”), were exercised, vested or converted into common stock. The dilutive effect, if any, of outstanding stock options and restricted stock units is reflected in diluted earnings per share by application of the treasury stock method. In applying the treasury stock method for stock-based compensation arrangements, the assumed proceeds are computed as the sum of the amount the employee must pay upon exercise, the amount of compensation cost attributed to future services and not yet recognized and the amount of excess tax benefits, if any, that would be credited to additional paid-in capital assuming exercise of the awards. The Company has not included the effect of Common Stock Equivalents in the calculation of diluted earnings per share for the three and nine months ended September 30, 2014 and 2015 because such inclusion would have an anti-dilutive effect due to the Company's net loss. As of September 30, 2014 and 2015 , the Company had 8.3 million and 8.8 million stock options and restricted stock units outstanding, respectively, which were excluded from the determination of dilutive earnings per share. Anti-dilutive securities could be dilutive in future periods. |
Restructuring, Acquisition and
Restructuring, Acquisition and Integration-Related Costs | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring, Acquisition and Integration-Related Costs | Restructuring, Acquisition and Integration-Related Costs Restructuring, acquisition and integration-related costs consisted of the following during the three and nine months ended September 30, 2014 and 2015 : Three Months Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 (in thousands) Integration-related costs $ 1,270 $ 1,526 $ 7,985 $ 4,501 Severance, retention and other employee costs 39 2,986 2,005 6,935 Facility-related costs (203 ) 974 999 3,400 Transaction-related costs 2 — 4 — Restructuring, acquisition and integration-related costs $ 1,108 $ 5,486 $ 10,993 $ 14,836 Restructuring, acquisition and integration-related costs consist of costs related to the Company's restructuring, acquisition and integration-related activities. Such costs include: 1) integration-related costs, such as system conversions, rebranding costs and integration-related consulting and employee costs; 2) severance, retention and other employee termination costs associated with acquisition and integration activities and with certain voluntary employee separations; 3) facility-related costs, such as lease termination and asset impairments; and 4) transaction-related costs, which are direct costs incurred to effect business combinations, such as advisory, legal, accounting, valuation and other professional fees. The Company recognizes a liability for costs associated with an exit or disposal activity when the liability is incurred. The Company recognizes severance costs when they are both probable and reasonably estimable. During the three and nine months ended September 30, 2015 , the Company recorded $4.0 million and $10.3 million , respectively, of restructuring costs in connection with changes in the Company's business strategy. The restructuring costs during the three and nine months ended September 30, 2015 consisted of $3.0 million and $6.9 million , respectively, of severance and other employee costs due to reductions in workforce and $1.0 million and $3.4 million , respectively, of facilities-related costs primarily due to the closing of certain sales offices and other facilities. Restructuring costs for the three and nine months ended September 30, 2015 are included in restructuring, acquisition and integration-related costs in the Condensed Consolidated Statements of Comprehensive Loss. The following table summarizes activity for liability balances associated with facility exit and restructuring liabilities for the nine months ended September 30, 2015 : Severance and Benefits Facilities Total (in thousands) Balance as of December 31, 2014 $ 5,373 $ 4,713 $ 10,086 Accruals 6,935 3,400 10,335 Payments (11,094 ) (1,926 ) (13,020 ) Balance as of September 30, 2015 $ 1,214 $ 6,187 $ 7,401 As of December 31, 2014 , $6.8 million of facility exit and restructuring liabilities were classified within current liabilities and $3.3 million were classified as other long-term liabilities. As of September 30, 2015 , $3.4 million of facility exit and restructuring liabilities were classified within current liabilities and $4.0 million were classified as other long-term liabilities. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets Goodwill The Company has historically operated as two reportable segments, Business Services and Consumer Services. During the three months ended September 30, 2015 , the Company implemented certain organizational, operational and reporting changes that resulted in the disaggregation of its Business Services segment into three separate reportable segments: Enterprise/Mid-Market, Small Business and Carrier/Transport. The Consumer Services segment was not impacted. For further information concerning the change in reportable segments, see Note 12, “Segment Information.” Upon disaggregation, the Company reassigned the goodwill balance of its legacy Business Services segment to the newly formed reportable segments based on a relative fair value allocation method. The following table presents the reassignment of goodwill to the newly formed reportable segments: Enterprise/ Small Carrier/ Business Consumer Mid-Market Business Transport Services Services Total (in thousands) As of December 31, 2014 $ — $ — $ — $ 48,831 $ 88,920 $ 137,751 Change in reportable segments 29,539 7,092 12,200 (48,831 ) — — As of September 30, 2015 $ 29,539 $ 7,092 $ 12,200 $ — $ 88,920 $ 137,751 Prior to September 30, 2015, the Company identified two reporting units for evaluating goodwill, Business Services and Consumer Services. Effective September 30, 2015, the Company identified four reporting units for evaluating goodwill: Enterprise/Mid-Market, Small Business, Carrier/Transport and Consumer Services. Each of these reporting units constitute a business for which discrete financial information is available and segment management regularly reviews the operating results. As a result of the change in reporting units, the Company performed an interim goodwill test immediately prior to the change in reporting units at the legacy reporting unit level and immediately after the change in reporting units at the new reporting unit level. Impairment testing of goodwill is required at the reporting unit level and involves a two-step process. However, the Company may first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. The Company elected to forgo the qualitative assessment of goodwill for its interim impairment tests. The first step of the impairment test involves comparing the estimated fair values of the Company's reporting units with the reporting units' carrying amounts, including goodwill. The Company estimated the fair values of its reporting units based on the income approach. This model uses significant unobservable inputs, or Level 3 inputs, as defined by the fair value hierarchy. Under the income approach, the fair value of the reporting unit was estimated based on the present value of estimated cash flows using a discounted cash flow method. The significant assumptions used in the discounted cash flow method included internal forecasts and projections developed by management for planning purposes, available industry/market data, strategic plans, discount rates and the growth rates to calculate the terminal value. The interim impairment tests as of September 30, 2015 indicated that the fair value of the Company’s reporting units, both prior to the change in reporting units at the legacy reporting unit level and immediately after the change in reporting units at the new reporting unit level, exceeded their carrying values. As a result, the Company did not record any impairment of goodwill. Other Intangible Assets The following table presents the components of the Company’s acquired identifiable intangible assets included in the accompanying Condensed Consolidated Balance Sheets as of December 31, 2014 and September 30, 2015 : As of December 31, 2014 As of September 30, 2015 Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value (in thousands) Customer relationships $ 359,187 $ (271,968 ) $ 87,219 $ 359,187 $ (320,010 ) $ 39,177 Developed technology and software 26,261 (22,096 ) 4,165 26,261 (23,821 ) 2,440 Trade name 1,521 (1,521 ) — 1,521 (1,521 ) — Other 1,800 (1,694 ) 106 1,800 (1,800 ) — Other intangible assets, net $ 388,769 $ (297,279 ) $ 91,490 $ 388,769 $ (347,152 ) $ 41,617 Definite-lived intangible assets are amortized over their estimated useful lives. The Company amortizes its customer relationships using the straight-line method to match the estimated cash flow generated by such assets, and amortizes its developed technology and trade names using the straight-line method because a pattern to which the expected benefits will be consumed or otherwise used up could not be reliably determined. As of September 30, 2015 , the weighted average amortization periods were 5.2 years for customer relationships and 3.8 years for developed technology and software. As a result of a change in estimate for the estimated useful lives of certain customer relationships in December 2014, the results of operations for the three and nine months ended September 30, 2015 include additional amortization expense of $1.4 million , or $0.01 per share, and $4.2 million , or $0.04 per share, respectively. Amortization of intangible assets, which is included in depreciation and amortization in the Condensed Consolidated Statements of Comprehensive Loss , for the three and nine months ended September 30, 2014 and 2015 was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 (in thousands) Amortization expense $ 15,500 $ 16,597 $ 47,428 $ 49,873 Based on the current amount of definite-lived intangible assets, the Company expects to record amortization expense of approximately $16.3 million during the remaining three months in the year ending December 31, 2015 and $23.6 million , $1.3 million and $0.4 million during the years ending December 31, 2016 , 2017 and 2018 , respectively. Actual amortization expense to be reported in future periods could differ materially from these estimates as a result of acquisitions, changes in useful lives and other relevant factors. |
Other Accrued Liabilities
Other Accrued Liabilities | 9 Months Ended |
Sep. 30, 2015 | |
Other Accrued Liabilities [Abstract] | |
Other Accrued Liabilities | Other Accrued Liabilities The Company's other accrued liabilities consisted of the following as of December 31, 2014 and September 30, 2015 : As of December 31, 2014 As of September 30, 2015 (in thousands) Accrued taxes and surcharges $ 17,801 $ 20,417 Accrued communications costs 25,917 23,455 Customer-related liabilities 9,565 7,841 Accrued interest 5,251 13,255 Accrued dividends 6,780 693 Other 19,867 15,705 Total other accrued liabilities $ 85,181 $ 81,366 |
Long-Term Debt and Capital Leas
Long-Term Debt and Capital Lease Obligations | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Long-Term Debt and Capital Lease Obligations | Long-Term Debt and Capital Lease Obligations The Company’s long-term debt and capital lease obligations consisted of the following as of December 31, 2014 and September 30, 2015 : As of December 31, 2014 As of September 30, 2015 (in thousands) Senior secured notes due June 2020 $ 300,000 $ 300,000 Senior notes due May 2019 300,000 173,925 Unamortized discount on senior notes due May 2019 (6,601 ) (3,278 ) Senior secured revolving credit facility — 40,000 Capital lease obligations 14,422 13,253 Carrying value of debt and capital lease obligations 607,821 523,900 Less current portion of debt and capital lease obligations (1,537 ) (16,565 ) Long-term debt and capital lease obligations $ 606,284 $ 507,335 2015 Transactions In March 2015, the Company repurchased $21.1 million outstanding principal of its 8.875% Senior Notes due 2019 (the “Senior Notes”) in the open market for $21.6 million , plus accrued and unpaid interest. The Company recognized a $1.3 million loss on extinguishment of debt, consisting of $0.5 million for premiums paid on the repurchase and $0.8 million for the write-off of unamortized discount on debt and debt issuance costs. In April 2015, the Company repurchased an additional $5.0 million outstanding principal of its Senior Notes in the open market for $5.2 million , plus accrued and unpaid interest. The Company recognized a $0.4 million loss on extinguishment of debt, consisting of $0.2 million for premiums paid on the repurchase and $0.2 million for the write-off of unamortized discount on debt and debt issuance costs. In June 2015, pursuant to terms under the indenture and authorization by the Board of Directors, the Company redeemed $70.0 million aggregate principal amount of its Senior Notes at a redemption price of 104.438% of the principal amount thereof, or $73.1 million , plus accrued and unpaid interest. The Company drew $55.0 million under its senior secured revolving credit facility, net of issuance costs, to fund the redemption, with the remaining amount paid with existing cash. The Company recognized a $5.6 million loss on extinguishment of debt, consisting of $3.1 million for the premium paid, $1.4 million for the write-off of unamortized discount on debt and $1.1 million for the write-off of unamortized debt issuance costs. In August 2015, the Company repurchased $30.0 million outstanding principal of its Senior Notes in the open market for $31.5 million , plus accrued and unpaid interest. The Company recognized a $2.5 million loss on extinguishment of debt, consisting of $1.5 million for premiums paid on the repurchase and $1.0 million for the write-off of unamortized discount on debt and debt issuance costs. During the three months ended September 30, 2015, the Company repaid $30.0 million of its senior secured revolving credit facility and drew an additional $15.0 million under its senior secured revolving credit facility, for a net decrease of $15.0 million during the the three months ended September 30, 2015. In October 2015, the Company repaid an additional $15.0 million of its senior secured revolving credit facility. The above losses are included in loss on extinguishment of debt in the Condensed Consolidated Statements of Comprehensive Loss. The payment of premiums is included in repayment of debt and capital lease obligations in the Condensed Consolidated Statement of Cash Flows. As of September 30, 2015 , the Company had $173.9 million aggregate principal amount of its Senior Notes outstanding and $40.0 million outstanding under its senior secured revolving credit facility, of which $15.0 million was classified within current portion of long-term debt and capital lease obligations and $25.0 million was classified within long-term debt and capital lease obligations. Debt Covenants The indenture governing the Senior Secured Notes includes covenants which, subject to certain exceptions, limit the ability of the Company and its Restricted Subsidiaries (as defined in the indenture) to, among other things, incur additional indebtedness, make certain types of restricted payments, create liens, transfer and sell assets, enter into certain transactions with affiliates, issue or sell stock of subsidiaries, engage in sale-leaseback transactions and create restrictions on dividends or other payments by restricted subsidiaries. Upon a change of control (as defined in the indenture), the Company may be required to make an offer to repurchase the Senior Secured Notes at 101% of their principal amount, plus accrued and unpaid interest. The indenture governing the Senior Secured Notes also contains customary events of default. As of September 30, 2015 , the Company was in compliance with these covenants. The indenture governing the Senior Notes includes covenants which, subject to certain exceptions, limit the ability of the Company and its Restricted Subsidiaries (as defined in the indenture) to, among other things, incur additional indebtedness, make certain types of restricted payments, incur liens on assets of the Company or the Restricted Subsidiaries, engage in asset sales and enter into transactions with affiliates. Upon a change of control (as defined in the indenture), the Company may be required to make an offer to repurchase the Notes at 101% of their principal amount, plus accrued and unpaid interest. The indenture governing the Senior Notes also contains customary events of default. As of September 30, 2015 , the Company was in compliance with these covenants. The indentures governing the Senior Secured Notes and Senior Notes contain covenants regarding the Company's ability to make Restricted Payments (as defined in the indentures), including certain dividends, stock purchases, debt repayments and investments. As of September 30, 2015 , the indentures governing the Company's Senior Secured Notes and Senior Notes permitted approximately $117.3 million and $246.1 million , respectively, in Restricted Payments. The Company's ability to make Restricted Payments varies over time, and is determined, in part, by the extent that the Company's cumulative EBITDA exceeds 300% of its cumulative interest expense. Revolving Credit Facility General. The Company has a credit agreement (the “Credit Agreement”) providing for a senior secured revolving credit facility with aggregate revolving commitments of $135.0 million . The senior secured revolving credit facility terminates on May 29, 2017, and all amounts outstanding thereunder shall be due and payable in full. Commitment fees and borrowing costs under this facility vary and are based on the Company’s most recent Consolidated Leverage Ratio (as defined in the Credit Agreement). As of September 30, 2015 , the Company’s Commitment Fee was 0.5% and the Company’s borrowing cost is LIBOR plus 3.25% for LIBOR Rate Loans and the Base Rate plus 2.25% for Base Rate Loans. The Company had $40.0 million outstanding under the Credit Agreement as of September 30, 2015 at a weighted average interest rate of 3.46% . In addition, $1.8 million of letters of credit were outstanding under the Credit Agreement’s Letter of Credit Sublimit as of September 30, 2015 . Covenants. The Credit Agreement contains representations and warranties, covenants, and events of default with respect to the Company and its subsidiaries that are customarily applicable to senior secured credit facilities. The negative covenants in the Credit Agreement include restrictions on the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, make capital expenditures, incur liens on assets, engage in certain mergers, acquisitions or divestitures, pay dividends, repurchase stock or make other distributions, voluntarily prepay certain other indebtedness (including certain prepayments of the Company’s existing notes), enter into transactions with affiliates, make investments, and change the nature of their businesses, and amend the terms of certain other indebtedness (including the Company’s existing notes), in each case subject to certain exceptions set forth in the Credit Agreement. The Credit Agreement requires the Company to maintain a consolidated net leverage ratio of not greater than 3.5 to 1.0 (with restrictions on cash netting) and a consolidated interest coverage ratio of not less than 3.0 to 1.0 in order to borrow under the Credit Agreement. Additionally, the Credit Agreement requires the Company to maintain a consolidated net leverage ratio of not greater than 3.25 to 1.0 in order to repurchase common stock and to make dividend payments in excess of the $0.05 per share regular quarterly dividend. The Company was in compliance with all covenants as of September 30, 2015 . Financial Information Under Rule 3-10 of Regulation S-X The Company’s Senior Secured Notes and Senior Notes are fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of the Company’s existing and future domestic subsidiaries, other than certain subsidiaries that are minor (the “Guarantor Subsidiaries”). All of the Guarantor Subsidiaries are 100% owned by the Company and have, jointly and severally, fully and unconditionally guaranteed, to each holder of the Notes, the full and prompt performance of the Company’s obligations under the Notes and the indenture governing the Notes, including the payment of principal (or premium, if any) and interest on the Notes, on an equal and ratable basis. Further, the Company has no independent assets or operations, and there are no significant restrictions on the ability of its consolidated subsidiaries to transfer funds to the Company in the form of cash dividends, loans or advances. The Company’s assets consist solely of investments it has made in its consolidated subsidiaries, and its operations consist solely of changes in its investment in subsidiaries and interest associated with the Senior Secured Notes and Senior Notes. Based on these facts, and in accordance with SEC Regulation S-X Rule 3-10, “Financial statements of guarantors and issuers of guaranteed securities registered or being registered,” the Company is not required to provide condensed consolidating financial information for the Guarantor Subsidiaries. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity Share Repurchases Since the inception of the Company’s share repurchase program, the Board of Directors has authorized a total of $750.0 million for the repurchase of EarthLink’s common stock. As of September 30, 2015 , the Company had $65.7 million available under the current authorizations. The Company may repurchase its common stock from time to time in compliance with the SEC’s regulations and other legal requirements, including through the use of derivative transactions, and subject to market conditions and other factors. The share repurchase program does not require the Company to acquire any specific number of shares and may be terminated by the Board of Directors at any time. In addition, the agreements governing the Company’s Senior Secured Notes and Senior Notes and the Company's Credit Agreement contain restrictions on the ability of the Company to repurchase common stock. The Company repurchased 0.7 million shares of its common stock pursuant to its share repurchase program for $2.2 million during the nine months ended September 30, 2014 . The Company did not repurchase any of its common stock during the nine months ended September 30, 2015 . Dividends During the nine months ended September 30, 2014 and 2015 , cash dividends declared were $0.15 and $0.15 per common share, respectively. The Company also pays cash dividend amounts on each outstanding restricted stock unit to be paid at the time the restricted stock unit vests. Cash dividend amounts are forfeited if the restricted stock units do not vest. Total dividend payments were $10.9 million and $21.2 million during the nine months ended September 30, 2014 and 2015 , respectively. The decision to declare future dividends is made at the discretion of the Board of Directors and will depend on, among other things, the Company’s results of operations, financial condition, cash requirements, investment opportunities and other factors the Board of Directors may deem relevant. In addition, the agreements governing the Company’s Senior Secured Notes and Senior Notes and the Company's Credit Agreement contain restrictions on the amount of dividends the Company can pay. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock-based compensation expense was $2.9 million and $3.6 million during the three months ended September 30, 2014 and 2015 , respectively, and $10.2 million and $10.9 million during the nine months ended September 30, 2014 and 2015 , respectively. The Company has classified stock-based compensation expense within selling, general and administrative expense, the same operating expense line item as cash compensation paid to employees. Options Outstanding The following table summarizes stock option activity as of and for the nine months ended September 30, 2015 : Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (shares and dollars in thousands) Outstanding as of December 31, 2014 2,475 $ 7.26 Granted — — Exercised (673 ) 6.54 Forfeited and expired (805 ) 8.63 Outstanding as of September 30, 2015 997 6.64 6.2 $ 1,374 Vested and expected to vest as of September 30, 2015 908 6.71 6.1 $ 1,209 Exercisable as of September 30, 2015 404 7.68 4.3 $ 278 The aggregate intrinsic value amounts in the table above represent the closing price of the Company’s common stock on September 30, 2015 in excess of the exercise price, multiplied by the number of stock options outstanding, exercisable or vested and expected to vest, when the closing price is greater than the exercise price. This represents the amount that would have been received by the stock option holders if they had all exercised their stock options on September 30, 2015 . The total intrinsic value of options exercised during the nine months ended September 30, 2015 was $0.9 million . The intrinsic value of stock options exercised represents the difference between the market value of Company’s common stock at the time of exercise and the exercise price, multiplied by the number of stock options exercised. As of September 30, 2015 , there was $0.5 million of total unrecognized compensation cost related to stock options. That cost is expected to be recognized over a weighted-average period of 1.7 years . The following table summarizes the status of the Company’s stock options as of September 30, 2015 : Stock Options Outstanding Stock Options Exercisable Weighted Average Weighted Weighted Remaining Average Average Range of Number Contractual Exercise Number Exercise Exercise Prices Outstanding Life Price Exercisable Price (in thousands) (in thousands) $ 4.97 to $ 4.97 300 8.3 $ 4.97 75 $ 4.97 6.08 to 6.08 254 7.4 6.08 — 6.08 6.90 to 7.51 298 5.8 7.46 184 7.43 7.64 to 11.82 145 0.9 9.40 145 9.40 4.97 to 11.82 997 6.2 6.64 404 7.68 There were no stock options granted during the nine months ended September 30, 2015 . The fair value of stock options granted during the nine months ended September 30, 2014 was estimated using the Black-Scholes option-pricing model with the following assumptions: Nine Months Ended September 30, 2014 Dividend yield 4.02% Expected volatility 46.77% Risk-free interest rate 1.60% Expected life 5 years The weighted average grant date fair value of options granted during the nine months ended September 30, 2014 was $1.48 per share. The dividend yield assumption was based on the Company's history of dividend payouts at the time of grant. The expected volatility was based on a combination of the Company's historical stock price and implied volatility. The selection of implied volatility data to estimate expected volatility was based upon the availability of prices for actively traded options on the Company's stock. The risk-free interest rate assumption was based upon the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option. The expected life of employee stock options represents the weighted-average period the stock options are expected to remain outstanding. Restricted Stock Units The following table summarizes restricted stock unit activity as of and for the nine months ended September 30, 2015 : Restricted Stock Units Weighted Average Grant Date Fair Value (in thousands) Outstanding as of December 31, 2014 5,810 $ 4.74 Granted 4,753 4.53 Vested (1,706 ) 5.04 Forfeited (1,084 ) 4.78 Outstanding as of September 30, 2015 7,773 $ 4.54 The fair value of restricted stock units is determined based on the closing price of EarthLink’s common stock on the grant date. The weighted-average grant date fair value of restricted stock units granted during the nine months ended September 30, 2014 and 2015 was $4.16 and $4.53 , respectively. As of September 30, 2015 , there was $21.9 million of total unrecognized compensation cost related to nonvested restricted stock units. That cost is expected to be recognized over a weighted-average period of 2.0 years . The total fair value of shares vested during the nine months ended September 30, 2014 and 2015 was $7.7 million and $8.6 million , respectively, which represents the closing price of the Company’s common stock on the vesting date multiplied by the number of restricted stock units that vested. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the nine months ended September 30, 2015 , the Company recorded an income tax provision of $2.8 million , resulting in an effective tax rate for the nine months ended September 30, 2015 of approximately (10.0)% . During the nine months ended September 30, 2014 , the Company recorded an income tax benefit of $3.6 million , including an income tax benefit of $4.4 million for discrete items, resulting in an effective tax rate for the nine months ended September 30, 2014 of approximately 6.7% . The difference between the effective tax rate and the federal statutory rate during the nine months ended September 30, 2015 primarily relates to changes in the valuation allowance on net deferred tax assets. The income tax provision for the nine months ended September 30, 2015 includes tax expense for foreign and state taxes, amortization of intangible assets with indefinite useful lives and a discrete expense primarily for the recording of an uncertain tax position of $1.9 million , including applicable interest, related to certain tax positions that the Company has taken during prior years. The difference between the effective tax rate and the federal statutory rate during the nine months ended September 30, 2014 primarily relates to changes in the valuation allowance on net deferred tax assets and reduction of liabilities for uncertain tax positions. The income tax benefit for the nine months ended September 30, 2014 includes tax expense for foreign and state taxes, amortization of intangible assets with indefinite useful lives, and a discrete benefit primarily for expirations of statutes of limitations related to uncertain tax positions of $4.4 million including related interest and penalties. As of September 30, 2015 , the Company had a valuation allowance of $346.2 million against its net deferred tax assets, exclusive of its deferred tax liabilities with indefinite useful lives. The Company continually reviews the adequacy of the valuation allowance and recognizes the benefits of deferred tax assets only as the reassessment indicates that it is more likely than not that the deferred tax assets will be realized. As of September 30, 2015 , the Company does not believe it is more likely than not that the remaining net deferred tax assets will be realized. Should the Company’s assessment change in a future period it may release all or a portion of the valuation allowance at such time, which would result in a deferred tax benefit in the period of adjustment. The Company is under examination in various jurisdictions and regularly assesses the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of the provision for income taxes. The Company continually assesses the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability and deferred taxes in the period in which the facts that give rise to a revision become known. During the three months ended September 30, 2015, the Company increased its reserve for a tax position taken in a prior year. A reconciliation of changes in the amount of unrecognized tax benefits for the nine months ended September 30, 2015 is as follows: Nine Months Ended September 30, 2015 (in thousands) Balance as of December 31, 2014 $ 17,205 Increase due to the addition of a new position 1,332 Balance as of September 30, 2015 $ 18,537 As of September 30, 2015, $0.8 million of interest and $0.1 million of penalties associated with uncertain tax positions have been accrued. Within the next 12 months, it is reasonably possible that approximately $2.1 million of the total uncertain tax positions recorded will reverse, primarily due to resolution of state tax examinations and the expiration of statutes of limitation in various jurisdictions. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). A three-tier fair value hierarchy is used to prioritize the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as observable inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for which little or no market data exists, therefore requiring an entity to develop its own assumptions. The estimated fair value of the Company’s Senior Secured Notes and Senior Notes was determined based on Level 2 input using observable market prices in less active markets. The carrying amount of the Company’s senior secured revolving credit facility approximated its fair value as of September 30, 2015 . The following table presents the fair value of the Company’s debt, excluding capital leases, as of December 31, 2014 and September 30, 2015 : As of December 31, 2014 As of September 30, 2015 Carrying Carrying Amount Fair Value Amount Fair Value (in thousands) Senior Secured Notes $ 300,000 $ 301,503 $ 300,000 $ 307,875 Senior Notes, net of discount 293,399 300,300 170,647 177,247 Senior secured revolving credit facility — — 40,000 40,000 Total debt, excluding capital leases $ 593,399 $ 601,803 $ 510,647 $ 525,122 |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | Segment Information General The Company reports segment information along the same lines that its Chief Operating Decision Maker reviews its operating results in assessing performance and allocating resources. The Company's Chief Operating Decision Maker is its Chief Executive Officer. The Company has historically operated two reportable segments, Business Services and Consumer Services. The Company’s Business Services segment provided a broad range of data, voice and managed network services to retail and wholesale business customers. The Company’s Consumer Services segment provided nationwide Internet access and related value-added services to residential customers. During the three months ended September 30, 2015, the Company implemented certain organizational, operational and reporting changes that resulted in the disaggregation of its Business Services segment into three separate reportable segments: Enterprise/Mid-Market, Small Business and Carrier/Transport. The Consumer Services segment was not impacted. The Company's new reportable segments are strategic business units that are aligned around distinct customer categories. The Company reorganized its business around these business units to optimize operations. The Company began reporting the disaggregated information to its Chief Operating Decision Maker during the three months ended September 30, 2015. As a result, the Company now operates the following four reportable segments: • Enterprise/Mid-Market . The Company’s Enterprise/Mid-Market segment provides a broad range of data, voice and managed network services to distributed multi-site business customers. • Small Business . The Company’s Small Business segment provides a broad range of data, voice and managed network services to small, often single-site business customers. • Carrier/Transport . The Company’s Carrier/Transport segment provides transmission capacity and other data, voice and managed network services to telecommunications carriers and large enterprises. • Consumer Services . The Company’s Consumer Services segment provides nationwide Internet access and related value-added services to residential customers. Segment Results The following table presents segment results under the Company’s new reportable segment structure and a reconciliation to consolidated loss from continuing operations before income taxes for the three and nine months ended September 30, 2015: Three Months Nine Months Ended Ended September 30, 2015 September 30, 2015 (in thousands) Enterprise/Mid-Market Revenues $ 110,051 $ 338,809 Cost of revenues (excluding depreciation and amortization) 54,574 167,062 Gross margin 55,477 171,747 Small Business Revenues 72,876 230,577 Cost of revenues (excluding depreciation and amortization) 34,059 106,577 Gross margin 38,817 124,000 Carrier/Transport Revenues 34,190 101,606 Cost of revenues (excluding depreciation and amortization) 14,839 46,124 Gross margin 19,351 55,482 Consumer Services Revenues 53,787 166,023 Cost of revenues (excluding depreciation and amortization) 18,919 59,138 Gross margin 34,868 106,885 Consolidated Revenues 270,904 837,015 Cost of revenues 122,391 378,901 Gross margin 148,513 458,114 Selling, general and administrative expenses 90,775 280,382 Depreciation and amortization 46,502 141,489 Restructuring, acquisition and integration-related costs 5,486 14,836 Interest expense and other, net 11,731 39,780 Loss on extinguishment of debt 2,482 9,734 Loss from continuing operations before income taxes $ (8,463 ) $ (28,107 ) The Company evaluates performance of its new segment structure based on segment gross margin. Segment gross margin includes revenues from external customers and related cost of revenues. Costs excluded from segment gross margin include selling, general and administrative expenses, depreciation and amortization, impairment of goodwill and intangible assets, restructuring, acquisition and integration-related costs, and interest expense and other, net, as they are not considered in the measurement of segment performance. Management continues to evaluate the segmentation of customers within the distinct customer categories, which may result in changes to segment information in the future. Segment information for the three and nine months ended September 30, 2014 has not been restated to reflect the Company’s new reportable segment structure. The Company began recording revenue and related cost of revenue transactions at the new segment level in 2015. Management has determined that it is impracticable to restate financial information prior to 2015 to conform to the new reportable segment structure due to the level of effort required to segment customers that terminated service prior to 2015 and identify the related cost of revenue associated with those customers, as this information is not currently available. For comparability purposes, the following table presents segment results and a reconciliation to consolidated loss from continuing operations before income taxes under the Company’s previous reportable segment structure for the three and nine months ended September 30, 2014 and 2015: Three Months Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 (in thousands) Business Services Revenues $ 237,054 $ 217,117 $ 705,273 $ 670,992 Cost of revenues (excluding depreciation and amortization) 113,785 103,472 358,604 319,763 Gross margin 123,269 113,645 346,669 351,229 Direct segment operating expenses 88,078 77,708 260,523 240,494 Segment operating income $ 35,191 $ 35,937 $ 86,146 $ 110,735 Consumer Services Revenues $ 60,691 $ 53,787 $ 187,150 $ 166,023 Cost of revenues (excluding depreciation and amortization) 21,910 18,919 67,155 59,138 Gross margin 38,781 34,868 119,995 106,885 Direct segment operating expenses 10,573 7,441 33,534 23,095 Segment operating income $ 28,208 $ 27,427 $ 86,461 $ 83,790 Consolidated Revenues $ 297,745 $ 270,904 $ 892,423 $ 837,015 Cost of revenues 135,695 122,391 425,759 378,901 Gross margin 162,050 148,513 466,664 458,114 Direct segment operating expenses 98,651 85,149 294,057 263,589 Segment operating income 63,399 63,364 172,607 194,525 Depreciation and amortization 46,716 46,502 139,186 141,489 Impairment of long-lived assets 589 — 11,360 — Restructuring, acquisition and integration-related costs 1,108 5,486 10,993 14,836 Corporate operating expenses 7,297 5,626 22,973 16,793 Interest expense and other, net 13,970 11,731 42,008 39,780 Loss on extinguishment of debt — 2,482 — 9,734 Loss from continuing operations before income taxes $ (6,281 ) $ (8,463 ) $ (53,913 ) $ (28,107 ) The Company evaluated performance of its previous segment structure based on segment operating income. Segment operating income includes revenues from external customers, related cost of revenues and operating expenses directly attributable to the segment, which included costs over which segment managers had direct discretionary control, such as advertising and marketing programs, customer support expenses, product development expenses, certain technology and facilities expenses, billing operations and provisions for doubtful accounts. Segment operating income excluded other income and expense items and certain expenses over which segment managers do not have discretionary control. Costs excluded from segment operating income include various corporate expenses (consisting of certain costs such as corporate management, human resources, finance and legal), depreciation and amortization, impairment of goodwill and intangible assets, restructuring, acquisition and integration-related costs, stock-based compensation expense, and interest expense and other, net, as they were not considered in the measurement of segment performance. The Company manages its working capital on a consolidated basis and does not allocate long-lived assets to segments. In addition, segment assets are not reported to, or used by, the Chief Operating Decision Maker and therefore, total segment assets and expenditures for additions of long-lived assets have not been disclosed. The Company has not provided information about geographic segments because substantially all of the Company’s revenues, results of operations and identifiable assets are in the United States. Revenues by Products and Services Information on revenues by groups of similar services for the three and nine months ended September 30, 2014 and 2015 is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 (in thousands) Business services Retail services $ 189,122 $ 178,207 $ 573,028 $ 554,995 Wholesale services 42,788 34,190 117,200 101,606 Other services 5,144 4,720 15,045 14,391 Total revenues 237,054 217,117 705,273 670,992 Consumer services Access services 49,516 42,392 154,665 132,310 Value-added services 11,175 11,395 32,485 33,713 Total revenues 60,691 53,787 187,150 166,023 Total Revenues $ 297,745 $ 270,904 $ 892,423 $ 837,015 The Company generates business services revenue by providing a broad range of data, voice and managed network services to retail and wholesale business customers. The Company's business services revenue includes revenues from its Enterprise/Mid-Market, Small Business and Carrier/Transport segments. The Company presents its business services revenue in the following three categories: (1) retail services, which includes data, voice and managed network services provided to business customers; (2) wholesale services, which includes the sale of transmission capacity and other services to telecommunications carriers and large enterprises; and (3) other services, which primarily consists of web hosting. Revenues generally consist of recurring monthly charges for such services; usage fees; installation fees; termination fees; and administrative fees. The Company’s generates consumer services revenue by providing nationwide Internet access and related value-added services to residential customers. The Company presents its consumer services revenue in the following two categories: (1) access services, which includes dial-up and high-speed Internet access services; and (2) value-added services, which includes revenues from ancillary services sold as add-on features to the Company's Internet access services, such as security products, premium email only, home networking and email storage; search revenues; and advertising revenues. Revenues generally consist of recurring monthly charges for such services; usage fees; installation fees; termination fees; and fees for equipment. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Legal proceedings and other disputes General . The Company is party to various legal proceedings and other disputes arising in the normal course of business, including, but not limited to, regulatory audits, trademark and patent infringement, billing disputes, rights of access, tax, consumer protection, employment and tort. The Company accrues for such matters when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Where it is probable that a liability has been incurred and there is a range of expected loss for which no amount in the range is more likely than any other amount, the Company accrues at the low end of the range. The Company reviews its accruals each reporting period. As of December 31, 2014, the Company had a $2.2 million liability for a loss contingency that became probable and estimable during the year. During the nine months ended September 30, 2015 , a settlement was reached and payment was made for the recorded amount. The Company's management believes that there are no disputes, litigation or other legal proceedings, audits or disputes asserted or pending against the Company that could have, individually or in the aggregate, a material adverse effect on its financial position, results of operations or cash flows, and believes that adequate provision for any probable and estimable losses has been made in the Company's consolidated financial statements. However, the ultimate result of any current or future litigation or other legal proceedings, audits or disputes is inherently unpredictable and could result in liabilities that are higher than currently predicted. Regulatory audits . The Company is subject to regulatory audits in the ordinary course of business with respect to various matters, including audits by the Universal Service Administrative Company on universal service fund assessments and payments and audits by local municipalities for E911 charges. These audits can cover periods for several years prior to the date the audit is undertaken and could result in the imposition of liabilities, interest and penalties if the Company's positions are not accepted by the auditing entity. The Company's financial statements contain reserves for such potential liabilities. Billing disputes . The Company is periodically involved in disputes related to its billings to other carriers for access to its network. The Company does not recognize revenue related to such matters until the period that revenues are determinable and it is reasonably assured of the collection of the amounts billed. In the event that a claim is made related to revenues previously recognized, the Company assesses the validity of the claim and adjusts the amount of revenue recognized to the extent that the claim adjustment is considered probable and estimable. The Company recognized $6.8 million of net favorable disputes related to its billings to other carriers during the three and nine months ended September 30, 2014 and $1.2 million and $4.3 million of net favorable disputes related to its billings to other carriers during the three and nine months ended September 30, 2015 , respectively, which are included in revenues in the Condensed Consolidated Statements of Comprehensive Loss. The Company periodically disputes network access charges that it is assessed by other companies with which the Company interconnects. The Company maintains adequate reserves for anticipated exposure associated with these billing disputes. The reserves are subject to changes in estimates and management judgment as new information becomes available. In view of the length of time historically required to resolve these disputes, they may be resolved or require adjustment in future periods and relate to costs invoiced, accrued or paid in prior periods. While the Company believes its reserves for billing disputes are adequate, it is reasonably possible that the Company could record additional expense of up to $13.4 million for unrecorded disputed amounts. The Company recognized $4.7 million and $3.3 million for favorable disputes with telecommunication vendors during the three months ended September 30, 2014 and 2015 , respectively, and $9.8 million and $9.9 million during the nine months ended September 30, 2014 and 2015 , respectively, which are included in cost of revenues in the Condensed Consolidated Statements of Comprehensive Loss. Regulation The Company's services are subject to varying degrees of federal, state and local regulation. These regulations are subject to ongoing proceedings at federal and state administrative agencies or within state and federal judicial systems. Results of these proceedings could change, in varying degrees, the manner in which the Company operates. The Company cannot predict the outcome of these proceedings or their effect on the Company's industry generally or upon the Company specifically. |
Summary of Significant Accoun19
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements of EarthLink for the three and nine months ended September 30, 2014 and 2015 and the related footnote information are unaudited and have been prepared on a basis consistent with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 as filed with the Securities and Exchange Commission (the “SEC”) (the “Annual Report”). These financial statements should be read in conjunction with the audited consolidated financial statements and the related notes thereto contained in the Annual Report. In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) which management considers necessary to present fairly the Company’s financial position, results of operations and cash flows for the interim periods presented. The results of operations for the three and nine months ended September 30, 2015 are not necessarily indicative of the results anticipated for the entire year ending December 31, 2015 . |
Basis of Consolidation | Basis of Consolidation The accompanying condensed consolidated financial statements of EarthLink include the accounts of its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements. Actual results may differ from those estimates. |
Long-Lived Assets | Long-Lived Assets The Company evaluates the recoverability of long-lived assets, including property and equipment and purchased definite-lived intangible assets, for impairment when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Conditions that would necessitate an impairment assessment include a significant decline in the observable market value of an asset, a significant change in the extent or manner in which an asset is used or a significant adverse change that would indicate the carrying amount of an asset or group of assets is not recoverable. For long-lived assets to be held and used, the Company recognizes an impairment loss only if its carrying amount is not recoverable through its undiscounted cash flows and measures the impairment loss, if any, based on the difference between the carrying amount and fair value. Long-lived assets held for sale are reported at the lower of cost or fair value less costs to sell. During the three and nine months ended September 30, 2014 , the Company recorded $0.6 million and $11.4 million , respectively, for impairment of long-lived assets, which consisted of impairment of work in progress for information technology projects not expected to be used. The impairment losses are classified within impairment of long-lived assets in the Condensed Consolidated Statements of Comprehensive Loss. |
Discontinued Operations | 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. On August 2, 2013, the Company sold its telecom systems business. The Company has no significant continuing involvement in the operations or significant continuing direct cash flows. The telecom systems results of operations were previously included in the Company's Business Services segment. |
Recently Issued Accounting Pronouncement | Recently Issued Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (the "FASB") issued authoritative guidance on revenue from contracts with customers. The new guidance outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new standard requires significantly expanded disclosures about revenue contract assets and liabilities. In August 2015, the FASB issued guidance that deferred the effective date by one year. The standard is now required to be adopted by public business entities in annual periods beginning on or after December 15, 2017, and interim periods within those annual periods, and may be applied on a full retrospective or modified retrospective approach. Early adoption at the original effective date is permitted. The Company is evaluating the impact of the implementation of this standard on its financial statements. In August 2014, the FASB issued authoritative guidance related to the disclosure of uncertainties about an entity's ability to continue as a going concern. The new guidance requires management to evaluate whether there are conditions and events that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the financial statements and to provide related footnote disclosures if so. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements. In April 2015, the FASB issued authoritative guidance to simplify the presentation of debt issuance costs. The new guidance requires an entity to present debt issuance costs as a direct deduction from the related debt liability rather than as an asset. Entities would apply the new guidance retrospectively to all prior periods. The new standard is effective for financial statements issued for fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard will require the Company to reclassify its debt issuance costs from other long-term assets to a direct deduction of long-term debt and capital lease obligations in its Consolidated Balance Sheets. As of September 30, 2015 , the Company had $8.8 million of debt issuance costs. In April 2015, the FASB issued authoritative guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. Entities could apply the new guidance either prospectively or retrospectively to all prior periods. The new standard is effective for financial statements issued for fiscal years beginning after December 15, 2015. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on the Company's financial statements. |
Restructuring, Acquisition an20
Restructuring, Acquisition and Integration-Related Costs (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring, Acquisition and Integration-Related Costs | Restructuring, acquisition and integration-related costs consisted of the following during the three and nine months ended September 30, 2014 and 2015 : Three Months Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 (in thousands) Integration-related costs $ 1,270 $ 1,526 $ 7,985 $ 4,501 Severance, retention and other employee costs 39 2,986 2,005 6,935 Facility-related costs (203 ) 974 999 3,400 Transaction-related costs 2 — 4 — Restructuring, acquisition and integration-related costs $ 1,108 $ 5,486 $ 10,993 $ 14,836 |
Rollforward of Restructuring and Related Costs | The following table summarizes activity for liability balances associated with facility exit and restructuring liabilities for the nine months ended September 30, 2015 : Severance and Benefits Facilities Total (in thousands) Balance as of December 31, 2014 $ 5,373 $ 4,713 $ 10,086 Accruals 6,935 3,400 10,335 Payments (11,094 ) (1,926 ) (13,020 ) Balance as of September 30, 2015 $ 1,214 $ 6,187 $ 7,401 |
Goodwill and Other Intangible21
Goodwill and Other Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The following table presents the reassignment of goodwill to the newly formed reportable segments: Enterprise/ Small Carrier/ Business Consumer Mid-Market Business Transport Services Services Total (in thousands) As of December 31, 2014 $ — $ — $ — $ 48,831 $ 88,920 $ 137,751 Change in reportable segments 29,539 7,092 12,200 (48,831 ) — — As of September 30, 2015 $ 29,539 $ 7,092 $ 12,200 $ — $ 88,920 $ 137,751 |
Schedule of gross carrying value and accumulated amortization by major intangible asset | The following table presents the components of the Company’s acquired identifiable intangible assets included in the accompanying Condensed Consolidated Balance Sheets as of December 31, 2014 and September 30, 2015 : As of December 31, 2014 As of September 30, 2015 Gross Carrying Value Accumulated Amortization Net Carrying Value Gross Carrying Value Accumulated Amortization Net Carrying Value (in thousands) Customer relationships $ 359,187 $ (271,968 ) $ 87,219 $ 359,187 $ (320,010 ) $ 39,177 Developed technology and software 26,261 (22,096 ) 4,165 26,261 (23,821 ) 2,440 Trade name 1,521 (1,521 ) — 1,521 (1,521 ) — Other 1,800 (1,694 ) 106 1,800 (1,800 ) — Other intangible assets, net $ 388,769 $ (297,279 ) $ 91,490 $ 388,769 $ (347,152 ) $ 41,617 |
Schedule of amortization expense | Amortization of intangible assets, which is included in depreciation and amortization in the Condensed Consolidated Statements of Comprehensive Loss , for the three and nine months ended September 30, 2014 and 2015 was as follows: Three Months Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 (in thousands) Amortization expense $ 15,500 $ 16,597 $ 47,428 $ 49,873 |
Other Accrued Liabilities (Tabl
Other Accrued Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Other Accrued Liabilities [Abstract] | |
Schedule of Other Accrued Liabilities | December 31, 2014 and September 30, 2015 : As of December 31, 2014 As of September 30, 2015 (in thousands) Accrued taxes and surcharges $ 17,801 $ 20,417 Accrued communications costs 25,917 23,455 Customer-related liabilities 9,565 7,841 Accrued interest 5,251 13,255 Accrued dividends 6,780 693 Other 19,867 15,705 Total other accrued liabilities $ 85,181 $ 81,366 |
Long-Term Debt and Capital Le23
Long-Term Debt and Capital Lease Obligations (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company’s long-term debt and capital lease obligations consisted of the following as of December 31, 2014 and September 30, 2015 : As of December 31, 2014 As of September 30, 2015 (in thousands) Senior secured notes due June 2020 $ 300,000 $ 300,000 Senior notes due May 2019 300,000 173,925 Unamortized discount on senior notes due May 2019 (6,601 ) (3,278 ) Senior secured revolving credit facility — 40,000 Capital lease obligations 14,422 13,253 Carrying value of debt and capital lease obligations 607,821 523,900 Less current portion of debt and capital lease obligations (1,537 ) (16,565 ) Long-term debt and capital lease obligations $ 606,284 $ 507,335 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock option activity | The following table summarizes stock option activity as of and for the nine months ended September 30, 2015 : Stock Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (shares and dollars in thousands) Outstanding as of December 31, 2014 2,475 $ 7.26 Granted — — Exercised (673 ) 6.54 Forfeited and expired (805 ) 8.63 Outstanding as of September 30, 2015 997 6.64 6.2 $ 1,374 Vested and expected to vest as of September 30, 2015 908 6.71 6.1 $ 1,209 Exercisable as of September 30, 2015 404 7.68 4.3 $ 278 |
Summary of the status of stock options by exercise price range | The following table summarizes the status of the Company’s stock options as of September 30, 2015 : Stock Options Outstanding Stock Options Exercisable Weighted Average Weighted Weighted Remaining Average Average Range of Number Contractual Exercise Number Exercise Exercise Prices Outstanding Life Price Exercisable Price (in thousands) (in thousands) $ 4.97 to $ 4.97 300 8.3 $ 4.97 75 $ 4.97 6.08 to 6.08 254 7.4 6.08 — 6.08 6.90 to 7.51 298 5.8 7.46 184 7.43 7.64 to 11.82 145 0.9 9.40 145 9.40 4.97 to 11.82 997 6.2 6.64 404 7.68 |
Schedule of Stock Options Valuation Assumptions | The fair value of stock options granted during the nine months ended September 30, 2014 was estimated using the Black-Scholes option-pricing model with the following assumptions: Nine Months Ended September 30, 2014 Dividend yield 4.02% Expected volatility 46.77% Risk-free interest rate 1.60% Expected life 5 years |
Restricted stock unit activity | The following table summarizes restricted stock unit activity as of and for the nine months ended September 30, 2015 : Restricted Stock Units Weighted Average Grant Date Fair Value (in thousands) Outstanding as of December 31, 2014 5,810 $ 4.74 Granted 4,753 4.53 Vested (1,706 ) 5.04 Forfeited (1,084 ) 4.78 Outstanding as of September 30, 2015 7,773 $ 4.54 |
Income Taxes Tables (Tables)
Income Taxes Tables (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Income Tax Contingency [Line Items] | |
Summary of Income Tax Contingencies | A reconciliation of changes in the amount of unrecognized tax benefits for the nine months ended September 30, 2015 is as follows: Nine Months Ended September 30, 2015 (in thousands) Balance as of December 31, 2014 $ 17,205 Increase due to the addition of a new position 1,332 Balance as of September 30, 2015 $ 18,537 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of debt, excluding capital leases | The following table presents the fair value of the Company’s debt, excluding capital leases, as of December 31, 2014 and September 30, 2015 : As of December 31, 2014 As of September 30, 2015 Carrying Carrying Amount Fair Value Amount Fair Value (in thousands) Senior Secured Notes $ 300,000 $ 301,503 $ 300,000 $ 307,875 Senior Notes, net of discount 293,399 300,300 170,647 177,247 Senior secured revolving credit facility — — 40,000 40,000 Total debt, excluding capital leases $ 593,399 $ 601,803 $ 510,647 $ 525,122 |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule Of Segment Reporting Information By New Reportable Segment | The following table presents segment results under the Company’s new reportable segment structure and a reconciliation to consolidated loss from continuing operations before income taxes for the three and nine months ended September 30, 2015: Three Months Nine Months Ended Ended September 30, 2015 September 30, 2015 (in thousands) Enterprise/Mid-Market Revenues $ 110,051 $ 338,809 Cost of revenues (excluding depreciation and amortization) 54,574 167,062 Gross margin 55,477 171,747 Small Business Revenues 72,876 230,577 Cost of revenues (excluding depreciation and amortization) 34,059 106,577 Gross margin 38,817 124,000 Carrier/Transport Revenues 34,190 101,606 Cost of revenues (excluding depreciation and amortization) 14,839 46,124 Gross margin 19,351 55,482 Consumer Services Revenues 53,787 166,023 Cost of revenues (excluding depreciation and amortization) 18,919 59,138 Gross margin 34,868 106,885 Consolidated Revenues 270,904 837,015 Cost of revenues 122,391 378,901 Gross margin 148,513 458,114 Selling, general and administrative expenses 90,775 280,382 Depreciation and amortization 46,502 141,489 Restructuring, acquisition and integration-related costs 5,486 14,836 Interest expense and other, net 11,731 39,780 Loss on extinguishment of debt 2,482 9,734 Loss from continuing operations before income taxes $ (8,463 ) $ (28,107 ) |
Schedule of Segment Reporting Information By Previous Reportable Segments | Three Months Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 (in thousands) Business Services Revenues $ 237,054 $ 217,117 $ 705,273 $ 670,992 Cost of revenues (excluding depreciation and amortization) 113,785 103,472 358,604 319,763 Gross margin 123,269 113,645 346,669 351,229 Direct segment operating expenses 88,078 77,708 260,523 240,494 Segment operating income $ 35,191 $ 35,937 $ 86,146 $ 110,735 Consumer Services Revenues $ 60,691 $ 53,787 $ 187,150 $ 166,023 Cost of revenues (excluding depreciation and amortization) 21,910 18,919 67,155 59,138 Gross margin 38,781 34,868 119,995 106,885 Direct segment operating expenses 10,573 7,441 33,534 23,095 Segment operating income $ 28,208 $ 27,427 $ 86,461 $ 83,790 Consolidated Revenues $ 297,745 $ 270,904 $ 892,423 $ 837,015 Cost of revenues 135,695 122,391 425,759 378,901 Gross margin 162,050 148,513 466,664 458,114 Direct segment operating expenses 98,651 85,149 294,057 263,589 Segment operating income 63,399 63,364 172,607 194,525 Depreciation and amortization 46,716 46,502 139,186 141,489 Impairment of long-lived assets 589 — 11,360 — Restructuring, acquisition and integration-related costs 1,108 5,486 10,993 14,836 Corporate operating expenses 7,297 5,626 22,973 16,793 Interest expense and other, net 13,970 11,731 42,008 39,780 Loss on extinguishment of debt — 2,482 — 9,734 Loss from continuing operations before income taxes $ (6,281 ) $ (8,463 ) $ (53,913 ) $ (28,107 ) |
Schedule Revenues by Products and Services | Information on revenues by groups of similar services for the three and nine months ended September 30, 2014 and 2015 is as follows: Three Months Ended Nine Months Ended September 30, September 30, 2014 2015 2014 2015 (in thousands) Business services Retail services $ 189,122 $ 178,207 $ 573,028 $ 554,995 Wholesale services 42,788 34,190 117,200 101,606 Other services 5,144 4,720 15,045 14,391 Total revenues 237,054 217,117 705,273 670,992 Consumer services Access services 49,516 42,392 154,665 132,310 Value-added services 11,175 11,395 32,485 33,713 Total revenues 60,691 53,787 187,150 166,023 Total Revenues $ 297,745 $ 270,904 $ 892,423 $ 837,015 |
Organization (Details)
Organization (Details) | 9 Months Ended |
Sep. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of reportable segments | 4 |
Number of route fiber miles | 29,000 |
Number of metro fiber rings | 90 |
Minimum percentage of IP coverage in United States | 90.00% |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Accounting Policies [Abstract] | ||||
Impairment of long-lived assets | $ 0 | $ 589 | $ 0 | $ 11,360 |
Unamortized debt issuance costs | $ 8,800 | $ 8,800 |
Earnings per Share (Details)
Earnings per Share (Details) - shares shares in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 8.8 | 8.3 |
Restructuring, Acquisition an31
Restructuring, Acquisition and Integration-Related Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Restructuring Cost and Reserve [Line Items] | |||||
Integration Related Costs | $ 1,526 | $ 1,270 | $ 4,501 | $ 7,985 | |
Business Combination Severance and Retention Costs | 39 | 6,935 | 2,005 | ||
Business Combination Facility Related Costs | (203) | 3,400 | 999 | ||
Business Combination Transaction Related Costs | 0 | 2 | 0 | 4 | |
Restructuring, acquisition and integration-related costs | 5,486 | $ 1,108 | 14,836 | $ 10,993 | |
Balance as of December 31, 2014 | 10,086 | ||||
Restructuring Costs | 4,000 | 10,335 | |||
Payments | (13,020) | ||||
Balance as of September 30, 2015 | 7,401 | 7,401 | |||
Restructuring Reserve, Current | 3,400 | 3,400 | $ 6,800 | ||
Restructuring Reserve, Noncurrent | 4,000 | 4,000 | $ 3,300 | ||
Employee Severance | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Balance as of December 31, 2014 | 5,373 | ||||
Restructuring Costs | 2,986 | 6,935 | |||
Payments | (11,094) | ||||
Balance as of September 30, 2015 | 1,214 | 1,214 | |||
Facility Closing | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Balance as of December 31, 2014 | 4,713 | ||||
Restructuring Costs | 974 | 3,400 | |||
Payments | (1,926) | ||||
Balance as of September 30, 2015 | $ 6,187 | $ 6,187 |
Goodwill and Other Intangible32
Goodwill and Other Intangible Assets Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Goodwill [Line Items] | ||
Goodwill | $ 137,751 | $ 137,751 |
Goodwill, Other Changes | 0 | |
Enterprise/Mid-Market | ||
Goodwill [Line Items] | ||
Goodwill | 29,539 | 0 |
Goodwill, Other Changes | 29,539 | |
Small Business | ||
Goodwill [Line Items] | ||
Goodwill | 7,092 | 0 |
Goodwill, Other Changes | 7,092 | |
Carrier/Transport | ||
Goodwill [Line Items] | ||
Goodwill | 12,200 | 0 |
Goodwill, Other Changes | 12,200 | |
Business Services | ||
Goodwill [Line Items] | ||
Goodwill | 0 | 48,831 |
Goodwill, Other Changes | (48,831) | |
Consumer Services | ||
Goodwill [Line Items] | ||
Goodwill | 88,920 | $ 88,920 |
Goodwill, Other Changes | $ 0 |
Goodwill and Other Intangible33
Goodwill and Other Intangible Assets Other Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | $ 388,769 | $ 388,769 | $ 388,769 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 347,152 | 347,152 | 297,279 | ||
Other intangible assets, net | $ 41,617 | $ 41,617 | 91,490 | ||
Use of Estimates, Quarterly Changes in Estimates | 1.4 | 4.2 | |||
Change in Accounting Estimate, Financial Effect | 0.01 | .04 | |||
Amortization of Intangible Assets | $ 16,597 | $ 15,500 | $ 49,873 | $ 47,428 | |
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | 16,300 | 16,300 | |||
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months | 23,600 | 23,600 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 1,300 | 1,300 | |||
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 400 | 400 | |||
Customer Relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | 359,187 | 359,187 | 359,187 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 320,010 | 320,010 | 271,968 | ||
Other intangible assets, net | 39,177 | $ 39,177 | 87,219 | ||
Finite-Lived Intangible Asset, Useful Life | 5 years 2 months | ||||
Developed Technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | 26,261 | $ 26,261 | 26,261 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 23,821 | 23,821 | 22,096 | ||
Other intangible assets, net | 2,440 | $ 2,440 | 4,165 | ||
Finite-Lived Intangible Asset, Useful Life | 3 years 9 months | ||||
Trade Names | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | 1,521 | $ 1,521 | 1,521 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 1,521 | 1,521 | 1,521 | ||
Other intangible assets, net | 0 | 0 | 0 | ||
Other Intangible Assets | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-Lived Intangible Assets, Gross | 1,800 | 1,800 | 1,800 | ||
Finite-Lived Intangible Assets, Accumulated Amortization | 1,800 | 1,800 | 1,694 | ||
Other intangible assets, net | $ 0 | $ 0 | $ 106 |
Other Accrued Liabilities (Deta
Other Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Other Accrued Liabilities [Abstract] | ||
Accrued taxes and surcharges | $ 20,417 | $ 17,801 |
Accrued communications costs | 23,455 | 25,917 |
Customer-related liabilities | 7,841 | 9,565 |
Accrued interest | 13,255 | 5,251 |
Accrued dividends | 693 | 6,780 |
Other | 15,705 | 19,867 |
Total other accrued liabilities | $ 81,366 | $ 85,181 |
Long-Term Debt and Capital Le35
Long-Term Debt and Capital Lease Obligations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||
Dec. 31, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Jun. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 523,900 | $ 523,900 | $ 607,821 | ||||
Current portion of long-term debt and capital lease obligations | (16,565) | (16,565) | (1,537) | ||||
Long-term debt and capital lease obligations | $ 507,335 | $ 507,335 | 606,284 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 8.875% | 8.875% | |||||
Long-term Debt, Redemption Price as Percentage of Principal Amount from May 2015 to May 2016 | 104.438% | ||||||
Proceeds from Lines of Credit | $ 15,000 | $ 55,000 | |||||
Repayments of Lines of Credit | $ 15,000 | 30,000 | |||||
Line of Credit Facility, Increase (Decrease), Net | 15,000 | ||||||
Line of Credit, Current | 15,000 | $ 15,000 | |||||
Long-term Line of Credit, Noncurrent | 25,000 | 25,000 | |||||
Loss on extinguishment of debt | $ (2,482) | $ 0 | $ (9,734) | $ 0 | |||
Dividends declared per share | $ 0.05 | $ 0.05 | $ 0.15 | $ 0.15 | |||
Equity Method Investment, Ownership Percentage | 100.00% | 100.00% | |||||
Senior Secured Notes Due 2020 | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 300,000 | $ 300,000 | 300,000 | ||||
Long-term Debt Redemption Price Due to Change of Control as Percentage of Principal Amount | 101.00% | ||||||
Amount permitted in debt covenants for Restricted Payments | 117,300 | $ 117,300 | |||||
Percent used in determining ability to make Restricted Payments | 300.00% | ||||||
Senior Notes Due 2019 | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | 173,925 | $ 173,925 | 300,000 | ||||
Debt Instrument, Unamortized Discount | 3,278 | $ 3,278 | 6,601 | ||||
Long-term Debt Redemption Price Due to Change of Control as Percentage of Principal Amount | 101.00% | ||||||
Amount permitted in debt covenants for Restricted Payments | 246,100 | $ 246,100 | |||||
Capital Lease Obligations | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | 13,253 | 13,253 | 14,422 | ||||
Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Long-term debt | $ 40,000 | $ 40,000 | $ 0 | ||||
Debt Instrument, Interest Rate, Stated Percentage | 3.46% | 3.46% | |||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 135,000 | $ 135,000 | |||||
Line of Credit Facility, Commitment Fee Percentage | 0.50% | ||||||
Letters of Credit Outstanding, Amount | $ 1,800 | $ 1,800 | |||||
Dividends declared per share | $ 0.05 | ||||||
Debt Instrument Variable Rate Base LIBOR | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 3.25% | 3.25% | |||||
Debt Instrument Variable Rate Base | Revolving Credit Facility | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Interest Rate, Stated Percentage | 2.25% | 2.25% | |||||
March 2015 Repurchase | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Repurchased Face Amount | $ 21,100 | $ 21,100 | |||||
Debt Instrument, Repurchase Amount | 21,600 | 21,600 | |||||
Loss on extinguishment of debt | 1,300 | ||||||
Redemption Premium | 500 | ||||||
Write off of Deferred Debt Issuance Cost | 800 | ||||||
April 2015 Repurchase | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Repurchased Face Amount | 5,000 | 5,000 | |||||
Debt Instrument, Repurchase Amount | 5,200 | 5,200 | |||||
Loss on extinguishment of debt | 400 | ||||||
Redemption Premium | 200 | ||||||
Write off of Deferred Debt Issuance Cost | 200 | ||||||
June 2015 Repurchase | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Repurchased Face Amount | 70,000 | 70,000 | |||||
Debt Instrument, Repurchase Amount | 73,100 | 73,100 | |||||
Loss on extinguishment of debt | 5,600 | ||||||
Redemption Premium | 3,100 | ||||||
Write off of Deferred Debt Issuance Cost | 1,100 | ||||||
Write off Debt Discount | 1,400 | ||||||
August 2015 Repurchase | |||||||
Debt Instrument [Line Items] | |||||||
Debt Instrument, Repurchased Face Amount | 30,000 | 30,000 | |||||
Debt Instrument, Repurchase Amount | $ 31,500 | 31,500 | |||||
Loss on extinguishment of debt | 2,500 | ||||||
Redemption Premium | 1,500 | ||||||
Write off of Deferred Debt Issuance Cost | $ 1,000 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share Repurchases | ||||
Repurchase of common stock, authorized amount | $ 750,000 | $ 750,000 | ||
Repurchase of common stock, remaining authorization | $ 65,700 | 65,700 | ||
Treasury Stock, Shares, Acquired | 0.7 | |||
Repurchases of common stock | $ 0 | $ 2,210 | ||
Dividends | ||||
Dividends declared per share | $ 0.05 | $ 0.05 | $ 0.15 | $ 0.15 |
Payment of dividends | $ 21,164 | $ 10,897 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | ||||
Stock-based compensation | $ 3,600 | $ 2,900 | $ 10,864 | $ 10,208 |
Stock Options | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | 900 | |||
Unrecognized compensation costs | $ 500 | $ 500 | ||
Weighted-average period for recognition of unrecognized compensation cost (in years) | 1 year 8 months | |||
Stock option activity | ||||
Outstanding at the beginning of the period (in shares) | 2,475 | |||
Granted (in shares) | 0 | |||
Exercised (in shares) | 673 | |||
Forfeited and expired (in shares) | (805) | |||
Outstanding at the end of the period (in shares) | 997 | 997 | ||
Vested and expected to vest at the end of the period (in shares) | 908 | 908 | ||
Exercisable at the end of the period (in shares) | 404 | 404 | ||
Weighted Average Exercise Price | ||||
Outstanding at the beginning of the period (in dollars per share) | $ 7.26 | |||
Granted (in dollars per share) | 0 | |||
Exercised (in dollars per share) | $ 6.54 | |||
Forfeited and expired (in dollars per share) | 8.63 | |||
Outstanding at the end of the period (in dollars per share) | $ 6.64 | 6.64 | ||
Vested and expected to vest at the end of the period (in dollars per share) | 6.71 | 6.71 | ||
Exercisable at the end of the period (in dollars per share) | $ 7.68 | $ 7.68 | ||
Weighted Average Remaining Contractual Term | ||||
Options outstanding at the end of the period (in years) | 6 years 2 months | |||
Vested and expected to vest at the end of the period (in years) | 6 years 1 month | |||
Exercisable at the end of the period (in years) | 4 years 3 months | |||
Aggregate Intrinsic Value | ||||
Outstanding at the end of the period | $ 1,374 | $ 1,374 | ||
Vested and expected to vest at the end of the period | 1,209 | 1,209 | ||
Exercisable at the end of the period | $ 278 | $ 278 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract] | ||||
Dividend yield | 4.02% | |||
Expected volatility | 46.77% | |||
Risk-free interest rate | 1.60% | |||
Expected life | 5 years | |||
Weighted average grant date fair value of options granted | $ 1.48 |
Stock-Based Compensation (Det38
Stock-Based Compensation (Details 2) - Stock Options shares in Thousands | 9 Months Ended |
Sep. 30, 2015$ / sharesshares | |
Range of Exercise Prices from $4.97 to $4.97 | |
Stock options outstanding and exercisable by exercise price range | |
Exercise price, low end of the range | $ 4.97 |
Exercise price, high end of the range | $ 4.97 |
Stock Options Outstanding - Number Outstanding (in shares) | shares | 300 |
Stock Options Outstanding - Weighted Average Remaining Contractual Life (in years) | 8 years 3 months |
Stock Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 4.97 |
Stock Options Exercisable - Number Exercisable (in shares) | shares | 75 |
Stock Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 4.97 |
Range of Exercise Prices from $6.08 to $6.08 | |
Stock options outstanding and exercisable by exercise price range | |
Exercise price, low end of the range | 6.08 |
Exercise price, high end of the range | $ 6.08 |
Stock Options Outstanding - Number Outstanding (in shares) | shares | 254 |
Stock Options Outstanding - Weighted Average Remaining Contractual Life (in years) | 7 years 5 months |
Stock Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 6.08 |
Stock Options Exercisable - Number Exercisable (in shares) | shares | 0 |
Stock Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 0 |
Range of Exercise Prices from $6.90 to $7.51 | |
Stock options outstanding and exercisable by exercise price range | |
Exercise price, low end of the range | 6.90 |
Exercise price, high end of the range | $ 7.51 |
Stock Options Outstanding - Number Outstanding (in shares) | shares | 298 |
Stock Options Outstanding - Weighted Average Remaining Contractual Life (in years) | 5 years 9 months |
Stock Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 7.46 |
Stock Options Exercisable - Number Exercisable (in shares) | shares | 184 |
Stock Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 7.43 |
Range of Exercise Prices from $7.64 to $11.82 | |
Stock options outstanding and exercisable by exercise price range | |
Exercise price, low end of the range | 7.64 |
Exercise price, high end of the range | $ 11.82 |
Stock Options Outstanding - Number Outstanding (in shares) | shares | 145 |
Stock Options Outstanding - Weighted Average Remaining Contractual Life (in years) | 11 months |
Stock Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 9.40 |
Stock Options Exercisable - Number Exercisable (in shares) | shares | 145 |
Stock Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 9.40 |
Range of Exercise Prices from $4.97 to $11.82 | |
Stock options outstanding and exercisable by exercise price range | |
Exercise price, low end of the range | 4.97 |
Exercise price, high end of the range | $ 11.82 |
Stock Options Outstanding - Number Outstanding (in shares) | shares | 997 |
Stock Options Outstanding - Weighted Average Remaining Contractual Life (in years) | 6 years 2 months |
Stock Options Outstanding - Weighted Average Exercise Price (in dollars per share) | $ 6.64 |
Stock Options Exercisable - Number Exercisable (in shares) | shares | 404 |
Stock Options Exercisable - Weighted Average Exercise Price (in dollars per share) | $ 7.68 |
Stock-Based Compensation (Det39
Stock-Based Compensation (Details 3) - Restricted Stock Units - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Restricted Stock Unit Activity | ||
Nonvested, at the beginning of the period (in shares) | 5,810 | |
Granted (in shares) | 4,753 | |
Vested (in shares) | (1,706) | |
Forfeited (in shares) | (1,084) | |
Nonvested, at the end of the period (in shares) | 7,773 | |
Weighted Average Grant Date Fair Value | ||
Nonvested, at the beginning of the period (in dollars per share) | $ 4.74 | |
Granted (in dollars per share) | 4.53 | $ 4.16 |
Vested (in dollars per share) | 5.04 | |
Forfeited (in dollars per share) | 4.78 | |
Nonvested, at the end of the period (in dollars per share) | $ 4.54 | |
Restricted Stock Units, Other Information | ||
Unrecognized compensation costs | $ 21.9 | |
Weighted-average period for recognition of unrecognized compensation cost (in years) | 2 years | |
Aggregate fair value of shares, vested | $ 8.6 | $ 7.7 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Income Tax Contingency [Line Items] | |||||
Unrecognized tax benefits | $ 18,537 | $ 18,537 | $ 17,205 | ||
Increase due to the addition of a new position | 1,332 | ||||
Income tax benefit (provision) | (2,060) | $ 4,329 | $ (2,821) | $ 3,592 | |
Effective Income Tax Rate, Continuing Operations | (10.00%) | 6.70% | |||
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Amount | $ 1,900 | ||||
Effective Income Tax Rate Reconciliation, Tax Contingency, State and Local, Amount | 4,400 | ||||
Valuation Allowance, Amount | 346,200 | 346,200 | |||
Unrecognized Tax Benefits, Interest on Income Taxes Accrued | 800 | 800 | |||
Unrecognized Tax Benefits, Income Tax Penalties Accrued | 100 | 100 | |||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | $ 2,100 | $ 2,100 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Carrying (Reported) Amount, Fair Value Disclosure | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | $ 510,647 | $ 593,399 |
Carrying (Reported) Amount, Fair Value Disclosure | Senior Secured Notes Due 2020 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 300,000 | 300,000 |
Carrying (Reported) Amount, Fair Value Disclosure | Senior Notes Due 2019 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 170,647 | 293,399 |
Carrying (Reported) Amount, Fair Value Disclosure | Revolving Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 0 | |
Estimate of Fair Value, Fair Value Disclosure | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 525,122 | 601,803 |
Estimate of Fair Value, Fair Value Disclosure | Senior Secured Notes Due 2020 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 307,875 | 301,503 |
Estimate of Fair Value, Fair Value Disclosure | Senior Notes Due 2019 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | 177,247 | 300,300 |
Estimate of Fair Value, Fair Value Disclosure | Revolving Credit Facility | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Long-term debt | $ 40,000 | $ 0 |
Segment Information New Segment
Segment Information New Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Schedule Of Segment Reporting Information By New Segment [Line Items] | ||||
Number of reportable segments | 4 | |||
Revenues | $ 270,904 | $ 837,015 | ||
Cost of Revenue | 122,391 | 378,901 | ||
Gross margin | 148,513 | $ 162,050 | 458,114 | $ 466,664 |
Selling, general and administrative (exclusive of depreciation and amortization shown separately below) | 90,775 | 105,948 | 280,382 | 317,030 |
Depreciation and amortization | 46,502 | 46,716 | 141,489 | 139,186 |
Restructuring, acquisition and integration-related costs | 5,486 | 1,108 | 14,836 | 10,993 |
Interest expense and other, net | 11,731 | 13,970 | 39,780 | 42,008 |
Loss on extinguishment of debt | 2,482 | 0 | 9,734 | 0 |
Loss from continuing operations before income taxes | (8,463) | (6,281) | (28,107) | (53,913) |
Enterprise/Mid-Market | ||||
Schedule Of Segment Reporting Information By New Segment [Line Items] | ||||
Revenues | 110,051 | 338,809 | ||
Cost of Revenue | 54,574 | 167,062 | ||
Gross margin | 55,477 | 171,747 | ||
Small Business | ||||
Schedule Of Segment Reporting Information By New Segment [Line Items] | ||||
Revenues | 72,876 | 230,577 | ||
Cost of Revenue | 34,059 | 106,577 | ||
Gross margin | 38,817 | 124,000 | ||
Carrier/Transport | ||||
Schedule Of Segment Reporting Information By New Segment [Line Items] | ||||
Revenues | 34,190 | 101,606 | ||
Cost of Revenue | 14,839 | 46,124 | ||
Gross margin | 19,351 | 55,482 | ||
Consumer Services | ||||
Schedule Of Segment Reporting Information By New Segment [Line Items] | ||||
Revenues | 53,787 | 166,023 | ||
Cost of Revenue | 18,919 | 59,138 | ||
Gross margin | $ 34,868 | $ 38,781 | $ 106,885 | $ 119,995 |
Previous Segment Information (D
Previous Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reportable segments | 4 | |||
Segment Reporting Information | ||||
Revenues | $ 270,904 | $ 297,745 | $ 837,015 | $ 892,423 |
Cost of revenues (exclusive of depreciation and amortization) | 122,391 | 135,695 | 378,901 | 425,759 |
Gross margin | 148,513 | 162,050 | 458,114 | 466,664 |
Direct segment operating expenses | 85,149 | 98,651 | 263,589 | 294,057 |
Segment operating income | 63,364 | 63,399 | 194,525 | 172,607 |
Depreciation and amortization | 46,502 | 46,716 | 141,489 | 139,186 |
Impairment of long-lived assets | 0 | 589 | 0 | 11,360 |
Restructuring, acquisition and integration-related costs | 5,486 | 1,108 | 14,836 | 10,993 |
Corporate operating expenses | 5,626 | 7,297 | 16,793 | 22,973 |
Interest expense and other, net | 11,731 | 13,970 | 39,780 | 42,008 |
Loss on extinguishment of debt | 2,482 | 0 | 9,734 | 0 |
Loss from continuing operations before income taxes | (8,463) | (6,281) | (28,107) | (53,913) |
Business Services | ||||
Segment Reporting Information | ||||
Revenues | 217,117 | 237,054 | 670,992 | 705,273 |
Cost of revenues (exclusive of depreciation and amortization) | 103,472 | 113,785 | 319,763 | 358,604 |
Gross margin | 113,645 | 123,269 | 351,229 | 346,669 |
Direct segment operating expenses | 77,708 | 88,078 | 240,494 | 260,523 |
Segment operating income | 35,937 | 35,191 | 110,735 | 86,146 |
Consumer Services | ||||
Segment Reporting Information | ||||
Revenues | 53,787 | 60,691 | 166,023 | 187,150 |
Cost of revenues (exclusive of depreciation and amortization) | 18,919 | 21,910 | 59,138 | 67,155 |
Gross margin | 34,868 | 38,781 | 106,885 | 119,995 |
Direct segment operating expenses | 7,441 | 10,573 | 23,095 | 33,534 |
Segment operating income | $ 27,427 | $ 28,208 | $ 83,790 | $ 86,461 |
Segment Information (Details 2)
Segment Information (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Revenue, Net | $ 270,904 | $ 297,745 | $ 837,015 | $ 892,423 |
Business Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, Net | 217,117 | 237,054 | 670,992 | 705,273 |
Consumer Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, Net | 53,787 | 60,691 | 166,023 | 187,150 |
Retail Services | Business Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, Net | 178,207 | 189,122 | 554,995 | 573,028 |
Wholesale Services | Business Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, Net | 34,190 | 42,788 | 101,606 | 117,200 |
Other Services | Business Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, Net | 4,720 | 5,144 | 14,391 | 15,045 |
Access and Service | Consumer Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, Net | 42,392 | 49,516 | 132,310 | 154,665 |
Value Added Services | Consumer Services | ||||
Segment Reporting Information [Line Items] | ||||
Revenue, Net | $ 11,395 | $ 11,175 | $ 33,713 | $ 32,485 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||||
Loss Contingency, Loss in Period | $ 2.2 | |||
Billing Disputes, Revenue | $ 1.2 | 4.3 | $ 6.8 | |
Loss Contingency, Range of Possible Loss, Portion Not Accrued | 13.4 | 13.4 | ||
Billing Disputes, Cost of Revenues | $ 3.3 | $ 4.7 | $ 9.9 | $ 9.8 |